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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 are going to discuss the potential bright spots and some weak points in the real estate market with Colin Lynch from TD Asset Management. Moneytalk's Anthony Okolie is limited as to the latest US GDP report, and in today's WebBroker education segment, Nugwa Haruna is going to show us how you can find information about real estate investment trusts 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. The earnings continue to pour in. And the market reaction seems to be on a favourable side today. You got the TSX with a triple digit gain of 108 points, little more than half a percent. Noticing some strength and some financial names, including the life codes. Let's check in on Manulife right now, at $26.37 per share, it's up 1.8%. Allied property REITs, coming in with its latest result. The market doesn't seem impressed. At 2262, it's down about 5%. South of the border, we have been hearing some heavy tech names all week in terms of earnings, some had earliergood results but markets were lacklustre. markets are picking up on what we heard from Meta, the parent company of Meta, after hours last night. 46 point to the upside on the SP five. The NASDAQ has an even stronger showing at 1.6%. Amazon, we are expecting earnings from them after the bells today. it'll be interesting to see what kind of business they are doing post-pandemic, when all of us can go out and shop again. I'm still hooked into the online space. But that's just me, I don't like malls. Amazon up about 4% at 109 bucks and change. And that's a market update. After a year of aggressive rate moves, the markets are anticipating that central banks are nearing the end of their hiking cycles. So what could that mean for real estate? Joining us now to discuss is Colin Lynch, head of global real estate investing with TD Asset Management. Colin, great to have you back on the show. >> Great to be here again. >> Let's get into where we are right now. We are on a conditional pause in Canada. We are anticipating the Fed is near the end, others may be near the end. How do we read that through for real estate? >> We read it through a bit as stability. So as you mentioned, we've had changes in interest rates in response to inflation. It what's the impact on real estate? Ultimately, if you have leverage, if you are a developer, your debt tends to be variable-rate. There are also owners of real estate that have variable-rate debt and as those interest rates went up, the cost of debt increased. And so certainly now, when we have the view from the markets that we are near the end of a hiking cycle, that does provide some stability, whether you are a developer in terms of your modelling, whether you are an owner of real estate as well. In addition to that, we have also seen some changes in the yield curve. And when you look out five or 10 years, certainly the pricing has come down and that's important because fixed rate debt is actually priced and based off of bond yields. And so as those deals have come down, the cost of debt has also come down. Now, we are significantly above where we were last year and the year before. So certainly, still more challenging from a leverage perspective, but certainly benefiting as the cost of debt has come down. And so that is providing a bit of core stability. We are at a crossroads in the real estate space. There are still pockets of challenge and still pockets of opportunity, but broadly positive now that we are reaching a stabilizing environment for rates. >> Commercial can mean a lot of things.. Let's talk about office, in the sense that we know there have been some concerns recently. My own life might not be much of a test case, but I haven't been able to get a seat on the train for the last two days. >> It is important to recognize… Certainly mid week, Tuesdays, Wednesdays and Thursdays across much of North America, we are seeing an increase returned to the office. Conversely, not so much Fridays and modestly on Mondays. That's a North American phenomenon. London and Europe is a bit similar but certainly when you get to the European continent plus several Asian-Pacific cities,we are seeing a much more robust return to the office, 4 to 5 days a week. And that's important because sentiment in terms of owners and occupiers of offices is a bit different around the world. Much more positive sentiment in the Asia-Pacific parts of Australia and parts of continental Europe then we see here. Here in North America, we have two things. One is what we just talked about. The physical return increasing but not in 2019 levels. We also have questions about the economy and where are we? And ultimately, real estate does serve the economy. So if the economy is slowing, that will impact the degree to which tenants are expanding or using more space or are contracting and using less space. The other thing that happens in an environment where there are questions about the pace of growth in an economy is tenants use that opportunity to upgrade space. So space that was in the higher quality, better located building that was not available but does become available, tenants might use that opportunity to move from what we would call a B class or a C class office building two in a class or AA or AAA. So we have seen that pretty much universally in previous periods of economic slowdown, and we are seeing it now. And so when you look across the leasing, we see those better quality, newer, well magnetized buildings have higher leasing than those older buildings well across North America. >> Let's talk residential because we have some interesting dynamic setting. As you said earlier, you are seeing some stability now when it comes to the rate environment. We are also seeing record immigration into this country. How does that play into the rental market? Before the pandemic, purpose, we need more apartments, we need more apartments. Where are we at? >> We certainly need more apartments. So to your point, immigration,in 2021 it was nearly 350,000. Last year, in 2022, over 1,050,000. My understanding is that we are on a similar pace this year. So a lot of demand and that is comprised of economic immigration. You also have refugees, you have international students, and international students has been quite significant, both last year and this year and is expected to be, to continue. So we have significant demand. What is the pace of supply? When you look across the apartment stop, the condominium stock and new housing in general, the pace of supply is not keeping up with demand. And we are seeing that in terms of pricing. Certainly, when you look at rental pricing, to how much you are paying to rent the space, that is up significantly and so today, we are seeing asking rents much above in place rents. And we anticipate that to continue because ultimately, vacancy across the country is declining significantly and in major metropolitan markets like Vancouver, Toronto and Montréal, we are seeing vacancy come down to where we were pre-pandemic and in some cases, lower. Ultimately, that does drive runs higher and that is a fundamental supply demand equilibrium. Lots of demand, limited supply and so as a result, the pricing and the rental prices have increased. >> Those higher rents would seem like an incentive for the industry to build more. Are we seeing that reaction in, not only in real time but in a timely fashion to get us more supply to house everyone in this country? >> That's a really good question. So certainly, the industry would like to build more. There are some hurdles to overcome in order to build more. So on the one hand, one has to work through a planning process in order to get the permitting, the zoning approval in order to build. It depends on which municipality you are working with across the country. That can take some time or a lot of time and increasingly, it's taking more and more time to get approvals through the system. The other thing that happened is we have had, as we have seen third society, inflation and that is impacted the cost of building. So whether you are looking at the cost of materials or you are looking at the cost of labour, both have increased quite materially during the pandemic. So as a result, if the cost of building and the length of time required for approval means that it takes a lot more time or it is more expensive to build, then that actually D incentivizes builders from building a lot more inventory. So therefore, when we come back to that demand and supply question, that's actually restricting supply at a time when we have a lot more demand. >> Very interesting times indeed for real estate. We are going to get your questions about real estate for Colin Lynch in just a moment time. Our minor, course, you can have 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 Facebook parent company Meta are in the spotlight today. That's after the social media giant delivered a strong earnings beat for its most recent quarter and is providing a pre-optimistic outlook as well. A rebound in advertising sales to merchants in China was a big driver for the quarter, and that has also been, for us, cutting jobs in an effort to bring down costs. You see the markets reacting pretty favourably to the set of results from Meta. 239 bucks and change per share, your up a little bit more than 14% on the session. Let's take a look at Suncor, it's buying the Canadian operations of Total Energies in a deal worth up to $6. 1 billion. Suncor CEO Rich Kruger says the agreement is a major step in securing bitumen for the long term and at a competitive price. The transaction will see Suncor also take full ownership of the fort Hills oilsands project. Suncor up right now at 2.7%. Bombardier swung to a profit in its most recent quarter as it sold more medium and large cabin private jets. Those larger aircraft, of course, come with higher selling prices. Bombardier also saw an increase in services revenue. The Québec-based company says it's on track to deliver 138 aircraft this year. As investors look to the result, Bombardier has been sliding the session, down a lot but more than 7% right now. Some concern, it seems, about cash flow at the company. Quick check in on the market. We will start on Bay Street with the TSX Composite Index. Right now we are up hundred and 14 points, little more than half a percent. And so the border, the S&P 500, it seems that the tech earnings that have been piling up all week are starting to turn sentiment a little. Your up 50 points, we'll call her, or 1 1/4 of a percent on the broader region of the US market. We are back now with Colin Lynch, taking your questions about real estate. Lots command, let's get to them. Here was a big story a couple of weeks ago. What does Nordstrom leaving Canada mean for the Canadian retail sector? Another big retailer saying it's not worth it to be here. >> Certainly, you never like seeing retailers exit the country. I'd say the silver lining is the number of spaces that Nordstrom occupied across the country weren't large, so different than when other retailers with much bigger footprints across country left. And the second point is that they occupied a lot of space in very desirable locations. And so for those landlords, it's never positive to see a tenant leave. Pretty sure that those particular spaces will be able to be leased out relatively quickly and or repurposed. If I step back from that, from Nordstrom in particular, and speak more generally about retail, we are actually seeing positivity. And so we have seen for many years, probably since 2015 or 2016, some negativity on the retail space and driven by e-commerce. This is probably the first year where we are seeing notes of optimism and that's being seen not just from foot traffic, not just from higher spend patterns, so spend patterns and now are higher than they were in 2019, we are seeing foot traffic returned to where it was in 2019, but we are also seeing, as a result, retailers doing new leases in and closed shopping centres and other retail formats. And so that's a positive note for the sector that we haven't seen in quite some time. So despite some higher profile, whether it's bankruptcies or departures, overall in the retail space, we are actually seeing some notes of optimism this year. >> When I think of a name like Nordstrom, it's in that space for there are only a handful of names, the big department stores. Now, I grew up in the air of the big department store. A couple of years ago, I took a stroll through one and I was sort of taken aback by the sheer size, the actual physical footprint. It doesn't seem like that's the way retail is going. > Well, that's true. We have seen a decline of the large-format department store. And actually, if we think, let's look at a specific location, the Eaton Centre in Toronto, originally, the space that Nordstrom was in was occupied by Eaton's, and that was a nine story at least department store. . You fast-forward to today and Nordstrom, I believe, is occupying two or three stories. So there alone, that is a significant decline in spatial usage. Department stores themselves have become smaller in terms of physical space. and then we have also seen the rise of specialist retailers. Specialist retailers that that didn't exist 20 to 30 years ago. Think Apple stores. And those Apple stores have really become the new anchors in the mall, driving significant foot traffic and spending patterns. And so yes, we are seeing a reconfiguration of what you would think about as a mall, how many department stores you have and in spaces where you have very large-format department stores, do you repurpose some of that? For instance, electronic retail, do you have grocery, you have sporting goods? And what we are seeing is there sometimes greater opportunity for having a combination of formats in the space where it used to be occupied by a single department store. >> Okay, let's get another question now, this one about some headlines recently about big office landlords defaulting on debts tied to certain properties. What's happening here? >> Yeah, so certainly, there is been quite of a number of headlines there. A couple of points. one is so far, the defaults have been relatively concentrated in a couple of metropolitan areas in the US, and so that would be New York City, that would be Los Angeles. There are other areas where we are looking was some concern, like San Francisco. What is driving the defaults? A couple of things. Higher loan to values, higher variable rate. As the cost of the debt is increased, the cost of servicing the debt has increased. And sometimes people purchase protection on that variable-rate debt in the form of one year agreements that converts that variable to fixed. What happens is the cost of that protection has increased dramatically year-over-year. Sometimes 25 times. And so it's become a lot more expensive to protect in terms of the interest rate variations. And so ultimately, a borrower or an owner of real estate gets exposed to the increase in interest rates, plus later on, they returned to the office. Are we returning or not? Tenants making downsizing decisions, vacancies increasing, and so as a result you have a scenario where the value of a building might decline as some of those factors play out while the cost of owning that building increases and so that resultsin a dynamic where some of the office owners and landlords have said, you know, I'll turn back the keys. Now, that has happened in the US. In the US, you have a broader ownership of real estate debt that is sometimes indicated to the markets, and then the lender or borrower relationship is a little bit different relative to other markets like Canada, where you might have a smaller lender community that is more relationship oriented. So all to say, not unexpected. Might anticipate further instances of default, particularly in markets where we have some concern on the office market. New York has been one where weather was 9/11, the global financial crisis were the beginning of the pandemic, that market tended to be quite exposed and so therefore has a higher level of volatility, plus, because it's New York, there's a lot of supply. And so back to the demand is weak and there's a lot of supply, the fundamentals aren't that strong. >> Let's get to another question now. This one is about China, the reopening there. Off the top of the show we were talking about the positive impact on Facebook and add sales in that market. What about real estate? >> Yeah, it's interesting. So China's reopening has had a multifaceted impact on real estate. So China pre-pandemic was, if not the largest, one of the largest sources of tourism around the world and so for neighbouring companies like South Korea, Japan, Singapore, that is important in terms of retail. And so a lot of retail foot traffic from tourists and particularly from China. And so the reopening is a net positive. Now, it's going to be a long road to recovery in terms of returning to the 2019 levels of ad purchasing from China but certainly we have seen the beginnings of that return. So that's positive. The other point about China reopening is China is also a source of a lot of international students around the world. So if you think about Australia, think about the United States, the United Kingdom, Canada, international students, China would be the number one or number two source country for all of the countries that I just mentioned. So the reopening gives incentive for the government of China to make their students go back to international universities in person fear that has been positive in the case of Canada, for instance, in terms of the multi-residential sector because that's just increased demand for space and accommodation particularly around universities. So it is a multifaceted situation that impact various areas of retail, residential, a number of areas of real estate in a number of countries. >> This is why we have you here, Colin. As always, make sure you do your own research before making any investment decisions. we will get back to your questions for Colin Lynch on real estate and just moments time. And a reminder, of course, you get in touch with us at any time. Just email moneytalklive@td.com. Now, let's get to our educational segment of the day. If you're interested in real estate investment trusts, WebBroker has tools which can help you research the space. joining us now with more is Nugwa Haruna, Senior client education instructor at TD Direct Investing. Nugwa, was great to have you with us. Let's talk about where we can find this information about REIT S on the platform. >> Investors who might be interested in owning real estate, as we know, the prices of real estate have fluctuated in the last few years and so low investors looking for ownership in commercial or resident real estate, without having to go out and buy these, they are able to get some of that income when it comes to real estate by utilizing REIT S. So real estate investment trusts are essentially companies that own, finance income producing properties and these companies are, to be classed as REIT S, they need to have at least 75% of their assets and real estate. And then, they end up paying 90%, at least 90% of their taxable income as distributions to shareholders. So within WebBroker, investors can find these REIT S. I'm going to take us into WebBroker and we can take a look at where investors were starting off can find for instance some Canadian REIT S. In WebBroker, you would click on it research. Under markets, we will go indices. And once on this page, you actually can go under the tab that says sector indices here. And once here, we will just scroll down to the S and P TSX REIT Index. I'm going to click on that, scroll down and pull up the members of this Index and this will present us with some Canadian REITs there. So this could be a starting off point for investors who may be interested. And they are able to filter these REITs by either market capitalization and since income is a huge motivation behind investors who do an abiding REITs, they can also filter this by dividend yield. So this gives investors an opportunity to start off if they are going to start looking at what REITs are out there, especially in the Canadian space. >> In the Canadian space, you mentioned filtering through yield, but can you do it by country? >> Yes, investors have the ability to say, okay, I see some Canadian REITs here, I will mention that these are not all the REITs that are publicly available. so investors, if they want to do more of a deep dive, they can do that using the screeners tool we have available. So I will click on research hereand under tools, we are going to go screeners. Now, once we are under the stock screener tool, we will just click on the little tab here that says screening, and I'm just going to clear all and we are going to start afresh. So in this instance, we have looked at some Canadian REITs. If an investor wants, they can keep filtering for Canadian REITs and this time, let's change countries. I'm click on the drop-down here and we are going to go USA. Now, let's add some criteria. So I'm going to click on the more criteria here. Under company basics, we are going to go sector and industry and once we do that, you are presented with the different sectors; in order to reduce the amount of noise coming at us, let us just clear this. Under real estate, will click on the drop down and will go to REITs here. Once you do that, you now see that there are 370 results on the previous index we had up there were about 25 companies. Here, we have 370. Now, you can make this a little smaller as well if you think that information is too much. So in this instance, let's go more criteria. And this time, instead of using let's say dividend yield, maybe we will use dividend growth rate in the last five years because, as we have said, investors who consider these kind of investments could be doing that especially because of their income-producing ability. So let's look for companies or reads that have at least not reduced their dividend growth rate in the last five years. So once I put that in, you now see we have 82 companies in the US space. So now, investors can scroll down, take a look, a deeper dive into some of these companies. If you want, you can add some more filters to each of these rates in terms of their market value. You can add as much information as possible. But once again, this could be another starting off point for investors to start researching rate. That great stuff as always. Thank for that. > It's always a pleasure being here. >> Nugwa Haruna, Senior 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 you back your questions for Colin Lynch about real estate, or mind that you 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.comor 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 with Colin Lynch, we are taking your questions about real estate. Plenty coming in, select get to them. Here's an intriguing one. I have a position in private equity, apartment and industrial REITs. What things I keep an eye on to make sure the REIT doesn'tRun into difficulty? >> Good question. For thinking about industrial REITs, you want to look at a couple of things. One, what is the exposure to different tenantsand how, fundamentally, are the tenants doing? Geographically, where are the exposures of that particular REIT? The industrial markets to behave a little bit differently. Overall, it's been really positive for Canada, but there are nuances and differences between, for instance, industrial exposure in the prairies or Alberta versus the greater Toronto area or the greater Vancouver area. You also want to look at leverage. And what's the level of that leverage and also the type of debt. And on that point, that's relevant for apartments as well. Generally, you tend to have higher leverage levels or debt levels for apartments because the rent is a bit more stable because the vacancy is lower. But in general, you want to look at the absolute level and also what is fixed versus variable rate. I mentioned the occupancy or the vacancy, so the higher the occupancy, good, the lower the vacancy, good, as well. The other thing to look at is in place rents versus the market rents. And so you can look at that in two different ways. So the if the in place rents is a much below the market rent, you can look at that and say, a, the tenants have an incentive to stay, b, when they were new, the chance for rental growth is there because you're in place rents are much below the market rents. You can look at that a different way and say the in place rents are much below,so the cash flow today is probably lower than otherwise. Virus choose a few things to look at, that's what they would be. >> Some important considerations there. Look at another one here. This one on a geographic basis. With the outlook for real estate in Europe? >> It's interesting, because in Europe, we have had a number of things happen. So in the UK, we have the significant issues around political uncertainty in September. That produce volatility in the pound. And it also produce volatility in terms of bond yields. And for investors in real estate, that's an important factor because a lot of investors and real estate in the UK are international. And so if we have currencies swings or if you are for instance a pension and you've had significant changes in your fixed income values, then that impact how you look at real estate. What was in that result? That plus valuers in the UK dynamic, value more based off of sentiment versus based off of transaction evidence. What that means is that there was a significant change in values quite materially. And so you fast-forward to today and the UK market in particular has adjusted quicker than other markets around the world and so we look at that and say, there's probably an interesting opportunity here in the UK, and I might even go as far as saying a generational opportunity because a lot of real estate in the UK, think London, is attractive to investors around the world and has been for decades and decades and decades. And so there's an opportunity to acquire real estate in great locations that's great quality, that is 20%, 25% lower than where it was in terms of pricing six months ago. That's probably a unique opportunity. On the continent, the continent has adjusted as well in terms of valuations. We certainly have geopolitical situation in Eastern Europe but in Western Europe and northern Europe, we have a dynamic were valuations have adjusted downward almost to the level of the UK at this point, in certain geographies. But we also have other things happening. One is a significant growth in demand for apartments. So similar to what we have seen in North America, we are seeing that in continental Europe and particularly in the north. What's driving that? We continue to see migration toward cities. We see families being formed later in life, and we see smaller families. And so even though the national population might be flat, households are increasing and its households that drive the demand for housing. And so we are seeing quite an opportunity in the multi-residential space, for instance, in Europe and in particular in the Nordic countries. So a number of things interesting happening. The valuations have traded off generally, whether it's industrial, whether it's office or whether it's retail, we think that there is opportunity in particular in multiunit residential but also some opportunity in the industrial space, the space that serves e-commerce tenants because those values have come off much more significantly than they have come off in other parts of the world. >> Very interesting stuff. I guess this is geography as well. How does Canadian real estate stack up against the United States right now? >> That's a good question. Canada has the benefit ofsignificant immigration so that does provide a floor for certain parts of the real estate world, especially multiunit residential. If we stay with multiunit residential look at the states, the state has a bit of a different dynamic. you have some immigration but you have significant migration happening, particularly from more expensive states to less-expensive states. over decades, we have seen movement out of the northeast and out of the west coast towardswhat we call the Sun Belt, so states like Texas and Florida and Georgia and the Carolinas, and we expect that to continue. However, we have seen some moderation in rental growth in those states because there has been a supply response. Overall, long-term, we are still quite positive because those migration trends will continue, we believe. But we do see, in the near term, some moderation in rental growth, and we did see that in some cases at 20% in 2020 and 2021. office, there is a little bit less volatility in Canada relative to the US partially because we have a different dynamic with lenders here than we do in the US. partially it because we have less supply in certain cities like Toronto and Vancouver then we saw in other cities like New York and Los Angeles. We have similarities in terms of questions on how fast the return to office environment will continue at pace, that similar in both countries. But a little different in terms of the dynamics that I just mentioned. Retail is similar in both countries. We have the e-commerce dynamic and Canada has really caught up now in terms of e-commerce penetration to where the US was in now is, and so in Canada, the story is more around if you own retail, you might benefit from some of the dynamics that we talked about which is more positivity from tenants. The economy is a concern and the degree to which it will grow or not but they have been spending. If you look longer term, you have different types of retail. Whether it's a shopping centre and in a lot of the shopping centres, the thesis is, yes retail, but also conversion of used to residential. And that thesis is more powerful in a country with a lot more immigration than, for instance, south of the border, where it really depends which state, which city you are looking at that thesis. Conversely, grocery anchored retail continues to perform very well, both in Canada and the US. And then lastly, industrial. So industrial has been very positive in both countries. In Canada, we have had more constrained markets and here's one interesting point. You can almost take the entire industrial market of Canada from a square footage basis and put it in the Midwest of the USA. So that's how much industrial in the US there is. And so the supply and demand dynamic is much more important right now in the US because certain parts of the US, we have seen our ramp-up and supply relative to demand. So even though demand might still be strong we've seen a significant growth and supply, you have to look at that equilibrium. and we've seen much more focus on that in the US and in Canada where supply has beenmore muted relative to the surge in demand that we see in industrial. >> Are going to get back to your questions for Colin Lynch on real estate and just moments 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. Growth in the United States slowed considerably in the first quarter. The economy continued to reflect the impact of the Fed's aggressive rate hikes to tame inflation. Anthony Okolie joins us now to discuss TD Economics latest report on the state of the economy south of the border and what it could mean for the Fed. >> Thanks very much. Yes, the US economy slowed much less than expected, with GDP coming in at 1. 1% annually in the first quarter, well below the streets to present estimates. Now, I brought along a chart which shows that there was a significant slowdown from the inflation, seasonally adjusted it to .6% increase that we saw in the fourth quarter between October through December and that is down from the 3.2% annual rate in the third quarter of 2022. Now, consumer spending, which accounts for nearly 70% of US economic activity was the main driver of growth. It rose 3.7% in the first quarter. That represents its fastest pace since the second quarter of 2021. Now, TD Economics points to the resilient job market plus easing inflation pressures that help support real household incomes and sustained a solid pace of consumer spending that we saw in the first quarter. Americans spent mostly on durable goods, things like appliances, autos, television, furniture, as well as services in the first quarter. Now, behind the board's weakness, we saw a big drop in business inventories. The inventory slowdown took about 2.3 percentage points from the overall growth. Now, companies of course typically slash their inventories when they expect a coming economic slowdown. Meanwhile, the US housing market, which is especially vulnerable to higher borrowing rates, they sell residential investment drop for the eighth consecutive quarter. The report also showed that the Personal Consumption Expenditure Price Index, the PCE Index, which is the Fed's favourite inflation measure, it actually rose higher than expected, raising fears of stagflation, which is a culmination of a rising inflation and slowing growth. Overall, TD Economics say that they expect the cumulative impact of higher rates and some tightening in bank lending standards to exert more meaningful drag on US domestic demand going forward. TD Economics looks for growth to slow to a stall speed as early as the second quarter. Great? >> Given all that and the fact that we have a Fed decision less than a week away, what does TD Economics think about that decision? Anything in there that might change their course? >> Nothing in there that will change the course. It markets are pricing in 1/4 percentage point increase next week and that aligns with the economic outlook where they are anticipating another hike, bringing the Fed rate to 5 1/4%. TD Economics expects economic activity in the US to slow this year which should help ease inflationary pressures and allow the Fed to keep the rate at five in order for the rest of the year. >> MoneyTalk's Anthony Okolie.the TSX Composite Index is hundred and 15 point, little more than half a percent. The S&P 500 is up, big tech names and some positive results. You are up 50 points or 1 1/4%. We are back now with Colin Lynch from TD Asset Management, taking your questions about real estate. Plenty coming in. Let's take this one. This will probably be the last one of the show. healthcare seems to be a growing field. Is there real estate play here? > Interestingly, yes. Many people might be familiar with healthcare REITs, medical offices. There is an interesting space that we call life sciences real estate, and that is the space were research at Stan on therapeutics to address diseases that affect us all. And as we have seen in the COVID pandemic, that research is really important. The funders of that research are venture capital firms, the government and pharmaceutical companies. And interestingly, a lot of the researchers are tied to universities,they are professors at universities or they have labs at universities. Why it's interesting from a real estate perspective is those researchers want to be located close to the University but when they have spinoff companies, those companies don't necessarily need to be located on the University's land, and so there is an interesting opportunity to own the real estate where a lot of that research gets done. The laboratories are there and the offices are there. And so we go back to demand and supply, the demand for that research, the demand for that space has increased significantly. The supply is more restrained because that work can only be done around medically intensive universities, so think Boston, think San Diego, think of the research trifecta in the USA. So we look at dynamic where there's lots of demandand the supply is limited and the results have been the space that is built for life-sciences real estate, that the rents have increased dramatically. Now, not all space can be life-sciences real estate because you need certain heights, certain fire codes, certain forms of real estate. And so some folks say you can take any office and converted to life-sciences real estate. We would not have that view. There are particular types of physical real estate that work and that best suits those particular types of tenants. So it's not just the physical location, it's also the characteristics of that real estate. The more you have a building that is well suited and well located for those tenants, we have generally seen, over the past not just during the past three years of the pandemic but before the pandemic, we have seen very strong performance. >> Very intriguing idea, when we haven't heard so far but that's why we bring: on the show. I always learned so much when you're on and I know the audience does. I look forward to next time. >> Thank you. Thanks for having me. >> Thanks to Colin Lynch, head of global real estate investing at TD Asset Management. Tomorrow, we will be back with an update on the marketing Canada's latest GDP report. On Monday, Michael Craig, head of asset allocation with TD Asset Management will be our guest taking your questions about asset allocation. And a reminder that you get a head start, just email moneytalklive@td.com. That's all the time we have the show today. See you tomorrow. [music]