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[music] >> Hello I'm Greg Bonnell and welcome to MoneyTalk Live, brought to you by TD Direct Investing.
Every day I'll be joined by guests from across TD, many of whom you will only see here we we'll take you through it's moving the markets and answer your questions about investing. Coming up today show: Bank of Canada has expected holding on rates and we will get a reaction from Andrew Kelvin, Chief Canada Strategist at TD Securities.
And in today's WebBroker education segment, Hiren Amin will take us through what a moving average is and how you can adjust on WebBroker.
Here is how you can get in touch with us on WebBroker.
You can email us at moneytalklive@td.com or Philip in your response on WebBroker.
Let's get you an update on the market.
Starting with the TSX Composite Index.
Benchmark crude prices still under a bit of pressure.
We will call that a gain of^...
¸that move seems to be fading.
Barely green, $9.68 a share for Crescent point.
Just up about 20 clicks there.
We saw some strength in the mining and that is starting to fade as well.
Still positive but a little less than half a percent.
South of the border, we have Jerome Powell testifying for the second day. Of course prepared comments yesterday from the chair of the US Federal Reserve.
That set the markets off and the selling phase. Right now modestly up 1/4 of a percent.
When it comes to the next rate hike meeting, 50 basis points, we have not made any decisions exactly.
But they did say they might have to go further and higher-than-expected. A bit more aggressive if need be.
The Bank of Canada is reaffirming its conditional pause and rate hikes, keeping them abound on hold for half percent. But the US Federal Reserve's warning hikes… How much longer can our central bank incur borrowing costs at the current level.
Joining us for Maurice Andrew Kelvin.
Chief strategist at TD Securities.
>>we always thought the Federal Reserve would finish at a higher terminal rate.
Each rate hike in Canada should bite a little bit harder than a rate hike in the US would. It's not inconsistent in that sense.
It does speak of this underlying tension where the Bank of Canada declares a pause in January.
I think a lot of people, it seemed maybe a little bit premature and overly confident in their assessment of the economy.
While I do share this view, we haven't really seen material signs of it yet.
The most recent jobs figures from January,the economy is not showing signs of slowing as the Bank of Canada had suggested when they put that initial pause in January. The fourth quarter was a little earlier than expected. CPI inflation involved in line for the bank account is last forecast which is why we expected that would stay on hold today.
But as we go into April, into June, we will need to see a pretty notable deceleration in economic activity in Canada to justify the Bank of Canada sold.
So that's the first piece of this. It may be that that Federal Reserve is seeing some strength on the ground.
That the Bank of Canada is not. But I would suggest that in an environment where the United States is showing resilience is probably going to be an environment with Canadian economy showing significant resilience. The second piece that will come into play is the currency. Because if the Federal Reserve really steps on the gas depending on what you think of this analogy, to tighten more than the market expects, that would put pressure on the Canadian dollar and with the Bank of Canada can be tolerant of fluctuations in the Canadian dollar, too much depreciation of the currency is inflationary and could bring them back in good hands. It's something to watch in the United States.
I agree it's extra-hawkish. To be expected. But there are balanced to how much those two central banks of Canada.
>> That sounds like it leaves the Bank of Canada and a hard place. The deck, with good reason to be concerned about higher borrowing costs really biting into households and their ability to make their debt payments but the same time, of the dynamic south of the border, I would not want to be a central bank governor on a good day. There seem to be very hard times to be a central by Gov.
>> It is a thankless job, no doubt.
So in terms of one what one thinks is common in the Canada and US,… Savings accumulated. That will help buffer the impact on household spending in Canada.
Even though we have these debt dynamics. I will say restricting monetary policy continues to wear and household spending.
But I would put forth even tighter labour markets, we need to see further deceleration going forward.
>> So the Bank of Canada needs to see these things turn in the economy. Some indications with the GDP underperforming.
The labour market still being hawkish. At some point we will get a spring budget from the federal government. That's the fiscal side.
Is there a danger now that those two camps start working at odds with each other?
The monetary policy is trying to achieve one thing that the fiscal policy wants to help.
>> It's always a danger.
In both directions.
There have been occasions in other countries where central banks have tried to loosen policy well fiscal agent is cutting spending which also works against the central bank schools. Obviously, in an inflationary environment, the risk would be more government stimulus with the Bank of Canada's job harder and ultimately cause rates to increase more.
I haven't seen any indication of this aggressive budget but calculations change all the time.
Certainly somebody could shift the poles of our government deciding if they need a shiny new policy that will go well with voters.
And things can change. I would just observe based on the physical update we got in November. Fiscal update. It didn't seem like the government was planning a very significant fiscal expansion. There's no need to see an election this year.
It's a minority government. It's always a risk.
Given that the next scheduled election is not for a few years now, I don't know that this is the time where sprinkle stimulus across the country to try and win a few extra votes.
So it's a risk and something we will be watching for very closely going into April. It's not part of our base case however.
>> Part of the Bank of Canada's base case is they think that inflation will get down around 3% by the middle of this year.
Are we that far off from the middle of this year and them achieving that?
>> I think so. A lot of base facts here.
Inflation was running extremely hot, I suppose, through the first part of 2022.
So, as those months of inflation fall in a year-over-year calculation, inflation just math mathematically falls.
So we can get down into the mid-threes without too much difficulty. I think the tricky part is moving from 3 1/2 to 2 1/2.
Because underlining inflation is running at a rate that is consistent with more, sort of 3 1/2 inflation.
I'm looking over a three month basis. So you need to see more disinflation on the month by month. To actually have a path to 2% inflation in 2024 which ultimately the bank's will.
That 3% midyear, inflationary that they talk about, that's a milestone in society.
It's not ultimately where they're trying to get to.
If we wind up at the end of 2023, inflation is still three and half percent.
That'll be a sign that the Bank of Canada made a dodgeball specific.
>> So the rates, maybe happy with higher.
The sweet spot is two.
But if we do have three, is it mission accomplished?
>> I think it's more comfortable being in there in the range.
They're trying to get to the midpoint of that range.
Ultimately. I think given the experience of 2022, certainly, and also what we are experiencing today, inflation expectations in the short term are elevated. There is an element of preserving credibility that we should take into account. So, in an environment where we are just sort of going along between 1 1/2 and 2 1/2 and maybe inflation hung out at 2.7 for a little while, they may not be overly concerned as well as they thought inflation will be stable going forward. In an environment where they have, really, Mr. target for a long period of time now, I think it's very difficult to get to 2.9% it's a mission accomplished.
They really have to achieve that 2% number to restore the credibility of the 2% inflation target.
>> Fascinating stop and a great start to the show.
We will get your questions what interest rates in the economy and with Andrew Kelvin adjustable it's time.
A reminder of course that you get in touch with us any time by emailing moneytalklive@td.com or Philip at your response box under the video player) WebBroker.
And right now some of the top stories in the world of business and a look at how the markets are trading.
First Quantum has struck a deal with the government of Panama that will see it's Coppermine returned to full production.
The company says the draft deal addresses Panama's concern about royalty payments.
The agreement still has to go through a 30 day consultation process in various government level approvals.
Adidas says it's costly split with the artist formerly known as Kanye West could result in an annual loss.
That will be the first annual loss for the company in 30 years. The fitness apparel firm and its partnership ended its partnership with the artist last fall.
Some sneakers in that partnership.
Adidas says it is embarking on rebuilding in 2024.
Regulators say they are investigating Tesla after receiving two complaints with the model Y vehicle. Maybe mainly that the steering wheel detached while driving.
The Highway traffic safety Administration says it involves 120,000 Tesla cars. An initial step before thinking about a recall being ordered.
Checking on the market, let's start here.
Jerome Powell continues to testify with lawmakers on Capitol Hill.
Very modest 4.3 points.
More than 1/10 of a percent of the S&P 500.
We are back now with Andrew Kelvin taking your questions about the economy and interest rates. Let's get to them.
When rather what are you expecting from the jobs data this week ?
>> All focus on the Canadian jobs, it's my bread-and-butter I suppose. January was frankly hilarious of a number.
Hundred 30000 Jobs Added in Canada.
We do expect some infringement there. We expect to see the economy show a decrease of 10000 Jobs in February.
I don't think it should be interpreted add a sign of weakness per se. The six month average is going to main remain extremely robust.
That is well above the certain brake and pace that would hold the unemployment rate stable.
Still in our mind with a very tight labour market. It's really just a question of reversing some of these one-off impacts.
Namely the impact of a very mild January weather which should have been construction hiring and things like that.
The story here is bigger picture, I would return to a normal pace of employment gains and I will read too much into the employment data until we also get the numbers for March and for April and for May.
>> Are the wages at this point just as important as the headline? Either gain or loss of positions? I mean the wage gains which then people fear will fuel inflation.
>> That's a hugely important piece of the labour market now. Going into February, large wage growth… The hourly our wage rate for workers. That fell from 4% in January. In January 2022, it was sort of, the last COVID shutdown month.
There was this compositional thing were the workers who tended to lose their jobs during the COVID shutdown's tended to be lower wage workers.
So it had a compositional impact. That follows the data.
In February, we will get this little pop.
That's the thing to watch going forward because with supply chains healing, I'm pretty comfortable with the idea that we will see slower goods inflation this year.
Putting food aside, energy prices are not working where goods and prices for things like autos and electronics. It should see disinflation this year.
I'm less comfortable on the services side of things.
Wages… Wage growth of 5% is not consistent with services inflation below 3%. Which is therefore not consistent with headline inflation at 2%. If wage growth is not decelerated, the Bank of Canada will have to continue until wage growth does decelerate.
>> Let's get to another question now.
The need for higher rates… When will the interest rate start dropping?
>> So that's a great question.
I get this question and a lot of people are asking. It really depends on how the economy unfolds and how the inflation path unfolds. Right now, interest rates are already a fairly restrictive stance.
I suppose the word I'm looking for.
So right now, the level of interest rates should slow the economy to grow less than its potential rate.
The bank of Canada cannot start cutting rates until you get growth that is still below its trend rate. Let's call that 2%.
It's in that ballpark.
The bank cannot cut rates until inflation is below 3% and falling.
It can't cut rates until the economy is… Excess supply which would be an unemployment rate that's perhaps the percentage point higher. I can't tell a story were all three of those things happen in 2023. I mean I could.
But I would be really stretching the bounds of credibility to do that.
We are looking for some rate cuts in 2024 and that's based on the idea that we think the economy can start to slip quite quickly.
We can see rate cuts as early as the first quarter of 2024.
I would expect in that instance, a speed of rate cuts quite a bit slower than the right headaches we saw. I don't that the Bank of Canada will turn around and start cutting by 15 and 75 and 100.
>> Unless you have a crisis.
>> Unless something really awful happens which is not what we are predicting. It's a difficult thing to predict in general.
So we are looking for a modest pace starting in the first quarter of next year.
The first half of 20 2023, we will have to push that number out.
>> What about where that neutral rate would be?
The bank is even recognizing that we are in restrictive territory now because we want to be in restrictive territory.
We are trying to cool things off and tame inflation.
If we start getting cuts because were waiting in the battle against inflation where is that neutral range?
>> It's a subject of debate right now more than normal.
The bank, between 23%. You go to the midpoint and that's what you think. I would argue that in the period after the financial crisis, before the pandemic, the neutral rate was materially lower than that and I say that is because the Bank of Canada's rate, we never had significant inflation… I look at those two facts, it tells me that the neutral rate was probably below 2 1/2.
Certainly maybe even below two. As we headed to this post pandemic.
Where inflation is a lot more built into the economy and resilience… The fact that the economy has the amount of tightening we've Artie seen, that would argue the opposite.
Maybe rates are higher than we had previously expected and you can look at things like onshoring as a factor as well.
So, all of this is to say that the Bank of Canada updates or forecasts, we will be paying really close attention to see with the Bank of Canada does in April.
Because for the first time in a long time, I think there is a compelling case for that vision to the neutral rate.
> Let's take another question. This one is about the outlook for currency. What's the outlook for the loonie?
We've talked about a lot of factors that could drive our currency. We will things end up?
>> Another great question. If we want to take the short term noise out of it, the Canadian dollar where it is it is at a cheap level compared to longer term.
So by the end of this year, we will be talking about the Canadian dollar at $0.75.
Near-term though, with the Bank of Canada sticking to their guns and sticking to their conditional pause, the Federal Reserve delivering very hawkish statements, that something that will put upward pressure on the US dollar and therefore downward pressure on the Canadian dollar. So near-term the balance risk is skewed toward a weaker Canadian dollar.
… But in the longer term, our forecasts with the Canadian dollar finishing in the year at about $0.75.
>> Is at a place for the Bank of Canada would feel comfortable with the loonie?
We talked about inflation through the exchange rate if the loonie falls through.
>> Are really contextual question in that it depends on what the economic backdrop is in Canada.
It is substantially weaker than it is in the US. The Bank of Canada is more comfortable with the weaker Canadian dollar policy.
If they can tie it to some external factors such as a drop in oil prices, the Bank of Canada is more comfortable with the weaker Canadian dollar.
Nothing we can change. Oil prices are following following rather.
If it's something where the Canadian dollar is moving because of central-bank divergence, indicating economies are somewhat similar and it's a quick depreciation of the Canadian dollar, the speed matters as much as the level. That could be somewhere with the Bank of Canada starts getting really comfortable. So I would think, if we start sort of getting below 72, $0.71, we start flirting with $0.70, that will start to put more pressure on the bank of Canada to maybe change their tune a little bit and puts more pressure to keep up with the Federal Reserve. Ultimately that will depend if we see the slowdown in the Canadian economy or not.
What guides the Bank of Canada's action.
But I would think that people would be getting a little bit nervous around the Bank of Canada.
>> Fascinating stuff is always at home.
Always before making any investment decisions.
We'll get back to your questions with Andrew Kelvin in just a moment's time.
A reminder that you can get in touch this any time by emailing moneytalklive@td.com.
Now let's get to our educational segment of the day.
One of the more useful tools when doing research is knowing the moving average when looking at a stock. Hiren Amin, Senior Client Education Instructor TD Direct Investing will tell us all about it.
Great to hear from you.
Let's start with what the moving averages telling people.
> Yeah. Absolutely. Thanks for having me again Greg.
Let's talk about technical analysis because this is kind of one of those schools of thought that investors use when they are trying to research stocks.
One of the central tenants is how to identify trends and be able to predict where the trends are heading?
Key to that is one of these indicators which we will chat about today which is a moving average. A moving average is really there to help smooth out that noise when you are looking at a price on a chart and it helps investors identify the trend of the stock across a certain period of time that they're looking at it.
In a way, dynamics.
If we take a peek at neighbourhood to see how it gets calculated, simply all it's doing within that timeframe you're looking at its adding all those data points together and then taking some of those prices and then dividing by the number of we are looking at. That's how you come up with the moving average.
The reason it's called "moving" is because each new trading day or frequency or.
That you look at, it's kind of adding that new data in and dropping off one of the back. So let's actually take a peek into WebBroker here. I'll show you how to get it set up on a chart here.
We have X IC loaded up which is an ETF that tracks the broad market TSX Composite Index.
From the profile over here we will go ahead over to our charts tab.
Moving averages are what we are going to be categorizing under the upper indicators section. Now, when we say upper indicators, what that means is they will be part of the chart.
It will overlay into the price chart itself.
Once you do come into the selection menu, there will be three specifically different moving averages to choose from.
We have exponential moving average, as we further good and we have simple moving average and ^...
¸just to put a little context for audience, the difference between really the simple and exponential moving average, a simple moving average, we are simply just adding the values at face value.
We are taking the data and just dividing by total periods and that's how we construct a moving average.
With the way Ted and exponential, the more recent prices. There is almost like a weight added to the prices that happen more recently and there's a lower given to the prices.
That's where the main differences. We will look at the simple moving average. I've gone ahead and clicked it. You will see it's going to be on the graph for me.
We can make some adjustments because we can see that we are looking at a one year one day chart over here.
I will click over here in the description and here's where I can actually adjust the views on a look at. I do want to look at a longer-term trend.
We are going to stick in a 200 day moving average over here.
I also want to compare it against may be, let's say, a 50 day moving average which is kind of that medium term. You can add this sin and we will simply hit "update chart" we should have two different moving averages here.
The one thing the traders also uses it tell us about trading signals.
Their hopes will typically be used when you look at crossovers happening.
Essentially, when the moving averages are intersecting against one another, either above or below the general trading of signals in a bullish signal or a bearish signal. For example a shorter term average, a purple one here, that would usually indicate a bearish signal. When the shorter crosses above the long-term average, that would indicate a bullish signal.
Now I should caveat that when it comes to technical analysis and using these, by no means means that this is a be-all end-all means to use for trading purposes. You still do want to look for confirmations by using other studies as well there.
So this is simply the way we construct a chart here.
>> Okay that's important right?
Explaining what the math is in the amount with the moving average.
Something is breaking our broking breaking below the line. If you want to be a technician, you want to learn more about this, work I go on the platform to learn more about these types of trading signals?
>> Exactly.
Some of the more savvy technicians could interpret this on their own but if you're getting started with technical analysis, a bit of guidance to that.
WebBroker is fantastic not only to help you manage investments but also providing learning opportunities to really level up or take your understanding to the next level. One thing I wanted to show everyone is, we have a tab called "technicals" over here.
Within that section it does a little bit of guided analysis for you. So if you're not really sure what you should be interpreting or how you should be interpreting, you can, the technicals section you can see a number of different technical events happening here.
I also wanted to show if you click on this icon appear which brings you to the education screen… We can actually go into "indicators" here. If you want to learn more about those crossovers, which I really briefly talked about, you can come in here and say "let's look at price crossing in the moving average." This is where the price candlestick is crossing the moving average. How it works and how it's gonna be meaningful, you can see this trading consideration.
You can really tell an investor how they should be using this.
The other last thing I also want to point out for audience was we have a learning centre as well.
We created fantastic resources here.
Digital resources to be able to learn and go to video lessons as well.
I think I are to have the filter applied but you can go to "filters" and we have a section on just technical analysis. If you click on that and apply the filters, I've got it queued up over here.
You can see short videos we have here, webinars, to really help you along the technical analysis journey there.
>> All right.
Thanks to Hiren Amin, Client Education Instructor at TD Direct Investing.
Make sure to check out the learning centre on WebBroker for more videos, live interactive master classes and upcoming webinars.
Before we get back to your questions on the economy with Andrew Kelvin, a reminder of how you can get in touch with us.
Do you have a question about investing, or what is driving the markets? Our guests are eager to answer your questions so send them to us here at MoneyTalk Live. You can send your questions two ways: you can send us an email any time at moneytalklive@td.com or you can use the question box at the bottom screen right here on WebBroker just type your question and hit "send". We will see if one of our guests can get you the answer right here at MoneyTalk Live.
> We are back with Andrew Kelvin taking your questions about the economy and interest rates.
I think by the opening discussion,… ( reads question) >> I think they have to factor the Fed into their decisions.
They need to factor in US growth into their decisions first off because that impacts Canadian exports and the demand for commodities, prices of commodities and the sorts of things.
They also need to factor in the Fed because it does impact the currency.
Historically, we've seen the Federal Reserve peak at 75 to 100 basis points above the BOC at the end of tightening cycles. So there is still room for pre-material divergence. But I would think much past hundred basis points, it becomes very difficult to justify that sort of divergence for anyone in a very short period of time.
There's always sort of a set of circumstances that can justify a spread of 125 hundred and 50.
But beyond 100 basis points, the sorts of scenarios I need to come up with become increasingly implausible and specific.
So I would think certainly beyond 100 basis points, my antenna would be up that perhaps this would not be sustainable.
>> Interesting stuff. This one about Canada's housing market and the effect we've had from rising rates.
How will falling home prices hit the economy?
>> I will hidden a bunch of different ways.
Home prices are falling, it tends to be something that impacts consumers and how they perceive the economy. House prices are one of the things that we look at as a gauge of the economy. If house prices are falling, people tend to associate that with the productivity.
It does have a negative impact on the margin. The thing I would say about falling house prices in Canada is we do have this one important factor driving shelter demand which is population growth.
And I would say that it helps blonde some of the impact in that it provides housing demand and normally fall in house prices would lead to a drop off in housing construction.
It's hard to cut housing construction too much in an environment where we just really need more shelter across this country.
I guess the second piece of it is an interesting societal point where, I think there's a broad understanding with the degree of affordability we have in Canada, it's not a very desirable outcome.
So I do wonder if perhaps going forward, some of these impacts may be blunted in a lower housing prices environment.
If we are just taking some from the pandemic years, I don't think anyone's too concerned about what that means with big picture.
If you see a concerted long-lasting drop in house prices, it probably would speak to a greater issue with the Canadian economy which brings its own set of issues which is hard to take with just the house prices.
>> Another question. This would more broadly about the economy, not just housing. How is Canada's economy due doing versus the US?
Our largest trading partner?
>> So, I would say the Canadian economy is showing some pretty inset and impressive resilience.
The paths are a little bit different.
The US economy had some periods of weakness earlier last year and it sort of rounded out of it.
The Canadian, economy has fallen in more of a stable deceleration path.
If you look at those Q4 numbers in Canada, fly GDP growth, that probably paints a bit more of a negative picture than is warranted.
It had a lot to do with inventory adjustments.
Domestic demand was a little bit firmer than what that number suggested.
I say both in Canada and the US the big picture is one of very robust labour markets that are likely to drive activity in the short term.
So I would say in both places, the way I would describe them is somewhere between surprising and perplexing.
The reason they've been able to shrug off these rate hikes.
>> We always think about Canada's economy being dependent on strength or weakness in the US considering they are our largest trading partner.
Is that still the case considering the US is doing well?
We should, by relationship do fairly well?
>> I don't think it's as strong as it used to be that relationship.
Exports and manufactured goods are not as big piece of the pie in Canada as they once were.
You don't have that sensitivity between the Canadian dollar or US activity and Canadian exports.
It's an important piece of the economy still, but it tends to be a little less volatile which sounds like a good thing.
But again, it used to be that the Canadian dollar weakened to the level it was at today.
>> Manufacturing smile on their face.
>> They still have that smile and they are selling to the US because they're getting paid in US dollars.
But you're not seeing the same shift in activity that we used to see 20 years ago.
So that relationship is still there.
I think it's still there in part because they are fairly similar economies.
The things that impact the US economy are things that will probably be impacting the Canadian economy.
There is so obvious benefits that flow north when the US is doing well.
But it's not quite as strong a relationship as he used to be.
>> Interesting stuff.
We will get back to your questions with Andrew Kelvin and the economy in just a moment's time.
Always do your own research before making an in any investment decisions and a reminder of how you can get in touch with us.
Do you have a question about investments or what's driving the markets?
Are guests are eager to hear what's on your mind. You can send us an email anytime at moneytalklive@td.com or you can use the question box right below this screen here on WebBroker.
Just write in your question and hit "send". We will see if one of our guests can get you the answer you need right here on MoneyTalk Live.
Wall Street is getting a bit of a preview on Friday of the US jobs report.
Releasing the EDP private payrolls report.
And the job openings and labour turnover.
The jolts.
What are they telling us?
Our Anthony Okolie is here to break down the numbers.
Anthony.
>> Thanks Greg.
We will start the US ADP report.
US companies added jobs at a strong base in February.
US private payrolls were up 242,000 versus the 200,005 estimated. That's more than double the amount expected. When you look at wage growth, it actually slipped in the annual increase. That's down month over month. A modest decrease there. Breaking it down by sector, leisure and hospitality.
Manufacturing benefiting from milder temperatures this winter.
Take on the job losses, mainly focused and professional and business services as well as construction. All the job gains came to companies employing 15 or more workers in the United States.
Small businesses, unfortunately they lost a net loss of 61,000 jobs.
Mostly from companies of 20 or less employees. Keeping in mind that the ADP is a precursor to the more closely followed payrolls due this Friday.
Now we will turn to the job openings and labour turnover survey or the jolts report. That report shows the job openings fell in January.
But still outnumber the available workers in the United States.
At the jolts saw 10.8 million openings. It down just over 400,000 jobs from opening from December.
That equates to nearly 2 job openings per every available worker in the United States.
This report also shows that hiring was strong in January.
Employees hired just over 6 million workers.
That's the highest total since August.
When you look at the… This is the indicator of work confidence and it fell to 3.
8 million.
That's the lowest level since May 2021.
Layoffs, also rose sharply.
Up 16% in January.
Of course, this latest report comes after the Fed Chairman Jerome Powell Cobb called the jobs market extremely tight in the latest reports.
They tend to kind of show that the labour markets are pretty tight except for signs of some weakness and wage growth in jobs.
Greg?
>> So we take the ADP report, the jolts report and put it into a blender.
What does TD Securities think were getting at this Friday?
>> TD Securities is still looking for the US to an above trend of 230000 Jobs in February. This is normalizing after the big jobs against all. Unsustainable of 517000 Back in January.
They are also looking for the unemployment to stay steady at 3.
4%.
Overlooking towards the end of the year, they expect to see the outcome rise to 4% by year-end as more people are drawn back into the labour force.
>> Interesting stuff. Thanks Anthony.
> My pleasure.
>> MoneyTalk Live's Anthony Okolie now let's check on the market to see how things are progressing.
On Bay Street, 66, 64 points to the upside about 1/3 of a percent.
A little money moving towards mining and energy stocks.
First Quantum has a news driven story behind it, they struck a deal with their Panama mine.
The government, now a draft agreement.
Other approvals and government there, consultation process.
What did you see First Quantum shares to the upside.
31 box in a penny up 4%.
Notice Mapleleaf foods earlier today, showing a bit of strength and now falling into the weakness category.
It down pretty modestly on that name.
S&P 500, self the border, Jerome Powell continues to testify to lawmakers in Washington.
Prepared remarks yesterday releasing two days of testimony.
Pretty flat right now the S&P 500.
Pretty modest up three points.
The tech heavy NASDAQ, the broader markets heading in their a little shy of 1/3 of a percent.
Tesla, we told you off the top of the shell of some regulators and only two complaints about a steering wheel coming off dislodged on one of the models but as we recalled earlier, tesla talked about cutting prices again on some of those models.
Down 3 1/3%.
We are back now with Andrew Kelvin, Chief Canada Strategist at TD Securities.
Let's get to another question here.
(Reads question).
>> These are US indices.
There is a much larger component for sheltering the CPI then there is the PC… That has to do with how the two indexes are put together.
CPI is just a straight consumer survey.
It is what consumers spend their money on.
Shelter is a big piece of that.
It does not include purchases made by third parties.
In the United States would include notably prescription medicines purchased by insurers.
So that does not make it into the CPI.
It does make it into the PCE.
Which gives the PCE a larger healthcare weight at the expense of much larger category namely shelter.
So that's the big difference.
The other piece of it is once by having the third-party purchase included, it's a bit of a broader index more representative.
And it also re-weights itself a bit more regularly.
A little bit more reactive to changes in the economic environment.
So that's all those reasons why the Federal Reserve prefers it.
But the key things are, less of a wait for shelter and the Fed likes it.
Those are the two things to keep in mind.
>> ^laughing¸the Fed likes it can you see tension between China and Canada hurting immigration and would that have an impact on housing?
> Interesting question.
I or anyone else has any specific insights.
What I would say is, having come through a period of pretty poor Canada/China relations, immigration has come back stronger than ever.
In 2022.
So there does seem to be some resilience there.
We certainly have seen or read media reports that perhaps tourism to Canada may suffer as a result of tensions with China.
If we were to see relations between the two countries deteriorated significantly enough, I suppose there's a lot more were people would perhaps stop emigrating here in such great numbers.
People will look at schools and places.
These sorts of things which all have negative impacts in demand.
But I would just say, as of the most recent data, we are seeing signs of that sort of trend materialize.
If anything it seems like the opposite.
That relationship between China and the West are not at their highest point.
It can remain a desirable place for people to come and study.
So right now.
>> Fascinating stuff as always thanks for coming here.
>> Thanks for having me.
>> Andrew Kelvin keep cheap canvas management.
This is a reminder of course that you can get a head start with those questions by emailing moneytalklive@td.com.
That's all the time we have for the show today.
Thanks for watching and we will see you tomorrow.
[music]
Every day I'll be joined by guests from across TD, many of whom you will only see here we we'll take you through it's moving the markets and answer your questions about investing. Coming up today show: Bank of Canada has expected holding on rates and we will get a reaction from Andrew Kelvin, Chief Canada Strategist at TD Securities.
And in today's WebBroker education segment, Hiren Amin will take us through what a moving average is and how you can adjust on WebBroker.
Here is how you can get in touch with us on WebBroker.
You can email us at moneytalklive@td.com or Philip in your response on WebBroker.
Let's get you an update on the market.
Starting with the TSX Composite Index.
Benchmark crude prices still under a bit of pressure.
We will call that a gain of^...
¸that move seems to be fading.
Barely green, $9.68 a share for Crescent point.
Just up about 20 clicks there.
We saw some strength in the mining and that is starting to fade as well.
Still positive but a little less than half a percent.
South of the border, we have Jerome Powell testifying for the second day. Of course prepared comments yesterday from the chair of the US Federal Reserve.
That set the markets off and the selling phase. Right now modestly up 1/4 of a percent.
When it comes to the next rate hike meeting, 50 basis points, we have not made any decisions exactly.
But they did say they might have to go further and higher-than-expected. A bit more aggressive if need be.
The Bank of Canada is reaffirming its conditional pause and rate hikes, keeping them abound on hold for half percent. But the US Federal Reserve's warning hikes… How much longer can our central bank incur borrowing costs at the current level.
Joining us for Maurice Andrew Kelvin.
Chief strategist at TD Securities.
>>we always thought the Federal Reserve would finish at a higher terminal rate.
Each rate hike in Canada should bite a little bit harder than a rate hike in the US would. It's not inconsistent in that sense.
It does speak of this underlying tension where the Bank of Canada declares a pause in January.
I think a lot of people, it seemed maybe a little bit premature and overly confident in their assessment of the economy.
While I do share this view, we haven't really seen material signs of it yet.
The most recent jobs figures from January,the economy is not showing signs of slowing as the Bank of Canada had suggested when they put that initial pause in January. The fourth quarter was a little earlier than expected. CPI inflation involved in line for the bank account is last forecast which is why we expected that would stay on hold today.
But as we go into April, into June, we will need to see a pretty notable deceleration in economic activity in Canada to justify the Bank of Canada sold.
So that's the first piece of this. It may be that that Federal Reserve is seeing some strength on the ground.
That the Bank of Canada is not. But I would suggest that in an environment where the United States is showing resilience is probably going to be an environment with Canadian economy showing significant resilience. The second piece that will come into play is the currency. Because if the Federal Reserve really steps on the gas depending on what you think of this analogy, to tighten more than the market expects, that would put pressure on the Canadian dollar and with the Bank of Canada can be tolerant of fluctuations in the Canadian dollar, too much depreciation of the currency is inflationary and could bring them back in good hands. It's something to watch in the United States.
I agree it's extra-hawkish. To be expected. But there are balanced to how much those two central banks of Canada.
>> That sounds like it leaves the Bank of Canada and a hard place. The deck, with good reason to be concerned about higher borrowing costs really biting into households and their ability to make their debt payments but the same time, of the dynamic south of the border, I would not want to be a central bank governor on a good day. There seem to be very hard times to be a central by Gov.
>> It is a thankless job, no doubt.
So in terms of one what one thinks is common in the Canada and US,… Savings accumulated. That will help buffer the impact on household spending in Canada.
Even though we have these debt dynamics. I will say restricting monetary policy continues to wear and household spending.
But I would put forth even tighter labour markets, we need to see further deceleration going forward.
>> So the Bank of Canada needs to see these things turn in the economy. Some indications with the GDP underperforming.
The labour market still being hawkish. At some point we will get a spring budget from the federal government. That's the fiscal side.
Is there a danger now that those two camps start working at odds with each other?
The monetary policy is trying to achieve one thing that the fiscal policy wants to help.
>> It's always a danger.
In both directions.
There have been occasions in other countries where central banks have tried to loosen policy well fiscal agent is cutting spending which also works against the central bank schools. Obviously, in an inflationary environment, the risk would be more government stimulus with the Bank of Canada's job harder and ultimately cause rates to increase more.
I haven't seen any indication of this aggressive budget but calculations change all the time.
Certainly somebody could shift the poles of our government deciding if they need a shiny new policy that will go well with voters.
And things can change. I would just observe based on the physical update we got in November. Fiscal update. It didn't seem like the government was planning a very significant fiscal expansion. There's no need to see an election this year.
It's a minority government. It's always a risk.
Given that the next scheduled election is not for a few years now, I don't know that this is the time where sprinkle stimulus across the country to try and win a few extra votes.
So it's a risk and something we will be watching for very closely going into April. It's not part of our base case however.
>> Part of the Bank of Canada's base case is they think that inflation will get down around 3% by the middle of this year.
Are we that far off from the middle of this year and them achieving that?
>> I think so. A lot of base facts here.
Inflation was running extremely hot, I suppose, through the first part of 2022.
So, as those months of inflation fall in a year-over-year calculation, inflation just math mathematically falls.
So we can get down into the mid-threes without too much difficulty. I think the tricky part is moving from 3 1/2 to 2 1/2.
Because underlining inflation is running at a rate that is consistent with more, sort of 3 1/2 inflation.
I'm looking over a three month basis. So you need to see more disinflation on the month by month. To actually have a path to 2% inflation in 2024 which ultimately the bank's will.
That 3% midyear, inflationary that they talk about, that's a milestone in society.
It's not ultimately where they're trying to get to.
If we wind up at the end of 2023, inflation is still three and half percent.
That'll be a sign that the Bank of Canada made a dodgeball specific.
>> So the rates, maybe happy with higher.
The sweet spot is two.
But if we do have three, is it mission accomplished?
>> I think it's more comfortable being in there in the range.
They're trying to get to the midpoint of that range.
Ultimately. I think given the experience of 2022, certainly, and also what we are experiencing today, inflation expectations in the short term are elevated. There is an element of preserving credibility that we should take into account. So, in an environment where we are just sort of going along between 1 1/2 and 2 1/2 and maybe inflation hung out at 2.7 for a little while, they may not be overly concerned as well as they thought inflation will be stable going forward. In an environment where they have, really, Mr. target for a long period of time now, I think it's very difficult to get to 2.9% it's a mission accomplished.
They really have to achieve that 2% number to restore the credibility of the 2% inflation target.
>> Fascinating stop and a great start to the show.
We will get your questions what interest rates in the economy and with Andrew Kelvin adjustable it's time.
A reminder of course that you get in touch with us any time by emailing moneytalklive@td.com or Philip at your response box under the video player) WebBroker.
And right now some of the top stories in the world of business and a look at how the markets are trading.
First Quantum has struck a deal with the government of Panama that will see it's Coppermine returned to full production.
The company says the draft deal addresses Panama's concern about royalty payments.
The agreement still has to go through a 30 day consultation process in various government level approvals.
Adidas says it's costly split with the artist formerly known as Kanye West could result in an annual loss.
That will be the first annual loss for the company in 30 years. The fitness apparel firm and its partnership ended its partnership with the artist last fall.
Some sneakers in that partnership.
Adidas says it is embarking on rebuilding in 2024.
Regulators say they are investigating Tesla after receiving two complaints with the model Y vehicle. Maybe mainly that the steering wheel detached while driving.
The Highway traffic safety Administration says it involves 120,000 Tesla cars. An initial step before thinking about a recall being ordered.
Checking on the market, let's start here.
Jerome Powell continues to testify with lawmakers on Capitol Hill.
Very modest 4.3 points.
More than 1/10 of a percent of the S&P 500.
We are back now with Andrew Kelvin taking your questions about the economy and interest rates. Let's get to them.
When rather what are you expecting from the jobs data this week ?
>> All focus on the Canadian jobs, it's my bread-and-butter I suppose. January was frankly hilarious of a number.
Hundred 30000 Jobs Added in Canada.
We do expect some infringement there. We expect to see the economy show a decrease of 10000 Jobs in February.
I don't think it should be interpreted add a sign of weakness per se. The six month average is going to main remain extremely robust.
That is well above the certain brake and pace that would hold the unemployment rate stable.
Still in our mind with a very tight labour market. It's really just a question of reversing some of these one-off impacts.
Namely the impact of a very mild January weather which should have been construction hiring and things like that.
The story here is bigger picture, I would return to a normal pace of employment gains and I will read too much into the employment data until we also get the numbers for March and for April and for May.
>> Are the wages at this point just as important as the headline? Either gain or loss of positions? I mean the wage gains which then people fear will fuel inflation.
>> That's a hugely important piece of the labour market now. Going into February, large wage growth… The hourly our wage rate for workers. That fell from 4% in January. In January 2022, it was sort of, the last COVID shutdown month.
There was this compositional thing were the workers who tended to lose their jobs during the COVID shutdown's tended to be lower wage workers.
So it had a compositional impact. That follows the data.
In February, we will get this little pop.
That's the thing to watch going forward because with supply chains healing, I'm pretty comfortable with the idea that we will see slower goods inflation this year.
Putting food aside, energy prices are not working where goods and prices for things like autos and electronics. It should see disinflation this year.
I'm less comfortable on the services side of things.
Wages… Wage growth of 5% is not consistent with services inflation below 3%. Which is therefore not consistent with headline inflation at 2%. If wage growth is not decelerated, the Bank of Canada will have to continue until wage growth does decelerate.
>> Let's get to another question now.
The need for higher rates… When will the interest rate start dropping?
>> So that's a great question.
I get this question and a lot of people are asking. It really depends on how the economy unfolds and how the inflation path unfolds. Right now, interest rates are already a fairly restrictive stance.
I suppose the word I'm looking for.
So right now, the level of interest rates should slow the economy to grow less than its potential rate.
The bank of Canada cannot start cutting rates until you get growth that is still below its trend rate. Let's call that 2%.
It's in that ballpark.
The bank cannot cut rates until inflation is below 3% and falling.
It can't cut rates until the economy is… Excess supply which would be an unemployment rate that's perhaps the percentage point higher. I can't tell a story were all three of those things happen in 2023. I mean I could.
But I would be really stretching the bounds of credibility to do that.
We are looking for some rate cuts in 2024 and that's based on the idea that we think the economy can start to slip quite quickly.
We can see rate cuts as early as the first quarter of 2024.
I would expect in that instance, a speed of rate cuts quite a bit slower than the right headaches we saw. I don't that the Bank of Canada will turn around and start cutting by 15 and 75 and 100.
>> Unless you have a crisis.
>> Unless something really awful happens which is not what we are predicting. It's a difficult thing to predict in general.
So we are looking for a modest pace starting in the first quarter of next year.
The first half of 20 2023, we will have to push that number out.
>> What about where that neutral rate would be?
The bank is even recognizing that we are in restrictive territory now because we want to be in restrictive territory.
We are trying to cool things off and tame inflation.
If we start getting cuts because were waiting in the battle against inflation where is that neutral range?
>> It's a subject of debate right now more than normal.
The bank, between 23%. You go to the midpoint and that's what you think. I would argue that in the period after the financial crisis, before the pandemic, the neutral rate was materially lower than that and I say that is because the Bank of Canada's rate, we never had significant inflation… I look at those two facts, it tells me that the neutral rate was probably below 2 1/2.
Certainly maybe even below two. As we headed to this post pandemic.
Where inflation is a lot more built into the economy and resilience… The fact that the economy has the amount of tightening we've Artie seen, that would argue the opposite.
Maybe rates are higher than we had previously expected and you can look at things like onshoring as a factor as well.
So, all of this is to say that the Bank of Canada updates or forecasts, we will be paying really close attention to see with the Bank of Canada does in April.
Because for the first time in a long time, I think there is a compelling case for that vision to the neutral rate.
> Let's take another question. This one is about the outlook for currency. What's the outlook for the loonie?
We've talked about a lot of factors that could drive our currency. We will things end up?
>> Another great question. If we want to take the short term noise out of it, the Canadian dollar where it is it is at a cheap level compared to longer term.
So by the end of this year, we will be talking about the Canadian dollar at $0.75.
Near-term though, with the Bank of Canada sticking to their guns and sticking to their conditional pause, the Federal Reserve delivering very hawkish statements, that something that will put upward pressure on the US dollar and therefore downward pressure on the Canadian dollar. So near-term the balance risk is skewed toward a weaker Canadian dollar.
… But in the longer term, our forecasts with the Canadian dollar finishing in the year at about $0.75.
>> Is at a place for the Bank of Canada would feel comfortable with the loonie?
We talked about inflation through the exchange rate if the loonie falls through.
>> Are really contextual question in that it depends on what the economic backdrop is in Canada.
It is substantially weaker than it is in the US. The Bank of Canada is more comfortable with the weaker Canadian dollar policy.
If they can tie it to some external factors such as a drop in oil prices, the Bank of Canada is more comfortable with the weaker Canadian dollar.
Nothing we can change. Oil prices are following following rather.
If it's something where the Canadian dollar is moving because of central-bank divergence, indicating economies are somewhat similar and it's a quick depreciation of the Canadian dollar, the speed matters as much as the level. That could be somewhere with the Bank of Canada starts getting really comfortable. So I would think, if we start sort of getting below 72, $0.71, we start flirting with $0.70, that will start to put more pressure on the bank of Canada to maybe change their tune a little bit and puts more pressure to keep up with the Federal Reserve. Ultimately that will depend if we see the slowdown in the Canadian economy or not.
What guides the Bank of Canada's action.
But I would think that people would be getting a little bit nervous around the Bank of Canada.
>> Fascinating stuff is always at home.
Always before making any investment decisions.
We'll get back to your questions with Andrew Kelvin in just a moment's time.
A reminder that you can get in touch this any time by emailing moneytalklive@td.com.
Now let's get to our educational segment of the day.
One of the more useful tools when doing research is knowing the moving average when looking at a stock. Hiren Amin, Senior Client Education Instructor TD Direct Investing will tell us all about it.
Great to hear from you.
Let's start with what the moving averages telling people.
> Yeah. Absolutely. Thanks for having me again Greg.
Let's talk about technical analysis because this is kind of one of those schools of thought that investors use when they are trying to research stocks.
One of the central tenants is how to identify trends and be able to predict where the trends are heading?
Key to that is one of these indicators which we will chat about today which is a moving average. A moving average is really there to help smooth out that noise when you are looking at a price on a chart and it helps investors identify the trend of the stock across a certain period of time that they're looking at it.
In a way, dynamics.
If we take a peek at neighbourhood to see how it gets calculated, simply all it's doing within that timeframe you're looking at its adding all those data points together and then taking some of those prices and then dividing by the number of we are looking at. That's how you come up with the moving average.
The reason it's called "moving" is because each new trading day or frequency or.
That you look at, it's kind of adding that new data in and dropping off one of the back. So let's actually take a peek into WebBroker here. I'll show you how to get it set up on a chart here.
We have X IC loaded up which is an ETF that tracks the broad market TSX Composite Index.
From the profile over here we will go ahead over to our charts tab.
Moving averages are what we are going to be categorizing under the upper indicators section. Now, when we say upper indicators, what that means is they will be part of the chart.
It will overlay into the price chart itself.
Once you do come into the selection menu, there will be three specifically different moving averages to choose from.
We have exponential moving average, as we further good and we have simple moving average and ^...
¸just to put a little context for audience, the difference between really the simple and exponential moving average, a simple moving average, we are simply just adding the values at face value.
We are taking the data and just dividing by total periods and that's how we construct a moving average.
With the way Ted and exponential, the more recent prices. There is almost like a weight added to the prices that happen more recently and there's a lower given to the prices.
That's where the main differences. We will look at the simple moving average. I've gone ahead and clicked it. You will see it's going to be on the graph for me.
We can make some adjustments because we can see that we are looking at a one year one day chart over here.
I will click over here in the description and here's where I can actually adjust the views on a look at. I do want to look at a longer-term trend.
We are going to stick in a 200 day moving average over here.
I also want to compare it against may be, let's say, a 50 day moving average which is kind of that medium term. You can add this sin and we will simply hit "update chart" we should have two different moving averages here.
The one thing the traders also uses it tell us about trading signals.
Their hopes will typically be used when you look at crossovers happening.
Essentially, when the moving averages are intersecting against one another, either above or below the general trading of signals in a bullish signal or a bearish signal. For example a shorter term average, a purple one here, that would usually indicate a bearish signal. When the shorter crosses above the long-term average, that would indicate a bullish signal.
Now I should caveat that when it comes to technical analysis and using these, by no means means that this is a be-all end-all means to use for trading purposes. You still do want to look for confirmations by using other studies as well there.
So this is simply the way we construct a chart here.
>> Okay that's important right?
Explaining what the math is in the amount with the moving average.
Something is breaking our broking breaking below the line. If you want to be a technician, you want to learn more about this, work I go on the platform to learn more about these types of trading signals?
>> Exactly.
Some of the more savvy technicians could interpret this on their own but if you're getting started with technical analysis, a bit of guidance to that.
WebBroker is fantastic not only to help you manage investments but also providing learning opportunities to really level up or take your understanding to the next level. One thing I wanted to show everyone is, we have a tab called "technicals" over here.
Within that section it does a little bit of guided analysis for you. So if you're not really sure what you should be interpreting or how you should be interpreting, you can, the technicals section you can see a number of different technical events happening here.
I also wanted to show if you click on this icon appear which brings you to the education screen… We can actually go into "indicators" here. If you want to learn more about those crossovers, which I really briefly talked about, you can come in here and say "let's look at price crossing in the moving average." This is where the price candlestick is crossing the moving average. How it works and how it's gonna be meaningful, you can see this trading consideration.
You can really tell an investor how they should be using this.
The other last thing I also want to point out for audience was we have a learning centre as well.
We created fantastic resources here.
Digital resources to be able to learn and go to video lessons as well.
I think I are to have the filter applied but you can go to "filters" and we have a section on just technical analysis. If you click on that and apply the filters, I've got it queued up over here.
You can see short videos we have here, webinars, to really help you along the technical analysis journey there.
>> All right.
Thanks to Hiren Amin, Client Education Instructor at TD Direct Investing.
Make sure to check out the learning centre on WebBroker for more videos, live interactive master classes and upcoming webinars.
Before we get back to your questions on the economy with Andrew Kelvin, a reminder of how you can get in touch with us.
Do you have a question about investing, or what is driving the markets? Our guests are eager to answer your questions so send them to us here at MoneyTalk Live. You can send your questions two ways: you can send us an email any time at moneytalklive@td.com or you can use the question box at the bottom screen right here on WebBroker just type your question and hit "send". We will see if one of our guests can get you the answer right here at MoneyTalk Live.
> We are back with Andrew Kelvin taking your questions about the economy and interest rates.
I think by the opening discussion,… ( reads question) >> I think they have to factor the Fed into their decisions.
They need to factor in US growth into their decisions first off because that impacts Canadian exports and the demand for commodities, prices of commodities and the sorts of things.
They also need to factor in the Fed because it does impact the currency.
Historically, we've seen the Federal Reserve peak at 75 to 100 basis points above the BOC at the end of tightening cycles. So there is still room for pre-material divergence. But I would think much past hundred basis points, it becomes very difficult to justify that sort of divergence for anyone in a very short period of time.
There's always sort of a set of circumstances that can justify a spread of 125 hundred and 50.
But beyond 100 basis points, the sorts of scenarios I need to come up with become increasingly implausible and specific.
So I would think certainly beyond 100 basis points, my antenna would be up that perhaps this would not be sustainable.
>> Interesting stuff. This one about Canada's housing market and the effect we've had from rising rates.
How will falling home prices hit the economy?
>> I will hidden a bunch of different ways.
Home prices are falling, it tends to be something that impacts consumers and how they perceive the economy. House prices are one of the things that we look at as a gauge of the economy. If house prices are falling, people tend to associate that with the productivity.
It does have a negative impact on the margin. The thing I would say about falling house prices in Canada is we do have this one important factor driving shelter demand which is population growth.
And I would say that it helps blonde some of the impact in that it provides housing demand and normally fall in house prices would lead to a drop off in housing construction.
It's hard to cut housing construction too much in an environment where we just really need more shelter across this country.
I guess the second piece of it is an interesting societal point where, I think there's a broad understanding with the degree of affordability we have in Canada, it's not a very desirable outcome.
So I do wonder if perhaps going forward, some of these impacts may be blunted in a lower housing prices environment.
If we are just taking some from the pandemic years, I don't think anyone's too concerned about what that means with big picture.
If you see a concerted long-lasting drop in house prices, it probably would speak to a greater issue with the Canadian economy which brings its own set of issues which is hard to take with just the house prices.
>> Another question. This would more broadly about the economy, not just housing. How is Canada's economy due doing versus the US?
Our largest trading partner?
>> So, I would say the Canadian economy is showing some pretty inset and impressive resilience.
The paths are a little bit different.
The US economy had some periods of weakness earlier last year and it sort of rounded out of it.
The Canadian, economy has fallen in more of a stable deceleration path.
If you look at those Q4 numbers in Canada, fly GDP growth, that probably paints a bit more of a negative picture than is warranted.
It had a lot to do with inventory adjustments.
Domestic demand was a little bit firmer than what that number suggested.
I say both in Canada and the US the big picture is one of very robust labour markets that are likely to drive activity in the short term.
So I would say in both places, the way I would describe them is somewhere between surprising and perplexing.
The reason they've been able to shrug off these rate hikes.
>> We always think about Canada's economy being dependent on strength or weakness in the US considering they are our largest trading partner.
Is that still the case considering the US is doing well?
We should, by relationship do fairly well?
>> I don't think it's as strong as it used to be that relationship.
Exports and manufactured goods are not as big piece of the pie in Canada as they once were.
You don't have that sensitivity between the Canadian dollar or US activity and Canadian exports.
It's an important piece of the economy still, but it tends to be a little less volatile which sounds like a good thing.
But again, it used to be that the Canadian dollar weakened to the level it was at today.
>> Manufacturing smile on their face.
>> They still have that smile and they are selling to the US because they're getting paid in US dollars.
But you're not seeing the same shift in activity that we used to see 20 years ago.
So that relationship is still there.
I think it's still there in part because they are fairly similar economies.
The things that impact the US economy are things that will probably be impacting the Canadian economy.
There is so obvious benefits that flow north when the US is doing well.
But it's not quite as strong a relationship as he used to be.
>> Interesting stuff.
We will get back to your questions with Andrew Kelvin and the economy in just a moment's time.
Always do your own research before making an in any investment decisions and a reminder of how you can get in touch with us.
Do you have a question about investments or what's driving the markets?
Are guests are eager to hear what's on your mind. You can send us an email anytime at moneytalklive@td.com or you can use the question box right below this screen here on WebBroker.
Just write in your question and hit "send". We will see if one of our guests can get you the answer you need right here on MoneyTalk Live.
Wall Street is getting a bit of a preview on Friday of the US jobs report.
Releasing the EDP private payrolls report.
And the job openings and labour turnover.
The jolts.
What are they telling us?
Our Anthony Okolie is here to break down the numbers.
Anthony.
>> Thanks Greg.
We will start the US ADP report.
US companies added jobs at a strong base in February.
US private payrolls were up 242,000 versus the 200,005 estimated. That's more than double the amount expected. When you look at wage growth, it actually slipped in the annual increase. That's down month over month. A modest decrease there. Breaking it down by sector, leisure and hospitality.
Manufacturing benefiting from milder temperatures this winter.
Take on the job losses, mainly focused and professional and business services as well as construction. All the job gains came to companies employing 15 or more workers in the United States.
Small businesses, unfortunately they lost a net loss of 61,000 jobs.
Mostly from companies of 20 or less employees. Keeping in mind that the ADP is a precursor to the more closely followed payrolls due this Friday.
Now we will turn to the job openings and labour turnover survey or the jolts report. That report shows the job openings fell in January.
But still outnumber the available workers in the United States.
At the jolts saw 10.8 million openings. It down just over 400,000 jobs from opening from December.
That equates to nearly 2 job openings per every available worker in the United States.
This report also shows that hiring was strong in January.
Employees hired just over 6 million workers.
That's the highest total since August.
When you look at the… This is the indicator of work confidence and it fell to 3.
8 million.
That's the lowest level since May 2021.
Layoffs, also rose sharply.
Up 16% in January.
Of course, this latest report comes after the Fed Chairman Jerome Powell Cobb called the jobs market extremely tight in the latest reports.
They tend to kind of show that the labour markets are pretty tight except for signs of some weakness and wage growth in jobs.
Greg?
>> So we take the ADP report, the jolts report and put it into a blender.
What does TD Securities think were getting at this Friday?
>> TD Securities is still looking for the US to an above trend of 230000 Jobs in February. This is normalizing after the big jobs against all. Unsustainable of 517000 Back in January.
They are also looking for the unemployment to stay steady at 3.
4%.
Overlooking towards the end of the year, they expect to see the outcome rise to 4% by year-end as more people are drawn back into the labour force.
>> Interesting stuff. Thanks Anthony.
> My pleasure.
>> MoneyTalk Live's Anthony Okolie now let's check on the market to see how things are progressing.
On Bay Street, 66, 64 points to the upside about 1/3 of a percent.
A little money moving towards mining and energy stocks.
First Quantum has a news driven story behind it, they struck a deal with their Panama mine.
The government, now a draft agreement.
Other approvals and government there, consultation process.
What did you see First Quantum shares to the upside.
31 box in a penny up 4%.
Notice Mapleleaf foods earlier today, showing a bit of strength and now falling into the weakness category.
It down pretty modestly on that name.
S&P 500, self the border, Jerome Powell continues to testify to lawmakers in Washington.
Prepared remarks yesterday releasing two days of testimony.
Pretty flat right now the S&P 500.
Pretty modest up three points.
The tech heavy NASDAQ, the broader markets heading in their a little shy of 1/3 of a percent.
Tesla, we told you off the top of the shell of some regulators and only two complaints about a steering wheel coming off dislodged on one of the models but as we recalled earlier, tesla talked about cutting prices again on some of those models.
Down 3 1/3%.
We are back now with Andrew Kelvin, Chief Canada Strategist at TD Securities.
Let's get to another question here.
(Reads question).
>> These are US indices.
There is a much larger component for sheltering the CPI then there is the PC… That has to do with how the two indexes are put together.
CPI is just a straight consumer survey.
It is what consumers spend their money on.
Shelter is a big piece of that.
It does not include purchases made by third parties.
In the United States would include notably prescription medicines purchased by insurers.
So that does not make it into the CPI.
It does make it into the PCE.
Which gives the PCE a larger healthcare weight at the expense of much larger category namely shelter.
So that's the big difference.
The other piece of it is once by having the third-party purchase included, it's a bit of a broader index more representative.
And it also re-weights itself a bit more regularly.
A little bit more reactive to changes in the economic environment.
So that's all those reasons why the Federal Reserve prefers it.
But the key things are, less of a wait for shelter and the Fed likes it.
Those are the two things to keep in mind.
>> ^laughing¸the Fed likes it can you see tension between China and Canada hurting immigration and would that have an impact on housing?
> Interesting question.
I or anyone else has any specific insights.
What I would say is, having come through a period of pretty poor Canada/China relations, immigration has come back stronger than ever.
In 2022.
So there does seem to be some resilience there.
We certainly have seen or read media reports that perhaps tourism to Canada may suffer as a result of tensions with China.
If we were to see relations between the two countries deteriorated significantly enough, I suppose there's a lot more were people would perhaps stop emigrating here in such great numbers.
People will look at schools and places.
These sorts of things which all have negative impacts in demand.
But I would just say, as of the most recent data, we are seeing signs of that sort of trend materialize.
If anything it seems like the opposite.
That relationship between China and the West are not at their highest point.
It can remain a desirable place for people to come and study.
So right now.
>> Fascinating stuff as always thanks for coming here.
>> Thanks for having me.
>> Andrew Kelvin keep cheap canvas management.
This is a reminder of course that you can get a head start with those questions by emailing moneytalklive@td.com.
That's all the time we have for the show today.
Thanks for watching and we will see you tomorrow.
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