>> the following program is paid for and presented by skyebridge media llc. gary: hi, i' m gary kaminsky, host of "wall street week." today' s guest is an energy trader. anthony: i' m anthony scaramucci. he will detail the biggest mistakes investors make when thinking about the energy markets and where to find the best opportunities going forward. lou: this show has never been solely about investments. we have talked about anything that affected people and their money. >> from times square in new york city, the new "wall street week."

gary: we are pleased to welcome mark fisher, founder and president of mbf trading. we always talk about the origin story. tell us about your upbringing and how you got into this stuff. mark: basically, i got lucky, i grew up in long island, right near where gary -- anthony: five towns. mark: right. i went to a private school. i saw a guy drive down the block with a car that was completely out of context with the neighborhood. every month, it was a different car. i decided, ok, let me go bang on his door. i go down the block, say, hi, i' m mark. what do you do for a living? he says, what do you care? i was 12, 13. i said, i' m the smartest guy on the block. at least i thought i was. he says, congratulations, shuts the door in my face. luckily for me, one of his

children was struggling academically. the next week, i bang on the door again. he goes, now what? i go, don' t shut the door, i have a business proposition for you. he goes, you have a business proposition for me? i was 13. i go, yes, transfer your son to my school, i will make sure that he graduates high school. he will graduate high school, i promise. he goes, what do you want in return? i said, i want a job. he said, you are 13, what can you do? i said i can work for you. he goes, ok. he says, the first day my son flunks out of school, last day on your job. that is how i got started. turned out to be the largest broker and that is how i got started. anthony: making really good money as a commodities trader before college. why go to college? mark: number one, i was not

making that good of money before college. number two, i needed a backup. like everyone in life, what happens if trading does not work out, what happens if they close the markets, what happens if i' m not good at it. anthony: what unique skills do you need to be a trader? mark: to be a trader today is definitely different from 30 years ago. 30 years ago, i saw somebody, atlantic beach, sitting there, selling ice cream from a truck. i saw 50 kids going up to him at once. they are all screaming, he goes, you ordered this, this, this, six dollars. he could just multitask and do this map and really break it down. i said he would be a great trader, and he turned out to be phenomenal. today that does not matter anymore. today it is who has the best algorithm, who has the best edge.

gary: the mathematical equation. what does that do, predict patterns? mark: critics patterns, but a lot of the best traders came from our floor. paul jones, the list goes on and on of people who started in the. -- in the pits. you have to go through four steps, s --collect, the side, analyze, implement. in the pit, echoes fast. anthony: some of the most people in the pits found it very difficult to take the skill sets they had over many years on the floor and do the same thing off the floor. why is that? mark: the skill set they had on the floor was taking advantage of the big offer. their skill set was making advantage of a rumor. a lot of them, regrettably, did

not learn how to develop pattern recognition or learn how to rade 95% of the people who used to trade cannot anymore. gary: are the viewers of this program better off, given the fact so much trading, not just the commodity markets but the equity markets as well, are now computerized? are viewers benefiting or rmb added dennis and banish -- or at it is a managed? mark: i think they benefit from the speed of execution if they have a long-term horizon. i find it very hard for most people who are novices today trade their way to a fortune and go against the computers. anthony: the financial media likes to make people think they can trade against computers, but here you are one of the greatest in the world and you can' t.

you trade with them, recognizing patterns, not trading against them. mark: we are trading stuff they have not gotten to yet. gary: i want to go through first-order stuff. you have been trading 30 years. a lot of people don' t know what an energy future is or what the energy futures market is. can you describe that? mark: an energy future is a contract that you enter into to buy or sell a thousand barrels of crude oil, let' s say, at a certain point in the future. unlike a security where you can own it in to it a -- in perp etuity, the contract expires. this is a way for individuals to speculate and hedge, oil companies and people -- anthony: airlines, maybe they are worried about the price of oil in the future? gary: or customers with home

heating oil and you want to enter into a guaranteed monthly payment. mark: in the asian markets, it is related to poor, all kinds of weather derivatives. basically, it is the futures contract on almost anything there is. gary: the first gulf war, legend has it that is when the energy futures market became crazy. fortunes were made, fortunes were lost, the market became incredibly volatile. take me back to your recollection of that. mark: i think it was -- you described it pretty well, but it was like animal house. that is what like what it was. a bunch of people on the floor, all walks of life, some well-educated, some not, some people used to be the master, some used to be harvard graduates. there was a lot of intermediation. now you just click on something on the computer is one shoe have

the money and things happen faster. as crazy as it was back then, i wonder if it would have been crazier electronic trading was back then. gary: "wall street week" will be right back. suzanne: the muni bond market is different from the stock market. we like bad news. gary: what is the price of crude oil in two years? >> sign up for the free "wall street week" newsletter, diving deeper into the most recent episodes with future episodes and investment ideas. go to wallstreetweek.com and sign up today. >> i used to dread going to work. >> i started looking for a business that i believed in. i wanted to do something more green. >> he helped me create a business plan. >> big.

>> i' m here because of score. >> "wall street week " is sponsored in part by morgan stanley, where capital creates change. anthony: we are back with mark fisher. gary: let' s talk about the energy markets, where we are today. let' s talk about the commodity prices and what you think is setting the commodity prices right now. mark: number one, i don' t know why anyone would want to listen to me because i was shocked with the market did. gary: you' ve developed based on being the most successful energy trading, you felt in our lifetime we would have never seen crude oil trade below $70. why? mark: i do not think the technology would make the inroads into the energy market. anthony: fracking and everything?

mark: i did not think we would be able to tap the supply of oil that we are able to tap now. i did not think, because of the horizontal drilling, to get as much oil as we can. think about it, the fact we are now becoming energy independent is shocking to me. i don' t want to get into politics, but a lot of the reason with us being energy independent is a lot of reason why we are going ahead and making the decisions we are making. anthony: you watch the nightly news, oil prices are "x" and the price at the pump is "y." that is the monthly price. if you look at the near month price and the future prices, where is -- where are we right now? mark: to me, i think that is the big mistake the public makes. the public makes the mistake, they are looking at where the energy market is trading.

the smart money is where it is 12 months from now, 24 months from now, 36 months from now. they are trading out on the curve. anthony: can the average individual make money on the equity markets trading a commodity? mark: i don' t think an average person can take and make money. an astute investor can make money trading on the curve. if people take the time to learn and understand what is going on. for instance, we have a situation right now with all these energy companies now that have to hedge production whether they want to or not. ? why to get bank financing, the banks make them do that. anthony: there has been some regulation that basically forced a lot of principles between commercial banks and investment banks out of the energy space. mark: two large degree that has benefited the economy because it is forced producers to still

sell, using the banks on the other side of the transactions, and now they are not. the marketplace has recognized you have all this for selling. this is going on not just in crude oil but natural gas. gary: in two years, what is the future price? mark: it is saying $10 higher. gary: does that make sense? mark: i' m not sure, but i know what does not make sense to me is six years out you can buy crude oil for basically $12, $14 higher, which makes no sense to me. anthony: you think it will be higher still, or lower? mark: buying out on the curve, so many things go wrong. he gives the investor the opportunity because i think those markets are undervalued. gary: talk about pattern recognition. where are we now? you put a lot of attention to what is happening in terms of the money supply, central banks, how it affects commodity prices. tell me where we are with that. mark: i think the piece that i

was missing, the piece that people miss today is the role technology has played. it has overshadowed qe2, qe3, whatever we are on. anthony: potentially qe3, but with the operation, qe4. they have and at the quantitative easing programs to jam down the interest rates. gary: the technology development has been so much more than the money printing, that is why the commodity price has not been impacted by the dollar. mark: it has not been depressed. my question is, and a much sure, whether or not moore' s law technology, i think it has its limits with commodities. anthony: moore' s law says at some of the microns become so close to each other they can no longer process any faster. mark: with technology, people have been betting against moore' s law the past 25 years. gary: going to ask you to play wall street strategists. mark: i hate that.

gary: let' s have fun with it. mark: why, gary? gary: we are having fun on the show. anthony: gary' s idea of n. go ahead. gary: if i' m watching this show and i had a market weight on energy last year, it hurt my portfolio. a lot of people were diversified. if i' m just trying to get market returns and the energy space the next five years? mark: i think you want to wait until there are more bankruptcies in the space. i think you want to wait -- there is still too much complacency. you may want to wait another year, then i would go a year, year and half out, and overweight. i still think there is not been enough disruption in the space. there has not been enough panic. anthony: do prices have to go lower? mark: i think they have to go lower, but how long they go lower for, i' m not sure.

anthony: is that overall beneficiary to the consumer? mark: it has not happened. gary: we have spoken to a number of guests on the program who follow these things, what is happening in the overall economy. mark: you go to the gasp, you' re saving six dollars, four dollars at the pump, you go inside 7-eleven and you spend the money. anthony: chase manhattan bank is confirming what you are saying. they have surveyed the checking accounts. working up about $60, $70 per month for consumer is the result of the lower price. they get to the gasp, it is less expensive, they go inside in bed i -- they go inside and by a bag of doritos. where' s the energy market rent out? mark: if you can invest in companies that are on the cutting edge of technology in this space, the tools.

anthony: the technology plays in the energy space that are helping companies reduce costs of exploration. mark: down the road i think you want to be invested in companies that have the wherewithal, the financial wherewithal to withstand two, three years of pain, yet not the giants, so they had the fox ability to maneuver. anthony: one specific thing that you can make money and right now for the individual investor in energy, what would it be? mark: if i' m a short-term speculator, trading from home, i would look to buy these front month spreads when they come close to exploration -- expiration because money is typically made because the market place has a greater need for these delivery months. anthony: this is the new "wall street week." we will be right back. gary: are you looking at opportunities outside of the

united states? deepak: there is still plenty to do domestically. anthony: you could also met the case commodity markets are manipulated. >> like us on facebook, follow us on twitter and instagram. "wall street week" is sponsored in part by hightower, an unobstructed view. >> imagine delivering straightforward advice as the right thing to do. a firm that places investor trust and its foundation, rising above the discord of energy compromised by conflicts. hightower has financial advice. we live by the fiduciary standard, a legal pledge to our clients interest first. not because fiduciary is the latest fad that we does is the way we were built. >> what would you bring to my company? >> what do you need? >> problem-solving skills.

>> i got through high school without a phone, car, or computer. >> no college degree? >> not yet, but life has taught me a lot and i' m ready for more. >> well, you' re not the typical candidate that i higher, but you are exactly what i' m looking for. >> your company could be missing out on the candidates that you need most. >> my name is bob. i' m a value investor. if you want to know where the values are, watch "wall street week." anthony: we are back with mark fisher of mbf trading. joining us is suzanne shank , president of metacapital management. and deepak narula, who has under $10 billion under asset management. gary, first question. gary: let' s go into the municipal bond world. a lot of excitement -- excitement might be the right

word, given what is going on in the rico. give me a sense how use either is playing out? suzanne: the muni bond market is different than the stock market. we like bad news. greece was great for the municipal and treasury market because rates opped. puerto rico is not great news. a few weeks ago we had over a billion and outflows from muni bond funds. we think because of puerto rico, but not sure. those have significantly lessened in recent weeks. we think while it has caused disturbed trading levels the last two years, the market has mostly digested that. the muni market in general had a great year in 2014, better than expected, and a pretty decent year this year. even with, say, the city of chicago which recently had to do several transactions to eliminate some liquidity risk, they were very successful in

doing so. those bonds were very much i think. anthony: municipal bonds are for the individual? suzanne: right, and they provide tax benefits. gary: i want to talk about your special day, the mortgage-backed area of the credit markets. you had a spectacular performance coming from the financial crisis because you purchased assets and incredibly attractive prices, the number one performing hedge fund two years in a row. how do you see the mortgage market now? deepak: the stress was on the bonds that did not carry the government guarantee on the principle. as home prices fell, in many cases borrowers default it on their mortgages and the bondholders basically had to settle for whatever the home was worth. the homes fell a lot in value of. we were down 25% from the peak.

these bonds in anticipation felt that we have the tools to do the analysis, 80% of the borrowers who' three cents on the dollar on the home. think that a change in interest rates are going to affect the way that your investors think about municipals? suzanne: janet yellen has been a very verbose on their plans, and the market has already factored in i think to some degree one move, probably 50 basis points, before the year-end. we expect more movement on the short end, but not the long end. interest rates could go lower by year-end. i don' t think it hurts the municipal bond market because they will not issue as much if rates go up substantially. rates have been so low for so long, i don' t think it will have a tremendous impact. gary: you own muni bonds?

if you' re a german buyer, are you going to buy a 20 year, 10 year u.s. bond with the dollar going up another 5%, 10% against the euro? anthony: "wall street week" will be right back. >> sign up for the free "wall street week" newsletter, diving into the most recent episode with investment articles and primers. go to wallstreetweek.com and sign up today. >> "wall street week" is sponsored in part by coke industries. we are coke. >> from fuel to durable tires to blacktop itself, we help make it all better. if life is really all about the journey, hey, let' s ride. we are coke. >> join millions of americans turning off the old media for newsmax tv.

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deepak narula suzanne: municipalities cannot fill the pardon and fill the gap between 2012 and 2020. how are we going to fill that gap if weep the board and all on municipal governments? gary: are you looking at opportunities outside of the united states? deepak: not really, there is still plenty to do domestically. gary: what sectors? deepak: we are mortgage guys, so we basically make loans against commercial real estate that the banks' s are not willing to lend against because there is some risk in the underlying real estate where the capital charged by the make would be enormous. gary: you are all specialists in subsets of asset classes. i' m curious, mark, the stock market. mark: i think the u.s. is still

the market of choice, as we saw in china, i think people will be afraid of their money in any market because they are afraid of that. china has a media belated market, people say. with the dollar getting stronger, it attract more money into this market. i don' t know, i think the space as a premium, and its context-based. anthony: suzanne? suzanne: i can only speak is a personal investor, but i' m a little nervous. the market did not perform as well as we all had hoped. the economic outlook has not been as rosie midyear as it was the beginning of the year. i think diversification is the key. deepak: i would say if you' re talking about markets being manipulated, and clearly the chinese stock market, what about the bond markets?

utah community plays of the central banks, they have manipulated bond markets globally. as that comes to an end, that is cause to come down in the bond market and asset valuations to go up as well as asset classes. anthony: you could also make the case that the commodity markets are manipulative. adding supplied to the markets to keep market share? gary: i think authorities have a lot less influence on the benchmark price as they used to. the price of energy , they do not have the influence they used to. anthony: i will tell you something i don' t think we are ever going back on, we are in an age of government intervention. it does not seem like we are going back on that anytime soon. mark: as the economies improve in the fed raises interest rates, there are more assets that will be deployed, more physical assets than paper assets. anthony:

gary: the fact is as an investor, you have to take avenge vantage of the opportunities that are created. as you will have discussed with us today. anthony: quickly, what you like? mark: i like biotech, i like the brokerage firms. once the rates are changing, all of this idle money turning, the net interest goes up. i think also regional banks, and also all the small banks will get consolidated. anthony: suzanne? suzanne: utilities and energy is where i see robust numbers with the clients we deal with. deepak: for your viewers, i would say mortgage rates are a reasonable bargain. the fed tightening cycle, i think this time around the fed will have a benign tightening cycle, so i think that' s a good investment. anthony: thank you to mark fisher, suzanne shank and deepak

narula for spending time with "wall street week." that is it for today. check in with us all week at wallstreetweek.com. until next sunday, have a prosperous week. >> the preceding perm was pay for and presented by skyebridge