tv Wall Street Week FOX Business May 1, 2016 9:30am-10:01am EDT
we've talked about anything that affected people and their money. from fox business headquarters and new york city, the new "wall street week." anthony: welcome to "wall street week," the show of record for the long-term investing, i'm anthony scaramucci. >> and i'm maria bartiromo in this weekend for gary kaminsky. good to see you, anthony.
the collapse in oil prices is the biggest economic story since the financial crisis. crude oil prices have plummeted 60% in five years, leading to massive layoffs, production cuts, 2016 brought relief to the energy sector with prices rebounding off of decade lows. anthony: the question on investors' minds, what happens next? we welcome legendary oil investor billionaire boone pickens, chairman and ceo of b.p. capital. what do you see going on with oil today? >> it's going up because you hit the low in january, $26.19. back up to $43 today. >> yeah. >> okay? now you're headed, you hit the low, and when you went back and checked it, we went back to 26 twice, now you're going to go twice that in 12 months. by the end here, you'll be back to 50. anthony: you think there's a lot of governmental
intervention in the market, saudi arabia in particular, and opec driving that? or is that fundamental supply and demand? >> no. we've had five times, since 1980, we have hit a low, rebounded within 12 months. but four times the saudis, they balanced the market. they told us before this one went down, they would not do that anymore. they're going to hold their production at ten million barrels a day, okay? now, that's exactly what they did, and guess who balanced the market? us. the united states. >> that's what i want to ask you about. if you're looking at oil to be back around 50, $60 by the end of this year which is what you're predicting, how does the production and the supply part of the story fill in there? the u.s. is now this major energy producer, doesn't the supply number -- don't supply numbers go up, and wouldn't that mean that oil prices go
down? >> why would supply go up? >> because of the u.s. and production. >> no. we had 1609 rigs running in november of 14. now, we have 342. >> okay. >> so they shut it down. they made us the swing producer and the swing producer of the united states, they do it all off economics. when the price went down, the rigs stopped. anthony: because of the low price, boone, do you think there is more bankruptcies on the horizon for the industry? >> yes, definitely will be. >> this is the whole story line and the debate around saudi arabia. saudi arabia had a real plan in place, they wanted to shut down the shale business in the united states. they did it! >> they did it, but we'll see how it goes from here. i mean, we'll recover. the u.s. industry will recover, but you're going to be up to
$70-80 by 17. >> by 17? anthony: the question investors have is who's going to own the assets in a post bankruptcy situation for a lot of the companies? >> who is? anthony: yeah, who's going to own it? >> they're going just move from one to the other companies. you remember exxon was like number three on gas production? but they're now number one. how did they do it? bought xto, bought a big independent, and exxon is number one. >> i remember the last time, well, i wasn't at the market this time, but i read about it, and remember when exxon got together with mobil, that was a period when oil prices were so low. when we see prices go down, you see deal-making, consolidation, that's what you're looking for now? >> you're going to have deals, no question, but we'll see. pioneer has so much oil, it's incredible. but so does enron, anadarko,
all of them well-financed and everything. anthony: you are bullish on those stocks? >> i am. i am bullish on them. >> we want to hear more what boone is bullish on. stick around. we'll have more after this short break. >> boone pickens says there is more opportunity in energy. what's the best way to invest in legendary trader mark fisher has that next? what will the outcome of the election mean for oil and our which allergy? eees. bees? eese. trees? eese. xerox helps hospitals use electronic health records so doctors provide more personalized care. cheese? cheese! patient care can work better. with xerox. that's it. how was your commute? good. yours? good. xerox real time analytics make transit systems run more smoothly... and morning chitchat... less interesting. transportation can work better. with xerox.
. maria: welcome back to "wall street week." we are speaking with oil titan boone pickens today. anthony: and also joining us legendary trader mark fisher, founder and ceo of nbf clearing corporation. welcome, mark. >> how are you? >> doing great. boone is looking for $50 a barrel by the end of the year or 2016. what's your outlook, mark? >> the last time i made a prediction i was dead wrong
when i said oil wouldn't go below 80. oil is in a band between 30 and 60 and i think for an investor, you know, anywhere between 35 and 55, like boone said, most of the companies are going to -- the strong ones will do quite well. maria: do you want to be buying the commodities straight out? want to be buying some of the companies that are doing production? you know, boone is expecting a huge wave of consolidation and deals, is that one way to play it? >> well, let me say i'm honored to be on the show with boone, he may not know this, he and i were on opposite sides of the largest crude oil operation that took place. a 7,000 lot trade that went down in one shot right after the iraq war and there was an arbitrary on the first and second month, and i was on the other side of the trade. maria: that was you? you remember that? >> i know who mark is, so yes. i didn't know we were on the
other side of that trade. >> we both made money, it was good for both of us. see, to me, i'm more interested in the opportunities in natural gas than i am in crude oil for a couple of reasons. number one, when you have someone as powerful as the prince of saudi arabia who could move the market $5 either way with five words out of his mouth, that's not necessarily a market that you want to go ahead and put eggs in your basket. because as you saw what happened, the prince, the 30-year-old prince out of saudi arabia scuttled the entire deal worked on for over two months, you know, in five minutes. but to me, there's a lot more catalyst going on in natural gas going forward than crude oil. and obviously a lot of the companies that boone mentioned will thrive if natural gas picks up. number one, i don't think we're going to see a repeat of the weather that happened this past winter. number two, with the l and g filing getting on track in the united states with increased exports to mexico, with
increased demand, more conversion from coal to nat gas, and if you get a typical winter and maybe a cold winter and a hot summer, you could see the price of natural gas go up by 50, 60%. to me, that's someplace where there's a lot more catalyst and you can't have one or two people influence the price in five minutes by 10%. anthony: mark, from a trader perspective, you're long at this point? >> yes, i'd definitely be a buyer of dips in natural gas and crude oil if i was looking to do something, it's a little esoteric, front spreads in heating oil and gas lean and crude, because i'm sure boone knows, with the market being at $43 in wti, the front month spread in brent went to backward state for the first time in god knows a long time. maria: you agree with that? natural gas? >> i agree with everything mark said.
i'm long natural gas, too. long on oil and long on natural gas. he's right, you can get a lot more leverage off the gas than you can off the oil. anthony: you're long fundamentally through the end of 2016, though, is that correct? i sort of think this is going up from here. >> i'm not long nearby contracts. i'm long out. anthony: outdated contracts. >> right. anthony: what do you think about that, mark? does that make sense? >> it does, the problem is, boone knows, long contracts, you expect the price to be $50-55 toward the end of the year, the market is in a tango state, the market is priced in, the spot price is 43, the market in december is it 48? i don't know where that is right now. so again, boone's 100% right. to me, i'm all about where is the biggest roi, return on my investment in energy space? with the leverage and the price of natural gas getting decimated over the last year, year and a half, there's more
leverage and less risk buying dips in natural gas than there is in trying to go ahead and make the extra four or five dollars there could be in crude. >> i think it's more than four or five. maria: more? how much? >> that's the only place that mark and i haven't agreed on everything he said. i think there's more there. maria: and part of this is -- as we've been talking about saudi arabia. number one, we had the production freeze, nothing came out of it. the saudis wouldn't do anything because the iranians wouldn't partake, and you hear saudi arabia saying we may consider taking iran co public, in an ipo, would you buy that deal? >> no. no. maria: why? >> i wouldn't buy it with stolen money. [ laughter ] >> why? >> well, do you think you're going to have stockholders' rights? maria: no. >> zero. how do you like that? anthony: what about a dividend?
>> i'd rather buy pioneer. anthony: what are the top three names, boone? >> mine? anthony: yeah, top three. >> pioneer, enron, anadarko. anthony: if you had to pick a big oil, which is the best of the big oil? >> i'd probably pick chevron. anthony: chevron. >> but big oil, i don't know what they're going to do, i don't know what their future is. they now have turned their end decline on production, they have to acquire reserves, they probably aren't going to find it, and they missed the shale play. chevron is big in west texas. anthony: do you think any of the oil companies would cut their dividend near-term? >> it will be horrible if they do. i'd rather cut capex than i would -- but exxon is
consistently buying their own stock. i would stop that and increase dividends. maria: what about is this a dividend play then, mark? do you agree with that? >> you know, honestly, when it comes to which individual energy stocks i would leave that to boone. i think that cutting capex is a good idea and returning more value to shareholders via, you know, buybacks and dividends is better, because why keep investing capex if the price is so low? anthony: boone, mark, stick around, more after this.. announcer: fight to frack, a major campaign issue for our presidential candidates. but what are the real consequences for our country? boone pickens and mark fisher are next. >> banning fracking altogether is insanity. is insanity. >> absolutely nuts.
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. anthony: welcome back to "wall street week." joined by boone pickens and mark fisher. a recent "gallup poll" shows americans' opposition to fracking is now at 51%. maria: yeah, bernie sanders made fracking a central part of his presidential campaign forcing others into the discussion. mark, do you worry that the next president could do to oil what the obama administration did to the coal industry? we know it wasn't good? >> i don't really -- i'm a little concerned whoever the next president is and what they do to the oil industry and the gas industry. i think banning fracking altogether is insanity. i mean, it could be done -- it could be done very efficiently, obviously with a lot of safeguards to protect the environment. there's new technology to replace the water that goes with fracking, but just to go
ahead and just ban it, we're going to end up creating our next energy crisis ourselves. with we have the opportunity to actually be the world's swing producer and energy producer in oil. it's nuts to me. anthony: what do you think, boone? >> absolutely nuts. you're producing globally every day, 94 million barrels of oil. 70% of that goes to transportation fuel. think. maria: wow. >> you shut that off, you shut down the world. maria: not exactly going to have solar energy transporting you from one place to the next. >> solar and wind are power generation, they are not transportation fuel. they don't even compete. maria: can't. >> no. anthony: boone, who would be the best candidate to become president related to energy? >> probably trump. anthony: why? >> understands the business better. maria: what do you make of this election here?
you've got a lot of mudslinging, we know, but that's politics. how do you think the economy, the markets react to a donald trump presidency? >> i think that we've got to do something about the 19 trillion in debt. he knows you have to have an economy that is better than 2%. 2%, we're in a death spiral, so i think he understands that, and consequently, i think that he will see the best way to rebuild the economy is off the back of cheap energy. we have the cheapest energy in the world, and we're abundantly supplied in america. we have more natural gas than anybody in the world. not the most oil, but we are in the top two. anthony: what do you think, mark? who's the best candidate for
the energy industry, but also the broader economy? >> anthony you and i had a discussion before the show, i think there should be a third political party in the united states called none of the above in all of the elections, if none of the above outpolls both candidates, both candidates are taken off the ballot and you have another election. i know that's completely out of box. with that being said, i think that the best chance that donald trump has, okay, is if he goes ahead and announces who his cabinet, who his top 12 -- secretary of state, you know, everything before the election, not only is he running but his entire group is running against the democrats. maria: that's an important point that you make because people want to see that he's going to surround himself with smart, informed people. take it to the other side, boone. a lot of people talking about donald trump being unable to beat hillary. what does a hillary clinton presidency do for markets and the economy?
>> well, hillary clinton is -- she said the same thing that bernie did. that was, no fracking. that's nuts. maria: what about the broader economy? >> pardon me? maria: broader economy. she is going to raise taxes, partly because she wants to spend it on things like health care. anthony: and infrastructure. she has that in her plan as well. >> yeah, but infrastructure should go back, if you're going to do that, go back to fdr, do the wpa. pay people to work, but they work. anthony: then those wages recirculate back into the economy which leads to some modest growth. >> exactly. but her plan will not get you 5% growth. no way. anthony: do you think that -- you looked at natural gas industry, a democratic
president does what to that industry? is that a massive recessionary force in that industry? >> a democrat, you say? anthony: yeah, either of the two candidates? >> all they talk about is renewables, wind and solar. wind and solar, you know, it doesn't -- wind doesn't blow every day and the sun doesn't shine every day. wind and solar will never be a big percentage of power generation. it gets 10%? sure it can get there. maybe 20. but you have to do that with natural gas is where you are on power generation. anthony: mark, what kind of policies would you recommend to the next president for the energy industry, and specifically the natural gas industry? >> in terms of energy infrastructure, i think that if government tries to spend the money, it's going to do a terrible job. there's got to be some type of quantitative easing, some type of incentive to industry to
create a qe effect on infrastructure, where it engages companies to go ahead and hire more people, train them, reeducate them, and build up this country's infrastructure, roads, bridges, everything the country needs. if the government spends the money, it's never going to work. anthony: you're talking more tax reform and incentives to help the private market, basically? >> yeah. maria: that's what everybody says. tax reform is necessary because of the highest corporate rate in the world. how big of an impact would tax reform have if the markets started sensing we're going to get a leader in there that's actually going to implement tax reform in year one, what happens to markets? >> you can't. i mean hillary's approach is raise taxes. that's a killer. it's a killer. we already have the highest tax rate for corporations in the world. anthony: so a tax cut, though, market rallies off a tax cut.
is that fair to say? >> yes. anthony: what do you think, mark? tax cut, market rallies? >> i think the market is in such a place, look what's happened in the last couple months, you have terrible earnings reports and the market keeps, you know, apple reports, the market holds its own. that's because really these companies in the s&p 500 or the dow, this is the place where people can put their money. i'm involved in creating the essential 40 companies in the united states, like a new type of etf. where are people supposed to put and trust their money? trust it in government bonds yielding sub 2%? you know with the companies, with the -- i view the market as more of, there's no other place to put your money at this point. anthony: boone pickens and mark fisher, thank you for joining us. we'll be back next week, and two weeks "wall street week" is heading to the salt conference
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