alix: u.s. stocks fluctuate after racing an earlier loss. treasuries rise for the first time in four days area joe: joe: the question is what did you miss. alix: how low can you go when it comes to oil? goldman sachs has possibly $20. others liars think it is drying up. joe: europe's yesterday crisis this refugee crisis. -- europe's refugee crisis. call dateher pla overall.- calm day

hud rising streak in the s&p. really a wait and see kind of vibe. joe: the index is still very , but this-- elevated has been a much quieter week. we have not had the swings. america says that the fed has never raised rates when the vix is over 25. volatility is key when the fed looks at it. market volatility is going to be the key issue. we will talk about it a lot over the next year days. i want to take a look at the goldman sachs financial condition index. stockhis does is take prices, credit spreads, and overall we are right around a five-year high. goldman sachs had no doubt today saying that because this is so high, it has done the fence tightening for it.

400as actually risen by s.sis point joe: one view is that it has done with his work for it, is that they should not go while conditions are being tightened. but if the market is already pricing and rate hikes they can do one for free. may be designed to go. and what people are paying attention to this. i want to go into my terminal 2 talk about the university of michigan consumer sentiment rep or. we have been looking for evidence that the stock market volatility is leading into the real economy. so far that has not been much. but we got a week -- a ak consumer report.

look at the huge drop month over month in the number of people who say they're confident that they will have a comfortable retirement compared to have a full five years ago. that is a major drop that is really clear evidence that the overall drop we've seen in sentiment is directly related to how people feel on their investment. alix: who were those people into thousand 12 of a will have a good retirement? >> it was a dramatic truck. -- drop. alix: what to do? guest suggested you should have your portfolio fully invested in cash and bonds with no exposure to stocks. tactical asset allocation. he joins us now from los angeles. thank you for joining us. explain why you think investors

should get out of the market. >> if you are a buy-and-hold aboutor, ignore what i'm to say. but if you're a technical person who was concerned about newsowns and losses, the we look at in two ways. the first is the trend. we have done historical studies not only in u.s. stocks that foreign stocks and about everything else. when the markets are trending, that is when you want to be in . what it shows is that when the ,arket is down trending and you moving to 10 year bond, you will avoid a lot of the volatility. -- loss trough lawson in the market. right now, for the first time in

a really long time we have this incredible six-year run. u.s. stocks are below trend and , it is a lot of people good time to move to the safety cash or bonds. me through the returns you been able to do by using this market timing mechanism versus the s&p. how successful is that? >> a lot of people assume that they look for an indicator that will give them 20% returned per year. the market tops and bottoms, but that is not how it works very you get about the same return if you invest in bonds. , andduces the volatility the drawdown by a huge amount you can invest in the highest omentum, you can invest in the only things that are going up. commodities,s, everything is below the long-term trend.

that is why the start of model shows you should be mostly cash. but in general it does not doing a lot better than the market. but it is a much smoother ride. in addition to this market timing model that you have you recently pointed out the role chart that you say our bearish. one of them is the allocation of investors to equities. it is at historically high levels. what does that tell you? there is a lot of coincident indicators that you see when markets are near tops. anytime, they were still going up. there are no bullish charts. but this indicator is showing simply how people are putting in the stocks. you can see that it is near peak. there are times when people were not allocating much of the stocks like in the early 80's. there are times in the late 90's and now that people have too

much in stocks. a lot of that has to do with drift. it is just one of many indicators that show you should probably be cautious right now. alix: the other part of your strategy is not a liberty of market timing but also looking for stocks are cheap versus when they are expensive and list a look at the killer shades -- schiller kay's ratio. adjusted inflation. a fund this we call the value of momentum etf. it looks at transcendence of valuation. there is so much misinformation about value. people will look at value in almost every other aspect of their life, but with a look at the stock work at they often you cannot use valuation to time the market. does that sound remotely reasonable to you? absolutely not. so you looked at schiller cape .

round 16 andlues 17. it has been as low as five. we're in a value around 26. it has come off a little bit this summer, but it is expensive. inflation is tame, but it is still expensive. people want to say it is going to be terrible, but we are looking at low single-digit returns going forward. portfolio0% of the when stocks are expensive and another 50%, stocks are going down. long, we up to 100% are 100% hedged in market neutral right now. joe: u.s. stocks look expensive, but some markets would cheaper right now. guests that find are bullish on these countries.

these are some of the most hated in the world. this is where you see upside opportunities? can invoke book and a subsequent fund that looks of the strategies. we went out and the ratio for our 45 countries of the world of round but it works grace in all of these countries just the same as it works rate in the u.s.. is even bigger examples of booms and busts in the markets overseas than in the u.s.. , that was all the bad news about the u.s.. most of the rest of the world is reasonable valuation. developed as round 15, 16. there is a subsection of countries that is really cheap. emerging europe, eastern europe, countries like russia and brazil. they have simply gone down a

lot, and no one wants to own them. that is one of the reason it works. if you have a lot of time horizon, and you do not want to rebels this more than once a year, it owns a lot of these countries. we call it the closure eisen holger no strategy. we also asked our guest what keeps you up at night? >> i sleep grade. -- great. but historically if you look back at history, what is a good hedge when stocks are going down? it has been bonds. bonds as low yielding as they are, and does not look like a grate place to be. a strategy that was a lot in cash or bonds, we are a little nervous about that. one of the other allocations that we love is the area managed

futures. it has been a wonderful alternative to diversify the traditional portfolio. but the stock bond correlation as potential to not be a diversify are going forward is a concern for me. joe: grade stuff. thank you. percentageg up, what of ipos have been unprofitable in the last six months? d to see. you nee ♪

break we asked what percentage of ipos were unprofitable in the last six months? alix: 78% earned the last two times ipos with this

unsuccessful, 2007, and 2001. joe: another indication that maybe there is a lot of the aleutian exuberance right now -- bullish exuberance right now. and saudi arabia are nearly 90 people are dead after a crane collapsed on mecca's. dozens more reportedly injured. officials blame strong wind for the collapse. mica is islam's holiest city. programs have been converging there for the annual pilgrimage which: it's in a cold -- few weeks. baltimore's mayor will not seek reelection next year. deaths in under fire the in police custody of freddie gray. ruled thursday that all six trials will be in baltimore. alix: serena williams store are

suitably grand slam is over. roberta vinci hold off what may be the greatest upset. upset,led off an williams is trying to win all four majors in a calendar seasons and become the first since theo that previous victor. joe: $20 oil? ing?the all clear show the iea is looking at a balanced market in 2016. alix: here is the one chart that tells the opposing views. you're going to be looking at the iaea non-opec supply chart.

mexico, brazil, russia, canada and the u.s.. aboutay we won't drop by 500,000 barrels a day next year. and that that will balance the market. goldman sachs that we have to fall yet another 585,000 barrels in the u.s. alone and another 220 thousand barrels for countries like brazil, canada, and the gulf of mexico. to shutre oil is needed in supply according to goldman sachs than what the iea said. this is why no one can figure out what is happening in the joe: oil market. joe: goldman's call sounds familiar. citigroup already made this call a wild back. alix: they are now in the 30's. but the reason why goldman says it could be 20 is because as we keep up production is going to go into storage. storage isnt going to fill, and they may hit

$20 to be tight enough to balance the market area why they going to stop production when it is that 40 five dollars a barrel? you can get a little dicey. it was an awesome morning. coming up, you will not believe the reason larry summers is given for why the fed should not raise rates. that is after the break. ♪

alix: i'm alix steel. joe: before the break we talked about some pretty strong arguments why the fed should not raise rates this month. he said to blame the vix and

twitter push back against him. one person said that if the expression jumped the shark have not jumped the shark, it would be applicable. not the fed typically has raised rates during a time of volatility. if they feel the economic and inflation targets are in place. alix: it speaks to the financial conditions versus the economic conditions and how it seems to be right now. pointed out that the fed has never raised rates while it was over 25, and that does not mean that they cannot. joe: we will be right back.

states will not taken at least 10,000 displaced syrians over the next year, joining europe's efforts and resettling them abroad. the one country, leading the way, is germany why the discrepancy? last month they were getting slammed about getting -- being stingy about the treatment of greece in the euro zone. now it is easy as the country that is the most generous. >> to an extent, they are linked. germany does real that it may be paid the price for not showing of solidarity, or do not like

seeing being -- being seen as the hegemon in europe and in this case it is trying to offset some of the damage done by the greek situation. there was a deeper meaning behind this, and that is demographics. it fundamentally needs people over the next year years, decades going forward. it is good to be equipped with declining population and an aging population. the moral argument and the third help of these people's basic economics in terms of upset in the negative driver trends in germany and. are going to see election and about a week. what do you think the outcome will be? >> most of the polls for the difference between the two leading parties within the margin of error.

it is basically a caps off between the two of them. whatever the outlet we are looking at a coalition government. forminghose two parties a government that will really give a coalition of around 100 hits around 300 and it will have a majority or be a very slow one. managing the majority in difficult times, then it will be done through implementing the bailout program and better be very difficult for any coalition. i would not rule out completely, but as he gets more than likely that when two large parties will join to create a smaller coalition. i think they are showing some hesitancy now. we've seen reports to suppress not wanting to win the referendum, and there are some reports coming out of greece that he does not want to win this election and he would rather be in your position and .o back to his old scams

joe: one of the huge stories in europe, is the rise of these more radical fringe candidates friends, andeeing even in the u.k.. this saturday we get the results of the labor leadership election. by all accounts, the far left is inspected to win. people think that if he wins it will be wrecked and go into the wilderness for years. lou you think labor is doomed if he wins. no one here saw it coming. is someone the money to mix it up, and now it would say he will win by a landslide. it really has changed the nature of politics in u.k.. i think it is good to be very difficult for the next party to be an effective opposition. they're going to spend a

lifetime fighting inwardly. while you have grassroots support. he does not have a lot of it in .he parliamentary think there may be times when many of them are what they are. from the other side makes more sense than what they are hearing from their leader. it will be very difficult for the list party over the next few any --o really provide one of the key events coming up will be the eu referendum. that is an issue where he is very euro skeptic. he is sitting backing the outcome. is considering leaving me you. a lot of his party is very pro-staying in the eu

i think it will be focused a lot more on themselves is doing the next month and here's. alix: thank you. don't miss this. it is going to be a huge link next week. ,here is a lot of economic data manufacturing data. but the federal reserve decision that we cannot talk about -- stop talking about his next thursday. alix: we will also have some indicators on how the economy is doing this by the volatility. we will have recent retail sales on tuesday as well as for august to see if we see a trickle down to i do not want to spend money because of the volatility of the stock market. joe: i would also be interested in because of the that capacity utilization number going up. there is going to be so much.

i cannot wait. i think we will have a fun time. alix: it is going to be an intense week. thank you for joining us. joe: have a good afternoon. joe: have a good afternoon. great time for a shiny floor wax, no? not if you just put the finishing touches on your latest masterpiece. timing's important. comcast business knows that. that's why you can schedule an installation at a time that works for you. even late at night, or on the weekend, if that's what you need. because you have enough to worry about. i did not see that coming. don't deal with disruptions. get better internet installed on your schedule. comcast business. built for business. tand that's what we're doings to chat xfinity.rself, we are challenging ourselves to improve every aspect of your experience. and this includes our commitment to being on time. every time. that's why if we're ever late for an appointment, we'll credit your account $20.

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