i'm mandy drury and this is "trading the globe" your passport to the global markets and here is the itinerary for tonight. facebook finally makes the much anticipated debut and just when you thought you could not learn anymore, tim seymour reveals why emerging market growth could have you liking this stock for a while. plus, it is the greatest emerging market story, and it is in your own backyard. kfc and taco bell are taking the globe by storm. in an exclusive interview the boss of young brands reveals why the growth is just getting

started. and the last time tim recommended a stock from the ambassad ambassador's index -- >> they continue to dominate the executive and sort of on the commercial -- >> it landed on the front page of "baron's" and now he has a new stock he says will do better. "trading the globe" starts right now. >> good friday evening, everybody. welcome to the show. i'm mandy drury and welcome to my co-host as well, stim tim seymour, and the collection of any flow ball investment in th business and we have it all lined up for you and global worries abroad have been weighing on the stocks here. and the s&p have lost 12 of the last 13 sessions. so tim, the question is here is who is wagging whom? are the european worries bringing the emerging markets down or are we concerned about what is happening in places like china and brazil? >> well, it is a great time to talk about this stuff because every indices that we are looking at and everybody else is

looking at, the dollar index which is representing the fear facer to, and the strength is at levels we have not seen and only one other time since 2008 in the fall when the world was melting down. it is a great time to talk about this. emer emerging is cast with a brush that is not fair fundamentally, but to me, these are the markets that are as tough as i have navigated ever, and it is because of the fundamentals that look interesting and the emerging is trading at 9.5 times earnings and not this cheap in five years and the technicals bombed out the charts and things as contrarians we like to sniff around at are totally not working. >> so we are essentially throwing the technicals and the fundamentals out here. and i want to bring back grace and rich ross, and you are a technical expert on this, and what are the technicals telling yog about selling in the emerging markets? >> well, clearly n a precarious position. the correction that began in earnest here in the united states in may, the proverbial sell in may and go away does not translate over sseas, and we ar

in bear markets in russia and brazil which were off 20% from the peaks in march alone. we are sitting on critical support. look at the market in russia for example, because we ahave taken out the lows that we established in the fall, in despite of the financial maelstrom. >> and you are saying that russia is driving the entire world's markets? i want to bring in dave reidel of the reidel research, and i am seeing no inflation a and central banks cutting the rates and it is a great backdrop. >> that is right. they are doing nothing wrong and emerge sshgt ing markets are lo good. and we look at the fear fac chur of consumer sentiment, and this summer not the time to be away at all, but nibbling at the

position of the emerging markets and maybe a few percentage points higher, but if we are right, we think that the focus is on the fundamentals in the back half of the year, and very good time to be long emerging markets equities. >> and you agree with that, tim? you are bullish on the emerging markets? >> yes, the fund flows of the emerging are at record levels in the first, a nd that concerns m. >> we were coming off of the low levels from last year which is a shocker for emerging levels around the earth. >> and it was warranted from the fundamental perspective, but the headwinds are what we are talking about. i don't disagree with rich from the any cal aspect of that we are at a precipice. it depends what type of investor you are and if you have the stomach and buying the companies and making top-down allocation and hold through here, you not buying the expensive valuations, but currencies cheap and fundamental macro that is sweet. >> and we will talk about that with the yum brands in a moment. but folks, another development this week, successful money

managers taking big stakes in emerging market names and who you might ask. well, george soros is taking down a chunk of media holdings, and tim, when you see this buying, are you feeling bullish and should we be doing what he is doing? >> well, smart investors and martin biggs, and the guys at oak tree and the guys at hbk have been buying and when i look at that, it is the same thing we are doing. we effectively thought that the first quarter was a pretty good environment here, but i get a little worried that half of the fund flows in that first quarter were etf flows and some of them were top-down, mandy, and some of them more whimsical and lot of it is retail flow. so going over to the you dave reidel and tell me from following the whales of the biggest investors of the world, and you are talking to them everyday, and do people want to buy emerging here? >> well, they want to buy emerging but not the etf names and mega trot megatross and tha

is bringing them down. you want the high quality mid-cap names that are found throughout all of the markets and great places to be. >> do you have examples or names there? >> absolutely. not even on the small side, but china mobile, chl, you should be putting all of the saving accounts in there and it is a 4% dividend yield and a great stock with great company and lotses of cash on the balance sheet and easy to trade. >> i would say that the smaller caps are megadeath. this is not a place to be scared to play. this is where as an investor and hedge fund we can do the best work. i cannot compete with the news flow of petrobras, and you need to find the management to get closer to and that is what we do all day. >> this is how you add the value for the investors and do the

research for them and pick out the smaller cap names. >> i hope so. >> let's hope. so and next, guys get real as in the brazilian real hitting the three-year lows and taking the country's stock market wit. this is important, because brazil is a big trading partner for the united states, and this is the fx effect, and now when you look at the currencies, let's bring in daniel wong from gain capital group, but on the street, he is known as the korean oracle, and this is a stock from best to worst in a short span of time, and what is behind this weakness? and will the real weakness continue? >> i call it the bloodbath, and it is stemming from the deterioration in overall sentiment. what reseeing what we are seeing is the data slow, and possibly the revival of the drachma and this is weighing on the emerging market currency, and especially the real. >> mr. oracle, it is tim seymour, and i would argue that

the guys want the currency weaker and you have a central bank intervening and economy where they are not competitive with the 153 lows and i think they are pushing it lower and a push in the real is bigger move than we have seen in the emerging markets currency and tell me where you see the level os hn this things because i know you are a trader and in the market all day. >> right. as a trade, we are looking at 210 or 220 being the intervention levels where brazil's central bank tries to stem real's strength, and once we see 210 or 220 we will fade the dollar real. >> and here is the problem, right, when you see any kind of central bank intervention, tim, they can't really stop a trend, but slow it down. do you think they will be able to stop it or slow it down? >> it is a be careful for what you wish for. they wanted a weaker currency and they did it into a bloodbath ad as daniel is pointing out. >> they have been struggling

over there. >> great for brazil, and the economy is uncompared, and maybe rich ross, you have a view on this, but where do you stop? and again, i know you are looking at the level where is a lot of the currencies look like they are about to fall off of the map, but real at 230 or 240, 260 where we went in 2008 when everybody was running for cover, these guys may have problems. >> tim, i could not agree more. when you look at the currency like the real, we could group them up with the four r's men, and the rand and the ruppel and the ruby, and extremely weak, and bringing you back to the real, this is a multiyear breakout from a base forming going back to 2009. this move has legs for sustained real weakness and keep in mind they are lowering the rates and not so worried about inflation with brazil as slower growth. that sellic growth of under 8% for the first time in eight years is going to add to the

woes of the real and the vespa in addition. >> and with the economy of brazil, they are trying to compete with china and brazil. >> and that is a slowdown. >> because they are so weak. aren't they? and david, i want to keep you on the trade for what is your trade for the emerging market countries? >> well, i would be long indonesia and starting to get long brazil. i like the large domestic economies that are self-sufficient, and can benefit from some exports even in a weaker environment, but can allow the currencies to weaken to spur growth. >> okay. thank you to all of you, and stick around david, and we are go ing to the thank daniel as well. in case you missed it. there was a little ipo in the states called facebook. >> a small one. >> facebook. yeah, i have heard of it. the performance of the new stock is well known by now. less familiar is just how much of an emerging market story this

is. and we were talking about this earlier on at "street signs" at 2:00, tim, and the ripple effects of the facebook ipo on the other social media companies around the world and there are a lot of them. a lot of them will emerge as well. >> earlier in the week when facebook's ipo was said to be $440 billion, and others like the facebook and the twitter of china and you saw the others that is a social media in russia, and they got a big bid. that will continue, but i do think that the social networking is underdeveloped, and i think though that the revenue proposition for these guys is not as good for facebook. i mentioned today that china's entire ad revenue market for social is about $150 million and facebook netted $3.7 billion alone. and so social media is important for the emerging markets and we know what is going on in the middle east and the arab spring and the ability of social media to bring the population toget r

together, and it is a amazing trend and underdeveloped. >> and another issue that we lightly touched on is whether or not china would ever be a successful market for facebook. the fear is that if you are here in the united states, and you are worried about the privacy already, and imagine if you are in china or friending someone in china for privacy there? >> and that is why i don't believe facebook will have a big run in china right now. >> we will be right back after the break. it is the fast food behemoth that is taking the fast food market by storm, yum brands. and coming up next the ceo reveals an exclusive interview of why there is a trend that you should know about.

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found out that the growth is not coming out of the united states, but from abroad. >> reporter: you know them for the colonel's secret blend of spices. >> today, we are making the k colonel's original recipe. >> reporter: and extra cheese and spicy burritos. >> i came by yesterday and you gave me the five-layer bureau to toe. >> reporter: what you may not know about yum brands is that it is one of the fastest growing emerging market stories in the market. last year 44% of sales came from china alone. in an exclusive trading the globe interview yum brands ceo and chairman dave novak told me that growth is just beginning. >> the consuming class is growing dramatically and it is expected to go from 300 million people to 6600 million in the next eight years. the overwhelming predominant

tailwind is the growth of the growing consumer class which we are well positioned to take advantage of. >> reporter: and it is not just the "c" in bric that is working. india is one of the fastest growing regions with scores of consumers ditching the curry in a hurry for a slice of pizza. >> india is trying to basically follow the footprint in china. >> reporter: in the first quarter india grew at 34% clip and done it by paying attention to the customers. >> we have tailored the menu for the local taste, and we have grilled chicken and fried chicken and tremendous amount of variety, and that makes us a valuable contributor to the society, and the growth that that country is going to experience as you go forward. >> reporter: according the novak, the company's cu customer-first approach will continue the drive the bottom line. >> particularly in the emerging markets is that we have got these great businesses and great brands and treat them like jewels and polish them, and

continually building the business the right way, and i think that the profits will come. >> tim, what is the untold story here for yum brands? >> dave novak is one of the best ceos not only in the emerging, but in the world. he has a new book out called "taking the people with you." and that is the point. cu culturally on the ground with the people and shows the vulnerability, and understands the tastes and this is how he leads 37,000 managers. these guys are kicking mcdonald's butt and that is amazing, because golden arches have been an example of growth globally and growing 15%. that is not enormous numbers, but for the fast food chain they are doing it. again, it is growth, and it is the management team, and the fact that the brand has a more iconic, you know, aura to it than mcdonald's. >> and if every dow stock has an e in counter part, it is the yum in mcdonald's. and let's bring in ron who runs a venture, and i understand that

india is being thrown a lot from yum, and they have a lot of youths in the indian market, and is this a buy for you? >> i'm a long term buyer, and our fund is a long-term fund, so on the fundamental basis, they are doing a great job of building the brands and doing great and build a presence in india and already has done so. there will be short term challenges to the growth. india is struggling right now, and has a 10% inflation rupe is and if you look at this standpoint from pizza hut which is one of the main units is getting crushed by domino's, and kfc is a chicken business in a country with a lot of vegetarians. >> but i have to come after you on the india backdrop, because it is a fantastic demographic story and better than china and the bureaucracy and so tough to get stuff done, there i don't think that yum can do it. >> the dem traffics are great

and 60% of the population is youth, and under 30 years old, and that is the future and where the brand will be. they have made good headways in getting a blueprint for india. they are opening up 100 stores a year in india. i think that is pretty fast, and faster than mostly anyone else out there. >> and they have growth challenges because indian diners spend 1/5 of the chinese each year on fast food, but it will happen. and let me bring in dave, because you are negative on yum. what are you seeing here? >> well, employment expectation s in china. we do a sentiment study and we have seen the downturn in sentiment in china and exespecially in the employment expectations. there is a correlation of yum prices and the stock prices and it is 20% lower today. >> i have to agree with david, because the valuation concerns me, because it is slightly expensive and you are looking at a business where 50% of it is developed markets, and shrinking

markets. >> but i would say this, guys, no question at 22 times the earnings this is not cheap, but again, they have 300 million in the consuming class moving to 600 million soon and that is the growth that you are buying and why you are buying up now. >> well, you won't make a pop and challenges this year, but long term, it is a brand that will stick. >> buy it cheaper. >> and rich ross from the technical point of view, do you have a call on yum? >> well, it is a stock like many consumer discretionary names, home depoe, and yum foods, and this has not had a down tic since the colonel was alive. this is a story that is rising at a 70-degree angle. at a market around the world that is melting down right now to be in a stock like yum just off of an all-time high is not the best pick. i look to avoid it. >> i didn't think that rich is

going to be embarrassed here. >> well, that is the trademark. dave, a better play in the space than yum? >> good local players. there is alsaya in mexico, and other local players and i'm not knocking yum long term, but you can own it cheaper. >> that is why we bring both sides and we are not cheerleaders, but objective journalists telling the story. it is called the amazon of latin america, and what is it? tim will explain after the break. stay with us. adding to it from the road, improving it in the cloud all in real time. good idea. ♪ it's the at&t network -- providing new ways to work together, so business works better. ♪ so business♪ orks better. [ female announcer ] you're the boss of your life.

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♪ >> welcome back to the "trading the globe" show. we all know about the dow, but

which global stock should you own instead of the familiar blue chips? it is time for the ambassador's index where tim seymour tells us to buy this and not that. last time tim opened up the index, and his pick landed on the cover of baron's, and now he has the sights set on the amazon of latin america, right, tim? >> yes, thank you, mandy. we love the metaphors and this is the amazon and the ebay of latin america, and this is the store ri where versus amazon we have a strong valuation market, and when it comes the paypal, the mercado which is there, and the payless system, and latin americans are slow to adopt to the payless system to force them to give the credit cards over the internet, et cetera. this is where they have the trust. they are well insulated on the ground, and the online growth in latin america is unbelievable. they have been there and ahead of amazon coming in september. they have a serious leg up.

the growth year over year is 30%, and the earnings per share is dwarfing that of amazon, and this is a place where, again, an expensive valuation historically has been rewarded with this type of growth. i think that you are kind of in value territory for meli, because you have a stock that sold off in the valuation, and offering a discount the amazon. so in short, this is a company that is to me, you know, effectively if i'm thinking of mercado libre i'm think of the amazon and the smartphone, and amazon as the blackberry. so that is the guy that you to beat is mercado libre. >> and do you have a case, dave? >> well, they have to use the credit cards for online shopping and trust the delivery system, and people across the latin america do not trust the postal service, and they do not believe that what they order will arrive in the mailboxes in good shape. that is the other hurdle i watch out for.

>> fantastic. thank you for joining us today. i'm mandy drury here with tim seymour, and you can catch us again next friday. don't think local but trade global. have a great weekend, everybody. next on the "celebrity apprentice," the final two will be revealed. >> it is for the whole enchilada. >> and get my agent on the phone. >> the "celebrity apprentice" next on cnbc. it's like, ah, it's part of me. it's me again. now that i'm retiring they all have plans for me.

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