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[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, we discussed the potential opportunity and information services stocks with TD Asset Management Ram Sampath. MoneyTalk's Anthony Okolie is going to have a look at how US small businesses are feeling about the state of the economy ahead of the US presidential election. And in today's education segment, Meagan Henriques is going to show us how to use the portfolio tracker tool on advanced dashboard.
Here's how to 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.
We do have the price of American benchmark crude West Texas intermediate pulling back about 4 1/2%. Of course, it has been a rallying pretty strongly to the upside in recent days over fears over what's next in the Middle East. Big pullback today, 74 bucks per barrel. It is having an impact on the energy space. Let's check in on Suncor. I could've shown you any of the oil and gas names on the TSX today.
Suncor is down to the tune of 3 1/2%, $53 and change.
Also, there was a big press conference in China from estate planning official.
Investors watching closely to see if there will be more stimulus announced. There was not. It is having an effect on a number of asset classes, including metals and copper. Capstone Copper is down almost 5%.
South of the border, bit of a bounce back for the S&P 500 after yesterday's date.
There was a stronger than expected US jobs report last week.
We are up 45 points, almost one full percent on that broader breed of the market. Let's check in all the tech heavy NASDAQ. Last time I checked it was bearing a little bit stronger. Indeed, up 1.2%.
Alibaba, a lot of asset classes are trading to the downside due to the lack of more similars from China, including a lot of these New York listed Chinese stocks.
Alibaba right now down to the tune of about 6%.
And that's your market update.
Declining interest rates are having an impact on many sectors in the markets, including one space that's often overlooked: information services. Joining us now to discuss is Ram Sampath, associate for Portfolio research at TD Asset Management. Great to have you on the show.
>> Thanks for having me.
>> This is your first time on the show.
Give us a brief overview of your coverage area.
>> I cover enterprise services.
If you look at enterprise services, that consists of information services and IT services. And within healthcare, its healthcare providers and services.
>> Pretty key elements of an economy but at the same time, a little bit overlooked.
Let's talk about information services in particular and a little bit more about what these companies do.
>> Sure. If you look at information services, these are companies which have had data for over 100 years. So they accumulate, distribute and analyse all of this data and give it to companies so that they can make better, data-driven decisions. Let me give you an example.
Have you wondered what happens when you apply for a loan or apply for credit card or when you take a look at… >> The person you're sitting in front of, they go away somewhere, they come back, it seems like they just made a decision.
There's probably more going on.
>> Exactly. If you think about what's happening, there's somebody behind you taking decisions when you take out a loan and these are what I would characterize as invisible giants. There is a reason why I say these are invisible giants because if you think about the S&P 500, you think about the Mag 7. No one actually talks about the other part of the market. So this is the part of the market where you actually have these companies who have all the data and take all of these data and have monopolistic characteristics that go under the radar and hence I call them invisible giants.
>> Let's talk about some of those invisible giants, examples of names in that space.
>> Sounds good.
Verisk Analytics would be one.
They are a massive player in the insurance space.
If you think about insurance, you think about the major insurance players, not those behind it.
Let's assume and that your insurance went up by 10%. Your thinking, what happened? I didn't have any sort of an issue but my insurance still went up 10%.
See you go around and shop for rates.
And you realize, actually, the other companies are also putting 10% increase.
There are two reasons why this could happen. One, probably inflation. The other part of it is maybe you are in a neighbourhood where prices have actually gone up because people have had poor driving history so that could be one.
So if you step back and take a look at it, where this could be the sole owner, proprietary owner of this particular data and they supply to insurance and that's what comes back to these are the giants and this would be one of them.
Another example which I will call out is FICO. FICO would be the invisible giant of certain data. You've probably heard about FICO scores.
It is a three digit number where it actually tells you whether you should be happy or be sad about it.
Let's say for instance you want to actually purchase a house and you think that you get a mortgage. You probably think that the bank is calling the shots on what mortgage you need to get. But actually, you go back, the banks go to FICO and ask about your three digit score.
FICO does a lot of analysis.
One is do you have a good credit history?
Do you have other auto loans or some other things?
And then it will spit out a score which will tell, hey, you're good to go, you will probably get a loan. Or, they might say, consider twice before giving a loan.
Your fate hangs on a thread when you are shopping for houses what FICO calls the shots and you don't even know about it.
>> You don't even realize.
The thing about these invisible giants, I had no idea that FICO was publicly traded, let's talk about the opportunity in the space for investors in terms of valuation and other metrics.
>> Sounds good.
If you take a look at FICO, the valuation is not cheap and these have historically been very, very expensive companies.
Just so that you get some perspective, the average group actually trades at twice as high as with the S&P 500 would trade at and part of it stems from these companies being monopolistic companies.
I have a chart appear. If you can pull that up.
>> We will show the audiences.
What is it telling us?
>> If you look at it, you so that interest rates actually declined in 2020 and 2021.
You can see that the US market originations declined during the period of time. Coming to 2022 and 2023, at the US market originations are at an all-time low. If you look at it of the perspective of the pre-pandemic average, it's probably around 50% below those levels.
Why is this an opportunity? Definitely one, you had a lot of move forward applications, so people who were not able to afford a house at a much lower interest rate but houses but are what you are seeing is interest rates starting to come down so as interest rates start to come down, there's probably going to be more activity. I would say I was probably one of the examples.
In 2022, I was not able to afford a mortgage. It was a hard time. And so coming off into 2024, this is a very opportune time for me to take a loan.
When we take a look at what these companies do, these are data driven decision makers so they have these data sets for over 100 years and when you look at gen-AI or AI on a broad scale, the easiest way to get generative AI is to have stacks of data or heaps of data.
You can analyse a lot of data that is there and you can generate more accurate information faster than was historically possible. So an example.
I hope you don't have a collision, but let's see there was a collision and you have some sort of claim on the horizon and you are going and getting the claim done.
Historically, it will probably have taken you 5 to 10 days for the claim to be processed, and sure that it's not a fraud and get the money back so you can buy a new car. With artificial intelligence, what we are seeing is that this has enhanced the process and some of the claims can be validated and paid to you within 5 to 10 hours and that's where generative AI comes in. But these companies typically do is raise prices because they are providing services at much faster rates and overall, it doesn't increase their bottom line as much and so this is very profitable for them.
>> Fascinating stuff and a great start the program. We are going to get your questions about information and healthcare services stocks for Ram Sampath 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.
The US listed shares of several Chinese companies are under pressure today, including Alibaba and Tencent. These moves come after Beijing held off on any new economic stimulus. That followed a host of measures introduced last month. Investors have been closely watching a news conference today held by a Chinese state planner for any new stimulus. Mainland Chinese stocks also sort ahead of that news conference that paired their gains afterwards.
Softening demand for snack foods and drinks has PepsiCo trimming its sales forecast.
The global snack food giant has now seen two straight quarters of weaker than expected sales with volumes down 2% in the most recent quarter. A more cautious consumer that has been stung by higher grocery prices has been one of the reasons given for the decline.
Also recall going back a year or more that snack food stocks were under pressure when those weight loss drugs started to soar in popularity. There could be a few factors at play as to why we are not eating as much snack food as we state. Social media app TikTok facing lawsuits from a group of more than a dozen US states attorney general.
The lawsuits, which have not been tested in court, allege compulsive use of TikTok by teens and children pose mental health risks. This action comes amid other actions against social media companies alleging harm to children. TikTok is owned by privately held Chinese company ByteDance.
A quick check in on the market, we have metals down across the board, oil down, weighing on the TSX Composite Index on Bay Street. Nothing dramatic that we are down 90 points, a little more than 1/3 of a percent. South of the border, the S&P 500 bouncing back a little bit after yesterday's selling pressure. Bond yields moving higher on the back of that stronger-than-expected US jobs report that had investors reassessing exactly how the Fed may decide, the market still thinks cuts are coming but perhaps not aggressively as before. The S&P 500 is up just less than three quarters of a percent.
We are back with Ram Sampath, taking your questions about information and healthcare services stocks. He is a big one for you.
How could the US election impact the health care services firms?
>> Good question. The US elections hanging by a thread and this is very relevant to health care services space.
Two things matter the most. One is… This is for people greater than 65 it wear the government is their premium.
If you look at the centre for America and Medicaid, the CMS, the government usually raises the insurance premiums by 1 to 2% on average. But if you look at Trump on the other hand, this goes up by 2 to 3%.
The healthcare services space, often preferred the Republicans over the Democrats. If we were to see a Democrat candidate wishes Harris, then we would probably see a slight slump in the stocks and the healthcare services space but if we were to see a Trump when, this actually benefits them so we would see the stocks grow much faster.
>> Thinking about conversations we've had on the show but the outcome of the presidential election and what it could mean, I think you just laid it out, it hangs by a thread.
We simply do not know. It makes it harder for investors. We can map out where we might head but we don't know where we are going to be.
>> That is so true. We can definitely map out what's going to happen but these stocks are still waiting and they have been range bound and just waiting for who we are going to see there.
>> Is coming closer and closer, November is creeping up on us. I will take another question from the audience. Someone wants to know, what caused the recent big drop in Humana shares?
>> Great question. Humana was down 11% and then another 11%. Overall, in a couple of days, it was down 22 to 25% and has not recovered since then. If you parse that what has actually happened was Humana called out saying they have their star ratings which have dropped from 4.5 to 3.5. Stepping back in understanding what the star ratings are. Star ratings are essentially ratings given by the government based on how much offering you have, how much benefit to pay and how much do you charge the government.
If you offer less benefits at a higher price point, you have lower star ratings.
So what happened to Humana over the last year was they actually saw an increase in terms of memberships and they were not raising prices. And now this year they have had to increase prices which means that the star rating has actually gone down to what it does is going into 2025, you are going to see lower membership and then going into 2026, you will see that the bonus payments which you get from the government are going to lower, which means that the stock is essentially getting punished for something which is going to happen in 2027.
>> If someone is taking a look at Humana, what could turn the story around? We are talking long term.
>> They would have to turn things around.
One was a drastic competition which happened in the space.
They changed pricing this year to make sure that they are profitable. If you are not running high in terms of probability, you might as well not be in business.
That's what they did and they got a double whammy on it because you're not getting more members.
What they can actually potentially do right now is what's done is done but going to the next year and having a better pricing strategy and making sure that they have better enrolment numbers and that will increase the star ratings which is a 2027 play.
>> Interesting name to watch and a good explanation of star ratings.
We had to tell the story because the stock was down so dramatically.
Nice explanation for the audience.
Someone wants to get your thoughts on Equifax.
>> Equifax is an interesting name. In the initial talk, we talked about FICO a little bit. This comes into a very similar area. What Equifax does is basically they are the credit bureaus. What they do is they take all of these ratings, the three digit number from FICO, and they create a 40 page report and send it to the banks.
So you can characterize them as somewhere in between FICO and the banks. What they do is not only have the three digit rating but they actually have a lot more data on what you, Greg, have been asked for the report and then they will also have your payment history, they will have your credit checks and everything done and completely packaged and give it to the banks so that they can make a decision on whether you get the loan or not.
>> In terms of an investment perspective, we are taking a look at the shares here, they have been on the move over the past year to the upside.
What are some of the upside, downside risks around the name?
>> What's happened over the last six months or even a year, one, you are starting to see that mortgage originations which have essentially bottomed start to increase. This is very similar to FICO. As a mortgage origination start to increase and need more credit reports, you're making more money.
Second, these companies have actually been taking more than inflation plus pricing.
Because FICO is increasing pricing, they have to increase pricing on a similar level to keep their margins.
The stocks in the entire space have been working because of pricing and anticipation.
>> What about risks?
>> The biggest risk is DOJ investigation.
You look at the credit bureaus like FICO, they have been increasing pricing a lot.
The DOJ is coming back and saying, hey, I cannot see you increasing pricing by 30% over and over.
If you look at closing costs, they are around $6000, and right now the bureaus cost around $500 but if the keep increasing the price, you could reach 12, $1300 soon. The major risk I would say in terms of increasing pricing, the DOJ is on the horizon and breathing down their necks to make sure they are not increasing pricing which harms the customer.
>> Fascinating stuff.
As always, make sure you do your own research before making any investment decisions. we are going to get back your questions for Ram Sampath on healthcare and information services stocks in just a moment's time.
And a reminder that you can get in touch with us any time. Just email moneytalklive@td.com.
Now, let's get our educational segment of the day.
Today's education segment, we are having a look at TD's Advanced Dashboard, platform designed for active traders available through TD Direct Investing. Meagan Henriques, Senior client education instructor with TD Direct Investing joins us now. Let's talk about investors looking to test out trading ideas without putting their portfolios at risk. How can you do that in Advanced Dashboard?
>> There are a lot of investors who before getting in and putting in real money, they want to be able to test out their trading ideas so in Advanced Dashboard, we do have a tool called portfolio manager.
Let's get an advance dashboard so I can show you how this would work. We are in advanced dashboard and I'm currently in a layout that has Portfolio manager open.
What were going to do is create a new one.
We go to the right and when you click on portfolio manager, I'm going to call this October 8, create, and now all I need to do is put in symbols.
Here, let's put in some that we talked about today, we are going to put FICO.
It's going to ask for quantity, so I put how many shares I'm interested in. You are not putting in real money yet, you are just testing it out. What I would say is right now, based on today's trades, I'm going to put in 100 shares, it's already giving me the cost per share and the date of today. I'm going to put save and basically this is how you would do it. You would simply put in symbols and then it's gonna put up a trade.
Now what I'm going to do is I'm going to show you a list I've already created.
Think of it as a cooking show where you put it in the oven and then an hour later, this is what it looks like.
We have our list already created and what this shows me is how the shares would have done had I actually invested in them. So I see the different companies, I see my total portfolio value, the cost of that, my daily profit and loss.
Currently, my fictitious portfolio is on the up and then my total profit and loss.
This is a good way that you can go into almost practice your trading ideas without putting the money into it.
>> Alright, you've done the practice, you haven't had any real money on the line up to a certain point. If you start looking at some of your ideas and thing hey, I may be onto something, you want to move forward, may be purchased one of the investments, how can we do that?
>> In advance dashboard, we wanted to be a simple as possible. From this portfolio manager, you could actually place your trade. Where you would go is on the left where we see these three dots, when you click on them, for instance let's click on TD, this list is going to appear where I buy, I sell, I do a lot. Let's say I did want to place my trade, I click on by, then my order ticket will open up or I put in my parameters before submitting my trade.
There are a few other things that you can do within this portfolio manager. Let me quickly show you.
You could also customize the different columns. Let's say I wanted my average cost to be right after the price. I click and drag it. Finally, the last thing that you can do or that I will mention today is you can export it to systems like Excel.
On the top left of that portfolio manager where we have these three lines, when you click on it, you can do export list as CSC so that way you can put it into Excel and track it that way as well.
>> Great stuff as always. Thanks for that.
>> Thank you.
>> Meagan Henriques, Senior client education instructor at TD Direct Investing. And a reminder that October is investor education month at TD Direct Investing. You can find more information by using this QR code. It will navigate to TD Direct Investing's webpage.
Before you get back your questions about healthcare and information services stocks for Ram Sampath, a reminder of how to 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 Ram Sampath, taking your questions about health and information services stocks. Someone wants to get your take on United Health.
>> If there is one stock that moves the market with healthcare, that's United Health.
United Health has had probably one of the more upside down side plays this particular year. At the beginning of the year, it was down 15% and now recovered since then and now probably up 20%.
There are a few things which are in play right now. Similar to Humana, they also play in the Medicare space. What's happened in the last year and 1/2 is that you are starting to see these utilization errors go up.
So people who did not go to the hospital due to COVID, that cause pent-up demand, then they went to get the treatment done in 2022 and later. It's not that the companies did not expect this to happen, it shows that the intensity was much more than expected.
This meant that the stock did not work for the initial half of the year. Going into 2025, they have repriced their insurance which means that the positioning for the stock is much better and given that they have repriced, they can actually bring back what's much lower than it is and finally with the advent of Humana losing their members, United is kind of position in a really good way where they can actually get more members.
>> Things working to the advantage of United Health. What would the risks be?
Could they lose their competitive advantage?
>> Yes.
United health is very vertically integrated so it's hard to say that they would lose their competitive edge. It comes back to the DOJ. The DOJ are investigating United on low barriers between optimum health, their services sector, and United healthcare, which is their insurance segment.
What they are saying is that optimum health is actually speaking with the insurance segment which means that you are getting all the patient data from the insurance segment to the optimum segment which means that you can increase in lower prices per member, per year as or how you want 10 this is a massive game changer.
If they are guilty, this would be a big detriment for the stock.
>> The US Department of Justice showing up in a couple of the story seems we have today. Another question from the audience for you. Someone else wants to know, how do Moody's and the other debt rating firms look right now?
>> It's another interesting part of the market.
It's another invisible giant that I talk about.
This is a very interesting space two.
Similar to FICO, what has happened between 2020 and 2021 is these are enterprises, they took on a lot of debt at low interest rates.
So what happened in 2022 and 2023 was that they did not have the need to actually take on debt which means that a company like Moody's did not have to rate on debt issuance at all and now coming into 2023 and beyond, now that we have actually bottomed in terms of how much debt issuance is happening, we are also coming into refinancing zone. So companies which took out loans in 2020 and 2020 one half to refinance on a five-year term which means that 2025 and 2026 Outlook is much better.
So this means that Moody's and even other companies in the rating agency space, they would have more debt which is going to be refinanced which means they have to rate on that debt.
>> So some business coming for some of these rating agencies.
I don't want to presuppose the US DOJ, are they taking a look at this or are they all right with the space?
>> They are all right with the space.
There is no massive price increase there.
The only thing to be concerned on Moody's is our companies taking on lower debt that historically because their margins have been higher over the last few years. That means their leverage is much lower so do they actually need more debt or can they actually use their free cash flow to do an M&A or go public?
In a sense, that would be the biggest risk for companies like these.
>> Interesting stuff on the debt rating agencies. Someone wants to know what do you make of Accenture and their big move into artificial intelligence?
>> Artificial intelligence has been the biggest talking point since the beginning of the year. You have had the likes of Nvidia, which have rallied up 160%, but you also have the likes of Accenture which have not worked actually even though they are an AI beneficiary. So if you take a look at Accenture, they were the first players to do digital transformation for enterprises when you were going from on premises to cloud. Again, then that beneficiary right now is that given that they have actually transitioned a lot of customers from on premises to cloud, they know the systems, people use them.
They provide consulting services. The next step is doing from cloud and layering AI on top of it.
It helps Accenture in two ways. One, it helps by transforming other companies in terms of the AI tech stock which they have. Internally, they actually use AI so that they can do consulting decision-making much faster than they have historically done. Accenture's position really well in terms of the AI space but not getting rewarded as of yet because customers are still cautious in spending money on AI and given that most of the money is going to Nvidia, Accenture is taking a backseat.
>> Could that hold the stock back for the next while until they prove their way into AI?
>> Exactly.
You are seeing a lot of companies actually go for RFPs with Accenture but not converting into a big engagement because they want to know who the leader is. Even though Accenture claims they are the leaders, there are some more options in the space in terms of IBM or Cape Gemini or cognizant.
Everyone wants to know who the leader is and they are just holding it back until we see a clear leader emerge.
>> We will get back your questions for Ram Sampath on health and information services stocks 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.
Small business often is a many the US improved modestly in September but economic concerns and high uncertainty continue to weigh on sentiment. Anthony Okolie joins us now with TD Economics take on these latest numbers and some key trends. What are we seeing?
>> The US Small Business Optimism Index improved. It ends the third quarter roughly in line with what we saw at the start of the year.
The modest increase comes despite continued economic strength.
We will dig into some of the key fines. On a positive note, higher earning trends this quarter and excitations for higher real sales both improved during the month.
On the jobs front, hiring intentions have eased below the pre-pandemic pace. That is consistent with the trend we have seen in the national hiring case as well.
Meanwhile, owners with job openings they could not fill last month's fell back into pre-pandemic territory.
The stock and job market filter through to wages and by extension selling prices as well. Plans to raise compensation decreased.
Inflation concerns fell slightly but remained at the number one small business problem. On aggregate, TD Economics says these developments should lead to further progress on inflation towards the Fed's 2% target.
Despite continued economic strength in the US, small businesses have never been more uncertain and it is impacting their spending plans.
Firms planning to add inventories fell in September. We also saw that companies planning for capital expenditure in the next six months also dropped five points to 19% so clearly small businesses in the US are anticipating improvement.
>> We still have a lot of uncertainty in what will happen in the US presidential election. How are they feeling about that?
>> A lot of uncertainty. The uncertainty index jumped to its highest level on record in September, up 11 points to 103 and the upcoming election is a large influence on that number. Historically the uncertainty index bikes in the months leading up to an election and the type polling that we have seen in the US election is likely contributing to the outsized uptake in uncertainty in the US.
>> Fascinating stuff. Thanks for breaking it down.
>> My pleasure.
>> MoneyTalk's Anthony Okolie.
Now, for an update on the markets.
We are back into advanced dashboard, taking a look at the heat map function, and nice view of the market movers. We know the TSX Composite Index on a headline basis is down on my screen about one third of a percent. What's going on? Seeing the price of American benchmark crew pulling back pretty dramatically after rallying quite strongly recently amid concerns on the Middle East. Today it's down about 5% per barrel. We are seeing metals across the board pulling back as well.
China had a big press conference, did not announce new stimulus and that has affected certain asset classes as well. As you take a look at the board, the energy space, there are some big players here including Cenovus and Suncor, Imperial oil pulling back. We are seeing some weakness in the mining space. We have tech, First Quantum down, Kinross showing a little bit of strength. The green spot on the screen would be Shopify, a bit of a push into that technique. South of the border, we saw some selling pressure yesterday as bond yields moved higher. The 10 year yield got back about 4%. The US labour market looking pretty strong. We are seeing a bounce back today after yesterday's selloff, Nvidia leading the charge with almost 4% along with some of the other tech names, a lot of green on that screen.
If you get to the energy bucket in the corner of the screen, you have the likes of Exxon and a few others pulling back to the tune of a little more than, my screen is little dirty there. Exxon is on a little more than 3%.
We are back now with Ram Sampath from TD Asset Management. That's my thumbprint on the screen.
I gotta watch what I touch sometimes.
Another question for you here.
What's the outlook for the US hospital space?
>> Interesting question. So we touched upon what happened with United Health.
So the hospital space is in that beneficiary.
So what happened in 2020 and 2021 was that a lot of people are hesitant to go to hospitals which meant that some of the treatment which needs to be done has to be done and that happened in 2023 and 2024.
You are starting to see a significant uptick in terms of utilization which means that the hospitals are much more efficient than what they were before in terms of how many patients they have.
If you historically look at it, utilization has been around 83 to 85%, but right now you are looking at 87 to 90% which is a significant uptick. A couple of things which the hospitals have been talking because if you look at what happened during COVID in the US, you lost around 1.5 million lives.
But actually, hospitals are seeing much higher volume and there are a couple of reasons for that. One, people are actually much more sick than they were pre-COVID.
Think about myself.
I'm probably 15 to 20 pounds more overweight than I was.
>> This jacket is a little tighter than it used to be, but I think the dry cleaner shrunk it. That's my story.
>> The point is, people are much more unhealthy than what they used to be pre-COVID, which means that the volumes are much higher than what we have seen and this is expected to be higher both in the senior space as well as people who are below 65 and so hospitalization trends are actually significant the stronger.
>> In terms of longer term, we could stand in the way of some of these names in the space?
>> A couple of things which are interesting in the space is on one end, volume is up but they have also… It all ties back to inflation.
You saw it with nurses or temporary staff who got much higher wages than what they were before.
You can keep increasing their salaries.
Given that you have increasing staffing, you actually need to make sure that they get paid enough but also not lose volume.
Two things to watch. One is there is a transition in terms of hospitals. Some of the major surgeries such as cardiac are being done in an outpatient setting. What this means is you need less nurses, less doctors than what you would need to in an inpatient setting. As we move more towards that, it means that hospitals are positioned well. For those who are not positioning themselves there, >> Interesting stuff. We have run out of time for audience questions. Before I let you go, running back to the top of the conversation, we talked about the massive amounts of data at play in the background with invisible giants. What do investors need to be thinking about?
>> A couple of things on what investors need to be mindful of. Data is the main resource for these companies, given that historically they have collected a lot of data. You hope that the US government, the DOJ, the FTC does not come after these companies which are monopolistic companies and ask them to share the data publicly.
So you have to be mindful of what the power of the data is. As well as on the flipside, how much power the US DOJ and FDC has on companies like this that it could make some of the stocks come down.
>> A fascinating space and when we don't talk about often enough. Great to have you here. Great for show. I hope you will come back.
>> Yeah, sounds good!
>> Our thanks to Ram Sampath, associate of portfolio research at TD Asset Management.
As always, make sure you do your own research before making any investment decisions.
if we did not have time to get to your question today, we will aim to get it into future shows. Stay tuned for tomorrow show. Daniel Ghali, Senior commodity strategist for TD Securities will be our guest. You want to take your questions about quantities. You can always get a head start.
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[theme music]
Every day, I'll be joined by guests from across TD, many of whom you'll only see here.
We're going to take you through what's moving the markets and answer your questions about investing.
Coming up on today's show, we discussed the potential opportunity and information services stocks with TD Asset Management Ram Sampath. MoneyTalk's Anthony Okolie is going to have a look at how US small businesses are feeling about the state of the economy ahead of the US presidential election. And in today's education segment, Meagan Henriques is going to show us how to use the portfolio tracker tool on advanced dashboard.
Here's how to 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.
We do have the price of American benchmark crude West Texas intermediate pulling back about 4 1/2%. Of course, it has been a rallying pretty strongly to the upside in recent days over fears over what's next in the Middle East. Big pullback today, 74 bucks per barrel. It is having an impact on the energy space. Let's check in on Suncor. I could've shown you any of the oil and gas names on the TSX today.
Suncor is down to the tune of 3 1/2%, $53 and change.
Also, there was a big press conference in China from estate planning official.
Investors watching closely to see if there will be more stimulus announced. There was not. It is having an effect on a number of asset classes, including metals and copper. Capstone Copper is down almost 5%.
South of the border, bit of a bounce back for the S&P 500 after yesterday's date.
There was a stronger than expected US jobs report last week.
We are up 45 points, almost one full percent on that broader breed of the market. Let's check in all the tech heavy NASDAQ. Last time I checked it was bearing a little bit stronger. Indeed, up 1.2%.
Alibaba, a lot of asset classes are trading to the downside due to the lack of more similars from China, including a lot of these New York listed Chinese stocks.
Alibaba right now down to the tune of about 6%.
And that's your market update.
Declining interest rates are having an impact on many sectors in the markets, including one space that's often overlooked: information services. Joining us now to discuss is Ram Sampath, associate for Portfolio research at TD Asset Management. Great to have you on the show.
>> Thanks for having me.
>> This is your first time on the show.
Give us a brief overview of your coverage area.
>> I cover enterprise services.
If you look at enterprise services, that consists of information services and IT services. And within healthcare, its healthcare providers and services.
>> Pretty key elements of an economy but at the same time, a little bit overlooked.
Let's talk about information services in particular and a little bit more about what these companies do.
>> Sure. If you look at information services, these are companies which have had data for over 100 years. So they accumulate, distribute and analyse all of this data and give it to companies so that they can make better, data-driven decisions. Let me give you an example.
Have you wondered what happens when you apply for a loan or apply for credit card or when you take a look at… >> The person you're sitting in front of, they go away somewhere, they come back, it seems like they just made a decision.
There's probably more going on.
>> Exactly. If you think about what's happening, there's somebody behind you taking decisions when you take out a loan and these are what I would characterize as invisible giants. There is a reason why I say these are invisible giants because if you think about the S&P 500, you think about the Mag 7. No one actually talks about the other part of the market. So this is the part of the market where you actually have these companies who have all the data and take all of these data and have monopolistic characteristics that go under the radar and hence I call them invisible giants.
>> Let's talk about some of those invisible giants, examples of names in that space.
>> Sounds good.
Verisk Analytics would be one.
They are a massive player in the insurance space.
If you think about insurance, you think about the major insurance players, not those behind it.
Let's assume and that your insurance went up by 10%. Your thinking, what happened? I didn't have any sort of an issue but my insurance still went up 10%.
See you go around and shop for rates.
And you realize, actually, the other companies are also putting 10% increase.
There are two reasons why this could happen. One, probably inflation. The other part of it is maybe you are in a neighbourhood where prices have actually gone up because people have had poor driving history so that could be one.
So if you step back and take a look at it, where this could be the sole owner, proprietary owner of this particular data and they supply to insurance and that's what comes back to these are the giants and this would be one of them.
Another example which I will call out is FICO. FICO would be the invisible giant of certain data. You've probably heard about FICO scores.
It is a three digit number where it actually tells you whether you should be happy or be sad about it.
Let's say for instance you want to actually purchase a house and you think that you get a mortgage. You probably think that the bank is calling the shots on what mortgage you need to get. But actually, you go back, the banks go to FICO and ask about your three digit score.
FICO does a lot of analysis.
One is do you have a good credit history?
Do you have other auto loans or some other things?
And then it will spit out a score which will tell, hey, you're good to go, you will probably get a loan. Or, they might say, consider twice before giving a loan.
Your fate hangs on a thread when you are shopping for houses what FICO calls the shots and you don't even know about it.
>> You don't even realize.
The thing about these invisible giants, I had no idea that FICO was publicly traded, let's talk about the opportunity in the space for investors in terms of valuation and other metrics.
>> Sounds good.
If you take a look at FICO, the valuation is not cheap and these have historically been very, very expensive companies.
Just so that you get some perspective, the average group actually trades at twice as high as with the S&P 500 would trade at and part of it stems from these companies being monopolistic companies.
I have a chart appear. If you can pull that up.
>> We will show the audiences.
What is it telling us?
>> If you look at it, you so that interest rates actually declined in 2020 and 2021.
You can see that the US market originations declined during the period of time. Coming to 2022 and 2023, at the US market originations are at an all-time low. If you look at it of the perspective of the pre-pandemic average, it's probably around 50% below those levels.
Why is this an opportunity? Definitely one, you had a lot of move forward applications, so people who were not able to afford a house at a much lower interest rate but houses but are what you are seeing is interest rates starting to come down so as interest rates start to come down, there's probably going to be more activity. I would say I was probably one of the examples.
In 2022, I was not able to afford a mortgage. It was a hard time. And so coming off into 2024, this is a very opportune time for me to take a loan.
When we take a look at what these companies do, these are data driven decision makers so they have these data sets for over 100 years and when you look at gen-AI or AI on a broad scale, the easiest way to get generative AI is to have stacks of data or heaps of data.
You can analyse a lot of data that is there and you can generate more accurate information faster than was historically possible. So an example.
I hope you don't have a collision, but let's see there was a collision and you have some sort of claim on the horizon and you are going and getting the claim done.
Historically, it will probably have taken you 5 to 10 days for the claim to be processed, and sure that it's not a fraud and get the money back so you can buy a new car. With artificial intelligence, what we are seeing is that this has enhanced the process and some of the claims can be validated and paid to you within 5 to 10 hours and that's where generative AI comes in. But these companies typically do is raise prices because they are providing services at much faster rates and overall, it doesn't increase their bottom line as much and so this is very profitable for them.
>> Fascinating stuff and a great start the program. We are going to get your questions about information and healthcare services stocks for Ram Sampath 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.
The US listed shares of several Chinese companies are under pressure today, including Alibaba and Tencent. These moves come after Beijing held off on any new economic stimulus. That followed a host of measures introduced last month. Investors have been closely watching a news conference today held by a Chinese state planner for any new stimulus. Mainland Chinese stocks also sort ahead of that news conference that paired their gains afterwards.
Softening demand for snack foods and drinks has PepsiCo trimming its sales forecast.
The global snack food giant has now seen two straight quarters of weaker than expected sales with volumes down 2% in the most recent quarter. A more cautious consumer that has been stung by higher grocery prices has been one of the reasons given for the decline.
Also recall going back a year or more that snack food stocks were under pressure when those weight loss drugs started to soar in popularity. There could be a few factors at play as to why we are not eating as much snack food as we state. Social media app TikTok facing lawsuits from a group of more than a dozen US states attorney general.
The lawsuits, which have not been tested in court, allege compulsive use of TikTok by teens and children pose mental health risks. This action comes amid other actions against social media companies alleging harm to children. TikTok is owned by privately held Chinese company ByteDance.
A quick check in on the market, we have metals down across the board, oil down, weighing on the TSX Composite Index on Bay Street. Nothing dramatic that we are down 90 points, a little more than 1/3 of a percent. South of the border, the S&P 500 bouncing back a little bit after yesterday's selling pressure. Bond yields moving higher on the back of that stronger-than-expected US jobs report that had investors reassessing exactly how the Fed may decide, the market still thinks cuts are coming but perhaps not aggressively as before. The S&P 500 is up just less than three quarters of a percent.
We are back with Ram Sampath, taking your questions about information and healthcare services stocks. He is a big one for you.
How could the US election impact the health care services firms?
>> Good question. The US elections hanging by a thread and this is very relevant to health care services space.
Two things matter the most. One is… This is for people greater than 65 it wear the government is their premium.
If you look at the centre for America and Medicaid, the CMS, the government usually raises the insurance premiums by 1 to 2% on average. But if you look at Trump on the other hand, this goes up by 2 to 3%.
The healthcare services space, often preferred the Republicans over the Democrats. If we were to see a Democrat candidate wishes Harris, then we would probably see a slight slump in the stocks and the healthcare services space but if we were to see a Trump when, this actually benefits them so we would see the stocks grow much faster.
>> Thinking about conversations we've had on the show but the outcome of the presidential election and what it could mean, I think you just laid it out, it hangs by a thread.
We simply do not know. It makes it harder for investors. We can map out where we might head but we don't know where we are going to be.
>> That is so true. We can definitely map out what's going to happen but these stocks are still waiting and they have been range bound and just waiting for who we are going to see there.
>> Is coming closer and closer, November is creeping up on us. I will take another question from the audience. Someone wants to know, what caused the recent big drop in Humana shares?
>> Great question. Humana was down 11% and then another 11%. Overall, in a couple of days, it was down 22 to 25% and has not recovered since then. If you parse that what has actually happened was Humana called out saying they have their star ratings which have dropped from 4.5 to 3.5. Stepping back in understanding what the star ratings are. Star ratings are essentially ratings given by the government based on how much offering you have, how much benefit to pay and how much do you charge the government.
If you offer less benefits at a higher price point, you have lower star ratings.
So what happened to Humana over the last year was they actually saw an increase in terms of memberships and they were not raising prices. And now this year they have had to increase prices which means that the star rating has actually gone down to what it does is going into 2025, you are going to see lower membership and then going into 2026, you will see that the bonus payments which you get from the government are going to lower, which means that the stock is essentially getting punished for something which is going to happen in 2027.
>> If someone is taking a look at Humana, what could turn the story around? We are talking long term.
>> They would have to turn things around.
One was a drastic competition which happened in the space.
They changed pricing this year to make sure that they are profitable. If you are not running high in terms of probability, you might as well not be in business.
That's what they did and they got a double whammy on it because you're not getting more members.
What they can actually potentially do right now is what's done is done but going to the next year and having a better pricing strategy and making sure that they have better enrolment numbers and that will increase the star ratings which is a 2027 play.
>> Interesting name to watch and a good explanation of star ratings.
We had to tell the story because the stock was down so dramatically.
Nice explanation for the audience.
Someone wants to get your thoughts on Equifax.
>> Equifax is an interesting name. In the initial talk, we talked about FICO a little bit. This comes into a very similar area. What Equifax does is basically they are the credit bureaus. What they do is they take all of these ratings, the three digit number from FICO, and they create a 40 page report and send it to the banks.
So you can characterize them as somewhere in between FICO and the banks. What they do is not only have the three digit rating but they actually have a lot more data on what you, Greg, have been asked for the report and then they will also have your payment history, they will have your credit checks and everything done and completely packaged and give it to the banks so that they can make a decision on whether you get the loan or not.
>> In terms of an investment perspective, we are taking a look at the shares here, they have been on the move over the past year to the upside.
What are some of the upside, downside risks around the name?
>> What's happened over the last six months or even a year, one, you are starting to see that mortgage originations which have essentially bottomed start to increase. This is very similar to FICO. As a mortgage origination start to increase and need more credit reports, you're making more money.
Second, these companies have actually been taking more than inflation plus pricing.
Because FICO is increasing pricing, they have to increase pricing on a similar level to keep their margins.
The stocks in the entire space have been working because of pricing and anticipation.
>> What about risks?
>> The biggest risk is DOJ investigation.
You look at the credit bureaus like FICO, they have been increasing pricing a lot.
The DOJ is coming back and saying, hey, I cannot see you increasing pricing by 30% over and over.
If you look at closing costs, they are around $6000, and right now the bureaus cost around $500 but if the keep increasing the price, you could reach 12, $1300 soon. The major risk I would say in terms of increasing pricing, the DOJ is on the horizon and breathing down their necks to make sure they are not increasing pricing which harms the customer.
>> Fascinating stuff.
As always, make sure you do your own research before making any investment decisions. we are going to get back your questions for Ram Sampath on healthcare and information services stocks in just a moment's time.
And a reminder that you can get in touch with us any time. Just email moneytalklive@td.com.
Now, let's get our educational segment of the day.
Today's education segment, we are having a look at TD's Advanced Dashboard, platform designed for active traders available through TD Direct Investing. Meagan Henriques, Senior client education instructor with TD Direct Investing joins us now. Let's talk about investors looking to test out trading ideas without putting their portfolios at risk. How can you do that in Advanced Dashboard?
>> There are a lot of investors who before getting in and putting in real money, they want to be able to test out their trading ideas so in Advanced Dashboard, we do have a tool called portfolio manager.
Let's get an advance dashboard so I can show you how this would work. We are in advanced dashboard and I'm currently in a layout that has Portfolio manager open.
What were going to do is create a new one.
We go to the right and when you click on portfolio manager, I'm going to call this October 8, create, and now all I need to do is put in symbols.
Here, let's put in some that we talked about today, we are going to put FICO.
It's going to ask for quantity, so I put how many shares I'm interested in. You are not putting in real money yet, you are just testing it out. What I would say is right now, based on today's trades, I'm going to put in 100 shares, it's already giving me the cost per share and the date of today. I'm going to put save and basically this is how you would do it. You would simply put in symbols and then it's gonna put up a trade.
Now what I'm going to do is I'm going to show you a list I've already created.
Think of it as a cooking show where you put it in the oven and then an hour later, this is what it looks like.
We have our list already created and what this shows me is how the shares would have done had I actually invested in them. So I see the different companies, I see my total portfolio value, the cost of that, my daily profit and loss.
Currently, my fictitious portfolio is on the up and then my total profit and loss.
This is a good way that you can go into almost practice your trading ideas without putting the money into it.
>> Alright, you've done the practice, you haven't had any real money on the line up to a certain point. If you start looking at some of your ideas and thing hey, I may be onto something, you want to move forward, may be purchased one of the investments, how can we do that?
>> In advance dashboard, we wanted to be a simple as possible. From this portfolio manager, you could actually place your trade. Where you would go is on the left where we see these three dots, when you click on them, for instance let's click on TD, this list is going to appear where I buy, I sell, I do a lot. Let's say I did want to place my trade, I click on by, then my order ticket will open up or I put in my parameters before submitting my trade.
There are a few other things that you can do within this portfolio manager. Let me quickly show you.
You could also customize the different columns. Let's say I wanted my average cost to be right after the price. I click and drag it. Finally, the last thing that you can do or that I will mention today is you can export it to systems like Excel.
On the top left of that portfolio manager where we have these three lines, when you click on it, you can do export list as CSC so that way you can put it into Excel and track it that way as well.
>> Great stuff as always. Thanks for that.
>> Thank you.
>> Meagan Henriques, Senior client education instructor at TD Direct Investing. And a reminder that October is investor education month at TD Direct Investing. You can find more information by using this QR code. It will navigate to TD Direct Investing's webpage.
Before you get back your questions about healthcare and information services stocks for Ram Sampath, a reminder of how to 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 Ram Sampath, taking your questions about health and information services stocks. Someone wants to get your take on United Health.
>> If there is one stock that moves the market with healthcare, that's United Health.
United Health has had probably one of the more upside down side plays this particular year. At the beginning of the year, it was down 15% and now recovered since then and now probably up 20%.
There are a few things which are in play right now. Similar to Humana, they also play in the Medicare space. What's happened in the last year and 1/2 is that you are starting to see these utilization errors go up.
So people who did not go to the hospital due to COVID, that cause pent-up demand, then they went to get the treatment done in 2022 and later. It's not that the companies did not expect this to happen, it shows that the intensity was much more than expected.
This meant that the stock did not work for the initial half of the year. Going into 2025, they have repriced their insurance which means that the positioning for the stock is much better and given that they have repriced, they can actually bring back what's much lower than it is and finally with the advent of Humana losing their members, United is kind of position in a really good way where they can actually get more members.
>> Things working to the advantage of United Health. What would the risks be?
Could they lose their competitive advantage?
>> Yes.
United health is very vertically integrated so it's hard to say that they would lose their competitive edge. It comes back to the DOJ. The DOJ are investigating United on low barriers between optimum health, their services sector, and United healthcare, which is their insurance segment.
What they are saying is that optimum health is actually speaking with the insurance segment which means that you are getting all the patient data from the insurance segment to the optimum segment which means that you can increase in lower prices per member, per year as or how you want 10 this is a massive game changer.
If they are guilty, this would be a big detriment for the stock.
>> The US Department of Justice showing up in a couple of the story seems we have today. Another question from the audience for you. Someone else wants to know, how do Moody's and the other debt rating firms look right now?
>> It's another interesting part of the market.
It's another invisible giant that I talk about.
This is a very interesting space two.
Similar to FICO, what has happened between 2020 and 2021 is these are enterprises, they took on a lot of debt at low interest rates.
So what happened in 2022 and 2023 was that they did not have the need to actually take on debt which means that a company like Moody's did not have to rate on debt issuance at all and now coming into 2023 and beyond, now that we have actually bottomed in terms of how much debt issuance is happening, we are also coming into refinancing zone. So companies which took out loans in 2020 and 2020 one half to refinance on a five-year term which means that 2025 and 2026 Outlook is much better.
So this means that Moody's and even other companies in the rating agency space, they would have more debt which is going to be refinanced which means they have to rate on that debt.
>> So some business coming for some of these rating agencies.
I don't want to presuppose the US DOJ, are they taking a look at this or are they all right with the space?
>> They are all right with the space.
There is no massive price increase there.
The only thing to be concerned on Moody's is our companies taking on lower debt that historically because their margins have been higher over the last few years. That means their leverage is much lower so do they actually need more debt or can they actually use their free cash flow to do an M&A or go public?
In a sense, that would be the biggest risk for companies like these.
>> Interesting stuff on the debt rating agencies. Someone wants to know what do you make of Accenture and their big move into artificial intelligence?
>> Artificial intelligence has been the biggest talking point since the beginning of the year. You have had the likes of Nvidia, which have rallied up 160%, but you also have the likes of Accenture which have not worked actually even though they are an AI beneficiary. So if you take a look at Accenture, they were the first players to do digital transformation for enterprises when you were going from on premises to cloud. Again, then that beneficiary right now is that given that they have actually transitioned a lot of customers from on premises to cloud, they know the systems, people use them.
They provide consulting services. The next step is doing from cloud and layering AI on top of it.
It helps Accenture in two ways. One, it helps by transforming other companies in terms of the AI tech stock which they have. Internally, they actually use AI so that they can do consulting decision-making much faster than they have historically done. Accenture's position really well in terms of the AI space but not getting rewarded as of yet because customers are still cautious in spending money on AI and given that most of the money is going to Nvidia, Accenture is taking a backseat.
>> Could that hold the stock back for the next while until they prove their way into AI?
>> Exactly.
You are seeing a lot of companies actually go for RFPs with Accenture but not converting into a big engagement because they want to know who the leader is. Even though Accenture claims they are the leaders, there are some more options in the space in terms of IBM or Cape Gemini or cognizant.
Everyone wants to know who the leader is and they are just holding it back until we see a clear leader emerge.
>> We will get back your questions for Ram Sampath on health and information services stocks 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.
Small business often is a many the US improved modestly in September but economic concerns and high uncertainty continue to weigh on sentiment. Anthony Okolie joins us now with TD Economics take on these latest numbers and some key trends. What are we seeing?
>> The US Small Business Optimism Index improved. It ends the third quarter roughly in line with what we saw at the start of the year.
The modest increase comes despite continued economic strength.
We will dig into some of the key fines. On a positive note, higher earning trends this quarter and excitations for higher real sales both improved during the month.
On the jobs front, hiring intentions have eased below the pre-pandemic pace. That is consistent with the trend we have seen in the national hiring case as well.
Meanwhile, owners with job openings they could not fill last month's fell back into pre-pandemic territory.
The stock and job market filter through to wages and by extension selling prices as well. Plans to raise compensation decreased.
Inflation concerns fell slightly but remained at the number one small business problem. On aggregate, TD Economics says these developments should lead to further progress on inflation towards the Fed's 2% target.
Despite continued economic strength in the US, small businesses have never been more uncertain and it is impacting their spending plans.
Firms planning to add inventories fell in September. We also saw that companies planning for capital expenditure in the next six months also dropped five points to 19% so clearly small businesses in the US are anticipating improvement.
>> We still have a lot of uncertainty in what will happen in the US presidential election. How are they feeling about that?
>> A lot of uncertainty. The uncertainty index jumped to its highest level on record in September, up 11 points to 103 and the upcoming election is a large influence on that number. Historically the uncertainty index bikes in the months leading up to an election and the type polling that we have seen in the US election is likely contributing to the outsized uptake in uncertainty in the US.
>> Fascinating stuff. Thanks for breaking it down.
>> My pleasure.
>> MoneyTalk's Anthony Okolie.
Now, for an update on the markets.
We are back into advanced dashboard, taking a look at the heat map function, and nice view of the market movers. We know the TSX Composite Index on a headline basis is down on my screen about one third of a percent. What's going on? Seeing the price of American benchmark crew pulling back pretty dramatically after rallying quite strongly recently amid concerns on the Middle East. Today it's down about 5% per barrel. We are seeing metals across the board pulling back as well.
China had a big press conference, did not announce new stimulus and that has affected certain asset classes as well. As you take a look at the board, the energy space, there are some big players here including Cenovus and Suncor, Imperial oil pulling back. We are seeing some weakness in the mining space. We have tech, First Quantum down, Kinross showing a little bit of strength. The green spot on the screen would be Shopify, a bit of a push into that technique. South of the border, we saw some selling pressure yesterday as bond yields moved higher. The 10 year yield got back about 4%. The US labour market looking pretty strong. We are seeing a bounce back today after yesterday's selloff, Nvidia leading the charge with almost 4% along with some of the other tech names, a lot of green on that screen.
If you get to the energy bucket in the corner of the screen, you have the likes of Exxon and a few others pulling back to the tune of a little more than, my screen is little dirty there. Exxon is on a little more than 3%.
We are back now with Ram Sampath from TD Asset Management. That's my thumbprint on the screen.
I gotta watch what I touch sometimes.
Another question for you here.
What's the outlook for the US hospital space?
>> Interesting question. So we touched upon what happened with United Health.
So the hospital space is in that beneficiary.
So what happened in 2020 and 2021 was that a lot of people are hesitant to go to hospitals which meant that some of the treatment which needs to be done has to be done and that happened in 2023 and 2024.
You are starting to see a significant uptick in terms of utilization which means that the hospitals are much more efficient than what they were before in terms of how many patients they have.
If you historically look at it, utilization has been around 83 to 85%, but right now you are looking at 87 to 90% which is a significant uptick. A couple of things which the hospitals have been talking because if you look at what happened during COVID in the US, you lost around 1.5 million lives.
But actually, hospitals are seeing much higher volume and there are a couple of reasons for that. One, people are actually much more sick than they were pre-COVID.
Think about myself.
I'm probably 15 to 20 pounds more overweight than I was.
>> This jacket is a little tighter than it used to be, but I think the dry cleaner shrunk it. That's my story.
>> The point is, people are much more unhealthy than what they used to be pre-COVID, which means that the volumes are much higher than what we have seen and this is expected to be higher both in the senior space as well as people who are below 65 and so hospitalization trends are actually significant the stronger.
>> In terms of longer term, we could stand in the way of some of these names in the space?
>> A couple of things which are interesting in the space is on one end, volume is up but they have also… It all ties back to inflation.
You saw it with nurses or temporary staff who got much higher wages than what they were before.
You can keep increasing their salaries.
Given that you have increasing staffing, you actually need to make sure that they get paid enough but also not lose volume.
Two things to watch. One is there is a transition in terms of hospitals. Some of the major surgeries such as cardiac are being done in an outpatient setting. What this means is you need less nurses, less doctors than what you would need to in an inpatient setting. As we move more towards that, it means that hospitals are positioned well. For those who are not positioning themselves there, >> Interesting stuff. We have run out of time for audience questions. Before I let you go, running back to the top of the conversation, we talked about the massive amounts of data at play in the background with invisible giants. What do investors need to be thinking about?
>> A couple of things on what investors need to be mindful of. Data is the main resource for these companies, given that historically they have collected a lot of data. You hope that the US government, the DOJ, the FTC does not come after these companies which are monopolistic companies and ask them to share the data publicly.
So you have to be mindful of what the power of the data is. As well as on the flipside, how much power the US DOJ and FDC has on companies like this that it could make some of the stocks come down.
>> A fascinating space and when we don't talk about often enough. Great to have you here. Great for show. I hope you will come back.
>> Yeah, sounds good!
>> Our thanks to Ram Sampath, associate of portfolio research at TD Asset Management.
As always, make sure you do your own research before making any investment decisions.
if we did not have time to get to your question today, we will aim to get it into future shows. Stay tuned for tomorrow show. Daniel Ghali, Senior commodity strategist for TD Securities will be our guest. You want to take your questions about quantities. You can always get a head start.
Just email MoneyTalkLive@TD.com. That's all the time we have for the show today.
Thanks for watching.
We will see you tomorrow.
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