Andriy Yastreb – 07/12/2022

>> On WebBroker, every day I will be joined by guests across from TD, many of whom you will only see here. We'll take you through its moving the marketsin answer your questions about investing. Coming up on today show, we are going to hear from energy analyst Andrea Yastreb from TD Asset Managementabout lowering oil prices. And then Caitlin Cormier is going to show us how to set up a mock portfoliousing the platform. Here's how you can get in touch with us with your questions. Email moneytalklive@td.com where you can fill out the viewer response box under the video player here on WebBroker. Before we get to our guest for today, let's get you an update on the market action. It's an interesting one. You are having a sizable pullback again in the price of American benchmark crew. It's at roughly 96 bucks and change down to the tune of 7%, that is weighing on energy stocks on either side of the border but there are some other forces keeping us from a poor showing. We are negative on the Bay Street, the TSX Composite Index, 18,779 down 37.62, less than 1%. With the pullback in energy prices like this, could be worse. Although energy names are feeling the pressure, let's check out a big one. Cenovus. Let's see how its trading. It's down to the tune of about 4. 2%, $21.76 a share. Noticing a lot of the forest product companies are getting a bid today on the TSX. Let's check out Canfor. Its shares are up to the tune of 4.2%, $25.18. The S&P 500, the broader read of the American market, there are some trainings of the guard we will get you up-to-date on in terms of American corporate news action. Right now, we are pretty much flat on the S&P 500. The big day for us tomorrow is going to the Bank of Canada's rate announcement but we are also going to get, from south of the border, for formulating ideas about where we might be heading. We will check out the NASDAQ, they are pretty much flat as well. down a fraction of a point. Occidental Petroleum, let's check out the space. it's the one that Warren Buffett's Berkshire Hathaway has been favouring lately. At 5753, it's feeling the pressure from the downdraft in crude prices, downwards of 2%. That's your market update. The price of oil has come off its highs as these recession fears increasingly on the minds of investors. But that hasn't really translated to big price declines at the gas pump. Here to discuss that differential is Andriy Yastreb, energy analyst with TD Asset Management. Great to have you on the program. Let's talk about that. You see a day like this, we have had a few of them, with a big pullback in crude prices. People are saying one of the savings gonna come through at the pump? What's happening? >> Is interesting, the energy prices are always volatile and if you think about the market right now, it's basically a tug-of-war between the fundamentals in the energy industry overall, which is pretty tight, we have spare capacity and OPEC that is very low, so we don't have a flush supply. We are in the midst of driving season. A lot of people are finally taking a vacation, going out of town, so we see a lot of demand seasonally. All of that is driving demand for crude and for oil and for gasoline up. At the same time, as you mentioned, there is always this concern about recession. Like, what's going to happen next? That's what's happening in the markets I think because on the one hand, you have very tight industry fundamentals, but at the same time, the financial markets have to think forward and think what will happen in 6 to 12 months and that's why we are seeing this volatility. >> You brought us some charts to help us illustrate what we are seeing in the movement of gasoline, diesel prices and American benchmark crude. Let's show the audience could walk us through this one right here. What's it telling us? >> When people talk about energy and oil, they are talking about different things. What this chart is showing three lines, the bottom line, the great one, is the base of oil. When people talk about $100 oil, they are talking about it in terms of dollars per barrel and that is what the chart shows. As you know, when we talk about gasoline, we talk about gallons and you add leaders here in Canada and we talk about five dollars or two dollars, so these chart is basically putting diesel, gasoline and oil prices at the same metric in terms of dollars per barrel. What's interesting here if you look at just the grey bar which is the oil, $100 oil, it's expensive. It's increased a lot from where it was in COVID times. It was in negative territory. But if you look historically, we are not that far from where oil was in 2011, 2014, for a number of years. But what's interesting here, what's different is that those green and yellow lines arepretty close to all-time highs here. And that's interesting because what it tells you is thatit's not the oil price itself that is so high, it's the refined product, the diesel and gasoline, that's really in short demand. And we can go through a number of reasons that are driving that. >> That chart was showing nominal prices. It's the same three variables in real terms. What's the difference there? >> When we talk about $100 oil being expensive, I think there's a difference here because $100 in 2012 is different from $100 today, even if you think about 2% inflation per year over 10 years, that's 20%, right? So for $100 oil in 2012, it will today be worth $120 or more than that. If you adjust for inflation, oil price is actually below $100 and it looks not that high compared to the period that I mentioned in 2011, 2014. But if you look at the green line, that 1 Is Really Way above that time and it's close to the peaks of the summer of 2008. What's driving that is there is a lot of demand for diesel globally. There was a lot of demand for diesel as the economy recovered from COVID, but there are also supply… Issues on that side. So in North America in particular, there were several refineries that were shut down after COVID around the last couple of years. In Europe, there's the situation with Russian supply because Europe was getting some of their diesel from Russia and because of sanctions, they lost some of that supply. On top of all of that, there is one country globally that has excess capacity and could ease the shortage, it's China, the Chinese diesel and gas exports are down 40% year-over-year. They have quotas from government and how much they can export. So the reason for that is that Chinese government is committed to ESG targets. They want to reduce carbon emissions. To get to those targets, they need to reduce how much the process oil, and so far they are committed to those targets. >> If we take those factors together that you have illustrated for us in terms of the relationship of diesel and gasoline to the American benchmark crude, and we know as investors at the energy sector has outperformed the TSX index overall. I think we can show the audience just how much and I guess the big question becomes, moving forward, what are we expecting out of the market? >> Obviously, energy had a really good run here and if you look at the prices since basically COVID recovery started, the energy sector doubled and was driving a lot of performance in TSX. In the last month or so, some of that outperformance has reversed as people started to get more concerned about recession. >> How about the S&P 500? Obviously, we know that energy has performed well as we are taking a look at the picture, the relationship on Bay Street, what about on Wall Street? Can you walk us through it? >> We go through here a bit more detail on what energy is. We see the same kind of performance in the recovery after COVID. Was it just to hear is if you break the sector down into subsectors, the most volatile part is ENP, which is expiration in production companies,so that is you are shell companies. Those underperform on the way down. If you look at the yellow line, that's integratedcompanies, those are like Exxon and Chevron, but because they are more diversified, they are not as volatile. The last line, the blue line, is transportation and storage in those companiesare basically pipelines, companies that have long-term contracts, they have more stable pricing and they underperform on the way up in the upper were the way down because they have more civility. >> In this kind of environment right now,you were showing those earlier the end product of the user relative to crude oil, the end product names, today's start to make more sense to investors if they want to be in the energy space? >>in the short term, yes. Inthis quarter when demand is so high,the difference between the prices are so high, I think all the companies that have exposure to refining oil have strong results. The more tricky question is how much of that is expected? Secondly, depending on what happens with the economy in the recession, we will see what happens to those spreads going forward. So I do expect these companies to post really strong results in the short term. The big question for investors is what's going to happen six, 12 months down the road. >> You talked about Summer driving season a couple of times. Obviously, we are all anxious to get out and explore, experience the world after everything we've been through the past couple of years. Is there price though of gasoline at the pump that will stop us from taking that trip or is the market saying, you know what? People are so anxious to get out, they are going to eat those high prices for a while. >> That's an interesting question and when you look at different sources and talk to different people in the industry, you get different answers. It's hard to see right now. I would say that on a margin, probably yes, with the thing is it's really hard to tell because we have seasonality, which is during summer, people want to go on vacation, they drive more. That happens every year. On top of that, we had COVID. So after COVID, a lot of people didn't take vacation because of lockdowns and health concerns. Now it's time when everybody wants to get out and recede the demand materializing. My view is that if it didn't have this high price, probably demand would be even stronger. That's my take. But it will be really interesting to see what happens in the fall when seasonality comes down, people are not taking vacations anymore and we will see if there is actual demand. >> A great start to the program. We world get to your questions about energy stocks for Andriy Yastreb from TD Asset Management in a moment. You can get in touch with us at any time. Email moneytalklive@td.com or fellow that viewer response box right under the video player here on WebBroker. Now let's get you an update on the top stories in the world of business and a look at how the markets are trading. The CEO of GAP is stepping down from the top job as the retailer continues to struggle with supply chain issues and falling sales. Sonia Syngal's resignation from the CEO position is effective immediately, but Says she will stay with the company as it transitions to new leadership. The retailer is also releasing updating sales forecast for the current quarter, saying it does expect declines in the high single digit when it comes to revenue. His pointed to promotions, freight extensions and inflation as key pressure point. Peloton Interactive says it will no longer make exercise bikes and treadmills in house but give it to 1/3 party manufacturer. Taiwan-based Rexon Industrial going to become the primary maker of its bike and tread product. That move comes as Peloton tries to simplify its supply chain and reduce costs in the face of falling demand. It was a clear pandemic winner, the lockdown driving sales higher. The stock soared. However, the economic reopening shifted consumer demand and tell us when stock is down more than 70% this year. The demand for snack foods has PepsiCo raising its revenue forecast. The company beat earnings expectations for his most recent quarterAnd now it sees sales growth of 10% over the fiscal year. That's up from its previous 8% forecast. PepsiCo also says it's Frito-Lay's business all revenue rise by 14% in the quarter. The conflict in Ukraine saw the company take a $1.4 billion impairment charge and PepsiCo made mention of higher-than-expected inflation cost for the rest of this year. We will check in quickly on the benchmark index here in Canada, we will start with the TSX opposite. It was down a little bit more than 1/4 of a point, 53 points, 18,000, 1753. We are seeing a sizable pullback in the price of crude. That is affecting energy names but other parts of the market are keeping us from a poor showing. We will check in on Wall Street with the S&P 500. We are starting to embark on earnings season. Their concerns out there, we have discussed them on the show on recent days and weeks regarding earnings forecasts and moves to the downside from corporate America. It still remains to be seen. Right now it's down a modest two points, 3852 on the S&P 500. First question coming in, company specific. What is your take on MEG energy? >> MEG energy is an oil sands company here in Canada. It's one of the smaller oil sands companies relative to others. Historically, it had a couple of issues where its production costs were slightly higher than peers, so that means that it has more torque on the upside and downside when oil prices move up and down. On top of that, the company had an issue when it went through COVID recession where it had too much debt, it had more debt than peers. Since then, the company has paid down debt. A higher price of the environment is helping the company achieve that. I think in the future, it depends on your macro overview. In $100 plus oil environment, this company is going to do really well. In a $50 price environment, is going to underperform. On top of that, I think there were some expectations that maybe some of the bigger oil and gas companies would acquire MEG energy. There was a lot of spy chelation and media as well. But I think in this environment, we are not seeing as many deals as we would've expect that $100 oil. expectations are very wide apart. in this environment where everyone is concerned about recession, we will probably not see the deal materialize. But it is a long-term possibility. >> That's fascinating, I hadn't thought about that, why we are not seeing dealmaking. If you've got energy prices at this level and we are hearing from major players saying, you know, we think demand is going to hold up through recession, supply-side, structural, we have problems. These deals aren't being made. What would the industry need overall, not even specific to MEG, need overall to feel like they want to start doing some wheeling and dealing? >> Expectations have to come together. Sellers of assets are looking at $100 oil and expect to be paid at that level and a lot of buyers have been burned so many times in 2015 when there was a price war between OPEC and Shell companies in the US. A marketshare war. Also in COVID when energy prices went down to negative briefly. So in that environment, a lot of buyers are being a lot more discipline than they were historically. Assuming midcycle prices, somewhere around $60 oil and 100. >> Interesting. Another viewer question coming in. With the higher price of gasoline, like we talked about in the opening segment, is it a good time to look at refiners like, for instance, Imperial Oil? >> Imperial oil is not a pure refiner. It is an integrated company, they have exhalation, production and refining. I think in the short term, as we mentioned before, it's one of the better position companies to play on therefining side because luckily for imperial, they went through a lot of turnaround with refineries in previous years so they didn't have any scheduled turnarounds around the summer, which means that all of their refineries are running at 100% capacity or close to that and they are well-positioned to benefit from these high prices. Obviously, the flipside of that is we don't know where those margins and profits will be in 6 to 12 months from now, depending on the macro outlook. >> Here's an interesting one. When you talk about the energy space, their different ways of looking at different companies. Pipelines, the viewers saying, generally considered a bit of a safe haven trade. What's your view on the pipeline? >> In Canada, we have two very large companies, TransCanada and… And we have a few smaller ones as well. If we think about those companies, the benefit they bring is they pay a really attractive dividend, five or 6%, and they are committed to improving it over time. There is a high dividend extending into the future. For investors focused on income, it's quite attractive. As I discussed previously, if you look at the charts, the different segments of the energy industry, this industry is more stable. You are getting the stability out of it but you don't have as much exposure when oil prices are going up. So in this environment, when investors want to stay invested in the market but they are worried about a potential recession, I think it's a safe haven where you can stay in a good dividend through this time of uncertainty. >> Is there a longer-term risk for pipelines? They are almost seen as a utility in the energy space, they pay handsome dividends, but we hear so much about ESG investing, decarbonisation economies including ours, longer-term, do we need to be concerned about the pipeline space? >> I think there are two long-term concerns and they are kind of on opposite sides of the spectrum. On one side, if the shortage of energy that we see globally requires Canada to export more and there is political will and support. . . [video buffering] So it's possible that they would not be able to adjust finance all of that with that. They would have to issue equity, which would dilute existing shareholders and usually that's a positive thing. And two…to the point you raise, in the very long term, if you think about the demand for oil starting to decline, what would that mean for pipelines? There is a discussion of potential stranded assets in the long term with the pipeline industry. I think it still decades away. When companies build pipelines, even the ones they operate now, I think those will be full for the next 10, 20, 30 years. I don't think it's a near-term risk for these companies. >> As always, make sure you do your own research before making decisions. We will get back to your questions for Andriy Yastreb on energy stocks in a moment's time. You can get in touch with us anytime. Email moneytalklive@td.com. Now let's get to today's educational segment. Today's choppy markets, you may want to spend time testing out strategies before you buy. WebBroker has… Strategy. >> Absolutely. So WebBroker has a really cool tool for investors that are thinking through different investments they might want to make, maybe not ready to take the plunge but they want to have it a little bit closer at hand to keep track of those investments. So how we can do that is we are going to go into WebBroker and we are going to use one of the easy to find circular buttons at the top right-hand side in the corner and choose this one was the star that says watchlist. When we click on that, it's going to bring up an area where we can create a mock portfolio of stocks that we would like to keep a closer eye on. We can choose stocks, we can choose ETFs, we can see mutual funds, options, indices can all be added. You can add up to 10 securities, you simply type in the symbol or name. I'm just going to add a couple of different securities here just so we have a little bit of a list to see. A couple of different types. We are focusing on avian today. There's lots of information we can see here. We can see changes in the market. We can click the drop down to see the current performance, a chart to see with going on so far today with those securities, and we have up to 10 watchlist's, up to 10 securities per watchlist. >> Interesting stuff indeed. You get the watchlist together, helpyyou keep track of stocks and ETFs you are interested in investing in further. How will this help me see if my portfolio would have fared well in the real world if I had bought them? >> That's a hard thing, maybe you're not ready to hit the purchase button, so we can make a mock portfolio and see how it would've performed if you had gone through that. So going back into WebBroker, we are on our watchlist here, so we can do is we can click the tracker button and the tracker is going to allow us to make this watchlist into a actual portfolio. We will go under the security is an click here under quantity and here we put in the number of the security that we would hypothetically like to buy and what we want to put in as an average cost. I'm just going to put what we see as the last price for the security and click save and it's actually gonna go ahead and automatically update for me with any changes in that security. If I refresh, there is a refresh button over here, so the stock is gone down by a penny since I purchased it. You can see already the change in market value versus book cost. You can do that for all of the securities in the portfolio. as time goes by, you will keep that information in their and you can continue to come back and see how the portfolio has fared over time now because the market is in a positive way today. We are seeing some of that impact on my portfolio already just a few seconds in. Just kind of a way that you can build a portfolio and see what would happen if you had gone through with the purchase and track it in real time with your watchlist. >> Great stuff as always. Thanks, Caitlin. >> Thank you so much. >> Caitlin Cormier is a client education instructor at TD Direct Investing. Here's a look at some of the upcoming webinars of the client education team is hosting this month. There is a session on symbol flying investing, avoiding making dividend mistakes and habits to help a person grow $100 $200,000. Make sure to check out the learning centre on WebBroker for more educational videos, master classes and webinars. Before we get back to your questions for Andriy Yastreb, a reminder of howyou can get in touch with us. You have a question about investing or what's driving the market? Our guests are eager to hear what's on your mind. send us your questions. There are two ways you can get in touch with us. Send us an email any time, moneytalklive@td.com, or you can use the question box right below the screen here on WebBroker. [video buffering] We are back now with TD Asset Management Andriy Yastreb. We are talking about energy stocks. The audience has a lot of questions. If you are question coming in from the platform. YourOutlook for WC P? >>Whitecap is one of the companies that made a big deal this year. Recently, they spent $1.9 billion, or at least they announced that they made the deal, it is still yet close. They are buying assets of XTO Canada, which was owned by Exxon and Imperial oil. Mostly those are assets in Alberta and BC, which are mostly gas assets, and a lot of expiration assets. So if you talk to the company, they are saying that those are really high quality assets, some of the best assets available on the market right now. Secondly, they are buying at a discount of what Exxon paid for it years ago when they acquired it and what they invested into thisacid over time, and it provides 20 years of drilling inventory for the company, a lot of growth potential in the long term. I think the deal makes sense on fundamentals from that perspective. They are all good strategic rationales for a deal. I think the negative side is that probably if they were doing a deal to size a year ago, the prices would've been cheaper. So going back to the discussion we had before, I think the negative take is that probably they have to pay up to get this asset in this environment. >> Going forward with this company as they try to integrate this asset, would the upside and downside risksof making good on this deal? >> I think there's not that much downside risk because I think there management is quite cautious about how they manage leverage, so even in a $50 environment, there leverage will be manageable and they will have a down debt in this acquisition. But in a year or six months from now, it will depend on the pricing environment how this deal will do by the market. and I think the upside here… Why Is mostly an oil company, so the diversification of the gas make sense from a couple of perspectives. You are diversifying your prices and your products, you become more stable. Secondly, LNG Canada has been… And there will be a growth attached to it where Whitecap can be one of the producers into exporting gas out from BC. >> Interesting stuff. Another viewer question coming in. This one about the drilling companies. Are drilling companies a good play in this environment? >> It's interesting, when we are talking about refinery is and they have been doing well and having good profits in the short term, I think the drillers are probably on the same page right now. If you look at the industry fundamentals, the day rates for drilling rigs have increased to something close to 20% so far this year, and that is driven by demand for drilling both in Canada and in the US. When I talk to companies in the drilling industry, they are saying that in Canada, it's almost impossible for capacity in US, but where you have equipment available, sometimes it's a problem to get experienced crews to man those drills. So they are deftly having a good time and enjoying higher rates. Once again, the question is what the macro environment will look like going forward and what are we going to see in 3 to 6 months or 12 months now because drilling is probably the most cyclical part of energy. It's the one that has really good profits and really high pricing power in a very tight environment regarding what we are seeing right now, but it's also the one to experience the largest cuts and price declines on the way down. >> In terms of names in the space that investors might want to take a look at and just sort of do their own homework on, Precision Drilling jumps into my mind. Any other company? >> Precision Drilling is the largest company in Canada. There is also ensign systems. That the smaller competitor in Canada. There are three companies on the US side. >> We have a good basket of them there. When you talked about the fact that there were not enough rigs to make the demand and not enough workers, it sounds like a situation where in many industry as they say, demand is there so let's ramp up. He talk about cyclicality. Is this overhang for whether it's drillers, energy explorers, refiners, simply not knowing, okay, it makes sense to invest but longer term, we are not sure if that investment is going to pay off? >> There is definitely that concern and more discipline companies have moved away from investing in higher prices and are looking at the cycle. They are assuming $60 oil and saying it doesn't make sense to invest. But you touched on another point which is the market is so tight right now, we are all talking about inflation impacting overall markets, but it also impacts energy companies. So if you want to put a new drill on the oil field and if it's a new drill that you haven't used before, probably your inflation is 20% compared to what you are paying for existing drills in the field and using old contracts. On top of that, going back to the issue of labour availability, if you think about the oilfield patch over the past 10 years, there were two downturns where a lot of people were laid off. In 2014, when oil collapse, went from $100 to 40, and again, in 2020, when oil went negative and everyone had to cut expenses to the bone. So what companies are talking about is they are trying to hire people and there are some experienced people out there who left the industry but they are not coming back because in the last 10 years, they were fired twice and they don't want to go into this again, especially if they have found some stable employment elsewhere. >> Good points indeed. Let's get back to the viewer questions. We have of you are saying, I am interested in the renewable diesel trend. Are there any investable companies in the space? >> There is one relatively large capital company in the US, darling international. What's interesting about the company, it's been around for decades. It's been doing some basic stuff like they would buy products from butcher shops, basically animal products that don't go into foodchain, they would also collect used cooking oil from restaurants, from McDonald's and other companies, and basically they would have hundreds of trucks around the company, around the US, collecting the supply and historically they would process it into basic chemical products that would go into hundreds of different consumer products over time. But over the last 15 years or so, the company realized that a lot of those products, like cooking oil, they can be refined and processed into fuel. They can make renewable diesel out of it. So they partnered with some of the refineries in the US to produce renewable diesel and the company has grown pretty consistently since then. I think the only point of caution there is that even though the company is experiencing good growth and obviously, in this environment, good margins, a lot of their margin is dependent on political support and on credits that they are getting from Washington. So depending on who is in Washington and how things change there, their margin can change as well. >> I was thinking in terms of the feedstock, society's love of fast food, I can't imagine there was a shortage of input they needed to make the diesel but you are saying there is political risk in this one. That's tougher the energy overall because you never know, four years down the road, who is going to be calling the shots. >> That's the largest risk. But one of the reasons I like darling compared to some of the other companies in the industry is that there is no ESG issue because they are feedstock, they use food waste and cooking oil that doesn't impact food supply. There are some renewable diesel projects out there that use soybean or corn or other feedstocks that actually compete with food supply. And could drive up food prices. >> Especially in times like this when we are worried about crops because of the crisis and conflict in Ukraine and we are worried about people going hungry, is that an added layer of difficulty on the other companies where they don't know if it's ethical using what could be used for food for fuel? >> Absolutely. I think the whole ESG discussion around energy is changing because that's one of the issues in renewable diesel and renewable energy questions. Are we competing with food stock and are we driving food prices higher? But another question is how do we manage carbon transition, the carbon intensity of the industry, and making sure at the same time there's energy security and people have the energy that will keep them warm during the winter? > Fascinating stuff. We are going to get back to your questions for Andriy Yastreb from TD Asset Management. We are talking energy. We'll get back to that discussion in a moment. Do your own research before making any investment decisions. As far as the questions go, you get them to us at any time including now. No better time than the present. Give a question about investing or what's driving the markets? Our guests are eager to hear what's on your mind, so send us your questions. There are two ways you can get in touch with us. You can send us anemail any time via moneytalklive@td. com or you can use the question box right below the screen here in WebBroker. Just writing your question and hit send. We will see if one of our guests can get you your answer right here at MoneyTalk Live. The price of copper has had a rough ride of late. TD Securities at with the prediction that there may be pain ahead. Anthony Okolie joins us now with the details of the report. > TD Securities says price action across all commodities is more consistent with a downturn as recession risk rises, specifically copper prices are melting into a downtrend, reflecting a sharp slowdown in commodity demand. Copper is an important barometer for the world economy because it is used in construction and heavy industry. TD says that copper is the most vulnerable metal entering into a bear market. Of course you see prices are more than 30% below their all-time high of over $10,000 per metric ton recorded back in March. Looking at copper today on the London metal exchange, its trading just under $7400 per metric ton. The reasons for the drop in copper prices are of course fear about slowing demand, increase interest rates more aggressively in China, which is a leading user of the metal. They are seeing a sluggish recovery from the COVID 19 lockdowns as well. Also, many money managers have unwound their positions on copper and other commodities and when you look at the top 15 funds according to TD Securities, they have seen an outflow of over $1 billion in the first week of June and July alone. The top take away from TD Securities is they are bearish on red metal with chart signals pointing to sustain downtrend on the horizon for copper prices. > So given all that context, Anthony, any idea or anything in the report about where the price could go from here? >> They said copper prices could certainly recover. There are rate hikes, China demand could recovered as well. But they point to the price of copper and the price averagely trades up to… Their charts are right now pointing to a significant downside for prices and copper. >> Interesting. Thanks for that. >> My pleasure. >> Money talks Anthony Okolie. Let's check in on the markets now. A little more than halfway through the lunch hour trading session here on Bay Street. I want to start with the TSX. We are right now down 52 points, little more than 1/4 than a percent. We are seeing a downdraft in the price of American benchmark crude. I will refresh my screen for you. West Texas intermediate crude right now sitting at roughly 96 bucks and $0. 19 a barrel, that 7 1/2% down in the session alone. We saw a big drop last week two. Energy names are under pressure. Vermillion energy E is one of the big names. At 2467, they are down a little more than 4%. We are seeing money move into some of the lumber place today. Let's check in on West Fraser Timber. It's at 107 bucks and $0.71 a share, up 2. 2%. Let's check on Wall Street now with the S&P 500. Tomorrow is going to be at the big day in terms of information that investors are going to keep a careful eye on. We are going to get the latest inflation print for the United States. Obviously, a lot hinges on that one when we start talking about what it means for central bank policy, how hawkish the Fed has to continue to be going forward. When we talk about central banks, we are going to hear from our tomorrow as well, the Bank of Canada will make a decision as well. A lot of fascinating things to come in terms of what investors might be looking for. We are back with Andriy Yastreb from TD Asset Management talking energy stocks. We have a viewer who wants to talk about natural gas. Any companies on your radar right now? >> Natural gas is an interesting space to be looking at. Here in Canada, the long-term story is that we have LNG facilities in Canada that have actually been built for the first time and we will see also Coastal GasLink pipeline connecting Alberta and BC areas where gas is being produced to the coast. In a couple of years, we will see Ellen G be exported from Canada and that's obviously going to be good for Canadian gas producers. In terms of companies, large companies that are exposed, we have Canadian nationals, it's a more diversified company. Gas is just part of their story, but they have good exposure there. We also have term line energy and we have art resources, which are more focused on gas and they are more positioned to grow into that market. In addition to that, both tourmaline and art have signed long-term contracts where they will be benefiting from global LNG pricing so it won't be dependent on local conditions for pricing which is always been an issue where in Canada sometimes gas was overproduced… They are trying to diversify that. And obviously, gas prices are obviously quite volatile so you have to be careful. In this environment where we have disruption in Europe because of Russian invasion in Ukraine, we have a situation where gas prices are very high everywhere and a lot of risk premium is being put into gas prices. And I think if conflict has been resolved and if stability of gas supplies to Europe is restored, we could see a downside to gas prices. You also mentioned Vermillion Energy and I just wanted to quickly mention on that one because it's a Canadian company. They produce oil and gas mostly. They are almost balance between them. But where they do stand out is that they also produce natural gas in Europe. So they have direct exposure in European market. Once again, that's really good right now when gas is really expensive in Europe. I don't know if gas price is correct there and go back to normal. Obviously, there's a lot of downside as well. >> Alright, we have a question coming in from one of the big energy names right now, Suncor. Can you give us a rundown? >> Suncor is one of the integrated companies. We know that recently, the CEO Suncor step down. They had another casualty just late last week and the company had an issue with safety records. So for the last… I may be mistaken, but since 2015, they had over a dozen casualties in their oil mines, and the company has been saying they were working to resolve the operational issues and increase safety procedures. Hasn't happened yet, we haven't really seen the impact of that work that has been done. It has been noticed because the stock has underperformed its peers and we have seen a few weeks ago when an activist investor got involved in a public letter to the company saying we need to change management, update the board, focus on fixing operating issues and improving safety at the company. This one is a bit hard to do, to deal with. On one hand,… The discount is justified given operation issues that the company has had in the CEO transition. I think this one is interesting because it's cheaper than peers, but it's probably cheaper for reason. >> We will squeeze in another question. I don't want the conversation to end. It will end. We will get one more question from the audience. Your thoughts on Cameco? >> Nuclear is really interesting long term in my view because if you think about what happened to the industry since Fukushima, there were a lot of old reactors in Europe and North America that were being shut down because some of that was accelerated, for example Germany decided they will completely shut down all of their reactors after Fukushima happened in 2011 and for all this period of time, uranium prices were very low. In fact, Cameco put some of its mines and maintenance, they were maintaining the mines. They had long-term contracts with utilities where they were supplying uranium and to supply the uranium into those contracts, they were buying it from the market because there was a price differential and they would still make money on that. Going forward, I think uranium is interesting because recently, the European Union came out with their long-term policy on energy transition and there is Canadian natural gas and uranium as transition fuels that can help us get in at zero. So what's happening overall is in the industry, a lot of emerging markets, like India and China, they continued to build new nuclear reactors, demand there is growing, but we are seeing this change in Europe and probably we will see it in other countries where the nuclear industry is considered as green and it's also very important for energy stability because it's stable production of electricity at a time when electricity production from wind and solar is intermittent. It doesn't always produce at hundred percent. On top of that, we have issues with gas supplies in Europe and we see increasing concern about the security of gas supply and energy supply. >> Andriy, fantastic conversation. I really enjoyed it, I hope you did too. >> Thank you so much, Greg. >> Thanks to Andre Yastreb, energy analyst at TD Asset Management. Stay tuned tomorrow as well. James Orlando, senior economist at TD Economics is going to be our guest. He will give us his reaction to the Bank of Canada rate decision, which is landing tomorrow morning. It'll be a good one. As always, you get a head start with your questions. Email moneytalklive@td. com. That's all we got for the show today. Take care. [theme music]