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[music] >>Hello I'm Greg Bonnell and welcome to MoneyTalk Live, brought to you by TD Direct Investing.
Every day I'll be joined by guests from across TD, many of whom you will only see here. We'll take you through it's moving the markets and answer your questions about investing. Come up coming up on today show we will discuss the health of the big tech sector and whether it's likely to continue its market leadership with TD Asset Management's Vitali Mossounov.
MoneyTalk's Anthony Okolie will have a look at what the latest housing data says about the state of Canada's real estate market and in today's WebBroker education segment, Nugwa Haruna will show us how you can research the technology sector using the platform.
You can email us at moneytalklive@td.
com to get in touch of us are full of the viewer response box under the audio player on WebBroker.
Before we get to our guest of the day let's get you an update on the markets.
Seems to be a bit of caution hanging over the tray today.
Of course the debt ceiling negotiations continuing south of the border depending on what camp you talk to.
He either things are going swimmingly or things are not going swimmingly at all. Apparently they will meet again tomorrow so a little something for the market to worry about.
A little bit of caution. You have the TSX Composite Index up about 1/3 of a percent.
The price of crude oil is up about 2% today and that has some money moving back to the energy names.
Cenovus among them at 22 bucks even a share, up about 2 1/3%. Later this week will get the latest quarterly earnings from Lightspeed Commerce today. Those shares, last time I checked, under a bit of pressure. It down about 2%. Now, south of the border as we said, negotiations ongoing.
Trying to tackle that debt ceiling problem.
Janet Yellen over the weekend saying some optimistic things. Of course, she is warmed up to this point that a default on US debt would not be a very good thing at all.
S&P 500 right now, up just a modest 3 1/2 points, about 1/10 of a percent. The tech heavy NASDAQ was faring a bit better today. Taking a look at the NASDAQ about 1/3 of a percent.
And Microsoft, some interesting news.
The European Union giving the thumbs up to the acquisition acquisition acquisition.… The US still is to weigh in. Microsoft pretty much flat. 309 bucks and change and that's your market update.
The big tech names have outperformed so far this year.
But will that market leadership continue amid worries about slowing economic growth?
Joining us joining us now to discuss is Vitali Mossounov. Global Technology Analyst at TD Asset Management.
> Good to be here.
>> Let's talk about tech.
The NASDAQ against the S&P 500… Outperformed. We just came through an earnings this season.
The big question is where we headed? What you see in those earnings?
>> These companies did really well and things that were out of their control, well, sometimes good fortune smiles upon you and I find in life, when you control things well, you put up level in an fortune is on your side and things tend to work out pretty well. That's the story of earnings.
>> Let's break into the three pillars: revenue. This was the concern heading into these earnings right?
With the slowing economy and all these concerns about a recession and they would see their sales slow… How would that look?
>> The sales kept slowing but it's all about expectations. Expectations were about worse sales. They did not slow as much as feared and again in the short term, that's what matters. In the long term its evaluations and fundamentals but in the short term its expectations.
Apple sales, they shrunk 3%. Not good.
Earnings flat. Alphabet sales grew 3%.
Not great.
Not typical big tech sales. But, good enough. We will call it good enough. So I think, as they especially talk about the next quarter, investors listened and said "this might be the bottom. And that's pretty good.
" They were the first to see pain last year and maybe the first out. We won't worry about them. Maybe consumer stock. So revenue, not bad.
> Not bad.
That's the part where maybe they smiled a bit because they couldn't control that side.
>> That recession never arrived. We don't know.
>> Will find out after.
>> Yes.
>> As you pointed out what they can control of their own costs. Skyrocketing during the pandemic because they thought the good times were here and they were never to leave and they found or rather have they found the discipline that the market is looking for?
>> I think they have.
I think the market may have forced the discipline on them with what they did their stock prices last year.
But there was a lot of discipline. Take on Microsoft here.
Able to get their expense growth down to the low single-digit range. 2% next quarter in terms of expenses but really that's the theme across the board openings like Apple and Microsoft… Facebook, coming in below what they even expected one quarter ago.
Cutting costs, obviously cutting the workforce. We have heard a lot of that.
Freezing pay. Microsoft, just last week, talking about full-time salary freeze. That's another one. And doing what they can. Spending less on the cloud, for example.
So costs, but they can control, they do remarkably well.
>> You would be hard-pressed I think to find any big tech company that did not throw, this quarter, the phrase AI. For good reason obviously.
(…) Every release, artificial intelligence. What did you see there to be mindful of?
>> It was the most predicted question you could imagine. It was not just tech companies. I think most companies got the question.
Look, what we saw were a lot of generic responses. I will sugarcoat it. Companies were prepared for this question and they got the question.
The answer, they said, "we've been making these investments for many years and we will have the products out shortly. We've got the product roadmap and there was a path to how to monetize AI." Some companies did a better job.
But by better I mean being more detailed or descriptive.
At Microsoft, I would certainly put in that camp.
They needed to. So much of their future strategy is about AI. The leadership they have at their ownership (… Video lagging) other companies didn't give you as much as you wanted.
Apple is in that camp. Apple typically likes to say "we create typically wonderful… (Video pause) " … Strategies about AI, the leadership they have at their ownership, part ownership of OPEN AI. Other companies, they did not give you as much as you wanted.
Apple is in that camp. But that's typical Apple.
Apple likes to say "we create wonderful products and when we launch them you will find out just how wonderful they are.
" They have a track record doing that. AI, monetizing that data. Bottom-line investors are trying to find out for any business model in any sector where are the threats and where are the opportunities?
>> A certain newness to it. Although people working in a I would say they've been working on this forever.
… But I think for the general public there's a certain newness to it in the developments recently. And around that there are some concerns.
We have tech industry heavyweights who are concerned about how we could change our lives and of course you have workers… Who are concerned about how we can change our lives. Probably front and centre before talking about some of the other things, what about my job?
>> And perhaps not getting enough attention and it will be a few years for this to play out.
But I am sort of in the camp that AI is going to bring a productivity boost, especially to the knowledge economy and we will see that play out over the near term for the medium term.
That's low hanging fruit.
But in the medium to long term, and I'm talking three, four, five years… This is the first technology that really has the potential to replace human workers.
AI, the essence of the tools were to build with that are automation tools.
These automation tools, the companies building them will be trying very much to have them automate tasks done by well, human beings. Even if they are only partially successful, this will have the effect of suppressing wages.
So mid to long term, be very cautious of this. We Verity scene management teams point to this. The CEO of IBM a couple of weeks ago, on the record saying he's looking to automate as much is 30% of his back office in functions like HR. It's all talk right now.
Again.
We don't want to get ahead of ourselves. But time will tell.
>> I guess the spin that might get put on it by corporations will be "we will take away the drudgery".
Human beings do want to do these mundane tasks anyway but if your job is mundane tasks and they're not there anymore, there's not another position or you, I can sort of see some anxiety that micro out of it.
>> Yeah. Every task, every job is mundane tasks but in general, that's good language and good spin. Most of us are not building or designing the Sistine Chapel you know? Jobs are jobs.
People strive to do them well.
Companies are going to try to unlock ways to save money.
It's the capitalist imperative.
The language will need to be careful.
That's very careful language.
But at the end of the day, you will see hints of their true intentions. And I think Microsoft dropped that hint. They said "look, we're gonna have to have a full-time salary freeze." And for the record it was not quite a public release but these things get leaked.
They said "we will have a full-time salary freeze but we are going to use the money that we save to invest in to AI initiatives." So you're actually telling the workers "were not to pay you more and were in a fund something that could replace you using that money." Or…Or fill out that video response box on WebBroker.
Now let's get you updated on some of the top stories in the world of business and take a look at how the markets are trading.
Canadian home sales and prices continue to move higher in April following last year's pullback and activity.
The latest numbers from the Canadian Real Estate Association show the number of homes changing hands jumped 11% month over month.
And the home price index was 1.6% compared to March.
That all said, sales activity and prices are still significantly lower compared to the same time last year.
There are some developments today in Newmont's multibillion-dollar takeover bid for the Australian miner Newcrest. One of the biggest mining deals of the year.
Newcrest said it will back the transaction adding it will be bringing significant value to its shareholders.
The deal still requires the approval of shareholders and regulators.
Shares of Centerra Gold are under pressure today, that after the miner swung to a loss in its most recent quarter on lower gold and copper production. Sin Tara saw increased exploration and developing costs at one of its minds in the quarter. And it's forecast gold production at the lower end of its annual guidance.
Down a little more than 15%.
A quick check on the markets, starting at home on Bay Street with the TSX Composite Index, first trading day of the week, modestly up 64 points a little shy of 1/3 of a percent. And south of the border, as politicians in Washington still wrangle about the debt ceiling, the market observes, the S&P 500 basically flat. It's a green arrow one point to the upside.
We are back with Vitali Mossounov taking your questions about technology. Plenty arty coming in. So let's start to get through them.
(Greg reads the question) >> That's been the big fear. Let's take a step back and talk through the latest quarter from Google.
We talked about the theme of slow but possibly bonhomie revenue growth. They said things wouldn't get worse and then searching YouTube seem to be finding their footing. So some good news on the business on the macroeconomic advertising front. Then the number one factor for the narrative of the stock is AI. Microsoft is come out with CHAT GPT, partnership with OPEN AI and really gone the front foot saying that those margins that surgery enjoys within Google, those days are coming to an end.
Everyone is anxiously awaiting.
What about Alphabet?
Do they have these products? They said "we do". But they stumbled. They have an event in Paris a few weeks ago that was another disaster.
Wrong answers from their chat pot. Such things. They had an event, a developer event just last week.
That was going to be really a make it or break it event for the stock. And luckily, fortunately for investors, Google really got their ACT! together.
A strong event with the number of product launches and demonstrations of how they will integrate their technology across everything from their workspace enterprise, Microsoft office competitor into Gmail, great demo there. How you can compose customer service email on the fly, asking for refunds.
I'll be taking advantage of that.
They showed their chops. Most importantly, they showed how they will integrate these capabilities in a large language models into their search, right now they have really change the narrative.
They have won the market over.
Next thing, we are watching is costs. How much is this going to cost? How destructive are they going to be the revenue model?
So far the market, the stock was up 10% last week would ultimately now, we need to show that these initiatives don't impact monetization.
>> When I think about new technologies, disrupting entire industries, the amount that sometimes you have these big entrenched players and they got surprised by some abstract that just came along and changed everything.
When I think about artificial intelligence, is this such an expensive proposition?
That it's going to have to be the googles and Microsoft and other people with deep pockets to make big advancements?
>> Well that's been the case so far with the, kind of, the fact they hire people to build the algorithms and in the To build the models and train them and pay as effectively for cloud costs. That has been the barrier.
But in recent weeks, we've actually seen evidence that these large language models are becoming increasingly commoditized.
They're coming into the open sphere as opposed to just being proprietary models. So I'm not quite sure that hip offices stands anymore.
>> 16-year-old kids coding away in a basement right now in California. Maybe not that extreme ^laughing¸.
>> There go to be start up companies and entrepreneurs.
… So I'm not quite sure that hypothesis stands anymore.
I think they are going to be available broadly and start up companies on entrepreneurs that build quite destructive solutions on this.
And they will create headaches and worries. A year ago they were adamant that they were going to spend as much as $1 billion over two years.
Tilting out distribution Centre's.
Today, they said that we are not only cancelling those plans, they will be giving away everything we built up including the two billion-dollar acquisition made just last August.
They will be going back to a digital company.
… The market likes that because they were very worried about Shopify getting into a dogfight with is at Amazon.
>> Clearly propelling the stock higher after that report. Over the challenges going forward?
The economy again?
Ultimately, they are getting back to the original focus.
It sort of depends on the consumer.
>> Yes.
Going forward, the challenges going to be very much with the economy does.
Shopify, of course, 100% about consumer discretionary sales online.
So consumer spending weekends. That is going to be a headwind for them. They can get around that. But I think the bowls in this case would say that they have got enough holes in the fire here. They have the initiatives around many of their more recent product launches that are doing quite well like Shopify markets, taking the platform global.
Going up market and expectations, perhaps for the second half of the year.
Already baked in. Some weakening of the consumer so the bowls would say that there is enough here even with things getting worse.
>> Interesting takes on that name.
A question now, this one a big picture one. Is Canada investing enough in technology?
>> It's an open question. There is evidence that we are. Some of that evidence is just some of the big technology behemoths that we have cultivated.
Starting with Nortel onto BlackBerry and now Shopify.
These are all homegrown ventures and you could argue that we are only second to being able to cultivate such successes. Of course AI, we touched on it a few minutes ago.
The great leaders of AI.
>> Jeffrey Hinton, >>.
.
.
Joshua Benton, Sutton… We do want to be self-critical to some degree and I think >> You laid out an interesting group of names.
Nortel, BlackBerry and Shopify.
But they didn't end well.
> I should have marketed that to you in a different way. But nonetheless, specifically around Shopify, it was kind of thinking of that curse when they got to the size of RBC, if you remember the market And yet again they fell off but we can see they are doing pretty well.
Let's be critical as well. Let's talk about the other side of this.
Our D spending technology is also… With respect to R&D, R&D as a percentage of GDP. We rank dead last in the G7. We are behind every other country there.
What is behind that, we can unpack more. But certainly, we are more services oriented economy that prevents us and precludes us from doing more of this industrial R&D investment. A country like Japan or Germany might be doing.
And we have a very, talking about housing a few minutes ago, a very robust housing market.
When that housing market continues to go up and people have that muscle of buying because prices will go up, it pulls away a lot of productive capital from other initiatives such as technology and leads simply into impassive assets.
>> When people talk about Canadian tech like Shopify, Shopify and Shopify… There's more going on the right?
If we look at the subsector of the TSX, there are other names in there.
>> Lots of other names and they don't get their fair share unfortunately. But I tend to think of it as we have three crown jewels of our Canadian technology sector.
Shopify is of course one of them.
But there are two other ones.
The second is constellation software and the third of CGI. In fact, constellation software, over the last 25 years, 1 think, has given investors somewhere north of 20% returns every single year.
It's a compounding machine and the founder in fact is known as the Warren Buffett of the North.
So it's a fascinating model. They have a lot of Pres.
letters published on the website, their transcripts and recordings are available. It's a bit of a cold stock but it's a friendly cult with good practices.
> Listening about constellations, what are the risks though?
>> The risks is they won't be able to deploy all this capital and acquisitions. The way they make money as they take the free cash flow that their software companies generate from selling anything from companies to managing golf club management memberships to payroll.
You take that money and you buy more companies.
And those companies that you buy in the future get more expensive or if they are not available for purchase at all, market runs dry, you get too big, the party ends.
The business model cannot continue.
>> Interesting stuff. As always make sure you do your own research at home before you make any investment decisions.
We will get back to your questions with Vitali Mossounov in just a moment's time. A reminder of course that you can get in touch with us any time by emailing moneytalklive@td.com.
Now let's get to our educational segment of the day.
We are of course discussing the technology segment on the show and if you're interested in the space WebBroker can help.
Joining us with more is Nugwa Haruna, Senior Client Education Instructor with TD Direct Investing.
Great to see you know what. Let's talk about technology, WebBroker and how to put the two things together.
>> Always a pleasure to be here Greg.
If you're interested in the specific sector, for instance technology, to seek how that sector has performed over time, especially compared to other sectors, you have the ability to do so in researching with an WebBroker.
So let's hop in WebBroker and see how you can do some of that research. Once an WebBroker, you're able to click on "research".
Under markets you can go into sectors and then industries.
Once on this page, you can pick and choose what country you want to do your research in.
The tally mentioned a little bit about the Canadian space Vitali mentioned.
But if you want the US space for picking, you can click on the flag here.
Once you do that, you have the chance to see how these sectors have performed today.
So right now, the top-performing sectors are based materials, financial and technology interest highlighting that because that's what were talking about today.
You can also see some of the bottom performing sectors.
Now, I'm just gonna scroll down and we will focus on the less the rather the left side of my screen. This gives you as an investor an opportunity to compare all the sectors to one another.
So you can either compare them by average market capitalization. If I filter here as expected, the technological space is the biggest when it comes to average market Size.
You can also filter it by performance if that's something that interests you and may be filtered by one your performance.
You will see that healthcare technology and industrials take the top in these spots. If you want to dig a little deeper, you could say "okay what industries make up the technological sector"? You can click on the sector itself. I will click on technology and once I do that it breaks things down even more.
Because now I can see the top companies today when it comes to changing market value in the technological space in the United States. So you can see the top company today is up over 100%.
You can also take a look at the bottom performing companies and if you want to see a breakdown of some of the industries that make up that sector, you could scroll down, take a look at the left and then you can see what that breakdown is.
Now finally, one thing I would mention, if you're an investor who has different strategies you may be thinking of, I know a lot of investors, when they think about the tech space they don't think about companies paying any kind of dividend.
But there are actually some tech companies that pay dividends.
So if you're interested in more income investing, you might be able to find out some companies that are paying a high dividend yield.
If you're more interested in growth, you might be able to check out companies that have the highest when it comes to earnings-per-share growth and finally if you're more of a value investor you can take a look at the price discount to book value and see the companies leading the space there.
Something for everyone when researching different sectors.
>> Interesting information based on those folders. Is there another way Nugwa on the platform that investors can filter in specific stocks once in the sector they like?
>> So Greg, right now, those were already preset that I showed you.
You did not have an opportunity to put a range. So if you wanted to take a little more control in the filters, you are able to do that using the screeners tool in WebBroker. Let's hop in there and I can show you how to do that.
Once in Reb WebBroker, in WebBroker click on research.
Go under tools and go to screeners.
This lets you filter for information most important to you based on certain criteria.
We will click on stocks and then screening. Once we do that there's already preset criteria and we want to clear all. This gives us a blank slate.
I want to just stick to some of what we were doing already.
Under "exchange" I'm going to go to US-based companies and I'm going to go to "more criteria". And this time under "sector and industry" I have an opportunity to uncheck all of these. I'm just going to focus on the technology sector.
So now there are 795 companies available. Still a lot.
So let's add some more criteria. In this time, let's do dividend yields.
There are companies that do pay dividends. They are not very, you don't see a lot of them.
But they are there. So let's get an investor interested in income. Decides to use this filter.
Let's say a minimum of a 2% dividend yield there.
When you do that, there's now 56 companies available.
Now, one more thing, let's add one more criteria.
This time I'm going to add an earnings-per-share growth historical.
Maybe in this instance, we want a company that, in the last five years, have at least not had a decline in the earnings-per-share.
And that brings us down to 28 companies. And so once you do that, you can just scroll down, take a look at these companies and an investor can then decide if they want to do more of a deep dive and as you always remind me Greg, you can save this screener. You can just save it over here and then you're good to go to come back and view it on a later date.
>> Don't make Greg's mistakes. Always save your work.
Thanks Nugwa.
>> Thanks Greg.
>> Nugwa Haruna, Senior client investigator TD Direct Investing. Make sure to check out the learning centre in WebBroker for more educational videos, live interactive master classes and upcoming webinars.
Before we get back to our questions with Vitali Mossounov, a reminder of how you can get in touch with us.
Do you have a question about investing, or what is driving the markets? Our guests are eager to answer your questions so send them to us here at MoneyTalk Live. You can send your questions two ways: you can send us an email any time at moneytalklive@td.com or you can use the question box at the bottom screen right here on WebBroker just type your question and hit "send". We will see if one of our guests can get you the answer right here at MoneyTalk Live!
We are back with Vitali Mossounov taking your questions for technology stocks.
Here's a big one.
Can we have your take on Apple?
>> The biggest one actually. The largest stock by market And technology. Apple has had a bit less strong than the other big tech names in the last year. There is not a cloud business that is slowing down for everyone to worry about.
There isn't a large advertising business that, of course is very macro economically sensitive. There is of course the iPhone which is 60% of sales.
One would have thought that the sales of iPhones would've decelerated quite rapidly. They have not.
So Apple has been a bit of a steady hand at of the big tech names. You can see that up on the chart. It's actually within striking distance of all time highs.
Apple's earnings were fine. Revenues declined a couple of percent and earnings were flat. It wasn't anything to write home about.
They talked about that weakness in the United States.
In Japan. So there is, of course, a pinch there.
Consumers are tightening their belts and they are not buying as many phones.
But it they are certainly not falling off a cliff.
What's helping Apple is the strong cost and control, gross margins are higher as the commodities and material cost are coming down and they are also spending less on sales and R&D. As most of the year before.
So Apple are in our no fireworks as a result.
>> Is that strength in a certain way?
Let's think of that behemoth that is Apple.
The amount of cash being generated and bought just for existing legacy products core after core, creating iPhones… If they don't get back to disrupting or at least thrilling us with new products, could they find themselves in a bit of trouble?
>> Definitely.
I think management and Apple is aware that the current technology computing generation, the smart phone that they have owned and controlled since 2007 is not permanent.
So there is an end date to that annuity. I think internally very focused on innovating for that next generation. No surprise then that, as if I think, this September, we should get a AR headset out of Apple.
Whatever the file combinations are.
>> Augmented reality right?
>> Yeah. They're working on it.
Today there was some positive press on it for people that I know a little something about it.
But it's going to be early.
This thing is not going to sell more than maybe a few thousand are a million units in the first year but they are thinking ahead. It's a good sign. It's a reassuring sign for investors that they are taking innovation very seriously.
They are ready for whatever it is the comes next.
>> Let's get to another one of the behemoth names.
What's the long-term outlook for Amazon?
>> Amazon had another one of those quarters.
Pattern is revenue is better than fear. Costs are getting under control and they've had actually, their CEO on a couple of quarters. Telling investors that they are focused on costs.
They never used to do that. That was all good. The numbers were fine. The retail business in Amazon was actually going faster than the other big tech companies but really, it was all about the retail margins. The North America and international margins on the retail side of the business.
Those went out.
Positive again in North America after many quarters of being negative.
They are telegraphing improvement that can go as high as the mid-single-digit range. So Amazon is certainly getting a handle on costs.
AWS is there is a big business and AWS continues to decelerate.
That's a sticking point with investors. The stock went up 10% as soon as they reported and then sold off pretty sharply because they said AWS in the conference call through April, the growth rate had fallen. People in like that.
Ultimately, credible business, strong market position and better than feared.
>> Is the cloud business the biggest risk here?
I think just Amazon during the pandemic.
We are told to stay home and not to go to the mall. If you go, the ball will be open anyway. What you do?
You buy stuff off the Internet. How should we think of the future of getting parcels dropped off on my front porch?
>> Amazon has built around both businesses is absolutely incredible. The retail business, if you think about it, yes, you can now get a new car.
Costco, depot home Home Depot Walmart wherever it might be. There's less reason to do that because in most major metropolitan cities, you can now have same-day delivery and a lot of items. So I think that the destruction threat, especially with the prime membership with the users is remote. I think AWS is a leader. We will call it still.
The biggest risk there I think for Amazon, is not actually something… They're very good at building these 100 your businesses that will be with us for generations. I think the risk as an investor for Amazon is "well, are they going to use all the capital to put up moat after moat after moat you Mark" because that's nice that when I get to see the money? Right?
So are they can have the discipline to one day say "we really invested in the customer. Now we are going to let you enjoy part of this, part of the magic." >> Interesting risk indeed. We will get back to your questions for Vitali Mossounov on investment stocks. As always make sure you do your own research by making before making investment decisions.
A reminder that you can get in touch with us at any time.
Do you have a question about investing, or what is driving the markets? Our guests are eager to answer your questions so send them to us here at MoneyTalk Live. You can send your questions two ways: you can send us an email any time at moneytalklive@td.com or you can use the question box at the bottom screen right here on WebBroker just type your question and hit "send". We will see if one of our guests can get you the answer right here at MoneyTalk Live!
After a dramatic slide over the past year, Canadian home sales of bounced back in 2023.
As demand continues to outpace supply.
Anthony Okolie joins us now as a look at the latest home sales and price figures and TD Economics outlook for the sector.
>> Thanks Greg.
The number of condos and homes being sold sort of 11% in April. That is the highest level since June of last year. With rates at a top and home prices at the bottom, it was not all that surprising to see buyers jumping off the sidelines and back into the markets in April.
In terms of new supply, homeowners are not flooding the market. The number of newly listed homes only edged up 1.6% month over month.
Now, that puts newly listed properties at a 20 year low.
Now, the shortage of listings of course is due to a number of factors including the fact that homeowners may not be able to find another property. We are seeing higher mortgage rates. This concerns that homes, big offers and bidding wars that we saw back in 2021 and early 2022.
With sales growth outpacing listings, the sales to new listing ratio jumped to 70% in April. Now, at that level, it favours sellers over buyers according to TD Economics.
When we break things down by province, sales are pretty much broad-based across the province across the eight provinces that have seen gains. Again, dominated by two provinces: Ontario and BC both saw double-digit gains followed by Alberta.
And when it came is to Canadian average home prices, they rose 6% in April.
The MLS home prices which is a lifelike comparison, it rose slightly less at a more modest amount last month.
Now, single home prices, family home prices grew faster than condos for the third straight month. So we are seeing some trends continuing as well.
Finally, we also got some Canadian housing starts numbers from statistics Canada.
As a chart shows, Canadian houses sales rose over 22,000 units.
But starts remain on a downward trend with a six month average differing modestly lower last month.
So overall, an improving demand backdrop is helping to boost home prices but the lack of supply is likely playing a much bigger role in bumping up home prices here in Canada.
Greg?
>> Interesting dynamics in the market there limit the year going forward?
>> I think when the dust settles, TD is expecting improvement in the second half of the year however they believe that starts will continue to trend lower thanks to the past client home sales passing through to homebuilding.
This will weigh on residential investment and GDP growth this year.
TD Economics thinks the Canadian average home prices have some modest downside left and are forecasting a bottom of the second quarter of 2023.
Finally, in the second half of this year, 322 through 2024, subject sales activities should… To a below-average price Greg?
>> Definitely a topic on many Canadians minds.
MoneyTalk's Anthony Okolie.
Now let's check in the markets. As we work towards a long weekend.
A little shy of half of a percent in gains.
American benchmark crude up, lending to some support to some of the oil patch names. $2.81 for Athabasca oil, a little more than 2%. Centerra Gold, with its latest numbers, we told him about you about the numbers of the top of the show, some of the projections going forward for production, seven bucks and $0.59 a share, Centerra down to the tune of, will call it almost 16%. Now, south of the border, a lot of investor eyes are on Washington. In negotiations, depending on what You're talking to, things are progressing our things are not progressing.
The nature of negotiations. I believe there are some more talks scheduled for tomorrow. Right now the S&P 500 basically flat at this stage. Although the tech heavy NASDAQ, fearing a bit better.
Let's check in on that.
He points to the upside a little shy of half a percent.
Micron, one of the text names, it is indeed holding there. 6358. You have micron up a little more than 4%.
Back now with Vitali Mossounov from TD Asset Management, we are talking technology.
We have some questions. This is an interesting one.
(Greg reads the question).
>>I think we summarize the number at the beginning.
It's been a big jump. Apple, Microsoft, Google… Up 30.
Mehta, from Facebook, 100. Shopify 80. It's been a big rally.
Sugarcoated. Investments have missed that. I think it's a good sentiment. It's a good testament, actually, to needing to be invested in the markets through the ups and downs. Because, especially in such volatile times, there are a lot of unpredictable barriers rather variable swinging the stocks around.
Facebook completely putting away for the Metaverse, unlocking their share of prices, Facebook, pardon me, Shopify, completely pitting away from logistics and unlocking a 40% rally in a matter of days their share price. You just can't time these things.
When you have a lot of great companies, tech companies are or intend to be, it can be very dangerous.
So yes, I think investors have missed this rally. Does the rally continue? I don't know. In the long run, are we seeing these businesses do the right things? Control costs and again find a discipline to make investments that have a payoff on them? Yes. And ultimately, that's encouraging for the future.
>> Always a pleasure to have you Vitali.
We look forward to next time.
>> Thanks Greg.
>> Our thanks to Vitali Mossounov, Global Technology Analyst at TD Asset Management. And stay tuned on Tuesday, Brad Simpson, Chief Wealth Strategist at TD Wealth will be our guest take your questions about market strategy.
A reminder you can get a head start, just email moneytalklive@td.com. That's all for show today. Take care!
[music]
Every day I'll be joined by guests from across TD, many of whom you will only see here. We'll take you through it's moving the markets and answer your questions about investing. Come up coming up on today show we will discuss the health of the big tech sector and whether it's likely to continue its market leadership with TD Asset Management's Vitali Mossounov.
MoneyTalk's Anthony Okolie will have a look at what the latest housing data says about the state of Canada's real estate market and in today's WebBroker education segment, Nugwa Haruna will show us how you can research the technology sector using the platform.
You can email us at moneytalklive@td.
com to get in touch of us are full of the viewer response box under the audio player on WebBroker.
Before we get to our guest of the day let's get you an update on the markets.
Seems to be a bit of caution hanging over the tray today.
Of course the debt ceiling negotiations continuing south of the border depending on what camp you talk to.
He either things are going swimmingly or things are not going swimmingly at all. Apparently they will meet again tomorrow so a little something for the market to worry about.
A little bit of caution. You have the TSX Composite Index up about 1/3 of a percent.
The price of crude oil is up about 2% today and that has some money moving back to the energy names.
Cenovus among them at 22 bucks even a share, up about 2 1/3%. Later this week will get the latest quarterly earnings from Lightspeed Commerce today. Those shares, last time I checked, under a bit of pressure. It down about 2%. Now, south of the border as we said, negotiations ongoing.
Trying to tackle that debt ceiling problem.
Janet Yellen over the weekend saying some optimistic things. Of course, she is warmed up to this point that a default on US debt would not be a very good thing at all.
S&P 500 right now, up just a modest 3 1/2 points, about 1/10 of a percent. The tech heavy NASDAQ was faring a bit better today. Taking a look at the NASDAQ about 1/3 of a percent.
And Microsoft, some interesting news.
The European Union giving the thumbs up to the acquisition acquisition acquisition.… The US still is to weigh in. Microsoft pretty much flat. 309 bucks and change and that's your market update.
The big tech names have outperformed so far this year.
But will that market leadership continue amid worries about slowing economic growth?
Joining us joining us now to discuss is Vitali Mossounov. Global Technology Analyst at TD Asset Management.
> Good to be here.
>> Let's talk about tech.
The NASDAQ against the S&P 500… Outperformed. We just came through an earnings this season.
The big question is where we headed? What you see in those earnings?
>> These companies did really well and things that were out of their control, well, sometimes good fortune smiles upon you and I find in life, when you control things well, you put up level in an fortune is on your side and things tend to work out pretty well. That's the story of earnings.
>> Let's break into the three pillars: revenue. This was the concern heading into these earnings right?
With the slowing economy and all these concerns about a recession and they would see their sales slow… How would that look?
>> The sales kept slowing but it's all about expectations. Expectations were about worse sales. They did not slow as much as feared and again in the short term, that's what matters. In the long term its evaluations and fundamentals but in the short term its expectations.
Apple sales, they shrunk 3%. Not good.
Earnings flat. Alphabet sales grew 3%.
Not great.
Not typical big tech sales. But, good enough. We will call it good enough. So I think, as they especially talk about the next quarter, investors listened and said "this might be the bottom. And that's pretty good.
" They were the first to see pain last year and maybe the first out. We won't worry about them. Maybe consumer stock. So revenue, not bad.
> Not bad.
That's the part where maybe they smiled a bit because they couldn't control that side.
>> That recession never arrived. We don't know.
>> Will find out after.
>> Yes.
>> As you pointed out what they can control of their own costs. Skyrocketing during the pandemic because they thought the good times were here and they were never to leave and they found or rather have they found the discipline that the market is looking for?
>> I think they have.
I think the market may have forced the discipline on them with what they did their stock prices last year.
But there was a lot of discipline. Take on Microsoft here.
Able to get their expense growth down to the low single-digit range. 2% next quarter in terms of expenses but really that's the theme across the board openings like Apple and Microsoft… Facebook, coming in below what they even expected one quarter ago.
Cutting costs, obviously cutting the workforce. We have heard a lot of that.
Freezing pay. Microsoft, just last week, talking about full-time salary freeze. That's another one. And doing what they can. Spending less on the cloud, for example.
So costs, but they can control, they do remarkably well.
>> You would be hard-pressed I think to find any big tech company that did not throw, this quarter, the phrase AI. For good reason obviously.
(…) Every release, artificial intelligence. What did you see there to be mindful of?
>> It was the most predicted question you could imagine. It was not just tech companies. I think most companies got the question.
Look, what we saw were a lot of generic responses. I will sugarcoat it. Companies were prepared for this question and they got the question.
The answer, they said, "we've been making these investments for many years and we will have the products out shortly. We've got the product roadmap and there was a path to how to monetize AI." Some companies did a better job.
But by better I mean being more detailed or descriptive.
At Microsoft, I would certainly put in that camp.
They needed to. So much of their future strategy is about AI. The leadership they have at their ownership (… Video lagging) other companies didn't give you as much as you wanted.
Apple is in that camp. Apple typically likes to say "we create typically wonderful… (Video pause) " … Strategies about AI, the leadership they have at their ownership, part ownership of OPEN AI. Other companies, they did not give you as much as you wanted.
Apple is in that camp. But that's typical Apple.
Apple likes to say "we create wonderful products and when we launch them you will find out just how wonderful they are.
" They have a track record doing that. AI, monetizing that data. Bottom-line investors are trying to find out for any business model in any sector where are the threats and where are the opportunities?
>> A certain newness to it. Although people working in a I would say they've been working on this forever.
… But I think for the general public there's a certain newness to it in the developments recently. And around that there are some concerns.
We have tech industry heavyweights who are concerned about how we could change our lives and of course you have workers… Who are concerned about how we can change our lives. Probably front and centre before talking about some of the other things, what about my job?
>> And perhaps not getting enough attention and it will be a few years for this to play out.
But I am sort of in the camp that AI is going to bring a productivity boost, especially to the knowledge economy and we will see that play out over the near term for the medium term.
That's low hanging fruit.
But in the medium to long term, and I'm talking three, four, five years… This is the first technology that really has the potential to replace human workers.
AI, the essence of the tools were to build with that are automation tools.
These automation tools, the companies building them will be trying very much to have them automate tasks done by well, human beings. Even if they are only partially successful, this will have the effect of suppressing wages.
So mid to long term, be very cautious of this. We Verity scene management teams point to this. The CEO of IBM a couple of weeks ago, on the record saying he's looking to automate as much is 30% of his back office in functions like HR. It's all talk right now.
Again.
We don't want to get ahead of ourselves. But time will tell.
>> I guess the spin that might get put on it by corporations will be "we will take away the drudgery".
Human beings do want to do these mundane tasks anyway but if your job is mundane tasks and they're not there anymore, there's not another position or you, I can sort of see some anxiety that micro out of it.
>> Yeah. Every task, every job is mundane tasks but in general, that's good language and good spin. Most of us are not building or designing the Sistine Chapel you know? Jobs are jobs.
People strive to do them well.
Companies are going to try to unlock ways to save money.
It's the capitalist imperative.
The language will need to be careful.
That's very careful language.
But at the end of the day, you will see hints of their true intentions. And I think Microsoft dropped that hint. They said "look, we're gonna have to have a full-time salary freeze." And for the record it was not quite a public release but these things get leaked.
They said "we will have a full-time salary freeze but we are going to use the money that we save to invest in to AI initiatives." So you're actually telling the workers "were not to pay you more and were in a fund something that could replace you using that money." Or…Or fill out that video response box on WebBroker.
Now let's get you updated on some of the top stories in the world of business and take a look at how the markets are trading.
Canadian home sales and prices continue to move higher in April following last year's pullback and activity.
The latest numbers from the Canadian Real Estate Association show the number of homes changing hands jumped 11% month over month.
And the home price index was 1.6% compared to March.
That all said, sales activity and prices are still significantly lower compared to the same time last year.
There are some developments today in Newmont's multibillion-dollar takeover bid for the Australian miner Newcrest. One of the biggest mining deals of the year.
Newcrest said it will back the transaction adding it will be bringing significant value to its shareholders.
The deal still requires the approval of shareholders and regulators.
Shares of Centerra Gold are under pressure today, that after the miner swung to a loss in its most recent quarter on lower gold and copper production. Sin Tara saw increased exploration and developing costs at one of its minds in the quarter. And it's forecast gold production at the lower end of its annual guidance.
Down a little more than 15%.
A quick check on the markets, starting at home on Bay Street with the TSX Composite Index, first trading day of the week, modestly up 64 points a little shy of 1/3 of a percent. And south of the border, as politicians in Washington still wrangle about the debt ceiling, the market observes, the S&P 500 basically flat. It's a green arrow one point to the upside.
We are back with Vitali Mossounov taking your questions about technology. Plenty arty coming in. So let's start to get through them.
(Greg reads the question) >> That's been the big fear. Let's take a step back and talk through the latest quarter from Google.
We talked about the theme of slow but possibly bonhomie revenue growth. They said things wouldn't get worse and then searching YouTube seem to be finding their footing. So some good news on the business on the macroeconomic advertising front. Then the number one factor for the narrative of the stock is AI. Microsoft is come out with CHAT GPT, partnership with OPEN AI and really gone the front foot saying that those margins that surgery enjoys within Google, those days are coming to an end.
Everyone is anxiously awaiting.
What about Alphabet?
Do they have these products? They said "we do". But they stumbled. They have an event in Paris a few weeks ago that was another disaster.
Wrong answers from their chat pot. Such things. They had an event, a developer event just last week.
That was going to be really a make it or break it event for the stock. And luckily, fortunately for investors, Google really got their ACT! together.
A strong event with the number of product launches and demonstrations of how they will integrate their technology across everything from their workspace enterprise, Microsoft office competitor into Gmail, great demo there. How you can compose customer service email on the fly, asking for refunds.
I'll be taking advantage of that.
They showed their chops. Most importantly, they showed how they will integrate these capabilities in a large language models into their search, right now they have really change the narrative.
They have won the market over.
Next thing, we are watching is costs. How much is this going to cost? How destructive are they going to be the revenue model?
So far the market, the stock was up 10% last week would ultimately now, we need to show that these initiatives don't impact monetization.
>> When I think about new technologies, disrupting entire industries, the amount that sometimes you have these big entrenched players and they got surprised by some abstract that just came along and changed everything.
When I think about artificial intelligence, is this such an expensive proposition?
That it's going to have to be the googles and Microsoft and other people with deep pockets to make big advancements?
>> Well that's been the case so far with the, kind of, the fact they hire people to build the algorithms and in the To build the models and train them and pay as effectively for cloud costs. That has been the barrier.
But in recent weeks, we've actually seen evidence that these large language models are becoming increasingly commoditized.
They're coming into the open sphere as opposed to just being proprietary models. So I'm not quite sure that hip offices stands anymore.
>> 16-year-old kids coding away in a basement right now in California. Maybe not that extreme ^laughing¸.
>> There go to be start up companies and entrepreneurs.
… So I'm not quite sure that hypothesis stands anymore.
I think they are going to be available broadly and start up companies on entrepreneurs that build quite destructive solutions on this.
And they will create headaches and worries. A year ago they were adamant that they were going to spend as much as $1 billion over two years.
Tilting out distribution Centre's.
Today, they said that we are not only cancelling those plans, they will be giving away everything we built up including the two billion-dollar acquisition made just last August.
They will be going back to a digital company.
… The market likes that because they were very worried about Shopify getting into a dogfight with is at Amazon.
>> Clearly propelling the stock higher after that report. Over the challenges going forward?
The economy again?
Ultimately, they are getting back to the original focus.
It sort of depends on the consumer.
>> Yes.
Going forward, the challenges going to be very much with the economy does.
Shopify, of course, 100% about consumer discretionary sales online.
So consumer spending weekends. That is going to be a headwind for them. They can get around that. But I think the bowls in this case would say that they have got enough holes in the fire here. They have the initiatives around many of their more recent product launches that are doing quite well like Shopify markets, taking the platform global.
Going up market and expectations, perhaps for the second half of the year.
Already baked in. Some weakening of the consumer so the bowls would say that there is enough here even with things getting worse.
>> Interesting takes on that name.
A question now, this one a big picture one. Is Canada investing enough in technology?
>> It's an open question. There is evidence that we are. Some of that evidence is just some of the big technology behemoths that we have cultivated.
Starting with Nortel onto BlackBerry and now Shopify.
These are all homegrown ventures and you could argue that we are only second to being able to cultivate such successes. Of course AI, we touched on it a few minutes ago.
The great leaders of AI.
>> Jeffrey Hinton, >>.
.
.
Joshua Benton, Sutton… We do want to be self-critical to some degree and I think >> You laid out an interesting group of names.
Nortel, BlackBerry and Shopify.
But they didn't end well.
> I should have marketed that to you in a different way. But nonetheless, specifically around Shopify, it was kind of thinking of that curse when they got to the size of RBC, if you remember the market And yet again they fell off but we can see they are doing pretty well.
Let's be critical as well. Let's talk about the other side of this.
Our D spending technology is also… With respect to R&D, R&D as a percentage of GDP. We rank dead last in the G7. We are behind every other country there.
What is behind that, we can unpack more. But certainly, we are more services oriented economy that prevents us and precludes us from doing more of this industrial R&D investment. A country like Japan or Germany might be doing.
And we have a very, talking about housing a few minutes ago, a very robust housing market.
When that housing market continues to go up and people have that muscle of buying because prices will go up, it pulls away a lot of productive capital from other initiatives such as technology and leads simply into impassive assets.
>> When people talk about Canadian tech like Shopify, Shopify and Shopify… There's more going on the right?
If we look at the subsector of the TSX, there are other names in there.
>> Lots of other names and they don't get their fair share unfortunately. But I tend to think of it as we have three crown jewels of our Canadian technology sector.
Shopify is of course one of them.
But there are two other ones.
The second is constellation software and the third of CGI. In fact, constellation software, over the last 25 years, 1 think, has given investors somewhere north of 20% returns every single year.
It's a compounding machine and the founder in fact is known as the Warren Buffett of the North.
So it's a fascinating model. They have a lot of Pres.
letters published on the website, their transcripts and recordings are available. It's a bit of a cold stock but it's a friendly cult with good practices.
> Listening about constellations, what are the risks though?
>> The risks is they won't be able to deploy all this capital and acquisitions. The way they make money as they take the free cash flow that their software companies generate from selling anything from companies to managing golf club management memberships to payroll.
You take that money and you buy more companies.
And those companies that you buy in the future get more expensive or if they are not available for purchase at all, market runs dry, you get too big, the party ends.
The business model cannot continue.
>> Interesting stuff. As always make sure you do your own research at home before you make any investment decisions.
We will get back to your questions with Vitali Mossounov in just a moment's time. A reminder of course that you can get in touch with us any time by emailing moneytalklive@td.com.
Now let's get to our educational segment of the day.
We are of course discussing the technology segment on the show and if you're interested in the space WebBroker can help.
Joining us with more is Nugwa Haruna, Senior Client Education Instructor with TD Direct Investing.
Great to see you know what. Let's talk about technology, WebBroker and how to put the two things together.
>> Always a pleasure to be here Greg.
If you're interested in the specific sector, for instance technology, to seek how that sector has performed over time, especially compared to other sectors, you have the ability to do so in researching with an WebBroker.
So let's hop in WebBroker and see how you can do some of that research. Once an WebBroker, you're able to click on "research".
Under markets you can go into sectors and then industries.
Once on this page, you can pick and choose what country you want to do your research in.
The tally mentioned a little bit about the Canadian space Vitali mentioned.
But if you want the US space for picking, you can click on the flag here.
Once you do that, you have the chance to see how these sectors have performed today.
So right now, the top-performing sectors are based materials, financial and technology interest highlighting that because that's what were talking about today.
You can also see some of the bottom performing sectors.
Now, I'm just gonna scroll down and we will focus on the less the rather the left side of my screen. This gives you as an investor an opportunity to compare all the sectors to one another.
So you can either compare them by average market capitalization. If I filter here as expected, the technological space is the biggest when it comes to average market Size.
You can also filter it by performance if that's something that interests you and may be filtered by one your performance.
You will see that healthcare technology and industrials take the top in these spots. If you want to dig a little deeper, you could say "okay what industries make up the technological sector"? You can click on the sector itself. I will click on technology and once I do that it breaks things down even more.
Because now I can see the top companies today when it comes to changing market value in the technological space in the United States. So you can see the top company today is up over 100%.
You can also take a look at the bottom performing companies and if you want to see a breakdown of some of the industries that make up that sector, you could scroll down, take a look at the left and then you can see what that breakdown is.
Now finally, one thing I would mention, if you're an investor who has different strategies you may be thinking of, I know a lot of investors, when they think about the tech space they don't think about companies paying any kind of dividend.
But there are actually some tech companies that pay dividends.
So if you're interested in more income investing, you might be able to find out some companies that are paying a high dividend yield.
If you're more interested in growth, you might be able to check out companies that have the highest when it comes to earnings-per-share growth and finally if you're more of a value investor you can take a look at the price discount to book value and see the companies leading the space there.
Something for everyone when researching different sectors.
>> Interesting information based on those folders. Is there another way Nugwa on the platform that investors can filter in specific stocks once in the sector they like?
>> So Greg, right now, those were already preset that I showed you.
You did not have an opportunity to put a range. So if you wanted to take a little more control in the filters, you are able to do that using the screeners tool in WebBroker. Let's hop in there and I can show you how to do that.
Once in Reb WebBroker, in WebBroker click on research.
Go under tools and go to screeners.
This lets you filter for information most important to you based on certain criteria.
We will click on stocks and then screening. Once we do that there's already preset criteria and we want to clear all. This gives us a blank slate.
I want to just stick to some of what we were doing already.
Under "exchange" I'm going to go to US-based companies and I'm going to go to "more criteria". And this time under "sector and industry" I have an opportunity to uncheck all of these. I'm just going to focus on the technology sector.
So now there are 795 companies available. Still a lot.
So let's add some more criteria. In this time, let's do dividend yields.
There are companies that do pay dividends. They are not very, you don't see a lot of them.
But they are there. So let's get an investor interested in income. Decides to use this filter.
Let's say a minimum of a 2% dividend yield there.
When you do that, there's now 56 companies available.
Now, one more thing, let's add one more criteria.
This time I'm going to add an earnings-per-share growth historical.
Maybe in this instance, we want a company that, in the last five years, have at least not had a decline in the earnings-per-share.
And that brings us down to 28 companies. And so once you do that, you can just scroll down, take a look at these companies and an investor can then decide if they want to do more of a deep dive and as you always remind me Greg, you can save this screener. You can just save it over here and then you're good to go to come back and view it on a later date.
>> Don't make Greg's mistakes. Always save your work.
Thanks Nugwa.
>> Thanks Greg.
>> Nugwa Haruna, Senior client investigator TD Direct Investing. Make sure to check out the learning centre in WebBroker for more educational videos, live interactive master classes and upcoming webinars.
Before we get back to our questions with Vitali Mossounov, a reminder of how you can get in touch with us.
Do you have a question about investing, or what is driving the markets? Our guests are eager to answer your questions so send them to us here at MoneyTalk Live. You can send your questions two ways: you can send us an email any time at moneytalklive@td.com or you can use the question box at the bottom screen right here on WebBroker just type your question and hit "send". We will see if one of our guests can get you the answer right here at MoneyTalk Live!
We are back with Vitali Mossounov taking your questions for technology stocks.
Here's a big one.
Can we have your take on Apple?
>> The biggest one actually. The largest stock by market And technology. Apple has had a bit less strong than the other big tech names in the last year. There is not a cloud business that is slowing down for everyone to worry about.
There isn't a large advertising business that, of course is very macro economically sensitive. There is of course the iPhone which is 60% of sales.
One would have thought that the sales of iPhones would've decelerated quite rapidly. They have not.
So Apple has been a bit of a steady hand at of the big tech names. You can see that up on the chart. It's actually within striking distance of all time highs.
Apple's earnings were fine. Revenues declined a couple of percent and earnings were flat. It wasn't anything to write home about.
They talked about that weakness in the United States.
In Japan. So there is, of course, a pinch there.
Consumers are tightening their belts and they are not buying as many phones.
But it they are certainly not falling off a cliff.
What's helping Apple is the strong cost and control, gross margins are higher as the commodities and material cost are coming down and they are also spending less on sales and R&D. As most of the year before.
So Apple are in our no fireworks as a result.
>> Is that strength in a certain way?
Let's think of that behemoth that is Apple.
The amount of cash being generated and bought just for existing legacy products core after core, creating iPhones… If they don't get back to disrupting or at least thrilling us with new products, could they find themselves in a bit of trouble?
>> Definitely.
I think management and Apple is aware that the current technology computing generation, the smart phone that they have owned and controlled since 2007 is not permanent.
So there is an end date to that annuity. I think internally very focused on innovating for that next generation. No surprise then that, as if I think, this September, we should get a AR headset out of Apple.
Whatever the file combinations are.
>> Augmented reality right?
>> Yeah. They're working on it.
Today there was some positive press on it for people that I know a little something about it.
But it's going to be early.
This thing is not going to sell more than maybe a few thousand are a million units in the first year but they are thinking ahead. It's a good sign. It's a reassuring sign for investors that they are taking innovation very seriously.
They are ready for whatever it is the comes next.
>> Let's get to another one of the behemoth names.
What's the long-term outlook for Amazon?
>> Amazon had another one of those quarters.
Pattern is revenue is better than fear. Costs are getting under control and they've had actually, their CEO on a couple of quarters. Telling investors that they are focused on costs.
They never used to do that. That was all good. The numbers were fine. The retail business in Amazon was actually going faster than the other big tech companies but really, it was all about the retail margins. The North America and international margins on the retail side of the business.
Those went out.
Positive again in North America after many quarters of being negative.
They are telegraphing improvement that can go as high as the mid-single-digit range. So Amazon is certainly getting a handle on costs.
AWS is there is a big business and AWS continues to decelerate.
That's a sticking point with investors. The stock went up 10% as soon as they reported and then sold off pretty sharply because they said AWS in the conference call through April, the growth rate had fallen. People in like that.
Ultimately, credible business, strong market position and better than feared.
>> Is the cloud business the biggest risk here?
I think just Amazon during the pandemic.
We are told to stay home and not to go to the mall. If you go, the ball will be open anyway. What you do?
You buy stuff off the Internet. How should we think of the future of getting parcels dropped off on my front porch?
>> Amazon has built around both businesses is absolutely incredible. The retail business, if you think about it, yes, you can now get a new car.
Costco, depot home Home Depot Walmart wherever it might be. There's less reason to do that because in most major metropolitan cities, you can now have same-day delivery and a lot of items. So I think that the destruction threat, especially with the prime membership with the users is remote. I think AWS is a leader. We will call it still.
The biggest risk there I think for Amazon, is not actually something… They're very good at building these 100 your businesses that will be with us for generations. I think the risk as an investor for Amazon is "well, are they going to use all the capital to put up moat after moat after moat you Mark" because that's nice that when I get to see the money? Right?
So are they can have the discipline to one day say "we really invested in the customer. Now we are going to let you enjoy part of this, part of the magic." >> Interesting risk indeed. We will get back to your questions for Vitali Mossounov on investment stocks. As always make sure you do your own research by making before making investment decisions.
A reminder that you can get in touch with us at any time.
Do you have a question about investing, or what is driving the markets? Our guests are eager to answer your questions so send them to us here at MoneyTalk Live. You can send your questions two ways: you can send us an email any time at moneytalklive@td.com or you can use the question box at the bottom screen right here on WebBroker just type your question and hit "send". We will see if one of our guests can get you the answer right here at MoneyTalk Live!
After a dramatic slide over the past year, Canadian home sales of bounced back in 2023.
As demand continues to outpace supply.
Anthony Okolie joins us now as a look at the latest home sales and price figures and TD Economics outlook for the sector.
>> Thanks Greg.
The number of condos and homes being sold sort of 11% in April. That is the highest level since June of last year. With rates at a top and home prices at the bottom, it was not all that surprising to see buyers jumping off the sidelines and back into the markets in April.
In terms of new supply, homeowners are not flooding the market. The number of newly listed homes only edged up 1.6% month over month.
Now, that puts newly listed properties at a 20 year low.
Now, the shortage of listings of course is due to a number of factors including the fact that homeowners may not be able to find another property. We are seeing higher mortgage rates. This concerns that homes, big offers and bidding wars that we saw back in 2021 and early 2022.
With sales growth outpacing listings, the sales to new listing ratio jumped to 70% in April. Now, at that level, it favours sellers over buyers according to TD Economics.
When we break things down by province, sales are pretty much broad-based across the province across the eight provinces that have seen gains. Again, dominated by two provinces: Ontario and BC both saw double-digit gains followed by Alberta.
And when it came is to Canadian average home prices, they rose 6% in April.
The MLS home prices which is a lifelike comparison, it rose slightly less at a more modest amount last month.
Now, single home prices, family home prices grew faster than condos for the third straight month. So we are seeing some trends continuing as well.
Finally, we also got some Canadian housing starts numbers from statistics Canada.
As a chart shows, Canadian houses sales rose over 22,000 units.
But starts remain on a downward trend with a six month average differing modestly lower last month.
So overall, an improving demand backdrop is helping to boost home prices but the lack of supply is likely playing a much bigger role in bumping up home prices here in Canada.
Greg?
>> Interesting dynamics in the market there limit the year going forward?
>> I think when the dust settles, TD is expecting improvement in the second half of the year however they believe that starts will continue to trend lower thanks to the past client home sales passing through to homebuilding.
This will weigh on residential investment and GDP growth this year.
TD Economics thinks the Canadian average home prices have some modest downside left and are forecasting a bottom of the second quarter of 2023.
Finally, in the second half of this year, 322 through 2024, subject sales activities should… To a below-average price Greg?
>> Definitely a topic on many Canadians minds.
MoneyTalk's Anthony Okolie.
Now let's check in the markets. As we work towards a long weekend.
A little shy of half of a percent in gains.
American benchmark crude up, lending to some support to some of the oil patch names. $2.81 for Athabasca oil, a little more than 2%. Centerra Gold, with its latest numbers, we told him about you about the numbers of the top of the show, some of the projections going forward for production, seven bucks and $0.59 a share, Centerra down to the tune of, will call it almost 16%. Now, south of the border, a lot of investor eyes are on Washington. In negotiations, depending on what You're talking to, things are progressing our things are not progressing.
The nature of negotiations. I believe there are some more talks scheduled for tomorrow. Right now the S&P 500 basically flat at this stage. Although the tech heavy NASDAQ, fearing a bit better.
Let's check in on that.
He points to the upside a little shy of half a percent.
Micron, one of the text names, it is indeed holding there. 6358. You have micron up a little more than 4%.
Back now with Vitali Mossounov from TD Asset Management, we are talking technology.
We have some questions. This is an interesting one.
(Greg reads the question).
>>I think we summarize the number at the beginning.
It's been a big jump. Apple, Microsoft, Google… Up 30.
Mehta, from Facebook, 100. Shopify 80. It's been a big rally.
Sugarcoated. Investments have missed that. I think it's a good sentiment. It's a good testament, actually, to needing to be invested in the markets through the ups and downs. Because, especially in such volatile times, there are a lot of unpredictable barriers rather variable swinging the stocks around.
Facebook completely putting away for the Metaverse, unlocking their share of prices, Facebook, pardon me, Shopify, completely pitting away from logistics and unlocking a 40% rally in a matter of days their share price. You just can't time these things.
When you have a lot of great companies, tech companies are or intend to be, it can be very dangerous.
So yes, I think investors have missed this rally. Does the rally continue? I don't know. In the long run, are we seeing these businesses do the right things? Control costs and again find a discipline to make investments that have a payoff on them? Yes. And ultimately, that's encouraging for the future.
>> Always a pleasure to have you Vitali.
We look forward to next time.
>> Thanks Greg.
>> Our thanks to Vitali Mossounov, Global Technology Analyst at TD Asset Management. And stay tuned on Tuesday, Brad Simpson, Chief Wealth Strategist at TD Wealth will be our guest take your questions about market strategy.
A reminder you can get a head start, just email moneytalklive@td.com. That's all for show today. Take care!
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