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[music] >> Hello, I'm Greg Bonnell. Welcome to MoneyTalk Live, brought to you by TD Direct Investing.
Every day, I'll be joined by guests from across TD, many of whom you'll only see her.
We are going to take you through its moving the markets and answer your questions about investing.
Coming up on today show, we are going to hear from TD Securities chief Canada strategist, Andrew Kelvin, with his take on this latest GDP report and what it could mean for next week's Bank of Canada rate decision. And in today's WebBroker education segment, Jason Hnatyk's going to take us through the difference between market and limit orders and how you can use them on the platform.
So here's how you can get in touch with us.
Just email moneytalklive@td.com where you can follow that viewer response box right under the video player you're on a broker.
Before we get to our guest of the day, let's get you an update on the markets. Bit of a mixed trading session, some of the concerns about ChinaAnd the pushback against COVID restrictions there are easing to a certain degree, but it's a bit of a choppy day. On the TSX right now it's up a modest 66% points, as 1/3 of a percent. Benchmark crude a little north of 78 bucks per barrel, as again.
They recovered from yesterday's decrease. Some energy names are showing a bit of strength.
Let's check in on Cenovus right now entailed staring at this hour.
It's up to the tune of about, I'll look over there for that one, about 4%, 27 bucks and change.
Kinross, though, noticing gold moving higher as well. A bit of a pullback in the US but right now so some gold names in positive territory. About 2% for Kinross, a little bit more than five dollars.
South of the border, it's a been a bit choppy, the S&P 500 is down to a tune of about 15 points, nothing too dramatic. It's up a little more than 1/3 of a percent.
The tech heavy NASDAQ, let's check checking on that one and see how it stands up to the rest of the market, John about 1/3 of a percent.
On Bay Street and Wall Street, we have the likes of Chevron moving up with crude, a modest 1% on Chevron.
That's your market update.
Canada's economy grew 2.9% in the third quarter as energy exports outweighed a drop in household spending and housing investment, but heading into next week's Bank of Canada rate decision, how is our central bank going to view today's release? Joining us now is Maurice Andrew Kelvin, Chief Canada strategist had TD Securities grade welcome back to the program.
>> Thank you for having me.
It's always a pleasure to be here.
>> What should we make of this GDP?
>> It really was all over the place.
If you want to take a positive spin on where the Canadian economy as you can find that. As it turns out, growth was much stronger than anticipated through June, July and August.
You can take that as a sign that there is even less slack in the economy and then we perhaps would've estimated 48 hours ago.
On the other hand, and is more towards where Eileen, some of the more forward-looking indicators were a little bit concerning.
We had a decline in out right terms of household planning. There was an extraordinarily strong second quarter.
The slowdown there was do you and could perhaps explain the pullback as a product of that very strong Q2, some snap back there.
But still, it's not necessarily a positive sign.
Housing investment remains under pressure and one of the significant positive indicators for that Q3 number was government spending.
I don't think we are going to be positioned in 2023 where we see continued government spending growth. So while it is great to have an upside surprise, some of the forward-looking pieces and some of the segments of the economy that we've really depended on over the last two, three, four, five years, are showing a little bit of weakness and we did get a flash estimate for October with the industry level stuff, with the monthly stuff, and that suggested that growth in October was roughly flat. So for the Bank of Canada, growth is obviously much shorter than it was in the third quarter but the 0.5% forecast for Q4, these are annualized numbers, so 0.5 annualized over 1/4 is essentially zero, that's still very much in play with a softer hand off in October. I think the Bank of Canada can really sort of dig into this, take whatever fits its priorities and it really comes back to you, are they really, really concerned with trajectory in CPI inflation?
There are early signs that their plan is working. If they are convinced enough that the tightening in the system is showing up in the parts of the economy that they needed to show up, household spending and housing, in such a way that will will reduce demand a bit, slow the economy through 2023, and bring inflation lower that way, they can probably sit back and raise it by a normal 25 basis points.
But if they are not convinced that the CPI trajectories under control, then you can look at the combination of still very high core inflation, so hi headline inflation, and we don't see moderation and headline inflation for the remainder of this year. And look at the fact that there is perhaps less slack in the economy than they had realized and say, you know what?
We still need to be a little bit more aggressive.
So I think you could make a compelling case for either 25 or 50 basis points here. The big picture for the Bank of Canada? We are getting closer to the end here of the tightening cycle.
We think you will see a pause certainly in the early half or the first quarter, I should say, of 2023.
>> Imagine our central bank, and he central bank, are really trying to bring it inflation down with rate hikes.
In this scenario, day tame inflation and bring it back to where it needs to be and they don't throw the economy over a cliff.
That brings us to recession risk.
It seems like everyone sort of baking in a recession of some sort for next year.
You take a look at numbers like these where we might be headed.
Is it a done deal or do we really have to sort of assume that we will be in a recession by next year?
>> I don't think it's a done deal for the simple fact that we expect population growth to be very robust throw 2023, and if we have more people, it makes it harder to have the total economy shrink in size.
On a per capita basis, it's going to feel very much like a recession whatever the outcome is in our view.
We do think there will be a modest recession in the first half of next year.
Annualized numbers around .52-.1 for the first quarters of the year.
But those are pretty modest overall in the context of one and 1/2 to 2% populate and go, those feel a bit more's significant declines in activity.
But the Bank of Canada, I think, from their perspective, the slowdown in the first half of 2023, that is, I think, baked in.
I think the Bank of Canada believes that as well.
You heard that in their most recent medications that a recession is as likely as not having one in the early part of 2023.
The trick for the Bank of Canada is they need to make sure that when they reach their pause point in early 2023 or perhaps the second quarter 2023 if I'm being too optimistic here, they need to make sure that is the end and they have done enough to get inflation under control.
if it turns out they stopped prematurely, that's a problem. And we get into early year 2023 or 2024, they realize they have an impact on enough to bring inflation under control and start raising rates again because that's the point where we really start compounding the economic impacts, really start amplifying the increases in the unemployment rate and you start having pandemic mortgagesreset at, you know, rates around current rates potentially which would be, I think, a market problem for the Canadian County.
> Earlier in the pandemic, obviously, fiscal and monetary policy work together to try to support… They cut the cost of borrowing down to nothing and then the fiscal side shows up and spends big.
Is there a risk of a disconnect? We find a place with the Bank of Canada and the central bank saying, here's our stop point. We've done the job. We hold here now, try to tame inflation.
Then, the public starts to feel the pain that they were worried about. Politicians don't like it when the publishing feels the pain because I reflect back on them. Is there a danger here with fiscal policy versus monetary?
>> There's always a danger. And I think if you go back to 2020, 2021, this is not to cast blame on the federal government by any means, it was a very difficult situation, fiscal policy is very hard to fine tune.
For me, the lesson of 2020 and 2021 is at fiscal policies powerful.
So I think it's very important that fiscal agents at the Central Bank act in concert here.
Now, in the near term, I don't see any indication that the federal government is likely to counteract the Bank of Canada's inflation targeting efforts.
It's sort of announced, as we've seen, we have the fiscal report recently, it was I thought pretty conservative in terms of their spending. When you talk about sayings that are targeted, low income tax credits, these are things that can have a big impact on individual livelihoods of a select group of people without having large-scale inflationary impacts.
If you look at the announcement out of Alberta recently, they spent 2 1/2 billion dollars to help curb inflation. These sort of targeted relief programs can help alleviate the biggest hit that comes from high inflation but it is important that the federal government not come out with large-scale fiscal stimulus programs here. I would say now, from the federal government, I don't see any indication that they are planning one in this spring.
You're right, it's very easy to say when you are not being pressured that you are not going to commit to irresponsible spending.
It could be altogether different if the government sees its lighting in the polls and getting a lot of pressure from its constituents.
I guess the saving grace there is it doesn't look like we need to see an election and not until 2025 so there won't be the sort of near-term pressures that would be on the government the same way would be if, let's say, we were staring at a fall 2023 election. That would be a scenario where I fear there would be a lot more political pressure in play.
>> One of the goodies and election time. A fascinating start to the program. We'll get your questions about the Canadian economy and interest rates for Andrew Kelvin in just a moment's time.
Our minor, course, you get in touch with us anytime.
Just email moneytalklive@td.com or fellow that your response box right here on the video player on WebBroker.
Right now, let's get you updated on some of the top stories in the world of business, take a look at how the markets are trading.
Suncor is keeping the Petro-Canada business, saying it will look for ways to improve its retail operations.
the decision follows a review that was spurred by activist investor Elliot Investment Management.
Suncor says improving Petro Canada will generate long-term value for its shareholders.
Restaurant Brands International says it has a deal to bring its Burger King and Popeye's banners to Eastern Europe.
The agreement with an affiliate of restaurant operator McWin includes a plan to open 600 Restaurants in Poland, Romania and Czech Republic.
TC Energy is warning investors of a material increase in project costs for its Coastal GasLink pipeline.
The company is citing labour cost, a shortage of workers and several unexpected natural events, including drought conditions and erosion.
TC Energy says it's still sees long-term value in the pipeline.
A quick look at how the markets are trading. We'll start here at home on Bay Street with TSX Composite Index. Right now, a modest gain of 77 points, but a sort of a percent. Seeing some firming in the price of crude after the big swoop it tookTo start the trading week yesterday and south of the border, the S&P 500, it's been a bit of a choppy session. Right now and modestly negative territory, down about 15 points on that broader read of the American market, 1/3 of a percent to the downside.
We are back with Andrew Kelvin taking your questions about the Canadian economy.
Look after them.
Right off the top, central bank talk.
Will the Bank of Canada diverge from the Fed at some point?
>> I think they'll have to.
The key develop into my mind in the Canadian economy in the last 10, 12 years, it's been the steady increase in household leverage, household debt to income ratios in Canada have steadily moved higher.
Lesson in the loosest possible sense is that leverage is safe, housing is a safe investment, we should take out debt to buy more of it. As a society, that sort of what we concluded. The US took the opposite tack. The United States has been leveraging for 10, 11, 12 years now. As a result, every rate hike in Canada impacts the economy more strongly than a rate hike in the United States does. If you lift basis points by 100 Points in Canada and the US, it hits Canadian households more heavily because of those high leverage levels.
Canada is starting to acknowledge that the hikes are having an impact on the household sector. We sell it with the GDP rates and household spending.
We may start to see an earlier slowdown in the pace of tightening. The Bank of Canada may hit a lower terminal rate which would achieve the same amount of easing that the Fed will have to get to.
Canada might be able to achieve that it 44 1/2%and in the US it would be five or 5 1/2%. That could be by next spring.
>> If that becomes apparent next spring…If we do get a weaker Canadian but, we will be importing inflation with all the things we buy from the United States. We get forced into sort of a weird corner on that one?
>> It is a bit of a strange dynamic because of that.
You're absolutely right.
I tend to think that if you are seeing a large change in demand, that offsets or more than offsets the impact of the imported inflation. But certainly, the fact that the Canadian dollar depreciates while the Bank of Canada is tightening, because it's been tightening by more, does make Canada's job were difficult.
I do think you will see another down leg and the Canadian dollar. We do have a forecast and a get sort of 72, 71 1/2 cents next spring, so we will sorta be retesting the levels we were at a little bit earlier this year, but not breaking through them.
And the Fed probably will reach its terminal rage in the second quarter of next year.
At that point, markets are forward-looking in nature.
At that point, we could see a pretty quick reversal of the fortunes of the Canadian dollar.
We could be back at levels around where we are today if not a little bit stronger by the end of 2023.
And if you want to take the very long term view, you go down to 2024 which might as well be the end of 2042 given how long two years have felt recently, we think we have a Canadian dollar at $0.80.
I think near term, it's reasonable to expect a little bit of weakness and through this late winter or early spring.
But longer term, we don't see the ad as a structural thing.
We see that as a temporary blood.
>> That's the nice lead into our next question from our viewer. Currency outlook, is the US dollar run done?
it's been strong against a basket of international currencies but in recent weeks, there's been some pullback.
Is there something happening here?
>> USL has been placing high versus the euro and the end.
Just the fact that the US dollar trend has broken doesn't mean we need to see US dollar weakness going forward either.
It US dollar probably has a little bit more fight in it. We can see a little bit of a rebound versus the euro, versus the Yen, compared to today's levels. But, you know, where is we can probably retest where the Canadian dollar was earlier this year, we came to be seen, in terms of the broad US dollar strength, we have probably seen the highs for the US dollar.
Because markets are a bit forward looking, they might be a little bit to forward-looking because we haven't established where our terminal is in the US so it's a bit early to start talking about 2023 rate cuts, but markets are starting to look at that, right? Markets are starting to look at the idea that, okay, inflation is starting to leg a bit in the United States, we seen some slowing growth, the market is costly looking for effective it.
Every two half months we have a story, well, maybe now it'll be the Fed pivot. It just takes one, right?
Markets have probably got a little bit ahead of themselves and that but I also think it's reasonable to suggest that we've seen the peak and broad dollars.
> Okay, another question coming in now. This is about our domestic economy, mainly the housing market. Which of you on the housing market? Are we near the bottom?
>> I think the housing market, it's very difficult most of the time to draw signal from it in the summer or winter.
There is just such seasonality in it. If you look at last August, we had house prices falling pretty dramatically, certainly in Toronto. And then they rebounded in September.
They are falling in this context of low demand, low supply. It didn't really say much about the overall trend.
Probably the similar dynamic in the winter which direction that goes in?
I don't know. But the winter, what happens in the months of December and January for the Canadian housing market will be noise more than signal.
Now, when you get into the spring, we are starting to see inventory rise a bit, just things like supply, sales to new listings, inventories are starting to recover to you a more normal levels.
We probably have another down leg and house prices sort of 3 to 5%. But longer term, that population dynamic does provide some support for the housing market.
That's not to say that just because an acid is valuable it can't be overvalued, but the big picture is Canada, unlike the United States 12 years ago, Canada's under bill.
We are not building enough homes to house our growing population. That's why rents are as firm as they are and that will ultimately put a floor under house prices at some point. All of this being contingent on the idea that the Bank of Canada's terminal rate is hit in the early part of next year at 4 1/4, 4 1/2, somewhere in that range, because it turns out the Bank of Canada needs to get to use something like 5%, just a big number, surely there is more pain to come in the housing market in that scenario.
>> So does the dynamic of a growing population mean that even though we have seen this pullback in housing, some people are concerned that housing has been such an important point of the economic growth story in this country for so many years that a pullback means very bad things for the economy.
Can we be saved from that state by bringing in so many new Canadians?
>> Yes, there is also pent up demand in the auto sector which should help auto sector's robust when you would under normal conditions expect sales to fall. One of the things about growing population is you need more cars for them to drive. In this country, people need and desire autos.
There is an overhang on auto demand from 2020, 2021, which will be… It will help cushion the blow on that specific part of the retail sector in 20 so, in 23.
And the last thing I would just say is that the really big picture, I don't think it was healthy that we were spending 1 to 1 1/2% of economic activity on brokerage fees.
That's not an efficient use of economic resources.
So housing will probably contribute less to growth going forward than it has recently years, but that's not an unhealthy thing necessarily, just a question of can we find out if there is segments of the economy to transition to?
And that's really sort of the million-dollar question with Canada. How do we support business investment?
What is our next industry it now that the manufacturing sector has matured in the oil sector has matured?
I guess that remains to be seen.
>> Our household vehicle will be coming up on 10 years old and this coming spring. I don't think I can hold my wife off much longer, so I'm probably gonna be at least one of those Canadians. A little break for the questions but as always, make sure you do your own research before making any investment decision.
You will back to your questions for Andrew Kelvin on the Canadian economy in a moment. You can get in touch with us anytime.
Just email us at moneytalklive@td.com. Delegate our educational segment of the day.
when you are looking to make an investment, there are different types of orders you can consider. Jason Hnatyk, client education instructor TD Direct Investing has more on market and limit ordersand how you can use them on the platform.
>>and placing a traitor to essential tactics that every self directed investor needs to make sure they got in their back Pollock hit. So WebBroker has many tools to stay informed about the different stocksthat they may be choosing to invest in and many different order types to place your traits with. So we are going to jump into WebBroker now so we can get a sense of what information is available and how easy it is to place a trade.
So to pull up your first quote, go to the research tab at the top of the page and then under investments, we will choose stocks.
So for this particular company that we have in the page, you will notice the quote is at the top of the page.
This is the last traded price for this particular company that has traded throughout the day.
And then you will see the change that it is represented as an up or down number that will reflect the change that the last trade is at from the previous day's closing price. The percentage that is off to the right, that is a percentage of the change for the entire day.
It is sometimes useful to refer to these percentages as it helps us compare apples to apples because as we know, many stocks are trading at many different prices on the market.
When the two pieces of information right below the last traded price here, it's very important that we get a handle on as self-directed investors, that is the bid and the ask price. Those of the current prices that are represented as all the other people, they are engaged in the market, the bid is representing the highest bid to buy on orders that are already out there in the asking price is showing us the lowest offer to sell.
So those are very key pieces of information to understand because depending if we are buying or selling, it helps us to understand what those prices might be that we are buying and selling to and from.
Additionally on this page, there's a lot more information that you can access. I will scroll down on the right-hand side, we have some fundamental information that can be very informative.
You can find out what the dividend of the company may or may not be paying. You can find out what the earnings-per-share are amongst other useful pieces of information. Take some time, diving, put your hands on it. You will be a better and more informed trader for it. Additionally, before we jump into placing a trade, what useful tool that WebBroker offers to help you stay informed so you don't need to kind of place one stock in at a time. We do offer a watchlist feature in the website.
You will notice next to the buy and sell button, there is a little star here with an add to watchlist. It allows you to quickly and conveniently make a list of stocks that you want to watch and allows you to make a list so that you can stay informed in a convenient fashion. Once you edit your watchlist, you will notice the same icon is up in the top right-hand corner. This will allow you to access up to 10 list that you have the ability to create and curate and make sure that you are kept informed in a convenient fashion.
Let's move on to placing a trade, and that's the easy part. You can either access the trading to get through the buy sell button in the top right-hand corner.
Additionally, and even more simply, you can use the buy and sell button next year quote. If we want to buy this particular security, we go ahead and select the buy button. This is going to bring us into our order ticket where we will now see the same coding information on the right-hand side to stay informed throughout the order entry process. One thing to keep in mind is that WebBroker is real-time but it is not streaming. So if you spend some time doing some additional analysis, deciding how many shares you'd like to place, the refresh button is located here in the bottom right.
You can go ahead and select that circle. That will update the quote into another real-time quotes you are once again working of most recent data. Now let's get into our order entry process.
The quantity field is the first place where you will have some choices to make. You can enter whatever quantity works for you, whether that's one share or a thousand, you can make sure that quantity is up to each and every investor.
As we have the shares selected, we then can choose which type of order we would like to place.
There are many different order types that we will focus on in future sessions.
We will focus briefly here just on market and limit.
They are typically the most commonly used orders that are placed on the web.
Now, market order for this particular order is speed of execution. When you select a market order, you're not saying I want to buy it at a particular price, you're saying, I want to buy my shares right now at the best price available.
Keep in mind who you are buying from. This is the asking price on the right-hand side. So our market orders will buy me 100 shares at the best market price available. So no price guarantee, but I can guarantee your order will be filled immediately.
the next order that we can discuss will be our limit order.
This order is an opportunity for you to take control over the price at which you are order would be executed. So the limit order is great because you get price certainty.
I can't guarantee a price will be executed, but you can take control and ensure that you are only paying exactly what you are willing to pay.
So from this particular case, we can see the current asking price is 8953.
Maybe I don't want to spend that much.
Maybe 8950 is the most I'm willing to spend. So when you send this order through, you're saying, I want to buy 100 shares at this particular company at no more than the price we have on screen.
So once again, the market order is for speed of execution, instant billet whatever the next price happens to be, a limit order gives you with that control to ensure you are filled at the price that you're willing to pay. Now, the last part of action you can take on this order would be until section.
You have the control to specify exactly how long your orders will be open for. Market orders are only good for the day, meaning that it's going to execute instantly anyways, but if we are focusing on limit orders, you can have it lost until 4 PM when the market closes or you can specify a particular date range you'd like to have your order open for or you can choose to cancel which would mean in the Canadian market that would be 90 days. That would be hundred and 80 in the American market. Once that is done you can preview order, said his tefillin hopefully you are on your way to make some money.
>> Our thanks to Jason Hnatyk, client education instructor TD Direct Investing.
On a programming no, Jason is going to join us on Thursday to take your questions about how to better use the WebBroker platform.
You want to make sure as well as check out the learning centre in WebBroker for more educational videos, live interactive master classes and upcoming webinars.
Now before you get back to your questions about the Canadian economy, a reminder of how you get in touch with us.
Do you have a question about investing or what's driving the markets?
Our guests are eager to hear what's on your mind, so send us your questions.
There are two ways you can get in touch with us. You can send us an email anytime@moneytalklive@td.com or you can use the question box right below the screen your own WebBroker.
Just writing your question and hit send.
We'll see if one of our guest can get you the answers right here at MoneyTalk Live.
We are back now with Andrew Kelvin taking your questions about the Canadian economy.
Let's get to some that came in in the past couple moments.
It is in the energy sector going to help the Canadian economy?
We were talking about a recession and there some idea that firming through prices should do something for us.
>> That's a really good question here the short answer is yes, the energy sector will help the Canadian economy. We do expect that energy prices next year will trade between 90 and hundred dollars a barrel, so that where they are today, and if global demand does not take prices there, we checked there will be some adjustments on the supply side that will bring the price there.
Overall GDP growth in Canada. What I would caution, though, is the impact of the energy sector on energy today is probably smaller than it would've been around the time of the financial crisis.
For the simple fact that we are in an environment where investment in the energy sector is becoming less attractive, given regulatory uncertainties, given the difficulty in building export capacity, and Canadian energy products tend to be quite large, capital-intensive projects.
So this oil, we haven't seen the same sort of wave of building new projects, acquisitions that we seen in past energy cycles, which means that the impact on employment, when business investment is a little bit more muted than it was in the past. So it still will be a positive, absolutely. It's not going to have the same incremental impacts as it had in past energy cycles.
So it will be helpful, it's especially helpful if you are the Government of Alberta, let's say, because it helps fill your coffers unless the government spend a little bit more money if it decides it wants to. But the big picture is it's not going to the same driver of growth that it was 10 or 12 years ago.
>> Is looking at those investment flows, good point indeed. Another question now about the rising rate environment.
Are rising rates of risk to governments given allthe COVID era debt they took on?
>> It will make debt service costs more expensive, there is no way around it. The government of Canada issuesbetween 350 and $400 billion debt per year. A lot of it is not deficits but refinancing existing debt.
But if you increase the cost of borrowing by 1%, for 350 or $300 billion, those are some large numbers.
>> Doesn't make me feel better my mortgage anymore.
> Right? And a lot of the debt is borrowed over the longer term. So it's not just a one-time cost.
Those costs do perpetuate into the future to stomachs in. Now, if you look at the… Passed earlier this month, they raised their public debt charges bio over a five-year period by about $28 billion.
Between 25 and 30. It's a large number.
It's important to look at this in a bigger context. The reason interest rates are rising is because the economy is booming.
While there is an increase in debt servicing charges close to $30 billion, revenues have been revised upwards by somewhere in the vicinity of $130 billion over five years.
So while the higher interest rates increases overall debt servicing costs, because they are a product of booming demand, it's also accompanied by an increase in revenues and, in fact, if you look at the rate at which deficits are inspected to of all over the next five years, that most recent update includes notable downward revisions to deficit forecast particularly for the current fiscal year. So the big picture, the government probably in better shape than they were six months ago.
But it's absolutely, I think, concerned with keeping the back of our mind that higher interest rates to have costs to government.
>> Another question here about the rate environment.
Wondering about whether we are doing the right thing.
Can your guest comment on whether rate hikes are the best way to deal with inflation? It's an interesting one. We've been getting this from a few reviewers as well, saying, are using the right tool, given the drivers of inflation?
>> So the Bank of Canada has one tool, which is interest rates and its variety of forms.
And they have one mandate, which is to keep inflation under control.
When all you have is a hammer, everything is a nail, would be the analogy. I do think it's probably the best tool to bring inflation under control because it's much more understood how monetary policy works for the economy to slow inflation then targeted fiscal interventions. Targeted physical interventions, at some level, is what got us into this mess. I met her I see them as the ideal solution.
Things like price controls have adverse impacts down the road they can be very difficult to predict.
I am quite sympathetic to the idea that perhaps leaving it to interest rates is too broad an approach. This is summer where I thinktargeted, very finally targeted physical measures can help. When we talk about was going on in Alberta with the two, 2 1/2 billion dollar package to deal with the harmful effects of inflation and little things that can help the people most negatively impacted by high interest rates our helpful and it's a way of accompanying monetary policy in a way that doesn't counteract that tighter monetary policy.
I guess the other thing I would suggest is that while supply chain disruptions, part of that was thing specific to supply factors and that is particularly true in Europe today with the energy disruptions, but a lot of supply chain disruptions that we experienced in North America were due to the fact that there is just this huge surge in goods demand.
The supply chain problems at some level caused by very strong demand. We were demanding more things that could go through ports. We were demanding more things that factories could produce that manifested itself as a supply-chain issue but really the root cause of that was demand and interest rates are pretty good way of dealing with them.
>> We are going to get back your questions for Andrew Kelvin on the Canadian economy in just a moment's time.
as always, make sure you do your own research before making any investment decisions and a reminder, you can contact us at any time.
do you have a question about investing or withdrawing the markets?
Argus are eager to hear what's on your mind, so send us your questions.
There are two ways you can get in touch with us. You can send us an email anytime at moneytalklive@td.com.
Or you can use the question box right below the screen here on WebBroker, just write in your question and hit send. We will see if one of our guests can get your answer right here at MoneyTalk Live.
Following anti-lockdown protests across China, there is now some optimism that the unrest could result in an easing of some of the restrictions there.
But will a move away from the zero COVID strategies lead to a quicker opening in the world's second-largest economy? Our Anthony Okolie has been digging into a new report on that very topic. What you think?
>> Thanks.
As everyone knows, COVID cases in China have jumped substantially, reaching close to 40,000 infections. The number of COVID cases have been recorded in almost all of the provinces. As the chart shows, the number of provinces with cases has risen sharply since bottoming out earlier this summer.
Beijing has acknowledged the public unhappiness with China's strictanti-COVID a policy is in their protests across the country.
Beijing's health department reaffirm their commitment to those measures. But there is hope for a gradual easing of COVID measures, raising optimism in markets in easing COVID measures.
The biggest challenge, course, facing Chinese authorities is vaccine coverage.
While cases are declining from record highs of about 40,000, daily caseloads are still hovering somewhere around 10,000. As the chart shows, stats from the NHC, 86% of over 60s and about 66% of the over 80 age group have been vaccinated three times, but most have only received two jabs and that's a major problem, particularly if we do see a major COVID wave that could overwhelm the country's medical systems, particularly in rural areas. Again, given the size of China's population, that means that millions are at risk.
However, while markets remain uncertain about the situation right now in China, investors are betting that the unrest will result in an easing of some restrictions and the market is also speculating that the recent protests will accelerate the timelines of reopening in China.
>> That's the markets pegylation.
What is TD Security saying about the chance that China could actually speed up the reopening process?
> TD Securities is saying, hold on here. Despite the protests, TD Securities does not think that the government is about to open the door to quick easing of COVID restrictions for a number of reasons.
One is still a lack of boosters for the elderly population.
Secondly, relatively low efficacy of Chinese vaccines.
Third, a limited ICU capacity.
So any opening is likely to be very slow, according to TD Securities, slow and gradual to avoid any pressure on the health system going for.
>> Fascinating stuff, one of the big issues facing the global economy. Thanks.
>> My pleasure.
>> MoneyTalk Anthony Okolie.
Let's check in on the markets now, we'll start your own pastry with the TSX Composite Index.
We've got 71 points to the upside, about 1/3 of a percent. Nothing too dramatic.
We of affirming in the price of crude, real's wounded due to those protests in China over the weekend, concerns rippled through a lot of the markets including the energy market.
Crude is back in positive territory, but 71 bucks per barrel.
Let's take a look at Crescent Point Energy.
tHEY ARE TO THE UPSIDE AT 10 BUCKS AND $0.47 PER SHARE, UP ABOUT 2%.
Some other energy names that are moving off, let's check in on TC Energy. About some of the cost increases they are talking about for the coastal got dazzling pipeline. Those are down to the tune of 3 1/2%. South of the border, and in a choppy trading session. They are trying to figure it was going on with the world economy, with China.
We have also been hearing from some fed speakers about the future path of rate hikes and investors try to make sense of it all. Got the SP down pretty modestly, about 9%.
The NASDAQ is down to a little more than half a percent. Exxon, names of the border as well, with the affirming of crude prices, got Exxon's lot at this hour, 110 bucks per share, up about a of a percent.
Right now we are back with Andrew Kelvin from TD Securities, talking about the economy.
Let's talk about what geographic regions could lead the way in 2023 for this country?
>> This really comes back to that energy price question. with energy prices expected to improve and with the energy sector expected to be a positive contributor to the growth in canada next year, energy producing provinces should strongly outperform the rest of the country. So I would look for Alberta, Saskatchewan and Newfoundland. I think it will be a little bit more manageable in those economies. On the other hand, you are looking at a few particularly at highly leveraged parts of the country. These are the parts of the country that while they do benefit from the highest population growth quite often, they also have the highest house prices and therefore the highest household leverage. So Ontario and British Colombia laggards could be a little bit in… Then it could be in provinces that have more moderate debt service ratios on average across households. So really for next year, I think geographically is going to be the year for the energy provinces which really helps make up for the fact that they were laggards during the pandemic.
>> We are out of time for audience questions.what are you anticipating to the Bank of Canada's rate decision?
>> I could make a compelling argument for 25 or 50 basis points. That's a question, will be 25 or 50?I would encourage people to pay too much attention on the sort of particular things like Gov. Macklem has said.
We have seen in the not-too-distant past that central bank comments can have a short shelf life. My instinct is that with monetary policy starting to work, we should be pretty close to the top of our tightening cycle.so we do believe at 4 1/4, it will be the end of the BOC's tightening cycle here. Whether we get there through 25 Basis Point Move in December or January or a 50 Basis Point Move in December or ending the rate hikes in January, I don't know that I could make a compelling argument one way or the other. The markets are trading it as a coin toss. Our view is that it will be a 25 basis point move, but I could be convinced very easily to flip that to a 50 and then back to 25 depending on how you want to frame those arguments because at the end of the day, what matters is the terminal rate. The path to get there it doesn't matter as much and Jesse Miss of the Bank of Canada has acknowledged that we are getting closer to the end of this tightening cycle. So the end is in sight, I guess that would be a bit of a piece of good news for people who are may be feeling a bit of pain from higher interest rate.
>> Always a pleasure having you.
>> Thank you for having me.
>> Are things Andrew Kelvin, G Canada strategist at TD Securities. Stay tuned for tomorrow show. Daniel Ghali, Senior commodity strategist at TD Securities will be our guest taking your questions about commodities. Get them ahead of time if you have them brewing up there in your head and can't wait to get them in. Email moneytalklive@td.com. That's all the time we have for the show today. Thanks for watching. We'll see you tomorrow.
[music]
Every day, I'll be joined by guests from across TD, many of whom you'll only see her.
We are going to take you through its moving the markets and answer your questions about investing.
Coming up on today show, we are going to hear from TD Securities chief Canada strategist, Andrew Kelvin, with his take on this latest GDP report and what it could mean for next week's Bank of Canada rate decision. And in today's WebBroker education segment, Jason Hnatyk's going to take us through the difference between market and limit orders and how you can use them on the platform.
So here's how you can get in touch with us.
Just email moneytalklive@td.com where you can follow that viewer response box right under the video player you're on a broker.
Before we get to our guest of the day, let's get you an update on the markets. Bit of a mixed trading session, some of the concerns about ChinaAnd the pushback against COVID restrictions there are easing to a certain degree, but it's a bit of a choppy day. On the TSX right now it's up a modest 66% points, as 1/3 of a percent. Benchmark crude a little north of 78 bucks per barrel, as again.
They recovered from yesterday's decrease. Some energy names are showing a bit of strength.
Let's check in on Cenovus right now entailed staring at this hour.
It's up to the tune of about, I'll look over there for that one, about 4%, 27 bucks and change.
Kinross, though, noticing gold moving higher as well. A bit of a pullback in the US but right now so some gold names in positive territory. About 2% for Kinross, a little bit more than five dollars.
South of the border, it's a been a bit choppy, the S&P 500 is down to a tune of about 15 points, nothing too dramatic. It's up a little more than 1/3 of a percent.
The tech heavy NASDAQ, let's check checking on that one and see how it stands up to the rest of the market, John about 1/3 of a percent.
On Bay Street and Wall Street, we have the likes of Chevron moving up with crude, a modest 1% on Chevron.
That's your market update.
Canada's economy grew 2.9% in the third quarter as energy exports outweighed a drop in household spending and housing investment, but heading into next week's Bank of Canada rate decision, how is our central bank going to view today's release? Joining us now is Maurice Andrew Kelvin, Chief Canada strategist had TD Securities grade welcome back to the program.
>> Thank you for having me.
It's always a pleasure to be here.
>> What should we make of this GDP?
>> It really was all over the place.
If you want to take a positive spin on where the Canadian economy as you can find that. As it turns out, growth was much stronger than anticipated through June, July and August.
You can take that as a sign that there is even less slack in the economy and then we perhaps would've estimated 48 hours ago.
On the other hand, and is more towards where Eileen, some of the more forward-looking indicators were a little bit concerning.
We had a decline in out right terms of household planning. There was an extraordinarily strong second quarter.
The slowdown there was do you and could perhaps explain the pullback as a product of that very strong Q2, some snap back there.
But still, it's not necessarily a positive sign.
Housing investment remains under pressure and one of the significant positive indicators for that Q3 number was government spending.
I don't think we are going to be positioned in 2023 where we see continued government spending growth. So while it is great to have an upside surprise, some of the forward-looking pieces and some of the segments of the economy that we've really depended on over the last two, three, four, five years, are showing a little bit of weakness and we did get a flash estimate for October with the industry level stuff, with the monthly stuff, and that suggested that growth in October was roughly flat. So for the Bank of Canada, growth is obviously much shorter than it was in the third quarter but the 0.5% forecast for Q4, these are annualized numbers, so 0.5 annualized over 1/4 is essentially zero, that's still very much in play with a softer hand off in October. I think the Bank of Canada can really sort of dig into this, take whatever fits its priorities and it really comes back to you, are they really, really concerned with trajectory in CPI inflation?
There are early signs that their plan is working. If they are convinced enough that the tightening in the system is showing up in the parts of the economy that they needed to show up, household spending and housing, in such a way that will will reduce demand a bit, slow the economy through 2023, and bring inflation lower that way, they can probably sit back and raise it by a normal 25 basis points.
But if they are not convinced that the CPI trajectories under control, then you can look at the combination of still very high core inflation, so hi headline inflation, and we don't see moderation and headline inflation for the remainder of this year. And look at the fact that there is perhaps less slack in the economy than they had realized and say, you know what?
We still need to be a little bit more aggressive.
So I think you could make a compelling case for either 25 or 50 basis points here. The big picture for the Bank of Canada? We are getting closer to the end here of the tightening cycle.
We think you will see a pause certainly in the early half or the first quarter, I should say, of 2023.
>> Imagine our central bank, and he central bank, are really trying to bring it inflation down with rate hikes.
In this scenario, day tame inflation and bring it back to where it needs to be and they don't throw the economy over a cliff.
That brings us to recession risk.
It seems like everyone sort of baking in a recession of some sort for next year.
You take a look at numbers like these where we might be headed.
Is it a done deal or do we really have to sort of assume that we will be in a recession by next year?
>> I don't think it's a done deal for the simple fact that we expect population growth to be very robust throw 2023, and if we have more people, it makes it harder to have the total economy shrink in size.
On a per capita basis, it's going to feel very much like a recession whatever the outcome is in our view.
We do think there will be a modest recession in the first half of next year.
Annualized numbers around .52-.1 for the first quarters of the year.
But those are pretty modest overall in the context of one and 1/2 to 2% populate and go, those feel a bit more's significant declines in activity.
But the Bank of Canada, I think, from their perspective, the slowdown in the first half of 2023, that is, I think, baked in.
I think the Bank of Canada believes that as well.
You heard that in their most recent medications that a recession is as likely as not having one in the early part of 2023.
The trick for the Bank of Canada is they need to make sure that when they reach their pause point in early 2023 or perhaps the second quarter 2023 if I'm being too optimistic here, they need to make sure that is the end and they have done enough to get inflation under control.
if it turns out they stopped prematurely, that's a problem. And we get into early year 2023 or 2024, they realize they have an impact on enough to bring inflation under control and start raising rates again because that's the point where we really start compounding the economic impacts, really start amplifying the increases in the unemployment rate and you start having pandemic mortgagesreset at, you know, rates around current rates potentially which would be, I think, a market problem for the Canadian County.
> Earlier in the pandemic, obviously, fiscal and monetary policy work together to try to support… They cut the cost of borrowing down to nothing and then the fiscal side shows up and spends big.
Is there a risk of a disconnect? We find a place with the Bank of Canada and the central bank saying, here's our stop point. We've done the job. We hold here now, try to tame inflation.
Then, the public starts to feel the pain that they were worried about. Politicians don't like it when the publishing feels the pain because I reflect back on them. Is there a danger here with fiscal policy versus monetary?
>> There's always a danger. And I think if you go back to 2020, 2021, this is not to cast blame on the federal government by any means, it was a very difficult situation, fiscal policy is very hard to fine tune.
For me, the lesson of 2020 and 2021 is at fiscal policies powerful.
So I think it's very important that fiscal agents at the Central Bank act in concert here.
Now, in the near term, I don't see any indication that the federal government is likely to counteract the Bank of Canada's inflation targeting efforts.
It's sort of announced, as we've seen, we have the fiscal report recently, it was I thought pretty conservative in terms of their spending. When you talk about sayings that are targeted, low income tax credits, these are things that can have a big impact on individual livelihoods of a select group of people without having large-scale inflationary impacts.
If you look at the announcement out of Alberta recently, they spent 2 1/2 billion dollars to help curb inflation. These sort of targeted relief programs can help alleviate the biggest hit that comes from high inflation but it is important that the federal government not come out with large-scale fiscal stimulus programs here. I would say now, from the federal government, I don't see any indication that they are planning one in this spring.
You're right, it's very easy to say when you are not being pressured that you are not going to commit to irresponsible spending.
It could be altogether different if the government sees its lighting in the polls and getting a lot of pressure from its constituents.
I guess the saving grace there is it doesn't look like we need to see an election and not until 2025 so there won't be the sort of near-term pressures that would be on the government the same way would be if, let's say, we were staring at a fall 2023 election. That would be a scenario where I fear there would be a lot more political pressure in play.
>> One of the goodies and election time. A fascinating start to the program. We'll get your questions about the Canadian economy and interest rates for Andrew Kelvin in just a moment's time.
Our minor, course, you get in touch with us anytime.
Just email moneytalklive@td.com or fellow that your response box right here on the video player on WebBroker.
Right now, let's get you updated on some of the top stories in the world of business, take a look at how the markets are trading.
Suncor is keeping the Petro-Canada business, saying it will look for ways to improve its retail operations.
the decision follows a review that was spurred by activist investor Elliot Investment Management.
Suncor says improving Petro Canada will generate long-term value for its shareholders.
Restaurant Brands International says it has a deal to bring its Burger King and Popeye's banners to Eastern Europe.
The agreement with an affiliate of restaurant operator McWin includes a plan to open 600 Restaurants in Poland, Romania and Czech Republic.
TC Energy is warning investors of a material increase in project costs for its Coastal GasLink pipeline.
The company is citing labour cost, a shortage of workers and several unexpected natural events, including drought conditions and erosion.
TC Energy says it's still sees long-term value in the pipeline.
A quick look at how the markets are trading. We'll start here at home on Bay Street with TSX Composite Index. Right now, a modest gain of 77 points, but a sort of a percent. Seeing some firming in the price of crude after the big swoop it tookTo start the trading week yesterday and south of the border, the S&P 500, it's been a bit of a choppy session. Right now and modestly negative territory, down about 15 points on that broader read of the American market, 1/3 of a percent to the downside.
We are back with Andrew Kelvin taking your questions about the Canadian economy.
Look after them.
Right off the top, central bank talk.
Will the Bank of Canada diverge from the Fed at some point?
>> I think they'll have to.
The key develop into my mind in the Canadian economy in the last 10, 12 years, it's been the steady increase in household leverage, household debt to income ratios in Canada have steadily moved higher.
Lesson in the loosest possible sense is that leverage is safe, housing is a safe investment, we should take out debt to buy more of it. As a society, that sort of what we concluded. The US took the opposite tack. The United States has been leveraging for 10, 11, 12 years now. As a result, every rate hike in Canada impacts the economy more strongly than a rate hike in the United States does. If you lift basis points by 100 Points in Canada and the US, it hits Canadian households more heavily because of those high leverage levels.
Canada is starting to acknowledge that the hikes are having an impact on the household sector. We sell it with the GDP rates and household spending.
We may start to see an earlier slowdown in the pace of tightening. The Bank of Canada may hit a lower terminal rate which would achieve the same amount of easing that the Fed will have to get to.
Canada might be able to achieve that it 44 1/2%and in the US it would be five or 5 1/2%. That could be by next spring.
>> If that becomes apparent next spring…If we do get a weaker Canadian but, we will be importing inflation with all the things we buy from the United States. We get forced into sort of a weird corner on that one?
>> It is a bit of a strange dynamic because of that.
You're absolutely right.
I tend to think that if you are seeing a large change in demand, that offsets or more than offsets the impact of the imported inflation. But certainly, the fact that the Canadian dollar depreciates while the Bank of Canada is tightening, because it's been tightening by more, does make Canada's job were difficult.
I do think you will see another down leg and the Canadian dollar. We do have a forecast and a get sort of 72, 71 1/2 cents next spring, so we will sorta be retesting the levels we were at a little bit earlier this year, but not breaking through them.
And the Fed probably will reach its terminal rage in the second quarter of next year.
At that point, markets are forward-looking in nature.
At that point, we could see a pretty quick reversal of the fortunes of the Canadian dollar.
We could be back at levels around where we are today if not a little bit stronger by the end of 2023.
And if you want to take the very long term view, you go down to 2024 which might as well be the end of 2042 given how long two years have felt recently, we think we have a Canadian dollar at $0.80.
I think near term, it's reasonable to expect a little bit of weakness and through this late winter or early spring.
But longer term, we don't see the ad as a structural thing.
We see that as a temporary blood.
>> That's the nice lead into our next question from our viewer. Currency outlook, is the US dollar run done?
it's been strong against a basket of international currencies but in recent weeks, there's been some pullback.
Is there something happening here?
>> USL has been placing high versus the euro and the end.
Just the fact that the US dollar trend has broken doesn't mean we need to see US dollar weakness going forward either.
It US dollar probably has a little bit more fight in it. We can see a little bit of a rebound versus the euro, versus the Yen, compared to today's levels. But, you know, where is we can probably retest where the Canadian dollar was earlier this year, we came to be seen, in terms of the broad US dollar strength, we have probably seen the highs for the US dollar.
Because markets are a bit forward looking, they might be a little bit to forward-looking because we haven't established where our terminal is in the US so it's a bit early to start talking about 2023 rate cuts, but markets are starting to look at that, right? Markets are starting to look at the idea that, okay, inflation is starting to leg a bit in the United States, we seen some slowing growth, the market is costly looking for effective it.
Every two half months we have a story, well, maybe now it'll be the Fed pivot. It just takes one, right?
Markets have probably got a little bit ahead of themselves and that but I also think it's reasonable to suggest that we've seen the peak and broad dollars.
> Okay, another question coming in now. This is about our domestic economy, mainly the housing market. Which of you on the housing market? Are we near the bottom?
>> I think the housing market, it's very difficult most of the time to draw signal from it in the summer or winter.
There is just such seasonality in it. If you look at last August, we had house prices falling pretty dramatically, certainly in Toronto. And then they rebounded in September.
They are falling in this context of low demand, low supply. It didn't really say much about the overall trend.
Probably the similar dynamic in the winter which direction that goes in?
I don't know. But the winter, what happens in the months of December and January for the Canadian housing market will be noise more than signal.
Now, when you get into the spring, we are starting to see inventory rise a bit, just things like supply, sales to new listings, inventories are starting to recover to you a more normal levels.
We probably have another down leg and house prices sort of 3 to 5%. But longer term, that population dynamic does provide some support for the housing market.
That's not to say that just because an acid is valuable it can't be overvalued, but the big picture is Canada, unlike the United States 12 years ago, Canada's under bill.
We are not building enough homes to house our growing population. That's why rents are as firm as they are and that will ultimately put a floor under house prices at some point. All of this being contingent on the idea that the Bank of Canada's terminal rate is hit in the early part of next year at 4 1/4, 4 1/2, somewhere in that range, because it turns out the Bank of Canada needs to get to use something like 5%, just a big number, surely there is more pain to come in the housing market in that scenario.
>> So does the dynamic of a growing population mean that even though we have seen this pullback in housing, some people are concerned that housing has been such an important point of the economic growth story in this country for so many years that a pullback means very bad things for the economy.
Can we be saved from that state by bringing in so many new Canadians?
>> Yes, there is also pent up demand in the auto sector which should help auto sector's robust when you would under normal conditions expect sales to fall. One of the things about growing population is you need more cars for them to drive. In this country, people need and desire autos.
There is an overhang on auto demand from 2020, 2021, which will be… It will help cushion the blow on that specific part of the retail sector in 20 so, in 23.
And the last thing I would just say is that the really big picture, I don't think it was healthy that we were spending 1 to 1 1/2% of economic activity on brokerage fees.
That's not an efficient use of economic resources.
So housing will probably contribute less to growth going forward than it has recently years, but that's not an unhealthy thing necessarily, just a question of can we find out if there is segments of the economy to transition to?
And that's really sort of the million-dollar question with Canada. How do we support business investment?
What is our next industry it now that the manufacturing sector has matured in the oil sector has matured?
I guess that remains to be seen.
>> Our household vehicle will be coming up on 10 years old and this coming spring. I don't think I can hold my wife off much longer, so I'm probably gonna be at least one of those Canadians. A little break for the questions but as always, make sure you do your own research before making any investment decision.
You will back to your questions for Andrew Kelvin on the Canadian economy in a moment. You can get in touch with us anytime.
Just email us at moneytalklive@td.com. Delegate our educational segment of the day.
when you are looking to make an investment, there are different types of orders you can consider. Jason Hnatyk, client education instructor TD Direct Investing has more on market and limit ordersand how you can use them on the platform.
>>and placing a traitor to essential tactics that every self directed investor needs to make sure they got in their back Pollock hit. So WebBroker has many tools to stay informed about the different stocksthat they may be choosing to invest in and many different order types to place your traits with. So we are going to jump into WebBroker now so we can get a sense of what information is available and how easy it is to place a trade.
So to pull up your first quote, go to the research tab at the top of the page and then under investments, we will choose stocks.
So for this particular company that we have in the page, you will notice the quote is at the top of the page.
This is the last traded price for this particular company that has traded throughout the day.
And then you will see the change that it is represented as an up or down number that will reflect the change that the last trade is at from the previous day's closing price. The percentage that is off to the right, that is a percentage of the change for the entire day.
It is sometimes useful to refer to these percentages as it helps us compare apples to apples because as we know, many stocks are trading at many different prices on the market.
When the two pieces of information right below the last traded price here, it's very important that we get a handle on as self-directed investors, that is the bid and the ask price. Those of the current prices that are represented as all the other people, they are engaged in the market, the bid is representing the highest bid to buy on orders that are already out there in the asking price is showing us the lowest offer to sell.
So those are very key pieces of information to understand because depending if we are buying or selling, it helps us to understand what those prices might be that we are buying and selling to and from.
Additionally on this page, there's a lot more information that you can access. I will scroll down on the right-hand side, we have some fundamental information that can be very informative.
You can find out what the dividend of the company may or may not be paying. You can find out what the earnings-per-share are amongst other useful pieces of information. Take some time, diving, put your hands on it. You will be a better and more informed trader for it. Additionally, before we jump into placing a trade, what useful tool that WebBroker offers to help you stay informed so you don't need to kind of place one stock in at a time. We do offer a watchlist feature in the website.
You will notice next to the buy and sell button, there is a little star here with an add to watchlist. It allows you to quickly and conveniently make a list of stocks that you want to watch and allows you to make a list so that you can stay informed in a convenient fashion. Once you edit your watchlist, you will notice the same icon is up in the top right-hand corner. This will allow you to access up to 10 list that you have the ability to create and curate and make sure that you are kept informed in a convenient fashion.
Let's move on to placing a trade, and that's the easy part. You can either access the trading to get through the buy sell button in the top right-hand corner.
Additionally, and even more simply, you can use the buy and sell button next year quote. If we want to buy this particular security, we go ahead and select the buy button. This is going to bring us into our order ticket where we will now see the same coding information on the right-hand side to stay informed throughout the order entry process. One thing to keep in mind is that WebBroker is real-time but it is not streaming. So if you spend some time doing some additional analysis, deciding how many shares you'd like to place, the refresh button is located here in the bottom right.
You can go ahead and select that circle. That will update the quote into another real-time quotes you are once again working of most recent data. Now let's get into our order entry process.
The quantity field is the first place where you will have some choices to make. You can enter whatever quantity works for you, whether that's one share or a thousand, you can make sure that quantity is up to each and every investor.
As we have the shares selected, we then can choose which type of order we would like to place.
There are many different order types that we will focus on in future sessions.
We will focus briefly here just on market and limit.
They are typically the most commonly used orders that are placed on the web.
Now, market order for this particular order is speed of execution. When you select a market order, you're not saying I want to buy it at a particular price, you're saying, I want to buy my shares right now at the best price available.
Keep in mind who you are buying from. This is the asking price on the right-hand side. So our market orders will buy me 100 shares at the best market price available. So no price guarantee, but I can guarantee your order will be filled immediately.
the next order that we can discuss will be our limit order.
This order is an opportunity for you to take control over the price at which you are order would be executed. So the limit order is great because you get price certainty.
I can't guarantee a price will be executed, but you can take control and ensure that you are only paying exactly what you are willing to pay.
So from this particular case, we can see the current asking price is 8953.
Maybe I don't want to spend that much.
Maybe 8950 is the most I'm willing to spend. So when you send this order through, you're saying, I want to buy 100 shares at this particular company at no more than the price we have on screen.
So once again, the market order is for speed of execution, instant billet whatever the next price happens to be, a limit order gives you with that control to ensure you are filled at the price that you're willing to pay. Now, the last part of action you can take on this order would be until section.
You have the control to specify exactly how long your orders will be open for. Market orders are only good for the day, meaning that it's going to execute instantly anyways, but if we are focusing on limit orders, you can have it lost until 4 PM when the market closes or you can specify a particular date range you'd like to have your order open for or you can choose to cancel which would mean in the Canadian market that would be 90 days. That would be hundred and 80 in the American market. Once that is done you can preview order, said his tefillin hopefully you are on your way to make some money.
>> Our thanks to Jason Hnatyk, client education instructor TD Direct Investing.
On a programming no, Jason is going to join us on Thursday to take your questions about how to better use the WebBroker platform.
You want to make sure as well as check out the learning centre in WebBroker for more educational videos, live interactive master classes and upcoming webinars.
Now before you get back to your questions about the Canadian economy, a reminder of how you get in touch with us.
Do you have a question about investing or what's driving the markets?
Our guests are eager to hear what's on your mind, so send us your questions.
There are two ways you can get in touch with us. You can send us an email anytime@moneytalklive@td.com or you can use the question box right below the screen your own WebBroker.
Just writing your question and hit send.
We'll see if one of our guest can get you the answers right here at MoneyTalk Live.
We are back now with Andrew Kelvin taking your questions about the Canadian economy.
Let's get to some that came in in the past couple moments.
It is in the energy sector going to help the Canadian economy?
We were talking about a recession and there some idea that firming through prices should do something for us.
>> That's a really good question here the short answer is yes, the energy sector will help the Canadian economy. We do expect that energy prices next year will trade between 90 and hundred dollars a barrel, so that where they are today, and if global demand does not take prices there, we checked there will be some adjustments on the supply side that will bring the price there.
Overall GDP growth in Canada. What I would caution, though, is the impact of the energy sector on energy today is probably smaller than it would've been around the time of the financial crisis.
For the simple fact that we are in an environment where investment in the energy sector is becoming less attractive, given regulatory uncertainties, given the difficulty in building export capacity, and Canadian energy products tend to be quite large, capital-intensive projects.
So this oil, we haven't seen the same sort of wave of building new projects, acquisitions that we seen in past energy cycles, which means that the impact on employment, when business investment is a little bit more muted than it was in the past. So it still will be a positive, absolutely. It's not going to have the same incremental impacts as it had in past energy cycles.
So it will be helpful, it's especially helpful if you are the Government of Alberta, let's say, because it helps fill your coffers unless the government spend a little bit more money if it decides it wants to. But the big picture is it's not going to the same driver of growth that it was 10 or 12 years ago.
>> Is looking at those investment flows, good point indeed. Another question now about the rising rate environment.
Are rising rates of risk to governments given allthe COVID era debt they took on?
>> It will make debt service costs more expensive, there is no way around it. The government of Canada issuesbetween 350 and $400 billion debt per year. A lot of it is not deficits but refinancing existing debt.
But if you increase the cost of borrowing by 1%, for 350 or $300 billion, those are some large numbers.
>> Doesn't make me feel better my mortgage anymore.
> Right? And a lot of the debt is borrowed over the longer term. So it's not just a one-time cost.
Those costs do perpetuate into the future to stomachs in. Now, if you look at the… Passed earlier this month, they raised their public debt charges bio over a five-year period by about $28 billion.
Between 25 and 30. It's a large number.
It's important to look at this in a bigger context. The reason interest rates are rising is because the economy is booming.
While there is an increase in debt servicing charges close to $30 billion, revenues have been revised upwards by somewhere in the vicinity of $130 billion over five years.
So while the higher interest rates increases overall debt servicing costs, because they are a product of booming demand, it's also accompanied by an increase in revenues and, in fact, if you look at the rate at which deficits are inspected to of all over the next five years, that most recent update includes notable downward revisions to deficit forecast particularly for the current fiscal year. So the big picture, the government probably in better shape than they were six months ago.
But it's absolutely, I think, concerned with keeping the back of our mind that higher interest rates to have costs to government.
>> Another question here about the rate environment.
Wondering about whether we are doing the right thing.
Can your guest comment on whether rate hikes are the best way to deal with inflation? It's an interesting one. We've been getting this from a few reviewers as well, saying, are using the right tool, given the drivers of inflation?
>> So the Bank of Canada has one tool, which is interest rates and its variety of forms.
And they have one mandate, which is to keep inflation under control.
When all you have is a hammer, everything is a nail, would be the analogy. I do think it's probably the best tool to bring inflation under control because it's much more understood how monetary policy works for the economy to slow inflation then targeted fiscal interventions. Targeted physical interventions, at some level, is what got us into this mess. I met her I see them as the ideal solution.
Things like price controls have adverse impacts down the road they can be very difficult to predict.
I am quite sympathetic to the idea that perhaps leaving it to interest rates is too broad an approach. This is summer where I thinktargeted, very finally targeted physical measures can help. When we talk about was going on in Alberta with the two, 2 1/2 billion dollar package to deal with the harmful effects of inflation and little things that can help the people most negatively impacted by high interest rates our helpful and it's a way of accompanying monetary policy in a way that doesn't counteract that tighter monetary policy.
I guess the other thing I would suggest is that while supply chain disruptions, part of that was thing specific to supply factors and that is particularly true in Europe today with the energy disruptions, but a lot of supply chain disruptions that we experienced in North America were due to the fact that there is just this huge surge in goods demand.
The supply chain problems at some level caused by very strong demand. We were demanding more things that could go through ports. We were demanding more things that factories could produce that manifested itself as a supply-chain issue but really the root cause of that was demand and interest rates are pretty good way of dealing with them.
>> We are going to get back your questions for Andrew Kelvin on the Canadian economy in just a moment's time.
as always, make sure you do your own research before making any investment decisions and a reminder, you can contact us at any time.
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Following anti-lockdown protests across China, there is now some optimism that the unrest could result in an easing of some of the restrictions there.
But will a move away from the zero COVID strategies lead to a quicker opening in the world's second-largest economy? Our Anthony Okolie has been digging into a new report on that very topic. What you think?
>> Thanks.
As everyone knows, COVID cases in China have jumped substantially, reaching close to 40,000 infections. The number of COVID cases have been recorded in almost all of the provinces. As the chart shows, the number of provinces with cases has risen sharply since bottoming out earlier this summer.
Beijing has acknowledged the public unhappiness with China's strictanti-COVID a policy is in their protests across the country.
Beijing's health department reaffirm their commitment to those measures. But there is hope for a gradual easing of COVID measures, raising optimism in markets in easing COVID measures.
The biggest challenge, course, facing Chinese authorities is vaccine coverage.
While cases are declining from record highs of about 40,000, daily caseloads are still hovering somewhere around 10,000. As the chart shows, stats from the NHC, 86% of over 60s and about 66% of the over 80 age group have been vaccinated three times, but most have only received two jabs and that's a major problem, particularly if we do see a major COVID wave that could overwhelm the country's medical systems, particularly in rural areas. Again, given the size of China's population, that means that millions are at risk.
However, while markets remain uncertain about the situation right now in China, investors are betting that the unrest will result in an easing of some restrictions and the market is also speculating that the recent protests will accelerate the timelines of reopening in China.
>> That's the markets pegylation.
What is TD Security saying about the chance that China could actually speed up the reopening process?
> TD Securities is saying, hold on here. Despite the protests, TD Securities does not think that the government is about to open the door to quick easing of COVID restrictions for a number of reasons.
One is still a lack of boosters for the elderly population.
Secondly, relatively low efficacy of Chinese vaccines.
Third, a limited ICU capacity.
So any opening is likely to be very slow, according to TD Securities, slow and gradual to avoid any pressure on the health system going for.
>> Fascinating stuff, one of the big issues facing the global economy. Thanks.
>> My pleasure.
>> MoneyTalk Anthony Okolie.
Let's check in on the markets now, we'll start your own pastry with the TSX Composite Index.
We've got 71 points to the upside, about 1/3 of a percent. Nothing too dramatic.
We of affirming in the price of crude, real's wounded due to those protests in China over the weekend, concerns rippled through a lot of the markets including the energy market.
Crude is back in positive territory, but 71 bucks per barrel.
Let's take a look at Crescent Point Energy.
tHEY ARE TO THE UPSIDE AT 10 BUCKS AND $0.47 PER SHARE, UP ABOUT 2%.
Some other energy names that are moving off, let's check in on TC Energy. About some of the cost increases they are talking about for the coastal got dazzling pipeline. Those are down to the tune of 3 1/2%. South of the border, and in a choppy trading session. They are trying to figure it was going on with the world economy, with China.
We have also been hearing from some fed speakers about the future path of rate hikes and investors try to make sense of it all. Got the SP down pretty modestly, about 9%.
The NASDAQ is down to a little more than half a percent. Exxon, names of the border as well, with the affirming of crude prices, got Exxon's lot at this hour, 110 bucks per share, up about a of a percent.
Right now we are back with Andrew Kelvin from TD Securities, talking about the economy.
Let's talk about what geographic regions could lead the way in 2023 for this country?
>> This really comes back to that energy price question. with energy prices expected to improve and with the energy sector expected to be a positive contributor to the growth in canada next year, energy producing provinces should strongly outperform the rest of the country. So I would look for Alberta, Saskatchewan and Newfoundland. I think it will be a little bit more manageable in those economies. On the other hand, you are looking at a few particularly at highly leveraged parts of the country. These are the parts of the country that while they do benefit from the highest population growth quite often, they also have the highest house prices and therefore the highest household leverage. So Ontario and British Colombia laggards could be a little bit in… Then it could be in provinces that have more moderate debt service ratios on average across households. So really for next year, I think geographically is going to be the year for the energy provinces which really helps make up for the fact that they were laggards during the pandemic.
>> We are out of time for audience questions.what are you anticipating to the Bank of Canada's rate decision?
>> I could make a compelling argument for 25 or 50 basis points. That's a question, will be 25 or 50?I would encourage people to pay too much attention on the sort of particular things like Gov. Macklem has said.
We have seen in the not-too-distant past that central bank comments can have a short shelf life. My instinct is that with monetary policy starting to work, we should be pretty close to the top of our tightening cycle.so we do believe at 4 1/4, it will be the end of the BOC's tightening cycle here. Whether we get there through 25 Basis Point Move in December or January or a 50 Basis Point Move in December or ending the rate hikes in January, I don't know that I could make a compelling argument one way or the other. The markets are trading it as a coin toss. Our view is that it will be a 25 basis point move, but I could be convinced very easily to flip that to a 50 and then back to 25 depending on how you want to frame those arguments because at the end of the day, what matters is the terminal rate. The path to get there it doesn't matter as much and Jesse Miss of the Bank of Canada has acknowledged that we are getting closer to the end of this tightening cycle. So the end is in sight, I guess that would be a bit of a piece of good news for people who are may be feeling a bit of pain from higher interest rate.
>> Always a pleasure having you.
>> Thank you for having me.
>> Are things Andrew Kelvin, G Canada strategist at TD Securities. Stay tuned for tomorrow show. Daniel Ghali, Senior commodity strategist at TD Securities will be our guest taking your questions about commodities. Get them ahead of time if you have them brewing up there in your head and can't wait to get them in. Email moneytalklive@td.com. That's all the time we have for the show today. Thanks for watching. We'll see you tomorrow.
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