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[music] >> Hello, I'm Greg Bonnell. Welcome to MoneyTalk Live, brought to you by TD Direct Investing.
Every day, I'll be joined by guests from across TD, many of whom you'll only see here.
We're going to take you through what's moving the markets and answer your questions about investing.
Coming up on today's show, we'll discuss whether tech stocks are set for another strong year of performance or if the run is done. TD Asset Management's Vitali Mossounov joins us. MoneyTalk's Anthony Okolie is going to give us a preview of what to expect from tomorrow's US jobs report and of course what it might mean for the US Federal Reserve next week.
There is a right decision in the offing.
In today's WebBroker education segment, Caitlin Cormier is going to walk us through how to set up a bond ladder using the platform.
So here's how you can get in touch with us.
Just email moneytalklive@td.com or fill out the viewer response box under the video player on WebBroker.
Before we get to all that and our guest of the day, let's get you an update on the markets. We will start here with the TSX Composite Index.
We do have the price of American benchmark crude settling down today after the big step back of yesterday.
Still below 70 bucks a barrel though but it's farming at those levels. 20,297 for the TSX, or a very modest 23 point, but 1/10 of a percent.
Let's take a look at some of the most actively traded names at this hour of the TSX, including Athabasca Oil. A big jump in oil.
It announced its 2024 capital budget yesterday. Investors seem to be pleased.
I've seen some analyst notes, they seem to be pleased as well. At the bucks and $0.60 per's share, they are dumping more than 7% today.
Take a look at Barrick Gold. There's been some giveback among some of the big mining names.
At 2343, your down $0.17, a little shy of a full percent. South of the border, tomorrow is jobs Friday.
We've had some jobs reports this week, payrolls and jobs openings, trying to figure out, is the labour markets softening in the states? What does it mean for the Federal Reserve mark you will know tomorrow morning. Today at 4582, you are up to records of the percent on the S&P 500.
Tech heavy NASDAQ, want to check in there.
Had some weakness in tech stocks earlier in the week. Seem to be calling back some of that lost ground. 165 points to the upside for the NASDAQ, more than a full percent. Some tech names making gains including Alphabet, parent company of Google. 137 bucks and change per share, pretty substantial gain in one day, 5 1/2%. And that is your market update.
Technology stocks have had a good run this year. The tech heavy NASDAQ opposite up more than 37%, but will that performance continue into 2024? Joining us now to discuss, Vitali Mossounov, VP, Dir. and coleader fundamental equity research at TD Asset Management.
Great to have you back.
>> Great to be back.
How are you?
>> Not too bad for Guy getting close to the end of the year and the big story or theme of the year has been tech, taking us by surprise. Quite dear.
Let's recap what we saw.
>> I remember we sat here in mid-January and talked about, this is a make or break year for tech.
It had been a bad 2023 and we were looking for the litmus test.
The way we described it was will revenue growth accelerate? Will these companies get costs under control?
11 months later, the numbers speak for themselves. They did it. did it. when they delivered to above expectations in the stock market.
>> A lot of those expectations in the being of the year weren't that great.
Artificial intelligence showed up.
A lot of people have said there has not been a lot of market breadth.
>> Before he talk about breadth, let's look at the numbers to put things in context. We have a chart for that showing year-to-date return. That really stands out.
Magnificent Seven up 90% of the year.
These are big, sophisticated company is a doubling in less than a year. The performance has been good in other places, in fact great.
The NASDAQ one, 46, the SNP still of 21.
These are great numbers as well.
But yes, you could say the bread hasn't been there but still, it's been okay.
We could dive into bread to a little bit more.
>> Because that's a pretty telling car, right? You got the Magnificent Seven, their way up here. Everyone else, not bad but down here.
>> Different postal code.
As far as breadth is concerned, it's a fair statement. I have another chart I want to share. It's a little different.
It's the advancers or decliners. Any given day, you measure how many stocks go up, how many stocks go down.
If there are more going up and down, that light is positive.
If it's negative, that means there's more stocks going down. You would expect typically that to be a positive number.
number. in value than falling. Markets tend to go up over time. What you see there in that tenure chart, on average, the horizontal line, on average there were 65 more stocks going up and going down in price.
But over the course of time, that has changed a little.
If you look at 2023 specifically, if you look at that without knowing the performance of stocks, what would your first guest be? How to talk to when you see that line all the way there at the bottom? As you would think not very well.
You see things go down but you would like to see them go up.
>> What that tells you is that most stocks most of this year, we have seen more stocks falling and rising. We just saw that. The breadth hasn't been there.
But I think we can extract some optimism out of that as well because we are heading into a new year, we are turning a new leaf and there are a lot of companies that have still kept growing their earnings, that are still conducting their business rather well and their shares have not been rewarded. So from a breadth perspective, we could certainly see a 2024 where the Magnificent Seven take a bit of a pause and the rest of the market has a chance to make its move higher.
>> Perhaps even though we don't like to see lines and big chunks of graft go negative, there is a pretty good set up outside of the Magnificent Seven. How do you hand off the baton? What would have to happen for the other stocks to say, give us a little bit of that limelight?
>> I will flip that question on you. What would have to happen for the big seven not to perform so well?
That is the million-dollar question in my mind.
They are both valid questions. But he did bring a table to walk us through that as well, sort of like how we started the year with a litmus test.
Let's see if there is a natural handover from 23 to 24.
There are five variables I wanted to look at. These are the variables that typically do drive the stocks.
Let's compare the set up for 23 with the set up for 24.
>> Here you go. The driver column, we got your five: accelerating revenue growth, falling costs, attractive valuations, falling discount rate and a good story.
2023 and 2024.
Let's play the game.
>> Let's play the game. 2023, revenue growth was really bad heading into the year. If you look at the back end of 24, big tech companies, their revenue growth was close to zero. After Q3, it's as good as well, 13%. We got our accelerating revenue growth. That was a good set up for the stocks. Heading into 2024, I would not bank on that. More or less they are growing in the mid to low teens, that's appropriate these companies. The first factor, the Centre for 23 was better than the set up we are getting for 24.
>> On the list is falling costs, I believe. He talked about cost discipline.
Let's compare the two years.
>> Heading into 2023, again, let's go back to the fourth quarter of 2022.
These companies were spending like drunken sailors. Costs were up 20% year-over-year, 30 for some businesses.
Year of efficiency, year of discipline, not just at Meta. As you exit the third quarter of this year the five big tech companies, expenses grew just 2% for the group.
Heading into 2024, you're not gonna get that again. These are growth businesses, they are going to need to invest back to the business.
I don't think there is only way to grow expenses as little as 2% next year. An incremental you were set up then we had heading into 2023.
>> Let's get the number three now and see how it set up. They found some religion on costs. What about attractive valuations?
>> Another one that I think we are going to give the nod to 23/24 heading into 2023, valuations were down to about 20 times earnings for the NASDAQ. You had those big tech companies trading in the US. That was outta historical low measured relative to the 2018. The stocks have done well. They've seen multiple expansion.
Not egregious in the historical context but again, a lower valuation, all else equal, is better than a higher valuation and heading into 23, investors had a better set up. They were paying less.
>> I feel 23 is winning. We are in number for now. I believe it was a falling discount rate. How does this size up?
>> This is when we have talked about now ad nauseam for a couple of years.
Rates have been rising and rising far longer than many observers expected. Of course, with some of the growth of companies, there cash flows are in the future.
The higher rate competing with those cash flows both in terms of putting your money in a GIC, discounting those cash flows back, the less the company is worth. 23 had a real headwind. Rates kept rising and rising.
They just rolled over a few weeks ago.
Heading into 24, it looks like rates are falling which is an exogenous variable but an important one for the stocks, and could act as a tailwind.
>> 2024 get the checkmark finally.
We like a good story.
>> Would like a good story.
It is true, stocks do well, but they need to have a good story to do well. Heading into 23, there was no story. It was early for AI. Some had begun to talk about it but it was mostly bad, bad, bad.
Heading into 24, AI is becoming really good. Product launches are coming, it's not just talk. Alphabet and Google have Gemini, is a really good AI story heading into 24 so I compare the quality of the narratives and what could support sentiment in stock prices, I think 24 wins and that one again.
>> That's a great analysis. A lot more to come with Vitali. We are going to get your questions about technology for Vitali Mossounov in just a couple of moments time. You can get in touch with us with this questions at any moment.
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 ratio it looks like AMD has some you have you a customers for its new artificial intelligence chip. Facebook parent company Meta and Microsoft say they intend to use the newly unveiled chip in their AI applications.
Nvidia's chip processors have been the big winner in the space this year but competitors are not sitting back. They are looking to take a bigger share of the market. Today it you've got AMD up almost 7% on the session. Take a look at Dollar General, it's delivering and earning speed. Shoppers continue to search for bargains. The retailer has struggled this year as consumer spending shifted to lower margin essentials such as groceries. That said, the business is showing signs of stabilizing with the Dollar General standing by its current sales forecast after cutting it several times this year.
The stock was getting a bit of a boost but right now it's about flat.
I also want to take a look at shares of e-commerce pet care company to eat. They are under pressure as they open this morning. They are off of the lows but still down about 1 1/2%.
They handed in a bigger loss than expected for its most recent quarter and its revenue forecast also appears to be weaker than the street was expecting. A quick check in on the markets. We will start here with the TSX. The price of crude stabilizing today. Still below 70 bucks a barrel.
Pretty much just flat.
We will be generous, let's call that four points to the upside for the TSX. And the S&P 500, and of jobs Friday and ahead of a US Federal Reserve rate decision next week making modest gains, 31, about three quarters of a percent.
We are back with Vitali Mossounov, take your questions about technology stocks.
Let's get to them. We will start here at home.
A viewer wants to get your thoughts on Shopify.
>> Shopify has had a great year. We saw the Magnificent Seven up 98%. I don't have their number quite at the top of my head but I know that Shopify has at least doubled so it has outperformed those businesses.
A little bit of background, I'm sure most viewers know this but for everyone's benefit, they had been a great pandemic darling and beneficiary.
We all went to shop online and there was a bit of a hangover after is e-commerce sales slowed down quite a bit coming out of that period.
On top of that, Shopify committed themselves to very significant logistics spending, very costly, losing a lot of money. Investors don't like uncertainty especially when you see them compete with the likes of Amazon.
This year, everything changed. The first thing that changed was, it was the year of efficiency.
They made a lot of restructuring changes, they cut 20% of their workforce. They look at their logistics business and said, there is no way we can do this as well is Amazon.
Let's partner with others. So those big cap ex Commitments that they had been talking about in future years it suddenly evaporated. Investors do like that, less spending.
The business I had become a better run.
They started marketing campaigns to attract customers and it has begun paying off and we see that in terms of new customer acquisition and win rates.
They give a thorough update to investors at an investor day yesterday.
>> It seemed to be mixed on the street.
>> It's one of those things or people sell the news. If you look at a stock ahead of the investor day and after earnings, it was a very strong performer and I was maybe an understatement, it was an exceptional performer. So it was a little soft. I think it was down for 5% right after the investor day. I wouldn't read anything into that reaction.
That's really just fast money and positioning. All in all to the viewer's question, it's a company that changed its substance to some degree and became a much cleaner story to invest in.
Now, you got to a point heading into 2024 where Shopify is as expensive as any tech stock. You're looking at on the one hand and saying, here's the stock that's got a lot of price momentum comment breaking out highs, and the business is executing phenomenally well on its KPIs, which would be something like store growth and GMP growth.
On the other hand, it's that valuation where investors need to be careful and say, is this worth what is among the most expensive premiums you can put on any technology company?
That's a personal decision to make but right now that is a consideration. The business itself, it is doing just fine.
>> Interesting stuff there on Shopify. We have another question here about artificial intelligence.
Is it living up to the hype and what to have for next year?
>> It's still early, so the hype can still live without having to live up to the hype.
It's been about a year so it's probably a good point to check in on this. It's been a year of promises. It's been a year of discussion. It's been a year of companies needing to present investors with roadmaps that this is something they can make money off of. Some companies have done very well with this.
There is Microsoft, Adobe.
In the September October timeframe, you're getting into this. Now in late 23 but especially the first quarter of 24 when the rubber needs to meet the road. The products need to be released and investors need to see proof that customers are signing up because it is needing to see increasing productivity in their workforce. Today it's early to say. We are right about at that point.
Where the rubber should meet the road.
Early signs are promising.
Microsoft, he really watch them as the behemoth, having the cleanest AI story, the OpenAI story aside.
But generally speaking, the cleanest or in terms of product, they could take the OpenAI were, they do work of their own, they implant the work to Microsoft office, you have a base of customers that will upgrade for a subscription fee.
Microsoft served some early statistics about adoption which are encouraging but it still anecdotes.
We are all waiting for the beginning of 24. For the record, I'm in the optimist camp.
>> You're in the office camp? I wanted to ask, the other AI story, there's always people that say technology destroys things, but there were people intimately involved in the creation of AI who are like, we are a little afraid of this technology.
Should we be optimist about AI improving our lives?
>> It depends on if you are an optimist or a pessimist.
I try to be really stand the optimist I would say to balance it out would say that all past technological evolution has led to better standards of living, human productivity is not happiness but at least growing standards of living and a better way to do things, an easier way to live.
Of course, the pessimist will remind us that every time we have had abrupt technological change, there was a period of immense friction when many lose their jobs, others gain jobs but there's generally some cracks appearing in society and that would be a true pessimistic view.
I think the greater pessimistic view of declaration something like this is you now have a universal technology if you will that really gets to that general AI state where they can really… >> May be better than us.
>> May be better than us. It's not a high bar.
But if you have these sentiment technologies that whatever point in time, I think it's a valid question: where is society going and how do we put appropriate checks and balances?
I could happen. The complexity of that is definitely above my pay grade.
We watch this and look at the future could have the impact it can have for companies in a stock market that we can invest in, that, and those developments, my top questions are: can this lead to new revenue streams and can this help you take costs out of your business?
And then we will look at it and say, on top of all that, can this create any kind of existential risk to your business or to society that we as investors as stakeholders have a stewardship response ability to be aware of? But it sort of a two-pronged approach if you will.
>> Interesting set.
We are going to stick in the AI space. You mentioned that this a couple of moments ago. I viewer wants to know what you made of the Altman saga? This takes us back to OpenAI and there was a lot of drama there couple weeks ago.
>> Yeah, there was.
It made for an entertaining weekend and then few days. But then ultimately it seems like it didn't matter.
>> It went back to status quo.
>> Went back to status quo but I'm sure there was a lot of work done behind the scenes.
We'll look at it is the actual event that transpired, they are what they are but looking at it from a template perspective, is this something that I think is normal for a company early in its life cycle?
Absolutely. You tend to have companies that are very early and they have poor governance structures, they have infighting and different priorities which often, as happened in this case, have a magic product that has suddenly a very influential investor that begins to pull on the strings in the organization. As you sort of review the board and set up of OpenAI, you realize that this is all a bit of a nuisance but it is not uncommon or unusual using water to assess this and say that it's somewhat predictable.
The more important question I think as investors is, Microsoft, a lot is riding on this for them. Have they made moves to reserve their effective control of this organization and allow OpenAI technologies to power Microsoft's roadmap? That appears to be the case. That's the most important thing. Everything else I would say is more of a circus than anything.
>> It's gonna make for a good movie and we will see will play the role of Sam Altman.
As always, make sure you do your own research before making any investment decisions.
just in case Hollywood's wondering, I'm available.
We will get back to your question the technology stocks for Vitali Mossounov and just moments 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.
Bond ladder's are one possible investment strategy and the fixed income space.
Joining us now to show us how to set one up on the platform is Caitlin Cormier, client education instructor with TD Direct Investing. Always great to see you. Walk us through how these bond ladder's work.
>> I just want to throw back, I think the whole point of AI is being able to change the age that you look anyway is in it, so maybe you could play that role.
>> You're my agent now.
>> Just listening in and had to throw that in there.
So today we're talking a little bit about bond laddering.
Bond laddering is an investment strategy where investors will go ahead and buy a number of different bonds with very different features, we are talking about different maturity dates, different risk levels, different types of fixed income meeting corporate bonds as well as government bonds and those sorts of things and the idea is to basically take and reduce the overall risk in the bond portfolio so we are improving predictability of future income so we got some things that are kind of stretching out over a longer terms, we are thinking about liquidity, we are thinking about laddering, there's something coming to you every year or so depending on the length of the latter, could be very short, every couple of months, or could be longer, once a year.
We are also being able to reduce the risk because we are buying different levels of credit worthiness in these different types of bonds and then again, just diversification. So kind of looking at different types of investments and really kind of building a portfolio as opposed to putting all of your fixed income portion into one particular fixed income product, for example.
>> Was going to a broker now and see how it can help us create a bond ladder.
>> Absolutely. Let's dive into our fixed income portal within WebBroker.
I'm going to click on the research tab here and go down to fixed income, second to last in the list.
This is kind of a home for everything that we have as far as fixed income products with TD Direct Investing.
So what we are going to do today as we are one to choose some different maturity dates, different types of bonds. We are looking at this left-hand side here, these five agency, Canada, municipal, corporate and provincial.
I will start with corporate bonds. We will choose between zero and five year maturity dates.
We will choose wellness coming to you within the next year and then maybe we will choose one a little further into the future.
Of course, they are arranged by maturity date.
We will choose one for 2026 as well. I'm just randomly choosing here.
Not doing a whole lot of research, obviously. Just picking.
I actually created a portfolio here so December 2023 is the name of our portfolio.
We are going to go ahead and click add to portfolio. You will see I already have one bond in here and I've added two more.
If you look at my maturity dates, about 2024, 2026 and 2031.
Let's grab two more bonds. Let's go back to home.
We will go in under Canada bonds. Let's choose some longer-term ones here.
Let's go ahead and choose one for 2029. We will add that once our portfolio and then finally we will go back one more time and we will choose a… Let's choose a provincial bond.
We'll try to get a date, we will choose the 2028 when here. All right.
So once I have them all added to the portfolio, this is basically the idea of building a mock portfolio. I'm not actually buying these investments right now. I'm distantly putting them together to see what it would look like as a portfolio. I'm going to go ahead and put in an amount here for each of these bonds.
So here we go. And we are going to basically pull out our report, the latter report, which will show us what this portfolio would actually look like, do a bit of analysis on the portfolio.
First I'm going to click the cuddly button, and then I'm going to go ahead and click create latter report.
I want to make sure that this going to show up for us.
Just one second here. I'm going to make sure I'm sharing my, that screen with you here.
It popped up in the outside here.
Just bear with me here for a moment, see if I can grab it.
It's downloaded here. There we go. Okay, perfect.
We got it. All right, so this is the latter report.
I'm going to zoom in so you can see a little better.
On the left-hand side is just the information about the securities. We got the price listed so of course power would be $100, these are all trading below par right now.
We got a broken down to market value, what percentage each one would be in our portfolio.
Our yield to maturity, taking into consideration both the price and the interest rate to find out what the average yield to maturity would be.
Duration, understanding what an interest change would have on the price of this portfolio and finally the amount of you're going to get annually as far as interest and then when we scroll to the next page, is going to give us a bit more about that diversification peace. When the show is here, we've got provincial agency, Government of Canada and corporate bonds represented. It shows when our income will be paid.
We are covering six months overall that we will be getting income payments. It will show us when these bonds will be coming due as well as diversification in terms of the rating, they are not all one rating or the other.
This report is actually quite interesting to be able to get a little bit of perspective on a portfolio. You throw a couple of bonds together and you can really get a good idea as to what the portfolio would look like if you were to implement it within your portfolio.
>> Great stuff as always. Thanks that, Caitlin.
>> Thanks, Greg.
>> Caitlin Cormier, client education instructor with TD Direct Investing.
And make sure to check out the learning centre in WebBroker for more educational videos, live, interactive master classes and upcoming webinars.
All right, we are back with Vitali Mossounov, taking your questions about technology stocks. If you are want to get your view on Taiwan Semiconductor.
>> I don't often get asked about that.
Well, Taiwan Semiconductor is the largest and most sophisticated foundry in the world. These are essentially big factories, most of which they operate on the island of Taiwan, that make semiconductor chips.
The big differentiating factor is for a while, they were competing with Intel and to some extent Samsung in order to be able to make these advanced chips but right now they are in the lead with no one really to close. It's good to be a monopoly. It's something that customers want. So for anyone watching a show that has an iPhone, that ship is almost certainly fabbed out, as they say, by Taiwan Semiconductor.
It has a lot of know-how, it's very difficult to replicate in the high-tech industry, historically a good capital allocator and you will see that translated to revenue growth, strong margins, earnings growth, a degree of capital return. Going forward, the question for them really is, this is someone with a cyclical business because ultimately chips go into things that are sold primarily to consumers and we are subject to economic cycles.
Where they've suffered a little bit in the last year or two is smart phones. Apple sales have been okay but android sales in particular, android phone cells, have been rather weak for a couple of years.
I would say to your down cycle. And the exact same dynamic with PCs after the initial boom of everyone needing to get a PC, a chrome book, whatever it is, an iPad after the pandemic. That sort of evaporated. Everybody had moved on.
That meant less revenue. Going forward, the question is: how does the economy do?
The bigger question I would say is even: is there an upgrade cycle coming with smart phones and PCs? Or is there just a bit of a shortage, perhaps we overbought phones in 2020, 2021, it's been three or four years, even if we don't need a new phone because the technology hasn't changed, do we still end up buying a new one because we broke ours? It's a great business but the risks are that you are tied to the economic cycle and if it doesn't pick up, if it goes the other way, and these inventory cycles of PCs and smart phones don't cooperate, then it may not be a good start.
>> When you said break it, my older son came home from university with his laptop and he said I don't know what's going on but there's a big crackdown the middle of my monitor. I could see the LCD bleeding through the monitor. I said someone stepped on it.
In the end, we just got the screen fix.
I'm not helping Taiwan Semiconductor. I'm guilty.
Getting back to the AI story. Is Google competitive in a high versus OpenAI?
>> That's an interesting and timely question. Because of yesterday's announcement.
Recall that the technology we are discussing was invented inside of Google by their researchers way back in 2017. So I perceive it as Google having invented it but not putting their foot on the gas officially to commercialize the technology and the last year has been about them really stepping on the gas pedal and trying to catch up. They need to reorganize the way they map out certain divisions, deep mind and brain and merging these together and really having even the founders involved in terms of getting these technologies built out to the market. With that preamble, we got an announcement from them just yesterday that they are launching their ChatGPT competitor effectively called Gemini.
It's going to come in a few different forms but effectively according to Google the test parameters that they look at, they say that this is going to be better, it is better today, and at first were going to be able to interact with this through their Bard chatbot, and later it will roll out into different versions.
We will see. It's going to be very hard to doubt Google that they don't have the chops to do this. It's probably about execution and the other question of course, how much a little cost?
>> We are going to get back your questions for Vitali Mossounov on technology stocks and just moments time.
As always, make sure you do your own research before making any investment decisions.
And a reminder that you can get in touch with us at any time. Do you have a question about investing or what's driving the markets? Our guests are eager to hear what's on your mind, so send us your questions.
There are two ways you can get in touch with us.
You can send us an email anytime at moneytalklive@td.com or you can use the question box right below the screen here on WebBroker. Just write in your question and hit send.
We'll see if one of our guests can get you the answer right here at MoneyTalk Live.
As central banks try to wrestle inflation back down to target, of course the health of the labour market has been a big focus for investors. So tomorrow, we are getting the latest read on jobs out of the United States.
What might we see from the US labour market? What could it mean for the Fed?
Anthony Okolie joins us now. I think you have TD Securities take on it.
>> Of course, we also bought some jobs numbers this week which could give some indication of how strong the US labour market is.
Again, there are plenty of releases this week that suggested employers are growing more cautious and employees are sticking around more, not jumping as quickly for better opportunities. Just to recap this morning for example, we got the latest US weekly jobless claims which rose slightly, suggesting that the labour market was gradually losing momentum is higher borrowing costs curbed demand in the broader US economy. Yesterday, we got the private payrolls number which grew by 103000 Workers in November. That's below the 128,000 expected by Wall Street, according to ADP. Wage numbers, wage growth numbers were the smallest in more than two years. Of course, TD Securities notes that the ADP series is not a reliable indicator of the monthly payroll numbers.
Finally, we also bought an early look at the US jobs data with the jewel's report or jolts survey. That showed the job openings in the US fell more than expected in October to its lowest level in nearly 2 1/2 years. Job vacancies came in around 8.7 million, not to drop global 6% from September and the drop in vacancies brought the ratio of openings to employers quite low. In the data we also look at the measure of worker confidence in their ability to change jobs and find another one easily. That came in little changed.
Again, keep in mind that the Jolts report, there is a one month leg between that and the payroll numbers which come out this Friday. TD Securities, in terms of the US payroll numbers, TD Securities looks for US payroll to rebound in November width of an above consensus print of 230,000.
The end of the strike might mean adding back the jobs that were lost in the fall.
TD Securities expects the US on appointment rate to the client to 3.8%.
Again, in terms of earnings, they expect to average hourly earnings to advance .3% month over month with the year-over-year measure rather falling to 3.9%.
>> So if we do get a job support tomorrow morning that's roughly within those parameters, that's a bit of resilience for the US economy.
We seen it in GDP as well. What does TD Security think about path forward?
The Fed has to take all this information next week and make a decision.
>> Exactly.
I will take you back to the minutes from the November meeting which illustrated a committee that is not ready to declare victory yet on inflation. In TD Securities view, they read the minutes as supportive of and on hold policy decision in December, particularly after the weaker than expected data that we saw on October payrolls as well as CPI inflation ended as well.
Now, TD Securities is looking for the Fed to start cutting rates in June of next year and they are forecasting 250 basis points of rate cuts as growth momentum slows significantly. They also believe that a second-quarter recession in 2024 is the most likely outcome, despite the recent strength and some of the economic data.
>> Lots of big stuff and more big stuff to come tomorrow. Thanks.
>> My pleasure.
>> MoneyTalk's Anthony Okolie.
Now, for an update on the markets.
We are having a look at TD's Advanced Dashboard, platform designed for active traders available through TD Direct Investing.
This is the heat malfunction, view of the market movers. We will start the TSX 60 by price and volume.
Seeing some weakness among the energy names.
Seeing some big setbacks in the price of American benchmark crude this week playing out some of these big names. Interesting to watch BCE, Telus and Rogers.
We were talking with Michael O'Brien earlier in the week about how the stocks which are very yield sensitive really got hit pretty hard this year but they started moving with the falling bond yields back into a bit of a stronger position.
They are seeing in utilities as well.
Nothing too dramatic down there.
Just quietly creeping higher from day-to-day as we see those bond yields ease off. South of the border, I want to take in on the S&P 100. Technologies seems to be the story of the day. It's today's theme so it aligns nicely.
AMD as a newbie customer such as Microsoft. A name like Google as well making some big moves, up a little more than 6%. Probably I should call him Alphabet but to me they will always be will. You can find more information on TD Advanced Dashboard by visiting TD.com/Advanced Dashboard.
All right, we are back now with Vitali Mossounov. Have you roots at this question in a couple of moons ago. There is and seem to be much innovation coming travel recently. No interesting products.
Arts best days behind it?
>> I would disagree. Of course, it's hard to compare anything to the original iPhone, this continuous innovation that they have never replicated today.
Everything they've done since then has been by definition a disappointment. If I look at the truck or what they have done, meaning incremental changes, they add up to the iPhone, so 15+ generations.
They have had some pretty substantial inventions both when you're talking about the watch which I'm not wearing or the Airpods. The iPads, and innovation with the Mac. Incremental things but all quite important, not to mention the services and what they been able to engineer is a very big profit driver and a way of keeping users loyal to Apple.
>> Is going to ask you about that. Once you get into the Apple woods, the iPhone came out in 2007, blackberry, we saw what happened to them when iPhone started taking market share. Once I get you into Apple woods, it's pretty hard to leave.
I'm not gonna leave because everything's there already. What a time to upgrade, I will upgrade with Apple.
>> They try but they don't leave.
>> I tried once. It was very hard.
>> I will even use Airpods. It's very enticing.
Will there be another point in time when we have a leap forward in consumer technology, a medium for communication and computing, as was the case with the smart phone? Yes, I think that the folks at Apple, just like the folks over at Meta, do you believe it's going to be some kind of mix of virtual and artificial augmented intelligence, mixed reality, whatever you want to call it but some kind of headset initially that might overlay digital data on top of the physical world, give you guidance in your life and I think we are moving in that direction. Apple, of course, has its vision the headset that retails for thousands of dollars, an early product that will at most have maybe a million units. Meta is further ahead. They been working on this for a few years after an acquisition.
The quest VR headset is I think in Canada it might be six or $700 which is substantial but still affordable as a gift if you want to do that for gaming.
Don't believe that Apple has lost their secret sauce. I believe they are special company. But the reality is that the iPhone, the smart phone industry is mature. Everybody more or less he needed to have one, 16 and 17 years after the launch, they have it now. So Apple's growth rates are predictably one, two, three, 4% per year, they just cannot be anything different right now until we see that next leap forward.
>> Before we let you go, let's run back to the top of the show.
Big year for tech this year. What can investors expect perhaps in 2024?
>> The first thing they should not expect our 98% return. You want to be clear that that was an anomaly and those kind of years happen but you cannot go into a year expecting those kinds of numbers. That is not consistent with market history.
I did frame it purposely in that table and I did frame intentionally, those five factors that we talked about, I do think were the drivers of the stock and headwinds to stocks and 23 and they will continue to matter as the primary determinant to the share price come 24.
Number one thing is watch the revenue growth. It should hang in there.
Watch the costs. Discipline continues.
Don't start spending like crazy.
Those efficiency is continue. Good signs on that front. And then keep watching the AI story, is that narrative going to propagate further, will we see some early successes?
If we see news out of Microsoft that their pilot does well, that will boost the sector.
The set up into 24, there is more puts and takes.
Going back for conversation, you can be an optimist, a pessimist, but at the end of the day, investors need to be a realist.
Weigh the good and the bad and then decide on the stocks that you want to own.
>> I look forward to the next one.
>> Thank you.
>> Vitali Mossounov, VP, Dir. and coleader fundamental equity research at TD Asset Management.
As always, make sure you do your own research before making any investment decisions. stay tuned.
We will be back tomorrow with the update for the latest US jobs report and what it might mean.
Coming up on Monday, Daniel Ghali from TD Securities will be our guest in your questions about commodities.
You can get this question that ahead of time. Just email moneytalklive@td.com.
That's all the time we have for the show today. Thanks for watching. We will see you tomorrow.
[music]
[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'll discuss whether tech stocks are set for another strong year of performance or if the run is done. TD Asset Management's Vitali Mossounov joins us. MoneyTalk's Anthony Okolie is going to give us a preview of what to expect from tomorrow's US jobs report and of course what it might mean for the US Federal Reserve next week.
There is a right decision in the offing.
In today's WebBroker education segment, Caitlin Cormier is going to walk us through how to set up a bond ladder using the platform.
So here's how you can get in touch with us.
Just email moneytalklive@td.com or fill out the viewer response box under the video player on WebBroker.
Before we get to all that and our guest of the day, let's get you an update on the markets. We will start here with the TSX Composite Index.
We do have the price of American benchmark crude settling down today after the big step back of yesterday.
Still below 70 bucks a barrel though but it's farming at those levels. 20,297 for the TSX, or a very modest 23 point, but 1/10 of a percent.
Let's take a look at some of the most actively traded names at this hour of the TSX, including Athabasca Oil. A big jump in oil.
It announced its 2024 capital budget yesterday. Investors seem to be pleased.
I've seen some analyst notes, they seem to be pleased as well. At the bucks and $0.60 per's share, they are dumping more than 7% today.
Take a look at Barrick Gold. There's been some giveback among some of the big mining names.
At 2343, your down $0.17, a little shy of a full percent. South of the border, tomorrow is jobs Friday.
We've had some jobs reports this week, payrolls and jobs openings, trying to figure out, is the labour markets softening in the states? What does it mean for the Federal Reserve mark you will know tomorrow morning. Today at 4582, you are up to records of the percent on the S&P 500.
Tech heavy NASDAQ, want to check in there.
Had some weakness in tech stocks earlier in the week. Seem to be calling back some of that lost ground. 165 points to the upside for the NASDAQ, more than a full percent. Some tech names making gains including Alphabet, parent company of Google. 137 bucks and change per share, pretty substantial gain in one day, 5 1/2%. And that is your market update.
Technology stocks have had a good run this year. The tech heavy NASDAQ opposite up more than 37%, but will that performance continue into 2024? Joining us now to discuss, Vitali Mossounov, VP, Dir. and coleader fundamental equity research at TD Asset Management.
Great to have you back.
>> Great to be back.
How are you?
>> Not too bad for Guy getting close to the end of the year and the big story or theme of the year has been tech, taking us by surprise. Quite dear.
Let's recap what we saw.
>> I remember we sat here in mid-January and talked about, this is a make or break year for tech.
It had been a bad 2023 and we were looking for the litmus test.
The way we described it was will revenue growth accelerate? Will these companies get costs under control?
11 months later, the numbers speak for themselves. They did it. did it. when they delivered to above expectations in the stock market.
>> A lot of those expectations in the being of the year weren't that great.
Artificial intelligence showed up.
A lot of people have said there has not been a lot of market breadth.
>> Before he talk about breadth, let's look at the numbers to put things in context. We have a chart for that showing year-to-date return. That really stands out.
Magnificent Seven up 90% of the year.
These are big, sophisticated company is a doubling in less than a year. The performance has been good in other places, in fact great.
The NASDAQ one, 46, the SNP still of 21.
These are great numbers as well.
But yes, you could say the bread hasn't been there but still, it's been okay.
We could dive into bread to a little bit more.
>> Because that's a pretty telling car, right? You got the Magnificent Seven, their way up here. Everyone else, not bad but down here.
>> Different postal code.
As far as breadth is concerned, it's a fair statement. I have another chart I want to share. It's a little different.
It's the advancers or decliners. Any given day, you measure how many stocks go up, how many stocks go down.
If there are more going up and down, that light is positive.
If it's negative, that means there's more stocks going down. You would expect typically that to be a positive number.
number. in value than falling. Markets tend to go up over time. What you see there in that tenure chart, on average, the horizontal line, on average there were 65 more stocks going up and going down in price.
But over the course of time, that has changed a little.
If you look at 2023 specifically, if you look at that without knowing the performance of stocks, what would your first guest be? How to talk to when you see that line all the way there at the bottom? As you would think not very well.
You see things go down but you would like to see them go up.
>> What that tells you is that most stocks most of this year, we have seen more stocks falling and rising. We just saw that. The breadth hasn't been there.
But I think we can extract some optimism out of that as well because we are heading into a new year, we are turning a new leaf and there are a lot of companies that have still kept growing their earnings, that are still conducting their business rather well and their shares have not been rewarded. So from a breadth perspective, we could certainly see a 2024 where the Magnificent Seven take a bit of a pause and the rest of the market has a chance to make its move higher.
>> Perhaps even though we don't like to see lines and big chunks of graft go negative, there is a pretty good set up outside of the Magnificent Seven. How do you hand off the baton? What would have to happen for the other stocks to say, give us a little bit of that limelight?
>> I will flip that question on you. What would have to happen for the big seven not to perform so well?
That is the million-dollar question in my mind.
They are both valid questions. But he did bring a table to walk us through that as well, sort of like how we started the year with a litmus test.
Let's see if there is a natural handover from 23 to 24.
There are five variables I wanted to look at. These are the variables that typically do drive the stocks.
Let's compare the set up for 23 with the set up for 24.
>> Here you go. The driver column, we got your five: accelerating revenue growth, falling costs, attractive valuations, falling discount rate and a good story.
2023 and 2024.
Let's play the game.
>> Let's play the game. 2023, revenue growth was really bad heading into the year. If you look at the back end of 24, big tech companies, their revenue growth was close to zero. After Q3, it's as good as well, 13%. We got our accelerating revenue growth. That was a good set up for the stocks. Heading into 2024, I would not bank on that. More or less they are growing in the mid to low teens, that's appropriate these companies. The first factor, the Centre for 23 was better than the set up we are getting for 24.
>> On the list is falling costs, I believe. He talked about cost discipline.
Let's compare the two years.
>> Heading into 2023, again, let's go back to the fourth quarter of 2022.
These companies were spending like drunken sailors. Costs were up 20% year-over-year, 30 for some businesses.
Year of efficiency, year of discipline, not just at Meta. As you exit the third quarter of this year the five big tech companies, expenses grew just 2% for the group.
Heading into 2024, you're not gonna get that again. These are growth businesses, they are going to need to invest back to the business.
I don't think there is only way to grow expenses as little as 2% next year. An incremental you were set up then we had heading into 2023.
>> Let's get the number three now and see how it set up. They found some religion on costs. What about attractive valuations?
>> Another one that I think we are going to give the nod to 23/24 heading into 2023, valuations were down to about 20 times earnings for the NASDAQ. You had those big tech companies trading in the US. That was outta historical low measured relative to the 2018. The stocks have done well. They've seen multiple expansion.
Not egregious in the historical context but again, a lower valuation, all else equal, is better than a higher valuation and heading into 23, investors had a better set up. They were paying less.
>> I feel 23 is winning. We are in number for now. I believe it was a falling discount rate. How does this size up?
>> This is when we have talked about now ad nauseam for a couple of years.
Rates have been rising and rising far longer than many observers expected. Of course, with some of the growth of companies, there cash flows are in the future.
The higher rate competing with those cash flows both in terms of putting your money in a GIC, discounting those cash flows back, the less the company is worth. 23 had a real headwind. Rates kept rising and rising.
They just rolled over a few weeks ago.
Heading into 24, it looks like rates are falling which is an exogenous variable but an important one for the stocks, and could act as a tailwind.
>> 2024 get the checkmark finally.
We like a good story.
>> Would like a good story.
It is true, stocks do well, but they need to have a good story to do well. Heading into 23, there was no story. It was early for AI. Some had begun to talk about it but it was mostly bad, bad, bad.
Heading into 24, AI is becoming really good. Product launches are coming, it's not just talk. Alphabet and Google have Gemini, is a really good AI story heading into 24 so I compare the quality of the narratives and what could support sentiment in stock prices, I think 24 wins and that one again.
>> That's a great analysis. A lot more to come with Vitali. We are going to get your questions about technology for Vitali Mossounov in just a couple of moments time. You can get in touch with us with this questions at any moment.
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 ratio it looks like AMD has some you have you a customers for its new artificial intelligence chip. Facebook parent company Meta and Microsoft say they intend to use the newly unveiled chip in their AI applications.
Nvidia's chip processors have been the big winner in the space this year but competitors are not sitting back. They are looking to take a bigger share of the market. Today it you've got AMD up almost 7% on the session. Take a look at Dollar General, it's delivering and earning speed. Shoppers continue to search for bargains. The retailer has struggled this year as consumer spending shifted to lower margin essentials such as groceries. That said, the business is showing signs of stabilizing with the Dollar General standing by its current sales forecast after cutting it several times this year.
The stock was getting a bit of a boost but right now it's about flat.
I also want to take a look at shares of e-commerce pet care company to eat. They are under pressure as they open this morning. They are off of the lows but still down about 1 1/2%.
They handed in a bigger loss than expected for its most recent quarter and its revenue forecast also appears to be weaker than the street was expecting. A quick check in on the markets. We will start here with the TSX. The price of crude stabilizing today. Still below 70 bucks a barrel.
Pretty much just flat.
We will be generous, let's call that four points to the upside for the TSX. And the S&P 500, and of jobs Friday and ahead of a US Federal Reserve rate decision next week making modest gains, 31, about three quarters of a percent.
We are back with Vitali Mossounov, take your questions about technology stocks.
Let's get to them. We will start here at home.
A viewer wants to get your thoughts on Shopify.
>> Shopify has had a great year. We saw the Magnificent Seven up 98%. I don't have their number quite at the top of my head but I know that Shopify has at least doubled so it has outperformed those businesses.
A little bit of background, I'm sure most viewers know this but for everyone's benefit, they had been a great pandemic darling and beneficiary.
We all went to shop online and there was a bit of a hangover after is e-commerce sales slowed down quite a bit coming out of that period.
On top of that, Shopify committed themselves to very significant logistics spending, very costly, losing a lot of money. Investors don't like uncertainty especially when you see them compete with the likes of Amazon.
This year, everything changed. The first thing that changed was, it was the year of efficiency.
They made a lot of restructuring changes, they cut 20% of their workforce. They look at their logistics business and said, there is no way we can do this as well is Amazon.
Let's partner with others. So those big cap ex Commitments that they had been talking about in future years it suddenly evaporated. Investors do like that, less spending.
The business I had become a better run.
They started marketing campaigns to attract customers and it has begun paying off and we see that in terms of new customer acquisition and win rates.
They give a thorough update to investors at an investor day yesterday.
>> It seemed to be mixed on the street.
>> It's one of those things or people sell the news. If you look at a stock ahead of the investor day and after earnings, it was a very strong performer and I was maybe an understatement, it was an exceptional performer. So it was a little soft. I think it was down for 5% right after the investor day. I wouldn't read anything into that reaction.
That's really just fast money and positioning. All in all to the viewer's question, it's a company that changed its substance to some degree and became a much cleaner story to invest in.
Now, you got to a point heading into 2024 where Shopify is as expensive as any tech stock. You're looking at on the one hand and saying, here's the stock that's got a lot of price momentum comment breaking out highs, and the business is executing phenomenally well on its KPIs, which would be something like store growth and GMP growth.
On the other hand, it's that valuation where investors need to be careful and say, is this worth what is among the most expensive premiums you can put on any technology company?
That's a personal decision to make but right now that is a consideration. The business itself, it is doing just fine.
>> Interesting stuff there on Shopify. We have another question here about artificial intelligence.
Is it living up to the hype and what to have for next year?
>> It's still early, so the hype can still live without having to live up to the hype.
It's been about a year so it's probably a good point to check in on this. It's been a year of promises. It's been a year of discussion. It's been a year of companies needing to present investors with roadmaps that this is something they can make money off of. Some companies have done very well with this.
There is Microsoft, Adobe.
In the September October timeframe, you're getting into this. Now in late 23 but especially the first quarter of 24 when the rubber needs to meet the road. The products need to be released and investors need to see proof that customers are signing up because it is needing to see increasing productivity in their workforce. Today it's early to say. We are right about at that point.
Where the rubber should meet the road.
Early signs are promising.
Microsoft, he really watch them as the behemoth, having the cleanest AI story, the OpenAI story aside.
But generally speaking, the cleanest or in terms of product, they could take the OpenAI were, they do work of their own, they implant the work to Microsoft office, you have a base of customers that will upgrade for a subscription fee.
Microsoft served some early statistics about adoption which are encouraging but it still anecdotes.
We are all waiting for the beginning of 24. For the record, I'm in the optimist camp.
>> You're in the office camp? I wanted to ask, the other AI story, there's always people that say technology destroys things, but there were people intimately involved in the creation of AI who are like, we are a little afraid of this technology.
Should we be optimist about AI improving our lives?
>> It depends on if you are an optimist or a pessimist.
I try to be really stand the optimist I would say to balance it out would say that all past technological evolution has led to better standards of living, human productivity is not happiness but at least growing standards of living and a better way to do things, an easier way to live.
Of course, the pessimist will remind us that every time we have had abrupt technological change, there was a period of immense friction when many lose their jobs, others gain jobs but there's generally some cracks appearing in society and that would be a true pessimistic view.
I think the greater pessimistic view of declaration something like this is you now have a universal technology if you will that really gets to that general AI state where they can really… >> May be better than us.
>> May be better than us. It's not a high bar.
But if you have these sentiment technologies that whatever point in time, I think it's a valid question: where is society going and how do we put appropriate checks and balances?
I could happen. The complexity of that is definitely above my pay grade.
We watch this and look at the future could have the impact it can have for companies in a stock market that we can invest in, that, and those developments, my top questions are: can this lead to new revenue streams and can this help you take costs out of your business?
And then we will look at it and say, on top of all that, can this create any kind of existential risk to your business or to society that we as investors as stakeholders have a stewardship response ability to be aware of? But it sort of a two-pronged approach if you will.
>> Interesting set.
We are going to stick in the AI space. You mentioned that this a couple of moments ago. I viewer wants to know what you made of the Altman saga? This takes us back to OpenAI and there was a lot of drama there couple weeks ago.
>> Yeah, there was.
It made for an entertaining weekend and then few days. But then ultimately it seems like it didn't matter.
>> It went back to status quo.
>> Went back to status quo but I'm sure there was a lot of work done behind the scenes.
We'll look at it is the actual event that transpired, they are what they are but looking at it from a template perspective, is this something that I think is normal for a company early in its life cycle?
Absolutely. You tend to have companies that are very early and they have poor governance structures, they have infighting and different priorities which often, as happened in this case, have a magic product that has suddenly a very influential investor that begins to pull on the strings in the organization. As you sort of review the board and set up of OpenAI, you realize that this is all a bit of a nuisance but it is not uncommon or unusual using water to assess this and say that it's somewhat predictable.
The more important question I think as investors is, Microsoft, a lot is riding on this for them. Have they made moves to reserve their effective control of this organization and allow OpenAI technologies to power Microsoft's roadmap? That appears to be the case. That's the most important thing. Everything else I would say is more of a circus than anything.
>> It's gonna make for a good movie and we will see will play the role of Sam Altman.
As always, make sure you do your own research before making any investment decisions.
just in case Hollywood's wondering, I'm available.
We will get back to your question the technology stocks for Vitali Mossounov and just moments 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.
Bond ladder's are one possible investment strategy and the fixed income space.
Joining us now to show us how to set one up on the platform is Caitlin Cormier, client education instructor with TD Direct Investing. Always great to see you. Walk us through how these bond ladder's work.
>> I just want to throw back, I think the whole point of AI is being able to change the age that you look anyway is in it, so maybe you could play that role.
>> You're my agent now.
>> Just listening in and had to throw that in there.
So today we're talking a little bit about bond laddering.
Bond laddering is an investment strategy where investors will go ahead and buy a number of different bonds with very different features, we are talking about different maturity dates, different risk levels, different types of fixed income meeting corporate bonds as well as government bonds and those sorts of things and the idea is to basically take and reduce the overall risk in the bond portfolio so we are improving predictability of future income so we got some things that are kind of stretching out over a longer terms, we are thinking about liquidity, we are thinking about laddering, there's something coming to you every year or so depending on the length of the latter, could be very short, every couple of months, or could be longer, once a year.
We are also being able to reduce the risk because we are buying different levels of credit worthiness in these different types of bonds and then again, just diversification. So kind of looking at different types of investments and really kind of building a portfolio as opposed to putting all of your fixed income portion into one particular fixed income product, for example.
>> Was going to a broker now and see how it can help us create a bond ladder.
>> Absolutely. Let's dive into our fixed income portal within WebBroker.
I'm going to click on the research tab here and go down to fixed income, second to last in the list.
This is kind of a home for everything that we have as far as fixed income products with TD Direct Investing.
So what we are going to do today as we are one to choose some different maturity dates, different types of bonds. We are looking at this left-hand side here, these five agency, Canada, municipal, corporate and provincial.
I will start with corporate bonds. We will choose between zero and five year maturity dates.
We will choose wellness coming to you within the next year and then maybe we will choose one a little further into the future.
Of course, they are arranged by maturity date.
We will choose one for 2026 as well. I'm just randomly choosing here.
Not doing a whole lot of research, obviously. Just picking.
I actually created a portfolio here so December 2023 is the name of our portfolio.
We are going to go ahead and click add to portfolio. You will see I already have one bond in here and I've added two more.
If you look at my maturity dates, about 2024, 2026 and 2031.
Let's grab two more bonds. Let's go back to home.
We will go in under Canada bonds. Let's choose some longer-term ones here.
Let's go ahead and choose one for 2029. We will add that once our portfolio and then finally we will go back one more time and we will choose a… Let's choose a provincial bond.
We'll try to get a date, we will choose the 2028 when here. All right.
So once I have them all added to the portfolio, this is basically the idea of building a mock portfolio. I'm not actually buying these investments right now. I'm distantly putting them together to see what it would look like as a portfolio. I'm going to go ahead and put in an amount here for each of these bonds.
So here we go. And we are going to basically pull out our report, the latter report, which will show us what this portfolio would actually look like, do a bit of analysis on the portfolio.
First I'm going to click the cuddly button, and then I'm going to go ahead and click create latter report.
I want to make sure that this going to show up for us.
Just one second here. I'm going to make sure I'm sharing my, that screen with you here.
It popped up in the outside here.
Just bear with me here for a moment, see if I can grab it.
It's downloaded here. There we go. Okay, perfect.
We got it. All right, so this is the latter report.
I'm going to zoom in so you can see a little better.
On the left-hand side is just the information about the securities. We got the price listed so of course power would be $100, these are all trading below par right now.
We got a broken down to market value, what percentage each one would be in our portfolio.
Our yield to maturity, taking into consideration both the price and the interest rate to find out what the average yield to maturity would be.
Duration, understanding what an interest change would have on the price of this portfolio and finally the amount of you're going to get annually as far as interest and then when we scroll to the next page, is going to give us a bit more about that diversification peace. When the show is here, we've got provincial agency, Government of Canada and corporate bonds represented. It shows when our income will be paid.
We are covering six months overall that we will be getting income payments. It will show us when these bonds will be coming due as well as diversification in terms of the rating, they are not all one rating or the other.
This report is actually quite interesting to be able to get a little bit of perspective on a portfolio. You throw a couple of bonds together and you can really get a good idea as to what the portfolio would look like if you were to implement it within your portfolio.
>> Great stuff as always. Thanks that, Caitlin.
>> Thanks, Greg.
>> Caitlin Cormier, client education instructor with TD Direct Investing.
And make sure to check out the learning centre in WebBroker for more educational videos, live, interactive master classes and upcoming webinars.
All right, we are back with Vitali Mossounov, taking your questions about technology stocks. If you are want to get your view on Taiwan Semiconductor.
>> I don't often get asked about that.
Well, Taiwan Semiconductor is the largest and most sophisticated foundry in the world. These are essentially big factories, most of which they operate on the island of Taiwan, that make semiconductor chips.
The big differentiating factor is for a while, they were competing with Intel and to some extent Samsung in order to be able to make these advanced chips but right now they are in the lead with no one really to close. It's good to be a monopoly. It's something that customers want. So for anyone watching a show that has an iPhone, that ship is almost certainly fabbed out, as they say, by Taiwan Semiconductor.
It has a lot of know-how, it's very difficult to replicate in the high-tech industry, historically a good capital allocator and you will see that translated to revenue growth, strong margins, earnings growth, a degree of capital return. Going forward, the question for them really is, this is someone with a cyclical business because ultimately chips go into things that are sold primarily to consumers and we are subject to economic cycles.
Where they've suffered a little bit in the last year or two is smart phones. Apple sales have been okay but android sales in particular, android phone cells, have been rather weak for a couple of years.
I would say to your down cycle. And the exact same dynamic with PCs after the initial boom of everyone needing to get a PC, a chrome book, whatever it is, an iPad after the pandemic. That sort of evaporated. Everybody had moved on.
That meant less revenue. Going forward, the question is: how does the economy do?
The bigger question I would say is even: is there an upgrade cycle coming with smart phones and PCs? Or is there just a bit of a shortage, perhaps we overbought phones in 2020, 2021, it's been three or four years, even if we don't need a new phone because the technology hasn't changed, do we still end up buying a new one because we broke ours? It's a great business but the risks are that you are tied to the economic cycle and if it doesn't pick up, if it goes the other way, and these inventory cycles of PCs and smart phones don't cooperate, then it may not be a good start.
>> When you said break it, my older son came home from university with his laptop and he said I don't know what's going on but there's a big crackdown the middle of my monitor. I could see the LCD bleeding through the monitor. I said someone stepped on it.
In the end, we just got the screen fix.
I'm not helping Taiwan Semiconductor. I'm guilty.
Getting back to the AI story. Is Google competitive in a high versus OpenAI?
>> That's an interesting and timely question. Because of yesterday's announcement.
Recall that the technology we are discussing was invented inside of Google by their researchers way back in 2017. So I perceive it as Google having invented it but not putting their foot on the gas officially to commercialize the technology and the last year has been about them really stepping on the gas pedal and trying to catch up. They need to reorganize the way they map out certain divisions, deep mind and brain and merging these together and really having even the founders involved in terms of getting these technologies built out to the market. With that preamble, we got an announcement from them just yesterday that they are launching their ChatGPT competitor effectively called Gemini.
It's going to come in a few different forms but effectively according to Google the test parameters that they look at, they say that this is going to be better, it is better today, and at first were going to be able to interact with this through their Bard chatbot, and later it will roll out into different versions.
We will see. It's going to be very hard to doubt Google that they don't have the chops to do this. It's probably about execution and the other question of course, how much a little cost?
>> We are going to get back your questions for Vitali Mossounov on technology stocks and just moments time.
As always, make sure you do your own research before making any investment decisions.
And a reminder that you can get in touch with us at any time. Do you have a question about investing or what's driving the markets? Our guests are eager to hear what's on your mind, so send us your questions.
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As central banks try to wrestle inflation back down to target, of course the health of the labour market has been a big focus for investors. So tomorrow, we are getting the latest read on jobs out of the United States.
What might we see from the US labour market? What could it mean for the Fed?
Anthony Okolie joins us now. I think you have TD Securities take on it.
>> Of course, we also bought some jobs numbers this week which could give some indication of how strong the US labour market is.
Again, there are plenty of releases this week that suggested employers are growing more cautious and employees are sticking around more, not jumping as quickly for better opportunities. Just to recap this morning for example, we got the latest US weekly jobless claims which rose slightly, suggesting that the labour market was gradually losing momentum is higher borrowing costs curbed demand in the broader US economy. Yesterday, we got the private payrolls number which grew by 103000 Workers in November. That's below the 128,000 expected by Wall Street, according to ADP. Wage numbers, wage growth numbers were the smallest in more than two years. Of course, TD Securities notes that the ADP series is not a reliable indicator of the monthly payroll numbers.
Finally, we also bought an early look at the US jobs data with the jewel's report or jolts survey. That showed the job openings in the US fell more than expected in October to its lowest level in nearly 2 1/2 years. Job vacancies came in around 8.7 million, not to drop global 6% from September and the drop in vacancies brought the ratio of openings to employers quite low. In the data we also look at the measure of worker confidence in their ability to change jobs and find another one easily. That came in little changed.
Again, keep in mind that the Jolts report, there is a one month leg between that and the payroll numbers which come out this Friday. TD Securities, in terms of the US payroll numbers, TD Securities looks for US payroll to rebound in November width of an above consensus print of 230,000.
The end of the strike might mean adding back the jobs that were lost in the fall.
TD Securities expects the US on appointment rate to the client to 3.8%.
Again, in terms of earnings, they expect to average hourly earnings to advance .3% month over month with the year-over-year measure rather falling to 3.9%.
>> So if we do get a job support tomorrow morning that's roughly within those parameters, that's a bit of resilience for the US economy.
We seen it in GDP as well. What does TD Security think about path forward?
The Fed has to take all this information next week and make a decision.
>> Exactly.
I will take you back to the minutes from the November meeting which illustrated a committee that is not ready to declare victory yet on inflation. In TD Securities view, they read the minutes as supportive of and on hold policy decision in December, particularly after the weaker than expected data that we saw on October payrolls as well as CPI inflation ended as well.
Now, TD Securities is looking for the Fed to start cutting rates in June of next year and they are forecasting 250 basis points of rate cuts as growth momentum slows significantly. They also believe that a second-quarter recession in 2024 is the most likely outcome, despite the recent strength and some of the economic data.
>> Lots of big stuff and more big stuff to come tomorrow. Thanks.
>> My pleasure.
>> MoneyTalk's Anthony Okolie.
Now, for an update on the markets.
We are having a look at TD's Advanced Dashboard, platform designed for active traders available through TD Direct Investing.
This is the heat malfunction, view of the market movers. We will start the TSX 60 by price and volume.
Seeing some weakness among the energy names.
Seeing some big setbacks in the price of American benchmark crude this week playing out some of these big names. Interesting to watch BCE, Telus and Rogers.
We were talking with Michael O'Brien earlier in the week about how the stocks which are very yield sensitive really got hit pretty hard this year but they started moving with the falling bond yields back into a bit of a stronger position.
They are seeing in utilities as well.
Nothing too dramatic down there.
Just quietly creeping higher from day-to-day as we see those bond yields ease off. South of the border, I want to take in on the S&P 100. Technologies seems to be the story of the day. It's today's theme so it aligns nicely.
AMD as a newbie customer such as Microsoft. A name like Google as well making some big moves, up a little more than 6%. Probably I should call him Alphabet but to me they will always be will. You can find more information on TD Advanced Dashboard by visiting TD.com/Advanced Dashboard.
All right, we are back now with Vitali Mossounov. Have you roots at this question in a couple of moons ago. There is and seem to be much innovation coming travel recently. No interesting products.
Arts best days behind it?
>> I would disagree. Of course, it's hard to compare anything to the original iPhone, this continuous innovation that they have never replicated today.
Everything they've done since then has been by definition a disappointment. If I look at the truck or what they have done, meaning incremental changes, they add up to the iPhone, so 15+ generations.
They have had some pretty substantial inventions both when you're talking about the watch which I'm not wearing or the Airpods. The iPads, and innovation with the Mac. Incremental things but all quite important, not to mention the services and what they been able to engineer is a very big profit driver and a way of keeping users loyal to Apple.
>> Is going to ask you about that. Once you get into the Apple woods, the iPhone came out in 2007, blackberry, we saw what happened to them when iPhone started taking market share. Once I get you into Apple woods, it's pretty hard to leave.
I'm not gonna leave because everything's there already. What a time to upgrade, I will upgrade with Apple.
>> They try but they don't leave.
>> I tried once. It was very hard.
>> I will even use Airpods. It's very enticing.
Will there be another point in time when we have a leap forward in consumer technology, a medium for communication and computing, as was the case with the smart phone? Yes, I think that the folks at Apple, just like the folks over at Meta, do you believe it's going to be some kind of mix of virtual and artificial augmented intelligence, mixed reality, whatever you want to call it but some kind of headset initially that might overlay digital data on top of the physical world, give you guidance in your life and I think we are moving in that direction. Apple, of course, has its vision the headset that retails for thousands of dollars, an early product that will at most have maybe a million units. Meta is further ahead. They been working on this for a few years after an acquisition.
The quest VR headset is I think in Canada it might be six or $700 which is substantial but still affordable as a gift if you want to do that for gaming.
Don't believe that Apple has lost their secret sauce. I believe they are special company. But the reality is that the iPhone, the smart phone industry is mature. Everybody more or less he needed to have one, 16 and 17 years after the launch, they have it now. So Apple's growth rates are predictably one, two, three, 4% per year, they just cannot be anything different right now until we see that next leap forward.
>> Before we let you go, let's run back to the top of the show.
Big year for tech this year. What can investors expect perhaps in 2024?
>> The first thing they should not expect our 98% return. You want to be clear that that was an anomaly and those kind of years happen but you cannot go into a year expecting those kinds of numbers. That is not consistent with market history.
I did frame it purposely in that table and I did frame intentionally, those five factors that we talked about, I do think were the drivers of the stock and headwinds to stocks and 23 and they will continue to matter as the primary determinant to the share price come 24.
Number one thing is watch the revenue growth. It should hang in there.
Watch the costs. Discipline continues.
Don't start spending like crazy.
Those efficiency is continue. Good signs on that front. And then keep watching the AI story, is that narrative going to propagate further, will we see some early successes?
If we see news out of Microsoft that their pilot does well, that will boost the sector.
The set up into 24, there is more puts and takes.
Going back for conversation, you can be an optimist, a pessimist, but at the end of the day, investors need to be a realist.
Weigh the good and the bad and then decide on the stocks that you want to own.
>> I look forward to the next one.
>> Thank you.
>> Vitali Mossounov, VP, Dir. and coleader fundamental equity research at TD Asset Management.
As always, make sure you do your own research before making any investment decisions. stay tuned.
We will be back tomorrow with the update for the latest US jobs report and what it might mean.
Coming up on Monday, Daniel Ghali from TD Securities will be our guest in your questions about commodities.
You can get this question that ahead of time. 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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