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[music] Hello I'm Greg Bonnell and welcome to MoneyTalk Live, brought to you by TD Direct Investing. Every day will be joined by guests from across TD, many of whom you'll only see here. We we'll take you through it's moving the markets and answer your questions about investing. Coming up on today show:, we will hear from TD Securities Robert Both with his reaction into today's Canadian inflation report and what it means for future path of interest rates. And in today's WebBroker education segment, Nugwa Haruna will take us through some of the different charting tools available on the platform. You can get in touch this by emailing moneytalklive@td.com or use the viewer response box right here in WebBroker. Now let's get you an update on the markets. A bit of an indecisive trade today, south of the border, rattling the retail space, right now sort of flat. Doubt about nine points, some weakness in crude again today, the American benchmark at $84 and change down to 2 to 2 three quarters of a percent. Now sing a bit of money moving away from the tech space, Shopify giving back a little bit of that, down a little more than two dollars or almost 4%. Stelco making some gains at least the last time I checked, $45.84 a share, this on the back of its earnings and the reaction to those earnings. South of the border, check in the S&P 500. Some of the wheat retail names weighing on the market, that after Target came out and disappointed with what they had for the quarter they are in right now. Of course this is the holiday season. So people want to see something on the retailers. 19, we will call that 20 points, about half a percent. The tech heavy NASDAQ which is been rallying a quite impressive … Last time we took a look at Loewy's, a bit of money moving in that direction, up almost 5%. And that's your market update. The latest Canadian CPI report shows that while inflation remains at elevated levels, it held steady in October at 6.9%. Well, our featured guest today says the data give some ammunition for both the Hawks and the doves. Joining us now is Robert Both, Macro Strategist it TD Securities. Watching inflation very carefully >> The consensus was in line, prices rose by… Month over month and I think there are important takeaways from this: the first is that, with a six point 9 Inflation Rate in October, we are probably tracking somewhere below where the Bank of Canada had predicted inflation would be so far. So their last monetary policy from October had a 7.1 projection in the fourth quarter. With today's data, we think that could come in somewhere before between 6.9 and 7%. While that is still very high, it does speak to things moving in the right direction. The second point is that inflation is just still far too high for comfort here. Especially with the core inflation measures taken higher from September, the tune that the Bank of Canada looks most closely out of it trimmed median inflation measures. Those rose by 1/10 of a percent. So, while things are moving in the right direction, perhaps they are not moving as quickly as we would like to see and that core inflation rate it does suggest that, you know, inflation could remain a little more sticky and it might take a little more time to see headline move material lower. There were a couple of other promising elements in the report though, services inflation registered a fairly small month over month increase. > This is been the big concern right now right? Energy, food which can shift pretty quickly but the fear was once it gets into the service as part of the economy, that's going to be harder to tame. Walk us through the services part. >> In the services, we are seeing a bit of an offset from the other pressures coming through the shelter component. Within shelter, you have two subcomponents that are sensitive to house prices versus the homeowner replacement costs which simply tracks the cost of new construction and there is another one called the "other owned accommodation expense" that includes things like the closing cost on a new house and as a result of that, it attracts those prices more broadly. Those are offsetting some of the other more inflationary parts of the in-service sector. Today, they do point to a slowing rate of change and also the food and energy measure which is what the US uses for their primary inflation, that registered one of its slowest increases since last year. So overall, you see a bit of a mixed signal. As you said, there is something for the hawk and for the dove. >> When it comes to the Bank of Canada, obviously the last time we heard from them, they took their foot off the gas a little bit. They pulled off supersized rakes a little bit but how does this set them up for December? > It's very interesting backdrop for the December meeting. Halfway between a 25 point basis rate hike in a 50 point basis rate hike. We are still sort of sitting on the fence here from the markets perspective. You know, with some hawkish and dovish elements with the Bank of Canada versus the month over month change in services and for X food and energy. It allows people to pick their narrative and as a result, the market, more or less look past this one. We find ourselves in the camp that the 25 basis point rate hike is more prudent for December meeting, you know, with even after the 50 basis point hike last month or in October that was smaller than expected, rates are still well into restrictive territory here. We are seeing signs of slowdown in other parts of the economy. There are interest sensitive parts that were referenced. I think the risk/reward approach does favour a more cautious path forward. We look for a 25 Basis Point Rate Hike in December and one more 25 Basis Rate Hike in January to top things up at 4.25%. >> The Bank of Canada, maybe even the Fed, are they trying to be more forward-looking? Monetary policy looking a certain way with a lag. Inflation is a year from now, 18 months from now… The economy is further. Does that make the back looking at data points not as important as in the Summer? We really jumped in the data is always… >> I think that's a fair point to make. The Bank of Canada has been talking about frontloading in this rate hike cycle. We saw that with 100 Basis Points in June. We've seen 75 to 50 basis point hikes since, you know, now that rates are well above their neutral range, it does make sense to put a little more weight on the forward-looking indicators. Even our latest quarterly GDP print, for Q 2. Interest rates are much lower back then. Usually interest rate hikes take one to two years to show up on the demand side. So, I think they do have to take a little more of a finely balanced approach going forward. >> The big question of course, whether we talk about our central bank of the US Federal Reserve, is once they reached the point where they feel they can stop, how long are they going to stay there? The move-up has been very dramatic this year. With any kind of loan that has tied to the rate, feeling that. I guess they are probably wondering now when it ends and how long they stay at that level? >> A few factors depend, first and foremost is the inflation outlook. The bank is going to have to see clear signs that inflation expectations remain and inflation as well on a downward path before they look at taking back some of these rate hikes. That inflation, in turn, depends on developments in the global economy. Some of these supply disruptions that have wreaked havoc across the producing sector over the last year or two, then, how the Canadian economy responds to the rate hikes that they delivered so far. And as I mentioned, we are starting to see evidence that those rate hikes are starting to have an effect on the labour market. On certain industries, on the GDP side… So, we are looking at somewhere, when CPI returns to the 3% area, if inflation expectations remain anchored, we think the Bank of Canada can start bringing rates back to a neutral stance. Not actually providing accommodation but taking your foot off the brake a little bit. We think that is unlikely to occur until the first quarter of 2024. So we think we will be at that 4.2% rate for the next 12 months. > A great start to the show. We will get back to your questions about the economy with Robert both in just moments time. A reminder to email moneytalklive@td.com to email us your questions. Right now a few top stories in the world of business and a look at how the markets are trading. Shares of Target are in the spotlight today, that is the retailer cuts its fourth-quarter forecast in the face of slowing sales heading into the holiday season. Shifting consumer habits in the face of high inflation has been a key concern for retailers with families putting off discretionary purchases as food and energy items eat up more of their budgets. Loblaw's is reporting a nearly 30% jump in the net profit for its most recent quarter, compared to the same period last year. Food stores rather food sales at stores open for more than a year and a key retail metric were up almost 7% and the drug store sales jumped 7. 7%. Soaring food inflation has been a key theme for grosser earnings this quarter. Annual pace of cannonade he and homebuilding slowed in October led by a decrease in condo building in the big cities. Canada mortgage and Housing Corporation housing starts fell 11% month over month although it does point out Septembers was the strongest showing this year for homebuilding. And here's some of the main benchmark index in Canada's trading. The S&P 500, with Target and that forecast heading into the holidays. Certain parts of the market, of course the retailers, the S&P 500 down a modest 21 points, a little more than half percent. We are back now with Robert Both taking your questions about the economy. Let's get to the questions about the economy. Is Amazon the labour market strength we've been talking about? >> Yes the Canadian labour market is notoriously volatile. But when you look at the labour market over the longer trend, we have started to see some of that strength come off. Over the last six months, jobs are averaging at 9000… That does suggest that we are seeing some of the pressure, off the labour market. Generally speaking, we need to add about 20 to 25,000 jobs in any given month to keep things at a steady state given how strong population growth is in this country. And we still have about 950,000 vacancies. So we have started to see some slow down there but there's a long way to go before we are actually in a healthy balance. I think overall, the labour market is showing evidence that we are still in an environment of excess demand. Those job vacancies are putting pressure on wages. Wage growth, while it is still sitting below inflation, is running in the mid-5% range which is the highest we've seen in years. That's something that the Bank of Canada is looking very closely at because they want to avoid any signs of a wage crisis spiral which would make their jobs of bringing inflation back to target much more difficult. >> Does not become the key for the bank going forward? People will ask for raises and once you collect the bargaining, that raises there for quite some time and that is I guess, the sticky part of inflation. >> Right, that's what you are referring to, normally downward rigidity. Wage gains are very hard to get back. So I think with the Bank of Canada is concerned about is seeing employers lock into wage increases for number of years. If wage growth is very strong for this one year but matches inflation going forward, they are happy but what they don't want to see is wages contracts being signed for 5% growth every year going forward. That would reinforce some of the expectations that inflation is here to stay. It would also put more pressure on the demand side at a time where they are actively trying to reduce demand and bring it more balance with supply. So, from a high level, I think we are not too concerned about where wages are right here. We are watching closely going forward. But we are hopeful that now that we have seen some job's slow a little bit we will also see vacancies trend at and higher rates start to filter these through the economy and that should hopefully bring things more back into balance. >> Let's get to another question of the platform now. Of you are wondering about the outlook for growth? This anticipated recession we keep hearing about… Will be gone next year? > So we do have a recession in our forecast now. The Canadian economy has been quite resilient to date. Over the first half of this year, we saw growth above 3%. But there has been a pretty material slowdown in Q3 already. It shows up even more on a higher frequency monthly GDP series. We have been averaging about 0.1% month over month since May. We do expect that to continue and we think ultimately we are going to see a contraction in the first half of next year. So our forecast is two quarters of negative growth in early 2023. That meets the definition of a technical recession but I think it's going to be quite shallow by historical standards. And also, when you look across other parts of the world that are also going to come under pressure into next year, the Canadian economy is well-positioned to outperform to some extent here. One large factor behind that is the buffer that we are providing by population growth. Canadian population grows by 1.8% year-over-year in the third quarter. That is higher than it was pre-COVID and its… When you are adding 1.8% more people every year, that just lifts the bar a little bit to actually see GDP decline out right. So inflation is a crucial driver of that population growth. The Bank of Canada has their own estimates suggesting that the international migration is contributing about two thirds of the potential growth of the economy over the next two years and that's going to buffer the coming slowdown to some extent. So on a per capita basis, we are probably going, the growth outlook does look a little more worrying. We are probably going to see about five or 6/4 with growth below 1/2% below that potential rate. But in terms of actual contractions, we do just expect a shallow one of the first half of next year. >> What is the biggest risk that would put us into a deeper recession? What would that trigger? > There are certainly a number of things. The most important when I think, is persistent strength and inflation. Whether that be through new disruptions to global supply chains or whether that's from inflation expectations becoming unanchored. Either one of those scenarios would entail the Bank of Canada hiking rates further than we anticipated earlier. And that would increase the likelihood of a severe downturn in later 2023. As it stands, I think of the 4.25% terminal rate, the Canadian economy is going to experience a couple of quarters of contracted growth but if you go much further than that, we do have a very high level, high leverage household sector. A lot of Canadian families are already having a much harder time making their mortgage payments while at the same time, having to pay a lot more for everyday goods and services that eat up most of their household budgets. It is so overall, you know, I think that's the scenario I worry about in terms of a harder landing. The Bank of Canada having to go further on the back of inflation expectations. > Another question, is stagflation risk still on the table? I saw this word thrown up on the screen and thought "we haven't talked about that for a while?" >> When you are discussing environment where you have global growth slowing and ultimately contracting while inflation is still considerably above the Bank of Canada's target range, I think it is fair to call that a stagflation area environment but I think it differs a lot from the type of stagflation that most people probably associate with the early 1980s were you have a much more severe downturn and much higher inflation. You know, as it stands by the first half of next year, we are probably going to be seeing inflation somewhere in the four, five, 6% range whether you're talking about Q1 or Q2. We expect that rather shallow. Other parts of the world are facing much larger exposure to the supply disruptions and the demand disruption from the war in Ukraine. I think they are likely to see higher inflation rates and deeper recession. In Canada, I don't think we are going to see an environment that compares to the 1980s but if some people want to call it stagflation, it's a little hard to push back and get a recession above target because the Bank of Canada is limited in what they can do to respond to that weakening growth outlook. We are going to see them keep rates at 4.25% even as the economy enters a recession and will have to see more progress on the inflation front before they take your foot off the brakes. >> Interesting stuff. As always, make sure to do your own research before making any investment decisions. We will get back to your questions for Robert Both on the economy in just a moment. A reminder that you can get in touch with any time by emailing MoneyTalkLive@td.com and now our education segment. Historical price performance and company shares are one element you may want to pay attention to when considering an investment. But WebBroker has tools that can help you analyse the stock. Joining us now with more is Nugwa Haruna, Senior Client Education Instructor at TD Direct Investing. Nugwa, great to have you back with us. Let's talk about information investors can learn on a price chart. >> Thanks Greg. Always a pleasure being here. The price chart itself tends to show investors historical price movements for Securities. This is especially info important to investors who practice technical analysis. These investors believe that all information important to that security is already factored into the price. The price of that security. As an investor doing fundamental analysis who believes that they may be, there may be stocks that are undervalued, a technician believes that all that information is already accounted for in the price chart. So let's go into WebBroker and pull up the price chart for security. Once in WebBroker, an investor can click on "research" and under "tools", the investor can click on "charts". So I will just pull it security here and we will take a look at the charts that investors can see. So investors can actually look at simplified charts like we have on screen. All this chart shows as the closing prices for that security. Our investors can make this as complex as they want by changing this type of chart to something called a candlestick chart. A "candlestick chart" will show investors additional information such as with the open timeframe of that. Wise, what the close was, the high and low for that period was. Then investors can go ahead and look for potential entry and exit positions and they can do this by drawing trendlines. This shows that security maybe having a downtrend, may be a sideways trend or it can be an uptrend. So this information can potentially help an investor. >> Alright. So when it comes to doing that kind of analysis based off of charts, maybe an investor isn't so comfortable drawing their own trendlines just yet. What tools WebBroker can help that? >> Trendlines tend to be subjective. I can draw a trend line and identify an entry position and if you are drawing a different timeframe, yours may be different. Investors who may not be that comfortable can actually utilize the technical tab within WebBroker. Investors can click on "technicals". This tab takes things like trendlines as well as other indicators that technical analysts utilize to identify bullish events. , Projected increase in stock prices. Bearish projected decrease in the price of stock and so it takes that legwork away from investors and additionally, if investors want to find the most popular kind of trendlines which are support and resistance, if they are not comfortable they can utilize the information that is already in WebBroker. You do want to check and make sure that it fits with your timeframe. So investors who want to learn more about these different indicators and have a better understanding of how they work and how they can potentially utilize them and find more information under the "education" tab which is represented by a little. And once you click on here you can see a little break down on different indicators identifying the different kinds of trendlines, and this gives investors some more arsenal to add to their financial toolbox. >> I've done a lot of shows over the years with technicians and I was always happy that they were the ones drawing the lines on live TV and not me. Thanks as always Nugwa. Great stuff. >> Always a pleasure being here. >> Nugwa Haruna, Senior Client Education Instructor at TD Direct Investing. Make sure to check out the learning sector in WebBroker to learn about master classes, upcoming webinars including how to screen for technical signals in the WebBroker platform. We will get back to your questions about the economy for Robert Both but first a reminder of how to contact 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 now with Robert Both taking your questions about the economy. Many say these hikes are pointless because this wave of inflation is and isn't natural and a global problem. >> It's a difficult question because this is a situation to something that is impacting a lot of Canadian families out there. But the key thing to understand is the alternative is more difficult outlook. If the bank of Canada backs off rate hikes… Inflation under control becomes more difficult in that scenario. We will probably see them hike higher than 4.25% and increasing ultimately the burden on the leverage Canadian families and deepening the economic downturn. While some people like to point to global developments as the ultimate driver of inflation, there certainly is an argument for that on the supply side. There is little the Bank of Canada can do to impact that in the short term. Over a longer term, you can improve the supply side by things like increasing labour force participation, bringing more workers into the country and then also, measures to improve productivity, investment as a share of GDP probably a bit lower than we would like if you went back over the last five years. But at the end of the day, you know, those are areas that are outside the Bank of Canada's control and none of them are something that you can really ratchet up quickly in real time. So the bank is very few options (apart from higher interest rates. Because we do have to bring supply and demand back into balance. We really have not seen enough progress on global supply disruptions to alleviate some of that imbalance so the output they are faced with is one where they have to bring it back into balance by a cooling demand and I think they have been pretty clear that that is what is driving their policy decisions and that's was going to continue driving or policy decisions. So, the there are not many easy decisions to be made. But this is probably the best one going forward, because to let this problem go unaddressed with ultimately putting more hardship on these families, that may be questioning the Bank of Canada's policy actions to date. >> Interesting stuff. Let's get to the next question here with all these rate hikes… Someone wants to get your view on the housing market. If you're looking for a part of the economy that reacted the most quickly in all this. That would be housing this year. >> Of course. You can never discuss the Canadian economy without touching on the housing market. So, as the governor said, higher interest rates are starting to cool interest in certain parts of the economy and housing is probably the best example of that. Sales are down about 50 to 60% from their highs last year. Prices are down somewhere between 15 to 20% from their peak in February and we think they are ultimately going to fall somewhere between 20 and 25 for that peak. So we are already quite away there. It is a very sizable correction in terms of historically, there have been 25% downturns in the house of housing market rather. If you take a step back and look at the performance since 2020, really, only giving half of the post COVID gains back. So, this is what I would call moderate slowdown or an orderly slowdown. We think sales and prices will continue drifting through the winter. The real test is going to come in the spring were policy rates are another 50 basis points higher. And when you have the strong seasonal demand, one factor that is helping to prevent an even worse outcome is that strong back from population growth from migration. That is really helped prop up housing demand at a time where affordability and market sentiment has been very negative. Weighing on home sale prices. So that has helped limit the downside scenario is here. I think, any environment where you have a housing market that is may be structurally under built and you are bringing in population growth, five, 600,000 a year, that is an environment where house prices can only fall so far before more buyers walk off the sidelines. So I think for the next six months or so, what we will see is more of this orderly, unwind of some of those post COVID gains and then in the spring, we will see once policy rates have risen a little further and would love to be stable whether comment that demand comes on the sidelines because as much as the housing market has taken a very large head over the last eight months, it hasn't been enough to fundamentally change the psychology around housing. I think it's too soon to say it. > We talk about that orderly pullback as well. Versus supersize gains early in the pandemic. One thing I know people were keeping an eye on and watching for is there don't seem to be any signs, at least I've been told of for selling. That's when you get in a bad situation you must sell their home what have we seen any of that? I haven't had anyone told me they've seen much for selling. >> We have not seen much of that. I think a lot of sellers, potential sellers are lopped into list their house in this type of environment. You see listings come down with sales and as a result, the housing market is still not wildly out of balance. Even with sales collapsing over the last year. That has helped limit the downside scenario for a price dropping and it will be something to watch going forward certainly. >> Always interesting stuff with the housing market. Always questions about it as well. This one a bit of a different flavoured. Talking about the strengths on the US dollar. Is it finally on the wane and if it is what is happening to the loonie? >> It's very difficult to discuss the outlook for the Canadian dollar without acknowledging USD currency trading there. So we are often discussing the Canadian dollar and context of the Canadian economy. It's often developments in the US that are driving their currency. We have seen the US dollar come off of its highs over the last few weeks ever since the November decision. I think what that reflects is markets anticipating a pivot by the Fed, a shift to smaller rate hikes. But what they might be missing is at the November meeting, Gov. Powell almost said he expects the terminal rates to be higher than he previously anticipated. So I think it's a little bit overdone, the weakness we've seen in the US dollar. Over the near term, I think we could probably start thinking close to those recent lows we saw in CAD USD, around $0. 72. But as we get further into 2023, 2024, I think you will see the Canadian dollar returned to that range that dominated the first half of this year between 78, $0.80 or a dollar 25. >> Does not help us with the fight against inflation as well? With the lower Canadian currency, the American dollar, the Americans reporting some inflation as well? > It certainly does make the job more difficult. And that is something that the Bank of Canada recently spent a little more time discussing. The impact of a weaker Canadian dollar. Generally, the bank doesn't discuss the currency. But when it does move quickly, it can impact their inflation outlook which is their mandate. So, with the recent stability, I think the rebound in the Canadian dollar, I should say, probably takes a little concern off of the bank. To the extent that they would necessarily alter their path of rate hikes, I think there's a very high bar for that. I don't think we have reached it into late October, early November. They are really more concerned about the volatility in the speed of the declined then any outright level. But, I think, you know, the Canadian dollar will probably be a secondary concern going forward. >> We will get back to your questions for Robert Both in the economy but a reminder to do your own research before making any investment decisions. A reminder you can get in touch with us anytime. 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. >> As we get closer and closer to the end of another earnings season, in this country it is the Big Banks round out for us. Anthony Okolie is been taking a look at the preview of the sector and joined us now. Anthony. >> Thank you Greg. TD Securities is expecting the big banks to report lower earnings-per-share in the fourth quarter. With earnings-per-share down 2%, year-over-year. Flat quarter. TD expects the big banks to report higher credit losses for bank bad loans. Their loan loss provisions for this you have started to show up. Given the last economic and farming going forward, understandably banks are worried about their growing consumer credit risk. We've seen higher level credit… TD Securities notes that PCLs are coming off a higher rate. TD Securities also expects the big banks to report a decline in investment banking revenue to the tune of a 35% year-over-year drop. They also see trading revenue from the big banks to be relatively flatter. Of course market volatility has taken its toll on trading revenue this year. That is consistent with what we've seen in the US for some of the US banks. Now, TD Securities also expects the focus this quarter to be on net interest income. Net interest margins in the fourth quarter for the big Canadian banks. TD Securities is forecasting the big banks net interest income to rise a strong 18 to 19% year-over-year. In the fourth quarter. Now, the reason this is biggest because this will be the strongest year-over-year improvement in over a decade for the big banks. Strong numbers there for net interest income. In terms of the Canadian regional banks, TD Securities will be in close attention to a few key things. I will highlight two of them: one of them of course our margins. TD Securities believes that the shared price underperformance of the regional banks in case the big banks is really due to market performance. Since the Bank of Canada has started its hiking interest rates cycle at the start of March, funding costs of actually increased faster than asset pricing. That really disproportionately hurts the last deposit rich franchise of the banks. So they are expecting, the regional banks net interest margins to only arise between 1 to 2 basis points. Much lower than what we were seeing or expecting for the big banks. The other key theme of course is low growth. TD Securities does expect low growth to slow for the banks similar to what we've seen in the US. Although they do expect low growth remain positive in the fourth quarter. Greg. >> Lots of interesting things to watch for. When it comes to those expectations for higher provisions, what does that actually mean for earnings-per-share going into next year? >> TD Securities has lowered their 2023 estimates for earnings-per-share or EPS. This lower forecast mentions about 10 basis points of each bank's domestic residential mortgage book. Because of their lower earnings-per-share outlook, they have also lowered their target prices across most of the big banks. >> Great stuff as always. Thanks Anthony. >> My pleasure. >> MoneyTalk Live's Anthony Okolie. Now let's check on the markets… Still in the thick of earning she season, let's check on Loblaw's, 2.53… We do have some downward pressure again today in the price of American benchmark crude. Let's check in one of the big energy names on Bay Street, 11 bucks and $0.20 for Crescent Point Energy, about 1 3/4 of a percent. South of the border Collie of the investors digesting those target earnings and what that means for the broader retail sector, we have seen some news in recent days including Walmart and some of the home-improvement chains. Target giving a bit of a grim prognosis for its holiday season. You have the S&P 500 down a modest hundred 19 points rather 19 points. Less than 1/2%. NASDAQ, down to the tune of one of the 3rd%. Let's check in on Target. Some concern for some investors today. Trying to read through a broader one for the retail space. Right now hundred and 58 bucks and change. You have target down almost 12%. We are back now with Robert Both from TD Securities. This question, any thoughts on when the Fed might stop its hiking cycle? >> So the Fed, it certainly made some waves in November, the November meeting. Chair Powell communicating that they are going to start looking at potentially slower rate hikes but also that the terminal rate at the end point of this hiking cycle might've been a little higher than they projected in their previous meetings. It is so, you know, I think markets probably latched on a little too much in the first half of that, when really, this is probably more hawkish development if the Fed is looking at potential hiking rates. We look for the Fed to look to 5. 5% by next May. We look for 50 basis point rate hikes in both December and the next meeting in February. Then they will step down to 25 Basis Point Moves in March and May. You know the federal, US economy in general has been a lot more resilient to higher interest rates than Canada. Certainly if you look at that last pay report. They added about 260,000 jobs and their positive revisions on top of that. So we really have not seen any slowdown in the US labour market and both headline and core inflation are also about a percent higher than they are in Canada. So the Federal Reserve has a little bit of a tougher job. But as I said, the economy and the consumers have proven a little more resilient. A lot of that boils down to this household sector and differences between the two countries. Obviously, Canadian households are very highly leveraged. Even in the second quarter, before a lot of these that rate hikes took a fact, Canadian households were spending about 2 to 3… Other disposable incomes on interest rates. Or debt rates I should say. US households by comparison, 9 to 10%. So Canadians are much more sensitive to restrictive monetary policy than they are US. And as a result, we think the Federal Reserve is actually going to lift rate hikes about hundred 25 basis points higher than the Bank of Canada. Which is a wider gap between the two banks. Coming out of the global financial crisis. >> Very interesting days ahead. Robert thank you for joining us. >> My pleasure. >> Robert Both, Macro Strategist a TD Securities. Tomorrow, Bryan Rogers, Senior Client Education Instructor TD Direct Investing joins us and a reminder you can email us your questions ahead of time by emailing MoneyTalkLive@td.com. That's all the time we have for today thanks for joining us and we will see you tomorrow. [music]