Jim Kelleher

[music] >> Hello, I'm Greg Bonnell. Welcome to MoneyTalk Live, brought to you by TD Direct Investing. Every day, I will be joined by guests from across TD, many of whom you will only see here. We'll take you through what's moving the markets and answer your questions about investing. Coming up in today's show, we are going to discuss the big takeaways from Tech earnings season so far with Jim Kelleher from Argus Research. And during the WebBroker in education segment, Caitlin Cormier is going to take us through how you can set up a dollar cost averaging strategy using the WebBroker platform. Here's how you can get in touch with us. Email moneytalklive@td.com or fellow that your response box right under the video player here on WebBroker. Before he gets all that and our guest of the day, let's get you an update on the market action. The first trading day of the week. Right now in Toronto, we are of a modest 68 points, about 1/3 of a percent, 18,929. We are seeing some of the energy names hanging out in spite of the fact that they are cheering thing downward pressure, nothing too dramatic in relation to American benchmark crude. We have earnings coming up in several days. Let's take a look at Cenovus right now. they had some points on the table. It's a little bit more than 2%, 2636, they are in positive territory. Interesting week for big tech. Shopify's earnings don't come until next week, I'd have to check on that one for you. 3970 right now and Shopify, down about 2% or $0.84. South of the border, let's check in on the S&P 500, the broader read of the American market. It is in positive territory at this hour to the tune of a full percent, 39 points, trying to build on some of the rallies we saw last week. Of course, it is a big week for mega-cap tech to be reporting. Let's check out the tech heavy NASDAQ. It was negative earlier in the session. Just now, it's pretty much laying there flat, up a 1.42 of a point. Let's check in on Amazon, one of the big names in the space, coming off the lows of the session, hundred 19 bucks and change, it's down a modest vortex and that's your market update. it is a big week for tech, Apple, Amazon, Alphabet, getting ready to report their quarter results. We have heard already from the likes of Snap, IBM and others. Joining us for more the big take away so far, Jim Kelleher, director of research from Argus Research. A pleasure to have you on the program. >> Thank you. Happy to be here. Thank you for having us. >> Let's talk tech. This is the big week for some of the mitigate Tech stocks. We've seen some earning so far. What is the feeling you are getting from this quarter? >> I think the second will probably outperform expectations a little bit. There is a feeling that technology earnings in the United States have gone down and have been up slightly. Recently, IBM reported. They are pretty good example of what we may be getting with earnings. Their adjusted earnings were reported down about 2%. However, that purely reflected the fact that IBM had a tax benefit a year ago and a big tax bill this time. So if you look at their adjusted pretax income, it was up a very nice 20%, but that's not the number that gets counted or reported. This is, as you mentioned, a big earnings week for not justconsumer discretionary like Amazon and in some of the other stocks and I think they are all going to do fairly well this time around. >> Obviously it's been a pretty tough market across most asset classes. Tech has been hit pretty hard. After the big run up we saw the pandemic, one of the concerns was the strength of the US dollar. a lot of these companies do business overseas, this is difficult. As the market price this in? It's been communicated. >> That's a great question. I would say that you have two countervailing effects here. One is that inflation does have what we call it to your dirty little secret and that is it tends to result in good revenue growth which we have seen running higher than earnings growth, the upper single digits, and earning growth is in the low single-digit areas. for US based large multinationals, currency is a really difficult problem. It's running at 600 to 800 basis points negative on currency for some of these companies, you know, the IBMs of the world or Intel's that have 60 or 70% of their revenue arrive overseas. I think the inflation impact on the upside revenue is pretty much being a little more than offset by the currency headwind, so it's I wouldn't call it a neutral event, but we are continuing to see revenue growth, which tells me that despite the currency repatriation headwind, there is some pretty solid sales growth out there. >> In terms of the technology space, it is a big one in that it encompasses a lot of different companies. As investors started to separate those who sell hardware from those who sell software from those who focus on online advertising… >> It's a big tent sector, and because of that you need to look at all the different parts and pieces. We've been seeing pressure in the online advertising space going back a minimum of six months and for those social media search companies that are dependent on digital spending, digital advertising spending, pressure has been real. Also, you know, many if not most consumers access social media sites such as Snap or Twitter on their phones and in North America in particular, where iPhone is dominant, there have been changes in iPhones, the iOS advertising tracking practices from Apple, and these have been a real headwind. These were more than a year ago, and Snap was one of the first to call them out, but it's impacting Twitter and Meta and all of the social media platforms. So the lack of advertising tracking, so to speak, it's a legitimate privacy concern, it may companies more reticent about expanding their online advertising sales. Now, we are coming into a more challenging economic period. Companies are really taking their time to think about, you know, where do they want to allocate their digital ad dollars? If you dive into the stat numbers, you will see that the advertising per user is coming down. > I'm one of those iPhone users that when I'm asked, can we track you across the Internet? I say no. I've been saying over some time. But I always thought they would figure out some way around this and figure out what I'm up to, but so far are up to now, they haven't figured out a way around that sort of problem. >> Both Twitter and Snap have said that they are working on workarounds to make sure that without violating user privacy, they are still giving advertisers a bigger read on where their ad spending is effective. The bigger issue, right now, I just think, is economic. If you look at synapse numbers for example, they grew their user base pretty nicely in the third quarter, off the top my head I'd say they grew it in the high teens percentages year-over-year, these are up to more than 300 million, and there. . . And if you look at the average revenue per user, there is a downtrend, particularly in Europe, there could be a currency effect there as well, but that was negative year-over-year. Another issue for them is the greatest growth that snaps having in the rest of the worldis roughly about half their users, but the average revenue per user North America is 10 times the average revenue per user in the rest of the world, outside of the US and Europe. That's a big problem because they are getting these you can almost call them empty calories, adding users that are bringing a lot of revenue dollars. The fact that Snap suspended the revenue guidance for Q4 indicates we are going to be seeing some changes there. > Fascinating stuff and a great start to the show. We are going to get your questions about stocks for Jim Kelleher in a moment's time. You can get in touch anytime. Email moneytalklive@td.com were fellow the viewer response box right under the video player here on WebBroker. Right now, I want to get you updated on the top stories in the world of business and checking on how the markets are trading. Shares of Tesla are in the spotlight today. That is the electric vehicle maker cut prices on some of its offerings in China. A keen market for the company. Tesla has made some major manufacturing investments in China given the market opportunity. That said, it faces competition from domestic Chinese firms andbroader economic concerns. You can see Tesla down to the tune of about 3 1/2%. Shares of some of the Chinese tech giants under pressure today under the wake of Chinese Pres. cementing his third tearoom as leader. The countries tech sector has seen tighter regulation under his leadership and the whole… Names such as Alibaba sent down more than current on the Asian markets. It is said to become the next Prime Minister of Britain. He has clinched the leadership of the Conservative Party in the wake of Liz Truss stepping down. It has been in turmoil since as many budget real money market several weeks ago. Let's check in on the train. We will check in on Bay Street with the TSX Composite Index. It is in positive territory to start of the week at 18,916. At a fairly modest 56 points, less than 1/3 of a percent. And then the broader read of the American market, the S&P 500 hanging in just a little shy of 1.5 to the upside on the board. We are back now with Jim Kelleher from the Argus Research and are taking your questions about technology stock so let's get to them. The first anomalous here, what's Jim's view on the cell if we are seeing in the big Chinese tech stocks today? When I just talked about in the newscast call is going on there? >> So we've been covering Alibaba for a couple of years and for that reason, we keep an eye on. . . and Tencent and the other technology giants and it's not a new story that the tech sector in China is under pressure due to geopolitics, really. For a company like Alibaba, they are facing renewed competition. There are many more companies doing what they are doing and they have kind of run out of new users to grow to. They are trying to increase revenue from the existing. the pressure comes from the president and the Chinese of ministration. For a long time, we felt that the Chinese leadership it just doesn't like guys like Jack Ma, the founder of Alibaba. They don't want to see strong personalities in there. The predecessor was more market oriented, the predecessor in the administration was more market oriented. Xi has never been that way. We saw over the weekend that he cemented his power by really packing his pallid borough and central committee with his own loyalist. There was Taiwan semiconductor in the news. Particularly the actual China-based technology companies. And these companies have been nothing but compliant with the requests made by the administration there. They've humbled themselves in agreeing to as it were pay fines here and there or change business practices to better accommodate the whims and desires of the Chinese Communist Party and the leadership. But I don't think that's enough and I think they are going to continue to remain under pressure and Xi is going to do everything he can to prevent these big personalities in these big companies from having the power they once did. >> Such a fascinating space that in a says you clearly laid out there the pressures and challenges at home with their own political administration and there are times, of course, when the United States will take issue with some of the Chinese attack giants based on intellectual property and privacy. It seems like a big issue in the world's two biggest economies are not on board tech -wise. >> We have seen in some of these semiconductor company equipment companies reporting, they both provide earning advance semiconductor capital meeting the machines that actually build semiconductors. Both of them were impacted by new developments from the Biden administration that's really tightened technology exports to China. But it's really interesting when you look beneath the headlines. You take a company like a lamb research. Last year, they sold about $5 billion worth of machinery to China. That was as much a 25% of their revenue or more. And this year, we had them on track to sell about 6 million. And now when they've announced, the Biden administration curves, the CEO Tim Archer came out and said we think these import restrictions are going to impact their revenue up by 2 to 2.5 billion. That tells you about two thirds the machines they shipped to China are not going to fall under that band. so for now at least, that part of their business is protected but honestly, it's been a moving target with how aggressive the Biden administration has been in trying to prevent, in particular, advanced AI, Advanced Technology from crossing the sea and getting over to China. >> This is a great entry point into the next question we are getting in off the platform about the semiconductor space. A viewer says, I'm interested in semiconductors, what's your take on Taiwan semiconductor? >> Well, there's a good example of a company that is operating at a very, very high level and is being hit purely by political headwinds, and you can't diminish them. The political headwinds are real. But in terms of their operations and their guidance, what they did in the calendar third quarter was terrific. I could probably get my model in front of me but I'll just say they had revenue in the high double digits in the earnings in the high double digits as well. They grew their revenue in the mid-double digits and earnings in high double digits and their guidance for the current quarter was very strong in terms of record revenue and they'll generate those record earnings once again. And what we are seeing, Greg, I would say it's really a reflection on how different the technology sector has become. In the third quarter, PC unit shipments declined about 15%. And smart phone units were down about 10%. And in the past, that would've been a catastrophe for the semiconductor space and for technology in general. But there's a couple things going on here. First of all, the content per device is way out. So the average selling price of those PCs and smart phones is way up also. So the unit decline is not nearly matched by the revenue decline. The revenue decline has been much more moderate. But more than that, PCs and smart phones are no longer the dominant technology driver of software development, semiconductor development, server development, all of these technologies because with so many more markets to serve, you look at electrification of vehicles, for example, talking about by the 2023, 2024, 20% of vehicles being either hybrid or fully electric. Electrification and content in electrified vehicles is massive compared to an internal combustion engine vehicle. And then you look at autonomous driving, you look at robotics and automation in the factories, those are also huge semiconductor consumers. Look at a cloud data centre. You need to accommodate all of the 5G data traffic and the broadband data traffic. The centres are growing rapidly. You can go on and on. There is other technology developers that have… I should say other technology developments that have widened the semiconductor use case away from the smart phone and the PC to a much broader and market. So for Taiwan semiconductor, they are really serving all of those and markets and not just being limited to the smart phone and PC space. So that's one reason why we need to bring new thinking to the technology. >> So political headwinds but clearly on a growing market that is contagious for the semiconductor spot. We have another question about ASM L. Is it the same story here or there some differences? >> ASM L's revenue growth this year has been funny. They've been supply constrained, getting some of their extreme ultraviolet lithography machines and other deep ultraviolet lithography machinesto market. They built a system pretty much 90%, put it in place on customer premises and then worked to do all the final certification and operations. But it actually means that the revenue recognition is pushed into the next order or the next quarter after that, so we got a situation where supply shortfalls an extremely good demand mean that the numbers are confusing. The overall trend of a ASML is fantastic. They are the leader in extreme ultraviolet lithography and extremely. . . a very high efficiency level and particularly in a very, very form factors that are prevailing in smart phones and PCs, autonomous factories and cars in every world. And those machines are in such demand that they are kind of sold out. The next-generation machines which are quite expensive, in the hundreds of millions of dollars, will start hitting the market in 2024 andTHERE ARE ALREADY ORDERS FOR THOSE MACHINES FROM iNTEL AND sAMSUNG AND tAIWAN SEMI. tHEY ARE IN A GREAT SPACE AND THEY ARE RUNNING AHEAD OF THEIR ABILITY TO PRODUCE, but the market has not been kind to them because they have been caught in the tech selloff. >> Exciting stuff as always. At home, make sure you do your own research before you make investment decisions. We will get back to your questions for Jim Kelleher on technology stocks in a moment time. Even get in touch with us at any time. Email moneytalklive@td.com. Now let's get to our educational segment of the day. One tool available to investors in your investment strategy, Caitlin Cormier has this look at how to set up such a strategy on WebBroker. >> All right, this morning, we are going to cover dollar cost averaging. So what is dollar cost averaging? What we are talking about is when you're making regular, consistent contributions to an investment, we would call that a systematic investment plan when you are kind of choosing a specific period of time, a specific amount of money to continually make those investments over time. For example, $50 biweekly from your paycheck. So this often involves choosing a specific investment fund, setting up the automatic deposit into your account and then having purchases made after the money is deposited into your account on that said schedule. To the benefit of something like this could be dollar cost averaging. So let's just take a peek at what dollar cost averaging is here. So systematic investment plan is that the consistent amount invested automatically over time, so for example hundred dollars a week over 20 years, if you use a mutual fund, you can avoid commission fees. Unlike ETS and stocks,mutual funds do not have that 999 investment fee. Every dollar is automatically invested because you can buy partial units. Every dollar that you can contribute is invested right away as opposed to having to choose a specific amount to buy a number of shares. Dollar cost averaging is using this type of an approach to buy investments in mutual funds and it may produce better results when investing regularly. Let's take a quick look at investments to see how this process can look up we are doing investment over time. Here we are looking at a 12 month period. We are looking at the dollar amount invested. And we are looking at the actual price of the security over time. So the first time we make this purchase, the price of the security is $10 and then it's nine, eight, seven, six, five, four, then back up to 10. And the ideas that over time, as this price decreases, we are actually going up to a maximum of more than double the amount of units we were initially purchasing at the first price. So instead of looking at the value of our investment dropping is a bad thing, all the sudden we are saying, yes, it's on sale, we are buying more units every time you make this purchase. It's finding a way to see the drop in the market as a benefit. You're actually able to increase the number of units you have so that when the price goes back up, all of a sudden, your value is increasing exponentially because you have the units you bought at $10 per unit plus those who bought at all those dollar values in between down to four dollars and then back up to 10. So you are increasing the number of units you have and therefore when the price goes up, the value of your portfolio is increasing exponentially. It's the same idea as if we were going to buy gas, their high prices and low prices, and the hope is that at the end we are getting the best possible value over time when we are doing that all the time. So the next question might be, this sounds great, I would love to be able to do this, but how do I actually do this within WebBroker? How can I actually go ahead and make these purchases in WebBroker? Let's take a peek here. We are going to jump in, we are going to click on accounts and then down here we are going to click on set up an automatic investment plan. This is where we can go to the documents that we need to complete this type of contribution. We just go ahead and download the form. You can also called the trading centre, chat with the traitor to get everything set up for you, including the contribution and the purchase of the investment so that it's all set up without you having to think about it. It's like paying a bill, all the sudden you are paying your investments and making sure your money is working for you right away. Thank you so much for taking the time to watch this today. And be sure to check out the learning centre for more videos on lots of different investing topics with TD Direct Investing. >> Thanks to Caitlin Cormier, client education instructor at TD Direct Investing. we are getting back to your questions about technology stocksfor Jim Kelleher after this. You have a question about stocks with the markets? Our guests are eager to hear what's on your mind. Send us your questions. There are two ways you can get in touch. 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 can see if one of our guests get your answer right here at MoneyTalk Live. we are back now with Jim Kelleher, taking in your questions about tech stocks. Here's one off the platform. how concerned should we be about ad sales in the tech sector after what Snap recently showed us? >> To go back to some of those points, we think the pressure on ad sales Israel. On the other hand, again, with snap, and we have seen this for Twitter a little bit, I don't cover Meta but I imagine for them it's true as well that the dollar per user, when you take the ad dollars and divide them by the number of users, that's down a little bit and for some of these companies, down quite significantly with the decelerating trend. But long term, this is the place to go. Traditional advertising media, which would be printed matter and broadcast television, both are really under pressure. Obviously, print matter has had the bulk of its deceleration here. We are seeing many fewer places to put ads in traditional media. But broadcast television is also really being impacted by these over-the-top bundles and by the deemphasis on buying a package of goods from a cable company or a satellite provider, etc. These changes are real and also when you look at the way the different generations of people access their media, there's a lot less watching of traditional large screen TVs and a lot more time spent on the phone. So a lot of the advertising will continue to gravitate towards the phone on a secular basis but we are seeing a lot of cyclical volatility right now and ad sales. >> It's interesting how you frame that. You almost laid out my career. Finally I move to broadcast TV for a decade, watch the revenues decelerate. It doesn't sound like there's anything eating Digital's lunch right now. >> Staying a step ahead of that change. Again, economic cycles will impact. But the bigger drivers are secular and demographic. Not only do we have, with these terrific secular developments in technology that are driving advertisers to these mobile platforms and online platforms, we also have the emergence of a middle-class worldwide, millions of consumers worldwide joining the middle class, and as they move from subsistence to prosperity is to secure edge devices like PCs and smart phones, things you need not just to great social media sites but to do business. So these platforms are more and more important. They are more valuable than ever as the global middle-class joins as well. So the long-term outlook for digital advertising is quite positive. But the cyclical headwinds are real. >> Fascinating stuff. Let's go to another question. What is your guest think about Nokia? I've never known how to say it properly. >> I say Nokia. > All right. >> Very interesting story is there. We've been down at Nokia for a long time. The predecessor leadership really appeared to lose their way technologically. Erickson and Nokia, the biggest providers of what we call radio access network year, meaning mobile gear, but Nokia also has a pretty good presence thanks to its acquisitions of assets like Alcatel and Ziemens in the wireline access market, IP optical access, things of that sort. they kind of lost their way in the mobile market and had big competitive losses in North America particularly with Verizon and then they were getting squeezed out of China because of political pressures is North American and Western Europe band broadband, China banned the big network providers, Ericsson and Nokia. So Nokia has struggled. But under their new leadership, they seem to do a little bit better here. We think they are gaining some momentum in the 5G space. They had been kind of losing out to Erickson. And I think Erickson continues to be the leader in the 5G network space. Samsung is coming on well. What I would say about Nokia is that they are kind of steady after a period of real chaos and they keep raising their revenue guides. That's and interesting predicament because of what you talked about earlier, they raise their revenue guidance four times this year without ever actually changing their underlying revenue guidance meeting it's all been currency adjusted because one third of Nokia's businesses in North America. So on balance, we have a whole rating on Nokia but we do see some promise there that we had not seen for some time. >> That's interesting, so this currency US dollar strength works the other way. Jim, you mentioned Erickson a few times. We had a view or wondering about your views on Erickson. You frame them as a leader perhaps the head of Nokia. What might trip Erickson up? What could be some of the challenges for them? >> The challenges for them is that they also have lost important business in China is again due to geopolitics. When you the band wall away from networked everywhere else, China gets mad and bans the use of American and European vendors and Chinese markets. Erickson also has an ongoing issue. They are a big company and they are very global and major. Between 2011 and 2019, they were providing quite a lot of networking year to Iraq and that was kind of under the curtain. And now they have a big beef with the Department of Justice and the US. If you want to keep doing business in North America, you want to stay on the right side of the Department of Justice. So they need to resolve that. They need to replace that loss Chinese revenue. They also have a good problem which means that their margins have been pressured. When you do deployment of a 5G network, that's your big cost. You have a big cost building your network year. You get better margins when you fill out existing networks. So they are currently margin pressured due to their spending to fill out network deployments kind of on a worldwide basis from 5G and in some places 4G. Over time, as you fill up those networks as opposed to just building them, your margins,. but right now they are in a challenging phase. >> We are going to get back to your questions for Jim Kelleher on technology stocks in just a moment time. As always, make sure to do your own research before you make any investment decisions and a reminder you can get in touch with us at any time. Do you have a question about investing her was driving the markets? Our guests are eager to hear what's on your mind to 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 will or you can use the question box right below the screen here on WebBroker. Just writing your question and hit send. We'll see if one of our guess can get you your answer right here at MoneyTalk Live. Every month, TD Direct Investing puts together sentiment survey on how self-directed investors are feeling about the markets. Anthony Okolie joins us now with the latest results. >> Thank you. the direct investing score came in at -56, that's down 41 points month over month. That's the most bearish that self-directed investors have been feeling since March 2020, the unofficial start of the pandemic. remember the DI sentiment score can range from -1, very hard to 100, being very bullish. A lot of factors can contribute to the sentiment, including the Fed's aggressive policy to fight inflation even at the risk of a potential recession. If we dig into the in the numbers, there is some interesting insights here. First, the proxy for chasing stocks and 52-week highs actually fell to -25 in September. That's down a whopping 17 pints month over month and that helped us get more bearish last month. That's because we saw fewer self-directed investors buying at the top of the market. Instead of taking advantage of buying the dip on some beaten-down stocks. When we break this down by age, baby boomers born between 1946 and 1964, these are also the investors with the shortest time horizon to environment, they are the mostpessimistic last month and there are score is down about 20 points month over month. Jens Yan millennial's, born in 1990 or after, they are down only five points, to only -3. Interesting enough, the youngest investors who readily trade in the technology sector, they lowered their risk appetite last month. They moved into traditionally high dividend paying stocks in energy and financial sectors. Emma we take a look at the top bought stocks among the youngest generation, the Jens Ian millennial's, that included favourites like Apple and has slowed, as well as traditional names like Enbridge and Bank of Nova Scotia. Taking a look at the sector, sentiment plunged in the IT sector. It's down overall to -14, that's down nine points month over month. Fears of a more aggressive Fed hiking interest rates it will inflation really weighed on the sector. When we take a look at regions, regionally, the sentiment was felt across the country and it was really led by Ontario's self-directed investors. Despite the negative sentiment we saw in the energy sector, investors in the prairies actually, which again, this is the region that has the most exposure to the energy sector, they took an interest in some local energy players like Tamarack Valley energy and Baytex, including a some of the favourites like Suncor. Great? >> Interesting numbers for the month of September. The month of September, investors will remember, was pretty volatile. When we take a look at some of the asset allocation choices it done by DIY investors, were there any trends? >> Yes, what was that investors were moving out of US equities and into Canadian equities, that included the youngest generation, which has actually the lowest exposure to the Canadian equity sector. Again, we saw them moving into the Canadian equities. In addition to that, when we look at sectors, all clients, all age groups rotated into defensive sectors like super stables and utilities among all of the market volatility. And within consumer staples, we have names like Costco, no-name foods and Coca-Cola were among the top bought stocks in that sector. >> Thanks for that. Money talks Anthony Okolie. Checking on the market action. First day of the trading week. We are up 53 points on Bay Street, the TSX Composite Index. It's modest, up a little bit more than 1/4 of a percent. Noticing that even though we have a bit of modest downward pressure on benchmark crude prices, some of the big energy names on Bay Street are holding including Baytex up about 6%. We have Kinross Gold at $4.84 per share, down almost 1/2%. South of the border, we are in the thick of earnings season. It mega-cap tech stocks on deck this week. There is some positive momentum to the upside. The S&P 500 up 37 points. Let's check out the NASDAQ, it's been choppy today. It's getting some momentum to the upside. We are up 60 basis points, a little shy of 65 points. Tesla's coming out cutting some of its prices in China. 206 bucks and change per share, Tesla down 3.7% this hour. We are back now with Jim Kelleher from Argus Research, we are taking a question about technology. The next one: could you get your guests view on IBM? >> Great. So IBM, one of the grandfathers of technology, it was considered to be somewhat irrelevant. They originally missed the curve on the transition to cloud. They were doing other things of the time like smart cities and whatnot. They've really pulled themselves back into relevance under the current CEO. Their recent quarter was a strong one, a very positive one as far as we are concerned. They are really focused on hybrid cloud and artificial intelligence. The focus on hybrid cloud reflects the fact that they took existing software assets that they acquired, like a cloud hosting business, and they combine that with their Red Hat combinationto become a leader in what we call hybrid cloud management. So IBM obviously build server farms and IT installations for large corporations around the world and all of those represent embedded assets that those companies want to protect. So hybrid cloud approach allows you to use your existing… Allows a large corporation to use its existing on premises assets and then also to branch out into a public cloud and then to manage all those assets together in a secure and highly effective manner. And that's resonating with a lot of IBM's large group of customers. They were able to grow all their businesses kind of nicely despite a very severe currency headwind. Basically, they grew all their businesses in single-digit percentages, but adjusted for currency, almost all of their businesses, meeting software, consulting and infrastructure, which is computers, all those businesses grew in the double digits adjusted for earnings season. So they finally seem to have their act together. They have miles to go and like everyone else, they are facing a higher cost for everything but they are in a better place than they were a few years ago. > We will squeeze in one more question. Apple. What's your outlook for the same? >> Apple was on the upside for revenue and earnings. This is there for school for a cube at the calendar 3Q. The reason is that for three or four quarters, CEO Tim Cook said we had six or 7 billion in foregone sales due to port shortages. The supply chain crisis is not over but it has abated somewhat. It is spotty year. It is not as pervasive. Apple tends to sell a lot of older phones. So there ASP, average selling price, will be seasonally lower but they should get a lot of unit sales. it does appear that they grew their unit sales based on compiler data. They grew their unit sales and double digits at a time when other companies were seeing their unit phone sales come down. So we expected a surprise on the upside on phones. Services is always strong and the wearable space, they have Apple watches and phones and people start gearing up for the holiday. Max another source of strength for his other. We are looking for a surprise from Apple in the current quarter. >> What's the big challenge? Is it the economy if we do and up in a recession? These are pricey products. I have one and I don't want to lose it. >> Absolutely. It is true that Apple does cater to a more prosperous clientele than those on the fridge of the middle class worldwide, but is an aspirational device, to own an iPhone or back, and people will sacrifice other things to get there, and once you are in the system with iCloud and Apple music and your photos and everything else, it's kind of hard to leave because you're leaving all that infrastructure behind. So it is an aspirational purchase and we definitely feel that revenue from greater China is really the one topline downside is greater China because we do see in the economy they are decelerating, but overall we think Apple is building share and people are, certainly in North America but in other parts of the world also, it remains the aspirational device that we think Apple will surprise to the upside this time even though the challenges you discussed are very real. >> A pleasure to having you will show today. >> Thank you. >> Our thanks to Jim Kelleher, director of research at Argus Research. Stay tuned for tomorrow. Anna Castro, Senior Portfolio manager with TD Asset Management will be on the show taking questions about asset allocations. A reminder, of course, it you can get a head start on sending this questions in. Just email moneytalklive@td.com. That's all the time we have for today. Thanks for watching. We'll see you tomorrow. [music]