The Canadian Investor - Aritzia, Blackrock, TSM, Amazon vs. Visa and more!

Episode Date: January 20, 2022

In this release of the Canadian Investor Podcast, we cover the following earnings releases and news: US CPI reaches 7% in December Amazon UK will not go ahead with its plan of removing Visa as a payment option Aritzia earnings Blackrock earnings JP Morgan Earnings Taiwan semiconductor earnings Canadian Banks returns since December 1st, 2021 We finish the episode with what is on our watchlist presented by EQ Bank! Tickers of stocks discussed: ATZ.TO, JPM, TSM, BLK   https://thecanadianinvestorpodcast.com/ Canadian Investor Podcast Twitter: @cdn_investing Simon’s twitter: @Fiat_Iceberg Braden’s twitter: @BradoCapital Stratosphere 🚀 https://www.stratosphereinvesting.com/See omnystudio.com/listener for privacy information.

Welcome back into the show. This is the Canadian Investor Podcast, made possible by our friends and show sponsor, EQ Bank, which helps Canadians make bank with high interest and no fees on everyday banking. We also love their savings and investment products like GICs, which offer some of the best rates on the market. I personally, and I know Simone as well, is using the GICs, which offer some of the best rates on the market. I personally, and I know Simone as well, is using the GICs on a regular basis to set money aside for personal income taxes in April of every year. Their GICs are perfect because the interest rate is guaranteed, and I know I won't be able to touch that money until I need it for tax time. Whether you're looking to set some money aside for a rainy day or a big purchase is

coming through the pipeline or simply want to lower the risk of your overall investment portfolio, EQ Bank's GICs are a great option. The best thing about EQ Bank is that it is so easy to use. You can open an account and buy a GIC online in minutes. Take advantage of some of the best rates on the market today at eqbank.ca forward slash GIC. Again, eqbank.ca forward slash GIC. Live from the great white north, this is the Canadian investor where you take control of your own portfolio and gain the confidence you need to succeed in the markets. Hosted by Brayden Dennis and Simon Belanger. The Canadian Investor Podcast. Today is January 17th, 2022.

My name is Brayden Dennis, as always, joined by Simon Belanger. Simon, how are you doing? Are you like eight feet under snow right now? This is the most snowfall I can recall in a long, long time. Yeah, it's been a while. I think the official figures in Ottawa, it's like 41 or 42 centimeters. And just looking at it, it looks like that. So it just happened in a few hours too. This is a serious one. And I know it's bad here in Toronto, but I saw like a figure of how much more snowfall the east side is getting. So you're probably feeling that.

So let's record this and then get the shovels out. USCPI came out, the Consumer Price Index, for December. It's been something that we've been tracking probably every month now and more of the same here. Yeah, yeah, exactly. So they came out and it reached 7% in December. The Canadian data should be coming out either this week or next week. It's usually a bit a week or two after the US data. The 7% increase was actually the highest increase since 1982. So it is definitely important to take note. It was in line with expectations from economists.

I know we've talked quite a bit about inflation in the past year, and it's everywhere. It's in the news everywhere you look, everyone you talk to. It seems like inflation is a word on everyone's mind. And I wanted to use this as a reminder that official figures are fine for baseline, but they are not a good indicator of what you are seeing on an individual basis for inflation. And I've mentioned, and we've talked about this before, to really get a sense of how prices are going up for you,

look at what your recurring expenses are every month and how that cost is going up. It might be more than 7% or it might be less. In my view, that's really what inflation is and how you should measure it to understand how it impacts you. Because even you and I, right, we could live in the same area, but we eat different things. And inflation just on the food we eat, it could be completely different for both of us because maybe I eat more meat, maybe you do or vice versa. So I think that's just something important to keep in mind when people see those

official figures. Make sure you crunch the number just to understand how it impacts you. Yeah. Or like if you're a commuter, the rise of gasoline prices far exceeds whatever CPI print that we're going to see. So I think that's a good point and probably a good thing to do overall is just track your month over month. And you'd be amazed at how much stuff you could cut back on as well. Like from a personal finance perspective, you know, it's the old adage across like business, like if you don't measure it, you'll never improve it. And so if you don't measure it, then how are you supposed to even really know how you're doing with personal finance?

I think it's probably a pretty good idea to begin with. Yeah, exactly. Visa and Amazon. So if we rewind a little bit ago, I was telling you guys about how Amazon basically said in the UK for the UK Amazon customers, they can no longer use Visa on the platform. And this was supposed to take place, be effective in two days from now on January 19th. On a statement they said today, as of recording, this change quote will no longer take place. I love it. Like, dude, didn't I keep saying like, I don't know, man, they keep, there just seems like a power stretch. The move was interpreted by experts as a way to, you know, to get lower fees, more bargaining power

or potentially go like on a better deal with lower take rates from MasterCard. A lot of that was speculation. Amazon says they'll continue to accept payments in the UK from Visa credit cards, reversing the ban that was announced in November. So yeah, it was November that I was covering this. In an email to customers, Amazon said it was, quote, working closely on a potential solution that will enable customers to continue using their Visa credit cards on Amazon.co.uk. What do you think here? Like, I'm really not surprised.

It seemed like a bully tactic. Yeah, it's not surprising from Amazon. Definitely, I had also a suspicion that it was probably a power play but then we saw some news that they were even offering people some incentives some money to switch over to the I think the Amazon MasterCard just less than a month ago so it was kind of hard to say like are they really being serious here or just flexing their muscles even more to get concessions from Visa so I guess it was the the latter here they were really trying toing their muscles even more to get concessions from Visa. So I guess it was the latter here. They were really trying to flex their muscles and trying to get a better deal with Visa

in terms of accepting those credit cards. Not surprising the outcome. I mean, Visa is just so present. Obviously, MasterCard is as well. But just taking one or the other off your platform did not seem like the best idea for Amazon. And there have been some takes about Amazon and some like recent missteps and questionable decisions, AWS outages. And I tend to agree. I'm like, would Bezos do this? tend to agree i'm like would bezos do this i don't know the answer to that and i know he's still involved but like there's been some bad moves man and this is one of them yeah but speaking of bezos remember what he when he went on the blue origin flight and he was like thanking all the the amazon workers and like made these comments that were not really well placed when people are like struggling. So insensitive. I mean, it's not like he sometimes also has errors in judgment. So

yeah. But again, that was that was Bezos already moved on Bezos. Yeah. You know, making those comments. So I don't know. It's just speculation at this point. We'll never actually know. A big clothing line company here in Canada released earnings. And let's chat about that, because I know we're both very interested in this business right now. Yeah, definitely. So Ritzia released their Q3 2022 earnings. Again, a bit of a weird schedule here. Before I get started on the earnings, I actually sent out a tweet this weekend where I wanted people to let me know just what they thought about their clothing, whether, you know, were they expensive, good quality, what was the customer experience, whether they were repeat customers, whether it was, you know, some of our listeners

that are women that enjoy their clothes or not, or people like you, Brayden, who were just saying like, oh, my girlfriend said this, or my spouse said this. My wife does shop there and she does like their clothes, but I just wanted to get a general sense of what people kind of thought about the brand without that being super scientific. And so far, the general feel is that, you know, they're not cheap items. It tends to be for a younger demographic, I think, as well is the sense I got. And I think it's kind of it's pretty positive overall, but definitely the price is seems to be a bit of a sticking issue for some. issue for some. Well, I think that they're positioning themselves in a way where they are not the most expensive clothing on the block, but in no way can they be mistaken for fast fashion. You know, like they're well and above that price point. And the quality is far and above that

lower price point as well. The feedback that seemed to be consistent on your thread, which by the way, I thought was clever that you tweeted that out, was a lot of what I had said that my girlfriend said, which was like, the quality is good. And for the most part, like the pieces you buy are solid, but then there'll also be like some super high margin t-shirt that they just throw in there as well and that's probably where they make all their money and just like some of these one-off items like a t-shirt for 80 whereas like some of the more staple pieces they sell in there are actually really good value yeah exactly and i'll go over the earnings here

but i'll announce it now definitely in the the next month, I'll want to review this one. I'm sure, Brayden, you'll want to chime in into that. So I know that's one that's been requested a lot. So I'll just say it. I want to do that. Before we go in, this is ticker ATZ, right? I believe so. I didn't even add it, but I think you're right. It's ticker, yeah, ATZ on the Toronto Stock Exchange for those who are maybe familiar with the company, but not familiar with the stock. Yeah, exactly. So now we'll just look at what their Q3 earnings look like. So net revenue increase by 62.9% to 453.3 million.

That's compared to Q3 2021. E-commerce revenue increased 46.9% to 148 million. Again, compared to last year. Those are big numbers. They are big numbers. And one that's going to be interesting is actually a bit more down the line. E-commerce revenue actually accounted for 32.6% of net revenues in Q3, which was down from 36.2% last year.

But again, let's remember their quarter ended on November 28, 2021. And this was before Omicron. This was when things were pretty much as open as they had been and what since the pandemic started overall. Yeah, I'd say so. Yeah, I think the figure is actually pretty encouraging that they kept a lot of that online traffic despite you know things reopening that was also reflected in their retail revenue which increased uh 72 percent to 305.3 million from q3 2021 again their u.s revenue i think this is the most interesting increase 115% to $198.7 million. Yeah, and their Canadian revenue increased 37% to $254.6 million. So what that tells me is I think their U.S. revenue will probably surpass their Canadian revenue,

I would say probably in the next couple of quarters. I would say, yeah, by the end of their next fiscal, for sure. Yeah, I didn't realize the scale. I knew it was growing faster, but like, I didn't realize the base was like actually somewhat comparable. was it really a tiny base? And when I looked at it, I'm like, wow, it's almost getting to 50-50 split at this point. So that's interesting for me. And that's really good news because obviously the US market is not always easy to get into for Canadian companies. And it shows that Aritzia might have some huge potential there. And for the first nine months of their fiscal year, they are actually free cash flow positive for the tune of $302 million, which is a 247% increase versus last year. And that's just massive. And obviously, I love to see that.

And that's probably a mix of true growth and base effects. Just thinking back at 2020, what do you think about that? Yeah, I think that the base effects have some sort of play here. I mean, think of the footprint as well. But I don't think that it's anything that you can take away from their execution at this point. No, exactly. So these are really impressive numbers. It'll be it's one that I think we'll try to just keep an eye on every time they have their earnings. Obviously, it's a Canadian company. A lot of people have mentioned this name when I talk about Lululemon. They say, oh, what about Aritzia?

So I think it's one to keep an eye on. And like I said, in the near future, I'll definitely do a deep dive into this and just look at the company where it started and just kind of the company as a whole more than just earnings overlooked. Because it looks, at least for the numbers and what I'm hearing from different people, it looks like it has a lot of potential. Yeah. So the company is broken out into a bunch of like in-house brands inside of their, like what they sell online and in their footprint. So they have all of these different in-house brands that the people can choose from. And I know like, dude, my, at least people my age, this is really popular. And it's been really popular for a long time now.

Brian Hill, the founder from Vancouver, this is why you're seeing so many like comparisons to Lululemon is like, okay, another Vancouver based clothing company that's breaking ground in the US. Like this could be huge. He opened the first location in 1984. He has been at this for a long time. And it's a fairly recent public, like recently publicly traded company. He's been at this forever. And, you know, I think that that's important too, like still run by the founder. I've heard him speak. He has a, like a very clear mission, which is provide high quality women's clothing at reasonable prices. It's kind of like how we buy stocks, high quality,

reasonable prices. And, you know, what's not to like if they can really break ground in the US and keep this e-commerce engine alive? I mean, man, it's already really profitable. It's hard not to like this thing. You know, it's funny just looking and, you know, sometimes I like to just look at stock chart just because it's fun to look at just to like this thing. You know, it's funny just looking and, you know, sometimes I like to just look at stock charts just because it's fun to look at just to get extra context. But this thing almost was like just breaking even as an investment for several years. And it's really just started picking up and giving really good returns in the past year or so.

When did they go public? I think 2016. Shares traded in 2016. Okay. It's longer than I thought. I thought it was like a 2019 IPO. I guess I just didn't pay any attention to it because I mean, man, up 230% since 2019 will definitely get my attention. That'll definitely help. But I i mean look it's six six and a half billion in market cap in cad going to you know i mean it's not cheap stock but you're going to get that nice arbitrage from no one really outside of canadian firm canadian funds really buying this thing in size which is another advantage i think yeah yeah definitely And it might be a good way to get in on this kind

of company before it becomes, like you just said, you know, more on the radar in the US. That's right. I guess the thing that has kept me out of owning all clothing stocks is that they're clothing stocks. And this one's a women's clothing stock. So I mean, I have a pretty good insider track now with my girlfriend being really into fashion and and knowing this product pretty well but how am i before that i mean i don't not really in the right position to to know if it's a good product or not like i have no idea the one thing that i you know has kept me out of clothing stocks for so long is how durable are they? That's the question that we always face. And it's been the wrong thesis for Lulu, clearly. But how durable is it? You just never know. It's really hard to say. Yeah. It's much easier to find those that did not stand the test of time

than those that do. And I totally agree with that. And that's the reason I only have Lulu in terms of a company that does clothing. So food for thought there as well. Yeah. We're trying to fish in the pond where there's some good high quality durable fish. And retail clothing has been not necessarily the best pond to fish in. As do-it-yourself investors, we want to keep our fees low. That's why Simone and I have been using Questrade as our online broker for so many years now. Questrade is Canada's number one rated online broker by MoneySense. And with them, you can buy all North American ETFs, not just a few select ones, all commission-free, so that you can choose the ETFs that you want. And they charge no annual RRSP or TFSA account fees. They have an award-winning customer service team with real people that are ready to help if you

have questions along the way. As a customer myself, I've been impressed with Questrade's customer service. Whenever I call or email, every support rep is very knowledgeable and they get exactly what I need done quickly. Switch for free today and keep more of your money. Visit questrade.com for details. That is questrade.com. Calling all DIY do-it-yourself investors. Blossom is an essential app for you. It has been blowing up with now more than 50,000 Canadians plus and growing who are using the app.

Every time I go on there, I am shocked. The engagement is amazing. This is a really vibrant community that they're building. And people share their portfolios, their trades, their investment ideas in real time. And it's all built on the concept of transparency because brokerage accounts are linked. And then once you link your brokerage account, you can get in-depth portfolio insights, track your dividends. And there's other stuff like learning Duolingo style education lessons that are completely free. You can search up Blossom Social in the app store and join the community today. I'm on there. I encourage you go on there and follow me, search me up. Some of the YouTubers and influencers and podcasters that you might know,

I bet you they're already on there. People are just on there talking, sharing their investment ideas and using the analytics tools. So go ahead, blossom social in the app store, and I'll see you there. All right, Canadian banks. I called this on the doc here, Simon. Canadian banks are ripping. That is what the title of this segment is. And the reason for that is since December 1st, here's the following returns from the big six Canadian banks. Here's the following returns from the big six Canadian banks. Royal Bank up 18%, TD up 13%, Bank of Nova Scotia up 13%, BMO 13%, CABC 19%, National Bank 7%. That's only since December 1st. All right, let's look at their trailing one year of returns from today all the way back to January of 2021. Royal Bank, 37%. TD, 38%.

BNS, 32%. BMO, 48%. CIBC, 48%. National Bank, 41%. As a group, if you equal weighted these things, you're up over 40% on a trailing 12 months in a super low interest rate environment. Yeah, housing seems to just go up and up and up. And there's probably some positive tailwinds for the banks moving forward from a macro perspective. some positive tailwinds for the banks moving forward from a macro perspective. Myself, everyone seems to continue to doubt their ability to compound at the rate that they have been for decades. Canadian bank investors have just been taking Ws year after year after decade after decade it is mind-blowing it's crazy yeah yeah i mean uh we probably should just start investing just put everything canadian banks right i'm going all in canadian banks no like i don't think either of us well i own eqb but do you own any of the big six no no i don't i used to have td and i sold it maybe uh i think about a year ago or so yeah yeah i'm gonna say i'm in the same boat and it's not that they're bad

businesses it's more so just like dude every time i try to do something with the bank they feel so incompetent that it's like the product is so like so bad at innovation so anyway some of them are good some of them uh continue to get it done and on our stock performance basis they're all getting it done recently so uh applaud to bank shareholders yeah i'm uh i noticed you didn't put laurentian bank in there is that one getting demolished i don't think that's yeah it's uh yeah i was just uh kidding yeah they had some scandals and uh their poor management i think we talked about them a little bit on the quarterly earning they they are not doing all that well overall still a 34 i just checked it 34 up on a ttm that's not bad but it's been yeah but yeah but like yeah i just sniped like a

good duration of performance it's down like 25 on a five-year run yeah yeah exactly yeah i was just joking around but now we'll go that's fair you got to zoom out that's exactly now we'll move on to blackrock which releases uh full year results in Q4 2021. They still don't have their annual report because that usually comes out a bit later. But get ready to hear some really big numbers here because their asset under management increased to $10 trillion, which was up 15% from last year. And just wrap your head around that. They have $10 trillion under management. That's crazy. It's just, I see those numbers every time and I just get, I can't believe it.

And obviously that was at the end of the reporting date. The average asset under management was actually $9.36 trillion, which was still an increase of 24% year over year. They had huge inflows, so $540 billion in net inflows, which was a 38% increase compared to last year. Their total revenues were $19.3 billion, which was a 20% increase year over year. Diluted EPS was $38.22, an increase of 20% year over year.

And they increased their quarterly cash dividend by 18% to $4.88 a share and I actually looked at this net flow highlight and for those of you aren't familiar with this inflows is basically just shows how much new capital is coming into their investment vehicles so under their asset management but the asset under management can also go up in value. But these is just a new cash that's infused into it. And the reason why I pulled this chart is basically all the different categories except one essentially is positive inflows. So there's capitals going by regions. If we look at the Americas, you know, Asia Pacific, you look at retail investors, everything is going up in inflows. The only thing going down

is institutional and specifically index funds for institutional. But aside from that, everything's going up. So from, you know, I don't know BlackRock, you know, in and out, but from the looks of it they're firing on all cylinders here the scale of black rock is kind of it's like one of those things where you realize that you're like oh my god they they actually do. 10 trillion AUM is out of control. And this is like just by comparison, if I'm like, if I'm going to buy a stock that's like under the financials category, we just talked about Canadian banks. There's no way I would buy a Canadian bank over BlackRock.

BlackRock is one of the best companies on the planet. We've written about it extensively on Stratosphere. It's such a big company. The ETF retail trading, they have the iShares. So for those who are listening, you might be familiar with iShares. They're the big competitor to Vanguard's ETFs. That is huge business. This is a ginormous business. And what is stopping this train from continuing to roll on? I can't even think of many good bear cases at all on BlackRock. And I think that dividend growth investors look no further. Yeah. And I mean, even the institutional side, they're doing really well. Yes, they lost some of the institutional for the index, but they gained it in the active management for institutional. So, I mean, they are still very present in the institutional side, especially in Canada, where Vanguard left that institutional side of the Canadian

kind of business. But BlackRock is still there. So I don't think they'll be dethroned anytime soon as one of the bigger, if not the biggest player in this space. Yeah. And I always find it really interesting to look at the portfolio holdings of people who work in that industry and see if they own some of the holdings in their industry, like BlackRock, if you work in money management. Just like an example I noticed recently, a little off topic, but similar concept, which is I noticed a lot of doctors own Thermo Fisher. And it's just like, hmm, interesting there. With fund managers and people who work in managing money professionally, I swear they all own BlackRock. And that, to me, is a really good telling tale of how good this business is.

Let's move on to kind of spooky stats around realtor to listings in the GTA, the Gran Torano area. So I tweeted this out on Saturday, which was no better proxy for a stretch real estate market than many of my peers leaving high paying skilled jobs to become real estate agents. I got tons of replies, people noticing the same thing. Like, oh, my friend was a pharmacist or my friend was an engineer. Now they're working as a real estate agent. It seems like a pretty good proxy for a stretch market. Now, according to some interesting data that came in in the replies and my analyst, Adrian, linked some data as well, that shows that there are 3,000 approximately, this is plus or minus because it's, you know, this is changing every day, but there are approximately 3,000 approximately, this is plus or minus because this is changing every day, but there are

approximately 3,000 active listings in the greater Toronto area right now with over 60,000 active realtors. Now, some of them might be doing this part-time, but it does bring up an interesting conversation. Where else in the world is there a 20 to 1 ratio of realtors to listings? I don't know where that exists anywhere else. And I think that is a good telling tale of what is going on with real estate around here. Every time we bring it up in this podcast, like, oh, record-breaking numbers, the next month's data just gets crushed by the following data. It's absolutely insane. to, I don't know anyone who's kind of recently switched, but a good indicator is the amount of pamphlets I get in my mailbox about, you know, do you want to sell your home and all that stuff? Like I literally get, I'm a guest like about a dozen every week of different realtors trying to

make sure they're the ones that will get your listing. If you do sell your home, I've definitely seen an increase. That's for sure. It's nothing scientific, but I've seen an increase in the past year, I would say. There's more and more that are doing that kind of advertising. Yeah, I got a couple of just DMs on social media over the last few months of people I went to university, people I haven't talked to since high school. Like, hey, Braden, just want to let you know, I got my real estate license. Just want to know if you're buying or selling a home or if you know anyone that's buying or selling a home. It's like, oh no, like it's got to be really competitive out there. So I feel bad for people who are like actually killers at selling homes, you know, like actually really solid agents have been doing this for a long time. I feel you with all this like influx

of competition with people that just decided to become a real estate agent overnight. That must be so annoying. Well, the established one, I would think they're probably doing fine, but it's probably the new ones that probably, you know, obviously they're being proactive, but I would probably recommend make sure you have some kind of emergency fund backing you up, or at least another option as a side gig, because it feels like there's just not enough, not enough of a pie for everyone to get a piece. The figures are, the reality is that there's just not enough inventory. Yeah, exactly. That's just a fact. As do-it-yourself investors, we want to keep our fees low. That's why Simone and I have been using

Questrade as our online broker for so many years now. Questrade is Canada's number one rated online broker by MoneySense. And with them, you can buy all North American ETFs, not just a few select ones, all commission free so that you can choose the ETFs that you want. And they charge no annual RRSP or TFSA account fees. They have an award-winning customer service team with real people that are ready to help if you have questions along the way. As a customer myself, I've been impressed with Questrade's customer service. Whenever I call or email, every support rep is very knowledgeable and they get exactly what I need done quickly. Switch for free today and keep more of your money. Visit questrade.com for details. That is questrade.com.

is questtrade.com. Calling all DIY, do-it-yourself investors, Blossom is an essential app for you. It has been blowing up with now more than 50,000 Canadians plus and growing who are using the app. Every time I go on there, I am shocked. The engagement is amazing. This is a really vibrant community that they're building. And people share their portfolios, their trades, their investment ideas in real time. And it's all built on the concept of transparency because brokerage accounts are linked. And then once you link your brokerage account,

you can get in-depth portfolio insights, track your dividends, and there's other stuff like learning Duolingo- style education lessons that are completely free. You can search up Blossom Social in the app store and join the community today. I'm on there. I encourage you go on there and follow me, search me up. Some of the YouTubers and influencers and podcasters that you might know, I bet you they're already on there. People are just on there talking, sharing their investment ideas and using the analytics tools. So go ahead, blossom social in the app store and I'll see you there.

So now we'll move on to JP Morgan earnings. So net revenue was $30.35 billion, which was essentially flat over the past three sequential quarters. Net income was down 11% on a sequential basis and down 40% year over year. It was mainly due to non-interest expenses here. Non-interest expenses would be something like fixed operating costs for banks, more specifically salaries or rent. So that's something that would be a non-interest expense for those who are not familiar with that. And speaking of expenses, for those who are not familiar with that. And speaking of expenses, JPM CFO Jeremy Barnum said that they will see expenses climb about 8% over this year driven by inflationary pressures. So that I word comes back again. And this means that the bank will most likely have below its target

of 70% of return on capital for the short term. Jamie Dimon, who I'm sure pretty much everyone knows at this point, added that he's not complaining about higher wages and that CEOs should not be crybabies about it. Did you see that? His quote about the CEO being crybabies. I actually haven't, but it's just not surprising at all. I'm already picturing him saying it right now. Yeah, exactly.

And he said that higher wages are a good thing for the people seeing those wages going up. On this last point, I find this a bit interesting that Jamie Dimon would actually go there. Because I did come over a study this weekend conducted late last year that that show that wages are going up for frontline workers, but they wanted to study whether they're actually better off economically since the start of the pandemic, because we all know wages increases are great, but it means nothing if your cost of living is going faster. So I thought it was interesting for him to mention that. And I'll definitely be doing a segment on this, this research that was done, because I thought it was interesting for him to mention that. And I'll definitely be doing a segment on this research that was done because I think it's interesting to look at to see, yes, we're seeing wage increases, but is it actually resulting in a better quality of life or more economic power for people? I suspect that probably not, but I haven't finished looking at this study. One positive thing that the bank should benefit from is definitely higher interest rates in the near term. And he did add that, Jamie Dimon,

that the economy continues to do quite well, despite headwinds related to the Omicron variant, inflation and supply chain bottlenecks. And definitely the rising interest rates should be something that will be a bit of a tailwind for banks in general. I would say banks that are lending banks, because obviously there's different types of banks, but banks that their main operations is lending. Typically, as interest rates go up, their margins, so the spread between the interest that they pay out to people that deposit money with them, and the one that they receive from lending out the money increases. So that's typically why it's better for banks when interest rates go up. The last statement that Jamie Diamond said was also interesting because there's data that came out that retail sales actually dropped 1.9% in December in the US,

which was more than expected. And expectations were actually that sales would be flat. And it's hard to say what would have caused it. It could have been a slew of different things. But I just wanted to add that data because I'm sure Jamie Dimon is aware of that. And I know he wants to show a positive outlook for the economy. But even someone like Jamie Dimon, if you just take bits and pieces, sometimes it can be good to put things into context because retail sales dropping like that could have been a slew of different things. Could be, you know, maybe consumers just decided that they didn't want to purchase because things were starting to get too expensive.

Maybe consumer did all their purchases earlier in the fall or late summer because they heard about all these supply chains bottlenecks happening, supply chain issues, so they wanted to get ahead of the curve. And it could just be that people just decided to slow down their consumption in general for no apparent reason. So I think it's always important to put things a bit more in context here. It will be interesting to see what type of data comes out from Canada because we've talked about US data just here, but it will be coming out in the next couple of weeks and I'm sure we'll talk about it in one of our Thursday releases. This is the beauty of JP Morgan earnings calls because you get Jamie Dimon with hot takes and

lots of comment far beyond just the results of JP Morgan's business. And so that's why so many people tune into it. Only because I think being the largest bank, it is a good proxy for the US economy, but also some interesting hot takes whether some of them are outlandish or not i i don't i don't know i don't know the answer to that what i will say is that he's clearly a very smart guy oh yeah exactly and i i know like i'm sure he knows what he's doing when he comes out with these hot takes and i would just love having like a Q&A of just him and Charlie Munger. Oh, yeah. And just like people asking them questions. I'm sure some of the hot takes would be amazing.

Can you imagine the answer they would give on Bitcoin? Those two? Oh, no. Isn't Diamond coming around to it? I don't know. Well, he said they're offering it because their clients want it, but he's still not. Yeah, right. Exactly. I don't know. Well, he said they're offering it because their clients want it, but he's still not a believer in it.

So it would just be as like, obviously, the Bitcoin issue was has already been like, you know, something of, you know, they've been very outspoken, Jamie Dimon and Charlie Munger, but just as a whole, they are not shy. I'll just say that. So it would be very entertaining to say the least. Yeah, well, Munger's 97, right? Like, didn't he just turn 98? Yeah, he just say that. So it would be very entertaining to say the least. Yeah. Well, Munger's 97, right? Like, didn't he just turn 98? Yeah, he just turned 98.

He's born on New Year's Day. He's born on January 1st, 1924. He's currently 98 years old. So like when you're 98, dude, you don't care. You're like, you just say whatever comes across, whatever comes across the top of your brain is what comes out. I love that. Last one on the slate today, which is Taiwan Semiconductor, ticker TSM.

They did have their fourth quarter report released on the 13th of January. Now, ticker TSM or TSMC, which stands for Taiwan Semiconductor, this is the chip-making behemoth they reported their Q4 with increased revenue of 21.2% and profits up 16.4%. Not bad numbers for a company at this scale. These are really good results. It's also worth mentioning that earnings profits were up 6.4% quarter over quarter from Q3 of 2021, which is again, a very solid number for a company this big. Net profit margin was fairly consistent year over year at 38%, which is so good, like not too shabby for a heavy manufacturer like TSMC. The demand for the five nanometer chips is really strong.

They posted their like supplementary materials that I was looking at just before the call. It's an interesting graph that shows the mix and the shift in revenue mix from the seven nanometers to the demand for five nanometers. the demand for five nanometers. Now, TSM is a perfect example of a stock that did pretty much nothing last year, not really based on financial reasons. It did nothing while big tech companies went to new highs and the demand for chips was at all-time highs. There's all this good stuff happening for it, but there's this geopolitical concerns with Taiwan Semiconductor. And this is fair. I'm not going to comment on that. I'm no expert in it.

But at the end of the day, financial results matter. Execution matters. And good results cannot go unappreciated forever. So it has already been a terrific early start in 2022 for TSM, with not only their Q to appreciate the stock because, yeah, there's geopolitical concerns. But if you look at the fundamentals of the business and what TSM offers as a business, their moat like being basically the only name in town for foundry, especially for these big players, it was just a matter of time that shareholders actually start to see some good returns yeah i mean it's like the the power is definitely in

their hands when it comes to the chip manufacturing because it's so concentrated right aside from them who else is there in that in that space like pretty much intel does foundry but that's it and they've had you know their chips have have not been the best performing ones recently. Yeah. And I know they're investing heavily right now. But on the geopolitical front, not to get into that, but I don't know if you, I don't think I've ever told you that. I was, for three months, I went to study. I went for a program exchange for three months in the summer in Taipei in 2007, just before the financial crisis, just to study Mandarin.

My Mandarin is not. Oh, yeah. My Mandarin is not great. I've been doing this show with you for so long. And like, as soon as I figure like, I feel like I know you extremely well. You're like, oh, yeah, I like learned Mandarin in 2007. Yeah, I mean, it was I'm just saying that because well first of all my mandarin is not great i can you know do some basic basic stuff i was getting pretty good because when you're uh you're

in taipei as soon as you get out of the financial district like do people do not speak english at least not back then and the reason i wanted to mention the geopolitical here is you know it was an issue back then as well. I remember people would talk to me locals and we'd chat about it. And it's really fascinating. And it actually goes back way before the Second World War. If you want to learn more about it and just learn the history of the Taiwanese people, the Taiwan Strait, and then it shifted after the Second World War. It's very interesting.

The Japanese occupied that space for time as well. straight and then it shifted after the second world war um it's very interesting the japanese occupied that space for for time um as well so if you want to read up on that i know it's not investing really but if you wanted to get a better sense of the whole history behind it you'll have to dig quite a while back to to really understand the bigger picture that's fascinating and i know that i know there's tons of history buffs on who listened to this podcast. I know that for a fact and getting some of that context is probably going to be pretty helpful if you were to own this stuff. And I talked about ASML last week on the pod, right? And they do the lithography and they sell the TSM. But what happens is, is you have this wild list of tier suppliers to get to the point where you actually have foundry capacity

and TSM just dominates. They are the foundry capacity. It's not like chip maker and TSM, Shipmaker and TSM, they're the same thing because TSM just has all of the capacity. And it's a behemoth of a business. And I think that it's been trading at a really attractive price for quite some time now. And they continue to get it done. They really do. I'm surprised at the margins on it, to be honest. Given everything that goes into it, a net profit margin of 38% is really solid. I guess it kind of is a testament to the complexity

of what they're producing and what investment is required into producing those. And to be honest, they've been in that business for a long time, so they know what they're doing as well. Yeah, they have been doing it for a long time. they know what they're doing as well so yeah they have been doing it for a long time and so they're the name in town anyways uh that does it for this week guys today was january 17th we are going to be coming at you twice a week for all of 2022 and uh i'm really i'm really pumped So for those who may be new to the show, we do Mondays and Thursday releases. It comes out early in the morning. So it's always there for you if you do your morning commute. If you've been listening to the show for a while, give us a rating of five stars on Spotify and Apple. It's available on both platforms now. So like seriously,

it helps us grow the podcast. I shared some stats on our Twitter the other day, CDN underscore investing, which is the Twitter for the podcast of just like kind of the slow month over month growth of the show. And like, while that's great and all, it relies on the virality of you guys sharing the show. So if you think so that someone else could benefit or even just would like the entertainment, we talk about Canadian things too as well, which is a bit nuanced, then go ahead and do that. It really helps support the show. If you haven't checked out Stratosphere, go to stratosphereinvesting.com. I really think you'll like it. Find a lot of the data we're talking about here on the podcast as well. We'll see

you in a few days. Take care. Bye-bye. The Canadian Investor Podcast should not be taken as investment or financial advice. Brayden and Simone may own securities or assets mentioned on this podcast. Always make sure to do your own research and due diligence before making investment or financial decisions.