Whos just finishing up trading and will join us shortly. Guys, welcome. Paul, lets kick off with you. Were looking at the start negative start, down about 46 points in the dow. How worried are you . Im not worried. I mean, listen, the markets had a great run. Last week, a great run since june 24th. Even if you went down 1 , 2 , 3 , i think its just a tiny little dip. Its barely a rounding error. And the markets, to me, are clearly headed higher in the short term. Doug, you buying into this weakness, as well . Yeah, i think we are buying into this weakness. We also are finding that the u. S. Has had a really great run, and, you know, the whole point of making your most money when reality and expectations are in disalignment, thats not the case right now in the u. S. Things are good and people recognize that. I think the real opportunities are is overseas where expectations are very low and those countries are maybe where the u. S. Was a couple of years ago. Were looking at second half that could be a lot like the second half of 2012, which is the u. S. Kind of stalls out and the International Markets really get up and going. Thats interesting point. Under way. Lets bring in david as well from sierra. You guys seeing more opportunity given the valuation here, even though were a little softer today . Are you seeing more opportunity potentially in some of the soldoff european and emerging markets . Yes, we think emerging markets have a good chance of outperforming the u. S. Over, say, the next 18 months. But right now, i think the focus should be on the bond market, because that could be a headwind here. And explain what you mean by that. If rates move higher or because of the volatility that weve seen, or the way in which it would make people behave . Well, rates have moved higher starting in early may. And the fed has been jawboning since their june 19th statement, which sent the bond yield up rather erratically. And it hasnt really been effective. So were looking at 1 higher rates for municipals that are refinancing, for corporates that are refinancing, and even for treasury debt. And thats a heavy burden unless it can be reversed. I want to bring in kenny in to this discussion now, joining us from the floor. Kenny, youve heard here some concern about whats happening in the bond market. But, you know, you have to say for all of the volatility weve seen and the focus on it, stocks have pretty much shrugged this one off. They have shrugged it off. Today was a low news day. Low volume. Not a whole lot of data. The ism number came in stronger than expected, but that made sense based on kind of the jobs weve seen and having been created. We see the Market Holding just above the 1,698 level, which is key. As long as it holds there and trades above, were still in kind of that movingahead phase, right . What you have to watch for, if it backs off and pierces 1,698, then you get more soling pressure. A market down 40, 50 points i dont consider being down, considering the move weve had. Its more of a churn as the market digests this most recent move. And then tries to assess and waits for whats coming at the end of august, whether its jackson hole, whether its the chatter about bernankes replacement, whether its the tapering, you know, conversation, which, by the way, remember, is on september 17th and 18th. The german elections are on september 22nd. Are we really sure that the fed and the u. S. Government wants to talk about tapering right ahead of those germans elections and potentially cause global volatility in the marks like we saw a month ago when it happened . Its a fair point. Doug sandler, you mentioned some of the opportunities we might be seeing overseas. A lot of people have been saying, why shouldnt we wait until after the elections in germany, after september 22nd . Well, i think thats you know, i think that is when something happens. You know, in the end, these markets, we look at the International Markets as being roughly about 30 cheap. U. S. Is somewhere between 5 and 10 cheap. So the question is, you know, do you feel like the markets arent going to move . I mean, people are going to start to recognize who will win the election before the elections decided. Where do you want to be ahead of that . And our view is we want to be at least neutral to the International Markets, and for a global investor, thats probably somewhat like a 40 , 50 allocation to international. Paul, if i money is always treated best where its go ahead, sorry. I said money flows where its treated best. Europe has not been the place for years. Maybe its next year. The u. S. Markets the strongest in the world. The dollar is strong. Maybe after the next pullback, the dollar takes off again. I think its a longerterm story than a couple of weeks, a couple of months. The money will flow to our shores for the next couple of years. The markets certainly pressing it like its a long way off. All things being equal, i love to put my money in a market thats rewarding me currently. You know, in the end, if youre paying two, three times for more that market than you are for the other one, you have to make a balance. Paul, i wanted to ask, if we had 5 or 10 left in this trading range, in this market, would that be worth it for people to get exposure here . I mean, its look, this is a psychological barrier. Were near alltime highs on these indexes. And the funny thing is, the only high that really matters, to be worried about, is the final high. You never know when the final high is. Let me say this. If youre nimble enough, you know, Consumer Discretionary has been working. The banks have been working. I dont know why people push against that. The banks are the most hated group. Theyve been that way for six years now. Yes, you can certainly play the last 5 , 10 . I dont think were in the last 5 for sure. At some point, youll get a pullback. Let ease say its 10 or 15 . It wont be the final high. The final high should be in 14 or after. All right. I would agree. Thank you very much for sharing your views. We have to leave it there and get over to scott wapner who has breaking news on david tipper in. Over to you. All right. Thank you very much. I got off the phone with him over at appaloosa, out with a letter today celebrating his 20th anniversary. More specifically, i do have some performance numbers from how mr. Tepper has done in july and also year to date. And they really underscore why hes considered one of the worlds greatest investors. Certainly one of the best performing Hedge Fund Managers of all time. Ill go through the numbers with you right here. July, he was up 5. 5 , net of fees. Again, july appaloosa up 5. 5 net of fees. But year to date, net, up 23. 4 . So he did well in july. Hes had a tremendously good year, up 23. 4 net. Youre looking at, also, his returns over the long term. Again, a 20year return, up 28 . 10year, up 25 . And how about over the last five years . Over the last five years, david tepper at appaloosa returning some 30. 5 . We did chat briefly about the market, as well, with david tepper telling me that stocks are still reasonable, in his words, probably still the only place to be. Made it clear that hes still long. Maybe not quite as bullish as he was, because of the move weve had, but he made it clear, if i was super bullish before, im just bullish now. So clearly, david tepper thinks quite highly of the u. S. Stock market at the current time. Asked about europe, as well. Weve been hearing from a lot of people, whether it was muhammad or other market participants, investors, Hedge Fund Managers, looking for opportunities in europe. I asked david about europe, where he said europe is bottoming. But that does not mean there cant still be problems. So just to underscore what weve learned here today, in the month of july, appaloosa is up 5. 5 net, year to date appaloosa is up 23. 4 . And again, just to underscore this one fact. If you put 1 million into appaloosa in 1993, again, hes sending out a letter today, to really commemorate his 20 years in running that firm, 1 million invested in appaloosa in 93 now worth 149 million. That is versus 5. 3 million in you simply invested in the s p. You have steven weiss here with me, obviously a frequent contributor to the halftime show, full disclosure, knows david tepper well, sometimes golf partner, as well. This is the first time youre learning of these numbers as well. What has made david tepper one of the greatest investors over all of the years, over a long period of time in. Hes the only investor i know running a hedge fund that can go from any asset class to another asset class and still make money. So he sees the whole world, the global opportunity. He sees every asset class. For example, he started life out as distressed, highyield investor. Twothirds of his returns now are coming from equities in the past year. So you dont really see that. The other thing is, he is an activist, but hes a quiet activist. You wont see him in headlines. You wont see him in a fight, like ackmans in right now, it just wont happen. So he gets things done without the ego, without the need for going in the press. But its just down and dirty, great research, great just due diligence. One more point. Steve cohn runs less money than dave now. He peaked about 14 billion, 15 billion. Daves earning about 18 billion. Dave, he has 35 people in his organization. Steve . Hes got 1,000. So we hear about Warren Buffett being the greatest investor of all time. I think dave teppers numbers prove he is. 28 net of fees. So thats after he got paid. Right. Thats what investors 36 gross over a 20year period. As i mentioned, and well make this the final point, over the last five years thats really incredible. The performance, up 39 gross, 30. 5 net of fees. If you look at anybody elses performance, theyll give you their fiveyear numbers, theyll give you the tenyear numbers and you may see tenyear numbers are okay. The fiveyear numbers are typically very, very poor. Mid Single Digits generally best case. Daves numbers havent taken the hit. Yeah, steve, thanks. Steve weiss. Lets go over to josh lipton for a market flash. Josh . Were watching American Eagle outfitters, tanking here in the after hours. The news, aeo announcing it is revising its Second Quarter eps outlook to about 10 cents. Total net revenue decrease, they say, about 2 in the Second Quarter. Consolidated comparable sales down 3w7 . The ceo saying in a statement they are not at all happy with the Second Quarter results. Talks about the disappointing performance primary because of the assortment and weak traffic. You can see the stock down more than 12 right now. Guys, back to you. All right, josh, thank you so much. The dow and s p kicking off the new week in the red for a second consecutive week. Bob pisani, looking at the stat here that were sending around, the dow having its worst day in more than a month. Yeah. And it was only down. 3 , bob. That tells you what weve done here. Yeah. We cant really we couldnt get into positive territory at all today. I think mr. Fisher had an impact there. Take a look at the markets today. The key point, ism services falling on the good ism number we got the other day, that helped early on but never got us into positive territory. Richard fisher quote of the day, talking about reducing bond purchases in the fall, said we should gird sour loins to make our first move this fall. Heres where we stand on the Economic News so far. I call it two out of three aint bad. Ism services, the manufacturing beat, the miss was on nonfarm payrolls, so something is wrong here. Because the Manufacturing Services employment part continued to show expansion. Heres the dow industrials, never could get into positive territory. Mr. Fisher came out about 11 30 with his remarks and the market just drooped down there, even though he didnt say anything he hasnt said before. In terms of sectors, another weak day for energy. You heard the followon, exxon, chevron, the numbers last week, still cant get into positive territory, down about 3 for exxon. Last week, the hold builders were weak all throughout the day. Fastenal, makes nuts, bolts, industrial parts, came out with numbers below expectations for july. We did have some strength in the healthcare group. Once again, the one group weak, like energy, you have another group come in, you get the strong numbers overall. The important thing for today, scott. We had a smooth start for new expanded circuit breaker. This morning, there were new Circuit Breakers extended to the open. The s. E. C. Is now extending the what we call limitup, limitdown rules, to the open, first 15 minutes excluded, the only exception is the last 15 minutes. Guys, back to you. That can make the last 15 minutes pretty interesting. Thank you very much. July saw record inflows into u. S. Equity funds. Coming up, well tell you where the money is going. And everyone buzzing about the upcoming release of jobs. Not the report. But a film about apples cofounder steve jobs. Coming up, we get the inside scoop on how the film was almost never made. By the way, maria tomorrow will talk to the movies star, Ashton Kutcher. Might have to hang around for that one. You wont want to police it. Well be right back. Clients are always learning more to make their money do more. ann to help me plan my next move, i take scottrades free, inbranch seminars. Plus, their live webinars. I use daily market commentary to improve my strategy. And my local scottrade Office Guides my learning every step of the way. Because they know i dont trade like everybody. I trade like me. Im with scottrade. announcer scottrade. Ranked highest in Customer Loyalty for brokerage and investment companies. Well, this weekends report from trim tabs setting a record 40. 3 billion going into u. S. Equity funds in july. That might help explain the markets decent performance last month, but why did it happen, and importantly, will it continue in august . Yeah. Well, with us is matt from etf analytics and our own rick santelli. Welcome to you both. Rick, you made the point earlier and lets just get a debate going right here as to whether these inflows into etfs in part are a contrarian indicator. Well, you know, i was talking to chuck beaderman, dotcom interview, i urge listeners and viewers to go there today and look at it. He said usually the inflows on an etf perspective in the short run are not auspicious for stocks, meaning theyre maybe better in the long run. He went further to point out, if you really break down the disproportionate amount of that 40plus billion that went into etfs, on the leveraged long etfs, they had inflows for the first time in five weeks. But on the leveraged short etfs they had the least coming in in five weeks. So the best thing to get a good bull market going is have a lot of shorts in. So theres many different ways to look at this, and the great rotation on the other side of the street, in terms of fixed income, still seems to get more divvied up in the cash and money markets. You know, matt, im curious, we saw today actually a pretty lowvolume day. I think one of the lowest volume days on the year in the exchange and that was the case last month. How can it be at the same time were seeing low volume on a daytoday basis and seeing a record high amount or volume of inflows . Well, theres nothing like high prices to drive investors into all products, including etfs. So i think, you know, we just talked about the dow being down the most in the past month, just 30 basis points. Anytime you see that sustained bull trend, you see investors 1 moving in, both into equity and actually into fixed income. We saw net inflows into the fixed income space in the etf market last month as well. So what youre telling me excuse me, im sorry there is no great rotation. That if people are hanging on, people dumping it dumping the bond funds and pouring money into stocks, that youre not seeing that . Well, what were seeing within bonds is not a great rotation out of bonds, but a great rotation inside bonds. So we see etf investors shortening on duration and buying credits. So we saw, for instance, 1 billion in outflows out of Investment Grade bond etfs and 1 billion of inflows into highyield bond etfs. Bank loans, anything with short duration and extended credit risk, thats what investors are buying in the bonds space. And in equity, theyre buying, you know, s p 500, russell 2000. We see significant inflows into japan, beginning inflowing into europe, maybe people betting on a recovery there, and also financials, which folks think will benefit from rising rates. So we do see aggressive inflows not across the spectrum. There are areas where there are outflows as well. But thats the play were seeing now. So, matt, to make sure im following here, what youre saying one of the biggest winners from the fund flows period, regardless of what kind of asset is im sorry, regardless of what kind of index theyre built off of, are etfs . Absolutely. And that makes perfect sense right now. This is a macro driven market. This is a qedriven market. It matters more than the fundamental of individual stocks whats going on in the broad economy. And etfs are the perfect play to make those bets. For instance, in the credit markets, shortening that duration, extending credit. In the equity markets, maybe picking out japan or financials or europe as the next big play. So etfs are the perfect tool for a macrodriven environment. We remain in that kind of environment, and thats why were seeing them win the battle of flows versus mutual funds and other products. Yeah, rick . Yeah, no, i think what matt says makes absolute sense, and i think it jives with the chairman of trim tabs who helps put this together, chuck beaderman, as i mentioned. So lets look around around see what that tells us. In my opinion, it tells me that we are still the cleanest shirt in a dirty hamper, and with regard to europe, theres so many naysayers now as we get closer to the german elections, as many guests have pointed out today. So for the here and now, im not sure that etfs and their inflows are the main reason to see stocks go up, or as chuck thinks, maybe come down. But i think the big story remains that the fixed Income Investor still doesnt trust the equity markets. I dont know, rick, you say theres so many naysayers about europe. Im hearing from more and more people who say that europe is the place to actually look right now. I just you know, as i said earlier, got off the phone with david tepper who said europes bottomed. Yeah, there can still be problems there, but that its bottomed. Yeah, well, you know wh