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[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 show, we'll discuss whether there are any sectors of the market that are still benefiting from the China reopening trend with Ben Gossack, from TD Asset Management. MoneyTalk's Anthony Okolie is going to have a look at a new report on Canadian credit card spending.
And in today's WebBroker education segment, Caitlin Cormier will show us how you can get the ball rolling on finding new investment ideas using the platform. So 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. He will start here at home with the TSX Composite Index. Right now down about 66 points or 1/3 of a percent.
After two days of some selling pressure on American benchmark food, you're saying in that space but still it was a sizable step back in the past couple of days.
Noticing some weakness in the financials as well, including Manulife, the big life go. You've got Manulife had 2588 per share, down about 2.
7%.
The price of gold though is firming. It's about 2050 bucks per ounce and we are seeing some names like Barrick on the up move. 2795 for Barrett, you're up about 2.7% on that one. South of the border, we have further rumblings across the US regional banks weighing on the broader market. S&P 500 down 36 points, almost a full percent. The tech heavy NASDAQ, want to see how it's holding up against the broader market. They are still in negative territory, down 45 points or 1/3 of a percent. Want to show you PacWest. This is the one that announced after closing bells yesterday, a California-based bank. It says it's exploring its options, including a possible sale.
it's not seeing out of the ordinary outflow. It is at 52% to the downside.
And that's your market update.
One of the big themes for investors to start the year was the surprise reopening of China after years of COVID restrictions. But as we get deeper into the year, which sectors of the market are still benefiting from the trend which had begun to lose some steam? 20 us now to discuss is Ben Gossack, Berkeley manager with TD Asset Management. Great to have you back on the show.
>> Happy to be back. Love chatting with you.
>> That was one of the stories at the beginning of the year.
Stocks had a good start to the year and that was one of the catalysts, right? China reopens and everyone thinks, well, this is going to be good for everything.
You have been taking a look at some sectors that got the bounce early and not so much now.
What's happening under the surface there?
> Yeah, so I mean, at the start of the year, we always look into our crystal balls.
Find out what's going to happen.
Definitely, in China, it was a big catalyst. My bingo card did not have deposit crisis issues for US regional banks so you can't win them all. What was really interesting about the China reopening, when we spoke to management teams in Novemberthat really depend on China, we had no visibility on when Chinery's reopening.
so when we got that surprise reopening in December, the game was on.
And so what you saw was that everyone got the benefit that China was reopening.
It didn't matter if you were a material stock, tight to travel or consumer consumption, industrial activity.
It was just everything was China and there was almost a full mode, a fear of missing out because stock prices went up.
One of the first sectors that really caught our eye was the casino stocks in Macau. So again, no activity.
Their stocks had been cratered and right away, they were up hundred percent.
And so what we have seen now and we are about five, six months into reopening, they now have to grow into those price movements.
So we've had these 100% moves off the bottom. Some have retraced by 20% but they are going sideways.
The enduring sectors, the one that has continued to work, it has been luxury.
This is a theme that we have talked about for quite some time. China reopening has helped to fuel the luxury companies and we've seen companies like Hermus, LVMH report and their stocks are pushing two brand-new highs.
The part that's quite interesting, and I think we have some charts to show the performance, people talk about the choppiness of the market and the uncertaintyof the market and where to put their allocation. We've seen people gravitate to cash in GICs.
But when you look at a chart like an LVMH or Hermes or other luxury stocks, you would know that there were any issues going on. It's quite amazing.
there some specifically US listed companies that we get the benefit of China, so let's say a Nike or Starbucks or Estée Lauder.
we have seen mixed results.
>> Starbucks is supposed to be counting on China for a big growth engine forward.
>> And in fact, Greg, they reported yesterday. There March comp, comparable store sales in March alone wrote 30%. The activity was there.
What's disappointing for investors and why the stock took back 9% in its market Is that the expectations weren't carried forward throughout the rest of the year.
So there's this question now. We have seen this big move inactivity.
Does that continue? Is management telling us that that is not sustainable?
Or is management being very conservative, wanting to lower our expectations and something they can grow into?
I lean more on the conservative part.
But definitely the activity is showing up.
>> Estée Lauder, this is makeup. You get to go out of the house, do things, you want to look good.
I think you have it as one of those companies that is losing steam, what's going on?
>> It's prestige.
Their margins look a lot like a software company.
This is a very profitable business trade was really interesting is if you look at the stock chart for Estée Lauder, great, just prior to COVID, in October, it was hitting lows, it's a benefit of reopening.
Estée Lauder, a lot of their sales are tied to travel.
If people are going to travel somewhere, they go to duty-free, they will buy makeup and all those stores that you see in the airport.
So they depend on that and they got the benefit of the doubt.
And much like investors, we had to make assumptions on which companies would benefit from reopening.
Management teams have to make assumptions of how much do I order? How much do I try to sell to the channel, the end merchant that is going to sell to you and me so that we can look good?
And so they made a lot of big assumptions.
And so there is activity, just like we said the Starbucks, there is activity but they are not converting the customer to those sales. So right now, they have a very bloated inventory and a bloated channel.
So they make a revenue recognition when they sell to the merchant and right now the merchant is just sitting on too much stock.
So even provinces like Tainan, which is a very popular resort area, there is tremendous volume activity.
But the customer is just not buying the beauty products.
So we saw consumer confidence get really impacted in COVID in China. People are coming out. They want to travel, they want to feel good, but they are being very selective in what they spend their money on.
>> Let's talk about travelling, right?
I mean, once you start to reopen and economy, people want to go on vacation and move about. Their implications.
This one, trip.com, Ctrip.
From the name alone, I assume it has something to do with travel.
>> This is one of those ones where people say it's a no-brainer. You should be buying the stock at the reopening.
This is they are online E travel company, similar to what people, like a booking.com or a trip advisor. Yes, it has gotten the benefit of the doubt.
And now it's sort of, there may be some profit-taking, we have seen some… The activity is not as much as our expectations going into it.
I will say for travel and what I have learned just speaking to people on the ground is that a lot of Chinese citizens, their passports expired over COVID.
In many countries, they need to apply for visas and so, yes, you're thinking, they're going to go and travel.
We have seen domestic airline activity exceed pre-COVID levels.
International activity is still very subdued.
And so when I look at opportunity, there is still a tremendous opportunity probably in the late spring and into summer where travellers can get their visas updated, will go to Europe and other countries and start spending money.
>> What are the risks for a name like that if you are counting on travel rebound, simply that people don't want to go abroad?
>>yeah, they definitely do want to go abroad. I think the issue is really getting to the mind of consumer and saying, they might buy a but they might not bite be.
That has been challenging.
It will be challenging for investors and it will be just as frustrating for the management teams.
If you are selling something he put on the shelf, you never want to have an empty shelf.
But the risk in terms of supplying this product is the oversupply and then you have to work through the inventory.
No different than during the pandemic.
We bought too much goods, then the supply chain got tight and it got over delivered and we saw companies have to discount.
So this is the part where the euphoria is over.
We are starting to see the dust settle and we are seeing some companies have been working and we've seen companies like an Estée Lauder or a Starbucks taking a step back.
But even industrials and materials, we thought that COVID coming away, we thought there would be stimulus.
We have seen manufacturer activity kind of be lacklustre versus expectations and we've seen materials like iron or kind of get a lift him up and and get completely retraced and rebound. It goes across all sectors.
So I'd say that initial wave, that initial euphoria has come down. The enduring sectors I would say are aerospace and luxury.
>> Always interesting stuff with Ben Gossack. You will get to your questions on global stocks for been in just a moment's time. A reminder, of course, you get in touch with us at 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 some of the top stories in the world of business and take a look at how the markets are trading.
We have shares of Shopify in the spotlight today.
The e-commerce firm is announcing another round of job cuts, and is selling the bulk of its logistics business.
Now, this news comes as Shopify reports better-than-expected revenue for its most recent quarter and the Ottawa-based company says it does expect sales to grow at a similar rate for the current quarter. Right now, the stock is up we will call that, we will give it 26% to the upside, 7982. Quite a jump in one session.
Telecom giant BCE grew revenue in its most recent quarter, but elevated costs did drive profit lower compared to the same period last year.
That said, the results still came in ahead of analyst estimates.
Meantime, rival Telco Telus is raising its dividend payout to shareholders.
Telus also saw its profit line pressured by higher costs in the quarter.
We've got Apple on deck to report its earnings after the bell. The tech giant of course previously warned sales will likely come in lower for the quarter, demand for iPads, Macs and also iPhones, apparently they were warning is earlier, softer than last year. We will see after the bells today, investors will be watching pretty carefully for any updates on it share buyback plan.
a quick check in on the market. We will start here at home on Bay Street with the TSX Composite Index. There was a bit of a down day when he started the show.
It was modestly positive earlier in the session but some downward forces.
Were about 70 points in the hole right now, about 1/3 of a percent.
And south of the border, US regional banks continue to make their weight felt through the market. You are down 40 points on the S&P 500, seeing some of the big Wall Street names not down his biggest some of the regional banks, but there are some concerns about the space.
That's about a percent to the downside.
We are back now with Ben Gossack, taking your questions about global stocks. Plenty coming in, so let's get to them.
Do we need to prepare for any issues regarding the US debt ceiling?
>> Yeah, so this percolates every couple of years.
I treat this issue like I would treat elections.
It's very political.
Impossible to adjust your portfolio four.
And even if you get it right, no telling what the actual outcome is from a stock perspective.
So from our perspective, managing our portfolios, again, we are looking for cash flow compounders that benefit from secular trends. The debt ceiling has no bearing on them.
And so I think it's provocative.
I think it gets people coming to talk about.
It's actually political which is very difficult, I think for anyone, than to create an investment thesis to trade around.
And typically, maybe this time will be different, typically it's taken up to the 11th hour and then there is a resolution.
I don't think anyone wants to see the US government not fulfil its debt obligations.
Will that mean Apple can't sell iPhones? Or the cloud won't grow?
It's something I find can be very distracting, and that's why I always tell people, stick to your plan, secure investment process.
These things, then they go away.
>> I think even Jerome Powell yesterday off the back their rate decision was basically saying, you do not want to see it.
Basically, it's almost intolerable to think that they could default on their debt. We had so many other commentators say, it's politics, but in the end, does the United States really will find itself in the position?
>> I mean, I remember, I don't know if it was the S&P or Moody's downgraded the US government debt.
It went from AAA to AA and that meant that companies like Microsoft or Johnson & Johnson, even ExxonMobil at the time had a better credit rating and what did that mean?
And it didn't mean anything.
One of those important securities as there is the US treasury.
Be it domestically and internationally, it's very important. On an international basis, our entire financial system is based on collateral and the best collateral out there is a U.S. Treasury bond.
>> Let's get another question now, this one about semiconductors. What are your thoughts on AMD?
>> Yeah, so I will speak specifically on AMD. I know they reported yesterday.
But what we saw and what we've seen with semiconductors, and I think we spoke about it the last time I was on here, some of the stocks that were the first to break down in 2021, we noticed that they had been bottoms in 2022 a and have started to show relative strength.
We talked about housing, but we specifically talked about semis in October and November, and that has continued to work.
When I look on TV and people talk about how much they moved, they moved too much for some people, not just relative to January 1.
Don't even look relative to when they actually bought it. You'd be surprised.
One of our analysts suggested a major tour, visiting various suppliers across Asia, and we are getting closer to the bottom in terms of the fundamentals in their financials. And so from our perspective, we think there is a new wave.
What's helping it is a bit of overhyped on AI.
>> I was going to say, be hearing about AI, everyone is talking about this. What power does AI bring? It's a process.
>> Yes, it is very convenient that the same people that were telling us that the world was going to change because of bitcoin, blockchain, dojo coin, you name it coin have all of a sudden become obsessed about AI and how it's going to change the world and how all of our jobs will change. Yes, I think AI is very interesting and we've had companies like IBM talk about Watson for years and so I do think AI is important. It will drive semiconductor demand.
There are companies that we own that would benefit from that.
So from our perspective, we like semis. We think thatit's the beginning of a new cycle and it's something that has started even as of last year even though right now everyone is talking about it.
And I encourage people, yeah, we are in the over overhyped phase of EI. So just temper your expectations when it comes to AI. We've seen there are some companies where people gravitated towards those AI stories. Management has said hey, and I is coming, does not your lofty expectations, and we have seen stocks that cut back.
So just because you see stocks that cut back doesn't mean that it can't benefit from AI, it's just that there is a lot of hype and expectations built into some stock prices.
>> Let's go to another question now, this one about near shoring. We've been hearing a lot about that. As he put the pandemic behind us, the need to make things at home.
Does this affect your investment thesis?
> Yeah, I think this is really interesting.
and again, the secret sauce, we have a process to look for competitive companies with ways to grow their cash flows that are well-managed and typically underestimated by the market.
But then we mirrored that with secular trends. So these are trends driven by human activity that can last three, four, five years.
Near shoring is one of them.
Some of it has to do with diversifying away from China.
Some of it is ESG related.
So if my customers are in the US and I can near shore and do some of that,that manufacturing activity in the US, forget about China or any other political issues, that might actually help me to meet my 2030 and 2050 goals regarding sort of carbon emissions.
Just the fact that I don't have to bring that material across seas and put diesel out into the ocean. There's a lot going on just beyond the geopoliticsregarding ESG. There different ways to play it.
It can be related to the inflation reduction act which encourages near shoring and green products.
It could just be the specific companies themselves of manufacturers and industry. It's working for our portfolio and it's definitely, I believe, a real trend.
>> As always, make sure you do your own research before making any investment decisions.
we are going to get back to questions for Ben Gossack on global stocks and just moments time. A writer, of course, even in touch with us at any time.
Just a moment to talk live on.
Now, let's get our educational segment of the day.
If you're looking for some potential inspiration when it comes to looking for new investing ideas, WebBroker has tools which can help.
Joining us now to discuss is Caitlin Cormier, client education structure with TD Direct Investing. Caitlin, great to see you. So take us through.
Where can we start sort of explain on the platform?
>> Absolutely. So we have a couple of different tools for investors to use to kind of help find some inspiration like you said as far as some different areas to research, some different securities.
So our screener tool can actually be an excellent tool to help find these investing ideas.
See you can build your own custom screen which we go through sometimes and kind of input exactly what you're looking for.
But if you're kind of just looking for that inspiration, kind of looking for a direction to go, we also have preset screens that you can use to get some ideas.
So let's jump in and take a peek at that.
When you click on research, go under tools and click on screeners.
Once I'm in screeners, we are going to go, like I said, and look at themes or the preset screens.
So the themes are basically just different specific topics that really have been categorized for different types of investments kind of pulled together.
For example, under Thomas vehicles, we can see trading central analyst team compiled a list of stocks that may benefit or have involvement in the autonomous vehicle industry. So if you click on that, we are going to see a list of 18 different companies that actually are related directly to the autonomous vehicle part of the market, basically. So these companies could actually directly be impacted by a Thomas vehicles.
So again, it just kind of gives us an idea if we are interested in that space, if we see growth in the future, if we want or exposure to that in our portfolio, you can just kind of scroll through and see which different companies are considered a part of that and then kind of make a decision as to whether we want to research those companies bit further.
Like I said, we also have preset screens.
So these loans are a little bit more specific as to what you are looking for. So for example, may be you are looking for dividend stocks or high volume traded stocks or anything within these categories but maybe let's go ahead and click on this one here, upside momentum. Now, this one does have 195 matches so it definitely has a few more than we may be able to sort through.
But it just gives as an opportunity to add additional criteria. We can see what criteria is already in here and we could add something else from the list here that might be important to us that might be kind of hopeful to filter down a little bit further. And again, you can see the results here down below and kind of choose if there is a particular company that we might take a bit of more interested in and want to do a bit more research on.
>> Alright, so someone's gone through a few screeners and have some interest, what about analysts?
>> At other place that investors can go to see what analysts are saying about companies and see if they can get any trading ideas from there.
Let's do a little bit different.
The top and to research and we are going to go under markets and click on overview. For this kind of the house for everything, including money talk live on this page. It's an important page of WebBroker. But we are going to scroll down and look at the right hand side and we are going to see here is a section that says training ideas.
Now it has a little flag years he can go between Canada and the US. There tends to be less under the Canadian side, but if you click on the west side, it's giving us analysts notes on different companies. So for example, today, we're looking at Estée Lauder.
So for example, you can click here and see what the news is about this particular security and then decide whether you want to do a bit more research on it and each one should show you exactly which companies are mentioned within the article here. And then again, once you found a company and you want to do more research, you can hop into the overall research page that company and then go from there and do whatever other research you might like. Just a couple of different places you can go within the trading platform to get some names to do a little bit more research.
>> Great stuff as always, Caitlin. Thanks a lot.
>> Thanks, Greg.
>> Caitlin Cormier, client education instructor at TD Direct Investing.
And make sure to check out the learning centre in WebBroker for more educational videos, live, interactive master classes and upcoming webinars.
Now before we get back to your questions about global stocks for Ben Gossack, a reminder of how you can get in touch with us.
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.
We are back now with Ben Gossack. We are taking your questions about global stocks.
This is nice, thank you. Love this daily show.
That's a very nice thing to hear. Here's the question.
Since international markets… It's nice, we will drink it in for second. Since international markets to typically follow the US market, does this provide an advantage when investing in global markets? How should people think about geography?
>> Our view on geography,you look at what country you think will outperform and then you look at what stocks would benefit.
I have always struggled with that model because sometimes it's a hot potato.
So in cases where we have seen say Europe lead the US, it's typically one people are looking for a value trade and Europe typically trades at a discount to the US so hot money flows in looking for deals and then realizes there are some issues in Europe there are some amazing companies but it's not equal, and then they gravitate back and so I don't like the hot potato game. Again, we talk about a process of looking for secular compounding stories.
So we will find those international markets if we think they can exploit secular trends.
You might find really great healthcare companies in Europe.
You would find amazing industrial companies.
If we are talking about luxury stocks, with the exception of maybe one stock on the New York Stock Exchange, all the luxury stocks are in Europe.
But it's very challenging in terms of say telcos or banks and that's where most of the market Would be. So I would say in any market, Europe, Asia, you have to be very selective and when you see people say, you have to buy Japan because of this, that's when you put on the brakes and again, go back to process.
Why Japan and what specifically?
So when people are worried about the UK and the budget and the pension plans, that never stopped us from owning an industrial defence company, and it just happen that it was in the UK and it still is pushing continued highs again because of geopolitical issues, wars.
So sometimes there can be a geopolitical issue or country crisis and some stocks, it doesn't matter. So that's why say focus on why you are owning specific companies in any given country.
>> Question does came in and I think it's a nice follow along to this conversation.
Someone is saying they are thinking of adding to their position in Europe or the emerging markets for the long term.
Is this a good time? We can't give advice on when to get in or out of a trade but this is interesting to if you are investing globally, do you hedge?
>> I was looking for a question about nice show, nice guests… [laughing] Look, I think we have seen, specifically for emerging markets, the trend has been if the emerging market is outperforming, typically their currencies outperform and so but that might also change given the geography is and at the end of the day, it's all relative to Canada.
So I would say for the most part is Canadian investor, given where people are investing, biggest risk is Canadian currency versus the US dollar.
But typically, we have seen a correlation between a country's currency and their local market and the emerging markets space, and it can really shift in Europe and in Asia.
So again, I would go back to work with a professional on this.
This isn't simple stuff. And a lot of your returns can be wiped out just by making the wrong currency decision.
> Important things to keep in mind indeed.
Another question now, this one about IBM. Your opinion on it please.
>> I will talk about tech in general.
People will say, okay, we like tech and tech was in favour for many years.
And companies like IBM and lagged. A lot of times, it depends, or you want trend?
even favourites like Microsoft have missed mobile, have missed a whole bunch of other stuff and just happened to invest behind Amazon on the cloud and reaping the benefits.
And so there are legacy companies like IBM that are trying to make the change. They bought a company called Red Hat that's part of the cloud infrastructure and they still have a big legacy business and so these things take time to turn around.
And so sometimes I find when people look at companies and they say, okay, it's got a low PE or a low multiple and people like Tadic catch-up, in many cases, it doesn't.
It never does. And there's a reason why trades at the valuation versus let's say other companies that might trade above market. So at the end of the day, what are trying to say is you have to do your work and, in some cases, even if it is low it will revert and it all depends if companies are on the right trend. At this point right now, given our discussion about AI, everyone is an AI company.
So do your homework and make sure people have real AI versus just the talk.
No different than last year when we said, is this matter universe? That when I really believe it ever was talking minute and now no one talks about matter.
So just your work and then try to get through the truth versus just people saying they are AI for the benefit of AI.
>> Let's take another question now, this one may be a big question.
Why are investors selling?
> If they are selling, I will take the other side.
Look,I think we saw was last year, we had a rat race in the market. Right now, we are going in this sort of sideways pattern. I think you will talk about this market being choppy, difficult to look at. We have been told that there is this recession coming and we are still heading for this recession. We have a job report coming on Friday.
We had an initial report from ADP this past Wednesday where jobs continued to work, and so that can be very frustrating to people.
What has helped us is when we have talked about looking at the market infractions, so taking a stock, dividing it by the market and from that chop we are able to see straight lines and so again, I go back to what we were saying before which is we do think that the market of stocks, so that's a collection of stocks, not the S&P 500 which is based on market, has shown a bottom relative to last year.
I'd market around the summer.
There was a cohort in the spring, a cohort in the fall, but they bottom relative to the market and they are improving on a relative strength basis.
That's where we have positioned our portfolio. And I think, our big thesis is that things are better than feared.
So Greg, I'm telling you there will be a recession.
>> We've been talking about for an awful long time. A better show up.
>> I'm not telling you that unemployment can go to 5-6%.
I'm not telling you that we won't see it banks fail or not meet their debt obligations or that thanks have to take credit provisions. All of this can happen. All I am saying is that as a market, we got to shifted on the downside.
that's why you see even with 72% of companies reporting Q1 earnings, our expectations were way too low. We were really in the doom and gloom. And I'm not saying anyone put out stellar reports, they were better than feared.
So that is where I believe people are getting it wrong.
We got to perish.
>> We are going to get back to questions for Ben Gossack on global stocks in just a moment 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.
Canadian consumers slowing down in March after starting the year a pretty strong no, this according to the latest research from TD Economics.
Our Anthony Okolie has been digging into the report and taking in some of the key trends in there.
What's going on, Anthony?
>> Thanks very much, Greg.
Yet, as you mentioned, the latest debit and credit card spending data points to signs of a cooldown in consumer spending in March.
As my first chart shows, those slow down and card spending more quite a sharp turn from the strong pace of both nominal and inflation-adjusted spending that we saw in the first two months of the year during what was an unusually warm winter season. When we break up the credit card spending by debit, credit standing by category, as my next chart shows, there was a significant pullback in services which was down 1.6% month over month.
Meanwhile, the good sector, the good spending actually rebounded just over 1% last month. Now, sorry, in March.
Cards mining in March was largely driven by Canadians spending more at food and beverage stores, including grocery stores, as households cut back on discretion or spending in favour of essentials because we have seen higher inflation here in Canada as well.
Pharmacies, personal care stores saw solid goods spending in March. Meanwhile, it was a bad month for things like travel, which was the biggest source of weakness for the services sector. As this next chart shows, spending on travel dipped in February as did international travel by Canadians which was down nearly 11%, 11% below the high we saw back in February 2020.
Now, one of the reasons that we saw this drop, of course, most Canadians prepaid their heartbreak travel spending in the earlier months, in winter. As a result, spending activity doesn't show up in February data.
Now, again, TD Economics says that the pattern of card spending on activities, things like travel, transportation, recreation and entertainment, they are starting to see some of this pattern normalizing from the pandemic distortions that we saw in the previous years.
Meanwhile, household related spinning, things like furniture, building materials, home furnishing compliance, that dropped in March as well after two consecutive months of growth. That seems to align with the stabilization that we are seeing in housing activity, which points to homebuyers being a bit more cautious before jumping into the real estate market.
Finally, we break things down by region, spending in Québec was the highest among the provinces, that was probably driven by inflation relief checks that they received. Meanwhile, Ontario and BC at leg to the Canadian average spending during the month of March.
Greg?
>> Let's talk about what TD Economics might think about where we are right now.
I told you before, April is a busy month for me with birthdays, wedding anniversary, blah blah blah. I'm saying in me, I'm going to calm down a bit but my children always find a reason to spend my money.
Am I test case?
>> TD Economics expects that real consumer expenditure will grow roughly around 1%annualized pace in the second quarter.
They do expect spending on services to outpace goods as again the pandemic distortions continue to normalize.
However, they expect further slowing and consumer spending in the second quarter as well as the rest of the year as high debt servicing costs continue to hit Canadian household budgets going forward.
>> Interesting stuff that we can all relate to.
Thanks a lot, Anthony.
>> My pleasure.
>> MoneyTalk's Anthony Okolie.
Let's check in on the markets now and see with wirano Bay Street with the TSX Composite Index.
We were modestly positive earlier in the session, and modestly negative at the start of the show, now down about 1/3 of a percent, 70 points to the downside.
We are seeing some settling in the price action when it comes to crude oil, it's just sort of studying after some significant losses. I want to check in on Shopify though.
Obviously, a lot of news around this one and the stock popping today, it's up to the tune of about 24% right now.
Not only had a quarterly report but it also talked about job cuts, also talked about getting rid of some of this logistics business, pretty much all of it.
So a big pop in the name there. Canadian Natural Resources, I want to take on this one. As we said, the price of American benchmark crude is settling today but it's been a sort of tumultuous ride to the downside in the past couple of session. At 7470, you can't see and queue down about 2.2%.
They also reported net profit is down year-over-year compared to where prices were a year ago at this time.
So to the border, more turmoil in the US regional banks. It's weighing on the broader market.
It down 29 points on the S&P 500, about three quarters of a percent. The NASDAQ was holding up a little bit better the last time we checked, down about half a percent.
Not as much as the broader market but still negative territory.
And Bank of America, the big Wall Street banks are feeling a bit of this pressure.
Nothing to the tune of what we are seeing in the US regional, but you've got bags America right now down about 2 1/4%.
We are back now with Ben Gossack from TD Asset Management. Lots of questions coming in, let's get to them. With the outlook for global travel companies such as Royal Caribbean?
>> I was never a big person for cruise ships and it's amazing that they've made it through, and I see people want to get back on cruise ships.
I think it goes back to what we were saying about the Chinese travellers.
I personally think it's difficult to pick the specific thing that they are going to travel on.
We were trained to buy what you know and if you love cruises, you're probably thinking everyone should be on cruises, hence the cruise company should be okay. If you're on the cruise and is full, that your channel check.
>> Your reference.
>> But you are a small sample size and you don't know what it is versus expectations that many of these companies raised a tremendous amount of debt just to survive and so I think it's a miracle they come out the other side.
What we have done and travel has been a big thing for us.
You try to pick places where we are going to almost catch everybody.
So I don't know if you're going to go on a specific airline, but wherever you go, you need to stay somewhere, so the hotel's space has been a good area to sort of pick and get that travel signal.
We have definitely seen it with luxury, but that's a separate the monotone but people will definitely buy luxury goods when they travel, especially if they are going to your.
>> On vacation, you money drop.
A purchase I would never make in my real life.
I'm just like, let's buy that. I also feel like it's cheaper because you're gonna get the tax back once you get back across the border.
>> So there's that element to it.
There are companies that are specifically skewed travel. They get that signal, that benefit. And the other thing we touched on briefly is that this return to travelwe've had aging in air fleet and so we are seeing strength and activity in companies that make airplanes and companies that service and supply airplanes.
So I think there is something to be played out over the longer term in the aerospace non-defence.
>> We are out of time for questions. Before you leave, I want to get your final thoughts in terms of throughout the show, as you been talking about the regional banks and some of the stresses that we are seeing there, the market updates, we talked about the debt ceiling and how all that will player. No shortage of words for investors. Which they be thinking about longer-term?
>> I always end with the same thing.
Stick to your plan.
People have various different plans and we see the people who stick to their plan tend to perform and outperform versus people that are all over the place.
The other thing I would say is let's not forget that stocks and markets are forward leaning indicators.
And while talk about we haven't seen the bad news, we, again, in our thesis of things being better than fear, we have seen areas where we have terrible headlines and activity.
Were economic activity has grounded to a halts but the stocks are working. That tells you that markets can be smart and look forwardand price that in. So yes, it is a lot of doom and gloom when you put on various media areas.
Stick your process and I would argue that people are too fearful. I'm not saying things are amazing but when things are less bad as they seem, that tends to recover sock.
>> Been, always a pleasure to have you and great to pick that brain.
>> Thank you.
I look forward to the next time.
How are things to Ben Gossack, portfolio manager with TD Asset Management. As always, make sure you do your own research before making any investment decisions.
We will be back tomorrow with a breakdown of the latest job data on both sides of the border and then on Monday, James Dixon, Dir. of family often strategies that TD Securities will be our guest taking your questions about market trends.
A reminder of course you get a head start with your questions, just email moneytalklive@td.com. That's all the time we have for the show today. Thanks watching.
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 show, we'll discuss whether there are any sectors of the market that are still benefiting from the China reopening trend with Ben Gossack, from TD Asset Management. MoneyTalk's Anthony Okolie is going to have a look at a new report on Canadian credit card spending.
And in today's WebBroker education segment, Caitlin Cormier will show us how you can get the ball rolling on finding new investment ideas using the platform. So 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. He will start here at home with the TSX Composite Index. Right now down about 66 points or 1/3 of a percent.
After two days of some selling pressure on American benchmark food, you're saying in that space but still it was a sizable step back in the past couple of days.
Noticing some weakness in the financials as well, including Manulife, the big life go. You've got Manulife had 2588 per share, down about 2.
7%.
The price of gold though is firming. It's about 2050 bucks per ounce and we are seeing some names like Barrick on the up move. 2795 for Barrett, you're up about 2.7% on that one. South of the border, we have further rumblings across the US regional banks weighing on the broader market. S&P 500 down 36 points, almost a full percent. The tech heavy NASDAQ, want to see how it's holding up against the broader market. They are still in negative territory, down 45 points or 1/3 of a percent. Want to show you PacWest. This is the one that announced after closing bells yesterday, a California-based bank. It says it's exploring its options, including a possible sale.
it's not seeing out of the ordinary outflow. It is at 52% to the downside.
And that's your market update.
One of the big themes for investors to start the year was the surprise reopening of China after years of COVID restrictions. But as we get deeper into the year, which sectors of the market are still benefiting from the trend which had begun to lose some steam? 20 us now to discuss is Ben Gossack, Berkeley manager with TD Asset Management. Great to have you back on the show.
>> Happy to be back. Love chatting with you.
>> That was one of the stories at the beginning of the year.
Stocks had a good start to the year and that was one of the catalysts, right? China reopens and everyone thinks, well, this is going to be good for everything.
You have been taking a look at some sectors that got the bounce early and not so much now.
What's happening under the surface there?
> Yeah, so I mean, at the start of the year, we always look into our crystal balls.
Find out what's going to happen.
Definitely, in China, it was a big catalyst. My bingo card did not have deposit crisis issues for US regional banks so you can't win them all. What was really interesting about the China reopening, when we spoke to management teams in Novemberthat really depend on China, we had no visibility on when Chinery's reopening.
so when we got that surprise reopening in December, the game was on.
And so what you saw was that everyone got the benefit that China was reopening.
It didn't matter if you were a material stock, tight to travel or consumer consumption, industrial activity.
It was just everything was China and there was almost a full mode, a fear of missing out because stock prices went up.
One of the first sectors that really caught our eye was the casino stocks in Macau. So again, no activity.
Their stocks had been cratered and right away, they were up hundred percent.
And so what we have seen now and we are about five, six months into reopening, they now have to grow into those price movements.
So we've had these 100% moves off the bottom. Some have retraced by 20% but they are going sideways.
The enduring sectors, the one that has continued to work, it has been luxury.
This is a theme that we have talked about for quite some time. China reopening has helped to fuel the luxury companies and we've seen companies like Hermus, LVMH report and their stocks are pushing two brand-new highs.
The part that's quite interesting, and I think we have some charts to show the performance, people talk about the choppiness of the market and the uncertaintyof the market and where to put their allocation. We've seen people gravitate to cash in GICs.
But when you look at a chart like an LVMH or Hermes or other luxury stocks, you would know that there were any issues going on. It's quite amazing.
there some specifically US listed companies that we get the benefit of China, so let's say a Nike or Starbucks or Estée Lauder.
we have seen mixed results.
>> Starbucks is supposed to be counting on China for a big growth engine forward.
>> And in fact, Greg, they reported yesterday. There March comp, comparable store sales in March alone wrote 30%. The activity was there.
What's disappointing for investors and why the stock took back 9% in its market Is that the expectations weren't carried forward throughout the rest of the year.
So there's this question now. We have seen this big move inactivity.
Does that continue? Is management telling us that that is not sustainable?
Or is management being very conservative, wanting to lower our expectations and something they can grow into?
I lean more on the conservative part.
But definitely the activity is showing up.
>> Estée Lauder, this is makeup. You get to go out of the house, do things, you want to look good.
I think you have it as one of those companies that is losing steam, what's going on?
>> It's prestige.
Their margins look a lot like a software company.
This is a very profitable business trade was really interesting is if you look at the stock chart for Estée Lauder, great, just prior to COVID, in October, it was hitting lows, it's a benefit of reopening.
Estée Lauder, a lot of their sales are tied to travel.
If people are going to travel somewhere, they go to duty-free, they will buy makeup and all those stores that you see in the airport.
So they depend on that and they got the benefit of the doubt.
And much like investors, we had to make assumptions on which companies would benefit from reopening.
Management teams have to make assumptions of how much do I order? How much do I try to sell to the channel, the end merchant that is going to sell to you and me so that we can look good?
And so they made a lot of big assumptions.
And so there is activity, just like we said the Starbucks, there is activity but they are not converting the customer to those sales. So right now, they have a very bloated inventory and a bloated channel.
So they make a revenue recognition when they sell to the merchant and right now the merchant is just sitting on too much stock.
So even provinces like Tainan, which is a very popular resort area, there is tremendous volume activity.
But the customer is just not buying the beauty products.
So we saw consumer confidence get really impacted in COVID in China. People are coming out. They want to travel, they want to feel good, but they are being very selective in what they spend their money on.
>> Let's talk about travelling, right?
I mean, once you start to reopen and economy, people want to go on vacation and move about. Their implications.
This one, trip.com, Ctrip.
From the name alone, I assume it has something to do with travel.
>> This is one of those ones where people say it's a no-brainer. You should be buying the stock at the reopening.
This is they are online E travel company, similar to what people, like a booking.com or a trip advisor. Yes, it has gotten the benefit of the doubt.
And now it's sort of, there may be some profit-taking, we have seen some… The activity is not as much as our expectations going into it.
I will say for travel and what I have learned just speaking to people on the ground is that a lot of Chinese citizens, their passports expired over COVID.
In many countries, they need to apply for visas and so, yes, you're thinking, they're going to go and travel.
We have seen domestic airline activity exceed pre-COVID levels.
International activity is still very subdued.
And so when I look at opportunity, there is still a tremendous opportunity probably in the late spring and into summer where travellers can get their visas updated, will go to Europe and other countries and start spending money.
>> What are the risks for a name like that if you are counting on travel rebound, simply that people don't want to go abroad?
>>yeah, they definitely do want to go abroad. I think the issue is really getting to the mind of consumer and saying, they might buy a but they might not bite be.
That has been challenging.
It will be challenging for investors and it will be just as frustrating for the management teams.
If you are selling something he put on the shelf, you never want to have an empty shelf.
But the risk in terms of supplying this product is the oversupply and then you have to work through the inventory.
No different than during the pandemic.
We bought too much goods, then the supply chain got tight and it got over delivered and we saw companies have to discount.
So this is the part where the euphoria is over.
We are starting to see the dust settle and we are seeing some companies have been working and we've seen companies like an Estée Lauder or a Starbucks taking a step back.
But even industrials and materials, we thought that COVID coming away, we thought there would be stimulus.
We have seen manufacturer activity kind of be lacklustre versus expectations and we've seen materials like iron or kind of get a lift him up and and get completely retraced and rebound. It goes across all sectors.
So I'd say that initial wave, that initial euphoria has come down. The enduring sectors I would say are aerospace and luxury.
>> Always interesting stuff with Ben Gossack. You will get to your questions on global stocks for been in just a moment's time. A reminder, of course, you get in touch with us at 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 some of the top stories in the world of business and take a look at how the markets are trading.
We have shares of Shopify in the spotlight today.
The e-commerce firm is announcing another round of job cuts, and is selling the bulk of its logistics business.
Now, this news comes as Shopify reports better-than-expected revenue for its most recent quarter and the Ottawa-based company says it does expect sales to grow at a similar rate for the current quarter. Right now, the stock is up we will call that, we will give it 26% to the upside, 7982. Quite a jump in one session.
Telecom giant BCE grew revenue in its most recent quarter, but elevated costs did drive profit lower compared to the same period last year.
That said, the results still came in ahead of analyst estimates.
Meantime, rival Telco Telus is raising its dividend payout to shareholders.
Telus also saw its profit line pressured by higher costs in the quarter.
We've got Apple on deck to report its earnings after the bell. The tech giant of course previously warned sales will likely come in lower for the quarter, demand for iPads, Macs and also iPhones, apparently they were warning is earlier, softer than last year. We will see after the bells today, investors will be watching pretty carefully for any updates on it share buyback plan.
a quick check in on the market. We will start here at home on Bay Street with the TSX Composite Index. There was a bit of a down day when he started the show.
It was modestly positive earlier in the session but some downward forces.
Were about 70 points in the hole right now, about 1/3 of a percent.
And south of the border, US regional banks continue to make their weight felt through the market. You are down 40 points on the S&P 500, seeing some of the big Wall Street names not down his biggest some of the regional banks, but there are some concerns about the space.
That's about a percent to the downside.
We are back now with Ben Gossack, taking your questions about global stocks. Plenty coming in, so let's get to them.
Do we need to prepare for any issues regarding the US debt ceiling?
>> Yeah, so this percolates every couple of years.
I treat this issue like I would treat elections.
It's very political.
Impossible to adjust your portfolio four.
And even if you get it right, no telling what the actual outcome is from a stock perspective.
So from our perspective, managing our portfolios, again, we are looking for cash flow compounders that benefit from secular trends. The debt ceiling has no bearing on them.
And so I think it's provocative.
I think it gets people coming to talk about.
It's actually political which is very difficult, I think for anyone, than to create an investment thesis to trade around.
And typically, maybe this time will be different, typically it's taken up to the 11th hour and then there is a resolution.
I don't think anyone wants to see the US government not fulfil its debt obligations.
Will that mean Apple can't sell iPhones? Or the cloud won't grow?
It's something I find can be very distracting, and that's why I always tell people, stick to your plan, secure investment process.
These things, then they go away.
>> I think even Jerome Powell yesterday off the back their rate decision was basically saying, you do not want to see it.
Basically, it's almost intolerable to think that they could default on their debt. We had so many other commentators say, it's politics, but in the end, does the United States really will find itself in the position?
>> I mean, I remember, I don't know if it was the S&P or Moody's downgraded the US government debt.
It went from AAA to AA and that meant that companies like Microsoft or Johnson & Johnson, even ExxonMobil at the time had a better credit rating and what did that mean?
And it didn't mean anything.
One of those important securities as there is the US treasury.
Be it domestically and internationally, it's very important. On an international basis, our entire financial system is based on collateral and the best collateral out there is a U.S. Treasury bond.
>> Let's get another question now, this one about semiconductors. What are your thoughts on AMD?
>> Yeah, so I will speak specifically on AMD. I know they reported yesterday.
But what we saw and what we've seen with semiconductors, and I think we spoke about it the last time I was on here, some of the stocks that were the first to break down in 2021, we noticed that they had been bottoms in 2022 a and have started to show relative strength.
We talked about housing, but we specifically talked about semis in October and November, and that has continued to work.
When I look on TV and people talk about how much they moved, they moved too much for some people, not just relative to January 1.
Don't even look relative to when they actually bought it. You'd be surprised.
One of our analysts suggested a major tour, visiting various suppliers across Asia, and we are getting closer to the bottom in terms of the fundamentals in their financials. And so from our perspective, we think there is a new wave.
What's helping it is a bit of overhyped on AI.
>> I was going to say, be hearing about AI, everyone is talking about this. What power does AI bring? It's a process.
>> Yes, it is very convenient that the same people that were telling us that the world was going to change because of bitcoin, blockchain, dojo coin, you name it coin have all of a sudden become obsessed about AI and how it's going to change the world and how all of our jobs will change. Yes, I think AI is very interesting and we've had companies like IBM talk about Watson for years and so I do think AI is important. It will drive semiconductor demand.
There are companies that we own that would benefit from that.
So from our perspective, we like semis. We think thatit's the beginning of a new cycle and it's something that has started even as of last year even though right now everyone is talking about it.
And I encourage people, yeah, we are in the over overhyped phase of EI. So just temper your expectations when it comes to AI. We've seen there are some companies where people gravitated towards those AI stories. Management has said hey, and I is coming, does not your lofty expectations, and we have seen stocks that cut back.
So just because you see stocks that cut back doesn't mean that it can't benefit from AI, it's just that there is a lot of hype and expectations built into some stock prices.
>> Let's go to another question now, this one about near shoring. We've been hearing a lot about that. As he put the pandemic behind us, the need to make things at home.
Does this affect your investment thesis?
> Yeah, I think this is really interesting.
and again, the secret sauce, we have a process to look for competitive companies with ways to grow their cash flows that are well-managed and typically underestimated by the market.
But then we mirrored that with secular trends. So these are trends driven by human activity that can last three, four, five years.
Near shoring is one of them.
Some of it has to do with diversifying away from China.
Some of it is ESG related.
So if my customers are in the US and I can near shore and do some of that,that manufacturing activity in the US, forget about China or any other political issues, that might actually help me to meet my 2030 and 2050 goals regarding sort of carbon emissions.
Just the fact that I don't have to bring that material across seas and put diesel out into the ocean. There's a lot going on just beyond the geopoliticsregarding ESG. There different ways to play it.
It can be related to the inflation reduction act which encourages near shoring and green products.
It could just be the specific companies themselves of manufacturers and industry. It's working for our portfolio and it's definitely, I believe, a real trend.
>> As always, make sure you do your own research before making any investment decisions.
we are going to get back to questions for Ben Gossack on global stocks and just moments time. A writer, of course, even in touch with us at any time.
Just a moment to talk live on.
Now, let's get our educational segment of the day.
If you're looking for some potential inspiration when it comes to looking for new investing ideas, WebBroker has tools which can help.
Joining us now to discuss is Caitlin Cormier, client education structure with TD Direct Investing. Caitlin, great to see you. So take us through.
Where can we start sort of explain on the platform?
>> Absolutely. So we have a couple of different tools for investors to use to kind of help find some inspiration like you said as far as some different areas to research, some different securities.
So our screener tool can actually be an excellent tool to help find these investing ideas.
See you can build your own custom screen which we go through sometimes and kind of input exactly what you're looking for.
But if you're kind of just looking for that inspiration, kind of looking for a direction to go, we also have preset screens that you can use to get some ideas.
So let's jump in and take a peek at that.
When you click on research, go under tools and click on screeners.
Once I'm in screeners, we are going to go, like I said, and look at themes or the preset screens.
So the themes are basically just different specific topics that really have been categorized for different types of investments kind of pulled together.
For example, under Thomas vehicles, we can see trading central analyst team compiled a list of stocks that may benefit or have involvement in the autonomous vehicle industry. So if you click on that, we are going to see a list of 18 different companies that actually are related directly to the autonomous vehicle part of the market, basically. So these companies could actually directly be impacted by a Thomas vehicles.
So again, it just kind of gives us an idea if we are interested in that space, if we see growth in the future, if we want or exposure to that in our portfolio, you can just kind of scroll through and see which different companies are considered a part of that and then kind of make a decision as to whether we want to research those companies bit further.
Like I said, we also have preset screens.
So these loans are a little bit more specific as to what you are looking for. So for example, may be you are looking for dividend stocks or high volume traded stocks or anything within these categories but maybe let's go ahead and click on this one here, upside momentum. Now, this one does have 195 matches so it definitely has a few more than we may be able to sort through.
But it just gives as an opportunity to add additional criteria. We can see what criteria is already in here and we could add something else from the list here that might be important to us that might be kind of hopeful to filter down a little bit further. And again, you can see the results here down below and kind of choose if there is a particular company that we might take a bit of more interested in and want to do a bit more research on.
>> Alright, so someone's gone through a few screeners and have some interest, what about analysts?
>> At other place that investors can go to see what analysts are saying about companies and see if they can get any trading ideas from there.
Let's do a little bit different.
The top and to research and we are going to go under markets and click on overview. For this kind of the house for everything, including money talk live on this page. It's an important page of WebBroker. But we are going to scroll down and look at the right hand side and we are going to see here is a section that says training ideas.
Now it has a little flag years he can go between Canada and the US. There tends to be less under the Canadian side, but if you click on the west side, it's giving us analysts notes on different companies. So for example, today, we're looking at Estée Lauder.
So for example, you can click here and see what the news is about this particular security and then decide whether you want to do a bit more research on it and each one should show you exactly which companies are mentioned within the article here. And then again, once you found a company and you want to do more research, you can hop into the overall research page that company and then go from there and do whatever other research you might like. Just a couple of different places you can go within the trading platform to get some names to do a little bit more research.
>> Great stuff as always, Caitlin. Thanks a lot.
>> Thanks, Greg.
>> Caitlin Cormier, client education instructor at TD Direct Investing.
And make sure to check out the learning centre in WebBroker for more educational videos, live, interactive master classes and upcoming webinars.
Now before we get back to your questions about global stocks for Ben Gossack, a reminder of how you can get in touch with us.
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.
We are back now with Ben Gossack. We are taking your questions about global stocks.
This is nice, thank you. Love this daily show.
That's a very nice thing to hear. Here's the question.
Since international markets… It's nice, we will drink it in for second. Since international markets to typically follow the US market, does this provide an advantage when investing in global markets? How should people think about geography?
>> Our view on geography,you look at what country you think will outperform and then you look at what stocks would benefit.
I have always struggled with that model because sometimes it's a hot potato.
So in cases where we have seen say Europe lead the US, it's typically one people are looking for a value trade and Europe typically trades at a discount to the US so hot money flows in looking for deals and then realizes there are some issues in Europe there are some amazing companies but it's not equal, and then they gravitate back and so I don't like the hot potato game. Again, we talk about a process of looking for secular compounding stories.
So we will find those international markets if we think they can exploit secular trends.
You might find really great healthcare companies in Europe.
You would find amazing industrial companies.
If we are talking about luxury stocks, with the exception of maybe one stock on the New York Stock Exchange, all the luxury stocks are in Europe.
But it's very challenging in terms of say telcos or banks and that's where most of the market Would be. So I would say in any market, Europe, Asia, you have to be very selective and when you see people say, you have to buy Japan because of this, that's when you put on the brakes and again, go back to process.
Why Japan and what specifically?
So when people are worried about the UK and the budget and the pension plans, that never stopped us from owning an industrial defence company, and it just happen that it was in the UK and it still is pushing continued highs again because of geopolitical issues, wars.
So sometimes there can be a geopolitical issue or country crisis and some stocks, it doesn't matter. So that's why say focus on why you are owning specific companies in any given country.
>> Question does came in and I think it's a nice follow along to this conversation.
Someone is saying they are thinking of adding to their position in Europe or the emerging markets for the long term.
Is this a good time? We can't give advice on when to get in or out of a trade but this is interesting to if you are investing globally, do you hedge?
>> I was looking for a question about nice show, nice guests… [laughing] Look, I think we have seen, specifically for emerging markets, the trend has been if the emerging market is outperforming, typically their currencies outperform and so but that might also change given the geography is and at the end of the day, it's all relative to Canada.
So I would say for the most part is Canadian investor, given where people are investing, biggest risk is Canadian currency versus the US dollar.
But typically, we have seen a correlation between a country's currency and their local market and the emerging markets space, and it can really shift in Europe and in Asia.
So again, I would go back to work with a professional on this.
This isn't simple stuff. And a lot of your returns can be wiped out just by making the wrong currency decision.
> Important things to keep in mind indeed.
Another question now, this one about IBM. Your opinion on it please.
>> I will talk about tech in general.
People will say, okay, we like tech and tech was in favour for many years.
And companies like IBM and lagged. A lot of times, it depends, or you want trend?
even favourites like Microsoft have missed mobile, have missed a whole bunch of other stuff and just happened to invest behind Amazon on the cloud and reaping the benefits.
And so there are legacy companies like IBM that are trying to make the change. They bought a company called Red Hat that's part of the cloud infrastructure and they still have a big legacy business and so these things take time to turn around.
And so sometimes I find when people look at companies and they say, okay, it's got a low PE or a low multiple and people like Tadic catch-up, in many cases, it doesn't.
It never does. And there's a reason why trades at the valuation versus let's say other companies that might trade above market. So at the end of the day, what are trying to say is you have to do your work and, in some cases, even if it is low it will revert and it all depends if companies are on the right trend. At this point right now, given our discussion about AI, everyone is an AI company.
So do your homework and make sure people have real AI versus just the talk.
No different than last year when we said, is this matter universe? That when I really believe it ever was talking minute and now no one talks about matter.
So just your work and then try to get through the truth versus just people saying they are AI for the benefit of AI.
>> Let's take another question now, this one may be a big question.
Why are investors selling?
> If they are selling, I will take the other side.
Look,I think we saw was last year, we had a rat race in the market. Right now, we are going in this sort of sideways pattern. I think you will talk about this market being choppy, difficult to look at. We have been told that there is this recession coming and we are still heading for this recession. We have a job report coming on Friday.
We had an initial report from ADP this past Wednesday where jobs continued to work, and so that can be very frustrating to people.
What has helped us is when we have talked about looking at the market infractions, so taking a stock, dividing it by the market and from that chop we are able to see straight lines and so again, I go back to what we were saying before which is we do think that the market of stocks, so that's a collection of stocks, not the S&P 500 which is based on market, has shown a bottom relative to last year.
I'd market around the summer.
There was a cohort in the spring, a cohort in the fall, but they bottom relative to the market and they are improving on a relative strength basis.
That's where we have positioned our portfolio. And I think, our big thesis is that things are better than feared.
So Greg, I'm telling you there will be a recession.
>> We've been talking about for an awful long time. A better show up.
>> I'm not telling you that unemployment can go to 5-6%.
I'm not telling you that we won't see it banks fail or not meet their debt obligations or that thanks have to take credit provisions. All of this can happen. All I am saying is that as a market, we got to shifted on the downside.
that's why you see even with 72% of companies reporting Q1 earnings, our expectations were way too low. We were really in the doom and gloom. And I'm not saying anyone put out stellar reports, they were better than feared.
So that is where I believe people are getting it wrong.
We got to perish.
>> We are going to get back to questions for Ben Gossack on global stocks in just a moment time.
As always, make sure you do your own research before making any investment decisions.
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Canadian consumers slowing down in March after starting the year a pretty strong no, this according to the latest research from TD Economics.
Our Anthony Okolie has been digging into the report and taking in some of the key trends in there.
What's going on, Anthony?
>> Thanks very much, Greg.
Yet, as you mentioned, the latest debit and credit card spending data points to signs of a cooldown in consumer spending in March.
As my first chart shows, those slow down and card spending more quite a sharp turn from the strong pace of both nominal and inflation-adjusted spending that we saw in the first two months of the year during what was an unusually warm winter season. When we break up the credit card spending by debit, credit standing by category, as my next chart shows, there was a significant pullback in services which was down 1.6% month over month.
Meanwhile, the good sector, the good spending actually rebounded just over 1% last month. Now, sorry, in March.
Cards mining in March was largely driven by Canadians spending more at food and beverage stores, including grocery stores, as households cut back on discretion or spending in favour of essentials because we have seen higher inflation here in Canada as well.
Pharmacies, personal care stores saw solid goods spending in March. Meanwhile, it was a bad month for things like travel, which was the biggest source of weakness for the services sector. As this next chart shows, spending on travel dipped in February as did international travel by Canadians which was down nearly 11%, 11% below the high we saw back in February 2020.
Now, one of the reasons that we saw this drop, of course, most Canadians prepaid their heartbreak travel spending in the earlier months, in winter. As a result, spending activity doesn't show up in February data.
Now, again, TD Economics says that the pattern of card spending on activities, things like travel, transportation, recreation and entertainment, they are starting to see some of this pattern normalizing from the pandemic distortions that we saw in the previous years.
Meanwhile, household related spinning, things like furniture, building materials, home furnishing compliance, that dropped in March as well after two consecutive months of growth. That seems to align with the stabilization that we are seeing in housing activity, which points to homebuyers being a bit more cautious before jumping into the real estate market.
Finally, we break things down by region, spending in Québec was the highest among the provinces, that was probably driven by inflation relief checks that they received. Meanwhile, Ontario and BC at leg to the Canadian average spending during the month of March.
Greg?
>> Let's talk about what TD Economics might think about where we are right now.
I told you before, April is a busy month for me with birthdays, wedding anniversary, blah blah blah. I'm saying in me, I'm going to calm down a bit but my children always find a reason to spend my money.
Am I test case?
>> TD Economics expects that real consumer expenditure will grow roughly around 1%annualized pace in the second quarter.
They do expect spending on services to outpace goods as again the pandemic distortions continue to normalize.
However, they expect further slowing and consumer spending in the second quarter as well as the rest of the year as high debt servicing costs continue to hit Canadian household budgets going forward.
>> Interesting stuff that we can all relate to.
Thanks a lot, Anthony.
>> My pleasure.
>> MoneyTalk's Anthony Okolie.
Let's check in on the markets now and see with wirano Bay Street with the TSX Composite Index.
We were modestly positive earlier in the session, and modestly negative at the start of the show, now down about 1/3 of a percent, 70 points to the downside.
We are seeing some settling in the price action when it comes to crude oil, it's just sort of studying after some significant losses. I want to check in on Shopify though.
Obviously, a lot of news around this one and the stock popping today, it's up to the tune of about 24% right now.
Not only had a quarterly report but it also talked about job cuts, also talked about getting rid of some of this logistics business, pretty much all of it.
So a big pop in the name there. Canadian Natural Resources, I want to take on this one. As we said, the price of American benchmark crude is settling today but it's been a sort of tumultuous ride to the downside in the past couple of session. At 7470, you can't see and queue down about 2.2%.
They also reported net profit is down year-over-year compared to where prices were a year ago at this time.
So to the border, more turmoil in the US regional banks. It's weighing on the broader market.
It down 29 points on the S&P 500, about three quarters of a percent. The NASDAQ was holding up a little bit better the last time we checked, down about half a percent.
Not as much as the broader market but still negative territory.
And Bank of America, the big Wall Street banks are feeling a bit of this pressure.
Nothing to the tune of what we are seeing in the US regional, but you've got bags America right now down about 2 1/4%.
We are back now with Ben Gossack from TD Asset Management. Lots of questions coming in, let's get to them. With the outlook for global travel companies such as Royal Caribbean?
>> I was never a big person for cruise ships and it's amazing that they've made it through, and I see people want to get back on cruise ships.
I think it goes back to what we were saying about the Chinese travellers.
I personally think it's difficult to pick the specific thing that they are going to travel on.
We were trained to buy what you know and if you love cruises, you're probably thinking everyone should be on cruises, hence the cruise company should be okay. If you're on the cruise and is full, that your channel check.
>> Your reference.
>> But you are a small sample size and you don't know what it is versus expectations that many of these companies raised a tremendous amount of debt just to survive and so I think it's a miracle they come out the other side.
What we have done and travel has been a big thing for us.
You try to pick places where we are going to almost catch everybody.
So I don't know if you're going to go on a specific airline, but wherever you go, you need to stay somewhere, so the hotel's space has been a good area to sort of pick and get that travel signal.
We have definitely seen it with luxury, but that's a separate the monotone but people will definitely buy luxury goods when they travel, especially if they are going to your.
>> On vacation, you money drop.
A purchase I would never make in my real life.
I'm just like, let's buy that. I also feel like it's cheaper because you're gonna get the tax back once you get back across the border.
>> So there's that element to it.
There are companies that are specifically skewed travel. They get that signal, that benefit. And the other thing we touched on briefly is that this return to travelwe've had aging in air fleet and so we are seeing strength and activity in companies that make airplanes and companies that service and supply airplanes.
So I think there is something to be played out over the longer term in the aerospace non-defence.
>> We are out of time for questions. Before you leave, I want to get your final thoughts in terms of throughout the show, as you been talking about the regional banks and some of the stresses that we are seeing there, the market updates, we talked about the debt ceiling and how all that will player. No shortage of words for investors. Which they be thinking about longer-term?
>> I always end with the same thing.
Stick to your plan.
People have various different plans and we see the people who stick to their plan tend to perform and outperform versus people that are all over the place.
The other thing I would say is let's not forget that stocks and markets are forward leaning indicators.
And while talk about we haven't seen the bad news, we, again, in our thesis of things being better than fear, we have seen areas where we have terrible headlines and activity.
Were economic activity has grounded to a halts but the stocks are working. That tells you that markets can be smart and look forwardand price that in. So yes, it is a lot of doom and gloom when you put on various media areas.
Stick your process and I would argue that people are too fearful. I'm not saying things are amazing but when things are less bad as they seem, that tends to recover sock.
>> Been, always a pleasure to have you and great to pick that brain.
>> Thank you.
I look forward to the next time.
How are things to Ben Gossack, portfolio manager with TD Asset Management. As always, make sure you do your own research before making any investment decisions.
We will be back tomorrow with a breakdown of the latest job data on both sides of the border and then on Monday, James Dixon, Dir. of family often strategies that TD Securities will be our guest taking your questions about market trends.
A reminder of course you get a head start with your questions, just email moneytalklive@td.com. That's all the time we have for the show today. Thanks watching.
We will see you tomorrow.
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