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tv   Street Signs  CNBC  January 15, 2015 2:00pm-3:01pm EST

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and s&p down two-thirds a percent and nasdaq and russell are the laggards, russell leading a way down on percentage basis. >> hurry home, stay warm, that's all for today's edition of power lunch. thank you for watching. >> "street signs" starts right now. ♪ oil down big, dow falls again, welcome to "street signs," live in toronto, canada, we continue to examine the macro economic impact of the oil shock, not just this country, but how what happens here impacts america, and your money, just another down day like the temperature, oil crushed again. >> you really couldn't have picked a better time to go to canada, brian, not just the big oil story, but so many headlines coming out of the northern neighbors. think about it. in the past 24 hours, we've had those takeover rumors of blackberry, later denied, target
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exits as well, and the big story is oil. it's a lot to get through here in terms of stats, so let me try to make it simple for you, everybody. look at the board here bind me. you have the dow down by 8 a points. stocks are down again. with only half of january over, the dow moved over 3200 points so far this month. the dollar here down against the swiss, worst day on record, down 13% more on why later on in the show. crude oil, of course, down again, pulling back a whopping 8% within a three hour period this morning, possibly the biggest reversal in six years, currently at 46.59 a barrel. so, what's up? well, first of all, bonds, right? the ten-year here, 1.766%, broking blow the 1.8 mark this morning. gold is at four month highs, and volatility is up. the vix up 13% so far this week today 7% alone. you see, brian, you know what's really defining markets, i feel this year, is enterprises that
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plunge or soar, multiple percentage points in a single session. copper, currencies, oil, stocks, the level of which is not just causing problems, but it's the speed, right? the massive dislocations that's hard for portfolios, for companies, for cap plans to adjust to quick dislocation. >> yeah, you know, as gym cramer said this morning, maybe it's algorithms gone wild. nobody can figure out where to go or what to do. not just with stocks, but with oil, copper, and everything. you know what's interesting, too, is that we think the oil story is a big story in america, and it is. it is a giant story here. it is not a headline in the paper. it is the entire front page of the newspaper here. basically, also saying that the u.s. economy is partly to blame here. we might have a beef with the canadian friends over that one in a second, but in this hour, talking impacts of this, on real estate, manufacturing, et cetera, and the target news, don't underestimate that, okay? that's 17,000 jobs that are
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going to be lost. i know it seems like, you know, i hate to -- >> no, that's a lot of jobs. >> a small amount in a big economy, but that's a lot of people losing jobs as well. it's a big story. great guests all hour. if we survive the next 58 minutes, it's a great show. >> you just held up the headlines, but i have a whole swath of newspapers from around the nation to hold up later on showing you how many times oil is on their front pages. people got to tune in to see that. brian, stick with us. let's get more on the wild gyrations. joining us, jim, chief investment strategist with wells capital management. jim, incredible moves seen in almost every asset class the last few weeks. what do you think of that? >> well, i think more than anything, i think it reflects financial market, particularly the stock market which is vulnerable here. we came in this year with the calmest, most confident,
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collected sentiment had in the recove recovery, which the foundation for this stock market bull had been climbing a wall of worry, and by the end of last year, after three years of the stock market going up and not being volatile, i think that dispated, and sentiment is too positive on top of that, valuations are up a fair amount, among the immediate yawn u.s. stock, valuations at post war highs now, a lot higher than suggestsed by the s&p 500, for example, and then that market faces probably a rate rise this year for the first time the feds reconnect rates with the cycle. those three challenges make the market more vulnerable to a year ago or two years ago to any news item. >> that's a good point, is it because the fed is not holding our hands anymore? you know, before whatever it was, whatever the headline, throw it at the market, and it did not stick. the fed backstopped us.
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how much is it we feel we are on our own now? >> well, that's true. i think quantitative easing is down, and people in the back of the investors mind know they debit when to raise rates. that's a different situation than a year ago or two years ago. but, also, you know, the median stock selling over 20 times earnings, whereas three years ago, that was below 15. there's quite a different valuation profile, a different sentiment, and i just think we're more susceptible to bad news where we would have flown through it earlier. i think in some cents, this is a good thing, maybe, refreshing the bull. if we have a year of volatility, flatness, valuations come down, we get the fed in the game, we readjust sentiment, maybe we set up another run for 2016 and beyond, so in some sense, there's a silver lining to the frustration that has been the character of this year so far. >> you know, jim, i would push back a little on the fed thing
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because we knew quantitative easing was going to end. i don't care it ended. we knew it was going to end, so i'm not sure how much that changes valuation. you're the smarter one. leaving it at that. what else changed in three months? just oil? >> well, i -- as i said, i just think we got -- we got so used to last year, the market going up perpetchewly and chronically. we got so used to the idea -- or we got so -- we got different valuation profile than what we had say a year ago when we started. i just think the combination of the challenges just makes the market more susceptible. you bring anything in. it happened to be oil. it -- it could have been a bad report in the united states. could have been anything on a susceptible mind set and market place. the vix is up. but at 20 -- it's a little over that -- we had that a lot early in the recovery, but today,
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after running with vix's at 10% or so, it's just twice as greats as it's been for years, and i think that's just a shocker for the investment sentiment today. >> for the stock market this year, jim, you expect the pause that refreshes, right? then hopefully we move further up in 2016 in your scenario. here's another scenario that's contrary right now, and that's for the u.s. dollar to decline. why are you not in the strong dollar camp? >> well, i'm in the weak dollar camp, but he's the biggest reason. i think the fallout from this tremendous drop in energy, i think, is its delivered in 2014, some of the greatest policy stimulus to the entire globe, and everyone's worried that we're in a deflation their spiral where the globe is failing. i think what we see, mandy, is everywhere around the globe, growth picks up, not just in the united states here, which is good already, but also in europe, japan, the emerging world, and we delivered to the
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globe a simultaneous massive fiscal tax cut in the form of lower energy prices, and i know, brian, it's going to hurt the producers, but there's far more consumers in the world to benefit, and on top of that, we gave everyone an equivalent of a massive quantitative easing last year because sovereign bond yields are down everywhere. i mean, we're worrying about whether draghi starts quantitative easing. i think, who cares in it was done last year. european yields collapsed. here's europe massive drop in long rates, massive drops in energy costs, big drop in currency. we are driving incremental demand growth to the shores and we'll get a pickup. >> fine. >> if it picks up in japan, that picks up the dollar. >> it's been negative in the beginning of 2015, bottom line it, does the dow jones industrial average, jim, in this year higher than it is right now? >> i think it will marginally, i do, but i think we might go fair
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amount lower. i wouldn't be surprised if the s&p 500, you know, breaks it slightly, but also maybe breaks through 2200, sometimes during this year, ending the year slightly positive but just barely. >> you expect a rise in the ten-year yield, no, where did you seed it ending 2015? >> i think it's going to be pretty high. i think one of the big things we came into the year with the deflation their worry, but i think we've been stimulating the globe, as i said. i think by spring and summer we're going to be worrying more about overheating in the united states and whether the fed is behind the curve and the bondage landings go from a 180 yield over 3% before the year is out. >> wow. >> that's what i'm looking for. >> wow, that's a big rise. >> that's one -- my prediction is over 3% as well. that's why i like jim. agrees with me most of the time. fantastic. >>. >> you're volatile, yet. >> of course you agree.
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thank you very much, jim, good to see you. well, brian, you have a lot more on tap for us from toronto. i don't understand why you place yourself outside. why not find yourself a fire somewhere and sit there and do a fire side chat with us? >> that's, you know, that sounds better. the fireside chat next time. we're not bright enough to think about it this time. we like being outside. canadians are walking by in t-shirts, by the way. after the break, the chief economist of td bank for more on the macro economic impact, and a hedge fund manager on the mess. do you think because the price of oil has fallen that it's cheap? we have a 25-year chart for you coming up that may change your mind, and "street signs" dual edition begins after this. oes a. for respawn, building the best interactive entertainment begins with the cloud. this is "titanfall," the first multi-player game built and run on microsoft azure.
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we are live in canada, looking at the where the macro impact, why are you in canada, a great economy country, a big economy, but believe me, this could be representative of a lot of what happens in the united states as well. this is the trickle down from the oil shock. look at drop in employment and wages. this was an e-mail from a friend of mine, his son is a consultant, got 20 % pay cut this week. employment and wages are cut, impacts earnings as well, right? not just banks, but manufacturers, make you make
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tubes for the oil rig, that trickles down as well. real estate, manufacturing, and, of course, the trade impact of the united states. this is our single largest trading partner at 17% of all u.s. exports come here to canada. this is not just a canada story, and this is a macro focus, digging in more, chief economist joining us now, craig, welcome, thank you for joining us. >> a pleasure. >> we tried to lay it out, simplistic, a complex story, how does it shape out? >> the drop in oil prices for the canadian economy is a challenge because canada is a major exporting country. >> this is a petro oil country? >> the drop in parody to the low 80s is a reflection of the fact that it does move with the currency. that's where one of the important things to emphasize from a macro point of view are justify sets. the drop -- the percentage drop in oil hurts the energy sector, and it's going to hurt oil producing prosinces in canada,
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but there's justify set. the drop is making canadian manufacturing more competitive in the nonreserve sector. think of the canadian economy, it's basically california with lousy weather, right? >> i can confirm the second part. >> the population's the size of california, the size of economy is the same, but it's the entire width of the united states. it's integrated on north and south lines, and, really,i inwh the u.s. economy goes has a big influence. the emphasis is on the fact that, you know, there's hope that the u.s. economy is actually going to show strength providing insulation to the canadian economy in the nonreserve sectors. >> one of the reasons why we're here viewing this is a mac macrocosm. what's the shake out affect the oil shock? we tried to lay it out. >> think about the drop in oil prices, first thing is a lot of the drop is related to weak global demand, and that's negative, but if a lot of the
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drop is also is supply story, and i think the drop from 70 on west texas to the crude to below 50 is a supply. it's stimlative because it's a big huge wealth transfer from oil producing nations to imports nations. look at the american average house hole saving $500 on lower gasoline prices. >> spend that on whatever it might be, the cost of health insurance, college costs not everything is going down in price in america. >> well, even beyond the price effect, you know, you're going to get a lift from -- it's like a huge tax cut, right? i do think that from a financial market point of view, what we are seeing is markets are focused on the deflation their risks from lower oil prices. i think they are missing some of the pos sieve offsetting forces out this. from the canadian point of view, the drop in oil is bad for the
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tsx, so resource heavy, not just oil because commodities fall broadly. the drop in commodity prices bad for the tsx, from the investment point of view, this is negative. from an income point of view, corporate profits contract, and from an economic growth point of view, canadian economy grows 2%. >> you know, the big question last year in the states, was what will the fed do? that was everything. every segment we did, what's the fed going to do? what's the fed going to do? it's early in 2015, but will the drop in oil be a net negative or positive? call it for north america. what's your take? >> well, because the u.s. dominates north america, i think that the drop in oil is a net positive. but from the point of view of the canadian economy and mexico, no question it's a negative shock. they are oil exporting countries. you know, but at the end of the day r it's not going to cause the canadian economy to go into recession, but there's investment implications here. look at market's expectations, they bring forward exceptions
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that when the fed raised rates, thereafter, the bank account raises rates. that's off the table. it's on hold a lot longer. >> do you think the u.s. fed's going to be on hold? we were just debating that in the last segment. >> well, it's amazing to see how market sentiment shifts dramatical dramatically, right? >> yeah. >> you saw at points markets up to april. you know, our view is in the fall, the fed comes off the sidelines. >> craig, a pleasure. thank you very much for braving the elements. you're used to it. california with worse weather. stealing that for later. we have breaking news with phil lebe lebeau. >> we have breaking news from tesla, spacex, and the hyperloop. he had an idea of series of tubes that transport people in pods at ultra high speeds in long distances. he said, look, not overseeing it or involved, but great if others are involved, and people have been involved. speaking today in texas, a a transportation summit, elan musk
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said he will be building, somebody will be building a test track for companies and student teams to test out their pods, most likely in texas, and thinking of having an annual student hyperloop pod race competition like a formula sae. there you have it. the hyperloop we thought was just an interesting, very interesting idea that elan gave us last year, that really probably is going to be nothing more than an exercise in terms of ideas for the future in transportation, elan musk saying will build a test facility for pods to be tested in texas. what's interesting, brian? we don't know who is going to build this. is elan musk funding it? tesla? spacex? who is funding the building of the test facility, but he says it will be built and possibly in texas. back to you. >> my sources say alpha romeo, but my sources are not good. i doubt that's accurate.
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thank you very much. >> okay. >> we need the hyperloop here to confirm that canada is big. canada is also cold. let's find opportunity in all of this mess, dynamic funds, portfolio manager joining us now with great insignificant and they have indoor television studs in the nation. >> that's true. >> breaking news. >> next time. there are indoor studs. >> we'll use them. >> it's a great shot. >> a beautiful city. let's dig in. how do you play in this? what's going to happen? >> canada is challenged. as fund managers, probably the most amazing thing is the speed in which oil dropped from 105 to 750 in a short period of time. leverage players, something else going on besides the demand issue in a short period of time. having said that, the bank of canada is on hold for extended period of time. there's going to be ripple effects and second derivative effects in western canadian markets on capx, energy is 25 %
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of energy of capx, and so that's going to have -- that's going to be an issue for sure. >> let's focus on the banks because big banks here, and they have been lauded for a long time as being stable and secure than the u.s. counterparts, and cibc right over there. what does the oil shock mean for the big banks? >> i work for a big canadian bank, owning us now, but i think the canadian banks did a good job in managing the energy sector. in terms of the overall economy, though, slow growth, and heavily indebted consumer. dmetic growth for the banks is tougher to come by. some of them have foreign operations, u.s. operations, but it's not, you know, it's -- we're at stall speed in the economy here. >> we showed this yesterday, some of the major oil and gas companies here are down oo a50 60% in 90 days. that tells me someone watching the markets for a long time, either this is a severe mispricing and there's long term opportunities, or some of the
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companies are going to go away. >> or that the people who own the stocks, there's a lot of leverage out there in terms of, you know, were they buying them for income on the energy side? using leverage -- what exactly was going on? i had not seen declines since the year 2,000, and three month period of time is extremement i wonder if there's a bigger question, if they were caught the wrong way, given how fast it happens in such a small period of time. >> is there opportunities here? viewers are, like, it's canada. 71 major companies trade also in the united states. they are available for our viewers as well in the retail market. >> i think that the, you know, the trade we hear a lot in the hedge fund world goes long credit equity. that could backfire, but go long equity, down, trading at 50 cents on the dollar and short the stocks and be up the capitalization curve if all hell breaks loose. it's risky, but it's what people
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are doing now. enjoy lower gas prices, get inside. >> when do you see the pain ending? >> that's a great question. >> my first one. >> well, there's always one. i think, you know, ultimately, i don't know. we are getting close. so deeply oversold that weir due for a rally. >> go get warm, and these mistour yous indoor tv studs, we'll seek them out. >> give me a call next time. >> i will. we'll have a -- something, whatever you guys drink here. ice wine? >> inside the studio. >> inside a studio. there you go. thank you very much. dynamic funds, again, not sure when it's going to shake out, but maybe it is finally coming to a head. some of the companies have been 70% drops in 90 days. if that happened in america, that's a total disaster. >> your guest, dramatic pause when is it going to end, and there was just a silence, dead air. that says everything. doesn't it?
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>> his jaw may have been frozen shut. >> that's true. okay. i'll give him a pass on it then. >> it is true. >> more coming up, talking to canada, target saying we're out of here, ey? closing shop in canada, but is this a good move and will the former ceo weigh in ahead, and we are lazer focused on oil, massive intraday reversal, final crude trades crossing for the day, at 46.53, down by 4%. i think the low of the day today was 46.41, but, guys, up as much -- up to 41.27 before 9:00 a.m. this morning. incredible reversal. look at the dow. it is still down, but it was down by triple digits earlier on in the session. it is currently down by 86, a little bit of pairing of the losses as crude oil came off its intraday low as well. do stay with us. you total your brand new car.
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and you can move the world. ♪ but to get from the old way to the new, you'll need the right it infrastructure. from a partner who knows how to make your enterprise more agile, borderless and secure. hp helps business move on all the possibilities of today. and stay ready for everything that is still to come. >> you heard the news of target closing in canada? >> upset to hear that, very disappointing. >> well, for me, i don't care.
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there's a lot of other stores, right? >> going out in front of target here in toronto, can ka, asking people coming out the store, exactly what they think about it, and, listen, it's a tough story. a lot of people will lose their jobs, and target not nearly as much, fz not been there long, but there is disappointment among people, and just a sad story for canada in general because 17,000 associates lose their jobs, and 133 stores close. >> absolutely. it makes it all the more hard to report on a story like this saying, well, the stock is up. obviously, this is a stock story as well, and our hearts go out to those who are going to lose their jobs, but nonetheless, investors cheer the move. stock up 2 % right now, and so was it a good decision for target to exit canada? on set with me is mark cohen, former ceo of sears canada, and courtney reagan. i know you are not surprised by the decision, mark, but at the same time, surprised it's in one
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fell swoop, a complete exit opposed to gradually closing nonperforming stores. >> could have done it gradually or make it go of it as is. the decision they stepped up to is just to completely cut and run. it's probably the right decision because it would have taken them years -- >> why do you say only probably? >> well, look, it's an enormous hit to their pnl. this is an enormous hit to the morale of the organization. this doesn't speak well of their management or their board in terms of setting themselves up for this kind of a failure in the first place, but, you know, when all is said and done, they have to move on. that's what they obviously have chosen to do. >> in this case, it was not kor any that entered canada in the first place. he inherited a canadian business not performing well. it was another venture into canada, spending $4.5 canadian
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dollars in the investment and lost lost 2.5 billion in the investment. peeling the band aid all at once, it's going to hurt, but there's not a path to profit the until 2021, a long time to wait, and think about the money they would lose. >> let's keep in mind, it's not like target america is doing great either. >> they bought a problematic portfolio of stores, half the locations acquired were on the wrong side of the tracks. there is almost, frankly, there is no one in the retail world who is ever prospered by going into bad real estate. then, of course, they took the big leap with a hundred plus stores opening at once, presuming that they had figured it out all. almost no one who crosses a national border, whether it's american companies or european companies or canadian companies succeed, especially when they try to do it on a grand scale. there's too many nuances that
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have to be overcome. them, of course, they couldn't stay in stock. that's unforgivable, and it came from their pricing, which had them charge canadian sumpls more for liking similar products than they would have paid in the u.s. >> over the border, cheaper in the same place. >> whether they shopped across border, they were aware of the cross border pricing. >> i guess, mark, that's conf e confusing, right? look at the great country in canada, here's a chevy, people in levis, it's similar to the united states in so many ways. what's the difference between the consumer here and consumer at home? i don't understand why so many american companies seem to struggle here. >> well, at face value, western canada or english speaking canada looks like an extension of the u.s., but it is a different country, and the competitive landscape is different and consumer values are different. some years ago when the canadian and u.s. dollar had a 35, almost
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40% differential, canadian consumers were always unhappy to have to pay more than their american counterparts but understood the rationale. in the last few years, the u.s. dollar and canadian dollar have been virtually at parody, and so how do you convince an audience they should pay more for products they are readily available to them across border or that they are completely aware of on a cross border basis? >> just to add to that, though, i say target is not the first american company, like brian suggested, that has struggled a little when moving into canada. the consumers are not exactly like american consumers. we talked earlier, like, perhaps more like australians or british consumers. you have to be careful making big moves and not everything that works in the u.s. works miles north of the border. target is not the only one struggling there, but they made a costly push to do so and now they want out of that. >> quick question on radioshack, that's the other retail news
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today, not canadian, but i want to ask the retail expert because they could file for bankruptcy. what's your take? >> i think they have to file unless they find deep pocketed investor willing to protect them while they right the ship. they put up a pretty good face with their remodels, but that's icing on a cake that does not have appeal. they do have way too many stores, and they don't have an asourcement of products differentiated enough that carry enough margins for them to survive in this environment. >> the only thing i add is the one factor they might have is that they are fairly convenient because there are so many stores. if you need that cord on a last minute basis, maybe that's when you go to radio shack, but that's not enough to sustain a business, and it's not been for sometime. >> i have a cord emergency. >> thank you very much, thank you very much. >> thank you. >> brian, go get warm. see you in a second. >> hold on -- >> yes. >> hold on, hold on. wayne? wayne?
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is -- wayne, this guy, he came down here because he's such a big fan of yours. >> hi, wayne. >> he came over, he said, he's a huge fan, sort of tolerates me, but he wanted to say hi. give a wave. >> tell him i love -- what was he saying? >> she says, hi, but he works in the bank, all the guys upstair,mented to say hi. friendly folk. >> i love the fact that wayne is a popular name in australia. >> nice. wayne, thank you very much. your our fan. appreciate it. you're the one. thank you. >> we are nothing without the fans, right? crude was above 51 bucks, but now it's settling at 46.50. do not go anywhere because "street talk" is on deck after this quick break, and that's where we find you the opportunities. e
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financial noise financial noise financial noise financial noise
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oil closing for the day settling at the lows of the day of $46.25, but it was above 51 earlier this morning. let's bring in david, president of magland capital, thank you
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for joining us, and the data team at cnbc say crude oil pulls back of 8% under three hours this morning, like, the biggest reversal in six years. what do you think of a swing of that magnitude, david? what's that say about the market? >> i think they are unsure of where the correct price of oil is now because of the fact we had so many announcements of supply not being cut at all, and there is ability about the demand, and the folks involved in the oil complex for many years now, even they don't have a correct reading on what the right price for settling is. >> brian is in canada and not joining us on this extensive, but oil producers, what's that tell you, and what do you think is going to happen? >> well, i think that it's definitely due there's a lot of
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activism that received a fair amount of notoriety, and up in canada, clearly, oil, the drop of oil is a catalyst for activism, and act vests are not necessarily strangers to canada, we've seen carl icahn involved, and transdan, orange capital, and it's just so happens -- ail those are, you know, oil and gas related companies with more to come, but the interesting thing from a process is canada affords shareholders, a bunch of friendlier circumstances than the united states even. you don't need to let the public know about your stake until it reaches 10% in cap da opposed to the united states at 5% so you can preserve the element of surprise and act anonymously for a long period of time, and then when calling a special meeting of shareholders, you know, we
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have special rigorous requirements in the united states depending on the state and company itself that have particular restrictions in canada, particularly, let's say in alberta and in calgary, they require a meeting of shareholders with just 5% of the equity. >> right. >> there's a number of things up in canada that make activism more likely and more shareholder friendly. >> sounds like it's much more favorable for activists. watching for more activity, an interesting take on this story. it is street talk, the stocks you need to know about today. dom chu, thank you for joining us. >> not a problem at all. i love this seg. . let's talk about ulta salon, health and beauty products down three quarters of 1%. >> despite the fact it's been upgraded to outperform from perform. they note the stores, product innovation, tail winds from the
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improving u.s. consumer, and a stable management team, and their target is $150. >> find the health and beauty products on, analysts say it's reiterated an overweight rating. >> good link there, dom. strong user base worldwide, but prime subscriptions are short of the penetration potential. target remains $400, but think about it, guys, when the stock is at 28 7, so $4 00 price tag? that's a huge upside of 40%. >> internet technology, corning upgraded to overweight from neutral over jpmorgan. >> that's right. cites market penetration and cornings uhd. that's ultrahigh definition products. jpm upped the stock by five bucks to $26 a share. >> there you go. glass works over to what's happening with weight watchers saying there's a challenging environment for the weight loss company. >> yeah, the firm notes what you say is a challenging
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environment. the firm did some google trends analysis and found that the new year boost, you know, that the weight loss company with new year's resolutions, which get broken, but nonetheless it was not strong as expected. they note the new product offering of the breakfast cereal line has higher operating expenses so it's cut down twenty bucks. >> finally, under the radar name today is iconics brand, apparel, but as with all the companies, it's an umbrella for big brand names. >> a lot of names we know like joe boxer, ed hardy, et cetera, et cetera, hold at one, and the analysts say now could be a good entry point following the pull back in last june. they own the comic strip peanuts. >> i did not know that. >> i did not either. there's the fact of the day, folks, they cite revenue from the peanuts movie, another fact
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i did not know. there's going to be a movie. >> i feel like charlie brown, i do. >> thank you, dom. okay. no surprise that the dramatic fall in oil prices is eating into the canadian economy. what's that doing to real estate values in calgary dropped the most in two years. what about elsewhere? coming up, brian is joined by a huge player in the toronto real estate scenario and is a reality tv star. you know who it is? >> i do not know, but i'll watch and find out. >> watch and find out. ameriprise asked people a simple question: in retirement, will you have enough money to live life on your terms? i sure hope so. with healthcare costs, who knows.
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welcome back to street signs, here's the real estate market. this is more cranes in toronto canada than any other city in north america. i just learned that from our new guest, land development corp., one of the most famous real estate developers, and a well known tv media personality. as a guy who sells and builds pardo pardon apartments, big products in the works. what happens to the real estate market in canada from the oil shock? >> well, we have kind of two markets. i would say that alberta, prairie provinces a affected by oil prices being low than the
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east coast and british columbia, the west coast. british columbia and east coast provinces will do well this year. similar to last year. toronto had 8% volume growth and 6% price growth last year. >> could that keep up? >> we it had eight or nine years in a row. >> oil prices have been going up the last six of the eight. >> ontario is the manufacturing prosince, and we're more positively affected by low oil prices than high oil prices. the central government's affected negatively, they get oil revenues as is a tax revenue, but overall, i think that, like i said, the east coast and far west coast will be in great shape. we're seeing slow downs in alberta. i have a bunch of development sites out there, and sales are off what they were, but, again, duohottest markets last year were ed monton and calgary with 10 % volume growth last year and
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6% in calgary price growth and 5% in edmonton. hot provinces last year. that's not sustainable anyway. >> glad to hear you say that. look at 1986, oil prices like this, i had people remind me that homes sold for a dollar, one dollar in 86 when the price bust in oil happened. what do you think? >> yes, in 86 and 91 and 2008, we had bad recessions. we're not in recession. our country's expanding and has expanded at 2 since the last recession, really. and you're -- your country's now expanding, so we're not expecting a recession in canada, but i think we are looking at certain provinces performing worst than last year. also, no one can believe that oil prices are going to fall forever. this is a resource that's very expensive to extract from the ground. there's only a few places in the world making money in oil. >> i'll tease it. i have a chart coming up in the
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next block, 25-year history of oil, that might surprise some people about where the price of oil may be. final question, as a real estate guy, how much do you watch the price of oil? >> i don't watch the price of oil at all. >> no? not important to you? >> not that it's not important, but i'm interested in recessions and crisis, right? if oil continues this level for a year and a half or two years, i'm concerned, but for four months, eight months, a year, it's not an issue. >> that's the question, how long does it last. brad, appreciate it, thank you very much. good to meet you, man. a big star here. >> oh, yeah. >> i'll come on your show and we'll flip. >> sure. >> i know nothing about real estate. brad, thank you very much. >> thanks. >> he's not concerned, but, again, the question is how long do oil prices stay at the levels, and i'm sure you had people on the show recently saying oil is cheap, coming up after the break, we have a 25 year chart of the price of oil and oil inflation dollars that just might change your mind about where the real price of
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oil should be. we'll have that for you right after the break, stick around. [container door opening] ♪ what makes it an suv is what you can get into it. ♪ [container door closing] what makes it an nx is what you can get out of it. ♪ introducing the first-ever lexus nx turbo and hybrid. once you go beyond utility, there's no going back. you know.... there's a more enjoyable way to get your fiber. try phillips fiber good gummies. they're delicious and an excellent source of fiber to help support regularity. mmmm. these are good! the tasty side of fiber. from phillips and cialis for daily useor you.
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all right. welcome back to "street signs." the newspaper, i'm going to hold this up in the gentle cool breeze the chinook as we call it here in tonightto. the whole thing, complete failure because i can't feel my fingers, basically the whole front page of one of the newspapers is about oil. i will call your attention to this, engine sputters cracks in the u.s. economy send markets tumbling? you and i have talked about hope and how the economy has gotten better. according to canada, u.s. economy stinks. >> and blaming us. >> as a canadian how do you feel about that? >> as a commonwealth member i think is what you meant to say, meaning to say, right, i mean i don't know whether that's sort of a national thing, the southern neighbors i'm not sure. it is telling where they, you know, perhaps think all the problems are coming from. you know what, you wanted us to hold up some of the papers down
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here. i have "the new york times" here with me. absolutely nothing on the front page of the "new york times" about oil. not a single headline has oil. i did get a good jc penney company. "usa today" all about the yosemite free climbers, they rock. "washington post" same thing, yosemite climbers. nothing about oil. here on "the wall street journal," brian, down beside there, they've got what's news, basically the headlines withins the paper they have apache shedding 5% of the staff. but that's it. right. no big banner, you know, in the u.s. economy. >> it's not a banner, it's the whole front page. second day in a row that oil has dominated the major papers here. when you look at this as a resource economy, you look at canada and banking all around us. gold is firmed up a little bit in the last couple weeks as the volatility, people flocking to gold for a safe haven but gold
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is 6, 700 bucks an ounce off its peak, a mining and oil economy, now people are optimistic, but i'm just saying, there's reason to be a little bit concerned. notice i said that when all the canadians around me left. >> yes. you will have to be very careful, otherwise you will find yourself out of there real quick, brian. okay. thank you very much. we'll get back to you in a minute. there has not been yet one quiet day in the markets this year and today no different. we'll check in on all the key markets for another wild day of stocks, that's just ahead. also, brian has made reference to a particular chart that's going to maybe make you question how you think about this recent avalanche rock in oil. in my world, wall isn't a street... return on investment isn't the only return i'm looking forward to. for some, every dollar is earned with sweat, sacrifice, courage. which is why usaa is honored to help our members with everything
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what's been happening in the world of stocks? bring up a board. the dow down by 23 points. we have significantly paired our losses. we were down triple digits earlier on today. the nasdaq still the underperformer down by about 1%. what's interesting here you haves u.s. stocks heading for five days of consecutive losses. for the whole of 2014, the s&p and nasdaq never saw five days of losses. so here we go. we're going to continue watching all the way to the end of trade. >> brian, what have we learned in the last two days that you've been up there in canada, calgary yesterday, today toronto. what are your biggest takeaways?
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>> number one, canada is large. it takes a long time to get anywhere. more importantly, i know a lot of people think because oil was more expensive and dropped it may be cheap. went back through 25 years of historical data and look at this chart, inflation adjust dollars from 1990 to today, the average price, and this is my numbers here, a little rough, not exactly perfect, but the average price of crude oil inflation adjusted in 2015 dollars is about $50 a barrel. i know we're well off our highs, but maybe $100 oil is not where it's supposed to be. maybe $50 is the right place for oil to be. that's what 25 years of history might tell us. >> that's a really excellent question. going forward whenever we ask our guests why we plunge so much, the question should be why are we sitting above 90 so long, why were we above $100 a barrel. was it artificially inflated. chris, come over here, ten seconds, come on. i want to prove again, canadians
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are tough. new friend chris, big fan of the show, no jacket, we're weak. i agree. back in new york tomorrow. >> not even a beanie or scarf, dude he is tough. they breed them tough up there, don't they. brian, we'll look forward to seeing you back here in the new jersey office, nice and snug and warm tomorrow. thanks for watching "street signs." "closing bell" starts now. and welcome to the "closing bell." i'm kelly evans at the new york stock exchange. it's been another volatile day here for stocks. >> what do you say about this year? i mean, every day it's something new, another day of surprises in the financial world. as of now, the markets if you believe what we're looking at here, haven't liked it. we've been in the negative territory much of this session, but not by much now. down about 130 points at the low a couple times and the dow now down just 24 points. but what a day of


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