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[music] >>Hello I'm Greg Bonnell and 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'll take you through it's moving the markets and answer questions about investing. Coming up on today show, will discuss the outlook for the healthcare sector with David Toung from Argus research. MoneyTalk's Anthony Okolie will have a look at a new Bank of Canada report on the biggest risks to our financial system. And in today's WebBroker education segment, Nugwa Haruna will show us how you can do fundamental analysis on the platform. You can get in touch us by emailing moneytalklive@td.com or follow that your response box under the video player in WebBroker. First let's get you an update on the market. Seeing some strength in the US buck. A basket of international currencies. That has gold under pressure, crude slightly under pressure. It doesn't mean things for the biggest sectors of the TSX Composite Index, right now 78 points, a bit more of 1/3 of a percent. A lot of the mining names under pressure. 25 bucks,… You have Barrick down almost, we will call that 4%. Now there are some pockets of strength in the market. Bausch health. That stock almost to the tune of 11% of the sour. At this hour, a stronger box, the debt crisis in the ceiling debate crisis, some optimism lately. It hasn't been resolved is that? As the markets watch at all, you have the S&P 500, the upside a little shy of half of a percent. The tech heavy NASDAQ, what to do against the broader market, stronger. Over a full percent. Some of the tech stocks including Nvidia up almost 5%, 4 3/4 of a percent. Here in 16 bucks to share and change on that name. And that's your market update. Earnings season always gives us a great window into how different sectors are doing when it comes to healthcare. One of the big trends has been the pickup activity as we get further into a post-pandemic world. Joining us now to discuss is David Toung, Senior analyst at Argus research. Great to have you with us. >> Great to be here Greg. >> As we put the pandemic behind us, people I think that health care is a one theme story. Obviously other things happening with the space. What you find most interesting right now? >> Well, what I find really interesting is the recovery in procedural volumes. these are elective procedures. People delayed them during the pandemic. There were some hospital staffing issues that are now largely resolved and people feel more comfortable coming in and having these procedures done. Whether that's getting a new knee or getting a pacemaker in… The hospitals have just greater capacity because they are staffing and their issues are stabilizing. There are a couple of stocks to, you know, that have done quite well on that. One of them is striker. It's an orthopedic company. They also make surgical equipment to equip the OR. Another company that we look at is (…) A surgical and happy to talk more about them. Of course Johnson & Johnson, a combination of a… Tech company in a pharmaceutical company. >> Let's break down a few of those companies. Obviously when people think about healthcare they think about bio farm and drugs. But obviously procedures, as you said, post-pandemic, picking up. Let's start with striker. >> Sure. Striker, they make hips and knees. They have a robotic platform that assists in the placement of the replacement joint. Not only does it assist in the placement, but there is this whole visualization of software where the surgeon can plan the surgery. You look at the anatomy of the knee measured and then put all that into the software and make a really precise cutting and alignment of the knee joint. The robotics is getting more and more popular because of, you know, better outcomes. Less pain, shorter recovery period, just, you know, better success rate. So, you know, it is one of the leading companies in orthopedic robotics. So we continued to look at striker. Another robotics company that we follow is (…) Surgical. They make a da Vinci robotic platform. These are mainly for soft tissue procedures that are sections of, for cancer removal. But the stock has been down, earlier in the last year. But, you know, the numbers show that not only its procedural volume but also placing more units. Not only is intuitive placing units in the US, it's also in Europe and Japan and in China. And one of the things that we look for intuitive is the utilization rate. Like, how many procedures are done per unit per day and, you know, in the US it's about one or two per unit. But utilization in China is like 3 to 4 times that. Those surgical units are used around the clock. Procedures are done at night… It is very, very popular. I mean, right now, there is a quota system on how many of these units can be placed to the China market. You can definitely see there is demand there. And that utilization, as it goes up, the hospital will buy additional units. Each unit brings in a lot of consumables. Software, the instruments actually used on the robotic arms, it is quite, you know, it is quite complex that Intuitive has as they place more these robotics. >> David, during the pandemic a lot of these procedures were put off and we are seeing a huge demand right now. Two or three years from now, is the risk going to be pretty tough when they look back at the year-over-year kind of picture? Will things settle out after people who were waiting to get their knee done get their need him? get their knee done rather. >> These companies have introduced new technology. New products. They meet a need. I'll give you an example. I follow a company called silk Road medical. They make equipment for a transcatheter aortic revascularization. That's kind of a long name there. But what it does is, it prevents stroke. It's a way of putting a stent in the carotid artery so that, you know, blood clots don't travel to the brain and causal stroke. And this is a big improvement over the standard care. There is a lot of runway for adoption of this, both in US and overseas markets. So, irrespective of the recovery, there is a clear runway for this type of new revolutionary technology that, as I mentioned, meets a very important need, that is to prevent stroke. >> Some interesting things for our audience to dig deeper to very interested. What about other takeaways from running season? Obviously the back a lot of procedures is a big story. Anything else cropping up during earnings reports? >> I also follow insurance companies like (lists companies) and the big one is UnitedHealth. These companies are showing growth. As the population ages. They are expanding the membership in Medicare advantage. You know, if you look at demographics of, in the US, you look at the population as you're getting older, in the population group, the key address market is getting older. And these, these UnitedHealth elements are seen growth in their Medicare advantage businesses. Medicaid is another area of growth for them because states want private insurers to manage these Medicaid programs. Another area where there is a growth is called value-based care which is, essentially risksharing with the physicians. It ultimately works well because the insurer benefits and the physician benefits. Because, as they become more efficient, they essentially earn more profit. The… I know I'm anticipating now. You might have a question about AI. >> Actually I will save that for a little bit later in the show. We asked for questions ahead of your appearance and somebody want to get some people want to get a little bit deeper to that. >> Sure. We are seeing good growth in Medicare advantage for these insurance companies. >> Lots of interesting stuff there and obviously a lot of interesting threats to pull on over the course of the show. We will get your questions about healthcare stocks with David Toung in just a moment's time. A reminder that you can get in touch with us by emailing moneytalklive@td.com or fillet that you viewer response box in WebBroker. Right now let's get you updated on some of the top stories in the world of business and take a look at how the markets are trading. Walmart is boosting its full-year sales forecast following an earnings beat for its most recent quarter. Retail giant says it's grocery business offsetting weakness and clothing and electronics, that as households ship spending two essentials. When it comes to big-ticket items, Walmart says it's consumers are waiting for promotions before they open their wallets. You can see right now, fading a bit in the session. Still in positive territory but off the highs up a very modest third of a percent right now. Closer to home, Canada goose is looking to China's reopening to boost sales as its US business lows. The high end apparel maker says revenue south of the border declined 1/2% in its most recent quarter, adding their not being super ambitious in America this year. Canada goose did see its Asia-Pacific sales jumped some 65% on China's reopening. Shares are pushed down more than 13% of the sour. Shares of Lightspeed Commerce are under pressure today. Point-of-sale payments company did grow its revenue by 26% year-over-year. But the sales forecast is falling short of expectations. LightSpeed also telling investors it will cease and cost increases with the launch of its unified payments program. That stock, which it rallied yesterday into the earnings, now pulling back almost 14% today. A quick look at the benchmark indices. Starting at home on Bay Street with the TSX Composite Index. 97 points, south of the border, the S&P 500, modestly in positive territory with about 13 points or 1/3 of a percent. We are back with David Toung from Argus research taking your questions about healthcare stocks. Here's what people want to know. What impact could artificial intelligence have on healthcare? >> >> I am by no means an expert on AI or Emma programmer. But I can tell you, insurance, AI is used for predicting behaviours, essentially. And why is this important? Because these insurance companies want to get as much information on the types of activities. The types of claims, healthcare claims that their members are doing and they, because, at the end of the day, their profitability depends on the spread between the premiums that they received in the claims that they pay out. That is their margin. You know, if there is a coming spike in claims for, you know, COVID or flu season, they want to be able to anticipate that and be prepared for it. And AI can really help with that. AI is also used for, you know, even, now… Because of wearables and home monitoring, and the type of visits that these members go. They have a lot of information about people's activities and they can use that at the predictive of how healthy they are. Short of their lunch and dinner, there are other things that they can use to help predict behaviour and basically predict if their members are going to get sicker. >> Several years ago David, I had an interesting discussion. I was interviewing someone from Sun Life who is since retired as a head. He was talking about doing a better job exactly as you were saying. Amount of exercise and all that kind of stuff. Gleaned off of these devices but he did say something to me that I found very interesting. He said "we have to be careful with the people that we serve" while it's cool technology, we don't cross the line into creepy. That was several years ago. How is the marketplace accepted these products? Are people alright with it? >> It's hard to know because I only know the surface. Deepen these companies it's not just AI. It's algorithms. It's other technologies. So… You know… It's, I mean frankly, these companies don't talk about it a whole lot unless they were asked questions directly. These are things that I can, I've been to the investor days for elements and for UnitedHealth. So you know, I can gain certain things from that. But shifting gears a little bit, you know, and this is not so much AI but, certainly, you know, data collection. I talked about robotics earlier. The new technology within medical devices is the ability to capture outcomes data. If you have, you know, I mentioned the device to capture blood clots. You know, there are other devices that are neurovascular. What they do is a stroke patient has, you know, you could still help them recover by essentially inserting a device, a catheter and to pull out the clot. And these devices capture a lot of data because there they are so much more advanced. And that data is fed back and the manufacturers will present the data to insurance companies saying "this is why our equipment is better. Presents a better outcome. And therefore, you should cover us through reimbursement. Cover the procedures that our devices do. His so that so that the data capture… It's very important and all of that can feed into AI. >> Very interesting stuff and very topical stuff with a lot of advancement going forward. Here's one about a name that was obviously in the headlines during the pandemic. Of course what is the outlook for Pfizer in this environment? >> You know, I just wrote my report on Pfizer. Pfizer has a tremendous amount of, 16 billion in operating cash flow in 2021, 2022. They need to reinvest it. They have, first of all, their vaccine revenue is coming down. Second of all, in the 25 to 30. They have a bunch of products losing patent protection and they're going to be losing their Marketing exclusivity. So you know, that's a cliff. They are doing acquisitions. Bringing new products in, new drugs into the pipeline whether through licensing, M&A, Pfizer over the past six months has been quite active in M&A. Wrote most recently, they announced the agreement to acquire (…) Which is a very strong portfolio. Pfizer is paying north of $30 billion and it appears they had to outbid to some other large bio farm accompanies for it. But that is exactly what they need to do. They need to replenish their pipeline is so that when those older drugs hit the patent expiration, they have products to replace that revenue. >> Interesting stuff as always. Make sure to home you do your own research before making any investment decisions. We'll get back to your questions with David Toung on healthcare stocks in a moment's time. A reminder you can email us anytime with questions at moneytalklive@td.com. And now our education segment of the day. >> There's different approaches to apply… There is a top-down approach or bottom-up approach. The bottom-up approach focuses more on picking individual companies, taking a look at their intrinsic value and using ratio analysis and moving on to sectors and industries and then more at the economy. On the other hand, when you look at the top-down approach, which I'm to be looking at today, the investor actually starts off with the first step is looking at the economy as a whole. Looking at things globally and then moving onto the next step which is more sector focus. So let's go into WebBroker take a look at how you can do this. In WebBroker, were going to click on research. Were going to click on sectors and industries. We will focus on the US markets today. Focusing on the left side of the street rather the screen, we will scroll down and look at different sectors. Let's filter this by performance and by each of these sectors performances in the last one year. You will notice your top three here technology, healthcare and industrials. Focusing on healthcare, the reason I'm doing this is because some investors look at the healthcare industry as more of a defensive sector and that's because they tend to believe, you and I know that your demand for health does not change regardless if we are in a recession or the economy is doing well. If you want to see the individual industries that make up these sectors, you can do that by clicking on thesis sectors. And that's because each sector is made up of different industries. These industries could be things like service oriented or manufacturing. That is where you will see all the industries that make up the healthcare sector. So investors will want to do some more deep diving and seek individual companies. They can click on each of these individual sectors to find out what those companies are and then do some more deep diving by starting to apply racial analysis. >> Our thanks to Nugwa Haruna, Senior Client Education Instructor and TD Direct Investing. Make sure to check of the learning centre in WebBroker for more educational videos, live interactive master classes and upcoming webinars. In our programming, coming up on Tuesday, May 23, Caitlin Cormier will be our guest to show how you can better utilize the WebBroker platform. Before we get back to our questions for today's topic, healthcare with David Toung, a reminder of how you can get in touch with us. Do you have a question about investing, or what is driving the markets? Our guests are eager to answer your questions so send them to us here at MoneyTalk Live. You can send your questions two ways: you can send us an email any time at moneytalklive@td.com or you can use the question box at the bottom screen right here on WebBroker just type your question and hit "send". We will see if one of our guests can get you the answer right here at MoneyTalk Live! Back with you can use the question box at the bottom screen right here on WebBroker just type your question and hit "send". We will see if one of our guests can get you the answer right here at MoneyTalk Live! >> We are back with David Tuong. >> I cover a number of stocks like (list companies). These companies provide the tools, instruments and supplies the biotech companies used to develop the manufacturer drugs. Biotech drugs are not pills taken orally. They are injected. Or they are infused. They derive from cells. Human cells. Other cellular materials. The process for developing is very, very complex. I have seen some of this in action at a meeting last year. Very, very interesting. The outlook is that, we went through a period of industry transitioning from making vaccines to making oncology drugs and other immunology drugs. So in that transition time, there was a sense that funding had to be shifted and some of the companies saw their valuations come down. And the thought was "well, if these biotech companies have funding issues, that's going to impact the life science companies. We have been tracking that." What happened with SVB Bank, there were many biotech companies that had some trouble with it. It affected their liquidity. I think most of it is passed. But there is still some lingering effects from that. But, what I find is an encouraging sign is, as I mentioned earlier, the sea gent acquisition. I noticed also a pickup in M&A. I talked about how Pfizer has to replenish its pipeline. That goes for other large-cap bio farmers. They need to. As they do their M&A. That is going to, that will help the situation for some of the smaller biotech that will lead to a little better view of the life science sector. >> Interesting space indeed in the connection with Seneca Silicon Valley, many people to put those two things together. Another question about Johnson & Johnson. This viewer wants to know how the name is doing right now? >> Yes. J&J spun out its consumer health segment and it's called … So… What this restructuring of J&J means is the company will now be totally focused on its pharmaceutical segments. And, you know, that means that they are focusing their capital and their cash flow. I think that's a good thing. Instead of having three divisions, they have two divisions. There is plenty of opportunity for investment internally and for external M&A. So we like the pipeline for J&J. We like the technology that J&J has in its tax segment. Medical text segment. I will talk about one thing. I talked about robotics earlier. What J&J has is a robotics platform for biopsies. It's a robotic probe that can reach much deeper into the long modules than other diagnostics. It can go deeper, it can pull out and do the biopsy and look at what's happening and take out to do the diagnostics. What J&J can also do is they make oncology drugs and what they're looking to do is put the medicine essentially that goes into the lungs. Place it right where it's going to be most effective. That's a very, very interesting combination that, you know, is unique for J&J. Because they have the robotics technology and they have the medicines. >> Some very interesting stuff with J&J. What would be the biggest risk around a name like this? >> There is the talcum powder situation that the company, you know, has been facing. They have put the claims into a subsidiary that was placed into bankruptcy. What they've done recently is increase the amount of assets that they put into this bankruptcy subsidiary and a lot of the claimants seem to like it. They need to get 75% of claimants to be on board for this. And, you know, I think the bankruptcy court made okay this procedure. And that would resolve essentially. That would resolve it. There would be a pot of money assets to be dedicated for claims and, you know, that would largely resolve it. But there are some plaintiffs who have not bought into that. So there is some sort of vote coming up. In the next few months. That's going to determine whether this, you know, would be the right vehicle to resolve. But in any case, I think the company as a whole has room really terrific pipeline. New technologies, which I referred to. So it is certainly an interesting company to look at. > Interesting indeed. We will get back your questions with David on health care stocks in just a moment's time. As always make sure you do your own research before making investment decisions. A reminder that you can get in touch with us at any time. Do you have a question about investing, or what is driving the markets? Our guests are eager to answer your questions so send them to us here at MoneyTalk Live. You can send your questions two ways: you can send us an email any time at moneytalklive@td.com or you can use the question box at the bottom screen right here on WebBroker just type your question and hit "send". We will see if one of our guests can get you the answer right here at MoneyTalk Live! >> The Bank of Canada just came out with its annual financial system review amid ongoing market uncertainty around US regional banks. Anthony Okolie is digging into the reviews and what are some highlights of the review and what it says about the state of our financial industry? >> The Bank of Canada did identify some key sources and concern in the Canadian financial system. In light of higher borrowing costs, Bank of Canada had some concern over the ability of Canadian households to service their debt. Now, the Bank of Canada says that more households are expected to face financial pressure in the coming years as their mortgages are renewed which would cause hard payments. Now, the drop in house prices is also reduced homeowner equity. The Bank of Canada notes that prices of prices have fallen in nearly all major cities in Canada since Mary of 2020. They also note cities around the GTA for example. As a result they are starting to see signs of financial stress beginning to appear. Especially for those recent homebuyers. Now, a recession alongside significant unemployment and further drops in prices, home prices, could cause significant financial stress for some households according to Bank of Canada. Regarding the Canadian Bank system, the spillover effects of the recent global banking crisis to Canada has been limited. They go on to say that recent global banking crisis to can the, that reflects in part the limited direct exposure to the troubled institutions. Now, Bank of Canada does say that Bank funding is becoming scarcer and more expensive. They also note that Canadian banks rely more heavily on wholesale funding. Things like short-term and long-term death, commercial paper as an example. Lesson deposits for some of the global banks here. As a result, higher interest rates will raise funding costs for Canadian banks relative to the US and European banks. Now, the Bank of Canada also highlighted the fact that Canadian Bank exposure to the commercial real estate sector is small. So nonresidential mortgages for example, make up about 2% of total value of Bank assets. But, here in Canada, Canadian banks have a higher share of uninsured mortgages on their balance sheets. So as a result, that leaves them vulnerable to recession which could lead of course, to credit losses for the banks as more and more households do default on the mortgage loans. But overall, the Bank of Canada says that the banking system in Canada remains robust, noting that market participants continue to have confidence in the resilience of the Canadian financial system. Right? >> The financial system review, risk assessment of things that you need to keep your eye on. Anything else that they have their ion? >> One is cyber attacks that pose a threat to financial stability. They also point to climate change. As a risk a significant risk. Including what they call disruptions from extreme weather events, uncertainty about the transition to a low carbon economy and what the Bank of Canada calls a repricing of assets, exposed to climate change that would affect the financial system. Finally, the Bank of Canada points to the growth of crypto asset markets and their interconnectedness with the financial system. They are keeping an eye on that. >> Thank you for breaking it down for us. >> My pleasure. >> MoneyTalk Live's Anthony Okolie. Let's take a quick look at the markets right now with the TSX Composite Index. We are noticing strength in the trade of the US dollar today. Really pricing the crack pushing the price of gold rather. Right now the TSX down hundred 16 points. A little more than half percent. Apart from that we are also seeing the mining sector. Some earnings to go through. Lightspeed Commerce coming out although it did grow its revenue year-over-year. In the street seems to be disappointed with the forecast. That stop right now down about 14%. Of course a point-of-sale, payments business. Canada goose, high-end apparel and park us, they said the US sales are pulling back. They are looking to China this year to boost the revenue. Right now the market, in reaction to what they are getting to Canada goose has those shares down a little more than 13%. South of the border, still debt ceiling negotiations going on. The tone is been more constructive when investors have had a careful eye on that one. Up a very modest 10% in the S&P 500. About 1/4%. The tech heavy NASDAQ was making better gains, a little shy of a percent to the upside, about 115 points. We saw some of the chipmakers getting bids but also Walmart this morning. Apart from that, coming in with its latest results, actually saying that a stronger-than-expected quarter, boosting their stock. It was performing a little more robustly. A little stronger in the morning session. Right now still in positive territory but off the highs barely up for percent. We are back now with David Tuong from Argus research. What is your view on Abbott? >> Sure. That's a stock that I follow. It has multiple segments. One of his medical devices. I talked earlier about the improvement in recovery and procedural volume. And that is a tailwind for Thabet. They make these devices that help people with cardiovascular issues. One of them is like a replacement valve. Really interesting. It's on, it's placed on a catheter and it's like an umbrella that opens up and drops over an artery that is sort of like, not closing well. This replacement on top of it really helps improve the functioning of the valve. It is so that the heart just pumps much better. And you know, it's not open-heart surgery. So it's less invasive. But it really could really help people's lives. And it is a growth vehicle. Another product that is really interesting and Abbott is there continuous glucose monitor. We talked about wearable… This is something that can be worn on the upper arm. Instead of pricking the skin, it can provide a readout on blood glucose, it also has the ability to monitor key tone levels. It there is actually a market beyond diabetics for this. For people's nutrition, people's overall health. You know, you combine this with a device that could monitor heart rate and breathing and blood oxygen levels, blood pressure, you know, you've got a really powerful set of tools to help peopleSo that they can stay out of hospitals. So this device that Abbott has, it's called "Freestyle libre, they've come out with version 1, two and three. Version 3 has a smaller form factor. So it fits in really well. They are coming out with the consumer version that you don't have to get a prescription for that's approved in Europe. They are looking to get approved in the US. That opens up and eventually they will go after the nondiabetic market. The athletic market. So we see a pretty nice opportunity for growth. In that particular form. >> What could be a risk for Abbott? Interesting, what happened last year, they had some issues in nutrition manufacturing facility. They had to shut it down. Remediated and they lost market share. There were some shortages in pediatric nutrition products. A lot of publicity. But they fixed it. They are also going to build a brand-new facility to increase their capacity for nutrition. They are also exiting the pediatric nutrition market in China. Things are just not going well there and they are going to move on. That is the risk of doing business globally. I mean there are risks in various markets. Regulatory risks and market risks. >> David, always a pleasure to have you on the program. You were a depth of knowledge about this space and I always look forward to talking to you in learning something new. Looking forward to the next time. >> Thank you very much Greg, great to talk to. >> Always do your own research before making any investment decisions. That was David Tuong, Senior analyst with Argus research. And stay tuned Friday where we will bring you an update of the markets and the latest Canadian real is reports. Will be back on Tuesday with Caitlin Cormier from TD Direct Investing taking your questions about how to better use the WebBroker platform. And a reminder that you can get a head start for Caitlin, just email moneytalklive@td.com. We will be off Monday for the Victoria Day holiday. That's all the time for today take care. [music]