tv Power Lunch CNBC January 5, 2016 1:00pm-3:01pm EST
so as far as fitbit, i hope bob is right. >> piling on for disney? another downgrade? >> yeah. technically broken. that's the problem. tech nickels right now, a lot of people relying on them. that's the case with disney. >> thank you for being here and thank you for watching. pl po power lunch begins now. >> welcome to a not technically broken edition of "power lunch." we start this hour with a major debate in this country. of course, it is about gun control. just a short time ago an emotional president obama laid out his plan to stop at least some of the gun violence that is plaguing the united states. >> -- actions that he hopes will reduce the level of gun violence in america and he got
more emotional than we have ever seen him at any point when he started talking about the victims of the newtown massacre. >> every time i think about those kids, it gets me mad. and by the way, it happens on the streets of chicago every day. >> now the president's steps include expanding background checks, especially for online purchases and purchases at gun shows. republicans say he's exceeding his executive authority. there is going to be litigation about it. he's going to get resistance, of course, from the national rifle associati association. republicans and perhaps some democrats. the president made clear he's going to spend part of his last year in office trying to move the ball forward on this issue. he urged voters to make this a voting issue, make members of
congress be afraid to oppose the steps that he takes. and that's how he kicked off the first big action of his last year in office. guys? >> a passionate president. we do not usually see presidents of the united states overcome by emotion in just that way. only a couple times in my lifetime do i remember seeing it. >> tears rolling down his cheeks. wh wiping his face. his voice didn't break so much as i could hear. fwha but that was a very powerful display of emotion. we describe him as cold and alo aloof. that is not what we just saw right now. questions going to be what sort of political effect does this have? may not have much of any. after newtown, he had a big head of steam behind him. but in this moment, that was a display of passion from this president. >> thank you very much for that. the major gun makes are
soaring now on huge volume. take a look at the numbers for smith & wesson which is up by over 10%. today hitting new record highs. sturm ruger is also up. the last time we saw massive volume on smith & swes wes on w 2012 when he convened that meeting on gun control measures. >> let's take a look at the broader markets. stocks, i guess you could say they're building on yesterday's sharp selloff. at least continuing it. around session lows. you see, there the dow jones industrial average off .5% or 71 points. the s&p 500 above 2000. nevertheless, off by 3 1/2 points or a fifth of a percent. the nasdaq is up about a half percent. >> oil is sinking again. crude is sitting at $36.18. it is up by 1.6%.
let's go to dominick chu. >> mandy, shares of apple are falling. this being helped along by a report in japan saying that apple's expected to cut the iphone production by 30% this quarter. the story also goes on a note that a year ago apple told its parts makers to maintain production levels at the same as they were before. due to a pileup of inventories, outputs need to be cut so they can go through existing stockpiles of the product. the company declined to comment over the last year, remember, apple stock lost around 2%. it's been an underperformer. along the lines of apple, we did ask our data partners which stocks get hit the hardest when apple shares drop by this degree. when apple stock follows by 2% or more, the stocks that fall along it with, skyworks, nvidia, xp semikconductor and qualcomm. cnbc pro has that full story
online right now. you can get that full story flchlt. >> all julia with a quick alert. >> twitter is allowing people to write tweets longer than the 140 character limit, looking at launching this new feature around the first quarter. this was first reported by recode and they talked about potential for changes like. this my source tells me that users time lines would not look different but users would be prompted to click to expand to see longer tweets. they will be notified they're about to tweet longer than the current limit. back over you to. >> thank you very much, julia. the texas economy was one of the biggest beneficiaries during the oil boom. but now with crude below $40 a barrel, how is the lone star state holding up? our brian sullivan is houston today. hi, brian. >> hey, tyler and mandy, thank
you very much. what is oil prices drop going to do to the united states? is it just going to be a regional thing? houston, new orleans, north dakota? or will it trickle through the rest of the economy? it's a huge and important question. that's why we came to houston, texas, and for the next two hours, guys, we're going to hit a different slice of the economy, restaurants, hotels, real estate. but right now, let's go right to the source. we ended up meeting a guy about 20 years ago. he started a tube lar products company. the tube that's go into an oil well in the ground. he is on the front lines. we went out to his fabrication facility yesterday outside of houston, texas. and we interviewed him. we began by asking him what the oil price drop is doing to his business, particularly jobs. >> basically, we have had to go from over 1100 employees to less than 530 now. >> the people who are still employed, have they had to take a pay cut? >> we did for a little while.
most of our salary people took a pay cut. but we have replaced. that the only ones that are on pay cut basis right now is the executives. >> is anybody saying we think oil will go back to $70 any time soon. >> no. no. i think the whole market has accepted that we have more oil than we need right now. but i tell people that within my thing, 2015 was an okay year after we get through 2016. >> with all due respect, i hope you're wrong. >> me, too. me, too. the old-timers used to say, the cure for low oil prices is low oil prices. >> so, guys, you can see here there is somebody at the front lines. he did $300 million in business in 2014, $180 million in revenue last year. he's more negative about this year than last year because of
the hedges that the oil companies have so they'll feel the impact of low oil more than they did in 2015. looking ahead, we got real estate developors coming up. we're going to talk about stocks stats. i'm telling you, the stats are going to open up your eyes and billionaires are going to join us in the next hour to talk about what impact they're seeing on the restaurants and casinos as oil prices drop. it starts to trickle through the houston and texas economy. we'll see you back here. >> we'll, indeed. thank you. after monday's big market selloff, investors are wonldering if there is more to come. so what is the outlook for 2016? clinton thomas is with us on the set. jonathan, you know, i think last year was defined by three massive themes. fed liftoff, china slowdown and the on going oil/commodity crash. how much do you think that oil/commodity continuing decline will be a feature of this year as well? >> i think there are four things that will drive next year heavily. and oil will absolutely be one of them.
people forget the fact that oil in the united states, we are now the world's largest oil producer. so these low and continuing low prices really have an infect on our own growth and our economy here. so i think that's going to have a large impact. >> can stocks go up if oil doesn't? >> yes, they can. i mean there -- >> do they cap the amount they can go up? >> 5% of the gdp and us being the most expensive produce nertz world, i think it affects the u.s. market. it puts some level of a cap on it. >> how can you turn it into a way to make money off the back of the oil/commodity theme? >> i think the trick to making money, it's a multidimensional issue. i think you have four big things to have in the market. you have oil. you have policy, fed policy. i think yellen indicated in december they're going to be multiple lifts in 2016. i don't think it will turn out to be that way. this return to normalization is going to be difficult. the inner shah will be strong but i think there is a need that everybody recognizes to move ahead.
the elections which aren't getting that much play but we have a circus with the gop primary. with entirely stark choice on the democratic side. if you look at our four leaders, you have cruz, trump, hillary and sanders. you couldn't have a more diverse set of people. finally, china. >> there's a lot to take in. how do you advice advise your clients? >> it will be a year of volatility and uncertainty. and so diverse fiction is always key. there are always opportunities to be somewhere. a lot of these -- a lot of retail investors have been moving into market neutral and kind of absolute return type of funds. they have actually done quite well. yesterday there were 4600 mutual funds, he can wid funts in the united states. only 5% went up yesterday. 160 of those, 200 that went up were all market mutual funds. >> what is your view about whether i'll be better off in 2016 with a stock picker or with an index fund? is this going to be a year of --
where the index funds are going to beat them again? >> it is absolutely not an indexer. this is about security selection. fundamental analysis. the risks that a lot of people run right now is looking back at three and five-year morning star ratings and saying look how those thing dz which was an artificially fed stimulated environment and thinking that's going to continue going forward. wh we're in a different world. fundamental stock picking is going to do well as it has, by the way, in the more opaque and sophisticated markets last year. you see a lot of headline news that the passives outperformed. in certain categories, that's true. in the international space which is more difficult to invest, you see outperformance across active managers. >> the passage beat them out of hedge funds though. >> yes, they did. >> they d my heart bleeds for those guys. >> you got go with the 150 foot yacht now, not 300 foot yacht.
>> the cool thing about your firm, you direct 40% of your profits to cancer research as well. thank you from american century investments. >> a war of words between saudi arabia and japan. saudi's foreign minister speaks with cnbc. a former ambassador to saudi arabia will weigh in. plus, manhattan real estate prices shattering records. you won't believe how much a one bedroom condo goes for now in manhattan. you're watching cnbc, first in business worldwide. equals great rates. it's a fact. kind of like reunions equal blatant lying. the company is actually doing really well on, on social media. oh that's interesting. i - i started social media. oh! it was my...baby.
welcome back to "power lunch." automakers revving up sales in december. shares are high despite cutting the outlook, eli lilly cutting the full year guidance and forecast 2016 below current street estimates. tyson foods, take a look at that one. it is down by 2% with the company downgraded to sector perform by outperform by rbc. citing a decline in the performance of tyson's prepared food business. growing tensions in the middle east. the 48 hour deadline passes to night for iranian diplomats to leave saudi arabia. bahrain and sudan the latest to sever ties with iran after they tacked the saudi embassy in tehran. that after saudi arabia executed a prominent shiite cleric.
we have a reporter live now in riyadh where she just spoke with saudi arabia's foreign minister. hadley? >> that's right. i had the chance to catch up with the saudi foreign minister. i asked him for his response to the current crisis with iran. i asked him to respond to accusations that this country is going to face divine retribution for the execution of the cleric. take a listen. >> he's a terrorist. he's as much of a religious scholar as osama bin laden was. he was implicated in insighting people, recruiting people, providing weapons and munitions for people and he was involved in attacks against security people. what i find very puzzling is this individual is a saudi citizen. he committed a crime in saudi arabia. he was sentenced in saudi courts. the sentence was carried out by saudi authorities. what does iran have to do with this? they execute hundreds of people every year. nobody says anything about it. this is their system.
and so for the iranians to inject themselves into our domestic affairs is in line with what iran has been doing for years. at a person point, everyone reaches their limits. thi they got away with murder for more than 30 years. we did not escalate. and we have not escalated in the past. very simple. iran should back off. they should stop being aggressive. they should stop interfering in the affairs of their neighbors. they should stop supporting terrorism. >> so the saudi foreign minister there saying iran has got to just back off. in another sign of how far things have deteriorated when i asked him how he can hope to beat the islamic state, he said doesn't know if iran wants to defeat isis. guys? >> hadley, thank you very much. let's bring in james smith, former ambassador to saudi arabia. he served from 2009-2013.
we're delighted to have you. is this a situation that is bound to get worse or do you see a way out of it? >> it doesn't have to get worse. although, it's troubling. there are several motivations why both saudi arabia and iran might want to get through this crisis. first of all, the saudis have a deep-seated responsibility and a commitment to fellow muslims to allow them into saudi arabia for the haj. it's very difficult to do that if you don't have a diplomatic presence in iran to support iranian muslims. as was mentioned earlier, isis is a common threat to iran and saudi arabia. so in order to continue that struggle, we need them talking. so there are motivations to move toward a settlement. let's hope that's what happens. >> so much, mr. ambassador, in
the muslim world seems to be predicated around the sectarian differences between the shia and the sunni. does this ultimately lead to some kind of vast sectarian conflict or a civil war within islam? do you see it going that way? >> no, i don't see it going that way but there's always the possibility. war takes on a character all of its own. you're really talking about a guns of august scenario. i don't see that happening. but keep in mind, it's only the iranians that look at this problem through a sectarian prism. they have undertaken a strategy of destabilization in the region which foreign minister talked about. the saudis want stability. so the executions that took place, the 47 individuals that were executed, this was not a
sectarian issue to them. it was an internal stability issue by punishing terrorists and those who have inkricited terrorism. >> let's talk about america's relationship with saudi arabia which was as close as it comes in the middle east and muslim world to friendly relations. more frosty today than really i think at any time in my lifetime. correct me in i'm wrong on that. partly coming out of the united states and the other global powers, negotiations regarding the nuclear agreement with iran. how fractured, my word, not yours, are american relations with saudi arabia? and how tricky a position does this conflict between iran and saudi arabia, how tricky a position does it put the u.s. in? >> i don't think the relations are fractured nearly as much as
some might think. there was much concern in the region as you said when the united states was negotiating with iran and had not brought the gulf states into that conversation. there are two issues about the iranian nuclear agreement. the first is technical. is the agreement enforceable? i think the country of the region including saudi arabia have come to the conclusion that, yes, it is technically enforceable. the other issue is will we enforce it? and that's the challenge that they have now because of the united states appear to have moved out of the region. all of the talk about the pivot of asia and the red line in syria caused the countries of the region to lack confidence in america's willingness to show a leadership role in the region. >> so, ambassador, with u.s. now
appearing to delay sanctions on iran, is that the right thing to do or the wrong thing to do? >> i would not suggest that you change in midstream. the challenge here is the saudis broke relations with iran because iran did not uphold their international agreement to protect the embassy and saudi personnel and tehran in accordance with the vienna convention. they have shown a willingness to break these agreements. they took our embassy in 1979. there is an attack on the british embassy in 2011. and now the incident with the saudi embassy. the concern for those who are focused on the iran nuclear agreement should be that you've seen a state who has shown the willingness to aggregate the responsibilities in an
agreement. what will we do when they do that in the nuclear deal? >> all right. ambassador james smith, thank you very much for being with us. james smith, former ambassador to saudi arabia. hunting for opportunities, three big cap stocks you may want to buy on this recent big dip. plus, dramatic scenes of a capsized fishing troeler. find out what happened next.
a dramatic sea rescue off the coast of norway after a fishing troller ran into trouble. these incredible scenes were captured by norway's coast guard as they attempted to pull five crew members safely from the boat. the boat was half way underwatt eastern lifting 90 degrees forcing the crewmen to cling on to the side while they waited to be rescued. i'm shivering even looking at. that at least hit a good ending, right? >> look at that. that countryside is gorgeous out there. it is fierce. to the bond market we go. hi, rick. >> hi, tyler. it is today the 14th session since the fed raised rates. in those 14 sessions, the closing range of a ten year note is between $2.19 and $2.30. so it hasn't been as crazy. i know there is volatility intraday. if you look at a two day clart,
the same continues. we're building pretty much on the same type of range and trade we had yesterday. if you look at november 1st, you can see what i'm talking b it's just oscillating in a tight range. two day of the dollar index reflects something a bit different as we get ever closer to $100. open the chart up to the beginning of december, you can really see that $100 is significant. look for a lot of collars, strangles and derivatives above that price. >> thank you for. that rick santelli. a strong dollar as you can see there on the board. let's see what impact that is having on gold prices. actually, not very much. gold is slightly to the upside at 1,077. take a look at the other metals. precious and not. pa laid yum is down by 1.3%. silver, cop eastern platinum are moving higher. >> stocks building on yesterday's huge selloff. where are the opportunities right now? three big name -- big cap names you may want to buy on the recent big dips.
plus, manhattan real estate prices soaring to record highs. how much an apartment in the big apple will set you back. ♪ every insurance policy has a number. but not every insurance company understands the life behind it. for those who've served and the families who've supported them, we offer our best service in return. ♪ usaa. we know what it means to serve. get an insurance quote and see why 92% of our members plan to stay for life. ♪
hello, everyone. here is your cnbc news update for this hour. gop presidential candidate jeb bush campaigning in new hampshire criticizing president obama's plans to use executive action to restrict gun sales. >> i think the impulse of the left is always to create more restrictions on law abiding gun owners. and that doesn't solve the problems, the tragedies of these well publicized cases that have taken place where we see the violence in the press focuses on. >> at least 21 migrants drowned off turkey's coast after their boats overturned in rough waters in two separate incidents as they tried to reach greece. nine bodies washed up on a beach in a resort town prompting authorities to dispatch coast guard boats and police. amazon says its sellers sold a record number of items on cyber monday exceeding $23 million. a rise of more than 40%.
the e- commerce giant said the fulfill by amazon service delivered a billion items around the world in 2015. >> and believe it or not, a pennsylvania company that publishes news letters on business topics has been ordered by a federal judge to pay $1.75 million to its 6,000 employees for docking their pay when they went to the bathroom. the company argued that federal law didn't require them to pay their employees for short breaks. that's the cnbc news update at this hour. ty? back to you. >> sue, that company clearly has a liquidity problem. >> i think, yes. indeed, they do. >> right. on that note, mandy, bail us out. >> i couldn't have said it better. okay, another wild day for stocks. if you ever needed an example of you need to follow the markets, take a look at what happened shortly after 10:00 a.m. bob pisani joins me now.
what happened? >> we had a move to the down side. 2016 is looking a lot like 2015. lightening up on the big global names. look at industrials. big names. owen illinois, dover, illinois tool works, emerson down more than 1%. then we have oil moving to the down side. energy names moved down. we've seen the names, baker hughes, cabbot oil and gas to the down side. one thang is notable today is the auto stocks. the auto numbers weren't that bad. but they sold right into before the gm numbers came out. ford had a great year overall. the f-150 truck was terrific. look at the numbers here. all the auto -- anything associated with autos is a down side leader today. what else looks like 2015? consumer staples? they're outperforming again. we have kimberly clark, altria, reynolds, clorox, they were on the best performers list. they're showing up again on the best performing list in 2016. >> thank you very much, bob.
as we can see there, stocks are down now. the first two trading days of the year. does this mean buy the dips? just isn't working anymore. joining us now, chief investment officer at the huntington press. good to see you both. john, i mean, what you would be doing with this dip? is this a dip to buy or sell? >> it's a dip to buy. be a little patient. as bob pisani talked about, this is a lot like 2015. 2015, stocks actually moved lower into the sixth day, sixth calendar day of the year. so we've been advising our portfolio managers, just be a little patient with. this let's see what develops. >> what do you think, kevin? what's your feeling on the same topic? >> yeah, i agree with john. i think it's a little early to cast aspersion for the whole year. the first two trading days are going to be reflection of what the end of the year is going to look like. but we did some tax loss harvesting at the end of the year. there is cash on the sidelines that we've been selectively
choosing some names, getting back into the market little by little and looking for opportunities on the dips. i still think the dip strategy works for the long term investor. it's the short term investor that gets whipsawed. >> we're trying to foretell what the future is going to hold for us in 2016, john. we have to try to answer the question and that is to what degree was the fed that held up the stock market rallies since 2009? at the bottom, and as opposed to underlying fundamental growth? >> the fed did help. the fed was a tail wind. now that tail wind is going to dissipate. in our business, in the investment business, we're going to be more micro focuses versus mack crow. we're going to focus more on the individual companies. so agreed there that fed helped. we don't think they were more than half of the return generation the customers saw in the total portfolios. yeah, definitely they were part of it. we agree. >> kevin, you have a few names here that you brought along that
you do like, like qualcomm which really did not have a good year over the past year. i it this was down 32%. but it started to pop-up on a few people's buy list. tell me why? >> they've been down 30% makes them attractive this year if you don't own it. qualcomm has a nice dividend. 4% dividend yield. excellent free cash flow. they just completed a strategic analysis of possibly breaking up their licensing from the chip set business and they're going to keep it together. and now they're going to invest in growth. i think that will position qualcomm for 2016 and beyond. >> i know also, kevin, do you think it might start -- time to start looking at some energy names as well. we have to leave it. there thank you very much for joining us. john huntington and kevin harris. can you go and see how john is making non a low growth environment. that is our website. tyler? >> thank you. the president has now laid out
his executive orders to try and prevent more deaths from firearms. among other effects, the orders would expand the number of gun buyers who are subject to criminal background checks. he also announced plans to hire more personnel to process those background checks. directed officials to conduct more gun research, improving gun safety generally speaking, encourage more domestic violence prosecution and ordered better tracking of lost guns. president obama showing a lot of emotion while speaking about the shootings a few years back in newtown, connecticut. >> first graders -- every time i think about those kids, it gets me mad. by the way, it happens on the streets of chicago every day. >> talking about whether or not there needs to be more regulation on guns, continues to push gun stocks higher. shares of smith & wesson trading
up 11% today. let's bring in andrea james, analyst with doherty and company. welcome. good to you have back with us. these types of responses whether from the executive branch or elsewhere by state for stricter gun registration rules. i use that term broadly. typically result in a pop in the stock's prices. are those pops sustainable? >> they're seeing stronger sales of guns in the december quarter. the fbi of tracking of background checks showed that there were a record number of people that bought a firearm in the month of december. i think that's what the pop is due to today. of course, it calls for more gun control do lead to buying spikes. >> let's just play a what if. what if the president, all of
the president's actions take effect? what if they are not overturned by the congress or the courts, what will that mean to gun sales and specifically to ruger and smith & wesson? >> well, i took a look at some of what obama is saying this morning. its not clear how it is going to be enforceable. it looks like two main components. one of which is making sure that federal firearms license holders, these are the ones who sell the guns. they have to be registered no matter how many guns they sell. i don't think that will have a material infect on sales. the other has to do of cleaning of the background check process. this is something the national shooting sports foundation, the leading firearm industry lobbyist has been lobbying for for a long time. the gun industry does want stronger background checks when
it comes to cleaning up the fbi data and making sure that person buying a firearm has every right to be buying one and isn't convicted of a crime. i doesn't help the firearms industry, obviously, when guns fall into the wrong hands. the lobbying group you mentioned represents whom? the gun manufacturers as compared with the national rifle association which represents gun owners and is staunchly opposed to that kind of registration as i understand it. correct me if i'm wrong. >> that's right. there are two different bodies. they agree on a lot of things. i don't want to speak for them. generally the way i look at it is that the nssf represents behind the counter meaning the gun manufacturers and the sellers. and then the nra represents the gun buyer in front of the counter, that individual citizen who protect second amendment rights and the individual citizen that wants to buy a firearm. >> thank you very much, andrea james from doherty and company. we appreciate you being with us. they say all real estate is local. coming up, we're going to look
at two cities with very drastically different real estate markets right now. we're watching manhattan. >> tyler, manhattan broke three new records in the fourth quarter including the most expensive average sale price ever. we're going to look at wloz buying, what is selling and how much one square foot will cost you. now to brian in houston. >> yeah, we may be on the opposite side of the spectrum. something happened the past couple of months and it has not happened in years. we'll have that side of the story live from houston, texas, when we speak to the big real estate developer here right outside of houston much that's all coming up when "power lunch" rolls on right after this break. ♪ he gave us moonlight
are you sticking with that price target despite this latest report? >> for the time being we're. there are negative headwinds nlt near term. once again, we're telling investors not to be as nearsighted as maybe some of those are today. and, you know, should be looking at the longer term picture. >> what is the longer term picture for apple? it was very ho-hum and lack luster in 2015. demand for i phones isn't going to be what it was, what have they got to fall back on? >> i think right now what the street slooking at is they're looking at the march quarter eastern the june quarter, clearly. and when we look at iphone shipments, we think the 75 million or so number in december is attainable. i think investors need a brace towards more of a 50 to 55 million shipment number in the march quarter. so clearly we're looking at declines over the n two quarters. the longest term story here is,
you know, the iphone 7 should, you no, once again kind of reaccelerate growth within the company. clearly, you have to be a believer of, you know, of the potential to grow outside of the smart phone business which currently represents about two-thirds of the revenue base. >> thank you very much for that snapshot on apple. let's get to dominick for a market flash. >> so let's talk about wearables a little bit more here. shares of fitness tracker fitbit coming off the worst levels today. still down. you can see nearly 13%. the company did unveil a new fitness tracker called the blaze. it is a smart watch type item to take on the apple watch. the item will be available in march for $200 each. sun trust did reiterate the buy rating on the stock saying the company is positioned for a strong fourth quarter report. the shares did gain around 30 pest last year. however, they've been decidedly negative over the last now months here. you remember the stock ipo'd at $20 a share but didn't open for
trading on the first day until near 30. >> big drop there for fitbit. let's get to houston now with our friend brian sullivan. >> all right. thank you very much. i just noticed also wt sichlt below $36 a barrel. the pain continues. the impact of oil is not just on the oil field workers out there in midland or in the balkani it is in the white collar work nertz office buildings behind us. a lot of jobs and housing as well. houston is strong with jobs and housing for years. that is starting to turn over. listen to. this we spoke with a staffer. she said a couple years ago, jobs were plentiyful. now things slowed down. >> we still see a lot of activity. i think this year, last year at this same time we had about 100 open active job orders that we were working on. right now i think we have 67. the salaries are not skyrocketing like they do in the good times. and so i see a leveling off. i don't know that i really
necessarily seen a decrease. >> in the good times though, you can see it? >> oh, yeah. you can see it. you can feel it. candidates come in and they read the paper and they think wow, you know, i have a college degree now. i want to make $60,000 and i want blah, blah, blah. it's like it's not quite like that. >> and if jobs slow down, real estate may slow down as well. this had been a hot market. it's still okay. listen to what a real estate developer told us yesterday. >> it's happening in certain submarkets of houston. for example, our community that is on the far west side is down about 25%. it's still one of the top 20 best-selling communities in the nation, but when compared to last year, it has been affected more than the other communities. >> you've been in this business for over 20 years? >> yes. >> in houston. you've been through a few cycles then? how does it play out? take us through it. >> in this case, it's different
than it was in the '80s. 1980s when oil collapsed, real estate values plummeted. so there is nothing you could do to try to salvage your investm next ts. >> you couldn't sell a home. >> you couldn't. >> how much is oil a part of your conversation in the board room whether you're planning? >> sure. it's got to be. i mean, you know, it's such a significant part of our economy. as i mentioned earlier, some parts are being supported by the lower oil prices. they're building homes specifically for a customer that comes in -- >> like this house is already sold. you're not going to build this and hope for a sale. >> that's correct. we're going to play it close to the vest and what we call just in time delivery systems to be able to monitor our products which are basically home sites that we sell to home builders and we'll look at smaller size neighborhoods going forward. not get a lot of inventory out on the ground at one time.
we're careful. we've been through this before. >> so, guys, even if you don't care about housing in houston, maybe you have investme in. ts in seattle, you might own the s&p 500 in a mutual fund inside the s&p 500 are a number of publicly traded home builders mshgs of whom have made a fortune in texas the last few years. coming up at the top of the next hour, we're going to show you the three or four home builders most exposed to the housing market. we'll talk about reits. we have an exclusive with billionaire tillman. we're at one of the restaurants here today about how oil is impacting him. you'll be surprised at what he has to say. we'll get stock picks as well and get a bullish prediction for oil as well. we're going to see $70. we have a whole big next hour coming up. we continue the story here from the lone star state and the beautiful city of houston. >> looks a lot warmer there than it is here. palm trees in the background. not so much here today. it's about 12 degrees. >> yeah. >> other side of real estate coin is in frosty manhattan.
prices shattering records as our robert frank has that story. >> the rich still see real estate as a safe haven. there is a lot of money looking for safety right now around the world. the average price of a manhattan apartment hit a record $1.95 million. that's according to douglas ellerman. the record price is $1645 per square'. the first time we surpassed the precrisis peek. brokers telling me buyers from overseas and local buyers remain strong. but manhattan very much a tale two of luxury markets right now. you have co-ops and condoes. that includes foreign buyers and the new construction. they're up 25%. average sale of $2.7 million. but co-ops, those are u.s. buyers in older buildings, those are selling for an average of $1.28. so co-op selling for half as much as condoes. foreign buyers account for 15% of all sales in manhattan.
30% of new developme nt. next year, 6,000 new condo units coming on the market. can all thafb absorbed? the most expensive sale of the quarter was a $45 million trade at 15 central park west. just put on the rental market. get this, for $125,000 per month. >> for that property? >> yeah. >> just quickly, the difference. why do co-ops so for less? >> because they do not accept foreign buyers. tracing bank accounts. they don't want to give that information. >> i would love to know what you get for $45 million. the markets having a bit of a wild up and down day here after monday's big drop. the dow is currently only down about 11 points now. you can see there started out in the green. it was down about almost triple digits at the low point. now it's coming back. we may be breaking even by the
i've been hearing about the had very heavy rains back home. they've been causing major flooding in southeastern awe stral yachlt look at. that cattle and other farm animals retreating to higher ground, what little there s they had 11 inches of rain in just one day. >> tyler? >> all right. stocks are steady. the dow down about 10%. stocks under pressure as you see. there high pressure building over the stock market. energy and materials leading the declines. energy lags. telecom leads. staples in the green. twitter looking to expand the length of tweets. what is this going to mean for the trump campaign? i can't even imagine. it could go way beyond the 140 character limit. shares at twitter down more than 2.5% today. next, a car that communicates with other cars on the road. see the future behind the wheel. you are watching, if i would let
here at the td ameritrade trader group, they work all the time. sup jj, working hard? working 24/7 on mobile trader, rated #1 trading app on the app store. it lets you trade stocks, options, futures... even advanced orders. and it offers more charts than a lot of other competitors do on desktop. you work so late. i guess you don't see your family very much? i see them all the time. did you finish your derivatives pricing model, honey? td ameritrade. phil lebeau is in vegas today where cars are talking to other cars.
>> this is the future. the next step when it comes to autonomous drive vehicles. vehicles talking to infrastructure, other vehicles and even pedestrians. take a look. all right. here we go. auto supplier delphi says this is the brains behind the next generation of intelligent cars and trucks. software and cameras in this test vehicle allows them to not only talk with other cars so they can avoid collisions at blind intersections -- force. >> changing lanes. >> so we're changing lane because there is a hidden driveway up here. >> it also goes one step further. communicating with stop lights about changes in traffic and with the smart phones of pedestrians so they can stop or slow down and avoid crashes where pedestrians could be hurt or killed. >> car let us know he's right there. >> the opportunity to get that advanced information before the car is there before anybody else is put in danger is -- it would be incredible improvement in safety. >> vehicle to vehicle communications is a crucial step in the development of autonomous
car drives and trucks like the google car. delphi's technology will be in the first gm models with super cruise control which come out later this year. the next step for smarter cars which will hopefully lead to fewer people being in accidents. and again, there is just the beginning. we'll see this delphi technology in cadillac models going on sale later this year. back to you. >> phil, i hope the cars can master profanity when they speak to one another. that will do it for the first hour of "power lunch." >> over to brian in houston. >> all right. thank you very much. 2:00 on 1:00. 1:00 right here in houston, texas. oil is the story of the year. it was in 2015. it will probably be the story again this year. welcome, everybody. i'm brian sullivan. melissa lee is at the nasdaq for you. we're here to really analyze what the oil price drop means to you and your money. yes, everybody loves low gasoline prices. but it hurt your investments.
will it damage the texas economy and the overall u.s. economy? that is the question. that is why we're here. also, i want you to understand something about how this has hurt the stock market, particularly here in houston. we ran an exclusive stock screener. we found there are 214 publicly traded companies in and around the houston market. 135 of those are listed as drilling, oil, gas, or energy related. only 17% of all the 214 names are higher over the past 12 months and that is why houston leads our power city index on the decline. it fell 16% as a whole last year. the stock market struggles of houston may be, just may be trickling through the overall houston and texas economy. let's talk more now about oil and energy and where the price of oil may go. we have the managing director of tutor pickering and holt here. thank you very much for joining us. we met yesterday.
you said you are standing by your call for $70 oil by the end of the year. defend that call. >> that's correct. so, you know, i think as we look at the market today and look at the last few sets of data, the market is a lot tighter than generally expected. so if we look at october data from the iea, we're in a balanced inventory mark. over the next six months, supply demand is going to start to cause inventories to draw. as that occurs, we should start to see a very significant correction in crude. we think by the fourth quarter of this year crude prices will be materially higher. moving from 35 today towards $70. >> what makes so you confident that supplies are going to drop? yes, production has come down a little bit. we're still above nine million barrels a day in the united states. way r we saw a 30% reduction in
spending. strip pricing which we'll see another 40% cut to budgets. that means you're going to see an acceleration of production declines which is a positive tail wind from a macroperspective. >> all right. we have run into a couple cnbc viewers and they as the same question. are there any oil stocks worth my money because some of them are down 60% and 70%. maybe some individual investors are licking their chops thinking not serve going to go out of business. eventually some of these will be worth my money. are there any names you follow that are worth our viewer and listeners money? >> definitely. now is a great time to start investing in the space. generally investors are underweight energy at the moment. as we get into the back half of this year, investors will move to an overweight position. that means the stocks could move materially higherst think about our favorite names in the sector at the moment, eog, concho and cimarex have great assets. those are the names we're sticking to today. you want a little more risk and beta exposure, incana is worth
buying. >> thank you. it's a real pleasure. a lot of folks are hoping you're right on that $70 call. i'm sure you're taking heat for it. >> i am. >> but if you're right, we'll get you back on and say you called it. appreciate that. now let's bring in richard fisher, former fed president of the dallas fed. listen, you made comments today already on cnbc. i want to separate that. i want to talk about oil. here's the contention. here's the question that i think you need to answer which is the oil price drop going to just be a regional thing or does it have the power to impact negatively the data which then gives the perception that the overall american economy is, indeed, slowing down? >> well, first of all, please bear in mind that oil is not everything in texas. it's 2.5% of the employment of the state. oil, gas and mining. it's about 12% of the output or percentage of gdp. if you come up here to north texas, you're down in houston where you've had flat job
growth, 0.0% for the year. about a third of the output of the state of texas comes from the houston metropolitan district. a third from dallas ft. worth. a third from elsewhere down by san antonio and else. where we've had 4.2% job growth in dallas. they've had 4.3% growth in austin. so we have a very diversified economy. our consumers are benefiting by lower oil prices. i just want to make sure the viewers understand houston has had a booming economy as heavily hydrocarbon driven. but the rest of the state is pr prospering and 150,000 jobs were created in the state of texas last year. so this is a very diversified economy led by hospitality, tourism, health care is huge, business and financial services very large and the predominant real activity is coming from
construction statewide although it slowed down in houston. i want to make sure the viewers understand that texas is not houston although we love houston and houston is a great leader, they're the only flat area in this area. as to oil, it's like saudi arabia except for probably even cheaper. you can drill, find oil. can you inventory oil. they're still adding jobs. it's a huge part of the american energy production function. i believe your last viewer, i don't know about the price forecast, but production is continuing. jobs are being created in the basin. and overall, the state is doing significantly well. less well than it was before. but not having a recession or negative growth. i just want to summarize by saying when you look at texas, it's like the music, it's not as bad as it sounds and particularly as it sounds when it's being emanated from houston. >> don't think i ever heard bogger and oil in the same
sentence. that's why we like you, richard. texas punched above the -- texas has a lot of weight. but it punches above the weight in the economy over the united states last five years. so i think my concern is that if oil slows down, if texas slows down, could it have an outside effect on the data which gives a perception then that maybe the u.s. is slowing even if it's not will texas change the way we look at the economy? >> well, you make one very good point. if you go back 16 years, not five years, 16 years, if you look at growth of jobs and income in the two middle income areas for the united states, if texas were to succeed from the united states, you'll have job destruction and wealth destruction for the two middle income sectors. so without texas over the last 16 years, you would not have had job growth whatsoever for the
most vital part of american society. it punched above the weight. it continues to punch above the weight. you talk about perception. onest things that i strive to correct is that texas is not just oil. it's a highly diversified economy. you referred early this morning incredible health care sector that we have here. we're the health care center of america, houston, dallas, san antonio, even now in el paso. so you've got some counter weights here. we're heavily diversified. major job creating sectors are not in the energy patch but the energy patch is very important us to. it just doesn't stop us from moving forward and perception can become reality. so i'm hoping you're doing a great job in houston. please, broadcast a perception that oil and gas is not all that exists here in texas. it's a very diversified economy and healthy economy. although not as robust as it was when every piston was punching like you had with the energy sector as well. it's a retardant.
i doesn't push us into recession. it shouldn't hurt the economy as a whole. consumption goes up and savings go up when energy prices are down. >> yeah. well, if we haven't done it, you sure are. richard fisher, real pleasure to get you on the program. making the bull case for houston and texas overall. real pleasure. thank you very much. we'll see you soon. 24 hours ago right on "power lunch," puerto rico's government said he was bracing for legal action after the commonwealth defaulted on the debts for the second time in five months. kate kelly joins us with a follow up. what is the fallout here? >> thanks so much. when i spoke to the governor garcia padilla yesterday, i talked to him about the perception issue. he said the island can't pay the $70 billion they owe in debt. but at the same time, they continue to pay their on obligations for the most part. a lot of people think it is political posturing. here's what he had to say when i asked that question. >> everybody that see the numbers conclude that we do not
have money to pay. i inherited this crisis. and i'm just trying to solve this crisis. i'm not running anymore. so for -- to be re-elected. it's not a political issue. it is mathematic. and those that are arguing that are trying to take this into the political arena is people that are just responding to particular interest, not the interest of the people of puerto rico and it creditors. >> joining me right now on set is hector nagrone. welcome hector. i would love your take on his comments just now s this posturing? is this reality? can they pay the debts? >> well, let's take the positive first. it's a new year. you know, yesterday the government of puerto rico demonstrated willingness to pay on the constitutional obligation that's have solvency. you know, in the negative of
this is unfortunately that they continue, the administration and the government overall continue to con flat the matter. the way they posture this is all the debt is the same. all the expenses are the same. and that all the debt has to get paid after all the expenses. that, of course, isn't true. there is a capital staff with many layers. there are many different credits. >> some of them are constitutionally guaranteed, some not. >> some not. for example, the general obligation bonds, they're sol vent and enjoy the most senior levels of protection. combined with that, there is a range of expenses. not all expenses are for the police and firearm. some are for services that need to be made less redundant across the municipalities or some maybe don't rise for the central services. so by adregs the priority of those payments in terms of debts and expenses, the commonwealth could solve this problem. but instead, they choose to con flat them. they choose so to create a crisis for the purposes of advancing policy. >> they paid out a bunch of money last month in christmas
bonuses. is that kind of thing you believe should have been done? legally could they have done that? >> i'd rather focus on the expense that's are more obvious and let politically salient. puerto rico has 78 municipalities. you have the equivalent of 78 m dmvs. there is no way there is redund ancy here. it has the same number of administrators relative to students as do the larger schools in the north end of the island. that probably doesn't foot with something that is a sporsly populated rural area. >> he said a bunch of things. he said we don't want to file for bankruptcy but it looks like that may be the best course. they're trying to solve their problem with the possibility of filing for chapter 9 which they can't now do. what would the impact of that if it were to happen? are they negotiating as they go in good faith with all creditors? >> so i think -- let's say --
let's split it in two-ways. in d.c. there is momentum around this being an important cross-ice tois address. you're seeing a number of policies come up. in many way there's is an important role for d.c. to play here. puerto rico enjoys inconsistent treatment over several programs and harmonizing those to the level of other states. but the big focus is on restructuring. and what concerns me is the discussion of extraordinary unprecedented restructuring powers being afforded to puerto rico. why? puerto rico issues in the municipal market. this is not a sovereign crisis. it issues in the marketplace as a state. which means it started as a state. if you grant it unique protections or ability to restructure the debt, well, that sets an insidious beginning for undermining kpez competence in the willing to play in the marketplace. that means perhaps when another
state tries to politically want something like extraordinary restructuring powers including restructuring the financial dealings, it is incompetence in the willingness to pay will be undermined. and that's dangerous. the reason is that because it creates a lack of confidence and volatility and makes it a cost advancing necessary infrastructure across the four trillion dollar marketplace much higher and less certain. >> we have to leave it in one second. are there discussions going on with creditors working through the issues? >> the creditors stand ready to be part of the solution. puerto rico makes it seem as though they're unable. there is a protracted effort. the remaining $60 bfl the capital effect, there are a bunch of creditors ready and anxious to connect but puerto rico is not earnest in availability and willingness to connect. they want to be part of the solution. being part of the solution, the government doing its honest job and separating the prior expenses relative to the debt and getting proper policy from d.c., that's a path forward.
>> okay. so just to recap, you're saying despite a recent agreement with the electric authority, there are many other creditors that want to have discussions and they're not happening with the pace or earnestness that you might hope. >> absolutely. >> brie arngs got to kick it back you to. >> all right. kate kelly. fascinating stuff on puerto rico. thank you very much. as we continue our folk us from houston, we're going to show you the public home builders with the most xpoen suexposure to tht f you're a small business owner facing any kind of a down turn, billionaire entrepreneur is with us exclusively. he's got some real world and practical advice just for you. you're going to want to see, by the way, how he got to this restaurant, the video of his arrival is worth a look. stick around. we're back from houston with more right after this.
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meantime, we're watching shares of apple. down 2% right now. a report saying that apple's expected to cut iphone production by 30% in the current quarter. let's bring in our reporter that covers apple. he has an outperform rating on the stock and $150 price target. dan, great to you have with us. this report comes out of japan's nikkei. this is about the calendar first quarter. do you believe it? >> i partially do believe it. i think at this point it's a bit of an eyeopener in terms of the production cuts. definitely bearish going with that march quarter. now it is feeling more and more like going to the dentist in terms of what that guidance is going to be like. i do think you look at what the stock is doing, the shows there is so much bad news baked in here. does it speak to the point and demand has been soft out of the gates. it shows that apple got over its skis in terms of initial projections that they thought they were going to see from consumers. >> do you really think there is a lot of bad news baked in here?
given that we're seeing a 2% decline on this nikkei report, granted it's on a fairly flat day for the markets, it shows me that investors still want to believe that there is another shoe to drop for apple. they don't believe in the apple story right now. and that's witnessed by the decline we've seen in december until now. december with morgan stanley cut the iphone estimates. >> yeah. i think that is sort of what you're seeing here. it's hard for the street to go glass half full until you finally get that march and june numbers. i think it will be worse on the street. we're starting to see. that and until that happens, until january 26, until apple reports, the increment alibier on the street is tough to come bichlt then it comes down to iphone 7 is really that make or break product cycle. that can be a $250, 255 million unit number to restore the faith back in apple from an i poiphon perspective. near term, there is dark and choppy waters ahead and going into march, this is just another
data point that shows that excess demand has been less than stellar out of the gates. >> it's kind of -- it's got to be kind of tough to be an analyst these days, dan, with an outperform rating on a stock. i mean you are saying the latest report the white knuckle period is still ahead but maintaining outperform rating. at these levels, dan, these are august flash crash levels. essentially, you're forecasting a 50% rise in apple shares over the next 12 months. as every day passes and the stock gets lower, are you questioning that outperform rating? why should investors stick with this white knuckle period and hope that 50% returns are going to happen some time after january 26th? >> this is a great question. we saw the same thing groundhog day a few years ago going into iphone six. you have to look at the data points. you look at valuation. fundamentally it comes to do you believe in iphone 7 products? do you believe that smart phone growth is still there?
trading at seven times ex-cash. a lot of analysts, you take off the rose color glasses and realize excess demand is not what you thought it was and not what cook thought it was. but there is one you have to see the forest through the trees. you don't throw in the white towel here. it's going to be choppy, a bit turbulent over the couple four to six weeks. that's when i think we start to see light at the endst tunnel. we don't it this light is a train. i do think that it is improving demand and i think we'll look back on this period being an opportunity but no doubt that we will start to see some bad news in terms of march guidance rather than good news. that is something that investors need to brace for. >> dan, always great to get your perspective. appreciate it. >> dan ives. up next, we're going to head back out to houston where brian is drilling down, so to speak, on the oil story for us. the doi is just going positive. all three major indices are in the positive with the s&p 500 just five points off of session highs as we head to break. take a look at the big winners
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lunch." i'm brian sullivan in houston. at the overall markets, they're not soaring by any means. but we are on our highs for the day. the dow is up 40 points. not a lochlt given how the year started, i think we'll take what we can get. maybe it's good karma for being in houston. one of the reasons that we're here is to try to figure out what is going to be sort of the derivative impacts of the oil collapse? is it good because of cheap gas or is there a down side as well? few people know the consumer more than your next guest. that is billionaire tillon fratita. we were at one of his places right now in houston. earlier today we sat down with him to ask him about all this. but you also got to seat way he arrived for the interview in a way that i guess only tillman can. listen to what he had to say. >> the biggest most successful restaurant owner in the united states. you got properties all over. but this is your hometown. are you feeling any energy of
the oil slowdown? >> of course you are. it started kind of more in the middle of the year. but also in houston, texas, you have to get hit over the head a few times before you realize that it's really coming. and a lot of the energy companies have taken it slow. they didn't want to announce the layoffs. but nobody's hiring basically accept a few just for certain projects. you see it starting to drop. you're getting the cancellation and high end restaurants. you know, for the parties. you're not having -- there was a conference here every week, you know, back in '12 and '13 and '14. you're starting to feel it. it takes a while. but '16 is here and houston is going to slow down. >> the general thought is as a restaurant, hotel and casino owner, low gas prices should be a boom for you. that's all you hear. low gas is going to boom everybody. i'm sure there say benefit. but how does it balance out against the other stuff we're seeing in oil and energy?
>> thank god i'm in 40 states because the low gas, you know, i was up in new jersey day before yesterday. and to see $1.70 gas up there and so it's helping people. everybody's got $6,000, $7,000 more a year to spend in a casino or restaurant or go spend the night somewhere. but in houston, texas, though, you lost so many jobs already. where our economy was just such booming. you do feel it. we just had a great first year at the new golden nugget in lake charles. you can see that you're just not quite as busy maybe as you thought you were going to be even though we had a great year. >> you said, when we spoke a year ago in february, you said to me, we're okay now. i think oil was around $445 $45 $50 but if we get into the 30s, the you know what is going to hit the fan. >> people will turn dollars into
the 40s and 50s. when you gheet the 30s, you really can't even churn the dollars. you really can't afford to drill anymore. you just kind of just look at each other and say now what do we do? houston it is built around the service companies. there's hundreds upon hundreds. and they're starting to merge and go out of business now. >> so what changes do you make at landry's? >> you just tighten your boot straps and, we're affected by this much. and we're still, believe it or not, because the city is a little more diversified, but you make it up in the rest of the country because there is $1.70 and $1.80 gas. you may start running down negative 1%, 2%, but if you're positive 1% or 2% everywhere else, you're fine. >> you have all this diverse fiction. restaurants are the biggest small business in america. i think there is almost a million independently owned restaurants in the united states. give them -- give some of those owners advice on what to do. if they own one or two
restaurants and they're in texas or louisiana, how do they manage through this down turn? >> i'll tell you how they need to take care of their business. as soon as they start seeing it go negative, if they don't have deep pockets, don't send good money after bad money. >> what do you mean by that? >> what happens is you're going to go out of business if you don't have deep, deep pockets. the biggest mistake that small entrepreneurs make is they keep send going money which i had left in my pocket when i know i'm going bad and there is no way i'm going to save it. but i think i am because we always tend to think things are going to turn around quicker than they are. like everybody is saying by the end of '16 is going to be great. it isn't going to be good-bye the end of '16. >> it's not? >> that's two years from now. >> at best it's the end of '17. i look for it in the spring of '18. so what happens is somebody starts losing a couple thousand dollars a month or they start feeding it. two years from now they're out another auto,000 and they still have to close and they're done. and what's happened is, remember, all the new
restaurants that have opened up all over houston as well as the rest of the country is talking about small business people, it's a land large market. everybody is paying higher rents today for all the leases they signed last year and earlier this year at a higher rate than anybody he ever got. so all of a sudden restaurants are paying $50, $40, $60 a foot three years ago was $20 and $30 a foot. so there is no way all these small restaurants are going to stay in business. >> you see it tough until the end of 2017? >> definitely. when i start mid building because i can grow through it and withstand it. but what happens is everybody has partners in all the businesses. i remember when all the hotels opened up for the super bowl and then we had a crash. when you're in partnerships, everybody looks at each other and says who is going to put up the money and they say let's give it back to the lenders. i got the only hotel that was opened up in the super bowl, the weston downtown that the same
owner still has. i didn't have partners and i didn't mind feeding it. but everything is usually a partnership. people say i'm not going to come with money. you don't come with money. let's give it back. >> so a bit of a bearish view from a guy that made billions of dollars by being optimistic, he sees tough times in the oil reliant market for a couple years. he joined us exclusively on "power lunch." all right. we're here to talk about oil. what better place to talk about oil than downtown manhattan, new york city. >> good afternoon, brian. the bears intensified the selling pressure at the close today. we finished at $35.97. a drop of 2% on the day. brent was lower as well. managing to maintain that premium. pressure coming from the dollar today as it crept up. remember, we're back at that $99 handle as well. and as the equity markets were struggling, too, tension ntz middle east not posing an imminent threat right now. so the bears are back into this trade here. this afternoon, the api will set
us up for the department of energy. tomorrow looking for a drawdown in crude inven tore yiftory. that will bring gasoline to build as well. look for that. brian? >> all right. we will. thank you very much. yesterday your next guest did not move the market but his report helped move the market. brian bush of glenscape joining us on cnbc. you track data points and storage better than anybody else out there. what you wrote yesterday did alter the price of oil. where are we in america with oil supply and storage? >> supply-wise, it's not just america. it's globally. we are oversupplied with crude production right now given what the world demand is and until the economy picks up, it's going to continue. but we are at all time record highs. we have over 100 million barrels of storage in tanks above where we were this time last year. >> 100 million more? >> 100 million more than where
we were this point last year. we're 100 million more than where we were on a five year average. >> so where are we in total? i think the concern of a lot of people is this -- if storage gets filled up, then the marginal price that i'm going to get for that barrel of oil that can't be stored is zero. its into value. are we near the risking point of oil being full with storage? >> no. we still got storage available. in fact, in the u.s. we may have more free available storage than almost anyplace else. we still have a little bit of room. we have 55 million barrels just along the u.s. gulf coast, free storage space. and of that probably 30,000 is operational available for storage. so we're not about ready to spill crude on the ground. but if the overproduction globally continues at some point we might reach that, we came very close to that back in the late 90s, early '80s when we saw hyper contain. . >> is there anything you look at that gives an indication, brian,
that supply and demand, good old supply and demand will come back into balance any time soon? >> right now, i don't see it. i don't see anything on the horizon that makes me believe economics are going to pick up in china or europe. and i certainly don't see anything that makes me think that opec is going to blink or the russians are going to cut back. i think we'll see maybe another 800,000 barrels a day of decline in u.s. production because we operate on market economics. so when the market is down, we pull back a little bit. it's going to be mostly the tight oil place. but that's not going to be enough to completely outstrip the overproduction, especially when you consider new production coming on in brazil, iran coming on and the possibility of libya stabilizing. >> all right. a lot of stuff coming online. storage a little room. brian bush, a real pleasure. thank you. appreciate that. we're not done from houston. you talk about housing. coming up, we're going to show you stats around the houston home building market. what publicly traded home builders are the most exposed to
houston and parts of texas? we're going to show you that as well. plus, meet a guy that runs a business buying and selling oil field assets. he's got some really interesting thoughts about this market. we're going to continue our live coverage of texas, maybe in trouble, live from houston right after this short break. stick around.
president obama announcing new steps aimed at reducing gun violence using his authority to expand background checks and strengthen enforcement of firearms laws. the nra said his actions are right for abuse by the government. ma marco rubio was campaigning in iowa and promised to reverse any executive measures if elected. >> i oppose gun violence. i don't think anything the president is talking about will prevent it. gun violence is kplited by criminals. criminals don't care what the law s they violate it. that's why they're criminals. he's obsessed with undermining the second amendment. >> three of the largest usair lines have increased fa ed faree
june. delta raising faresed 4dz on one way, southwest quickly followed suit. american raising fares by $3. not immediately clear what prompted the price hikes. and a lowly pay phone is getting a high-tech makeover. new york city beginning to replace thousands of pay phones with free wi fi hot spots. the advertisers support service could give people living in new york city a reason to spend less from the carriers like verizon or at&t or others. tomorrow on "squawk box," stanley fisher, look forward to that very much. that's tomorrow at 8:30 a.m. eastern time. meantime, "power lunch" is back in two minutes. my language skills, i've read all of your lyrics. you've read all of my lyrics? i can read 800 million pages per second. that's fast. my analysis shows your major themes are that time passes. and love fades. that sounds about right. i have never known love. maybe we should write a song together. i can sing.
welcome back to "power lunch." time to play for a bounce in stocks or is there more down side ahead? let's ask our guests. chris, i got to go to you first. after yesterday's selloff, does the market look oversold right now? are we right to believe that it is still a buy the dip sort of market? >> we don't think we are. we think this is a sell the rally type of market. the market is not oversold here
at all. there is still something like 40% issues above the 50-day moving average. you tend to get better oversold conditions when that number is less than 20. we're 5% away from all time highs. you can't get a bottom near a top. we think this is more likely a market when you're inclined to sell bounce thanksgiving dips? >> 5% from the highs. you can't get a bottom until close to a top. how much down side to you foresee? >> we want to watch that 1990 level here. that is the key level. under 1990, it raises the likelihood that we retest those august and september lows in the $18.60. so $19.90 is key short term support. >> so that's about 26 points from where we are now. what is your take on market sentiment? >> market sent. is confusion. and when you have been doing this as long as i have, you know that the month of january is always a very peculiar month. a very difficult month to trade. you have the last two weeks of the end of the year when nobody really does anything. everybody rushes to put positions on.
you see incredible volatility in the market. we've seen higher vix. the big thing i'm looking at though is yesterday there was two billion worth of stock to buy on the close. crude oil sold off. i think this year is going to go down as the great separation of crude oil as an economic indicator and the price of crude oil just being that there is a lot of crude oil out there. >> all right. we're going to leave it. there thanks so much. for more market insights go, to tradingnation.cnbc.com. we have breaking news. phil? >> we have final talley on total vehicle sales in the u.s. for december and for 2015. the sales rate for december was 17.3 million. the real story is total sales for all of last year in the u.s., it hit a new all time high, 17.47 million vehicles were sold in the u.s. again that, is an all time high, about 700,000 more vehicles than were sold during the previous high of 2000. that is according to a research
firm. 17.47 million vehicles sold last year an increase of roughly 5%. back to you. >> all right. thank you so much. just checking auto stocks. all are down right now across the board. meantime, ranks on the rise across the nation. what effect has the energy crunch had on renters? we have that story straight ahead.
welcome back to "power lunch." the dow transportation index is turning positive. it was off by 1% at one point today. it would have been tracking for a four-day losing streak hovering near a 52-week closing low. lifting the index higher to dashgs trying to, ch robinson and southwest airlines, ups and matson up between 1% and 3%. the transports focused.
back over to nyou in houston. >> thank you very much. let's move from cars and trucks to homes. housing certainly is a big part of the energy and oil story. texas has been a growth market for many of the publicly traded home builders. here is the question, what publicly traded home builders have the most exposure to houston? luckily we have the answer courtesy of mkm partners. the most percentage of their properties in houston. lgi homes, taylor morrison, tri--point homes and beezer homes. there are many others but those have the greatest exposure to this market, many of those tox have gotten walloped by the market over the last year or so. what about commercial real estate? well, if commercial real estate slows some of the ones analysts say you have to watch are parkway properties, east group, cousins, camden and white stone. not a complete list, but some
names you should be watching if you are concerned about houston. let's bring in diana olick. if it slows down as it has according to a real estate developer we talked to earlier today we are also coming off of record years. what are you hearing on the ground about real estate and oil and texas. >> yeah, i mean, it's so interesting because as you said houston was really an amazing difference compared to the rest of the country for such a long time. it was record high prices, record high sales and the weakness we really began to see mostly on the high end but now we are starting to finally see it trickle down. the problem is the home builders pushed prices more than the resale market so they have a lot more trouble ahead. some of the builders you talked about, we actually listened closely on the conference call to what they're saying and maritage homes says they are seeing a spike in cancellation rates. so, again, the weakness is coming for the builders a lot more than in the existing home market. >> yeah, and for investors also
what you hear is you have to look on the fringes, those maybe lower-priced homes those could get hit first as oil fieldworkers lose their jobs. >> like express homes from dr who are ton, they are not doing so badly because they have those lower priced entry level homes. great stat interest united van lines, there are still more people moving into houston than moving out of houston. so we have to see that there's going to be more demand it's just not going to be nearly what we saw. >> i will say this about houston and i mean it with big texas love, houston goes on forever. you can drive for two hours in any direction and somehow you are still in houston. diana olick, thank you so much. quick break, back with more. stick around.
take a look at the airline stocks underperforming transports in today's session down about .8%, down 18% in the past 12 months, today three major airlines initiating price hikes. tonight on 5:00 "fast money" we will talk about whether those price hikes can turn this trade around, a trade that has been a losing one in 2015. brian, over to you in houston. melissa, thank you. harrison williams runs an interesting company called og clearinghouse, basically they help people buy and sell oil land and oil assets, institutions, individuals, et cetera. he has been in the business more than 25 years, harvard and mitt guy. let's get right into it.
thank you for joining us. >> glad to be here. >> before we talk about your business which is fascinating, i want to ask you saudi arabia and iran is heating up a little bit. haven't hearth as much talk about it as i would have thought. what is your take? >> i think that the psychology of market today is so keyed into oversupply that although you have instability it doesn't knock the price up like it did, say, two years ago. it's an interesting phenomenon. when the attacks on the saudi embassies in iran happened, you saw a moment tear spike for a buck and everybody said, so what and back down it went. >> supply and demand rules everything. >> absolutely. >> your business, fascinating. i own land with oil on t i want to sell it to you, you run an auction business, you and i spoke on the phone, give our viewers and listeners the state of the oil land market right now. >> what we're talking about is oil leases. that's how you sell producing oil and gas property. right now you end up with psychological problem whenever a
price goes down anybody that wants to sell says, my goodness, i'm not going to sell now, i was rich last month. anybody buying during that price crash says, i'm going to buy low, but, you know, maybe i'm going to wait a little bit to see what low is. ultimately markets adjust. we're just now, i think, getting to that point where the markets adjust and the markets will start to function reasonably again. >> it sounds just like what happened in the housing market, right. >> no question. >> when things are bad sellers thought my house is worth x, buyers said, huh-uh, your house is worth x minus this, took a while for them to come together. any sign that the oil market is coming together? >> i think probably so. you're starting to see the banks apply pressure to companies, that will start properties flowing to sell. there's plenty of money out there trying to buy low and certainly that money if it's not convinced that we are at the absolute low point we're certainly in the bottom
quartile. at a certain point they will start pulling the trigger and you will get a market that's much more active. >> are you seeing new people come into the oil market, maybe some distressed folks, bottom feeders, people who don't know about the business thinking if it's down this much let's come in. couple money maybe. >> i don't find any money to be dumb and i've been looking for a long time. >> fair point. >> certainly when a market is in distress it attracts money so you do see new people but we're used to new people. we welcome them. >> and their money. >> yeah. >> all money is smart. >> you bet ya. >> folks, we will head off here. i want to do a couple conclusions based on a couple days in houston just quickly. houston is fine for now, nobody is saying houston is facing an imminent collapse, harrison told me yesterday we are a tough people but this year will be an important year. till man said it may be tough forrer for a couple days.
rig counts ended below 700 for the first time since 1999. will a texas slow down impact the national data, richard fisher says no. remains to be seen. the big thing is this and i will end on it, this is not like 1986 because they didn't have a lot of debt then. all the debt that's layered on the energy market maybe truly does make this time different. by the way, every oil ceo in america is ironically not here, they are in florida for a conference so we're going to florida and we will be reporting there live. we have a couple ceo exclusives from florida. we will be back with more oil from south florida tomorrow. >> the debt point is a good point. that's why we are watching the high yield markets so much. harrison makes a good point that we are so oversupplied that maybe risk premium simply does not exist to the extent that it has existed in the past in the oil market. we saw no reaction practically and maybe that's why they are not talking about it down there where you are. >> that's right. that's right. it's all about supply and demand
economics 101, melissa. >> looking forward to your great stuff coming from miami tomorrow on "power lunch." i will see everybody 5:00 "fast money." thanks for watching. the "closing bell" starts right now. hi, everybody, welcome to the "closing bell." i'm kelly evans down here at the new york stock exchange. >> and i'm bill griffeth. investors being taken on another wild ride today. the dow is down just 4 points but you see the volatility of the day. the dow was down 110 points at the lows, it rallied into the green for the second time, but where are we going to end up, that's the big question, you will have to stick around to find out at the end of this hour, we had a wild ride yesterday. >> that's right. the biggest drag on the dow today is walt disney. mik i don't remembery down grading the stock from neutral to a buy saying fears of cord cutting and espn will out