Andrew Kelvin

[theme music] Hello! I'm Greg Bonnell. Welcome to MoneyTalk Live, brought to you by TD Direct Investing. Everyday I'll be joined by guests from across TD, many of whom you'll only see here. We're going to take you through what's moving the markets, answer your questions about investing. Coming up on today's show we will get Andrew Kelvin's reaction on the Canada rate decision in the US inflation report that later this morning. MoneyTalk's Anthony Okolie will give us a look for the rail sector and in today's WebBroker education segment, Jason Hnatyk will show us how do you stop orders on the platform. Here's how you can get in touch of us. Just email moneytalklive@td.com or Phil at that viewer response box under the video player in WebBroker. Let's get you an update on the market action. Right now a triple digit gain of 103 points. That's good about half percent of again. Noticing one of our text plays it seems to be in favour today. Let's check in on Shopify. It was making gains earlier in the session. Holding onto them at 63, 18 a share up a little shy of 5%. We did notice some weakness though in Air Canada. Right now, that stock at 18, 70, down a little more than 2 1/2%. South of the border you did get the read on US inflation this morning. Came in a little lighter than expected. The details underneath the hook were perhaps mixed. We will talk about that in the moment. A bit of pop higher than pullback, right now though, at this moment, the S&P 500 about 1/5 of a percent. The tech heavy NASDAQ, last time I looked it was still in negative territory, about 28 points. We will call that 29 or 1/4 of a percent. Noticing as well some weakness in the US retail names today. Including Macy's. That's your market update. The Bank of Canada has held its key rate of 4 1/2%. It is seeing inflation pressures easing. But the governor also made it clear the bank is willing to raise rates again to get inflation back to its target range. Joining us now to discuss is Andrew Kelvin, Chief Canada Strategist at TD Securities. Great to have you enter. >> Great to be here. >> Of course… Asked a direct question about the rate of the path of rates, he is asked about a cut. There is still push – pull in the market. How do we read all this? >> Markets are pricey. BOC cuts… Market pricing really shifted for the Bank of Canada from what we had in the United States. About a month ago now. So I think you need to look at everything the Bank of Canada has sent today as a context for market that is biased towards the rate cuts, not rate hikes. So I think there was a goal from the Bank of Canada today to maybe push back, directly or not. They chose directly, against this notion that rate cuts were in the… The big picture for them as well they are encouraged, on some level, this is almost the easy work. It's going to be much more difficult to get inflation from 3 1/2% to 2 1/2% and two. They think the market price is a little bit premature and they want to make sure it's understood that rates could be in restrictive territory for quite some time. >> What would it take for them to get off of pause which is what they are on right now, to the upside? To make good on this saying "if we have to raise rates we will do it again to bring inflation under control" what will happen for inflation for them to do that? >> I'm really focused on the labour market data. To get inflation back to 2%, we need to see service inflation decelerate. Which means you probably need to see wage growth slow a little bit. Wage growth is as high as it is because the labour market is extremely tight. The governor said in his press conference that we need to see a period of weakness to lend some slack to the economy which would be slower job growth, which would be a higher unemployment rate. The BOCs pause at 4/2% is entirely predicated on this idea that the economy is going to slow. Because they have already lifted rates more than 4% of points. It turns out they haven't lifted rates enough to cause the economy to slow. To whatever external factor you want to point to. They did not hike enough to begin with. They ultimately would need to start tightening more. So, to my mind, if we keep riding the sort of growth we see in the first quarter which is practically do not percent GDP, we have added 60… Through that that if we see numbers like that just continue into the second quarter in Q3, the Bank of Canada may find their hand forced to have to live rates again. Historically, when the bank is in restrictive territory, it's actually more common than not that they hike. They pause because they think they are done and they want to see what impact rate hikes are having and then they decide they need to, O no, height later on in the cycle which is a very quick reversal in history. But the idea that they pause in hike again is actually more historically consistent than the path which we are expecting. Which the bank is expecting which is the fort half is the top. >> That's an interesting perspective. Historically. What about the others? Those are the conditions that perhaps would force the Bank of Canada to hike again even though were unconditional pause. What would it take for the bond market to prevail? To actually see a cut before the end this year? >> If we want to talk about a cut in December versus January, that would just be growth that is a little bit weaker than anticipated. We are looking for growth that is going to be closer to 1% this year. They took a little bit more onboard than we have. So if you want to talk about, you know, a cut by the end of the year, which is sort of or the bond market is, you just need to see growth slowing a little bit more than anticipated in Q2 and Q3. Maybe a little bit less of a pullback or rebound, I should say, in Q4. A recession will probably get you into a serious discussion about cutting rates in the fourth quarter. But anything prior to that, we really need to be talking about a coordinated global downturn. The sort of recession where you are having a debate if it's a recession or depression. Right now, I see no indication that that is likely given every day goes by and we don't see new bad news of the US banking sector, it makes it more likely that the banking sector is healing. So, from that perspective, it looks in a very unlikely scenario to be discussing rate cuts before sort of, the very end of this year. Really, we think cuts are 2024 story. Not a 2023 one. >> We had a monetary policy where the bank reassesses its position on economic growth and where everything is headed. They have had to factor in the fact that we've had a federal budget, provincial budgets and there was a question asked point-blank of the Gov. saying "in these fiscal plans, do you see anything that is going to stand in the way of your inflation fight?" I thought it was a very interesting answer. He said "these budgets are not standing in the way of bringing inflation down." You look through all these documents. Are they inflationary or is the Bank of Canada on the right course? >> I think the Gov. handle that question really well from an objective perspective. Not just a political perspective. The budget is more inflationary than deflationary. I will put it that way. To the extent that deficits are going to be larger and there is a bit of new spending. Something that is, from an arithmetic perspective… Inflationary. There will be a bit more commanding is the budgets. But I don't think the numbers we are talking about are enough to really change the broader narrative to change the broader trajectory, and where inflation is going where the economy is going. So to the Gov.'s point, if you were to see some spending cuts from the federal government or tax raises or something of that like, you would see less demand and that would help bring inflation under control. I don't know if that's anything in the last set of budgets that I thought would make it materially more difficult for the Bank of Canada to bring inflation under control. >> Of course inflation is the heart of this conversation but central banks, we have a fresh read on US consumer prices. The market first, seem to think "okay, inflation is pulling back. A bit of choppiness." How should we be reading this inflation report? >> It really speaks to how jittery markets are. We can see very large moves on modest surprises on economic data. I think markets have maybe even braced a little bit for an upside surprise not a downside surprise. So when we have inflation coming a little bit softer than expected in the US, it was seen as a sign that the Fed might have to tighten less or equal. But, I would sort of, take it back to the Canadian situation because in Canada, you are looking at very similar situations on the inflation front. Inflation is decelerating. This is good. But there is still quite a bit more work to be done and because there is still quite a bit more work to be done for both the Fed and the Bank of Canada, a very outsized reaction in markets is probably unwarranted because we should not be changing, making large changes to the projected path of monetary policy based on a downside surprise of approximately 1/10 of inflation. >> Good point indeed a great start to the program. We will get your questions for Andrew Kelvin just a moment's time at the economy and interest rates. You can email us your questions by emailing moneytalklive@td.com. Now let's get a look at some of the top stories in the world of business and see the markets are trading. Shares of American Airlines or the spotlight today. That is the market reacts to an updated earnings forecast from the air carrier. American Airlines is now forecasting and adjusted first-quarter profit between one and five cents per share. Only up modestly from its previous earnings guidance. The higher cost of fuel and labour has been hitting the bottom line at American Airlines. We see the stock down to the tune of… Percent we have restaurant company MTY Food Group growing its bottom lines during its most recent quarter. Revenue more than doubled compared to the same period last year in the back of a number of acquisitions. Including BBQ Holdings and Wetzel's Pretzels. The Québec-based company franchises and operates restaurants across from 85 different banners. Brookfield Infrastructure Partners is making a multibillion-dollar acquisition in the global shipping container sector. Brookfield is paying $4.7 billion US for Triton International. The biggest owner of shipping containers in the world. The deal requires the approval of Triton shareholders and regulators. A quick check in on the markets today let's start on Bay Street with the TSX Composite Index, right now triple digit gain of 112 points a little more than half percent. And south of the border, as the market digests that US inflation read coming a little bit softer than expected, inflation continues to ease. That's good for a quarter percent. Back now with Andrew Kelvin taking your questions with the economy and interest rates. Should we anticipate a hard or soft landing for the economy? >> >> Based on the data we've seen thus far I would say soft. There is a bit of semantics here. The thing of Canada in particular is you have a population growth. Population is growing at 2.7% year-over-year. If we think about a hard landing versus a soft one, in absolute terms, it's very difficult for me to tell a story without making some pretty outrageous assumptions about what happens to the economy. That actually generates a large contraction in overall economic activity because there are so many more people in this country than there were one year ago. So we wanted a scenario where per capita GDP remains negative for quite a long period of time. 6/4. But the economy can continue growing overall just because we have such strong population growth. So I think just with the population, in the context of an under billed housing market, it's difficult for me to come up with a compelling hard landing scenario. Again, I can always come up with outlandish hypotheticals. But right now, we've seen points towards a soft landing on a hard one. If not a no landing scenario. >> Longer-term, what is Canada have to think about in terms of what you just outlined there? Strong immigration, growing GDP virtue of that. But GDP per capita has not been impressive for a very long time in Canada. What we need to do? In the end is productivity right? >> If you look at today's monetary policy report the other update on potential growth in Canada. They have updated their trench population growth which makes sense. The population is growing faster. But they downgraded their assumptions because populations growing faster, we are not increasing our productivity. And it's a question that is been sort of plaguing Canadian economists for 30, 40, 50 years. Having to deal with the Canadian productivity puzzle. Is it something that is involving getting people more, better streamlined people into skilled trades so we can deal with some of the's skill side of things the acute labour shortage : is it a question of doing more business investments? It's always been a part of the Canadian economy. People of spent hours and hours and years and years trying to come up with a solution for it and right now nobody really has a compelling one. But it remains a problem and my simple solutions would be… I have two. Do a better job getting people in skilled trades. We need more people able to install this green infrastructure and number two, knocking down interprovincial trade barriers is a really simple way to boost economic activity. With very little cost and it takes very little brainpower. Those to be the two things I would point to. But there is no silver bullet. At the same time, there are a lot of solutions that can make small differences which cumulatively can really help. >> Next question we have coming in, any concerns about (Greg reads the question) making some headlines lately about countries not transacting the US buck how they would've before. >> This comes up every two or three years. It sort of tends to follow political cycles. I would suggest there is not a strong candidate to read replace the US dollar as a global currency. If you think about needs to be invested in, you need a very large liquid pile of assets. Three bond markets conceivably large enough to replace the US bond market. The euro market but there is not one euro market. It's a whole bunch of fragmented credits. Germany versus Italy… What have you. I would suggest European bond market is not will set up to take up larger chunk of the global reserve portfolio pool. If the Japanese bond market in Japan is not in great physical shape, let's suggest a very high density GDP, it's not an asset that is been traded very much outside Japan's very domestic market. It's not a good candidate either to replace those dollars. So then you get to the… Market and I would suggest as long as we are talking about an environment where you don't have capital ability of China, as long as it's not going to have as liberal a financial apparatus is in the states, it doesn't become a very compelling place for very large pools of fixed income investments. So, if those are your candidates to take over the US dollar, you could have the US dollar and lose a share in the margins as it becomes a smaller share of global GDP. That's a natural thing. But in terms of the US dollar losing its pull positions in Federal Reserve currency, I mean I do see fundamental shifts in the way the Chinese financial system is set up. For that to be even a realistic talking point. So right now, I don't see any material prospect of it. >> A discussion that just goes out for years. I saw an interesting chart the other day. Reminding us that no currency stays dominant global reserve currency forever. I thought this makes sense. Given history, the British Empire's dominance, Spain, blah blah blah. But in the short term, it's, you are not being threatened with the US dollar. What is it take longer term for a country to lose that? >> I think it really comes down to having a dwindling share of global economic activity. If we were to fast-forward, hypothetically, 70 years, >> We won't be doing this show. It will still exist but we will be doing it. (Laughing) >> The US economy is only 5% of the global GDP. I don't think it makes sense for a country that is 5% of the global GDP to be the global reserve currency is for as firmly as it is today certainly. It probably will have outsized importance for a long time. Look at where the British pound is. It really punches above its weight as a global effect. Because the history of the British pound of the British economy is a really important global economy. The US dollar is going to have some of these legacy effects but that would be the really obvious one. If you fast-forward, two, three, four generations in the US economy is in the top few economies of the world. It is sort of down to that sort of eight – 10 range. That would be a scenario where will be very difficult. >> A discussion to throw to the grandchildren. What you think happened to the US regional banks? Is idiosyncratic or systematic? How do we review that? >> I meditate the economy hedge a bit. It's a little bit. There are idiosyncratic issues surrounding some of these banks regarding risk management and the nature of their deposit base which created, you know, broader issues but I think what it does speak to you is an environment where, when you start to tighten monetary policy really quickly, you can't always predict the impact it will have. I don't think the Federal Reserve was tightening monetary policy with the idea that they were gonna be causing really significant banking concerns amongst US regional banks. US regional banks collectively are of systemic importance. Even if the individual banks are not collectively… It is a big part of the US market then say, the smaller banks would be to the Canadian market. So I do think it's going to be an important thing to keep an eye on. I think, because they have material impacts in US growth overall. If US alone growth stalls, that can have impacts on the US economy which will feed into Canada. Something I'm keeping a close eye and certainly to see how everything plays out. But thus far, I don't necessarily see signs of a systemic issue facing the US economy in the Canadian economy, global financial system. Systemic is always a tricky one. We go back to 2009. I don't see any indication that that's the direction we are going. But at the same time, I don't want to downplay the potential impacts either. >> The other side of this too. The Fed even addressed at the last time we heard from them the, the fact that what they'd seen in terms of stresses and some of the US banks could lead to some credit tightening which could, in a way, sort of do their job for them. >> Absolutely. It is an element of tightening financial conditions which does require fewer fed hikes, all else equal. It will hit US activity. If you look at the way it typically evolves, when an economy is slow, lending tends to tighten anyways. If you think about turbocharging at some institutions, it does sort of substitute for perhaps, a few additional rate hikes. But I would stress that we already have seen quite a few rate hikes in the United States are ready. >> As always at home make sure you do your own research before making investment decisions. We will get back to questions with Andrew Kelvin in just a moment's time. You can email us your questions any time@moneytalklive@td.com. Let's get to our educational segment today. Stop orders is one way to try to manage volatile markets. Jason Hnatyk, Senior Client Education Instructor at TD Direct Investing has more. >> Stop orders can be a very useful type for investors looking to manage risk other portfolios. There are many ways to use a stop order. We will focus on using stop orders today, sell stop orders. They can be used in places where you want to lock in your gains or limit your losses. A great opportunity for investors to place a trade it to know they have an exit strategy in place even if they're not at your computer. Let's go ahead and remove through the charts. We'll get a visual example. On the chart here, you will see there is a blue line. This is representing a buy price at approximately $50 that I may have entered into this trade. Now, if I'm thinking of using an investment plan which is a great opportunity for me to automate the trade, maybe I can take a little bit of emotion, maybe the most unwilling to lose on this particular position is five dollars. So, if we go ahead and maybe draw another line at the five dollar mark below, let's say approximately $45, putting another line of the chart… What we are showing here let's go ahead and get my line on. I've got my line on my chart. If the stock does pull back from the point at which it is now, I will have an order in place to sell my shares. This is not the expected or hoped outcome that we are looking to get out of this trade but we are taking a very practical approach. We are trying to limit the losses if it does go down further than we are hoping to have the stock retreat below. Additionally, a stop order can be a great opportunity to lock in our gains. I'm gonna go ahead and move this topline down down to a much lower part of the chart. Maybe we are lucky enough to buy into the stock at a lower price. Write down near the lows of the pandemic crash earlier in 2020. The same would hold true, we are still placing our order to sell below the market. In this case we are saying if the stock does retreat any further, I want to go ahead and exit my trade so I don't give back some of my hard-earned gains that have already experienced on the stock. So in a lock in those gains and walk away with a profit and not allow somebody else to do the same. Now, another concept that is key to understand for investors when talking about stop orders, is we want to make sure that we don't set them too close to the present market. As we are looking at the chart, we can see that even if we are in an upper downtrend, stocks are always continually moving at one specific direction. They will meander up and down as we go in the same would hold true for any given day that we are trading in the market. There is going to be our range for a high the low point in a given day. So understanding what that stock is doing and how high or low on average it will get, it can be a very useful piece of information to know. In WebBroker, under the lower indicators, study sets, we have a study that tells us just that. That's average per range. If we add that tour chart, we will see it's now below our candlesticks. We can see that this line is telling us, on average, what is the range that the stock is trading in based on the last 14 days. If you would like to edit this study, you absolutely can go ahead and click on the name of the study and the left-hand side and edit the period in which the average is calculated at and will give you a bit of a description so you know exactly what the study is trying to tell you. But, in a nutshell, this is telling us that the stock presently has an average range during this time period of a dollar 34. So if we are setting our stock prices closer than $1. 34 on the market we are likely to stop out earlier than we anticipated but ultimately at the end of the day, you would be setting your stop orders based on the risk that you are willing to take. So that will trump all. Let's go ahead in place trades. We can put the theory into practice here. I'm going to go ahead and hit "sell" at the top here next to our quote. This will bring up our order ticket. We will go ahead and fill this and as we normally would. Enter a quantity that we originally purchased. Now, under "price type" this is where we get access to changing and choosing different orders. I will choose "stop market" for this particular example. You will notice there is a trigger price now appearing on her screen. What this is telling us, this is the price at which you want to order to be triggered or activated so we will then sell and send your order to the market with a market order. So in our example that we had in our chart, we were saying that we wanted to exit our trade at the stock and traded down to $45. If that happens, this will trigger an or activate our order and send in order to trade out of our 100 shares of this particular company that we own. You also have the ability to change your "good until" status. Typically folks will choose the "good until cancel" option. We will keep your order open for 90 days and for US Securities your order will be open and keep you protected for 180 days. So as you can see, a stop order can be a very effective order type for you to master and using your trading. >> Our thanks to Jason Hnatyk, Senior Client Education Instructor TD Direct Investing. Make sure to check the Learning Center in WebBroker for more educational videos, live interactive master class in upcoming webinars. Now before your questions on the economy and interest rates 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. Here's a question for it for a central-bank owner. The Gov. pretty much asked this question today. You think interest rate cuts her off the table this year? >> You never say anything with 100% certainty. The way the governor wore it boarded it I thought was pretty clever. Saying rate cuts in 2023 were not the most likely scenario. I would agree with that. I've been surprised by the resilience in the Canadian economy through the first part of 2023. I would've thought that rates of these levels would've had a higher impact on household spending. The market was more resilient than anticipated. A lot of this comes down to population growth has been surprisingly to the upside to help offset. Wraps a per capita basis but big picture, the Canadian economy is in a much better place than I expected it would be. We do need to respect, I think that resilience. With that in mind, I think it's unlikely that we would see the deterioration in the labour market that we need to see to justify rate cuts this year. As much as inflation is moving quite a bit lower, we are still talking about inflation around 5% which is extremely high. And they don't know that there's a lot of Canadians out there thinking to themselves "boy, I'm sure glad I've seen this deceleration in inflation in the last few months". I don't think it's a widespread view. So I just think it's very difficult for me to come up with a scenario where rate cuts in 2023 are responsible for and inflation targeting central bank to do. >> The resilience in the economy, obviously resilience the Canadian households as well despite the fact that for some people with mortgages, paying a lot more at the door. Is this that big pile of savings that we heard about during the pandemic? We were able to spend and suddenly savings kept going higher and higher. >> That's certainly one piece of the explanation. Also we have seen income growth continue to grow above its pre-pandemic trend. So incomes are growing faster than they used to. Prices are as well. But incomes are going faster than they used to. Households are still accumulating larger than normal because of savings. Not just from what they accumulated in 2020 and 2021. 2022 was also a healthy year for accumulate savings for the Canadian economy. That provided the buffer as well. Some of the things that Canadians tend to direct their economic activity towards, the housing market, have shown a lot more resilience than expected in part because there is not enough housing and there are more heads that need roofs over them. Then there used to be. >> A question now about our currency. What's your outlook for the loonie? >> So I tend to think of that period of weakness we've seen previously driven by US dollar strength rather than something specific to the Canadian dollar driving that weakness. Now, we are seeing the opposite. With the, sort of, banking turmoil in the United States, with some concerns about the US economy, there were some indications the economy was starting to slow. We've really seen the steam run out with a strong US dollar trade and that benefit the Canadian dollar. Despite the fact that oil prices are below where they were not too long ago. Yes, they rebounded with the OPEC production cuts that oil prices are not an extremely high levels in Canadian dollar has depreciated a bit. We think as this continues to play itself out, as the US dollar continues to weaken broadly, we will see the Canadian dollar depreciated by perhaps another two cents this year. Then another sort of three or four cents in 2024. >> The US dollar obviously with the relationship we have comparing to good reason, I think about how gold will move off of it. How some of the stocks in the TSX, linked to the materials trade will move off of the action in the US box. What is the challenge to the thesis that the US buck will continue to come off these highs? >> I don't think it needs to be a varied extreme depreciation in the US dollar. I think we can talk with the US dollar gently. >> Calming itself? (Laughing) >> The US dollars on the weaker side compared to long-running trends. It's a normalization with the Canadian dollar should be rather than something that is outlandish and I need to explain. $0.70 for the Canadian dollar, that was the outlandish scenario that I need to explain away. Moving back to something in the high 70s is a bit more of a return to normal for my perspective. >> Around this next topic, let's talk specifically about the housing market. How it's looking someone wants to know. >> My perspective is that if we are not at the bottom, we are quite close to it. We have this very large demand driver coming from population growth housing construction has not kept up with. Interest rates in Canada, luckily they're pretty close to the top. We probably have seen, we believe, the peak in five year bond yields, for example. We believe the Bank of Canada will be on hold for all of 2023. So in that sort of a scenario, you don't have the same sort of negative drivers impacting the housing market so we had in 2022. You have that sort of population growth supporting it. So you know, perhaps there's another few months of softer activity, perhaps we've Artie hit bottom. But regardless, we do think that going forward, six or 12 or 18 months, and our base case at least, the housing market recovers. >> You bring up an important unimportant point you and talk with the housing market in the mortgage market. We have been's fixated for good reason on what central banks are doing with their key rates and how it affects the prime rates of the banks. Affecting people with variable rate mortgages. But if you're looking for a fixed product, you're looking at pricing off of the five-year Canadian bond which the yield has been coming back down. >> Yes. Most Canadians are bond traders. They just don't know it. >> I never thought of it that way! >> It reflects this idea that the US economy is near the top of its tightening cycle. It reflects this idea that the Bank of Canada has reached the top of its tightening cycle. This idea that growth will slow in incoming quarters and down the road, we will see rate cuts. So, if you're taking a five year mortgage and that's related to the five-year Government of Canada bond yield, that does incorporate these future expectations for the Bank of Canada. So, that's why you have that inversion in the mortgage. That's reflected in the curve. >> We will get back to your questions with Andrew Kelvin on the economy interest rates in just a moment's time. Always do your own research before making any investment decisions and howyou 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 sensend us your questions any time 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. Another earnings season just around the corner. The Canadian Railroad Company is scheduled to record their first quarter results later in the month. Of course a pretty big deal approved south of the border by US regulators. Our Anthony Okolie joins us now with TD Securities outlook for the railroad sector. Anthony. >> Thanks very much Greg. TD Securities expects a very strong first-quarter earnings growth this year for Canadian railroads. That outlook is actually reflected in the 2023 earnings forecast, modestly above consensus estimates. TD Securities does say the rest of 2023 remains uncertain. They point to the higher risk of negative US regulatory intervention, following of course the recent railroad derailments in the United States. Canadian rails, they note, would have much less exposure on a relative basis. Regarding railroad volumes, TD Securities notes that Carlos fell 3% year-over-year in the first quarter of 2023. With intermodal, basically two or more modes of transportation. Intermodal is down. If you exclude that it's up 3% in the first quarter. With respect to call, TD Securities and says we could see some upside to expectations in 2023. Utility stockpiles that need to be replenished. The prospects for US call exports.… However, lower natural gas prices. TD Securities believes that auto production should rise this year as dealers try to replenish their inventories. But that high interest rates and economic uncertainty could weigh on consumer demand in 2023. On Canadian grain, they believe that Canadian grain is a major tailwind for Canadian Railroad companies but US grain is a slight negative. Now, in the previous report, TD Securities called for combined production of corn, soybeans and wheat in the US to fall about 6%. And, intermodal continues to be a primary area of uncertainty amid the retail inventory overhang. As consumers are spending continuously to pivot away from goods towards services. Overall, though TD Securities believes that the prospects of a second-half volume recovery are diminishing. Greg and Mark> Pretty good run down there with the case for the rails. What about the risks the TD Securities is seen? >> A couple of risks. One of them is lower-than-expected economic growth which could further dampen rail volumes. They also point to inflation pressures. If they persist, we could see rapid increases in fuel prices or other costs as well. Finally, they point to unfavourable regulatory developments as well as labour disruptions and potentially harsher weather are some of the key risks for the railroads going forward. >> Thank you Anthony. >> My pleasure. >> MoneyTalk Live's Anthony Okolie. Let's check with the markets now. The TSX about half a percent. MTY Food Group off the top we talked about in the show. Doubling its revenue from the same period last year that on the back largely of acquisitions. About 2 1/2%. We did notice some weakness with uranium plate Denison Mines. Right now about 30 to share down a little more than 2%. South of the border, a little bit choppy on the heels of that inflation report coming in. A little lighter than expected. Of course as always, details under the surface that people can quibble about right now. Markets have decided to move back into positive territory. The S&P 500 up a modest 10 points. We will call that 1/4 of a percent. The tech heavy NASDAQ appears to have moved back in positive territory very slightly. 1.27, one tick to the upside. American Airlines coming in with the revised forecast for its first quarter earnings which will be released in the next several weeks, the street does not seem to like the sound of a they have to say it 15 bucks and seven cents a share down about 9%. Back now with Andrew Kelvin from TD Securities take your questions with the economy and interest rates. While rising oil prices help or hurt Canada? A bit of a double edged sword. >> They will help Canada. Pick Canada remains a positive growth. Not as strong as it used to be. Not like the days of 2012, 2013, 2014 when news and oil prices would bring in big capital investments into the energy sector in Alberta. All Access capital labour and wages. It's not like that anymore. Business investment in the energy sector has been sort of steady decline for several years now. But it does increase the value of our exports. It's good for energy producers in Canada, it's good for people who associate with energy producers and those benefits across the economy as these companies invest maybe a little bit more maintenance than they otherwise would. It helps the federal provincial and federal coffers in Alberta. So it's a positive for Canada. >> Reading the mind of the viewer, perhaps they are concerned on the other side. So much of the inflation story, at least up to this point have been about soaring energy prices. >> It's an understandable concern. We want to hear a lot. It's one of these things where the downsides are very apparent to people I think people are most sensitive in the form of inflation expectations tend to be fuel prices because that's the thing we see most often. We fill up our cars. Even if we have to fill up our cars reasonably frequently, we go by a gas station that tells us how much the prices changed were not changed. As we get the most frequent reminders of inflation. >> I can't think of too many things in life than broadcasting on the side of the street whether I will buy the product or not. >> Groceries don't tell you of an increase or decrease in the price of lettuce. I have to go into the store. At that point I'm committed. We produce large quantities of energy. It's perhaps 1/4 of our exports. There is a net benefit overall. >> We are out of time to questions. Before we let you go and you, a big thought and where we are at right now? The Bank of Canada right decision with a stone hold? Inflation seems to be easing off the levels but there is a way to go. People are just trying to figure out whether they will cut this year, hike this year or whether they just hold the line. What should we be thinking about we pull back the lens? >> The Bank of Canada, is waiting to see if the labour market does the tear rate due to the already significant monetary tightening policy. If the labour market holds up and the economy holds up through the second quarter, the risk of additional tightening from the Bank of Canada will start to increase in the late Summer into the fall. Our expectations of Fort half percent will be the overnight rate all year. I think the message of the Bank of Canada delivering today and, when I agree with is the short term at least, they are much more concerned about the risk of hikes rather than potential cuts. >> Andrew. Always a pleasure for having you looking forward to the next time. >> Thanks for having me. >> That was Andrew Kelvin, Chief Canada Strategist at TD Securities. Stay tuned on Thursday, Brad Simpson Chief Wealth Strategist at TD Wealth will be our guest taking your questions about the markets. A reminder you can get in touch with us 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]