Latest / Bloomberg Intelligence / Canada Has Plenty Of Oil But Can’t Bring It To Market: Wihbey

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Canada Has Plenty Of Oil But Can’t Bring It To Market: Wihbey · Bloomberg Intelligence

• 0:05
  Speaker 1: Welcome to the Bloomberg p m L Podcast. I'm Pim Fox.
• 0:08
  Speaker 1: Along with my co host Lisa A. Bramowitz. Each day
• 0:11
  Speaker 1: we bring you the most important, noteworthy, and useful interviews
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• 0:17
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  Speaker 1: L Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot com.
• 0:32
  Speaker 1: Oil in Canada it basically has one customer that's in
• 0:36
  Speaker 1: the United States apart from those that use it in Canada,
• 0:40
  Speaker 1: but that could change as the Canadian government back say
• 0:44
  Speaker 1: pipeline to move that oil to the Pacific, which could
• 0:47
  Speaker 1: then mean exports to Asia. Here to tell us more
• 0:51
  Speaker 1: about energy and it's global implications is Paul Michael Weeby.
• 0:56
  Speaker 1: He is a research fellow at the Daniel Morgan Graduate
• 0:59
  Speaker 1: School of National Security. Also, he's a former vice president
• 1:02
  Speaker 1: of the Liberal Party of Canada that was under the
• 1:05
  Speaker 1: Prime ministership of Pierre Elliott Trudeau. Paul Michael weib thank
• 1:09
  Speaker 1: you very much for being with us. Maybe just outlined
• 1:12
  Speaker 1: for people that are not familiar with the dynamics of
• 1:15
  Speaker 1: the Canadian energy markets the role that the United States
• 1:18
  Speaker 1: currently plays and what could change well, good morning, and
• 1:23
  Speaker 1: thank you for having me on the broadcast. The Canadian
• 1:28
  Speaker 1: energy market is really a fascinating um sector to watch.
• 1:33
  Speaker 1: It has had some real problems over the last few years.
• 1:37
  Speaker 1: Everyone is familiar with Keystone, the Keystone pipeline which is
• 1:41
  Speaker 1: still tied up by the way in the Nebraska state courts.
• 1:46
  Speaker 1: Um we here in Canada and right now I'm in Montreal,
• 1:51
  Speaker 1: and in Canada, there is a an abundance of crude
• 1:55
  Speaker 1: oil thanks to the development at the oil stands, but
• 1:59
  Speaker 1: there is a bolt of bottleneck in that that massive
• 2:03
  Speaker 1: supply of crude which is being produced cannot get to
• 2:07
  Speaker 1: the markets for which it was destined. So we have
• 2:10
  Speaker 1: three pipelines, Trans Mountain, which is supposed to deliver gas
• 2:17
  Speaker 1: oil to the Asian and US markets, particularly California, Transmountain,
• 2:23
  Speaker 1: Keystone and Line three r en Bridge in Minnesota. All
• 2:27
  Speaker 1: these pipelines, each of which has a capacity of around
• 2:31
  Speaker 1: seven hundred thousand barrels of crude, are tied up for
• 2:36
  Speaker 1: one reason or another, and they've been delayed for years
• 2:40
  Speaker 1: um uh because of court challenges and all position of
• 2:44
  Speaker 1: one sort or another. So the Canadian energy market is
• 2:50
  Speaker 1: going through some troubling times. And as a result, UH,
• 2:56
  Speaker 1: the United States has picking up the slack in terms
• 2:59
  Speaker 1: of getting fruit oil exports to hungry markets overseas, particularly
• 3:04
  Speaker 1: the Asian markets thanks to development of shale crude exports
• 3:11
  Speaker 1: that the United States is now shipping to various consumers.
• 3:16
  Speaker 1: So in Canada there's a real dilemma. Lots of oil,
• 3:20
  Speaker 1: but they can't get the oil to market. Alright. So
• 3:23
  Speaker 1: given that context, what do you believe the tariff and
• 3:27
  Speaker 1: trade war between the United States and Canada will do
• 3:30
  Speaker 1: to the energy sector. Nothing in the short term UH
• 3:35
  Speaker 1: that would affect Canadian production UH, and nothing in the
• 3:42
  Speaker 1: longer term really unless we have a total breakdown in
• 3:47
  Speaker 1: bilateral energy trade between the two countries. The indirect impact
• 3:53
  Speaker 1: of tarroists is in the area of steel and aluminum,
• 3:57
  Speaker 1: where by the Canadian energy in the treat is buying
• 4:01
  Speaker 1: UH too bigger products at a different cost structure than
• 4:07
  Speaker 1: normally would be the case. Because UH, Asian steel products
• 4:11
  Speaker 1: are flooding the Canadian market UH since they can no
• 4:14
  Speaker 1: longer enter the US market at levels that they had
• 4:19
  Speaker 1: been used to in terms of of lower tarrorifts. So
• 4:22
  Speaker 1: there's an abundance of supply in the Canadian steel and
• 4:27
  Speaker 1: aluminum sector, which is actually providing a cost differential H
• 4:32
  Speaker 1: to the Canadian energy sector that is advantageous. But apart
• 4:36
  Speaker 1: from that, there is no real adverse consequence UH in
• 4:41
  Speaker 1: terms of the tariffs impacting energy trade between the two countries.
• 4:46
  Speaker 1: Having said that, you raise a very important question that
• 4:50
  Speaker 1: is really the larger issue of harmonization between two countries
• 4:54
  Speaker 1: in terms of oil and gas supplies and m I'm
• 4:57
  Speaker 1: very interested in having seen Santor Hoven Santor Hoven from
• 5:01
  Speaker 1: North Dakota bring forward a bill, the North American Energy
• 5:05
  Speaker 1: Security Act, that would harmonize pipeline approval UH regulation between
• 5:14
  Speaker 1: Canada and the US, And specifically, in that bill, the
• 5:18
  Speaker 1: Sentator is calling for the State Department to pass on
• 5:24
  Speaker 1: its regulatory approval and permitting process, pass it over to FIRK,
• 5:31
  Speaker 1: and put a ninety limit on the approval process for
• 5:35
  Speaker 1: cross border pipelines. And I think that's very important and
• 5:39
  Speaker 1: I think that's in the direction we ought to be going.
• 5:43
  Speaker 1: I think it would be very helpful for the Canadians
• 5:45
  Speaker 1: as well as for American consumers to be able to
• 5:51
  Speaker 1: secure Canadian crude UH in a more rational and streamlined
• 5:56
  Speaker 1: process than what we have already. All right, we'll talk
• 5:58
  Speaker 1: about that in terms of its opposite when you talk
• 6:00
  Speaker 1: about a rational and streamlined process. I want to shift
• 6:04
  Speaker 1: your attention, because you are an expert in global energy resources,
• 6:08
  Speaker 1: to what is happening in Iran and the back and
• 6:11
  Speaker 1: forth between the United States and President Donald Trump and
• 6:15
  Speaker 1: Iran's potential for oil exports. What are your thoughts there? Well, look,
• 6:21
  Speaker 1: I think UH to give this context, if you don't mind,
• 6:26
  Speaker 1: just a step back up a moment to yesterday's extraordinary
• 6:30
  Speaker 1: pronouncement by the President where he said on his Twitter
• 6:37
  Speaker 1: feed that the OPEC monopoly must remember that gas prices
• 6:40
  Speaker 1: are up and that they are doing little to help.
• 6:44
  Speaker 1: He goes on and demands a reduction in pricing. Now,
• 6:48
  Speaker 1: this UH is historic, It's unprecedented, and what it represents,
• 6:55
  Speaker 1: in my opinion, is a full frontal assault on the
• 7:01
  Speaker 1: integrity and cohesion of OPEC as a price setting organization.
• 7:08
  Speaker 1: And what that's doing, to get to your question, is
• 7:11
  Speaker 1: driving a wedge, a massive wedge between Saudi Arabia and Iran.
• 7:18
  Speaker 1: Because the Saudies are complying coordinates of Bloomberg reports. The
• 7:22
  Speaker 1: Saudies are complying with the President's demands, and this is
• 7:27
  Speaker 1: quite the opposite of what the Iranians want. So when
• 7:32
  Speaker 1: you add to the ideological and and and security dilemma
• 7:39
  Speaker 1: in the Persian Gulf arising up from the rivalry between
• 7:43
  Speaker 1: Iran and Saudi Arabia, and now you have OPEC being
• 7:48
  Speaker 1: uh rendered asunder by the President, then I think what
• 7:55
  Speaker 1: we're seeing is Iran being further and further isolated, its
• 8:01
  Speaker 1: breaking apart under the hammer blows of and we've got
• 8:04
  Speaker 1: to leave it there. Paul Michael Weeby of Daniel Morgan
• 8:08
  Speaker 1: Graduate School of National Security. Tomorrow, there is a deadline
• 8:26
  Speaker 1: for tariffs and trade retaliation in the back and forth
• 8:30
  Speaker 1: between China and the United States. And here to tell
• 8:32
  Speaker 1: us more is Dan Mossy is our economics editor and
• 8:36
  Speaker 1: columnist for Bloomberg Opinion. You can follow Dan on Twitter
• 8:40
  Speaker 1: at moss underscore. Echo that's e c O. Alright, moss underscore, Echo,
• 8:49
  Speaker 1: what do you believe will happen tomorrow? Well, Um, as
• 8:56
  Speaker 1: you mentioned, it's been flagged that the first installment of
• 9:00
  Speaker 1: tariffs imposed by the United States on certain Chinese imports scheduled.
• 9:06
  Speaker 1: I'm hesitant to say go into effect because they could
• 9:10
  Speaker 1: still fudge things to keep the lines open to Beijing.
• 9:15
  Speaker 1: But you know, of all the ponderables in US China
• 9:19
  Speaker 1: economic relations, this is possibly the most flagged development. They've
• 9:24
  Speaker 1: said they will be imposed as of tomorrow, not the
• 9:28
  Speaker 1: entire fifty billion, which was the figure that was bandied
• 9:30
  Speaker 1: around a while ago, but the first installment. So, as
• 9:35
  Speaker 1: a person who likes to tweet says, we'll see what happens. Okay,
• 9:39
  Speaker 1: we'll see what happens in terms of the implementation. What
• 9:44
  Speaker 1: do you make of the notion that many of the
• 9:47
  Speaker 1: products that are shipped from China to the United States
• 9:53
  Speaker 1: have no alternative, at least at a price point that
• 9:57
  Speaker 1: is competitive. You know, the caricature pim of China as
• 10:03
  Speaker 1: some low cost sweatshop sort of operation is out of date. However,
• 10:10
  Speaker 1: it is still cheap ish. It's not rock bottom cheap.
• 10:14
  Speaker 1: It's not the sweatshop caricature. A lot of this stuff
• 10:17
  Speaker 1: is still fairly cost competitive. And let's put it in
• 10:20
  Speaker 1: even more cosmic terms. China is the world's largest exporter,
• 10:25
  Speaker 1: the US is the world's largest economy. Okay, these two
• 10:30
  Speaker 1: need each other. There's obviously a lot of rhetoric flying around.
• 10:36
  Speaker 1: You know, one thing that's very curious is whenever Trump
• 10:39
  Speaker 1: talks about China and how China is supposedly shafting the US,
• 10:43
  Speaker 1: he will often preface it or put at the end
• 10:46
  Speaker 1: of the tweet. You know, I have great respect for
• 10:48
  Speaker 1: President she President, she is a friend of mine. President
• 10:51
  Speaker 1: she is a world class poker player extraordinaire. The olive
• 10:55
  Speaker 1: branch is always there. But look, you can make the
• 11:00
  Speaker 1: case that these are the only two economic relationships in
• 11:03
  Speaker 1: the world that matter. Deep down, each realizes that. So again,
• 11:11
  Speaker 1: I hate to say it, but you know, we'll we'll
• 11:13
  Speaker 1: see what happens. I think a lot of the hoopla
• 11:17
  Speaker 1: about what's supposed to be imposed tomorrow reflects the fact
• 11:21
  Speaker 1: that it's fourth of July week. Wait, here's a countdown.
• 11:26
  Speaker 1: Here's where China stands today. Oh well, actually the same
• 11:29
  Speaker 1: place it's stood yesterday. So we'll see what happens. As
• 11:34
  Speaker 1: you can tell, I'm a little bit skeptical about this, okay.
• 11:37
  Speaker 1: As this trade war continues to grab headlines and people
• 11:42
  Speaker 1: focus on the trade war, I also note that China
• 11:46
  Speaker 1: has a plan, a plan, and they are pouring government
• 11:51
  Speaker 1: resources and support into things such as artificial intelligence automation.
• 11:59
  Speaker 1: When it comes the manufacturing. We don't seem to have
• 12:03
  Speaker 1: a plan like that. The United States does not have
• 12:07
  Speaker 1: a state directed economy, but we have no well, we
• 12:11
  Speaker 1: have a state directed trade policy. It seems that could
• 12:14
  Speaker 1: actually hurt the very companies that we're going to rely
• 12:18
  Speaker 1: on in order to produce those future technology. Look, China
• 12:23
  Speaker 1: feels like it's on a roll at the moment. They
• 12:26
  Speaker 1: feel that their time has come. They feel that the
• 12:30
  Speaker 1: US is in relative, but perhaps unstoppable decline the glory
• 12:37
  Speaker 1: days of China. President She's made this point. You know,
• 12:41
  Speaker 1: they want to have that again. They feel they can
• 12:44
  Speaker 1: have that again. The key to that is moving beyond
• 12:49
  Speaker 1: the sort of low cost assembly and manufacturing base to
• 12:56
  Speaker 1: get into and bulk up on the technology is that
• 13:00
  Speaker 1: are going to define the economy of the twenty one century.
• 13:03
  Speaker 1: Remember we're barely eighteen years in to the twenty one century,
• 13:07
  Speaker 1: so this is arguably a struggle for dominance of the
• 13:12
  Speaker 1: twenty one century economy. You know, it doesn't really have
• 13:15
  Speaker 1: that much to do with soy beans and genes and stuff.
• 13:19
  Speaker 1: That's well, that's my point. In other words, it's going
• 13:21
  Speaker 1: to knock China off the China course. What's going to
• 13:25
  Speaker 1: do it arrest of Congress in China. Note that that's
• 13:28
  Speaker 1: not going to happen. But at the end of the day, again,
• 13:31
  Speaker 1: these two economies need each other. Maybe there's an opening
• 13:37
  Speaker 1: for a not a trade negotiator, but a trade therapist.
• 13:41
  Speaker 1: Just to get back to the point from our previous exchange,
• 13:48
  Speaker 1: a lot of what the US imports from China is
• 13:53
  Speaker 1: stuff that has been put together at various points in
• 13:57
  Speaker 1: global supply chains. Now most of the global supply chains
• 14:02
  Speaker 1: that snake around the world are anchored by you guessed
• 14:06
  Speaker 1: at US headquartered corporations. Right, So it's not like, Okay,
• 14:11
  Speaker 1: We're going to suddenly stop buying this stuff from China
• 14:15
  Speaker 1: because a decent chunk of it originated with US corporations.
• 14:20
  Speaker 1: Well done. Dan Moss, economics editor columnists for Bloomberg Opinion.
• 14:25
  Speaker 1: I encourage you to follow him on Twitter at Moss
• 14:29
  Speaker 1: Underscore Eco e c O multi touch screens, wireless charging documents, scanners,
• 15:04
  Speaker 1: wireless trackballs and mouse, all in a package that is
• 15:10
  Speaker 1: designed to help you ease the problems of sitting at
• 15:13
  Speaker 1: your desk. Here to tell us more about the future
• 15:15
  Speaker 1: of the smart office is Saga Goville. He is the
• 15:19
  Speaker 1: chief executive of sum Tracks and he joins us here
• 15:22
  Speaker 1: in our eleven three oh studios Soccer. Thanks very much
• 15:25
  Speaker 1: for being here, maybe just outlined for people what is
• 15:28
  Speaker 1: Sundtracks and how you came to really design and produce
• 15:33
  Speaker 1: uh what in many cases is the office of the future.
• 15:38
  Speaker 1: Thank you for having me, PAM, pleasure to be here.
• 15:40
  Speaker 1: UM Soundtracks is a publicly listed technology company. We manufacture
• 15:46
  Speaker 1: electronic technology products for a variety of industries, from automotive
• 15:50
  Speaker 1: companies like Daimler to consumer electronics companies like Harmon Kardon
• 15:55
  Speaker 1: and industrial companies like Schneider Electric. And we've been doing
• 15:58
  Speaker 1: that now for over two decades and we really leverage
• 16:02
  Speaker 1: a lot of that experience of manufacturing electronics and technology
• 16:05
  Speaker 1: products from B two B and applied it now to
• 16:08
  Speaker 1: the B two C market with our first flag chick product, uh,
• 16:11
  Speaker 1: the smart desk. We'll tell us about this. H Stark
• 16:15
  Speaker 1: Gesture Systems. What is this? So you know, one of
• 16:20
  Speaker 1: the things that we've realized, or I realized, is that, uh,
• 16:25
  Speaker 1: you know, everything is getting smarter. You have a smart homes,
• 16:27
  Speaker 1: smart cars, smartphones, but your workspace really hasn't been innovated
• 16:33
  Speaker 1: on in the last thirty years. And so we really
• 16:35
  Speaker 1: set out to modernize your personal workspace, and that's what
• 16:38
  Speaker 1: we've done with this the smart desk. So the Stark
• 16:41
  Speaker 1: Gesture system is a new way to control your PC
• 16:45
  Speaker 1: or control your computer with touchless gestures, kind of like
• 16:48
  Speaker 1: in Minority Report or in some of the Iron Man
• 16:52
  Speaker 1: movies like you've seen, where you're able to move information
• 16:55
  Speaker 1: across your screens without even touching the computer. Now, in
• 16:59
  Speaker 1: putting this all together, you've had to integrate a variety
• 17:03
  Speaker 1: of technologies from different vendors. Correct, that's right, that's right.
• 17:07
  Speaker 1: So you know, we've leveraged our vast electronics manufacturing capabilities
• 17:11
  Speaker 1: to incorporate the greatest technology that's out there and package
• 17:15
  Speaker 1: it into this beautiful new form factor that hasn't been
• 17:18
  Speaker 1: seen before, so that everything is within arms reach. And
• 17:23
  Speaker 1: we built a number of different features that really set
• 17:25
  Speaker 1: this product apart from anything that's in the market today.
• 17:28
  Speaker 1: So what are some of those features, because I was
• 17:30
  Speaker 1: looking at just some of the photographs, all right, So
• 17:32
  Speaker 1: you get three screens, the multi touch displays, you get
• 17:36
  Speaker 1: the touch lists, stylist control. Also you get the digital phone.
• 17:40
  Speaker 1: Of course, documents scanner that's actually built into the frame
• 17:44
  Speaker 1: of the of the computer of the monitor rather, that's right.
• 17:48
  Speaker 1: So we've built a number of unique features to this product,
• 17:51
  Speaker 1: but I'll tell you about the most important ones. UM.
• 17:54
  Speaker 1: As you mentioned, we have a large the largest display
• 17:57
  Speaker 1: area that you can buy on the market with seventy
• 17:59
  Speaker 1: two is a touch screen display, which is really a
• 18:03
  Speaker 1: fully immersive working experience. Not only that, but we built
• 18:07
  Speaker 1: in the gesture system as I mentioned, that allows you
• 18:09
  Speaker 1: to control your workflow with both touch and unique touchless gestures,
• 18:14
  Speaker 1: so that we take your hands off the keyboard and
• 18:16
  Speaker 1: mouse and into the air where you can control this computer.
• 18:20
  Speaker 1: As you mentioned, we also include a document scanner, so
• 18:22
  Speaker 1: you can simply put a piece of paper down onto
• 18:25
  Speaker 1: the tabletop and we'll be able to scan the document
• 18:27
  Speaker 1: right there. Additionally, we've also included bluetooth voice over IP.
• 18:32
  Speaker 1: The days of having a physical phone on your desk
• 18:35
  Speaker 1: UM are long gone and there's no need for that anymore.
• 18:37
  Speaker 1: We're replicating all of that with software integrating with Vantage
• 18:41
  Speaker 1: and eight by eight any other of the major voice
• 18:43
  Speaker 1: over IP providers. And not only that, we're doing all
• 18:46
  Speaker 1: of this vast functionality which is one wire so most
• 18:50
  Speaker 1: people's desk, it's enormous amount of clutter and wires everywhere.
• 18:53
  Speaker 1: It's a mess, and so we set out to completely
• 18:56
  Speaker 1: revolutionize that. So you just plug in one wire for
• 18:59
  Speaker 1: power and you're off to the races and you can
• 19:00
  Speaker 1: stand while doing this. Of course, that's right. So it's
• 19:03
  Speaker 1: a sit stand functionality as well, so too for the
• 19:05
  Speaker 1: health benefits of that for various workers. Now, what is
• 19:09
  Speaker 1: something like this cost? So, uh, the we're starting this
• 19:13
  Speaker 1: price at four thousand dollars and we're also offering a
• 19:16
  Speaker 1: one seventy five a month for twenty four months. So
• 19:19
  Speaker 1: the services that come bundled with this. Is that also
• 19:23
  Speaker 1: a subscription or is that a one time cost? So
• 19:26
  Speaker 1: all of the features are included in this product that
• 19:29
  Speaker 1: are listed there, um, whether it's the gesture technology or
• 19:33
  Speaker 1: the scanning functionality and so forth. So everything you see
• 19:37
  Speaker 1: is included with that price. Okay. Now, in looking at
• 19:39
  Speaker 1: a little bit of the history of the company, I
• 19:41
  Speaker 1: note that you've got operations in Romania. You made a
• 19:44
  Speaker 1: purchase in the past of a company I believe in Germany,
• 19:47
  Speaker 1: and I'm wondering you are a small to mid size business.
• 19:51
  Speaker 1: What would you describe as being the biggest challenge that
• 19:55
  Speaker 1: you face right now? Inasmuch as we have so much
• 19:58
  Speaker 1: of this discussion about trade policies and trade wars between
• 20:02
  Speaker 1: the United States and Europe. Yeah, it's uh, it's it's
• 20:06
  Speaker 1: tough to see what's going on there. There's no question, UM.
• 20:09
  Speaker 1: You know, we're hoping that UM, you know, we can
• 20:12
  Speaker 1: continue to work in the current environment. As you know,
• 20:15
  Speaker 1: we do a lot of business internationally with both European clients,
• 20:19
  Speaker 1: Asian clients, and in the United States. Were really a
• 20:22
  Speaker 1: truly in an international global company, UM, and so you know,
• 20:26
  Speaker 1: the potential tariffs would have strong implications for our business
• 20:30
  Speaker 1: because as you mentioned, we do a lot of business
• 20:32
  Speaker 1: in Germany. It's largely an export driven economy, and so
• 20:35
  Speaker 1: the implications that you know, new tariffs might have, UM
• 20:39
  Speaker 1: could be profound for our business. I want to thank
• 20:41
  Speaker 1: you very much for coming in and sharing some of
• 20:43
  Speaker 1: this information with us. Uh uh. Saga Goldville is the
• 20:48
  Speaker 1: chief executive officer of sem Tracks. They're based in Farmingdale, uh,
• 20:52
  Speaker 1: New York on Long Island. Much appreciate it. You can
• 20:55
  Speaker 1: get healthy with a smart desk set up. My co
• 21:12
  Speaker 1: host and colleague, Lisa Abramowitz is on a well deserved
• 21:15
  Speaker 1: holiday this week, but he's not on a holiday. David
• 21:19
  Speaker 1: Katz is the chief investment officer for Matrix advis Acid Advisors,
• 21:23
  Speaker 1: and he helps to manage nearly eight hundred million dollars. David,
• 21:27
  Speaker 1: thanks very much for being with me today. You know, um,
• 21:31
  Speaker 1: you raise an interesting idea, which is that there are
• 21:34
  Speaker 1: a lot of things to get worried about. You could
• 21:37
  Speaker 1: talk about interest rates, flattening yield curve, potential for slowing
• 21:41
  Speaker 1: global economy, of fear of the US recession, trade wars.
• 21:46
  Speaker 1: But these are I guess, to paraphrase former Secretary Defense
• 21:50
  Speaker 1: Donald Rumsfeld, these are all known nons are the if
• 21:54
  Speaker 1: if we're able to confine ourselves to these non gans,
• 21:58
  Speaker 1: do you think stocks generally increase in value over the
• 22:01
  Speaker 1: second half this year? Well, we think out of that
• 22:04
  Speaker 1: entire list, all are very manageable, except for the possibility
• 22:09
  Speaker 1: of a trade war. So that's our biggest concern. We
• 22:11
  Speaker 1: think if there really were a significant escalation of tariffs
• 22:15
  Speaker 1: and a trade war occurred, that would be a significant
• 22:19
  Speaker 1: negative for the economy, for corporate earnings, and then for
• 22:21
  Speaker 1: the stock market. We're hopeful that we're in the middle
• 22:24
  Speaker 1: of a ugly public negotiation. But before all is said
• 22:28
  Speaker 1: and done, there's some sort of sanity and some sort
• 22:30
  Speaker 1: of resolution. If that's the case, all of the other
• 22:34
  Speaker 1: issues that we raised as overhangs we think are very
• 22:37
  Speaker 1: very manageable and the market should do nicely better. Okay,
• 22:41
  Speaker 1: nicely better. Let's get a little specific if we can.
• 22:44
  Speaker 1: The energy sector is doing nicely better compared to how
• 22:48
  Speaker 1: it performed in the first quarter. Well, the energy sector
• 22:51
  Speaker 1: is a great example that things change. It went from
• 22:54
  Speaker 1: worse the first between the first and the second quarter.
• 22:57
  Speaker 1: Energy prices, although they're off today, are a very significant
• 23:00
  Speaker 1: and we think that the stocks have a good deal
• 23:02
  Speaker 1: more of catch up, so we're looking for better things
• 23:04
  Speaker 1: from that group in the second half of the year.
• 23:07
  Speaker 1: We like companies like Occidental Petroleum or Royal Dutch, and
• 23:10
  Speaker 1: our favorite right now is Schlumberja, which really has avoided
• 23:13
  Speaker 1: the rally of the last quarter, so we think it's
• 23:15
  Speaker 1: got a lot of catch up here. Why did you
• 23:17
  Speaker 1: select Slumberge. Of course they're known in oil field services
• 23:21
  Speaker 1: and then the technology in order to operate oil industry assets.
• 23:27
  Speaker 1: But why Slumberge now? Well, Historically when people have wanted
• 23:32
  Speaker 1: into the oil sector, Schlumberje has been a leader. Uh
• 23:35
  Speaker 1: this last rally. They really have missed the entire rally.
• 23:38
  Speaker 1: Part of that was that their earnings are not growing
• 23:41
  Speaker 1: as quick as competitors. But we think that the business
• 23:44
  Speaker 1: is about to turn in a more positive way. We're
• 23:47
  Speaker 1: not expecting a lot from the second quarter earnings, but
• 23:50
  Speaker 1: we think the outlook is going to be good. International
• 23:52
  Speaker 1: activity in terms of drilling is picking up significantly, Pricing
• 23:56
  Speaker 1: is firming, and we think the stock has a lot
• 23:58
  Speaker 1: of catch up here, so easily could be in the
• 24:00
  Speaker 1: mid seventies the high seventies, which would really put it
• 24:03
  Speaker 1: on par with the significant rally that's happened in the
• 24:07
  Speaker 1: major oil companies. All right, so that's Schlumbers. Turn your
• 24:11
  Speaker 1: attention now to financials JP Morgan, Chase, and Wells Fargo. Well,
• 24:17
  Speaker 1: the c CAR results last week, we're actually very good
• 24:20
  Speaker 1: and so far as that they weren't bad, and they
• 24:22
  Speaker 1: gave a lot of these companies flexibility to increase their
• 24:25
  Speaker 1: share by backs and increase the dividends. JP Morgan increased
• 24:28
  Speaker 1: their dividends over their yield is now above three percent.
• 24:33
  Speaker 1: It tells it eleven times earnings. Great earnings outlook. Jamie Diamond,
• 24:36
  Speaker 1: who we believe is probably the smartest guy in the
• 24:39
  Speaker 1: financial sector said that we're in a golden age for
• 24:43
  Speaker 1: financials and for banks right now, and none of that's
• 24:45
  Speaker 1: in the stock price. So financials have had start and go, uh,
• 24:49
  Speaker 1: start and stop over the last year, where they've rallied,
• 24:51
  Speaker 1: they slowed down this last quarter they were pretty miserable.
• 24:54
  Speaker 1: We think they're poised for a very strong back half.
• 24:56
  Speaker 1: We like the whole group in its entirety. We like
• 24:59
  Speaker 1: JP Morgan, UH and Wells Fargo best. Now you mentioned dividends.
• 25:03
  Speaker 1: Many investors go to utilities for dividends. Is that still
• 25:07
  Speaker 1: something that they should follow or have utilities changed? Okay,
• 25:12
  Speaker 1: So utilities are within the dividends sector and they're probably
• 25:16
  Speaker 1: the most influenced by interest rates. So our interest rate
• 25:19
  Speaker 1: outlook is that interest rates will continue to rise and
• 25:23
  Speaker 1: that's a negative and an overhang for the utility group.
• 25:26
  Speaker 1: So we like the dividends sector right now. We think
• 25:29
  Speaker 1: they've lagged in the first six months of the year.
• 25:31
  Speaker 1: The one area we don't like our utilities. Outside of utilities,
• 25:35
  Speaker 1: we think there are lots of opportunities. So healthcare has
• 25:38
  Speaker 1: got a lot of higher yielding stocks. We think the
• 25:40
  Speaker 1: telecon company's a t and T and Verizon or at
• 25:43
  Speaker 1: very attractive prices regardless of whether interest rates go up.
• 25:47
  Speaker 1: There are a lot of industrials that are paying three
• 25:49
  Speaker 1: three and a half percent yields, like an Eton Corps.
• 25:51
  Speaker 1: We think those are gonna be great places to make money.
• 25:53
  Speaker 1: So we think the market is going to swing back
• 25:56
  Speaker 1: to dividends stocks in the back half of the year.
• 25:58
  Speaker 1: But the one exception to that, it's going to be utilities.
• 26:01
  Speaker 1: Tell us about Eaton Corp. Based in Cleveland, stocks down
• 26:05
  Speaker 1: about four percent so far this year. Pays a three
• 26:08
  Speaker 1: and a half percent dividend, so the stocks down four percent,
• 26:12
  Speaker 1: but the business is doing exceptionally well. We've owned it
• 26:16
  Speaker 1: for a number of years and have done very well.
• 26:19
  Speaker 1: But one of the things that we've seen is that
• 26:21
  Speaker 1: the management is the most upbeat they've been in quite
• 26:24
  Speaker 1: some time. Earnings are rising significantly, they've got a really
• 26:27
  Speaker 1: good cash flow, yet the stock hasn't done anything uh.
• 26:30
  Speaker 1: They've raised the dividend nicely, So this is a case
• 26:32
  Speaker 1: where we easily could see the stock UH ten or
• 26:35
  Speaker 1: fifteen percent in the back half of the year, and
• 26:37
  Speaker 1: that would just be catching up with a better market.
• 26:40
  Speaker 1: We think it's one of the lower risk ways to
• 26:43
  Speaker 1: invest in the market now and so far is that
• 26:44
  Speaker 1: it's at a very low valuation and a good yield,
• 26:47
  Speaker 1: but a very good outlook. Another stock that's down about
• 26:50
  Speaker 1: four percent so far this year has a much smaller
• 26:54
  Speaker 1: dividend of about one and a quarter percent, is cbs
• 26:59
  Speaker 1: Y CBS and the portfolio okay, great question, so um.
• 27:04
  Speaker 1: The media industry has seen a lot of interest in Fox,
• 27:08
  Speaker 1: between Disney and Comcast trying to buy it, and we
• 27:10
  Speaker 1: think that highlights the value of these assets. CBS has
• 27:13
  Speaker 1: been a miserable performer in the last year, but the
• 27:16
  Speaker 1: business is great. Their earnings are growing very very nicely. UM.
• 27:20
  Speaker 1: Their add their advertising spending is going up very nicely.
• 27:23
  Speaker 1: So the fundamentals are great. The valuation is great. The
• 27:26
  Speaker 1: Fox buyout highlights the value in entertainment assets, and we
• 27:30
  Speaker 1: think something better is going to happen to CBS this year.
• 27:34
  Speaker 1: Either they will resolve their conflict with the red Stone family.
• 27:37
  Speaker 1: There's a possibility the red Stone family might ultimately put
• 27:40
  Speaker 1: it up for sale. If they do, we think the
• 27:42
  Speaker 1: stock is easily worth more. But even of its own fundamentals,
• 27:47
  Speaker 1: we think the stock should tell it thirteen or fourteen
• 27:49
  Speaker 1: times earnings and it's at that ten times earnings, So
• 27:52
  Speaker 1: we like the group for the back half of the year.
• 27:54
  Speaker 1: We like Comcast too, we like via Come too, but
• 27:57
  Speaker 1: CBS is our favorite. Alright, I'm only gonna give you
• 28:00
  Speaker 1: twenty seconds, David, but I gotta ask technology, what are
• 28:03
  Speaker 1: you doing there? So we think technology is going to
• 28:07
  Speaker 1: be fine in the back half of the year. It's
• 28:08
  Speaker 1: not going to be as lopsided to the upside as
• 28:10
  Speaker 1: the first half of the year. And our focus would
• 28:12
  Speaker 1: be on some of the tech companies that are doing well,
• 28:15
  Speaker 1: but stocks of legs so Cisco and Qualcom or a favor,
• 28:18
  Speaker 1: and we'd be a little bit wary of the ultimately
• 28:21
  Speaker 1: hot stocks like a Netflix or an Amazon, which have
• 28:23
  Speaker 1: been on fire. We think they're going to be less
• 28:25
  Speaker 1: good places for the for investors to make money. Thank
• 28:28
  Speaker 1: you very much, David Kat's chief investment officer Matrix Asset Advisors,
• 28:33
  Speaker 1: helping to manage nearly eight hundred million dollars of customer
• 28:37
  Speaker 1: assets based in New York. Thanks for listening to the
• 28:43
  Speaker 1: Bloomberg P and L podcast. You can subscribe and listen
• 28:46
  Speaker 1: to interviews at Apple Podcasts, SoundCloud, or whatever podcast platform
• 28:51
  Speaker 1: you prefer I'm pim Fox. I'm on Twitter at pim Fox.
• 28:55
  Speaker 1: I'm on Twitter at Lisa Abramo. It's one before the podcast.
• 28:58
  Speaker 1: You can always catch us worldwide on Bloomberg radioh