Joseph Bonner

[theme music] >> Hello, I'm Greg Bonnell. Welcome to MoneyTalk Live, brought to you by TD Direct Investing.

Every day, I'll be joined by guests from across TD, many of whom you'll only see here.

We're going to take you through what's moving the markets and answer your questions about investing.

Coming up on today's show, as we await the results of Nvidia later today, we are going to talk about the health of the tech and communication sectors. It Joe Bonner of Argus Research joins us. Also on the show, if you have an interest in REITs, some of the big ones have reported their quarterly results. MoneyTalk's Anthony Okolie is going to have a look at those results and the outlook for the sector. In today's web broker education the segment, we will look at how to create custom layouts on Advanced Dashboard with senior client education instructor Meagan Henriques.

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 to all that and our guest of the day, let's get you an update on the markets.

We will start here at home with the TSX Composite Index.

Down about 77 points, one third of a percent. The price of gold and crude oil are under pressure today. I've seen pressure in some of the mining names.

Let's look at the most actively traded names at this hour and Bay Street. They include Shopify.

Decent sentiments out on the street today, the stock is up 2%. It had pulled back dramatically in recent weeks due to its quarterly report. CAE it not out with its quarterly report yet but warning of hard times ahead.

They are preconditioning us for the quarterly results ahead. CAE is down 7.5%.

South of the border, the market awaits Nvidia after the bell and also awaits the Fed announcement at 2 PM Eastern time. The S&P 500 is currently down five points or 1/10 of a percent.

Looking at the tech heavy NASDAQ, there is a little momentum to the upside. Up 15 points or 1/10 of a percent. Target one of the names moving today on its quarterly earnings report.

The street is clearly not pleased. You can see the stock is down almost 7 1/2%. And that's your market update.

It's become one of the big drivers out there in the market, especially in the tech sector. Of course, we are talking about artificial intelligence.

But can that momentum last? While the AI trade remains front and centre for many investors, there has also been concerns raised about a potential AI bubble. Let's get some perspective now. Joe Bonner, Senior Communications and technology analyst at Argus Research. Welcome.

>> Good morning, thank you.

>> Let's get into the AI, some trends you are seeing out there. The Metaverse was a big one for a while, then AI knocked it to the side.

Are all these big ideas living up to the hype?

>> We are at the top of the hype cycle.

I thought last year was the top of the hype cycle but we have definitely got more momentum.

When you think back, cloud computing, that went through a hype cycle, before that it was the iPhone, the smart phone, before that it was the Internet itself. We have been through this before. He got promising new technology promising to make things more efficient, cheaper, better. Every company wants to build and develop it, sell it, buy it.

But you have to think, we are in the beginning stages here, okay?

This is software technology. It goes through an iterative process. Every 6 to 9 months you've got ChatGPT 4.0 or Gemini 2.5.

Every 6 to 9 months, it's going to get better and better and better.

So right now, it's just at the beginning stages. Lots of hype, but maybe some hiccups along the way. But it's going to get better and better and it will come to some use at some point.

>> That's what I wanted to ask you about.

We are talking about the early innings here and you say the technology will grow more powerful and get better. At some point, people want to be able to put it in their pocket, put it on the computer in front of them, the killer app that really hasn't arrived yet.

>> Yeah, I mean, you got to realize, we are at the beginning. It makes mistakes.

We have a technology that makes mistakes.

There is a job one there. You have to think about the safety issue. Deepfakes.

AI generated content. How do you filter that out versus what's not AI generated?

It's got to be something more than just an intelligent chat bot. The killer app, something you put in your pocket, that will really make a difference. We are not there yet.

>> Who has got the chips for it? There been clear winners. The next phase it seems more difficult to choose, is it Google, Microsoft or some other company we haven't thought of?

>> There's a lot of startups around the space, a lot of capital going into the space.

You are right. Nvidia is the one with the chips.

They are the one right now.

Also think about Microsoft.

Microsoft did an investment in OpenAI back in 2019.

That's either really lucky or farsighted depending on how you look at it.

That is one corner of the AI market.

We can see, Microsoft's AI is already contributing to their revenue.

So right now, it's the big guys that habit. But like I say, there is lots of capital going into startups and is going to be a very active space for a while.

>> Before you move on, we haven't really mentioned the Metaverse. That was a big company that changed its name based on the fact that they thought the Metaverse was the next big thing. How is that story unfolding?

>> My opinion, the Metaverse has been a flop. It's been a flop.

You gotta go back to when CEO Mark Zuckerberg changed the name and said he's pivoting the company. He said end of the decade. We are 2024 now, so we have a few years.

But the market wants everything now. It is impatient.

All it sees is the capital expenditure going out and have not seen the returns.

Again, it's not there. Simple.

>> Let's talk about some of the other areas to focus on, including enterprise software. We have seen some growth but forecasts have not been great. What's happening that space?

>> Yeah, there's been a lot of warnings.

Not really warnings on earnings or anything like that but a lot of talk about contract, about the macroenvironment and contracts taking longer to get done and a lot of customer resistance, budget resistance.

But then when you see the numbers, you had a company like Microsoft, cloud computing, up 31% in the first quarter, a smaller company for example around the mid-20s, it seems like there is a lot of concern but the deals are still getting done.

You want to take that concern, you want to take that concern as a real but also you look at those numbers and a lot of companies would kill for that kind of revenue.

>> What you think of the space going forward? Obviously, when these two factors that closer in terms of what is the perception and what is the reality.

>> I think, yes, I think, I mean, I'm not an economist but if you look at the macros, we are not in a bad place.

Again, you have to look at the forecasting, look at who is raising forecasts and I'm definitely positive despite the concern.

>> Another part of your coverage universe includes the media sector. I spent 25 years in traditional media before I took on this role, so I've lived some of the downturn, to put it nicely. What is going on out there?

>> So you think about media, traditional media companies, streaming came along, everybody had to try to compete with that.

They all started their own streaming services, investing gobs of money and rolling out the services, producing more content, they got money for licensing and taking that money back and trying to build up the streaming services and it didn't work.

So it was all about subscribers, and now it's all about profitability.

Everyone is looking for a profitable streaming service.

So the market did not like going after the subscribers. The market likes profitability more. But the questions are in these streaming services and the subscales streaming services, bundling, we should talk about the cable bundle, all the cable channels, now we are going to see these services get together and we bundling them into packages, there is a sport service coming in later this year and other companies bundling their streaming services, they have to do this.

I think the focus on profitability is a good thing but there's a? About our these subscale services really going to survive?

You think about all the news around Paramount, Paramount+, is it for sale, is it not for sale, is it on the market, is it off the market?

That's kind of the bubble one right there.

Others, you gotta wonder if they are going to come together at some point.

>> Fascinating stuff and a great start to the show. We are going to get your questions about technology and communication stocked with Joe Bonner in just a moment's time.

And a reminder that you can get in touch with us 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.

We've got shares of target in the spotlight today, this following a disappointing quarter and disappointing forecast from the US retailer.

Sales, customer traffic and average spend for those customers all fell in the most recent quarter.

While the high cost of living has consumer spending less on discretionary items, Target is also cutting prices on its grocery offerings in the hopes of attracting customers away from its rivals, such as Walmart.

Shares of lululemon athletica are also under pressure today. Let's check in on the name now. The stock is down to the tune of about 6%. What's going on?

The apparel maker says its chief product officers leaving the company and will not be replaced. Instead, those response abilities will go to lululemon's global creative Dir.

the company's next quarterly report is slated for the first week of June. An update on Canadian pension funds. The Canada Pension Plan investment Board supporting a net return of 8% for its most recent year. Strong equity market performance was offset by weakness in real estate and emerging markets. The 8% return falls short of the funds benchmark reference portfolios which were up almost 20% on strong US equity returns. Quick check on the markets. We'll start here at home with TSX Composite Index. Down about 67 points or one third of a percent. Oil prices under pressure today, gold prices under pressure today. Minors in particular some of them making sizable moves to the downside.

South of the border, we await Nvidia and fed minutes at 2 PM Eastern time. Two fairly big things for investors. A bit of caution out there.

You are down three points on the S&P 500, about 66.

We are back with Joe Bonner, take your questions about technology and communication stocks. First one for you.

Canadian question for you. What's waiting on shares of BCE?

>> Yeah, BCE is a telecom company, Bell.

We have some competitive issues.

If you zoom out on the industry as a whole, I know I did, I went shopping for a new phone and I got sticker shock, the prices are way up.

That leads to a greater propensity to pay onto your phone. What that means is is bad for upgrading or changing carriers. The amount of customers looking to sign up are fewer. There is also move rates, at least in the United States, move rates are down, so again, hard to get new customers, so a lot of competition in the market. BCE, I saw in March that both Moody's and the SNP did not downgrade their debt but change their outlook on their debt to negative.

That's a bad sign.

You look at the ratios, they are not terrible but they are not great.

You got a great dividend yield.

But without capital appreciation, BCE has some issues. Management has also mentioned that.

They have some regulatory problems. The Canadian government seems to be bolstering competition which, again, it's the incumbent so that the negative for BCE.

They brought some issues. Their outlook is in great.

Revenue growth is better on the EPS. They did restructuring earlier this year and that will help with the margins but getting revenue growth back is going to be an issue.

>> Is that the key here? If they want to turn around this story in the medium and longer term, it's about turning around the revenue?

>> Absolutely.

>> Interesting break down there on BCE.

Let's take another question for you.

Someone wants to know what your outlook is for Meta?

>> Let's put the Metaverse to the side for the moment.

Let's think about what Meta does, it's digital advertising. They aggregate large audiences on their social media platforms and show them digital advertising.

So that business is doing pretty, again, 20 some percent growth, 3.24 billion members, users. You wonder, 15 million more in the first quarter, you wonder when the law of numbers kicks in there because it's amazing.

Advertising business, it's doing great.

The thing about the Metaverse and AI is we see all this money going out, this investment, and a new look at AI, you God Microsoft and OpenAI on one side, you got Google, Alphabet, Google and Anthropic and Amazon on the other side. Meta is kind of in the middle. They are developing their own models but they don't want to be beholden to anyone for AI, but you have to wonder, is this really money well spent?

Can't they just use somebody else's?

I know it's important to them, the use AI and ad targeting and that's a great place for them but you have to wonder about the cost. As you wonder about the cost, obviously, they rebranded the company, better, talking about Metaverse, it was a big play.

Despite the challenges they are facing, would it be and equally questioning if they suddenly abandoned that plan? They stuck there for a while and said we made a big play in this direction, we have to stick with it.

>> Oh, yeah. Mark Zuckerberg is the founder and controlling owner of the company. He's sticking with it. I would be surprised if he gave up on it. It would be nice if they may be directed more money to AI than the Metaverse.

>> Interesting to see how that transpires at Meta, parent company of Facebook. Let's take another question for Joe. Someone wants to take on Microsoft.

>> Microsoft, okay.

That's one of the winners in generative AI. I mentioned their cloud computing grew 31% in the first quarter. It's been growing about mid to high 20s. Everybody thought, this has to slow down and it has not slowed down.

With generative AI actually contributing 6 to 7 points of growth for that, it's a real revenue. It's not, we are going to do it someday, it's a real revenue today.

That business is going well.

Microsoft is a conglomerate, there is Windows, Office, Teams, all of the enterprise technology. You have got all these moving parts.

It will depend on technology spending, obviously.

And the outlook for technology spending, again, there's sector forces of wanting the best technology, you want to upgrade versus budget so Microsoft is really at the centre of business productivity technology.

>> When I think of a company like Microsoft or the other tech behemoths, it almost used to be an insult to call them mature because someone new comes along and knocks off your perch but for AI spend, you need to have deep pockets. It's gonna be these big companies actually have the money to spend.

>> The money and the compute power. When you see the capex that Microsoft, Amazon, all these companies are putting into AI, and again, compute infrastructure so important. A lot of smaller AI startups, they need to get that compute infrastructure in order for it to work and there's only three or four companies that have that and I just name them, pretty much.

>> Interesting set.

As always, make sure you do your own research before making any investment decisions.

we will get back to questions for Joe Bonner and just moments time. A reminder that you can get in touch with us at any time. Just email moneytalklive@td.com.

Now, let's get our educational segment of the day.

If you use Advanced Dashboard, you may want to customize your layout. You can do that pretty easily.

Meagan Henriques is here to tell you how.

>> So a lot of investors want to be able to customize their experience so that they can choose the different investing components that are going to be important to them to make their decisions.

In Advanced Dashboard, I can show you how to do that. Let's get to it.

When we are in Advanced Dashboard, where we would need to go is on the top right, we have our layout manager.

Once you click here, it will bring you to our layout menu where you can choose from our layout library. These are preset layouts that TD has prebuilt for you. If you are content with that, by all means, I would suggest going here first. If you already know what you want, then we can create a layout from scratch and to do that, we can go to custom layout.

From here, you can choose what type of layout you want. For simplicity, I'm going to select the flex sheet, the 2 x 2, and I'm going to call this flex, and then I click on add layout.

Since this is from the flexsheet, it's already broken for so all we would need to do is click on the plus to add our different widgets.

So I'm going to add a chart to the top left. I'm gonna add to the right to an order entry, on the bottom I'm going to add a watchlist, and finally on the bottom I'm going to add a heat map.

So now that we have added all of our different components together, we want to do is make this screen as efficient as possible and to do that, we are going to need to link our different components together using the channel configuration.

So every widget on the top left will have the same type of settings, so it's these four vertical lines that when you click on it, it will bring you to the channel configuration.

Here, I want my chart to be able to receive information. You can select both if you want. It doesn't make a big difference for this one. On the bottom, I'm gonna to the watchlist, select the default one. Same thing, I'm going to click on those bars and select how I want this to be configured. For this, since I might be particular on my watchlist, I only want to send information.

I don't want to adjust to add any symbols I was just curious about.

Let's move over to the right. On the top right, we have our order entry. This one will only have the choice to receive. And then our last one is a heat map where it can only send. Now that we have everything set up, I'm going to show you how easy it is now that we have it to you look at different companies.

Whether we go from our watchlist, so if I click on Bank of America, we are going to see my chart is going to change as well as my order entry for Bank of America is ready. And now, since I linked my heat map as well, I can click on anything from a heat map and as you can see, my chart has changed and my order entry has changed.

If you did want to add more, you can always click on the plus and then select other widgets that you like. For instance, if you wanted to see our videos, you can go to learn, video lessons, and you can even watch a video within the Advanced Dashboard layout to see how you can customize your advanced dashboard.

So as you saw, it was pretty simple.

>> That was senior client education instructor Meagan Henriques. For more educational resources, you can check out the learning centre on what broker or use this QR code that navigates to TD Direct Investing's YouTube page.

Once there, you will find more informative videos. Before you get back to your questions for Joe Bonner, a reminder of how you can get in touch with us.

Do you have a question about investing or what's driving the markets?

Our guests are eager to hear what's on your mind, so send us your questions.

There are two ways you can get in touch with us.

You can send us an email anytime at moneytalklive@td.com or you can use the question box right below the screen here on WebBroker. Just write in your question and hit send.

We'll see if one of our guests can get you the answer right here at MoneyTalk Live.

We are back with Joe Bonner, taking your questions on technology and communication stocks. Another one for you here.

Can we get your thoughts on Disney?

>> Sure. So just the context here, there was a lot of it activist investor interest in the last few years but it's all been taken care of.

The point is that if Disney shares don't deliver, we could see the activist come back. Let's talk about the business.

The once and future CEO Bob Iger has injected a lot of energy into Disney.

February there was an announcement of a new package of sports mega package of streaming video, he is also packaging Disney Plus and they just announced another package, did a deal with Fortnite game maker, a deal with them.

So he's got a lot of things going. The business itself, I direct to consumer business.

I talked about this move to profitability.

Disney is saying they are going to be profitable in the direct-to-consumer streaming video. A good milestone announcement. That's what they're going to do.

They've got to execute on that.

When you think about Disney, there's all the Hollywood content that we talk about, but when you think about bread and butter, is that experience segment, the park segment, Disney World, the cruise line, the Hong Kong Parks, that's really the bread-and-butter.

There some criticism there that there is some slowing because there is a lot of pent-up demand over COVID and a lot of people coming out. Now, it's not double digits anymore.

Maybe it's high single digits.

Some criticism there but this is the bread-and-butter business for Disney.

It just keeps giving a lot of refreshes of the parks there, new rides, new experiences, keeping those customers, those visitors coming back.

On the downside, there is two things about Disney you gotta consider versus the linear networks. We talked about streaming being such a big thing. Those linear networks are an issue because they are losing viewers. That's just an issue. That has to be dealt with.

Striker has talked about maybe selling them off or maybe not so that's a question.

The others the issue of succession.

Iger left and came back. He's got a couple more years on his contract.

The board is really going to need to show some traction on that issue.

>> Interesting breakdown on Disney there.

Let's talk about one of their competitors, not about theme parks but in the streaming space. What's ahead for Netflix?

>> Netflix is in a very good position here.

They were the disruptor, they were the first ones who started streaming, first ones to go global, have this great interface with good enough content, great delivery system, great discovery system if you're looking for recommendations. As kind of a marriage of technology and content.

70 million subscribers, they are definitely the incumbent now.

They bring together this technology and this good enough content but they are all about expanding to new genres and new niches and new audiences that they can serve.

They signed agreements with the WWF and live event football.

They put in their advertising to a couple of years ago.

That goes in together, live event and advertising, building that advertising stream, that advertising tier of their streaming service and that's going to be the challenge.

Right now, it is small. They are going to need to build that out in the next few years.

>> Is part of that move towards life stuff so they can put advertising into it and then it's sort of like a market particularly for sports a recognition of that original content, even though those titles were not very prestigious, that they were expensive for them?

>> Yes.

Advertising will be a revenue stream, an additive.

They are not stepping away from original or scripted content, they are just winding up a new niche. It's a new audience niche that they can explore.

>> Interesting set. We are going to get back your questions for Joe Bonner in just a moment's 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.

Let's talk about the Canadian realist eight sector, generated some good results in the first quarter of this year despite elevated interest rates, economic uncertainty. Now there are signs that inflation is cooling in this country and increasing beds that the Bank of Canada could be cutting rates this summer. So is it a good time to take a closer look at the reach market? Anthony Okolie has been looking at a report that looks it just that with TD Cowen.

>> Talking about the first results. It came in just about 7% year-over-year, beating TD Cowen's forecast of 6.4% and this is the highest that funds from operations since the first or second quarter of 2021 when it was high 6%.

Driving that beat with the senior housing sector which was the fastest-growing sector followed by residential. This came despite higher-than-expected per-unit interest expense growth for the second straight quarter. This headwind continues to slow versus overall growth rates, according to TD Cowen. Meanwhile, when they looked at the management teams, the outlook and sentiment voiced by management teams overall remained pretty positive, specifically residential, retail and senior sectors.

Although the first rate cuts seems imminent, TD Cowen believes that management teams are prepared for a higher for longer interest rate environment.

Basically meaning they are putting more preference for paying down debt. Given their latest results, TD Cowen's target prices are largely unchanged but they do reflect a 3% reduction that they made in their first-quarter preview.

But overall, they did reduce most sectors 2024 adjusted funds from operations per unit estimates marginally except for the senior sector which was raised in percent.

In terms of their outlook for the rest of the year, we will start with the senior sector, TD Cowen expects the seniors to lead growth followed by residential and industrial's and within senior, specifically, TD Cowen expects solid industrial fundamentals to drive retirement home occupancy improvements and higher rents. They also expect residential and industrial's to deliver nearly identical adjusted funds from operations growth for the rest of the year.

Finally, they expect the retail REITs to average adjusted funds operations growth so slow slowly to 3% by the fourth quarter of this year.

>> It seems that perhaps there are some factors working in the favour of the REITs. What about the risks and challenges?

>> The risks to the REIT sector according to TD Cowen could includes lower rent growth, higher vacancies, new supply coming onto the market, fluctuations in interest rates. There is also 10 credit risk among others.

For companies in their specific coverage universe, with development projects, additional risks include things like construction delays, cost overruns as well as failure to achieve targeted financial projection.

>> Interesting stuff. Thanks are breaking it down.

>> My pleasure.

>> MoneyTalk's Anthony Okolie.

Now, for an update on the markets.

[music] We are having a look at TD's Advanced Dashboard, platform designed for active traders available through TD Direct Investing.

This is the heat map function, gives us a view of the market movers. Let's look at the TSX 60 by Price and volume. I'm seeing the price of gold, silver, copper lower on my screen.

If you look at the basic materials bucket, we find the minors, the reaction is in great. First Quantum is down 4% and Kinross Gold down about 2.5, tech under pressure as well. Nutrien, of course, different kind of mining business, potash, crop nutrients, it's up about 2%. Shopify getting a bit today.

A little bit of green on the screen in the technology space. South of the border, so much of what's been happening in US markets in terms of hitting all-time highs has been largely a technology story, artificial intelligence. Nvidia is on deck after the closing bells to report its latest earnings.

The markets in a bit of a wait and see mode. We are getting fed minutes and about 90 minutes.

We will see what the tone was around the table for the last Fed decision and try to decide sentiment.

Looking at the S&P 100, see what's happening south of the border as we await headline, the S&P 500 right now is pretty much just flat.

Bit of a mixed picture out there.

And that's direct update.

We are back now would Joe Bonner from Argus Research, let's take another question. Google, how is Google doing and is there search dominance under threat?

>> Yeah, when you think about ChatGPT, that's a year into the heart of Google search.

ChatGPT basically answers questions just like Google does.

Google is taking the threat seriously.

It's one of the few companies that has to compute power, research ability to compete in generative AI and they have moved to do that. However, they've also gotten a bit of a reputation for not being able to shoot straight when releasing new models.

There always seems to be a glitch or some kind of hitch that makes the new model not work properly.

So really, the positive is that they see the threat, they are moving to address it, the challenge will be execution around it.

There really is another challenge to Google that I need to mention which is the regulatory threat. When you have 80, 90% of the global search market, you control the digital advertising market, there are antitrust issues around Google, Alphabet.

There are cases in the US, there are all kinds of fines that they have already paid in the EU, more investigations coming, that is the other issue besides ChatGPT.

>> That could be a threat felt broadly across the tech industry. When it comes to antitrust regulators, they have been stepping up in the past couple of years when it comes to these big tech names on the amount of concentration they have.

>> They really have. You think about Meta, met I wanted to buy AVR exercise app. Not exactly a transformative acquisition, tens of millions of dollars, and that got opposition. Basically, it these companies like Google and Meta, they are basically out of the M&A game until this trend moves further.

>> Interesting stuff there. We got time for one more question for you. Someone wants to talk about gaming stocks.

Is this a good environment for gaming and stocks like EA?

>> I cover EA. I think the gaming market is a little soft right now.

EA just finished their fiscal year. They give their guidance for the next fiscal year, 1% revenue growth. Not great guidance.

They had restructured. Profitability is not that bad.

I think it's about 10% EPS growth. But you have to wonder, the market, is there… Are we waiting for a new really great game like Fortnite?

Are we waiting for some kind of new hardware or VR? I don't think it's doing it now, but will that do it?

Or are we just going to go to kind of like Microsoft Game Pass, the digital realm, aiming in the cloud? I think we're still in a holding pattern in video gaming right now.

That said, I think EA has cornered the sports network, they have NFL for American football, they have FIFA for soccer, hockey, basketball, all these different sports games. They really have that market cornered. They got some share games that do well.

I think we are really just kind of in a holding pattern.

>> It's been a great show, really appreciated having you here. I look forward to our next chat.

>> Great, thank you.

>> Our thanks to Joe Bonner, Senior Communications and technology analyst at Argus Research.

As always, make sure you do your own research before making any investment decisions.

stay tuned for tomorrow show. Everything you wanted to know about the web broker platform! We get a comprehensive tutorial from Ryan Massad, client education instructor with TD Direct Investing.

You can get your questions in early, just send them to moneytalklive@td.com.

That's all the time we have for the show today. Thanks for watching and we will see you tomorrow.

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