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

will explore innovation and leadership. Because business is everywhere, prepare here. Stocks are lower, the SMP five hundred index down sixteen to two thousand eighty, a drop of eight tenths of one percent, naztack down forty four points, the drop of nine tenths of one percent. Town industrials down one twenty a drop of seven tenths of one percent, Gold up eleven dollars an ounce to twelve eighty six, a gain of nine tenths of one percent. And crude oil below

forty nine dollars. Apparel now for sixty eight down forty cents, a drop of eight tenths one percent. I'm Charlie Pelt and Dat's a Bloomberg business splash. Chipella thanks so much time now for the t F report brought to you

by Vaneck Vectors ETFs. Expect more from your muni's target tax exempt income by majority and credit quality AH with low cost ttfs, visit vanek dot com slash Muni Vanek access the opportunities for a report on e t F s our Own Catherine Cowtery, Peru maybe out, Pakistan maybe in, and China's allocation could more than double. Investors are awaiting m s c i's annual review and potential changes to

its spense mark in taxes. Bloomberg Intelligence analyst Eric Beltuna says Pakistan was downgraded to frontier market status in two thousand eight and their speculation it could be raised to emerging status again. He adds there is positive momentum in Pakistan. It's got a infrastructure project with China that's moving forward. It's got population where half the people are under twenty five. It's larger than Russia population wise, um, but it's frontier.

It's got a lot of issues as well, but it's up nine percent this year. There's an e t F focused on the country, the Global x MSCI Pakistan E t F take her p A K Valtunist on the impact of a possible ms C I move. Even if Pakistan makes it into the MSCI Emerging Markets, it would be point one waiting, I mean almost invisible. If you add it up, that's about two point four billion dollars worth of by orders for Pakistan stocks. P a k has about six and a half million dollars in total assets.

That's your Bloomberg ETF report. I'm Katherine Cowdery is taking stock with Kathleen Hayes and Pim Fox on Bloomberg Radio. Shares of Apple are down about one and a half percent today as the company begins its annual developers conference in San Francisco. One of the announcements is that the Apple will connect Siri, the voice activated application, with other apps, and also it will be made to work on Mac computers.

The company also ditching its os X brand for Mac os and the Apple Watch will get a faster operating system. Find out more. Let's bringing John Petridis. He is Managing director Portfolio manager, point View Wealth Management based in Summit, New Jersey. John, thank you for being with us, Thanks for having me on. So are any of these announcements today from Apple enough to make you bullish on the stock or are you still a bear? Still bearish on

the stock? However, I do like that they're emphasizing the Apple TV. Um. I think that is where Apple needs to be concentrating all of its efforts. And now that you can download apps through the Apple TV, uh, you know, the goal would be for you and I to ultimately build our own ala card cable model through Apple TV and pay for the apps for each indidividual show rather than a Comcast or FiOS or someone like that, you know,

two hundred a month. You know, let's pay it through Apple TV just for the shows that we want, as opposed to watching twenty at a five hundred different shows. So how important is this? Is this like, oh, it's another cool step, you know, just add on a little bit, or is this something that is potentially the you know, the big move that Apple needs. No, we're not there yet. Um, That's why I said this isn't This is going in the right direction, but you're far from where Apple needs

to be. You know, there are rumors a few weeks ago that Apple was thinking about buying Time Warner and taking over HBO and taking on some other content. That's what Apple needs to do. They need to get away from being a pure hardware company and relying on iPhone sales and iPhone upgrades every two years. Uh, to be the driver of the company. They need to get their business model to where you and I are paying Apple

a hundred dollars a month for services um. And if they don't hurry up on the content side, the meat be a content side, which is why I think they need to be They're gonna fall far behind because Google has YouTube, Facebook has Facebook Video, Amazon and building at its own content, Netflix has its own content. I mean, the world is changing an Apple and Tim Cooke's vision right now is still focused on getting an iPhone in everyone's hand when they should be working on the media.

Tell us about Alexa from Amazon and how Apple needs to compete in that arena. Well, they are so. Alexa is a cute little toy that you could have in your house that you can be voice activated in Apple is. There have been rumors that Apple gonna come out with their own version of an Alexa. However, I don't know about you if you have an iPhone, but Siri has been a letdown experience for me personally, so you know, I find myself yelling at the device more than now.

It's in and it still can't understand what I'm saying. So the fact that they're focusing on Siri um onto other devices, I think you need to work on series application itself and U you know that would be the benefit off if they can compete versus in Alexa. How would you compare Siri to the voice activated function on say the Samsung Note M. You know, I haven't played with the Note well enough to compare one versus the other.

All I know is that for me. You know herey, we're now going on to iPhone seven that will be introduced in September. You know here he came out of the four s, which is what four years ago, and I still think that application is subpar at best. Now, John, I want to turn your attention away from technology when it comes to mobile phones and computers and turn your

attention to energy and high yield bonds. What do you recommend individuals do and are their bonds or even stocks that are in the energy industry that you think are compelling? Vis right, So I would have continue to avoid the energy high yield bond space for now. Go back to January and say Bruary, when the world seemingly was falling apart and yields blew out on the high yield bonds. They particularly for energy companies when the price of oil is now was at twenty five bucks you know barrel.

Now we're at fifty dollars at barrel. We've nearly doubled. And you know what I think energy companies should be doing today is actually issuing stock. You know, there were companies, the energy companies that were issuing stock back in January, figure in early March, really in the in the in

the eye of the storm. Well, now with the price of oil doubling and in certain cases of energy stocks up, you know a hundred hundred fifty since then, now is the time companies should be issuing stock and focusing on their balance sheets because there is no uh, you know, the supply demand situation is although improving because drowing has really falling off a cliff in the US. You know, these companies need to start pumping out oil, and now is the time when they should be shoring up. They're

like their balance sheets. So I think now is the time energy companies should be issuing stock to to focus in bringing up liquidity so basically then you're saying you would buy some energy stocks. What about Master Master Limited Partnerships. Yeah, I think that's where you're finding the area of the energy space that should be issuing the most in terms

of stock. Because m LPs are usually the oil and gas pipelines, right they transport oil from point A to point B, and building out and maintaining those pipelines is very very expensive to do, and you need access to the credit markets, and right now, the credit markets are issuing bonds at very high interest rates because they're very concerned about the price of the commodity. So in order to UH to N m LPs pay out a big portion of the cash flow in the form of a dividend.

So I think investors would actually feel comforted if MLP companies on the back of this stock rally issued shares freed up liquidity. That would that would UH secure the dividend because many income oriented investors, those that are in retirement are focusing on MLPs because they need that source of income, and that would actually help the space a lot. I mean, how often do you have someone on talking

about companies that should be issuing stock. It's usually the opposite right, Usually the reward companies who buy back their shares.

But here in the energy space, now is the time where company should be doing In the opposite, John, is now the time to invest in a company such as Chevron paying a dividend of a little bit more than four Yeah, Well, we believe in diversification and despite the rally in oil, you never know where the commodity is going to be, So a Chevron, an exn Mobile, a British Petroleum, you know, those big cat super major that are integrated, that have the upstream, that have the mid

stream and a downstream on the energy are the right places that investors should be in because you can weather the downturn um if the price of oil was to go down, and you have a diverse business model and you'll benefit on the upside. So you know, it's it's it's unless you should be diversified across the different sectors, and we would recommend that you hide in the supermajors. Final comment on final question, could you wagh In on

Microsoft acquiring LinkedIn? Sure? I think that this was a very interesting acquisition on Microsoft side, but I think it was very defensive in nature, and what I mean by that is Microsoft paid a forty nine percent premium for linked In nearly eight or over eight times sales. And if you're a shareholder of Microsoft, which which our clients do own, it's not a creative or it will be dilutive until two thousand and nineteen. And that's on a

non gap basis. So what does that mean. That means you will not see a hit to the bottom line to the positive side for Microsoft cheryld's two thousand nineteen. And that excludes option dilution. And you know that there's massive option dilution within for LinkedIn shareholders. So and the reason why I think this is defensive is Microsoft described themselves as a platform and productivity company, and I think this acquisition they buy it ahead of someone like a

Facebook or Apple or some other laws or Google. John but Tradeing, thank you so much for joining us, Managing Director, Portfolio Manager, point View Wealth Management. The Microsoft LinkedIn deal defensive on Microsoft's part, Still bearish on Apple. This is taking stock boom Brig Radio