Broadcasting live to New York, Bloomberg to Washington, d C. Bloomber to Boston, Bloomberg twelve to San Francisco, Bloomberg nine to the country and around the globe the Bloomberg Radio plus a Bloomberg Got Gone. This is taking stock. Oil prices are down nearly three percent today, down a dollar twenty two a barrel, the forty one fifty four. This comes after US inventory data shows that domestic inventories of crude oil and petroleum products rose last week to a record.
We're gonna try to find some value looking at the energy industry right now. Let's get value from Charlie Pellock. He's in the Bloomberg newsroom with the Bloomberg Business Flash, and I think pim Fox. Let's begin with those energy stocks. We've got trans Ocean and Excel Mobile falling at least one percent. They're leading energy company's lower crude as PIM mentioned, down now buy about two point nine percent. Stocks are falling. Sm P five hundred index down by the most in
more than a week. Energy producers tumbling along with the price of crude oil. We're brought to you by national realty Providers of one hundred percent satisfaction guaranteed New York City realty investments. See them at n r I A dot net SMP five hundred index down six to drop there of three tents of one percent to seventy five down, Industrials down thirty four, a drop of two tents of one percent to eighteen thousand four d az stackdown eighteen to fifty two oh six, a drop there of four
tenths of one percent. To Bracco Lacos is head of Equity Strategy and Global quad Research at JP Morgan Chase Bank, and he talked about what it would take to keep markets moving higher. We do need to see I would say, one, still a relatively stabilizing dollar trend, and we need to see oil prices that continue to stabilize and not the
goal let's say the forties um. And we would hope for interest rates to stay a little because if you look at this broader profits cycles has two thousand and seven, the biggest contributor to earning his growth, in my opinion, has been one factor interest expensed savings that has basically end up resulting in record high margins about ten point seven percent for SMB that was saw in the last year and right now we've got the ten year up ten thirty seconds, Zeal there one point five one and
Gold up by thirteen seven game narrow four tenths of one percent. So again recapping a move law for stocks twenty eight minutes to go ahead of the close SMP down six a drop of three tenths of one percent, and the three thirty two on Wall Street. Now, let's take a look at other news from around the world. Thank you, Charlie from the Bloomberg News room. I'm Rainey in Essensio. This news update is brought to you by Blue Jeans Enterprise Video Club. See Faces, Emotions, Energy, See
the People your team's video from any device. Start a free thirty day trial at blue jeans dot com and click the ray you Mike. Blue Jeans Work Smarter, Connect Better. Liberal groups want Hillary Clinton to reject appointments from Wall Street. Bloomberg's Bob Moon has the story. It is a page right out of the campaign playbook of Bernie Sanders. There's a promise if elected president Goldman Socks is not going to have a Secretary of Treasury for a sad administration.
An alliance of fifteen progressive groups several of which backed Sanders, is pressuring the Democratic presidential nominee to keep people connected to Wall Street out of her transition team in the White House if she wins the November election. Move on dot Org, Democracy for America and other groups say rejecting people with Wall Street connections would demonstrate Clinton is serious about her promises, such as further tightening regulations on the
financial industry. Bob Moon Bloomberg Radio in Turkey, president ar receipt type of air Towan is turning of the heat on the nation's banks. He says if they do not lower mortgage rates, he'll consider it an act of treason. The market average is close to fourteen percent. Air one says rates should be cut to about nine. ESPN says veteran sportscaster John Saunders has died. No cause was given then.
John Saunders was sixty one years old, and the city's Department of Health and Mental Hygiene is expanding the guidelines on who should be tested for ZEKA. It will include anyone with the most common symptoms fever, a widespread skin rash, joint pain, or conjunctive vitus. Officials earlier said only those who had traveled to an affected region or their sexual partners should be tested. Global News twenty four hours a day, powered by more than twenty undred journalists and analysts in
more than one twenty countries. I'm Rainy in Essensio. This is Bloomberg, Charlie, and we thank you. What again recapping Stock's law SMP five hundred index down six so drop there are three tenths of one percent to twenty one seventy five. I'm Charlie Palatine. That's a bloom Bread business flash. You're assuming to taking stock with pim Box and Katholeen
Hays on Bloomberg Radio. For more than two years, strong oil production from the Organization of petroleum exporting countries and those outside the blocks such as the United States and Russia, have created a supply overhang that has dragged the price of oil down. Oil today down nearly three percent. Down A dollar and a quarter forty one dollars fifty three cents will buy you that barrel of West Texas intermediate crude. So what prices low? Are there bargains? Is there a
value play? Let's find out from Bob Robodi. He is the founder and the president of Roboti and Company, and he joins me in the studio. Bob, thanks for coming in. Always great to see you. Great great tell people a little bit about your background. How long have you been doing this looking for value and energy and maybe tell us have you seen this kind of market before? I guess my first energy stock and that one of my first investments was forty years ago, so I've got forty
years of history. And of course a lot of things have transpired in the oil business since then, so we've seen many things like this, you know, as they say, history does rhyme, and we've seen things a lot worse than this, and we've seen things that are pretty much analogous to this. In the meantime, it's a great opportunity to be able to buy things if you're a long term investor, long term investor and focused on deep value. Uh right, the deep value, and that is predicated on
what we think the earnings power the business is. So that's what you know. It is not an asset that is cheap and below book, but as an asset that will generate cash flows that is significantly greater than the current implied value of the company. Is all right, let's talk about one just maybe as an example, you were taking a look at one of the oil drilling stocks at Wood Oceanics. Tell us about how that exemplifies your strategies. Sure, Actually, at what is the first stock I did buy in
the energy business? In V six, I first bought the company, so I have a very long history with the company in the business. The one thing I will tell you that's negative about the business is UH, it is uh there are no barriers to entry in the business. And you know, one of the large players in businesses seed Drill, wasn't in business ten years ago, so that's one thing you have to bear in mind. Uh. And a number of years ago we realized that this was going to
be a problem and sold down our interest. But more recently, what we think is the valuations today, Uh, we think the earnings power of the business is six dollars a share. We think we understand the fleet having invested in it for all that time, and really think fleet dynamics are supply is declining because the old vessels are not competitive, are going away, and we think the demand will be there because we think deep water exploration development is still
something that is part of the major's UH. Combination of how they produce well, so that just under ten dollars a share nine dollars in eighties six cents, you say that the company is gonna earn six dollars a share. Right, the the fleet is a relatively small fleet, but it's all new equipment and so therefore it has thirty year life to it. And that's what it is if you've got supply demand balance of the fleet, and we think
that that happens sometime over the next few years. When that happens, exactly, we're out exactly sure, uh, And but we also believe the balance sheet is such that they have the staying power that they're gonna be there when those earnings do come to play. All right, Now they're based in Houston. Now I'm gonna take you across the ocean, and i want you to focus on a company. It's based in London, uh, Subsea seven, but it's a Norwegian company.
What drew you to Subsea seven, what drew is to Subsea seven was that with Oceanics so understanding the all shore drilling business and how all shore development works, and there is no barrier to entry in that business. Subsea seven we can trust as a business that has a barrier to entry and people don't perceive that, uh, and so we think that's a very significant part of it. We also think, of course today there's a number of
positive attributes. Subsea seven has a very strong balance sheet four five hundred six hundred million in net cash on the balance sheet. It's competitors over the last few years, A couple of them have gone out of business, a couple others of badly damaged. So the competitive landscape is
significantly improved for the company. The capital intensity of the business has gone down because there's plenty of vessels, but it's not a vessel based businesses and engineering uh expertise business and there are very few people there are only three people in the top tier. So those are all attributes that kind of come together that we could make it extremely low valuation, strong balance sheet, uh inside our
ownership of stock, so a very compelling investment today. All right, So a sub side is seven uh so far this year still room to run. Uh sure if stocks down from twenty seven dollars to you know, it's up at eleven today. So and that's what we think. The earnings power of the business has improved in the downturn. The
competitive landscape. Its further differentiated them from their competitors. The nature of fields and getting costs down and being more engineering oriented and focused means they have a higher value contribution. They partnered with UH with slumberget in the downturn too, so very strong relationships and very differentiated UH proposition to their customers. Tell us a little bit about master limited partnerships. What should people be wary of? Give you about seconds
or so, sure you know. Master limited partnerships are, of course a formula for a disaster. You have capital allocators who are incented. They get fifty of the upside of the osmins they make. You have investment bankers who are great at raising capital UH. And of course, a year or two ago in this space, it was very low costs because people wore starved for yield. People didn't understand the investment risks, so it's a you know, and of
course you had investors who were dying for risk. So all those things came together and then they told the story where you could have your cake you needed to. We could distribute out all of these earnings and yet grow the business. You can't do both things Capitals Limited. Thank you very much, Bob, Robody, founder and President of Robody and Company, talking about deep value in looking for oil in deep places sub Sea seven as well as
Atwood Oceanics. You're listening to taking Stock. I'm pim Fox. Coming up, we'll tell you about hunting for stocks in the stock market, rather than looking for which way the market will go. This is Bloomberg. Bloomberg. Taking Stock has brought you by your Mercedes Benz Triestate Dealer. The all new twenty seventeen Mercedes Benz E Class has arrived. The future of transportation. Available at your Mercedes Benz Triestate Dealer Today offers an inventory at m b usa dot com