WEBVTT - Point View's Petrides: Energy Cos. Should Issue Stock (Audio)

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<v Speaker 1>Signed Charlie public to dal. The SMP, NAZ DAK all

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<v Speaker 1>Stocks are lower, the SMP five hundred index down sixteen

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<v Speaker 1>to two thousand eighty, a drop of eight tenths of

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<v Speaker 1>one percent, naztack down forty four points, the drop of

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<v Speaker 1>nine tenths of one percent. Town industrials down one twenty

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<v Speaker 1>a drop of seven tenths of one percent, Gold up

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<v Speaker 1>eleven dollars an ounce to twelve eighty six, a gain

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<v Speaker 1>of nine tenths of one percent. And crude oil below

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<v Speaker 1>forty nine dollars. Apparel now for sixty eight down forty cents,

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<v Speaker 1>a drop of eight tenths one percent. I'm Charlie Pelt

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<v Speaker 1>and Dat's a Bloomberg business splash. Chipella thanks so much

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<v Speaker 1>time now for the t F report brought to you

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<v Speaker 1>by Vaneck Vectors ETFs. Expect more from your muni's target

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<v Speaker 1>tax exempt income by majority and credit quality AH with

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<v Speaker 1>low cost ttfs, visit vanek dot com slash Muni Vanek

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<v Speaker 1>access the opportunities for a report on e t F

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<v Speaker 1>s our Own Catherine Cowtery, Peru maybe out, Pakistan maybe in,

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<v Speaker 1>and China's allocation could more than double. Investors are awaiting

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<v Speaker 1>m s c i's annual review and potential changes to

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<v Speaker 1>its spense mark in taxes. Bloomberg Intelligence analyst Eric Beltuna

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<v Speaker 1>says Pakistan was downgraded to frontier market status in two

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<v Speaker 1>thousand eight and their speculation it could be raised to

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<v Speaker 1>emerging status again. He adds there is positive momentum in Pakistan.

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<v Speaker 1>It's got a infrastructure project with China that's moving forward.

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<v Speaker 1>It's got population where half the people are under twenty five.

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<v Speaker 1>It's larger than Russia population wise, um, but it's frontier.

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<v Speaker 1>It's got a lot of issues as well, but it's

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<v Speaker 1>up nine percent this year. There's an e t F

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<v Speaker 1>focused on the country, the Global x MSCI Pakistan E

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<v Speaker 1>t F take her p A K Valtunist on the

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<v Speaker 1>impact of a possible ms C I move. Even if

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<v Speaker 1>Pakistan makes it into the MSCI Emerging Markets, it would

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<v Speaker 1>be point one waiting, I mean almost invisible. If you

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<v Speaker 1>add it up, that's about two point four billion dollars

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<v Speaker 1>worth of by orders for Pakistan stocks. P a k

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<v Speaker 1>has about six and a half million dollars in total assets.

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<v Speaker 1>That's your Bloomberg ETF report. I'm Katherine Cowdery is taking

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<v Speaker 1>stock with Kathleen Hayes and Pim Fox on Bloomberg Radio.

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<v Speaker 1>Shares of Apple are down about one and a half

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<v Speaker 1>percent today as the company begins its annual developers conference

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<v Speaker 1>in San Francisco. One of the announcements is that the

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<v Speaker 1>Apple will connect Siri, the voice activated application, with other apps,

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<v Speaker 1>and also it will be made to work on Mac computers.

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<v Speaker 1>The company also ditching its os X brand for Mac

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<v Speaker 1>os and the Apple Watch will get a faster operating system.

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<v Speaker 1>Find out more. Let's bringing John Petridis. He is Managing

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<v Speaker 1>director Portfolio manager, point View Wealth Management based in Summit,

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<v Speaker 1>New Jersey. John, thank you for being with us, Thanks

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<v Speaker 1>for having me on. So are any of these announcements

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<v Speaker 1>today from Apple enough to make you bullish on the

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<v Speaker 1>stock or are you still a bear? Still bearish on

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<v Speaker 1>the stock? However, I do like that they're emphasizing the

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<v Speaker 1>Apple TV. Um. I think that is where Apple needs

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<v Speaker 1>to be concentrating all of its efforts. And now that

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<v Speaker 1>you can download apps through the Apple TV, uh, you know,

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<v Speaker 1>the goal would be for you and I to ultimately

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<v Speaker 1>build our own ala card cable model through Apple TV

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<v Speaker 1>and pay for the apps for each indidividual show rather

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<v Speaker 1>than a Comcast or FiOS or someone like that, you know,

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<v Speaker 1>two hundred a month. You know, let's pay it through

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<v Speaker 1>Apple TV just for the shows that we want, as

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<v Speaker 1>opposed to watching twenty at a five hundred different shows.

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<v Speaker 1>So how important is this? Is this like, oh, it's

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<v Speaker 1>another cool step, you know, just add on a little bit,

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<v Speaker 1>or is this something that is potentially the you know,

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<v Speaker 1>the big move that Apple needs. No, we're not there yet. Um,

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<v Speaker 1>That's why I said this isn't This is going in

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<v Speaker 1>the right direction, but you're far from where Apple needs

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<v Speaker 1>to be. You know, there are rumors a few weeks

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<v Speaker 1>ago that Apple was thinking about buying Time Warner and

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<v Speaker 1>taking over HBO and taking on some other content. That's

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<v Speaker 1>what Apple needs to do. They need to get away

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<v Speaker 1>from being a pure hardware company and relying on iPhone

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<v Speaker 1>sales and iPhone upgrades every two years. Uh, to be

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<v Speaker 1>the driver of the company. They need to get their

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<v Speaker 1>business model to where you and I are paying Apple

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<v Speaker 1>a hundred dollars a month for services um. And if

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<v Speaker 1>they don't hurry up on the content side, the meat

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<v Speaker 1>be a content side, which is why I think they

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<v Speaker 1>need to be They're gonna fall far behind because Google

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<v Speaker 1>has YouTube, Facebook has Facebook Video, Amazon and building at

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<v Speaker 1>its own content, Netflix has its own content. I mean,

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<v Speaker 1>the world is changing an Apple and Tim Cooke's vision

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<v Speaker 1>right now is still focused on getting an iPhone in

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<v Speaker 1>everyone's hand when they should be working on the media.

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<v Speaker 1>Tell us about Alexa from Amazon and how Apple needs

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<v Speaker 1>to compete in that arena. Well, they are so. Alexa

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<v Speaker 1>is a cute little toy that you could have in

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<v Speaker 1>your house that you can be voice activated in Apple is.

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<v Speaker 1>There have been rumors that Apple gonna come out with

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<v Speaker 1>their own version of an Alexa. However, I don't know

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<v Speaker 1>about you if you have an iPhone, but Siri has

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<v Speaker 1>been a letdown experience for me personally, so you know,

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<v Speaker 1>I find myself yelling at the device more than now.

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<v Speaker 1>It's in and it still can't understand what I'm saying.

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<v Speaker 1>So the fact that they're focusing on Siri um onto

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<v Speaker 1>other devices, I think you need to work on series

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<v Speaker 1>application itself and U you know that would be the

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<v Speaker 1>benefit off if they can compete versus in Alexa. How

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<v Speaker 1>would you compare Siri to the voice activated function on

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<v Speaker 1>say the Samsung Note M. You know, I haven't played

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<v Speaker 1>with the Note well enough to compare one versus the other.

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<v Speaker 1>All I know is that for me. You know herey,

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<v Speaker 1>we're now going on to iPhone seven that will be

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<v Speaker 1>introduced in September. You know here he came out of

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<v Speaker 1>the four s, which is what four years ago, and

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<v Speaker 1>I still think that application is subpar at best. Now, John,

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<v Speaker 1>I want to turn your attention away from technology when

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<v Speaker 1>it comes to mobile phones and computers and turn your

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<v Speaker 1>attention to energy and high yield bonds. What do you

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<v Speaker 1>recommend individuals do and are their bonds or even stocks

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<v Speaker 1>that are in the energy industry that you think are compelling?

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<v Speaker 1>Vis right, So I would have continue to avoid the

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<v Speaker 1>energy high yield bond space for now. Go back to

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<v Speaker 1>January and say Bruary, when the world seemingly was falling

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<v Speaker 1>apart and yields blew out on the high yield bonds.

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<v Speaker 1>They particularly for energy companies when the price of oil

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<v Speaker 1>is now was at twenty five bucks you know barrel.

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<v Speaker 1>Now we're at fifty dollars at barrel. We've nearly doubled.

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<v Speaker 1>And you know what I think energy companies should be

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<v Speaker 1>doing today is actually issuing stock. You know, there were companies,

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<v Speaker 1>the energy companies that were issuing stock back in January,

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<v Speaker 1>figure in early March, really in the in the in

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<v Speaker 1>the eye of the storm. Well, now with the price

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<v Speaker 1>of oil doubling and in certain cases of energy stocks up,

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<v Speaker 1>you know a hundred hundred fifty since then, now is

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<v Speaker 1>the time companies should be issuing stock and focusing on

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<v Speaker 1>their balance sheets because there is no uh, you know,

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<v Speaker 1>the supply demand situation is although improving because drowing has

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<v Speaker 1>really falling off a cliff in the US. You know,

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<v Speaker 1>these companies need to start pumping out oil, and now

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<v Speaker 1>is the time when they should be shoring up. They're

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<v Speaker 1>like their balance sheets. So I think now is the

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<v Speaker 1>time energy companies should be issuing stock to to focus

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<v Speaker 1>in bringing up liquidity so basically then you're saying you

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<v Speaker 1>would buy some energy stocks. What about Master Master Limited Partnerships. Yeah,

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<v Speaker 1>I think that's where you're finding the area of the

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<v Speaker 1>energy space that should be issuing the most in terms

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<v Speaker 1>of stock. Because m LPs are usually the oil and

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<v Speaker 1>gas pipelines, right they transport oil from point A to

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<v Speaker 1>point B, and building out and maintaining those pipelines is

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<v Speaker 1>very very expensive to do, and you need access to

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<v Speaker 1>the credit markets, and right now, the credit markets are

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<v Speaker 1>issuing bonds at very high interest rates because they're very

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<v Speaker 1>concerned about the price of the commodity. So in order

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<v Speaker 1>to UH to N m LPs pay out a big

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<v Speaker 1>portion of the cash flow in the form of a dividend.

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<v Speaker 1>So I think investors would actually feel comforted if MLP

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<v Speaker 1>companies on the back of this stock rally issued shares

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<v Speaker 1>freed up liquidity. That would that would UH secure the

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<v Speaker 1>dividend because many income oriented investors, those that are in

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<v Speaker 1>retirement are focusing on MLPs because they need that source

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<v Speaker 1>of income, and that would actually help the space a lot.

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<v Speaker 1>I mean, how often do you have someone on talking

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<v Speaker 1>about companies that should be issuing stock. It's usually the

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<v Speaker 1>opposite right, Usually the reward companies who buy back their shares.

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<v Speaker 1>But here in the energy space, now is the time

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<v Speaker 1>where company should be doing In the opposite, John, is

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<v Speaker 1>now the time to invest in a company such as

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<v Speaker 1>Chevron paying a dividend of a little bit more than

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<v Speaker 1>four Yeah, Well, we believe in diversification and despite the

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<v Speaker 1>rally in oil, you never know where the commodity is

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<v Speaker 1>going to be, So a Chevron, an exn Mobile, a

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<v Speaker 1>British Petroleum, you know, those big cat super major that

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<v Speaker 1>are integrated, that have the upstream, that have the mid

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<v Speaker 1>stream and a downstream on the energy are the right

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<v Speaker 1>places that investors should be in because you can weather

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<v Speaker 1>the downturn um if the price of oil was to

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<v Speaker 1>go down, and you have a diverse business model and

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<v Speaker 1>you'll benefit on the upside. So you know, it's it's

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<v Speaker 1>it's unless you should be diversified across the different sectors,

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<v Speaker 1>and we would recommend that you hide in the supermajors.

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<v Speaker 1>Final comment on final question, could you wagh In on

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<v Speaker 1>Microsoft acquiring LinkedIn? Sure? I think that this was a

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<v Speaker 1>very interesting acquisition on Microsoft side, but I think it

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<v Speaker 1>was very defensive in nature, and what I mean by

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<v Speaker 1>that is Microsoft paid a forty nine percent premium for

0:10:17.120 --> 0:10:20.960
<v Speaker 1>linked In nearly eight or over eight times sales. And

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<v Speaker 1>if you're a shareholder of Microsoft, which which our clients

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<v Speaker 1>do own, it's not a creative or it will be

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<v Speaker 1>dilutive until two thousand and nineteen. And that's on a

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<v Speaker 1>non gap basis. So what does that mean. That means

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<v Speaker 1>you will not see a hit to the bottom line

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<v Speaker 1>to the positive side for Microsoft cheryld's two thousand nineteen.

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<v Speaker 1>And that excludes option dilution. And you know that there's

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<v Speaker 1>massive option dilution within for LinkedIn shareholders. So and the

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<v Speaker 1>reason why I think this is defensive is Microsoft described

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<v Speaker 1>themselves as a platform and productivity company, and I think

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<v Speaker 1>this acquisition they buy it ahead of someone like a

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<v Speaker 1>Facebook or Apple or some other laws or Google. John

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<v Speaker 1>but Tradeing, thank you so much for joining us, Managing Director,

0:11:02.400 --> 0:11:07.200
<v Speaker 1>Portfolio Manager, point View Wealth Management. The Microsoft LinkedIn deal

0:11:07.280 --> 0:11:11.840
<v Speaker 1>defensive on Microsoft's part, Still bearish on Apple. This is

0:11:11.880 --> 0:11:13.280
<v Speaker 1>taking stock boom Brig Radio