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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's show, holiday shopping season is upon us, but will retail stocks gain as consumers spend less on those big items? We are going to discuss all of that with Chris Graja from Argus Research. MoneyTalk and he is going to have a look at a new report from TD Securities on where gold might be headed.
And on today's education segment, Caitlin Cormier is going to have a look at how you can see what's happening in the markets using Advanced Dashboard.
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.
We will start her at home with the TSX Composite Index.
A bit of green on the screen but it's modest. 41 points to the upside, about 1/5 of a percent. Among some of the most actively traded names today includes First Quantum. That's a story that's been going on for several weeks now in terms of trouble they are having with their operations in Panama.
We told you yesterday about how the Supreme Court in Panama ruled that the latest contract governing that mine is unconstitutional. First Quantum replied later in the day saying that they are going to shut down operations in Panama if that's the case. The stock is down another 9% today, 1150, well off of its highs of only a couple of months ago nearing 40 bucks per share. I also want to check in on Enbridge. They announced today that they are expected to grow the bottom line next year, increasing the dividend. Right now the pipeline giant at 4693 is up a little more than 1%.
South of the border, the US economy continues to show some strong numbers but we have bond yields continuing to pull back. How is it playing out in the market?
The S&P 500 is about seven points to the upside, a little shy of the fits of a percent. How is the tech heavy NASDAQ case against the broader market? A little bit weaker. Modest read on the screen, seven, eight points to be generous, just five ticks.
General Motors making some gains today.
They are up at 9 1/2% on the session alone, talking about dividend hikes, substantial one, share buybacks, also a substantial one. The street like the sound of that. And that's your market update.
Holiday shopping season is upon us but after a earnings season where many retailers warned of slowing sales due to the high cost of living, will retail profits be squeezed? Joining us now to discuss is Chris Graja. Great to have you back on the program. Perfect time of the year to talk about retail. We have heard the warnings.
Will consumers open their wallets and what will it be like for retail this season?
>> People are always going to try to do what they need to do to make the holiday special for people they care about.
That may have implications in January. But in general, people try to be optimistic for the holidays and I think that's one of the positives.
If you look at the basic numbers, the GDP revision up today is very strong, the CPI has come down very nicely. nicely.
When you look at it on the surface, it looks pretty good.
As you said, inflation is still high. Doug McMillan, CEO of Walmart said a couple of months ago that the cost of a basket of groceries is still probably 20% higher than it was before the pandemic so if you are a family, you are spending $200 a week on groceries, that's $40 a week, $160 a month of incremental expense that is weighing on your ability to make discretionary purchases. And that is what the biggest challenges are. Whether it's contractor supply, people are still buying pet food, they are buying things to care for their property, but they aren't buying big-ticket things like trailers. We see the same thing at Home Depot. Whereas during the pandemic, Home Depot, people were buying multiple appliances, we need a new fridge, let's get a dishwasher in the oven matching so we have them. Now, people are waiting until the very end to the replacements.
Even in stores that sell much lower priced things, people are switching down to store brands, they are making decisions as to how much they need to have.
They are D stocking their pantries from when they stopped up. The question is why?
People have spent through some of the pandemic savings for sure. Some of the programs that were designed to sort of stabilize the economy during COVID, SNAP benefits, that's a US supplemental nutrition assistance program, child tax credit, the pause on student loan repayments, a lot of those things have rolled off.
One of the dynamics you do see is services spending is relatively strong. I think one of the reasons for that is that some of the lower income consumers are more stretched because food is a bigger portion of their overall monthly budget. And then the other thing is they probably spent through, the evidence suggests, a higher percentage of their savings from COVID so the wealthier cohort is a little more flush and they are spending more and more relatively on services, experiences, travel, going out to eat, and we can talk about how that affects us bending forecast for Christmas specifically.
>> You see the shift between spending on what you need and what you want. I want to ask you about, I find it interesting during this retail season, some retailers are talking about how when they hold the sale, demand is big and soft lies off the shelves. But outside of the big sale periods and big discounts, consumers are pulling back.
From an investment point of view, that seems to me to speak of tightening margins or perhaps no profit margin at all. Is that a bit of an overhang for them?
>> It's certainly a very good thesis.
One of the questions is whether they have inventories well enough aligned. So one of the things you alluded to is kind of like appointment shopping. Over the last year, we've seen that shopping was weak. It's strong like Mother's Day, Father's Day, back to school, Thanksgiving, Halloween, Christmas, typically. But then, in those levels it becomes challenging. One of the things I have my own very closely this holiday season is, this is getting technical, but Thanksgiving was early this year.
So we have a longer period between Thanksgiving and Christmas.
And shopping will pick up in the last few days before Christmas. There is no doubt about that.
But you kind of worry, to your point, about the weeks between the cyber Monday promotions and when people are like, oh no, Christmas is two days away, I'd better get what I need. If inventories are elevated during those kind of dull weeks, and we saw a little of it last year, some of the retailers may get a little bit nervous and mark things down.
So yeah, I think it's a balance of inventories coming into the season, how effectively they did sell through during sort of the period in October where they did have a lot of sales, how they did through Black Friday. It seems like it was an okay, And how they feel about their inventories coming up to the holidays, whether they feel like they have to lower prices to clear things out. Battir thought that people are looking for sales and discounts after the years where there were product shortages and people were like you, I want to get my child this toy. I'm just going to pay full price to make sure I get it.
>> I want to take this discussion back to the fact of shifting consumer habits. I know after I do my panic shopping right before Christmas, that happens to me every year, when the new year comes, you got things. You still want to get out of the house and experience. Could that be a tough time for retailers when we move into the new year, people putting more money into restaurants and experiences after holiday shopping?
>> I think one of the challenges is if the economy remains tight, particularly for people at lower income levels, you've kind of spent your money and you splurged to get that extra toy or game system or the extra funding for the holidays and then January rolls around in the credit card bills come out and quite honestly, one of the challenges is that credit cards are at record high rates and you're saying, I really need to be careful here for a couple of months.
And you're right.
For the higher income shopper, one of the things you will see right after Christmas is some of the higher and retailers and department stores go with their resort collection. That's not for everybody, but yeah, as you say, there's a percentage of the population that is, as Christmas and, they start thinking of their clothes for flying south or going to California were going to Spain or somewhere like that to or taking a cruise so there are a lot of dynamics. That's what makes it interesting. But I think the big one is if people make it a Merry Christmas, how does it look if their credit cards are strained come January?
And we don't have as many of those appointment shopping events to get people to open their wallets.
>> All right. Fascinating stuff. Of course, we are going to get our questions for Chris Graja in just a moment's time on retail stocks.
Of course you can 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 the top stories in the world of business and take a look at how the markets are trading.
Shares of General Motors in the spotlight.
The automaker is providing some new numbers for investors to digest. They are pretty big numbers. Let's get to them.
First off, GM says those new labour agreements after the strike action in the fall is going to increase our costs by more than $9 billion. It's a big ticket.
Despite that, GM is raising the dividend by 33% and has plans to buy back some $10 billion in shares. You were little together, the market seems pleased. 3166, you got GM up almost 10% on the session.
Enbridge also boosting its dividend payout to investors. The pipeline giant forecasted higher earnings for 2024. It is citing increased shipping volumes across its network. Enbridge also provided an update on its planned acquisition of three US utilities, from Dominion energy, saying it has secured 75% of the funding for that deal.
The stock up 1 1/3%. The market reacting to a mixed order for Alimentation Couche-Tard. The gas bar and convenience for operators is weakness and cigarette sales south of the border did weigh on sales and in a note to clients, TD Cowen said that while the earnings mix was not as good as expected, Couche-Tard's US fuel margins continue to hover around record levels. The stock down right now about 4%.
Quick check in on the market. Will start on Bay Street with the TSX Composite Index.
We have some green on the screen, up to 1/4 of a percent.
South of the border, the S&P 500 is up a little more, 6 1/2 points, a little more than 1/10 of a percent.
We are back with Chris Graja from Argus Research, we are taking your questions about retail stocks. Let's get to them.
Here's the big theme of the year. How is AI impacting the retail space?
>> That's the trillion dollar question.
My framework for looking at it is I'm really excited about anything that can bring companies closer to their customers and help them provide better service. And I'm really pretty down on things that are going to be a wall between human interaction or things that make it harder for somebody to problem solved or to connect with the human.
One example I think of a law is… You think of the possibilities of ChatGPT, generative AI, how great would it be if he ran a business and you could make every customer that speaks every language feel comfortable that you can translate and communicate with them and understand their culture. I think that's what everybody's hoping for and that's the real potential everybody's hoping to unlock. I think the fear is that your customer service requests will be just denied with a bought and then when you try to get a complex problem straightened out, you just go and you get, please state your problem another way. So some of the companies I think are doing a good job with it.
FNC, an online marketplace, has a lot of different products they sell. They are using AI and working to incorporate generative AI to get you better suggestions from the millions of products they have.
So one of the things they know is that the products that make it to the first page of the search are the ones that still the best.
And then also in the algorithm they have kind of used artificial intelligence machine learning to sort of identify the most attractive pictures, whether it's the lighting, the sintering, the focus, and then also using another layer of intelligence on the particular sellers to no who has high ratings, who is very good at fulfilling products, who has a firm delivery date. So kind of bringing all of those things together to get people what they want. One of the examples they talk about a lot is if somebody says they want something for a cocktail party, it knows that a man may be looking for a blue blazer and the search won't bring up any actual liquor or anything like that.
Kroger, the big department store chain, has a project with Nvidia where they are using infrared scanners and optical recognition to scan their produce sections to identify fruit and produce that may not be as fresh. You're going to have a lot of retailers using it on their supply chain to try to map the most effective routes from place to place. It going back to the original example, it would be great to walk into Home Depot and you're looking for a product and it's not in the aisle where you think it should be, and the associate can just say, do we have any more of this kind of screwdriver? Where would it be? Do we have any extras in the overhead bins?
So to get all of that information, and somebody can speak it rather than having to peck it one finger at a time into a tiny little virtual keyboard.
One of the other things that the question is, with everything, what is the return on investment?
Everybody is thinking of the technology and how cool it is, but then the question just becomes, the Nvidia chips that you see from the share price, the Nvidia chips are very expensive, and what's the return on investment capabilities and what kinds of off-the-shelf options become available?
>> You mentioned Home Depot. I thought wow, what a step forward it would be, at least for me and probably other consumers, you're standing in front of that massive wall of bolts and nuts and you did a very specific one. If I can fix that for me so I don't have to stare at that wall for 45 minutes, I will be happy guide. Let's take another question from the audience.
This one is about fashion or reselling.
What is your view of TJX? This is the parent company of winners and marshals, isn't it?
>> It is. TJX in the United States, they own home goods and home sense.
The neat thing about the business model is they have this treasure hunt atmosphere.
Before the pandemic for sure, the way the model works is they are a buyer of historically overstocked merchandise, either from department stores or manufacturers. One of the reasons it persists is that they have a lot of merchants who are pretty good at it and they tend to pay very quickly. They negotiate a tough deal for on price but they pay quickly and in the garment industry, cash and getting paid is extremely important. So they are always managing their inventory as well, operating fresh merchandise into the stores, and it kind of creates the treasure hunt that you go into TJX, you find something nice and you say, I'll have to go back again, because you know that you have to go in regularly to get those deals, and that has been a driver of traffic which has been really, really important. One of the challenges to that business, and we saw it in the pandemic, is because the merchandise is so unique, it doesn't really lend itself to the mass online presentation, so they don't have a very large web presence. That was, in a lot of ways, the thing that insulated them very nicely from Amazon but it was also a challenge in the pandemic when the stores closed, they didn't have online to use as a service buffer.
>> It was like a treasure hunt. Once in a while it marshals, I would find it high that looks good on TV. At the same time, I can count on finding the tie next time or the genes I bought last time.
It was a bit of a unique sales venue, I guess.
>> There is 1 Literally in New York and I would go down a couple days a week at lunch and I would kind of refresh my home workout gear, go through the racks, and one of the things that the store is that they are very flexible.
It's not like they are very defined departments.
They are just floating racks that kind of go where the merchandise is.
You go through and sometimes you would find in under Armour sweatshirt for $29, you can find a nice under Armour T-shirt maybe with a baseball team logo, maybe it's not your favourite baseball team, but a pretty nice shirt for 9.99, and you can often tell, you're at the gym, you will see somebody with a strange sure, you think, oh, they got that ad T.J. Maxx, and they got a great price.
>> I have some of those in my closet as well.
And make sure to check out the learning centre in WebBroker for more educational videos, we will get back to your questions for Chris Graja on the retail sector and just moments time.
And a reminder that you can get in touch with us any time. Just email moneytalklive@td.com.
Now, let's get our educational segments of the day.
In today's segment, we are having another look at TD's Advanced Dashboard, platform designed for active traders available through TD direction.
Caitlin Cormier, client education instructor with TD Direct Investing has this look at how you can stay up-to-date on the markets and customize your views using the platform.
>> One of the great features of Advanced Dashboard is you being able to create custom layouts to put in any tools and widgets that you would like to see.
However, how are you going to know which widgets you would like if you don't have time to look through them?
Let's take a peek today at our market policy Leah. It's one of our pre-created layouts within Advanced Dashboard. We will get a feel for some of the tools we have.
First up, we have our bubble chart, which is giving us a visual representation of the TSX 60.
It showing us the one your performance of the securities. We have the heat map which is giving us up-to-date information on how the markets are trading, specifically the TSX. We can see the most actively traded securities, so this is within Canada on the TSX, you can see the top 10 securities. We can also see how the markets are performing, so different indices, here we are looking at both Canada and the US. We can see market news, so as it comes in, that rolling information about what is happening within the market, as well as our earnings calendar here on the left-hand side.
You will also notice that once we choose a security that we want to do a bit more research on, for example I can go ahead and click, let's choose one an hour left here, the right hand side on my screen it is going to automatically update to represent information from that security.
So we can see a chart here from that security.
I can click on news and get information about that security. Equity analytics, which gives us pretty much all of the information we need to have as far as fundamental information on that company and finally the Earnings Analyzer.
The great thing about this linking as we are able to get this up-to-date information between these two screens so again if you click on most active and choose a security within the screen, it will automatically update on the right-hand side and give us the information about that particular security.
This is one way that you can get a little bit more familiar with the different tools that we have an Advanced Dashboard see you can really create your own custom screen.
>> Our thanks to Caitlin Cormier, client education instructor with 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.
Okay, we're back with Chris Graja, taking your questions about retail stocks. Let's get to the next one here, Chris.
Can you get your thoughts on Costco?
>> Sure!
The thing I think you need to understand about Costco if you are an investor, when you look at it, it always looks expensive and one of the reasons that it trades at a premium multiple is that approximately two thirds of the operating income comes from membership revenue. So they have a level of recurring revenue that really isn't typical in the retail sector. And the way they make that business model work is that they offer very low prices, sort of similar to TJX, it may be a benefit in this market, they offer low prices, people come back to see what's there and to get bargains, and the combination of the traffic and low prices leads people to renew that membership so that's kind of the virtuous cycle that is held the stock over the years, the renewal rate is about 90%. Which are the things that when you see behind the scenes, you should always ask as an investor, this multiple is high,.
then this multiple appears low, why might that be? So you get the answer as to what operating dynamics there might be that may not be apparent to the person who is just looking at the stock very casually.
Some of the things that are important to understand is they are in the low-margin business. They don't have high profit margins.
They sell low-margin merchandise and they turned it over very rapidly.
Their execution has to be almost perfect.
They deal with a lot of fresh merchandise, so you can't really have spoilage. You have to get everything turning over so that you are not throwing things away that would hurt your very low margins. Gas is a volatile business. Costco has gas stations. When gasoline prices are rising, they try to hold gas prices low as a member benefit but that often hurts margins. The plus side of that is that it's another benefit. I'll drive by the Costco when gas prices are high, hopefully for Costco people will also go into the store once they've gone by to save money on the gas. One thing that always gets a lot of news is the dollar 50 hot dog and soda deal.
Which they probably lose money on, but people recognize the value and some people really, really enjoy it.
It's kind of a signal to the market that of their commitment to low prices.
>> Okay, good breakdown there of some of the pros and cons for Costco.
We touched briefly earlier in the show, let's talk about home improvement retailers. God of you are wondering how they are handling the current environment.
>> Yeah.
So yeah, let's talk longer term first.
With a record number of people in the US locked in at mortgage rates are substantially below where rates are now, we talk about it, others talk about it as the golden hand off. A lot of people aren't going to move because they have mortgage rates in the 23% range.
A lot of those people are going to stay and fix up their homes. We have a big wave of Milennials who are just getting into buying their first homes and there are baby boomers who are living longer, looking for ways to stay in their homes and may be doing some retrofitting. Homes in general, the housing stock in general has aged and they are at the 40-year-old point where homes need to be upgraded. So those are a lot of the long term positive drivers for the home improvement sector.
In the margin structure is pretty good.
High single digits, low double-digit margins.
The challenge in the near term is probably that some individuals are a little bit burned out. They did a lot of the projects when they were locked up with the pandemic. Higher interest rates are weighing on people's willingness to take on the bigger ticket discretionary projects. For now, home values have remained pretty high which is a good indicator of people's willingness to invest in their homes. But I think, and then you also have people who are, they have invested in their homes, they spent a lot of time in their homes, they want to go to a concert, they want to go to a hockey game, they want to go to eat. In the near term at least, some of their spending priorities have shifted. With mortgage rates high, it's not a huge portion of their business, but housing turnover is maybe 5% or so, so that when people plan to sell their house, they fix some things up. When people move into a new house, maybe they replaced some appliances, they fix some things up.
So some of that business is a little bit diminished in the near term but there certainly are a lot of long-term positives in the sector.
>> Okay. We will get back to your questions for Chris Graja on retail stocks in just a moment's time.
As always, make sure you do your own research before making any investment decisions.
Let's talk about gold, gold prices at their highest level in six months amid a backdrop of continuous central bank buying and falling bond yields. So where could gold prices had in the new year?
Anthony Okolie has been digging into a new TD Securities report on the outlook for gold. What are they saying?
>> TD Security says that in addition to lower bond yields, they point to central bank buying is a key driver that has been set in gold prices higher, with prices hitting as much as $2000 per ounce several times recently. Now, they point to aggressive central bank buying which is offset the negative impact of high carrying costs for gold which is a result of the highest interest rate environment in two decades, over two decades.
As the chart shows, central-bank gold holdings have reached their highest level since… The system that required currency peg to the US dollar which was pegged to gold about $35 US per ounce. Now TD Securities is confident that central bank buying will remain strong over the next few years.
Driving that view, they cite a recent poll or recent survey by the world gold council this year, which showed that 24% of central banks intend to boost reserves over the next 12 months. Also, central banks increasingly view the role of the US dollar diminishing in the coming years.
The survey also showed that the percentage of central banks that believe gold future as a reserve asset will be a greater share of the total reserve rose from 46% last year to 62% this year. So this means potentially higher demand from monetary institutions in years to come. TD Securities believes this attitude will be a big driver of gold demand in the future.
Now, they also note among geopolitical competitors, China's gold holdings is pretty insignificant, it's roughly around 4% of their foreign exchange reserves, despite recent aggressive buying by their central bank. Now this legs way behind the US which currently sits at about 69%, Germany is at 60% of gold as their total reserves, Russia is a 25%. So China still has plenty of room to grow their reserves.
Even if they increase to 10%, that represents about 3000 tons of gold that they would have to go into the market to purchase.
So looking ahead, TD Securities believes that with inflation still above the Fed's 2% target, central-bank is unlikely to signal a dovish tilt and gold could be range bound in the near term. However, once data shows that inflation pressure is beginning to cool, TD Securities believes that the Fed funds rate will top out at about 5.5% with a dovish tilt until mid-2024. Once the Fed pivots to a less hawkish stance, TD Securities sees investors interest in gold reemerging at that point. They believe that this will be a catalyst for the $2100 per ounce plus Outlook or sustained price protection next year for the price of gold.
>> Any gold bugs watching the program right now are pleased with the price action in the next couple of months. They probably like the sound of that as well.
What are some of the risks to this forecast?
>> One of the risks that TD Securities notes in the report is that the Federal Reserve starts cutting interest rates early, before reaching its 2% target. They believe that if the Fed does cut rates prematurely, that will raise pressure on its credibility in the eyes of the market, particularly if they need to go back and tighten again if inflation reemerges. TD Security says this scenario present an upside risk to their $2100 per ounce price protection for 2024.
>> Very interesting. Thanks for that.
>> My pleasure.
>> MoneyTalk's Anthony Okolie.
Now for an update on the market. We are looking at Advanced Dashboard. We are screening to the TSX 60 by price and volume. The TSX comp is it on the top line is up about 60 points right now.
What is making that happen?
You are seeing a bit of a bounce back in Scotiabank shares after the selling pressure of yesterday after their disappointing poorly reported and some of the other names in the financial space which are heavy weights for the topline number are also putting some points on the table.
Energy is a bit of a mixed bag today.
Everyone is trying to figure out what OPEC is going to get up to you. They have a virtual meeting which is supposed to be tomorrow. The one standout on the weak side is First Quantum, down 9 1/2%. This is all about the Panama operations, that constitutional question put before the Supreme Court. They basically said that the latest contract they signed with the Panamanian government is unconstitutional and First Quantum has said that they are going to have to shoulder the mine. South of the border, let's screen through the S&P 100, looking at some of the automakers today to the upside. They are being led by General Motors.
They came out and said yes, the contract that we signed are going to cost us about $9 billion extra but they seem to be in a well enough financial position to hike the dividend substantially and announce a share buyback program of $10 billion. You put it all together, the street likes it.
Ford is also a bit higher as well. The financials seem to be getting a bit of a bit on Wall Street as well.
For more information on TD Advanced Dashboard, you can visit TD.com/Advanced Dashboard.
All right, we are back now with Chris Graja from Argus Research, we are talking retail. Have your wants to get your take on the electronics retailers?
>> Sure. One of the things that's positive and really cool is that it's a sector with a lot of innovation and they are products that people want to own, kind of tying together what we were talking about with a IN housing, one of the neatest things that Best Buy is working on, right now it's a very small portion of the business, so we will talk about some of the other things later, but one of the things that they have is a healthcare related business and they are using kind of combinations of AI and technology to enable people maybe to stay in their homes a little bit longer.
So what he does is you would set up sensors in various rooms, at various points around your home. If one of us had an elder relatives living alone, the AI would sort of learn what time they get out of bed in the morning, how much time they typically spend and say the bathroom, how much time they, what time they typically turn off the lights, what time they typically turn off the TV and by learning all of these things, you can maybe see if somebody has fallen down, maybe somebody is not feeling well or getting out of bed at their normal time.
So the technology makes it easier to monitor people's health and give them independence and allow relatives caregivers the ability to place a call and see how they are.
In the sector in general, benefits from innovation but it can be stagnant year-over-year if there is not a new product or innovation cycle, that can weigh on sales from time to time. One of the current challenges for Best Buy is that the big-ticket spending we've been talking about throughout all of the questions, their CEO said during the third quarter called that demand was a little bit uneven and difficult to predict.
People are spending on experiences.
Certainly, one of the things that Best Buy did very well is they became a Survivor in the sector. I think they were very agile during the pandemic and that they got curbside going very quickly, they adapted their website. One of the major things they are working on is total tech, so it's a service related product, probably like many other retailers, Amazon prime included, kind of recognizing the beauty of what Costco has done with all of the recurring revenue. Total tech offers you your extended warranties on appliances, big-ticket things, and it also, I may be selling the short, but it allows you to get customer support and answers to questions on tech products, even those you did not get from Best Buy.
Other things they are trying to do is emphasize the fact that they sell more than simply consumer electronics. One of the opportunities I missed is I bought a grill at the end of the summer.
I might have gone to Best Buy if the price was right, but I didn't realize that they sold grills. That last conversation with the CFO, he said that one of the things they are working on.
Teaching people about technology, over several years, what are the beneficiaries has been Apple for consolidating devices and making them easier to use rather than another party for being able to provide the education. So maybe the final take away is competition, fairly low margin structure, but on the positive side, they have a healthy, always changing array of products that people want and, in many cases, are some of the most important things they own.
>> Alright Chris. The show flew by. Always great to have you want. Great to get your insights. I look forward to the next time.
>> Thanks.
>> Our thanks to Chris Graja, Senior analyst in retail at Argus Research.
As always, make sure you do your own research before making any investment decisions.
stay tuned for tomorrow show. Haining Zha, VP and Dir., asset allocation research at TD Asset Management will be our guest taking your questions about China's economy and markets.
You can get a head start this question.
Just email moneytalklive@td.com.
That's all the time we have the show today. Thanks for 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's show, holiday shopping season is upon us, but will retail stocks gain as consumers spend less on those big items? We are going to discuss all of that with Chris Graja from Argus Research. MoneyTalk and he is going to have a look at a new report from TD Securities on where gold might be headed.
And on today's education segment, Caitlin Cormier is going to have a look at how you can see what's happening in the markets using Advanced Dashboard.
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.
We will start her at home with the TSX Composite Index.
A bit of green on the screen but it's modest. 41 points to the upside, about 1/5 of a percent. Among some of the most actively traded names today includes First Quantum. That's a story that's been going on for several weeks now in terms of trouble they are having with their operations in Panama.
We told you yesterday about how the Supreme Court in Panama ruled that the latest contract governing that mine is unconstitutional. First Quantum replied later in the day saying that they are going to shut down operations in Panama if that's the case. The stock is down another 9% today, 1150, well off of its highs of only a couple of months ago nearing 40 bucks per share. I also want to check in on Enbridge. They announced today that they are expected to grow the bottom line next year, increasing the dividend. Right now the pipeline giant at 4693 is up a little more than 1%.
South of the border, the US economy continues to show some strong numbers but we have bond yields continuing to pull back. How is it playing out in the market?
The S&P 500 is about seven points to the upside, a little shy of the fits of a percent. How is the tech heavy NASDAQ case against the broader market? A little bit weaker. Modest read on the screen, seven, eight points to be generous, just five ticks.
General Motors making some gains today.
They are up at 9 1/2% on the session alone, talking about dividend hikes, substantial one, share buybacks, also a substantial one. The street like the sound of that. And that's your market update.
Holiday shopping season is upon us but after a earnings season where many retailers warned of slowing sales due to the high cost of living, will retail profits be squeezed? Joining us now to discuss is Chris Graja. Great to have you back on the program. Perfect time of the year to talk about retail. We have heard the warnings.
Will consumers open their wallets and what will it be like for retail this season?
>> People are always going to try to do what they need to do to make the holiday special for people they care about.
That may have implications in January. But in general, people try to be optimistic for the holidays and I think that's one of the positives.
If you look at the basic numbers, the GDP revision up today is very strong, the CPI has come down very nicely. nicely.
When you look at it on the surface, it looks pretty good.
As you said, inflation is still high. Doug McMillan, CEO of Walmart said a couple of months ago that the cost of a basket of groceries is still probably 20% higher than it was before the pandemic so if you are a family, you are spending $200 a week on groceries, that's $40 a week, $160 a month of incremental expense that is weighing on your ability to make discretionary purchases. And that is what the biggest challenges are. Whether it's contractor supply, people are still buying pet food, they are buying things to care for their property, but they aren't buying big-ticket things like trailers. We see the same thing at Home Depot. Whereas during the pandemic, Home Depot, people were buying multiple appliances, we need a new fridge, let's get a dishwasher in the oven matching so we have them. Now, people are waiting until the very end to the replacements.
Even in stores that sell much lower priced things, people are switching down to store brands, they are making decisions as to how much they need to have.
They are D stocking their pantries from when they stopped up. The question is why?
People have spent through some of the pandemic savings for sure. Some of the programs that were designed to sort of stabilize the economy during COVID, SNAP benefits, that's a US supplemental nutrition assistance program, child tax credit, the pause on student loan repayments, a lot of those things have rolled off.
One of the dynamics you do see is services spending is relatively strong. I think one of the reasons for that is that some of the lower income consumers are more stretched because food is a bigger portion of their overall monthly budget. And then the other thing is they probably spent through, the evidence suggests, a higher percentage of their savings from COVID so the wealthier cohort is a little more flush and they are spending more and more relatively on services, experiences, travel, going out to eat, and we can talk about how that affects us bending forecast for Christmas specifically.
>> You see the shift between spending on what you need and what you want. I want to ask you about, I find it interesting during this retail season, some retailers are talking about how when they hold the sale, demand is big and soft lies off the shelves. But outside of the big sale periods and big discounts, consumers are pulling back.
From an investment point of view, that seems to me to speak of tightening margins or perhaps no profit margin at all. Is that a bit of an overhang for them?
>> It's certainly a very good thesis.
One of the questions is whether they have inventories well enough aligned. So one of the things you alluded to is kind of like appointment shopping. Over the last year, we've seen that shopping was weak. It's strong like Mother's Day, Father's Day, back to school, Thanksgiving, Halloween, Christmas, typically. But then, in those levels it becomes challenging. One of the things I have my own very closely this holiday season is, this is getting technical, but Thanksgiving was early this year.
So we have a longer period between Thanksgiving and Christmas.
And shopping will pick up in the last few days before Christmas. There is no doubt about that.
But you kind of worry, to your point, about the weeks between the cyber Monday promotions and when people are like, oh no, Christmas is two days away, I'd better get what I need. If inventories are elevated during those kind of dull weeks, and we saw a little of it last year, some of the retailers may get a little bit nervous and mark things down.
So yeah, I think it's a balance of inventories coming into the season, how effectively they did sell through during sort of the period in October where they did have a lot of sales, how they did through Black Friday. It seems like it was an okay, And how they feel about their inventories coming up to the holidays, whether they feel like they have to lower prices to clear things out. Battir thought that people are looking for sales and discounts after the years where there were product shortages and people were like you, I want to get my child this toy. I'm just going to pay full price to make sure I get it.
>> I want to take this discussion back to the fact of shifting consumer habits. I know after I do my panic shopping right before Christmas, that happens to me every year, when the new year comes, you got things. You still want to get out of the house and experience. Could that be a tough time for retailers when we move into the new year, people putting more money into restaurants and experiences after holiday shopping?
>> I think one of the challenges is if the economy remains tight, particularly for people at lower income levels, you've kind of spent your money and you splurged to get that extra toy or game system or the extra funding for the holidays and then January rolls around in the credit card bills come out and quite honestly, one of the challenges is that credit cards are at record high rates and you're saying, I really need to be careful here for a couple of months.
And you're right.
For the higher income shopper, one of the things you will see right after Christmas is some of the higher and retailers and department stores go with their resort collection. That's not for everybody, but yeah, as you say, there's a percentage of the population that is, as Christmas and, they start thinking of their clothes for flying south or going to California were going to Spain or somewhere like that to or taking a cruise so there are a lot of dynamics. That's what makes it interesting. But I think the big one is if people make it a Merry Christmas, how does it look if their credit cards are strained come January?
And we don't have as many of those appointment shopping events to get people to open their wallets.
>> All right. Fascinating stuff. Of course, we are going to get our questions for Chris Graja in just a moment's time on retail stocks.
Of course you can 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 the top stories in the world of business and take a look at how the markets are trading.
Shares of General Motors in the spotlight.
The automaker is providing some new numbers for investors to digest. They are pretty big numbers. Let's get to them.
First off, GM says those new labour agreements after the strike action in the fall is going to increase our costs by more than $9 billion. It's a big ticket.
Despite that, GM is raising the dividend by 33% and has plans to buy back some $10 billion in shares. You were little together, the market seems pleased. 3166, you got GM up almost 10% on the session.
Enbridge also boosting its dividend payout to investors. The pipeline giant forecasted higher earnings for 2024. It is citing increased shipping volumes across its network. Enbridge also provided an update on its planned acquisition of three US utilities, from Dominion energy, saying it has secured 75% of the funding for that deal.
The stock up 1 1/3%. The market reacting to a mixed order for Alimentation Couche-Tard. The gas bar and convenience for operators is weakness and cigarette sales south of the border did weigh on sales and in a note to clients, TD Cowen said that while the earnings mix was not as good as expected, Couche-Tard's US fuel margins continue to hover around record levels. The stock down right now about 4%.
Quick check in on the market. Will start on Bay Street with the TSX Composite Index.
We have some green on the screen, up to 1/4 of a percent.
South of the border, the S&P 500 is up a little more, 6 1/2 points, a little more than 1/10 of a percent.
We are back with Chris Graja from Argus Research, we are taking your questions about retail stocks. Let's get to them.
Here's the big theme of the year. How is AI impacting the retail space?
>> That's the trillion dollar question.
My framework for looking at it is I'm really excited about anything that can bring companies closer to their customers and help them provide better service. And I'm really pretty down on things that are going to be a wall between human interaction or things that make it harder for somebody to problem solved or to connect with the human.
One example I think of a law is… You think of the possibilities of ChatGPT, generative AI, how great would it be if he ran a business and you could make every customer that speaks every language feel comfortable that you can translate and communicate with them and understand their culture. I think that's what everybody's hoping for and that's the real potential everybody's hoping to unlock. I think the fear is that your customer service requests will be just denied with a bought and then when you try to get a complex problem straightened out, you just go and you get, please state your problem another way. So some of the companies I think are doing a good job with it.
FNC, an online marketplace, has a lot of different products they sell. They are using AI and working to incorporate generative AI to get you better suggestions from the millions of products they have.
So one of the things they know is that the products that make it to the first page of the search are the ones that still the best.
And then also in the algorithm they have kind of used artificial intelligence machine learning to sort of identify the most attractive pictures, whether it's the lighting, the sintering, the focus, and then also using another layer of intelligence on the particular sellers to no who has high ratings, who is very good at fulfilling products, who has a firm delivery date. So kind of bringing all of those things together to get people what they want. One of the examples they talk about a lot is if somebody says they want something for a cocktail party, it knows that a man may be looking for a blue blazer and the search won't bring up any actual liquor or anything like that.
Kroger, the big department store chain, has a project with Nvidia where they are using infrared scanners and optical recognition to scan their produce sections to identify fruit and produce that may not be as fresh. You're going to have a lot of retailers using it on their supply chain to try to map the most effective routes from place to place. It going back to the original example, it would be great to walk into Home Depot and you're looking for a product and it's not in the aisle where you think it should be, and the associate can just say, do we have any more of this kind of screwdriver? Where would it be? Do we have any extras in the overhead bins?
So to get all of that information, and somebody can speak it rather than having to peck it one finger at a time into a tiny little virtual keyboard.
One of the other things that the question is, with everything, what is the return on investment?
Everybody is thinking of the technology and how cool it is, but then the question just becomes, the Nvidia chips that you see from the share price, the Nvidia chips are very expensive, and what's the return on investment capabilities and what kinds of off-the-shelf options become available?
>> You mentioned Home Depot. I thought wow, what a step forward it would be, at least for me and probably other consumers, you're standing in front of that massive wall of bolts and nuts and you did a very specific one. If I can fix that for me so I don't have to stare at that wall for 45 minutes, I will be happy guide. Let's take another question from the audience.
This one is about fashion or reselling.
What is your view of TJX? This is the parent company of winners and marshals, isn't it?
>> It is. TJX in the United States, they own home goods and home sense.
The neat thing about the business model is they have this treasure hunt atmosphere.
Before the pandemic for sure, the way the model works is they are a buyer of historically overstocked merchandise, either from department stores or manufacturers. One of the reasons it persists is that they have a lot of merchants who are pretty good at it and they tend to pay very quickly. They negotiate a tough deal for on price but they pay quickly and in the garment industry, cash and getting paid is extremely important. So they are always managing their inventory as well, operating fresh merchandise into the stores, and it kind of creates the treasure hunt that you go into TJX, you find something nice and you say, I'll have to go back again, because you know that you have to go in regularly to get those deals, and that has been a driver of traffic which has been really, really important. One of the challenges to that business, and we saw it in the pandemic, is because the merchandise is so unique, it doesn't really lend itself to the mass online presentation, so they don't have a very large web presence. That was, in a lot of ways, the thing that insulated them very nicely from Amazon but it was also a challenge in the pandemic when the stores closed, they didn't have online to use as a service buffer.
>> It was like a treasure hunt. Once in a while it marshals, I would find it high that looks good on TV. At the same time, I can count on finding the tie next time or the genes I bought last time.
It was a bit of a unique sales venue, I guess.
>> There is 1 Literally in New York and I would go down a couple days a week at lunch and I would kind of refresh my home workout gear, go through the racks, and one of the things that the store is that they are very flexible.
It's not like they are very defined departments.
They are just floating racks that kind of go where the merchandise is.
You go through and sometimes you would find in under Armour sweatshirt for $29, you can find a nice under Armour T-shirt maybe with a baseball team logo, maybe it's not your favourite baseball team, but a pretty nice shirt for 9.99, and you can often tell, you're at the gym, you will see somebody with a strange sure, you think, oh, they got that ad T.J. Maxx, and they got a great price.
>> I have some of those in my closet as well.
And make sure to check out the learning centre in WebBroker for more educational videos, we will get back to your questions for Chris Graja on the retail sector and just moments time.
And a reminder that you can get in touch with us any time. Just email moneytalklive@td.com.
Now, let's get our educational segments of the day.
In today's segment, we are having another look at TD's Advanced Dashboard, platform designed for active traders available through TD direction.
Caitlin Cormier, client education instructor with TD Direct Investing has this look at how you can stay up-to-date on the markets and customize your views using the platform.
>> One of the great features of Advanced Dashboard is you being able to create custom layouts to put in any tools and widgets that you would like to see.
However, how are you going to know which widgets you would like if you don't have time to look through them?
Let's take a peek today at our market policy Leah. It's one of our pre-created layouts within Advanced Dashboard. We will get a feel for some of the tools we have.
First up, we have our bubble chart, which is giving us a visual representation of the TSX 60.
It showing us the one your performance of the securities. We have the heat map which is giving us up-to-date information on how the markets are trading, specifically the TSX. We can see the most actively traded securities, so this is within Canada on the TSX, you can see the top 10 securities. We can also see how the markets are performing, so different indices, here we are looking at both Canada and the US. We can see market news, so as it comes in, that rolling information about what is happening within the market, as well as our earnings calendar here on the left-hand side.
You will also notice that once we choose a security that we want to do a bit more research on, for example I can go ahead and click, let's choose one an hour left here, the right hand side on my screen it is going to automatically update to represent information from that security.
So we can see a chart here from that security.
I can click on news and get information about that security. Equity analytics, which gives us pretty much all of the information we need to have as far as fundamental information on that company and finally the Earnings Analyzer.
The great thing about this linking as we are able to get this up-to-date information between these two screens so again if you click on most active and choose a security within the screen, it will automatically update on the right-hand side and give us the information about that particular security.
This is one way that you can get a little bit more familiar with the different tools that we have an Advanced Dashboard see you can really create your own custom screen.
>> Our thanks to Caitlin Cormier, client education instructor with 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.
Okay, we're back with Chris Graja, taking your questions about retail stocks. Let's get to the next one here, Chris.
Can you get your thoughts on Costco?
>> Sure!
The thing I think you need to understand about Costco if you are an investor, when you look at it, it always looks expensive and one of the reasons that it trades at a premium multiple is that approximately two thirds of the operating income comes from membership revenue. So they have a level of recurring revenue that really isn't typical in the retail sector. And the way they make that business model work is that they offer very low prices, sort of similar to TJX, it may be a benefit in this market, they offer low prices, people come back to see what's there and to get bargains, and the combination of the traffic and low prices leads people to renew that membership so that's kind of the virtuous cycle that is held the stock over the years, the renewal rate is about 90%. Which are the things that when you see behind the scenes, you should always ask as an investor, this multiple is high,.
then this multiple appears low, why might that be? So you get the answer as to what operating dynamics there might be that may not be apparent to the person who is just looking at the stock very casually.
Some of the things that are important to understand is they are in the low-margin business. They don't have high profit margins.
They sell low-margin merchandise and they turned it over very rapidly.
Their execution has to be almost perfect.
They deal with a lot of fresh merchandise, so you can't really have spoilage. You have to get everything turning over so that you are not throwing things away that would hurt your very low margins. Gas is a volatile business. Costco has gas stations. When gasoline prices are rising, they try to hold gas prices low as a member benefit but that often hurts margins. The plus side of that is that it's another benefit. I'll drive by the Costco when gas prices are high, hopefully for Costco people will also go into the store once they've gone by to save money on the gas. One thing that always gets a lot of news is the dollar 50 hot dog and soda deal.
Which they probably lose money on, but people recognize the value and some people really, really enjoy it.
It's kind of a signal to the market that of their commitment to low prices.
>> Okay, good breakdown there of some of the pros and cons for Costco.
We touched briefly earlier in the show, let's talk about home improvement retailers. God of you are wondering how they are handling the current environment.
>> Yeah.
So yeah, let's talk longer term first.
With a record number of people in the US locked in at mortgage rates are substantially below where rates are now, we talk about it, others talk about it as the golden hand off. A lot of people aren't going to move because they have mortgage rates in the 23% range.
A lot of those people are going to stay and fix up their homes. We have a big wave of Milennials who are just getting into buying their first homes and there are baby boomers who are living longer, looking for ways to stay in their homes and may be doing some retrofitting. Homes in general, the housing stock in general has aged and they are at the 40-year-old point where homes need to be upgraded. So those are a lot of the long term positive drivers for the home improvement sector.
In the margin structure is pretty good.
High single digits, low double-digit margins.
The challenge in the near term is probably that some individuals are a little bit burned out. They did a lot of the projects when they were locked up with the pandemic. Higher interest rates are weighing on people's willingness to take on the bigger ticket discretionary projects. For now, home values have remained pretty high which is a good indicator of people's willingness to invest in their homes. But I think, and then you also have people who are, they have invested in their homes, they spent a lot of time in their homes, they want to go to a concert, they want to go to a hockey game, they want to go to eat. In the near term at least, some of their spending priorities have shifted. With mortgage rates high, it's not a huge portion of their business, but housing turnover is maybe 5% or so, so that when people plan to sell their house, they fix some things up. When people move into a new house, maybe they replaced some appliances, they fix some things up.
So some of that business is a little bit diminished in the near term but there certainly are a lot of long-term positives in the sector.
>> Okay. We will get back to your questions for Chris Graja on retail stocks in just a moment's time.
As always, make sure you do your own research before making any investment decisions.
Let's talk about gold, gold prices at their highest level in six months amid a backdrop of continuous central bank buying and falling bond yields. So where could gold prices had in the new year?
Anthony Okolie has been digging into a new TD Securities report on the outlook for gold. What are they saying?
>> TD Security says that in addition to lower bond yields, they point to central bank buying is a key driver that has been set in gold prices higher, with prices hitting as much as $2000 per ounce several times recently. Now, they point to aggressive central bank buying which is offset the negative impact of high carrying costs for gold which is a result of the highest interest rate environment in two decades, over two decades.
As the chart shows, central-bank gold holdings have reached their highest level since… The system that required currency peg to the US dollar which was pegged to gold about $35 US per ounce. Now TD Securities is confident that central bank buying will remain strong over the next few years.
Driving that view, they cite a recent poll or recent survey by the world gold council this year, which showed that 24% of central banks intend to boost reserves over the next 12 months. Also, central banks increasingly view the role of the US dollar diminishing in the coming years.
The survey also showed that the percentage of central banks that believe gold future as a reserve asset will be a greater share of the total reserve rose from 46% last year to 62% this year. So this means potentially higher demand from monetary institutions in years to come. TD Securities believes this attitude will be a big driver of gold demand in the future.
Now, they also note among geopolitical competitors, China's gold holdings is pretty insignificant, it's roughly around 4% of their foreign exchange reserves, despite recent aggressive buying by their central bank. Now this legs way behind the US which currently sits at about 69%, Germany is at 60% of gold as their total reserves, Russia is a 25%. So China still has plenty of room to grow their reserves.
Even if they increase to 10%, that represents about 3000 tons of gold that they would have to go into the market to purchase.
So looking ahead, TD Securities believes that with inflation still above the Fed's 2% target, central-bank is unlikely to signal a dovish tilt and gold could be range bound in the near term. However, once data shows that inflation pressure is beginning to cool, TD Securities believes that the Fed funds rate will top out at about 5.5% with a dovish tilt until mid-2024. Once the Fed pivots to a less hawkish stance, TD Securities sees investors interest in gold reemerging at that point. They believe that this will be a catalyst for the $2100 per ounce plus Outlook or sustained price protection next year for the price of gold.
>> Any gold bugs watching the program right now are pleased with the price action in the next couple of months. They probably like the sound of that as well.
What are some of the risks to this forecast?
>> One of the risks that TD Securities notes in the report is that the Federal Reserve starts cutting interest rates early, before reaching its 2% target. They believe that if the Fed does cut rates prematurely, that will raise pressure on its credibility in the eyes of the market, particularly if they need to go back and tighten again if inflation reemerges. TD Security says this scenario present an upside risk to their $2100 per ounce price protection for 2024.
>> Very interesting. Thanks for that.
>> My pleasure.
>> MoneyTalk's Anthony Okolie.
Now for an update on the market. We are looking at Advanced Dashboard. We are screening to the TSX 60 by price and volume. The TSX comp is it on the top line is up about 60 points right now.
What is making that happen?
You are seeing a bit of a bounce back in Scotiabank shares after the selling pressure of yesterday after their disappointing poorly reported and some of the other names in the financial space which are heavy weights for the topline number are also putting some points on the table.
Energy is a bit of a mixed bag today.
Everyone is trying to figure out what OPEC is going to get up to you. They have a virtual meeting which is supposed to be tomorrow. The one standout on the weak side is First Quantum, down 9 1/2%. This is all about the Panama operations, that constitutional question put before the Supreme Court. They basically said that the latest contract they signed with the Panamanian government is unconstitutional and First Quantum has said that they are going to have to shoulder the mine. South of the border, let's screen through the S&P 100, looking at some of the automakers today to the upside. They are being led by General Motors.
They came out and said yes, the contract that we signed are going to cost us about $9 billion extra but they seem to be in a well enough financial position to hike the dividend substantially and announce a share buyback program of $10 billion. You put it all together, the street likes it.
Ford is also a bit higher as well. The financials seem to be getting a bit of a bit on Wall Street as well.
For more information on TD Advanced Dashboard, you can visit TD.com/Advanced Dashboard.
All right, we are back now with Chris Graja from Argus Research, we are talking retail. Have your wants to get your take on the electronics retailers?
>> Sure. One of the things that's positive and really cool is that it's a sector with a lot of innovation and they are products that people want to own, kind of tying together what we were talking about with a IN housing, one of the neatest things that Best Buy is working on, right now it's a very small portion of the business, so we will talk about some of the other things later, but one of the things that they have is a healthcare related business and they are using kind of combinations of AI and technology to enable people maybe to stay in their homes a little bit longer.
So what he does is you would set up sensors in various rooms, at various points around your home. If one of us had an elder relatives living alone, the AI would sort of learn what time they get out of bed in the morning, how much time they typically spend and say the bathroom, how much time they, what time they typically turn off the lights, what time they typically turn off the TV and by learning all of these things, you can maybe see if somebody has fallen down, maybe somebody is not feeling well or getting out of bed at their normal time.
So the technology makes it easier to monitor people's health and give them independence and allow relatives caregivers the ability to place a call and see how they are.
In the sector in general, benefits from innovation but it can be stagnant year-over-year if there is not a new product or innovation cycle, that can weigh on sales from time to time. One of the current challenges for Best Buy is that the big-ticket spending we've been talking about throughout all of the questions, their CEO said during the third quarter called that demand was a little bit uneven and difficult to predict.
People are spending on experiences.
Certainly, one of the things that Best Buy did very well is they became a Survivor in the sector. I think they were very agile during the pandemic and that they got curbside going very quickly, they adapted their website. One of the major things they are working on is total tech, so it's a service related product, probably like many other retailers, Amazon prime included, kind of recognizing the beauty of what Costco has done with all of the recurring revenue. Total tech offers you your extended warranties on appliances, big-ticket things, and it also, I may be selling the short, but it allows you to get customer support and answers to questions on tech products, even those you did not get from Best Buy.
Other things they are trying to do is emphasize the fact that they sell more than simply consumer electronics. One of the opportunities I missed is I bought a grill at the end of the summer.
I might have gone to Best Buy if the price was right, but I didn't realize that they sold grills. That last conversation with the CFO, he said that one of the things they are working on.
Teaching people about technology, over several years, what are the beneficiaries has been Apple for consolidating devices and making them easier to use rather than another party for being able to provide the education. So maybe the final take away is competition, fairly low margin structure, but on the positive side, they have a healthy, always changing array of products that people want and, in many cases, are some of the most important things they own.
>> Alright Chris. The show flew by. Always great to have you want. Great to get your insights. I look forward to the next time.
>> Thanks.
>> Our thanks to Chris Graja, Senior analyst in retail at Argus Research.
As always, make sure you do your own research before making any investment decisions.
stay tuned for tomorrow show. Haining Zha, VP and Dir., asset allocation research at TD Asset Management will be our guest taking your questions about China's economy and markets.
You can get a head start this question.
Just email moneytalklive@td.com.
That's all the time we have the show today. Thanks for watching. We will see you tomorrow.
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