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[theme music] >> Hello, I'm Greg Bonnell. Welcome to MoneyTalk Live, brought to you by TD Direct Investing.
Every day, I'll be joined by guests from across TD, many of whom you'll only see here.
We're going to take you through what's moving the markets and answer your questions about investing.
Coming up on today's show, we are going to discuss which sectors are showing market leadership and which have rolled over with TD Asset Management Ben Gossack.
MoneyTalk's Anthony Okolie is going to give us a preview of Friday's key US inflation report.
And in today's WebBroker education segment, Ryan Massad is going to show us how you can screen for ETFs on the platform.
Here's how you can get in touch with us.
Just email moneytalklive@td.com or fill out the viewer response box under the video player on WebBroker.
Before we get our Guest of the day, let's get you an update on the markets. A bit of a mixed session. We will start from Bay Street with the TSX Composite Index.
Right now we are down about 66 points, a little shy of the third of a percent.
Among some of the most actively traded names out there include some of the energy names. They were getting a bit with crude prices higher today.
Baytex is up a little more than 3%. Some of the lifeco's including Manulife today taking points off the table.
At 3539, Manulife is pulling back about 1.7%.
South of the border, it's all about inflation, rates, whether the Fed may or may not cut. We are past the bulk of earnings season south of the border. The NASDAQ is up about 80 points or half a percent. And Nvidia, last week it was the big spotlight story coming out with its earnings. The street was please today afterward. Still seems to be pleased.
$1124 per share, Nvidia is up 5.6% today.
And that is your market update.
While the big technology stocks grab all the headlines and are considered by many to be market leaders, and they were actually underperforming for a while. But our future Guest today says big tech is back. Joining us now to discuss that and some of the other trends he's watching his Ben Gossack, managing director and portfolio manager with TD Asset Management. Great to have you back.
>> I'm back on the show, tech is back in performance mode, so yes, ready to discuss markets with you.
>> All eyes are on tech. I know you do great work with the charts. I promised them to the audience.
>> We try to have a very disciplined process and some people would call it pattern matching. You could call it good hygiene.
So this is flossing, brushing. We are looking for pockets of strength and weakness. We are busy people and you rely on let's see the TV or the newspaper to tell you what's going on and they been telling you it's been tech and AI and chips.
But yeah, technology as a sector, has been underperforming for most of this year. It would've peeked out around January.
It wasn't until maybe late April, early May, it started to resume and work again.
Now, we're like, of course, we were never worried, but that is a good chunk of the market. What's impressive is that even though tech was underperforming, that did not stop the S&P 500 from reaching new highs. I think that's really important for people to know, at this market, this bull market that we have been talking about is not just lead by tech.
>> Let's bring up the chart that shows the story here because I know you prepared one for us. Technology sector trends, there we go. What to these trends tell us?
>> You should be seeing two charts on your screen.
The way we look at relative strength and weakness is the refraction. The numerator is the ETFs for the S&P 500 and then we divide that price by the S&P 500.
You just need to use your eyes. If it's going up, it means tech is outperforming, if it's going down… The reason we looked on the left-hand side which is the market cap, so market cap over market cap, equal weight tech over equal weight S&P 500, and this lets us see through the market. If someone were to say, well, tech is working and is only because the large Tech stocks are performing, someone could make a case and we have seen how tech has outperformed but if I can also show it on an equal weight basis, it's kind of like put your hand in a hat, grandma tech stock, have a good chance of outperforming the market.
It tells me it's not just leadership, there is breadth and that's why I like to look at both and you can see that the market cap leaders of technology, the apples and Microsoft's, Nvidia-- we match that pattern on the equal weight which means that it was all tech underperforming. When you have something that is powering up and outperforming, eventually, you have to take a break.
So you run really fast, well, you can't sustain that pace for quite some time, sometimes you need to slow down, take a break, grab some water. When he chart is descending, I can't tell the difference between taking a break and the beginning of a new trend. Maybe you fell and hurt yourself. I have no idea.
Sometimes we need the benefit of hindsight.
When we see that bottoming at the end of April, beginning of May and we see it starting to power up again, then it's like, okay, of course, we were just taking a breather. But all through that pullback, rather than us projecting what we want to see, it's more like what is the market trying to tell us?
>> So on that theme in terms of what is actually happening out there, discretionary stocks, you have some pictures to show us about what's happening in that sector.
>> So this is actually quite notable. It tech coming back, that's great. We have seen Nvidia earnings come back. We have seen all of the peripherals, anything tied to hardware working in… Hard to convince anyone. This is the one where it's like, do you want to see what you want to see or are you listening to what the markets telling you? We are looking at on the left-hand side market cap-weighted discretionary rollover and on the right hand side, you are looking at equal weight.
I don't spend that much time on the market cap side of discretionary because it is so dependent on Amazon and Tesla. They overwhelm everything else within the sector so you're not really learning about discretionary. On the equal weight, what was really notable is that equal weight discretionary outperformed equal weight S&P 500 throughout last year. It was not just the seven magnificent stocks.
Discretionary are the stuff that we want versus the stuff that we need, and so that's kind of a good way of saying, hey, maybe things are better. But now that is rolling over and so if you had a bearish tone, you would say, well, now, this helps me, it helps the consumer.
>> They are starting to feel the heat now from higher borrowing costs and inflation.
>> This is where we had to be careful.
I do see it come down but a lot of… The individual stocks, the same stocks that were underperforming are underperforming more.
We have, let's say, the big brands dependent on China to grow, think of Nike or Starbucks, they have been underperforming, they continue to underperform. Another area that rollover… price competition for companies like McDonald's, again, their cost one up, employee benefits when up, maybe they also took advantage of the market, but they raise prices to the point that people are now protesting. Now they have a five dollar menu and now we sing companies like Restaurant Brands, Burger King or Wendy's respond. Markets like when you raise prices, they hate when there's price competition. So those stocks got worse.
Anything tied to travel, even the cruise lines are doing well. We have seen the hotels do well. We see in the financial tied to travel all do well in the homebuilders. That's something we've talked about the started to work when the Fed started to raise rates, homebuilders continue to have power.
I think Windows rollover is when I will be concerned. To say that McDonald's is going to have competition to make it cheaper for us to buy stuff, is that bad for the consumer?
Is the consumer now on strike? The other thing I would also say and just cautioned people on discretionary is it's more relevant to look at discretionary relative to Staples because it's wants versus needs. And guess what? Those needs, the stocks got even worse. If the world was just discretionary versus Staples and long and short, you would still be better off long discretionary short Staples.
Like all things, it's more complicated. It is notable to me that discretionary is weaker. That is not a great time. But I am not ready to now say, oh, things are really changing. It's just the stuff that was bad got worse.
>> Another space you been taking a look at and sometimes people don't think this is the most exciting area, the utilities.
>> Yes. So utilities, if you can see from our chart, cereal underperformers. You can see on the market cap side, you see it on the equal weight side, and what we are having right now is let's say I underperform and then there's a period of catch up. You talk about when you outperform, you think, sometimes, it's like you can't get any worse so get slightly better. Like, I'm at rock bottom, how low can I go? I can only go from here.
We have seen utilities come up off the bottom.
Now some people would say that's great, I want to be the one that bought at the lowest price and its go through a period of performance. For us, is it just checking back to the original descending line or is it a period where we have a new trend? We don't know, so we wait. And we are already starting to see utilities run into resistance. But what I think is really important to share with people is the market is picking winners and utilities.
We have talked about chips and we have talked about hardware and people want to build data centres and we are starting to see articles now where they're like, guess what? We need to power those data centres.
And we are turning everything else into electricity.
The world is short power, and the market now is picking winners who they think are long power, be it nuclear, natural gas, renewables, and there are a select group of these utility stocks that are just flying in anticipation of, yeah, we are going to need more power generation and those that can provide natural gas and nuclear today are going to be the ones that signed this contract with the Microsoft, and Apple, and Oracle, because we just need so much energy.
>> Fascinating insights with Ben Gossack.
We will get to your questions about global stocks or been in just a moment's time.
And a reminder that you can get in touch with us any time.
Just email moneytalklive@td.com or fill out the viewer response box under the video player on WebBroker.
Right now, let's get you updated on the top stories in the world of business and take a look at how the markets are trading.
Got some fresh signs that iPhone sales are rebounding sharply in China. Data from a state affiliated research firm shows a 53% jump in shipments of foreign branded phones for the month of April. Now, the report does not mention Apple specifically, but I phones are the dominant player in China when it comes to imports.
$191.70 per share, Apple is of a little shy of… The company at the centre of the meme stock races in the spotlight again.
At this moment, up 33%. The retailer announced they raised more than $900 million in recent stock sale. The stock grew sharply and then pulled back earlier this month as the social media account of Roaring Kitty, a key player in the meme stock story, became active again. Some developments to follow. There is a multibillion dollar deal in the US telecom space today. Timo L says it plans to acquire most of your cellular in a deal valued at $4.4 billion. The acquisition is aimed at expanding T mobile coverage in rural areas.
Timo Ballas up a little shy of 1%. Taking a look at the markets, we will start here on Bay Street and see how the TSX Composite Index is doing. A bit of a down day. Nothing dramatic.
Down 66 points or one third of a percent.
South of the border, the S&P 500, what's going on? What have investors got on the mind?
Not a lot of conviction in either direction. We are now up two points or six ticks.
We are back now with Ben Gossack commenting your questions about global stocks. Let's get to them. Someone wants to know, how come gold and copper stocks have not participated in the rally?
The rally means of the underlying commodity.
>> Again, pattern matching I think is really important.
A long time ago, when I started learning about stocks and building of coverage, people talked about, is it gold or copper, could be coffee beans, you name it, wheat.
And so if you really wanted to play the cycles, rather than focus on the commodity, he by the corporate's that handle these materials because effectively, a company has operating leverage.
So yes, you have a benefit from the topline but the bottom line will accelerate because they have the balance sheets. What's notable to me is that we have seen gold reach new heights, we have seen copper breakout, but when I look at a First Quantum or Freeport, if I look at all the gold producers, they are not participating in this rally. Someone could say, hey, it's just a matter of time. But rather than anticipate what you want to see, it's more like it, why isn't it?
So sometimes we just don't have all the answers to these questions.
What is telling me is maybe that these moves are going to be short-lived.
I have a couple of theories. Maybe the gold rally in central banks buying because they are setting themselves up for some type of conflict and they are worried about the US putting sanctions, that's a theory, I have no idea. But if that is short-lived, why would someone bid up a Barrick Gold? I assure you, there are incredibly brilliant people that study the stocks every day and they know every ounce of gold out there and it's not like it's lost on them that gold has broken out and those stocks have not followed. If they wanted to take up the stocks, they would.
Same thing with copper. We have heard of it being a short squeeze.
If it is a short squeeze and short-lived, why would someone take risk capital and risk it on a First Quantum, again, which has other idiosyncratic issues but let's say a… Any other sort of copper related stock. It just tells me that these things are not translating to the corporate.
The other thing is it could be as simple as the fact that things are more extensive.
Employees payrolls are higher, and so their cost structure requires an even higher commodity price to justify the bottom line.
>> Interesting ideas there to put into your own research. Let's take another question from the audience.
Someone wants to get your outlook on the energy sector.
>> There was a bit of a you could say euphoric feeling across energy may be about a month, month and 1/2 ago.
Again, when we do our pattern mention, looking at charts, we see energy was lifting off. Oil was starting to work again.
Gasoline prices were lifting off but that is sort of faded in the stocks have started to underperform.
So again, I feel like that energy… It feels that that euphoria has subsided with the exception of Canada.
It does look like the Canadian producers, their stocks are still working.
Again, we could come up with a theory and say that's the structure of the Canadian market. We have also seen the Trans Mountain Pipeline expand.
There was a differential. Again, oil is oil but it depends on where it's located and if we can't get our products onto the market, we trade at a discount.
We can come up with a theory. There are many truths out there, some are more truthful and someone could probably make a case and say that differential is starting to close and so maybe that's why they Canadian energy producers are doing better. But I still see them as being a pocket. It's pretty challenging in the US and elsewhere.
>> You mention off the top of the show that the world needs more and more power in one of the sources going to be? You also mentioned natural gas. The longer term, for the whole energy transition, I think people are still trying to wrap their heads around it.
The carbon economy will fade as the easy and electricity takes over.
Where are we and where we headed?
>> I think it's one of these things where people probably pull forward the future, like all things. I think we have a ways to go.
I think it's tough. Let's say these data centres need natural gas. But every time we drill these wells we jewel them again, we get more gas then we are getting oil.
It's tough to say I will buy natural gas because I think we need to use it to power data centres.
Some of these utilities or these new power generations are going to take another 3 to 10 years. So it's exciting, but at the same time, like all things, manage your expectations.
A few years ago, I was promised driverless cars and we are still not there yet, right? So the future will be bright, it's just that sometimes it takes a lot longer than we expect.
>> Someone who follows your work or at least your appearances here I think is behind question. Can you get your outlook for industrials?
>> Again, when you look at all the sectors, so take his back, discretionary rollover, utilities, interesting but maybe hitting a ceiling. Industrials are still looking exceptional and once it also interesting to me is that you cannot see on a market cap basis, so the big, large, US industrials, like a Honeywell, UMP, UPS, that are still struggling, and that obscures all the great stuff that's happening. These are being tied to data centre expansion, to decarbonisation, electrification trends. As far as we can tell, in Canada, US, Europe and Asia, I see industrials working everywhere and then what we are doing on our portfolio side is that we are just managing our exposure.
So one element of risk that you could add to your portfolio is that you just get addicted to a signal and then you just keep going at that signal and then you create an imbalance in your portfolio and at some point, the market will say, we have enough data centre capacity or expansion as is and we need to digest it and I expect at that point, that's when the stocks will underperform.
So I expect semis and those industrials to underperform around the same time. And so you should monitor how much exposure you have to that.
Like all things, it's great when it works, and like all things, things sort of have to rebalance themselves.
And so that's one piece of advice. Monitor your exposure. You like one thing, you see another thing, buying two of the same thing is not diversifying, it's just compounding the bed. So that's my recommendation to most people.
>> Interesting insights on that one.
As always, make sure you do your own research before making any investment decisions. We are going to get back to your questions on global stocks and just moments time.
And a reminder that you can get in touch with us any time. Just email moneytalklive@td.com.
Now it's get to our educational segment of the day. If you're looking to screen through different ETFs, what progress will so can help. Ryan Massad, Senior client education instructor at TD Direct Investing has more.
>> Things, great. There are number of ways you can search for ETFs and web broker. A lot of different things. It may seem a bit overwhelming but we can break it down. Let them into web broker. And web broker, we can click on the research tab. Then under the investments tab, we are going to go to ETFs. Once we are in there, we're going to have an overview of ETFs in a number of different ways. This connects with different parts of the broker that talk about ETFs that allows to search for ETFs.
The first thing off the bat is all across this page, you are going to see these Canadian and US flags. It in the top right corner, if you want to switch this to a Canadian or a US view, you're gonna do that on the top right corner here. So if I wanted to look at the ETF market in the US, then I just have to click on this US flag and it would switch everything, all of the features on the site, to the US market. I can switch back Canadian at any time. Each submenu as well so I can click on that if I want to change things around.
First things first, if you are looking at categories, there are a number of different ways you can jump into categories.
You can look at the top-performing categories. For example, we have a chart on the top left.
You can add categories to that chart and it will actually draw out those, the performance of that. On the right here, we've got movers, so if you're looking at today's movers, so the gainers or the losers in dollars or percentages, new 52 week highs or lows in those ETFs, you're going to have a nice list here.
Even here, you can see where you would like to screen for. Is it all ETFs? Is it standard ETFs? Is it inverse index? And so on.
One other section I want you to see here is if I scroll all the way down to the right, this little section here is connected to our ETFs screeners tool that is also available to you on web broker, but you can get to it from here.
You would say, I want to screen the market for some ETFs in certain situations, perhaps I would like to include only index ETFs, I would like only Canadian and I can go through some of the main categories and quickly search. I can see down here I've got matches, I can click on view matches and I'm going to get a nice list of ETFs.
Now, from this list, if I like it, I can click on a couple that I might want to compare and then I will hit the compare button and it will bring them up side by side which will allow me to much more easily compare those that I want to see.
If any of these words to interest me, all I have to do is go up here to maybe the buy button for any of them, click on by and it will go ahead and bring me to that order entry ticket. So there are a lot of tools here within web broker that will allow you to search for ETFs. It makes it a little bit easier because the ETF market is a bit daunting and I strongly recommend you jump into that ETF section to make things a little bit easier for you.
>> Our thanks to Ryan Massad, Senior client education instructor at TD Direct Investing. For more educational resources, you can check out the education Centre on what broker or use this QR code to navigate to TD Direct Investing's Instagram page. There, you will find more informative videos.
We are back with Ben Gossack, taking your questions about global stocks. One just came in. Do you see a future for production of electricity through fusion?
>> I'm very bullish on human ingenuity.
Quantum computing is still not there yet.
If you are not able to put urea into fertilizer, we could not feed a growing population for the world.
I'm long human ingenuity, I'm sure we can come up with fusion networks, it's probably not tomorrow, but the very fact that we know that we have a shortfall and a problem means people are going to look at it and study it. So yes, one day is probably all I can say.
In a public stock, it's probably early days. It wasn't so long ago that we did not want to own anything tied to nuclear, and then all of a sudden, people do so watch narratives, we have seen for even some companies, I've seen the narrative flipped from all of disaster to you this is going to work out four or five times and we haven't even crossed halfway through the year. To watch the narratives.
But yeah, I'm long on human ingenuity.
>> Trust our abilities to figure things out in the long run. Another audience question. Someone wants to know if you see any true large-cap value plays currently?
>> I struggle with the word value.
So when I joined this industry, the question would be, Greg, are you a growth investor or a value investor? And I'd be like, why can't I just buy stocks that are going up?
Typically, when it comes to value, that's been based on a valuation, so that's typically been in the form of P/E ratios, price-to-earnings, something that size considered expensive and that might be a growth stock, that would have a high P/E ratio, and stuff with low PE would be value and you would look for something with a 10 PE and if it came a 12 PE, this a 20% appreciation and that's pretty good.
But for me, I've struggled with that. I've actually lost more money trying to chase stuff that I thought was cheap and the reason why is I think the price of stocks is pretty smart, it's the E, that I think a bunch of analysts, they can be slow, so what might look like value is really an expensive stock.
>> Were talking about the E part of the equation, that's usually forward earnings.
That's why said the part about analysts, we think this, it hasn't happened yet.
>> Just like we like to look at fractions, PE is a fraction. Let's say the price anticipated something bad, so it goes down. So your P/E ratio actually looks like that stock got cheaper because the analysts have not adjusted their earnings.
Maybe they are waiting for the earnings call and then, when the news comes out, they will be like, okay, I will take it down, and now your stock is actually expensive. Maybe the price anticipated something bad.
So I'm sure someone can find a basket of what they consider large-cap stocks have not worked in this bull market and: value and I'm sure there is opportunities out there.
That typically has not been my style but all I know is that there are many different ways to make money and markets.
I think that's exciting, and so there is going to be a way for you to look for stocks that have not participated that might be mis-valued and that's what you love to do and have at it. That's, we need to have those assets replaced.
>> Let's get to another question from the audience, another one that's been in the headlines quite a bit. What's your view on bullying?
>> Yeah, so… [laughing] I have not had the greatest experiences in the field. Not talking about the stock, just talking about aircraft. What I would say in general, let's take a step back from Boeing, I'm excited about commercial airspace.
That's, again, tied to travel.
People have made decisions but they have chosen that they love travel and travel is addictive.
And just because Boeing is a household name, it doesn't have to be the stock that you own to participate in this.
There are two majors, Airbus and Boeing, is just Boeing has these issues. They are not going to go away.
But there are so many different exciting areas. We have seen it was some of the online travel agencies, they've done really well.
We've seen aircraft engine suppliers do really well.
After market has done really well.
So I think there are a lot of exciting stories and commercial airspace and I think Boeing has challenges and it doesn't look like it's going away that quickly and I think the stock prices telling you… >> Don't expect a quick resolution.
>> It's not large-cap value is what I am trying to say.
>> That's a take on Boeing there. We'll get back to questions for Ben Gossack on global stocks in just a moment's time.
As always, make sure you do your own research before making any investment decisions.
And a reminder that you can get in touch with us at any time.
Do you have a question about investing or what's driving the markets?
Our guests are eager to hear what's on your mind, so send us your questions.
There are two ways you can get in touch with us.
You can send us an email anytime at moneytalklive@td.com or you can use the question box right below the screen here on WebBroker. Just write in your question and hit send.
We'll see if one of our guests can get you the answer right here at MoneyTalk Live.
If you cast your mind back to the second half of last year, there was a feeling out there that progress is being made on inflation south of the border. Of course, that stalled earlier this year, leaves a lot of questions in the market. Anthony Okolie joins us now looking at a TD Securities forecast about US inflation and some implications for the Fed. But if we got here?
>> All eyes will be on this Friday's PCE data. There is growing speculation that the data will show that inflation cooled in April and that's because we already got the US CPI and PPI data, which suggest that core and headline inflation lost further momentum last month. Now, again, as Greg mentioned, this came after inflation all but stalled earlier this year. As this chart shows, the Fed focuses on the six month percentage change on an annualized basis due to volatility but as you can see, this too has stalled out recently and there are a couple of reasons why this is happening. One of course is services have shot up.
Consumers are paying more for non-housing costs, things like financial services, insurance, even daycare. The second thing is also shelter costs. We have heard a lot about that. Shelter costs have accelerated.
Interesting stat, that adds a full percentage to core PCE inflation, that's more than double the pre-pandemic contribution.
What to expect for the April PCE? TD Securities believes that PCE, the headline will come in below consensus, .2% in April, that's down versus March. They see a super core PCE, this zooms in on those services, prices or services.
They see that cooling as well.
Year-over-year headline and core, both are expected to cool. We are also going to get some data on consumer spending in April and TD Securities expects income growth to come down while spending remains strong but overall, TD Securities thinks that the data is going to continue to support their view of inflation that eventually will track back to the path that is consistent with the Federal Reserve target over the coming months.
>> Talking about what we were seeing last year, heading into this year, the expectation was that the Fed might cut three or four times. That has been pushed back with the stall that you are talking about. You put all that together, what is the thinking that can mark their questions as to whether the Fed will cut this year.
>> There are questions to that. T security things that in the near term, the Federal Reserve will be cautious in their stance.
However, they do expect the Federal Reserve will cut two times, with the first cut happening in September, the second 1 Happening in December. We'll have to wait and see what happens.
>> Thanks for that, Anthony.
>> My pleasure.
>> MoneyTalk's Anthony Okolie.
Now, for an update on the markets.
We are having a look at TD's Advanced Dashboard, a platform designed for active traders available through TD Direct Investing.
This is the heat map function, we got a nice view of the market movers. We are going to go through the TSX 60 by Price and volume to see what's happening out there today.
Bit of a mixed picture an energy bucket.
You see Cenovus's up a little more than 2% and some of the other oil and gas brother and not rallying to that degree. The financial space seems to be a sore point for the market. You've got Manulife and Sun Life down, bit of a bid into some of those mining names. South of the border, as Anthony was saying, big questions regarding how the different pieces of the inflation puzzle fit together, the PCE is coming out this Friday, the preferred gauge of the Fed.
It's a big day for the chipmakers today, Nvidia's up almost 6%, that off the back of the market being pleased with their earnings and forecast from last week.
Competitor AMD up almost 4% as well.
Elsewhere, not seeing as much grain. In the healthcare space, Pfizer is down, CVS Health care as well.
And the financials are not showing us all that much on Wall Street today.
We are back with Ben Gossack from TD Asset Management, let's get back to your questions here.
Apple. Someone says, there does not seem to be much innovation coming from Apple recently, no interesting products. Our its best days behind it?
>> Yeah, you probably could've said that five years ago.
People would say it hasn't done anything since Steve Jobs. So the way I view Apple, to me, it's always been a cyclical stock.
That was more apparent when it was all about the iPhones and we were getting the floor, the five and then the six which is unprecedented. In fact, you could argue that they just copied the android phones or the bigger screen format.
>> Which Steve Jobs never wanted to do, right?
>> That is long behind us.
Market has told people they want big phones. And then China finally got access to the iPhone. It's never been as good as the iPhone 6, but it's still a cycle.
That has gotten less of a signal as services and all these other air buds have done really well, but to me it still cyclical and so last year, you had to own Apple. This year, it's been an honour performer. At this point, I think it's taken a pause. I just don't know if the next move is higher or lower.
But I think of people treated as a cyclical, they would have different expectations of a company like Apple.
Again, it's a lot of cash, fortresslike balance sheet, it is a product that people want. I would also caution that it's not a luxury. Everyone has an iPhone. That's not luxury. They just pay a price for it but that doesn't mean, it's not like, I want to buy an iPhone, iPhone says you are not entitled.
>> When everyone on the go train including me and I'm doing work in the morning on my iPhone, everyone has an iPhone.
>> Exactly.
>> Doesn't make me special.
>> I caution people when I hear it being talked about as a luxury stock, it's not luxury. At this point, yes. We are probably waiting for another type cycle.
So all eyes will probably look to September.
I know they have a developer conference coming up next month, so that probably will set the stage for the software. And then, we are probably looking for some type of new hardware for the 16, the 15 and the 14 and the 13 kind of all look alike so if the 16 kind of looks like the 15, again, there is a massive installed base, so was going to drive them to update it? The last time was supposed to be 5G iPhones but that was a story that didn't really work. Now, your hearing stories about AI smart phones. We will see if that drives people to upgrade. If they do upgrade, that would be a very powerful cycle.
>> We are coming up on a 16!
I have a 12. Don't judge me.
Let's squeeze one more question and before we say goodbye to Ben today. Someone wants to get your opinion on fintech stocks.
>> Yeah, so, fintech has a broad definition. I would say through COVID, that became tied to companies like Square that became block, Sophia, so may be doing financial services on line.
In prior life when I was a bank analyst, fintech was talking, we would look at let's say a company like a Citigroup or a J.P. Morgan, you look at every service they provide and there was a startup that was going to attack everything and destroy the mode of things. Fast forward to today, that has not happened. The banks are even stronger and most of those companies that were going to disrupt the banks became a provider of technology. The other stories that we got was about how sort of blockchain's and all these different crypto current seas were going to replace certain rails and that's the term that's used about how money moves around. Have not seen that yet. Where we are seeing sort of weakness has been, it's an element I call fintech but it's the companies that work with the merchants. Think of the point of payment system, the software that goes behind it, there is vicious competition right now, and so all of the stocks have really underperformed. So I think fintech is an evolution. Everything has become more and more digital.
But all of the stuff, again, maybe someone thinks that there is value in their, most stuff tied to fintech has been underperforming.
And so that's not, again, exciting elements and financials that I know I really enjoy. That has not been an area that has been quite as exciting.
>> Before let you go, I want to take you back around to the top of the conversation on what was happening in the market. These to be saying, it still is saying, but it seems like a lot of people are paying attention, we are almost in May and seeing markets touch new highs. What's going on?
>> Again, I think we have been in a bull market for almost 2 years.
I think people only took notice of that in November when prices took off. I also believe that people are just not invested in markets or other risk assets. We have seen the staff, we know there's a ton of cash on the sidelines and I think it's hard to buy it when everyone keeps telling you that you were buying at the height. So I think there is going to be, money is going to slowly come into the markets which I think is really healthy and it doesn't mean that we can't have a 5% pullback, is 10% pullback. My belief, and we will see again, it's just one person's belief, that will be short-lived as the money slowly comes back into markets. I think that might be the difference. But again, tomorrow, we can start to sell off and you will have timestamp this, and I'd be like, yeah.
[laughing] >> One guys opinion. It's always a pleasure having you.
>> Love our chats.
>> Look forward to the next one.
Our thanks to Ben Gossack, Managing Director and portfolio manager at TD Asset Management.
As always, make sure you do your own research before making any investment decisions.
if we didn't get to your question today, we will aim to get into future shows. Stay tuned for tomorrow show. David Picton, Pres. and CEO of Picton Mahoney Asset Management will be our guest in your questions about market strategy. You can get a head start with those questions, just email moneytalklive@td.com.
That's all the time we were for the show today. Thanks for watching and we will see you tomorrow.
[music]
Every day, I'll be joined by guests from across TD, many of whom you'll only see here.
We're going to take you through what's moving the markets and answer your questions about investing.
Coming up on today's show, we are going to discuss which sectors are showing market leadership and which have rolled over with TD Asset Management Ben Gossack.
MoneyTalk's Anthony Okolie is going to give us a preview of Friday's key US inflation report.
And in today's WebBroker education segment, Ryan Massad is going to show us how you can screen for ETFs on the platform.
Here's how you can get in touch with us.
Just email moneytalklive@td.com or fill out the viewer response box under the video player on WebBroker.
Before we get our Guest of the day, let's get you an update on the markets. A bit of a mixed session. We will start from Bay Street with the TSX Composite Index.
Right now we are down about 66 points, a little shy of the third of a percent.
Among some of the most actively traded names out there include some of the energy names. They were getting a bit with crude prices higher today.
Baytex is up a little more than 3%. Some of the lifeco's including Manulife today taking points off the table.
At 3539, Manulife is pulling back about 1.7%.
South of the border, it's all about inflation, rates, whether the Fed may or may not cut. We are past the bulk of earnings season south of the border. The NASDAQ is up about 80 points or half a percent. And Nvidia, last week it was the big spotlight story coming out with its earnings. The street was please today afterward. Still seems to be pleased.
$1124 per share, Nvidia is up 5.6% today.
And that is your market update.
While the big technology stocks grab all the headlines and are considered by many to be market leaders, and they were actually underperforming for a while. But our future Guest today says big tech is back. Joining us now to discuss that and some of the other trends he's watching his Ben Gossack, managing director and portfolio manager with TD Asset Management. Great to have you back.
>> I'm back on the show, tech is back in performance mode, so yes, ready to discuss markets with you.
>> All eyes are on tech. I know you do great work with the charts. I promised them to the audience.
>> We try to have a very disciplined process and some people would call it pattern matching. You could call it good hygiene.
So this is flossing, brushing. We are looking for pockets of strength and weakness. We are busy people and you rely on let's see the TV or the newspaper to tell you what's going on and they been telling you it's been tech and AI and chips.
But yeah, technology as a sector, has been underperforming for most of this year. It would've peeked out around January.
It wasn't until maybe late April, early May, it started to resume and work again.
Now, we're like, of course, we were never worried, but that is a good chunk of the market. What's impressive is that even though tech was underperforming, that did not stop the S&P 500 from reaching new highs. I think that's really important for people to know, at this market, this bull market that we have been talking about is not just lead by tech.
>> Let's bring up the chart that shows the story here because I know you prepared one for us. Technology sector trends, there we go. What to these trends tell us?
>> You should be seeing two charts on your screen.
The way we look at relative strength and weakness is the refraction. The numerator is the ETFs for the S&P 500 and then we divide that price by the S&P 500.
You just need to use your eyes. If it's going up, it means tech is outperforming, if it's going down… The reason we looked on the left-hand side which is the market cap, so market cap over market cap, equal weight tech over equal weight S&P 500, and this lets us see through the market. If someone were to say, well, tech is working and is only because the large Tech stocks are performing, someone could make a case and we have seen how tech has outperformed but if I can also show it on an equal weight basis, it's kind of like put your hand in a hat, grandma tech stock, have a good chance of outperforming the market.
It tells me it's not just leadership, there is breadth and that's why I like to look at both and you can see that the market cap leaders of technology, the apples and Microsoft's, Nvidia-- we match that pattern on the equal weight which means that it was all tech underperforming. When you have something that is powering up and outperforming, eventually, you have to take a break.
So you run really fast, well, you can't sustain that pace for quite some time, sometimes you need to slow down, take a break, grab some water. When he chart is descending, I can't tell the difference between taking a break and the beginning of a new trend. Maybe you fell and hurt yourself. I have no idea.
Sometimes we need the benefit of hindsight.
When we see that bottoming at the end of April, beginning of May and we see it starting to power up again, then it's like, okay, of course, we were just taking a breather. But all through that pullback, rather than us projecting what we want to see, it's more like what is the market trying to tell us?
>> So on that theme in terms of what is actually happening out there, discretionary stocks, you have some pictures to show us about what's happening in that sector.
>> So this is actually quite notable. It tech coming back, that's great. We have seen Nvidia earnings come back. We have seen all of the peripherals, anything tied to hardware working in… Hard to convince anyone. This is the one where it's like, do you want to see what you want to see or are you listening to what the markets telling you? We are looking at on the left-hand side market cap-weighted discretionary rollover and on the right hand side, you are looking at equal weight.
I don't spend that much time on the market cap side of discretionary because it is so dependent on Amazon and Tesla. They overwhelm everything else within the sector so you're not really learning about discretionary. On the equal weight, what was really notable is that equal weight discretionary outperformed equal weight S&P 500 throughout last year. It was not just the seven magnificent stocks.
Discretionary are the stuff that we want versus the stuff that we need, and so that's kind of a good way of saying, hey, maybe things are better. But now that is rolling over and so if you had a bearish tone, you would say, well, now, this helps me, it helps the consumer.
>> They are starting to feel the heat now from higher borrowing costs and inflation.
>> This is where we had to be careful.
I do see it come down but a lot of… The individual stocks, the same stocks that were underperforming are underperforming more.
We have, let's say, the big brands dependent on China to grow, think of Nike or Starbucks, they have been underperforming, they continue to underperform. Another area that rollover… price competition for companies like McDonald's, again, their cost one up, employee benefits when up, maybe they also took advantage of the market, but they raise prices to the point that people are now protesting. Now they have a five dollar menu and now we sing companies like Restaurant Brands, Burger King or Wendy's respond. Markets like when you raise prices, they hate when there's price competition. So those stocks got worse.
Anything tied to travel, even the cruise lines are doing well. We have seen the hotels do well. We see in the financial tied to travel all do well in the homebuilders. That's something we've talked about the started to work when the Fed started to raise rates, homebuilders continue to have power.
I think Windows rollover is when I will be concerned. To say that McDonald's is going to have competition to make it cheaper for us to buy stuff, is that bad for the consumer?
Is the consumer now on strike? The other thing I would also say and just cautioned people on discretionary is it's more relevant to look at discretionary relative to Staples because it's wants versus needs. And guess what? Those needs, the stocks got even worse. If the world was just discretionary versus Staples and long and short, you would still be better off long discretionary short Staples.
Like all things, it's more complicated. It is notable to me that discretionary is weaker. That is not a great time. But I am not ready to now say, oh, things are really changing. It's just the stuff that was bad got worse.
>> Another space you been taking a look at and sometimes people don't think this is the most exciting area, the utilities.
>> Yes. So utilities, if you can see from our chart, cereal underperformers. You can see on the market cap side, you see it on the equal weight side, and what we are having right now is let's say I underperform and then there's a period of catch up. You talk about when you outperform, you think, sometimes, it's like you can't get any worse so get slightly better. Like, I'm at rock bottom, how low can I go? I can only go from here.
We have seen utilities come up off the bottom.
Now some people would say that's great, I want to be the one that bought at the lowest price and its go through a period of performance. For us, is it just checking back to the original descending line or is it a period where we have a new trend? We don't know, so we wait. And we are already starting to see utilities run into resistance. But what I think is really important to share with people is the market is picking winners and utilities.
We have talked about chips and we have talked about hardware and people want to build data centres and we are starting to see articles now where they're like, guess what? We need to power those data centres.
And we are turning everything else into electricity.
The world is short power, and the market now is picking winners who they think are long power, be it nuclear, natural gas, renewables, and there are a select group of these utility stocks that are just flying in anticipation of, yeah, we are going to need more power generation and those that can provide natural gas and nuclear today are going to be the ones that signed this contract with the Microsoft, and Apple, and Oracle, because we just need so much energy.
>> Fascinating insights with Ben Gossack.
We will get to your questions about global stocks or been in just a moment's time.
And a reminder that you can get in touch with us any time.
Just email moneytalklive@td.com or fill out the viewer response box under the video player on WebBroker.
Right now, let's get you updated on the top stories in the world of business and take a look at how the markets are trading.
Got some fresh signs that iPhone sales are rebounding sharply in China. Data from a state affiliated research firm shows a 53% jump in shipments of foreign branded phones for the month of April. Now, the report does not mention Apple specifically, but I phones are the dominant player in China when it comes to imports.
$191.70 per share, Apple is of a little shy of… The company at the centre of the meme stock races in the spotlight again.
At this moment, up 33%. The retailer announced they raised more than $900 million in recent stock sale. The stock grew sharply and then pulled back earlier this month as the social media account of Roaring Kitty, a key player in the meme stock story, became active again. Some developments to follow. There is a multibillion dollar deal in the US telecom space today. Timo L says it plans to acquire most of your cellular in a deal valued at $4.4 billion. The acquisition is aimed at expanding T mobile coverage in rural areas.
Timo Ballas up a little shy of 1%. Taking a look at the markets, we will start here on Bay Street and see how the TSX Composite Index is doing. A bit of a down day. Nothing dramatic.
Down 66 points or one third of a percent.
South of the border, the S&P 500, what's going on? What have investors got on the mind?
Not a lot of conviction in either direction. We are now up two points or six ticks.
We are back now with Ben Gossack commenting your questions about global stocks. Let's get to them. Someone wants to know, how come gold and copper stocks have not participated in the rally?
The rally means of the underlying commodity.
>> Again, pattern matching I think is really important.
A long time ago, when I started learning about stocks and building of coverage, people talked about, is it gold or copper, could be coffee beans, you name it, wheat.
And so if you really wanted to play the cycles, rather than focus on the commodity, he by the corporate's that handle these materials because effectively, a company has operating leverage.
So yes, you have a benefit from the topline but the bottom line will accelerate because they have the balance sheets. What's notable to me is that we have seen gold reach new heights, we have seen copper breakout, but when I look at a First Quantum or Freeport, if I look at all the gold producers, they are not participating in this rally. Someone could say, hey, it's just a matter of time. But rather than anticipate what you want to see, it's more like it, why isn't it?
So sometimes we just don't have all the answers to these questions.
What is telling me is maybe that these moves are going to be short-lived.
I have a couple of theories. Maybe the gold rally in central banks buying because they are setting themselves up for some type of conflict and they are worried about the US putting sanctions, that's a theory, I have no idea. But if that is short-lived, why would someone bid up a Barrick Gold? I assure you, there are incredibly brilliant people that study the stocks every day and they know every ounce of gold out there and it's not like it's lost on them that gold has broken out and those stocks have not followed. If they wanted to take up the stocks, they would.
Same thing with copper. We have heard of it being a short squeeze.
If it is a short squeeze and short-lived, why would someone take risk capital and risk it on a First Quantum, again, which has other idiosyncratic issues but let's say a… Any other sort of copper related stock. It just tells me that these things are not translating to the corporate.
The other thing is it could be as simple as the fact that things are more extensive.
Employees payrolls are higher, and so their cost structure requires an even higher commodity price to justify the bottom line.
>> Interesting ideas there to put into your own research. Let's take another question from the audience.
Someone wants to get your outlook on the energy sector.
>> There was a bit of a you could say euphoric feeling across energy may be about a month, month and 1/2 ago.
Again, when we do our pattern mention, looking at charts, we see energy was lifting off. Oil was starting to work again.
Gasoline prices were lifting off but that is sort of faded in the stocks have started to underperform.
So again, I feel like that energy… It feels that that euphoria has subsided with the exception of Canada.
It does look like the Canadian producers, their stocks are still working.
Again, we could come up with a theory and say that's the structure of the Canadian market. We have also seen the Trans Mountain Pipeline expand.
There was a differential. Again, oil is oil but it depends on where it's located and if we can't get our products onto the market, we trade at a discount.
We can come up with a theory. There are many truths out there, some are more truthful and someone could probably make a case and say that differential is starting to close and so maybe that's why they Canadian energy producers are doing better. But I still see them as being a pocket. It's pretty challenging in the US and elsewhere.
>> You mention off the top of the show that the world needs more and more power in one of the sources going to be? You also mentioned natural gas. The longer term, for the whole energy transition, I think people are still trying to wrap their heads around it.
The carbon economy will fade as the easy and electricity takes over.
Where are we and where we headed?
>> I think it's one of these things where people probably pull forward the future, like all things. I think we have a ways to go.
I think it's tough. Let's say these data centres need natural gas. But every time we drill these wells we jewel them again, we get more gas then we are getting oil.
It's tough to say I will buy natural gas because I think we need to use it to power data centres.
Some of these utilities or these new power generations are going to take another 3 to 10 years. So it's exciting, but at the same time, like all things, manage your expectations.
A few years ago, I was promised driverless cars and we are still not there yet, right? So the future will be bright, it's just that sometimes it takes a lot longer than we expect.
>> Someone who follows your work or at least your appearances here I think is behind question. Can you get your outlook for industrials?
>> Again, when you look at all the sectors, so take his back, discretionary rollover, utilities, interesting but maybe hitting a ceiling. Industrials are still looking exceptional and once it also interesting to me is that you cannot see on a market cap basis, so the big, large, US industrials, like a Honeywell, UMP, UPS, that are still struggling, and that obscures all the great stuff that's happening. These are being tied to data centre expansion, to decarbonisation, electrification trends. As far as we can tell, in Canada, US, Europe and Asia, I see industrials working everywhere and then what we are doing on our portfolio side is that we are just managing our exposure.
So one element of risk that you could add to your portfolio is that you just get addicted to a signal and then you just keep going at that signal and then you create an imbalance in your portfolio and at some point, the market will say, we have enough data centre capacity or expansion as is and we need to digest it and I expect at that point, that's when the stocks will underperform.
So I expect semis and those industrials to underperform around the same time. And so you should monitor how much exposure you have to that.
Like all things, it's great when it works, and like all things, things sort of have to rebalance themselves.
And so that's one piece of advice. Monitor your exposure. You like one thing, you see another thing, buying two of the same thing is not diversifying, it's just compounding the bed. So that's my recommendation to most people.
>> Interesting insights on that one.
As always, make sure you do your own research before making any investment decisions. We are going to get back to your questions on global stocks and just moments time.
And a reminder that you can get in touch with us any time. Just email moneytalklive@td.com.
Now it's get to our educational segment of the day. If you're looking to screen through different ETFs, what progress will so can help. Ryan Massad, Senior client education instructor at TD Direct Investing has more.
>> Things, great. There are number of ways you can search for ETFs and web broker. A lot of different things. It may seem a bit overwhelming but we can break it down. Let them into web broker. And web broker, we can click on the research tab. Then under the investments tab, we are going to go to ETFs. Once we are in there, we're going to have an overview of ETFs in a number of different ways. This connects with different parts of the broker that talk about ETFs that allows to search for ETFs.
The first thing off the bat is all across this page, you are going to see these Canadian and US flags. It in the top right corner, if you want to switch this to a Canadian or a US view, you're gonna do that on the top right corner here. So if I wanted to look at the ETF market in the US, then I just have to click on this US flag and it would switch everything, all of the features on the site, to the US market. I can switch back Canadian at any time. Each submenu as well so I can click on that if I want to change things around.
First things first, if you are looking at categories, there are a number of different ways you can jump into categories.
You can look at the top-performing categories. For example, we have a chart on the top left.
You can add categories to that chart and it will actually draw out those, the performance of that. On the right here, we've got movers, so if you're looking at today's movers, so the gainers or the losers in dollars or percentages, new 52 week highs or lows in those ETFs, you're going to have a nice list here.
Even here, you can see where you would like to screen for. Is it all ETFs? Is it standard ETFs? Is it inverse index? And so on.
One other section I want you to see here is if I scroll all the way down to the right, this little section here is connected to our ETFs screeners tool that is also available to you on web broker, but you can get to it from here.
You would say, I want to screen the market for some ETFs in certain situations, perhaps I would like to include only index ETFs, I would like only Canadian and I can go through some of the main categories and quickly search. I can see down here I've got matches, I can click on view matches and I'm going to get a nice list of ETFs.
Now, from this list, if I like it, I can click on a couple that I might want to compare and then I will hit the compare button and it will bring them up side by side which will allow me to much more easily compare those that I want to see.
If any of these words to interest me, all I have to do is go up here to maybe the buy button for any of them, click on by and it will go ahead and bring me to that order entry ticket. So there are a lot of tools here within web broker that will allow you to search for ETFs. It makes it a little bit easier because the ETF market is a bit daunting and I strongly recommend you jump into that ETF section to make things a little bit easier for you.
>> Our thanks to Ryan Massad, Senior client education instructor at TD Direct Investing. For more educational resources, you can check out the education Centre on what broker or use this QR code to navigate to TD Direct Investing's Instagram page. There, you will find more informative videos.
We are back with Ben Gossack, taking your questions about global stocks. One just came in. Do you see a future for production of electricity through fusion?
>> I'm very bullish on human ingenuity.
Quantum computing is still not there yet.
If you are not able to put urea into fertilizer, we could not feed a growing population for the world.
I'm long human ingenuity, I'm sure we can come up with fusion networks, it's probably not tomorrow, but the very fact that we know that we have a shortfall and a problem means people are going to look at it and study it. So yes, one day is probably all I can say.
In a public stock, it's probably early days. It wasn't so long ago that we did not want to own anything tied to nuclear, and then all of a sudden, people do so watch narratives, we have seen for even some companies, I've seen the narrative flipped from all of disaster to you this is going to work out four or five times and we haven't even crossed halfway through the year. To watch the narratives.
But yeah, I'm long on human ingenuity.
>> Trust our abilities to figure things out in the long run. Another audience question. Someone wants to know if you see any true large-cap value plays currently?
>> I struggle with the word value.
So when I joined this industry, the question would be, Greg, are you a growth investor or a value investor? And I'd be like, why can't I just buy stocks that are going up?
Typically, when it comes to value, that's been based on a valuation, so that's typically been in the form of P/E ratios, price-to-earnings, something that size considered expensive and that might be a growth stock, that would have a high P/E ratio, and stuff with low PE would be value and you would look for something with a 10 PE and if it came a 12 PE, this a 20% appreciation and that's pretty good.
But for me, I've struggled with that. I've actually lost more money trying to chase stuff that I thought was cheap and the reason why is I think the price of stocks is pretty smart, it's the E, that I think a bunch of analysts, they can be slow, so what might look like value is really an expensive stock.
>> Were talking about the E part of the equation, that's usually forward earnings.
That's why said the part about analysts, we think this, it hasn't happened yet.
>> Just like we like to look at fractions, PE is a fraction. Let's say the price anticipated something bad, so it goes down. So your P/E ratio actually looks like that stock got cheaper because the analysts have not adjusted their earnings.
Maybe they are waiting for the earnings call and then, when the news comes out, they will be like, okay, I will take it down, and now your stock is actually expensive. Maybe the price anticipated something bad.
So I'm sure someone can find a basket of what they consider large-cap stocks have not worked in this bull market and: value and I'm sure there is opportunities out there.
That typically has not been my style but all I know is that there are many different ways to make money and markets.
I think that's exciting, and so there is going to be a way for you to look for stocks that have not participated that might be mis-valued and that's what you love to do and have at it. That's, we need to have those assets replaced.
>> Let's get to another question from the audience, another one that's been in the headlines quite a bit. What's your view on bullying?
>> Yeah, so… [laughing] I have not had the greatest experiences in the field. Not talking about the stock, just talking about aircraft. What I would say in general, let's take a step back from Boeing, I'm excited about commercial airspace.
That's, again, tied to travel.
People have made decisions but they have chosen that they love travel and travel is addictive.
And just because Boeing is a household name, it doesn't have to be the stock that you own to participate in this.
There are two majors, Airbus and Boeing, is just Boeing has these issues. They are not going to go away.
But there are so many different exciting areas. We have seen it was some of the online travel agencies, they've done really well.
We've seen aircraft engine suppliers do really well.
After market has done really well.
So I think there are a lot of exciting stories and commercial airspace and I think Boeing has challenges and it doesn't look like it's going away that quickly and I think the stock prices telling you… >> Don't expect a quick resolution.
>> It's not large-cap value is what I am trying to say.
>> That's a take on Boeing there. We'll get back to questions for Ben Gossack on global stocks in just a moment's time.
As always, make sure you do your own research before making any investment decisions.
And a reminder that you can get in touch with us at any time.
Do you have a question about investing or what's driving the markets?
Our guests are eager to hear what's on your mind, so send us your questions.
There are two ways you can get in touch with us.
You can send us an email anytime at moneytalklive@td.com or you can use the question box right below the screen here on WebBroker. Just write in your question and hit send.
We'll see if one of our guests can get you the answer right here at MoneyTalk Live.
If you cast your mind back to the second half of last year, there was a feeling out there that progress is being made on inflation south of the border. Of course, that stalled earlier this year, leaves a lot of questions in the market. Anthony Okolie joins us now looking at a TD Securities forecast about US inflation and some implications for the Fed. But if we got here?
>> All eyes will be on this Friday's PCE data. There is growing speculation that the data will show that inflation cooled in April and that's because we already got the US CPI and PPI data, which suggest that core and headline inflation lost further momentum last month. Now, again, as Greg mentioned, this came after inflation all but stalled earlier this year. As this chart shows, the Fed focuses on the six month percentage change on an annualized basis due to volatility but as you can see, this too has stalled out recently and there are a couple of reasons why this is happening. One of course is services have shot up.
Consumers are paying more for non-housing costs, things like financial services, insurance, even daycare. The second thing is also shelter costs. We have heard a lot about that. Shelter costs have accelerated.
Interesting stat, that adds a full percentage to core PCE inflation, that's more than double the pre-pandemic contribution.
What to expect for the April PCE? TD Securities believes that PCE, the headline will come in below consensus, .2% in April, that's down versus March. They see a super core PCE, this zooms in on those services, prices or services.
They see that cooling as well.
Year-over-year headline and core, both are expected to cool. We are also going to get some data on consumer spending in April and TD Securities expects income growth to come down while spending remains strong but overall, TD Securities thinks that the data is going to continue to support their view of inflation that eventually will track back to the path that is consistent with the Federal Reserve target over the coming months.
>> Talking about what we were seeing last year, heading into this year, the expectation was that the Fed might cut three or four times. That has been pushed back with the stall that you are talking about. You put all that together, what is the thinking that can mark their questions as to whether the Fed will cut this year.
>> There are questions to that. T security things that in the near term, the Federal Reserve will be cautious in their stance.
However, they do expect the Federal Reserve will cut two times, with the first cut happening in September, the second 1 Happening in December. We'll have to wait and see what happens.
>> Thanks for that, Anthony.
>> My pleasure.
>> MoneyTalk's Anthony Okolie.
Now, for an update on the markets.
We are having a look at TD's Advanced Dashboard, a platform designed for active traders available through TD Direct Investing.
This is the heat map function, we got a nice view of the market movers. We are going to go through the TSX 60 by Price and volume to see what's happening out there today.
Bit of a mixed picture an energy bucket.
You see Cenovus's up a little more than 2% and some of the other oil and gas brother and not rallying to that degree. The financial space seems to be a sore point for the market. You've got Manulife and Sun Life down, bit of a bid into some of those mining names. South of the border, as Anthony was saying, big questions regarding how the different pieces of the inflation puzzle fit together, the PCE is coming out this Friday, the preferred gauge of the Fed.
It's a big day for the chipmakers today, Nvidia's up almost 6%, that off the back of the market being pleased with their earnings and forecast from last week.
Competitor AMD up almost 4% as well.
Elsewhere, not seeing as much grain. In the healthcare space, Pfizer is down, CVS Health care as well.
And the financials are not showing us all that much on Wall Street today.
We are back with Ben Gossack from TD Asset Management, let's get back to your questions here.
Apple. Someone says, there does not seem to be much innovation coming from Apple recently, no interesting products. Our its best days behind it?
>> Yeah, you probably could've said that five years ago.
People would say it hasn't done anything since Steve Jobs. So the way I view Apple, to me, it's always been a cyclical stock.
That was more apparent when it was all about the iPhones and we were getting the floor, the five and then the six which is unprecedented. In fact, you could argue that they just copied the android phones or the bigger screen format.
>> Which Steve Jobs never wanted to do, right?
>> That is long behind us.
Market has told people they want big phones. And then China finally got access to the iPhone. It's never been as good as the iPhone 6, but it's still a cycle.
That has gotten less of a signal as services and all these other air buds have done really well, but to me it still cyclical and so last year, you had to own Apple. This year, it's been an honour performer. At this point, I think it's taken a pause. I just don't know if the next move is higher or lower.
But I think of people treated as a cyclical, they would have different expectations of a company like Apple.
Again, it's a lot of cash, fortresslike balance sheet, it is a product that people want. I would also caution that it's not a luxury. Everyone has an iPhone. That's not luxury. They just pay a price for it but that doesn't mean, it's not like, I want to buy an iPhone, iPhone says you are not entitled.
>> When everyone on the go train including me and I'm doing work in the morning on my iPhone, everyone has an iPhone.
>> Exactly.
>> Doesn't make me special.
>> I caution people when I hear it being talked about as a luxury stock, it's not luxury. At this point, yes. We are probably waiting for another type cycle.
So all eyes will probably look to September.
I know they have a developer conference coming up next month, so that probably will set the stage for the software. And then, we are probably looking for some type of new hardware for the 16, the 15 and the 14 and the 13 kind of all look alike so if the 16 kind of looks like the 15, again, there is a massive installed base, so was going to drive them to update it? The last time was supposed to be 5G iPhones but that was a story that didn't really work. Now, your hearing stories about AI smart phones. We will see if that drives people to upgrade. If they do upgrade, that would be a very powerful cycle.
>> We are coming up on a 16!
I have a 12. Don't judge me.
Let's squeeze one more question and before we say goodbye to Ben today. Someone wants to get your opinion on fintech stocks.
>> Yeah, so, fintech has a broad definition. I would say through COVID, that became tied to companies like Square that became block, Sophia, so may be doing financial services on line.
In prior life when I was a bank analyst, fintech was talking, we would look at let's say a company like a Citigroup or a J.P. Morgan, you look at every service they provide and there was a startup that was going to attack everything and destroy the mode of things. Fast forward to today, that has not happened. The banks are even stronger and most of those companies that were going to disrupt the banks became a provider of technology. The other stories that we got was about how sort of blockchain's and all these different crypto current seas were going to replace certain rails and that's the term that's used about how money moves around. Have not seen that yet. Where we are seeing sort of weakness has been, it's an element I call fintech but it's the companies that work with the merchants. Think of the point of payment system, the software that goes behind it, there is vicious competition right now, and so all of the stocks have really underperformed. So I think fintech is an evolution. Everything has become more and more digital.
But all of the stuff, again, maybe someone thinks that there is value in their, most stuff tied to fintech has been underperforming.
And so that's not, again, exciting elements and financials that I know I really enjoy. That has not been an area that has been quite as exciting.
>> Before let you go, I want to take you back around to the top of the conversation on what was happening in the market. These to be saying, it still is saying, but it seems like a lot of people are paying attention, we are almost in May and seeing markets touch new highs. What's going on?
>> Again, I think we have been in a bull market for almost 2 years.
I think people only took notice of that in November when prices took off. I also believe that people are just not invested in markets or other risk assets. We have seen the staff, we know there's a ton of cash on the sidelines and I think it's hard to buy it when everyone keeps telling you that you were buying at the height. So I think there is going to be, money is going to slowly come into the markets which I think is really healthy and it doesn't mean that we can't have a 5% pullback, is 10% pullback. My belief, and we will see again, it's just one person's belief, that will be short-lived as the money slowly comes back into markets. I think that might be the difference. But again, tomorrow, we can start to sell off and you will have timestamp this, and I'd be like, yeah.
[laughing] >> One guys opinion. It's always a pleasure having you.
>> Love our chats.
>> Look forward to the next one.
Our thanks to Ben Gossack, Managing Director and portfolio manager at TD Asset Management.
As always, make sure you do your own research before making any investment decisions.
if we didn't get to your question today, we will aim to get into future shows. Stay tuned for tomorrow show. David Picton, Pres. and CEO of Picton Mahoney Asset Management will be our guest in your questions about market strategy. You can get a head start with those questions, just email moneytalklive@td.com.
That's all the time we were for the show today. Thanks for watching and we will see you tomorrow.
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