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[music] >> Hello, I'm Greg Bonnell. Welcome to MoneyTalk Live, brought to you by TD Direct Investing.
we are back from our holiday break and as always we will be discussing what's moving the markets. We are going to answer questions about investing.
Coming up on today show, we will discuss the tug-of-war in the oil market between geopolitical fears and expectations for slowing economic growth. TD Securities Bart Melek joins us.
MoneyTalk's Anthony Okolie is going to take us through that Canadian Jobs Report and what it might mean for the Bank of Canada's right decision later this month.
And in today's WebBroker education segment, Jason Hnatyk is going to show us how you can keep track of the commodities market on WebBroker.
So here's how you get in touch with us.
Just email moneytalklive@td.com or fill out the viewer response box under the video player on WebBroker.
Before we get our Guest of the day, let's get you an update on the markets. We will start with the TSX Composite Index. It is a down day for the price of crude and it's pulling some energy names lower but we are seeing some bid in the tech names on both sides of the border. We do have some green on the screen despite the downdraft and WBT I. At 20,933, it's up 1/4 of a percent.
If we look at the action and energy names, a modest bit of green on the screen is probably welcome. Let's check in on Cenovus. I shown you any of these names.
Right now we are down about 1 1/2%, 2171 on the name, down $0.33 per share. Barrick Gold getting a bit today.
Reports last week Derek is considering a new takeover offer for First Quantum. It sort of standing out among the mining aims today. It's up.
The S&P 500, the banks will start reporting at the end of the week. Off the heels of that much higher-than-expected jobs report south of the border, you have a bit of a bid into the S&P 500. It's up a little more than half percent to the upside.
The NASDAQ is up almost 2%. The name it's really standing out today is Boeing.
Might've seen some of the dramatic news reports over the weekend with the panel blowing out on one of its planes. Now they have grounded more than 170 of them. Lot of questions swirling around the name.
Boeing is down almost 7% at this hour. And that is your market update.
Higher OPEC production levels and price cuts from Saudi Arabia are weighing on the price of oil but our future guest today says the bigger issue is whether fears about slowing economic growth will outweigh concerns about conflict in the Middle East. Joining us now to discuss his Bart Melek, global head of commodity strategy and TD Securities. Always great to have you back.
>> It's great to be here. Happy new year.
>> Happy new year.
We have some big issues to talk about.
Let's talk about the here and now. The price of crude, at the start of the week, it's down substantially. Saudi Arabia, price cuts, what's going on in the market right now?
>> I think, one, today in particular, it's a reaction to Saudi Arabia dropping prices for its crude. The worry, of course, in the market broadly is when you look at the CFTC data, investors have reduced long exposure and have tilted towards the short end of exposure on crude oil.
They are worried that we will get a significant slowdown in demand as the year unfolds.
That is due to the restrictive monetary policy at leg to effects and its impact on the economy. Though, we haven't really seen that occur to a great extent, but the concern is certainly out there. The other big worry is that US supplies continue to surprise to the upside.
That OPEC report showed that the cartel produced I think 70,000 barrels more at the end of the year, the last month of the year, then I think people expected. And now, of course, there is worry that perhaps they may not be as committed to future cuts. There is talk that they would extend potentially to the end of the year but if you are seeing production move higher at a time where you are worried about less demand and US production still going strong, you may, just as a matter of course, take whatever profits you might have had and try to reduce losses and see what happens.
In the meantime, we continue to have multi-decade increase in risk in the Middle East.
We continue to see problems in the Red Sea. We now have potentially lead to navies facing off each other, I'm talking about potential problems between the Iranians and the American fleet. I'm not saying that's going to happen, but certainly there is the risk.
We are worried about the extension of the current Israeli conflict beyond where it currently is and involving the rest of the region which could logically impact the supply of oil over the next few months.
That, in my opinion, has not really been priced in and the market is very I would judge dismissive of those risks at this point.
>> Is that the longer-term thing we have to start thinking about? I remember early into 2024, we have some here and now issues before us, but over the holidays, the only headlines I saw it come out of the Middle East were concerning.
Interesting to come back to the office and seeing crude down. The long term, do we need to think about these geopolitical pressures?
>> Absolutely.
We also have to think about what OPEC will do and what oil looks like for 2024. In our estimate, we are looking for demand to grow 1.2 million barrels a day or so for the year. I'm confident that at the next OPEC meeting, Saudi Arabia and the rest of the cartel will commit to extending the cuts and they will come to some sort of accommodation to keep supply from overwhelming the market we project may be a balanced market in the first three months of this year. I'm very tempted to say next year but we are in 2024.
>> We have flipped the calendar.
>> And we do see substantial deficits for the balance of the year, certainly for the next six months or so, if OPEC does commit and execute. And we are not all that confident that the very strong pace of production increases from US shale is going to continue. When we look at CAPEX, that has moderated and I don't think the price environment is probably conducive to as much activity as we have seen last year. If that's the case, I think OPEC's ability to move prices higher will be successful, probably into the second quarter of the year.
>> The stock price then, with the pullback we are seeing now, a little over 70 bucks per barrel for West Texas intermediate on my screen, where could we see oil prices later this year some of these factors come to play out?
>> We have been formally saying that mid to high 80s or so for WTI and a little higher for Brent here is very possible but we are going to have to get off the, we are going to have to inflect higher here.
We are going to have to start talking about a potential recovery and what that might be as opposed to just entering a trough on the macro side and I think we are going to need a bit more timing specificity on when the Fed is likely to ease because we've been going back-and-forth on that front here. The market is probably a lot more optimistic with regards to when the Fed is going to cut and how much they are going to cut than the Fed itself, and we are seeing, over the last few days, we have seen some adjustment where the market has been pulling back.
On the equity side, and not projecting equities, but I think expectations have become a little bit less and the implication for markets like oil and the broader commodity markets, that risk appetite wanes a little bit, it impacts my market as well.
So it's all very much interconnected: interest rates, risk appetite for equities and commodities respond within that framework.
>> Interesting stuff as always with Bart Melek and a great start to the program. We are going to get your questions about commodities for Bart in just a moment's time. And a reminder that you can get in touch with us any time. Just email moneytalklive@td.com or fill out the viewer response box under the video player on WebBroker.
Right now, let's get you updated on the top stories in the world of business and take a look at how the markets are trading.
Let's check in on shares of Boeing. They are under pressure today, following a dramatic panel blowout on one of their 737 Max 9 Jets.
Dozens of the Jets, I believe more than hundred and 70, have been grounded after the incident on Friday which saw the panel tear away from the plane in midflight.
Boeing says it is agree with the FAA's decision to ground the Jets for inspection. Right now we've got going down 7%.
It appears the holiday shopping season was a lucrative one for several big retailers.
Lululemon, an American Eagle outfitters and Abercrombie and Fitch are among the names hiking their sales estimates for the fourth quarter. This news came that a three-day retail conference in Orlando, where other retailers are expected to share their revised forecasts. You can see some of those names right now including Abercrombie and Fitch, that's a pretty strong showing in one session, up about 7%.
Energy giant Shell is warning investors of some 4 1/2 billion charges and impairment charges for its coming fourth quarter report. The company says the charge will largely be focused on its refining and chemicals operations in Singapore which are on the sale block. Shell is scheduled to report its quarterly results on February 1. Right now, we have shelled down almost 2%. A quick check on the markets, we will start here on Bay Street with the TSX Composite Index. Even though we do have some weight on the energy names, we are showing a bit of strength to the upside. It's modest, 1/4 of a percent, about 57 points. South of the border, we are getting a rally in some of the tech names including the chipmakers who seem to be leading the charge. He got that broader read of the market, the S&P 500 up 30 points or a little more than half a percent. We are back with Bart Melek, taking your questions about commodities, so let's get to them. First one here, we talked about oil off the top of the show, someone wants to get your outlook for gold.
>> I like gold. That doesn't mean there isn't a pullback.
There's probably a bit of a separation between what the Fed thinks is likely going to happen on the interest rate front versus what the market is pricing.
The market is quite optimistic. Many are thinking that we could see cuts as early as March, five, even six cuts. The Fed isn't as willing to say and it stops and through various communiqués that we have heard that it is willing to do it as early as that.
They are very much prepared to look at data. So I think right now there is a potential risk that we pull back a little bit.
We have seen the employment number common much stronger-than-expected. What was a, 216 so with unemployment dropping to 3.7.
We have seen wages continue to move considerably higher on a year-over-year basis, month on month as well. So as far as we are concerned, the Federal Reserve is probably in no hurry to start easing right now. And if they are in a hurry, they are certainly not willing to tell us.
They are probably waiting for some significant slowdown.
We are seeing the market respond to that.
After the employment data came out, the jobs report, there was a bit of a negative reaction, we started moving higher and then we really took off into the 2060 level or so when the ISM on manufacturing numbers came out and the employment component came in at below 50. That was a signal to many people that, hey, one, the Fed is probably looking at employment that is slowing down and therefore they are going to cut. Now, we gave back a lot of that today back again, waiting for more data and signals from the Fed. My expectation is that the data isn't going to collapse anytime soon, it's going to be gradual. I think the US central bank is looking for that.
But once we see inflation moving closer to the 2% target, once we see economic data be a little weaker on the consumer side and on the labour side, then I think the Fed will be more willing to tell us that they are thinking, at least, of cutting rates in the market. I think that we are going to see 2100 average over the next quarter or two. The risk to me is probably to the upside and the reason for that is I think this Federal Reserve is very much concentrating policy on benefiting the lowest parts were the lowest end of income distribution in the United States and right now, they judge that, well, inflation, which is right now being driven by food, by housing, is hurting the lowest end of the income distribution the most and I think there fight is to… >> Get that under control.
>> Yeah.
But once the macro conditions deteriorate, if they deteriorate, we think they will ultimately, the concern I think from the Fed will be to make sure that the deteriorating labour market isn't impacting that cohort negatively as well.
In my opinion, that's going to likely happen before the 2% target comes around.
>> We have a follow-up question from the audience that fits nicely. We have of you are asking about the Fed pivot, when it does come, what can mean for commodities.
We talked about gold but more broadly, is it going to be a catalyst to the upside for more commodities?
>> I think so. I think for a lot of them, because typically speculative money will try to position itself ahead of the actual supply demand tightening. Lower rates or easier monetary policy tends to be followed by stronger economic numbers just as weakness follows tighter monetary policy.
We are also looking at someone higher inflation numbers certainly on the headlines because we do think energy picks up a little bit during that recovery so we are going to have a Federal Reserve that's kind of in a tricky situation where on the one end, they want to get more accommodating as the macroeconomy deteriorates and on the other they might see stubborn headline inflation, especially of energy moves higher. For gold, that is an ideal situation. It rates going lower and prices if not going higher stay put and then you will get all sorts of credibility questions, rightfully or wrongfully, it doesn't matter, but people will question the feds willingness to hit the 2% target if, I have every confidence that they will want to, it just may not be a straight path.
So we like gold. We think it goes to the 2100 range and the risk is to the upside.
>> Let's take a look at another audience question. If you are want to get your outlook for Chinese commodity demand.
Heading into last year this time, there was an idea that China's appetite would be ferocious with the reopening but it didn't play out. What do you think?
>> China did not play out after the reopening and I think to the disappointment of money, but there are good reasons for that. It looks like the Chinese set of stimulus during the lockdowns were not as robust as we have seen many Western countries and there seems to have been maybe not a permanent but at least the longer term damage to confidence in everything from housing to consumption has suffered so the Chinese economy, broadly, has underperformed the expectations we had a year ago and there is weakness relative to where we thought but ultimately we do you think it will be a bit of a recovery. We do expect some stimulus to come out of China and helps out market along. I'm thinking of things like copper, aluminum, nickel all should benefit down the road. We like copper here quite a bit. We still think there is some downside pressure but longer term, we think that one looks pretty good along with silver when that economy picks up and we've all heard what happened.
>> That's a wildcard, waiting for the stimulus from China?
>> I think we are all waiting.
>> We've been waiting for a while.
>> We are waiting and we will see what happens.
I'm pretty sure it will happen but we are not certain of what form that will take or on what timeline.
>> Interesting stuff. As always, make sure you do your own research before making any investment decisions.
We are going to get back to questions for Bart Melek on commodities in just a moment's time.
And a reminder that you can get in touch with us any time. Just email moneytalklive@td.com.
Now, let's get to our educational segment of the day.
We are talking commodities. If you are looking to keep track of the commodities market, WebBroker has tools which can help. Joining us now with more: Jason Hnatyk, Senior client education instructor with TD Direct Investing. Great to see you. Walk us through.
>> Great to be here, as always.
While we can't trade commodities here at TD Direct Investing, that doesn't mean it's any less important to stay abreast of how they are doing, whether or not you got exposure in your portfolio Weatherby stock for ETFs that you own or you were looking to use it as a bellwether for how the markets are performing or maybe the economy at large. I'm going to walk you through three different ways that WebBroker gain help keep you informed and so let's jump in and take a look. The first way we are going to know how commodities are performing is going to the research tab at the top of the page.
Under markets, we are going to go to the markets overview page.
On this page, there is a wealth of information from looking at how some of the major indices are doing to some of the top news stories to the global exchanges.
Going down here below the global exchange is, you will notice there are three different sectors of commodities that are available. We have agricultural commodities, metals, as well there is the energy sector.
Under the energy sector, we are looking at West Texas crude, just highlighting what you mentioned earlier in the show, it is showing down for the day, $70.30, down just over three dollars for the session.
Looking further to the right, we can identify the lifetime range and where the cost is sitting in that range. I like to share the news from the research section.
The reason I like it here is because you have the opportunity to search. I'm going to search for commodities.
I went to test my spelling here on the live show. If researcher commodities, we are getting a broad sector view of what's going on here. We can see that there is a report from earlier in the morning around the market open.
The last thing I want to show everybody here is under reports. There is a wealth of information available that's just one click away.
In the report section, there are three key areas. The first is going to be under the MorningStar reports on the right-hand side. There are different sectors and industries within the economy and you can look to see what's important to the particular commodity of your choice. The next is the TD Economics area. Our friends at TD Economics but thoughtful reports together so you can stay abreast of the ever-changing commodities market. Lastly, similar to the MorningStar report, there are the ink research reports where you can dig into the different sectors to see how commodity prices are impacted and how they are projected to make themselves felt in the broader economy as a whole.
>> Lots of places they are not of your can do some research on commodities.
What if they want to start making some investments related to specific commodities? How can WebBroker help there?
>> Absolutely. We've done our work and research and now we want to see how the rubber is going to meet the road.
I will bring us to our screeners tool within the platform to see how we can identify commodity specific ETFs. To access the screeners, we will go to the research tab at the top of the page.
Underneath the tools column on the right hand side, we are going to choose screeners.
We've been here many times before in the program. This is where we have the opportunity to screen for stocks, technical events as well as mutual funds and ETFs. I'm going to click on ETFs for our purposes today.
And when you create a new custom screen.
From here, once we have it loading on our screen, I'm going to choose under the overview section there is a fund category selection. Once I add that criteria to my screen, down below, I'm going to isolate for Canadian investments.
Under fund category, we can scroll through all sorts of different categories that are available.
I'm going to scroll down the and as I continue to go down in the Canadian section, let's see if we can find it quickly.
My apologies. If we go and find the one, let's keep going down. Here it is, United States broad basket is the first one that came to mind. Then he flipped the taco back to the US to keep this in mind. From here, the last thing to point out is that at the bottom of the screen for ETFs, it automatically includes mutual funds so we don't that included, we uncheck that box and then we can look at the matches that meet the very broad screen that I've created. We've got an extensive list for commodity ETFs that are available. You can click on the symbol to start your purchasing process.
Alternatively, you can choose up to five funds and click the checkbox is on the left-hand side and it gives you the ability to compare those funds against each other, you can peel back the onion to make sure you are putting your money in the most efficient place for you. Lots of information available, just dive into web broker and find it. After tough as always, Jason. Thanks for that.
>> My pleasure.
>> Jason Hnatyk, Senior client education instructor with TD Direct Investing.
And make sure to check out the learning centre in WebBroker for more educational videos, live, interactive master classes and upcoming webinars.
Now before we get back to your questions about commodities for Bart Melek, a reminder of how you can get in touch with us.
Do you have a question about investing or what's driving the markets?
Our guests are eager to hear what's on your mind, so send us your questions.
There are two ways you can get in touch with us.
You can send us an email anytime at moneytalklive@td.com or you can use the question box right below the screen here on WebBroker. Just write in your question and hit send.
We'll see if one of our guests can get you the answer right here at MoneyTalk Live.
Okay, we're back with Bart Melek, taking your questions about commodities. This one just came in.
If you are says, lithium keeps going down.
If we need more electric vehicles, is it a good time to buy for 2024? Why does he keep going down?
This is a good reminder for the first show of the year, we cannot give specific buy or sell recommendations on the program or the platform but we can talk about lithium and EVs and what's going on with that market.
>> Sure.
We've had a disappointing set of circumstances for EVs broadly.
As we have seen in the United States, inventories have surged. We are hearing announcements from producers that they are reducing production. They are worried about the distance the saints can travel.
The performance, we recently read a lot in the media about the massive cost of replacing batteries in some models so I think for the next little while, inventories will continue to be high and we are probably going to see reduced production by major auto manufacturers and that ultimately means that demand for these battery metals could very well be temporary. It isn't as robust as I think many had priced or expected. That means that there's downward pressure. Now, does it recover? I think ultimately as we move into 24 or 25 or 26 and these new regulations like the ones in Canada kick in mandating higher sales as a percentage of total sales. I think that means prices rebound with higher markets in higher demand.
One that exactly will happen, we haven't done the exact work but it's tricky because I think a lot of the assumptions we had of how quickly this happens may be recalculating now.
>> Tempered expectations on that front.
This could be part of the EV conversation as well. What is your outlook for copper over the next one to three years? Copper is going to be part like vacation.
>> Copper to me as the elector vacation metal because electrification is not possible without copper.
It is used in transformers, and electrical motors, switchgear, you name it. There are a massive amount of uses. An average EV uses much more copper than a standard gas vehicle. As we shift into copper, I think demand moves higher and we are not really seeing an awful lot of new investment. In fact, we've, I'm sure many of us would follow this, have heard about the goings-on in Panama.
>> There was supposed to be a massive copper project.
>> And it's done. So when we look at it, we are probably--We were surprised, we did not see it coming. Unfortunately, the crystal ball doesn't tell us everything, but certainly that market is going to be significantly tighter this year and then I think many thought this year. We are probably going to have subdued demands at some point and the consensus view was that probably means a bit of a surplus.
Production use comes out and I think we are talking deficits again. That means copper on the margin is probably stronger this year than otherwise. It doesn't mean for the next quarter or two we are not going to see downward pressure as the global economy goes into a trough, a gross trough, but I think the recovery will be more robust as inventories are low and the supply side and new production isn't there. So I even like it a year out. As we move into the second year, they're going to be some increases in production.
So it may be flat age for the next two years due to this recession and I think significantly higher, may be beyond three years here because in order to incentivize new investment in mining, you're going to need much higher prices than we are seeing today. Increasingly, mining projects are significantly lower grade than they have been 20 years ago. We took the good stuff out already.
They are quite often located in risky parts of the world where the discount rates are higher and they are also in parts of the world that are not easy to access. You're going to need to build infrastructure, roads, power, there are water shortages you're going to have to deal with so the costs are going to be higher. To the extent that you're going to have a market that is going to be potentially in a deficit and one that will need, will be needed to feed new demand, we are going to have to have incentives to build these projects. Firms aren't going to invest millions unless there is money on it so I like copper, I like it for the long term, but always over the next year or two, it's always tricky because things quite often surprise us. There's a bit of instability relative to where we thought we were going to be.
>> Great discussion on it there. I know if you are had a question about supply and demand in the copper market, pretty robust discussion there. I think Bart got you covered on their tea. We are going to get back to your questions for Bart Melek on commodities and just moments time.
As always, make sure you do your own research before making any investment decisions.
and a reminder that you get in touch with us at any time.
Do you have a question about investing or what's driving the markets?
Our guests are eager to hear what's on your mind, so send us your questions.
There are two ways you can get in touch with us.
You can send us an email anytime at moneytalklive@td.com or you can use the question box right below the screen here on WebBroker. Just write in your question and hit send.
We'll see if one of our guests can get you the answer right here at MoneyTalk Live.
Canada's job growth stalled in the final month of last year, adding just 100 new jobs while the unemployment rate held steady. Our Anthony Okolie has been digging into those numbers and also the implications we might see for the Bank of Canada on the right decision later this month.
>> It was a disappointing jobs report that surprised to the downside. It was virtually flat in December versus roughly 14,000 jobs expected by Bay Street analysts. The employment rate stayed steady and it was up seven percentage points since April.
The employment rate fell for the third consecutive month as the country's working age population, age 15 and older, rose by 74,000. Of course, the employment rate has risen consistently over the last year as rapid population growth continues to outstrip job creation. Some of the key highlights, full-time employment was down which was offset by the roughly 24,000 net new part-time jobs in December. Of course, the biggest gains by sector were in three areas: professional, scientific and tax services. We also saw some gains in healthcare and social assistance as well as other services. Those gains were offset by weakness in wholesale and retail trade, manufacturing. Total hours worked rose month over month. When you look at the key wage growth, it was up 5.4% year-over-year, that compares to 4.8% in November. That's the fastest pace of wage growth we have seen since last February.
Of course, the Bank of Canada has said that wage growth above 4% is not compatible with a 2% inflation target unless they see a significant jump in labour productivity.
Looking ahead, despite wages remaining elevated in the 4 to 5% range, TD Economics has seen signs that the job market is gradually losing momentum.
Over the past year, TD expects the labour force growth to outpace employment gains.
That will put pressure on the employment rate, moving at higher than current levels. Meanwhile, job vacancies are falling across the country although it has not been consistent across provinces. TD Economics believes the effects of the cumulative 475 basis points of interest rate hikes are taking hold on the economy.
We are seeing the consumers and businesses pull back. Growth is slowing away that's consistent with inflation inching closer to the Bank of Canada's 2% target.
>> That leads us to the big question. You probably get this question two.
So, tell me what's gonna happen with the Bank of Canada in 2024? What is the rate policy look like? What's the outlook?
>> That's the big question. The BOC is going to meet eight times this year with the first policy decision on January 24.
TD Economics believes today's report does little to change the thinking of the Bank of Canada. As the chart shows, currently markets are pricing in the first rate cuts to occur at the Bank of Canada's third meeting of the year in April which is in line with TD Economics forecast. They expect the BOC to cut rates by the April meeting. Looking ahead, TD Economics expects measured 25 basis point cuts to bring the endpoint a 3 1/2% from the current overnight policy rate of 5%.
That's slightly lower than the market expectations of 3.75% but it is normally tighter than pre-pandemic levels.
>> Interesting stuff. To be an interesting year. MoneyTalk's Anthony Okolie.
Now, for an update on the markets.
We are having a look at TD's Advanced Dashboard, platform designed for active traders available through TD Direct Investing. We are looking at the heat map function here which gives you a view of the market movers on the TSX 60 by Price and volume. Some pressure from the energy space. Crude prices pulling back pretty dramatically, weathered Suncor, CNQ or Cenovus, all down to the tune of about 2% or more. It wears the green on the screen coming from? Shopify showing strength today and some of the mining names including Barrick and First Quantum, also the banks.
It's not a big jump higher for the banks but they are heavyweights. They are in the green putting points on the table. South of the border, the chipmakers were leading the charge, there was AMD or Nvidia or Intel, all showing strength. Billing is the standout with the problems they had on Friday with airplanes panel blowing out and jets being grounded for inspection.
You can find more information on TD Advanced Dashboard by visiting TD.com/Advanced Dashboard.
We are back now with Bart Melek from TD Securities talking commodities. How do you view political risk for commodities production? Can countries like Panama live with that the tax revenue if they are shutting down mind? This is one of the big stories of last fall.
>> I don't know if they can live without it or live with it but certainly it's something that they are going to have to take a look at and see what the policy is and perhaps rework the regime that allocates revenue from these resources and we will see.
Certainly we know in other countries there is quite a bit of resource nationalism emerging where companies basically will be asked to share more of their resources.
Increasingly countries are viewing resources as belonging to the people of those countries as opposed to the mining interests and ultimately compromises will have to be reached where those funds get redistributed to the nations and they get distributed to investors as well.
Ultimately what that probably means is that the cost structures will increase. At the end of the day, if I'm investing a dollar and a risky asset and I have to pay more to a government, that means I get less, so ultimately the price is going to have to go up for me to be profitable, essentially. So ultimately, on the margin, that is probably going to be less projects done, a tighter market and a higher incentive price is going to be baked in to this because I'm now paying more revenue to other parties and I still have to make a fixed rate of return or some sort of percentage of the risks that I'm taking.
>> It's always great to get your insights.
Great to kickoff the year of shows with you as our first guest. Look forward to more conversations.
>> I'm looking forward to being here again. Thank you very much.
>> Our thanks to Bart Melek, global head of commodity strategy at TD Securities. As always, make sure you do your own research before making any investment decisions.
stay tuned for tomorrow show, Andres Rincon, head of ETF sales and strategy of TD Securities will be our guest. He wants to take your questions about exchange traded funds. You can get a head start on this question. Just email moneytalklive@td.com. That's all the time we have for the show today. Thanks for watching. We will see you tomorrow.
[music]
we are back from our holiday break and as always we will be discussing what's moving the markets. We are going to answer questions about investing.
Coming up on today show, we will discuss the tug-of-war in the oil market between geopolitical fears and expectations for slowing economic growth. TD Securities Bart Melek joins us.
MoneyTalk's Anthony Okolie is going to take us through that Canadian Jobs Report and what it might mean for the Bank of Canada's right decision later this month.
And in today's WebBroker education segment, Jason Hnatyk is going to show us how you can keep track of the commodities market on WebBroker.
So here's how you get in touch with us.
Just email moneytalklive@td.com or fill out the viewer response box under the video player on WebBroker.
Before we get our Guest of the day, let's get you an update on the markets. We will start with the TSX Composite Index. It is a down day for the price of crude and it's pulling some energy names lower but we are seeing some bid in the tech names on both sides of the border. We do have some green on the screen despite the downdraft and WBT I. At 20,933, it's up 1/4 of a percent.
If we look at the action and energy names, a modest bit of green on the screen is probably welcome. Let's check in on Cenovus. I shown you any of these names.
Right now we are down about 1 1/2%, 2171 on the name, down $0.33 per share. Barrick Gold getting a bit today.
Reports last week Derek is considering a new takeover offer for First Quantum. It sort of standing out among the mining aims today. It's up.
The S&P 500, the banks will start reporting at the end of the week. Off the heels of that much higher-than-expected jobs report south of the border, you have a bit of a bid into the S&P 500. It's up a little more than half percent to the upside.
The NASDAQ is up almost 2%. The name it's really standing out today is Boeing.
Might've seen some of the dramatic news reports over the weekend with the panel blowing out on one of its planes. Now they have grounded more than 170 of them. Lot of questions swirling around the name.
Boeing is down almost 7% at this hour. And that is your market update.
Higher OPEC production levels and price cuts from Saudi Arabia are weighing on the price of oil but our future guest today says the bigger issue is whether fears about slowing economic growth will outweigh concerns about conflict in the Middle East. Joining us now to discuss his Bart Melek, global head of commodity strategy and TD Securities. Always great to have you back.
>> It's great to be here. Happy new year.
>> Happy new year.
We have some big issues to talk about.
Let's talk about the here and now. The price of crude, at the start of the week, it's down substantially. Saudi Arabia, price cuts, what's going on in the market right now?
>> I think, one, today in particular, it's a reaction to Saudi Arabia dropping prices for its crude. The worry, of course, in the market broadly is when you look at the CFTC data, investors have reduced long exposure and have tilted towards the short end of exposure on crude oil.
They are worried that we will get a significant slowdown in demand as the year unfolds.
That is due to the restrictive monetary policy at leg to effects and its impact on the economy. Though, we haven't really seen that occur to a great extent, but the concern is certainly out there. The other big worry is that US supplies continue to surprise to the upside.
That OPEC report showed that the cartel produced I think 70,000 barrels more at the end of the year, the last month of the year, then I think people expected. And now, of course, there is worry that perhaps they may not be as committed to future cuts. There is talk that they would extend potentially to the end of the year but if you are seeing production move higher at a time where you are worried about less demand and US production still going strong, you may, just as a matter of course, take whatever profits you might have had and try to reduce losses and see what happens.
In the meantime, we continue to have multi-decade increase in risk in the Middle East.
We continue to see problems in the Red Sea. We now have potentially lead to navies facing off each other, I'm talking about potential problems between the Iranians and the American fleet. I'm not saying that's going to happen, but certainly there is the risk.
We are worried about the extension of the current Israeli conflict beyond where it currently is and involving the rest of the region which could logically impact the supply of oil over the next few months.
That, in my opinion, has not really been priced in and the market is very I would judge dismissive of those risks at this point.
>> Is that the longer-term thing we have to start thinking about? I remember early into 2024, we have some here and now issues before us, but over the holidays, the only headlines I saw it come out of the Middle East were concerning.
Interesting to come back to the office and seeing crude down. The long term, do we need to think about these geopolitical pressures?
>> Absolutely.
We also have to think about what OPEC will do and what oil looks like for 2024. In our estimate, we are looking for demand to grow 1.2 million barrels a day or so for the year. I'm confident that at the next OPEC meeting, Saudi Arabia and the rest of the cartel will commit to extending the cuts and they will come to some sort of accommodation to keep supply from overwhelming the market we project may be a balanced market in the first three months of this year. I'm very tempted to say next year but we are in 2024.
>> We have flipped the calendar.
>> And we do see substantial deficits for the balance of the year, certainly for the next six months or so, if OPEC does commit and execute. And we are not all that confident that the very strong pace of production increases from US shale is going to continue. When we look at CAPEX, that has moderated and I don't think the price environment is probably conducive to as much activity as we have seen last year. If that's the case, I think OPEC's ability to move prices higher will be successful, probably into the second quarter of the year.
>> The stock price then, with the pullback we are seeing now, a little over 70 bucks per barrel for West Texas intermediate on my screen, where could we see oil prices later this year some of these factors come to play out?
>> We have been formally saying that mid to high 80s or so for WTI and a little higher for Brent here is very possible but we are going to have to get off the, we are going to have to inflect higher here.
We are going to have to start talking about a potential recovery and what that might be as opposed to just entering a trough on the macro side and I think we are going to need a bit more timing specificity on when the Fed is likely to ease because we've been going back-and-forth on that front here. The market is probably a lot more optimistic with regards to when the Fed is going to cut and how much they are going to cut than the Fed itself, and we are seeing, over the last few days, we have seen some adjustment where the market has been pulling back.
On the equity side, and not projecting equities, but I think expectations have become a little bit less and the implication for markets like oil and the broader commodity markets, that risk appetite wanes a little bit, it impacts my market as well.
So it's all very much interconnected: interest rates, risk appetite for equities and commodities respond within that framework.
>> Interesting stuff as always with Bart Melek and a great start to the program. We are going to get your questions about commodities for Bart in just a moment's time. And a reminder that you can get in touch with us any time. Just email moneytalklive@td.com or fill out the viewer response box under the video player on WebBroker.
Right now, let's get you updated on the top stories in the world of business and take a look at how the markets are trading.
Let's check in on shares of Boeing. They are under pressure today, following a dramatic panel blowout on one of their 737 Max 9 Jets.
Dozens of the Jets, I believe more than hundred and 70, have been grounded after the incident on Friday which saw the panel tear away from the plane in midflight.
Boeing says it is agree with the FAA's decision to ground the Jets for inspection. Right now we've got going down 7%.
It appears the holiday shopping season was a lucrative one for several big retailers.
Lululemon, an American Eagle outfitters and Abercrombie and Fitch are among the names hiking their sales estimates for the fourth quarter. This news came that a three-day retail conference in Orlando, where other retailers are expected to share their revised forecasts. You can see some of those names right now including Abercrombie and Fitch, that's a pretty strong showing in one session, up about 7%.
Energy giant Shell is warning investors of some 4 1/2 billion charges and impairment charges for its coming fourth quarter report. The company says the charge will largely be focused on its refining and chemicals operations in Singapore which are on the sale block. Shell is scheduled to report its quarterly results on February 1. Right now, we have shelled down almost 2%. A quick check on the markets, we will start here on Bay Street with the TSX Composite Index. Even though we do have some weight on the energy names, we are showing a bit of strength to the upside. It's modest, 1/4 of a percent, about 57 points. South of the border, we are getting a rally in some of the tech names including the chipmakers who seem to be leading the charge. He got that broader read of the market, the S&P 500 up 30 points or a little more than half a percent. We are back with Bart Melek, taking your questions about commodities, so let's get to them. First one here, we talked about oil off the top of the show, someone wants to get your outlook for gold.
>> I like gold. That doesn't mean there isn't a pullback.
There's probably a bit of a separation between what the Fed thinks is likely going to happen on the interest rate front versus what the market is pricing.
The market is quite optimistic. Many are thinking that we could see cuts as early as March, five, even six cuts. The Fed isn't as willing to say and it stops and through various communiqués that we have heard that it is willing to do it as early as that.
They are very much prepared to look at data. So I think right now there is a potential risk that we pull back a little bit.
We have seen the employment number common much stronger-than-expected. What was a, 216 so with unemployment dropping to 3.7.
We have seen wages continue to move considerably higher on a year-over-year basis, month on month as well. So as far as we are concerned, the Federal Reserve is probably in no hurry to start easing right now. And if they are in a hurry, they are certainly not willing to tell us.
They are probably waiting for some significant slowdown.
We are seeing the market respond to that.
After the employment data came out, the jobs report, there was a bit of a negative reaction, we started moving higher and then we really took off into the 2060 level or so when the ISM on manufacturing numbers came out and the employment component came in at below 50. That was a signal to many people that, hey, one, the Fed is probably looking at employment that is slowing down and therefore they are going to cut. Now, we gave back a lot of that today back again, waiting for more data and signals from the Fed. My expectation is that the data isn't going to collapse anytime soon, it's going to be gradual. I think the US central bank is looking for that.
But once we see inflation moving closer to the 2% target, once we see economic data be a little weaker on the consumer side and on the labour side, then I think the Fed will be more willing to tell us that they are thinking, at least, of cutting rates in the market. I think that we are going to see 2100 average over the next quarter or two. The risk to me is probably to the upside and the reason for that is I think this Federal Reserve is very much concentrating policy on benefiting the lowest parts were the lowest end of income distribution in the United States and right now, they judge that, well, inflation, which is right now being driven by food, by housing, is hurting the lowest end of the income distribution the most and I think there fight is to… >> Get that under control.
>> Yeah.
But once the macro conditions deteriorate, if they deteriorate, we think they will ultimately, the concern I think from the Fed will be to make sure that the deteriorating labour market isn't impacting that cohort negatively as well.
In my opinion, that's going to likely happen before the 2% target comes around.
>> We have a follow-up question from the audience that fits nicely. We have of you are asking about the Fed pivot, when it does come, what can mean for commodities.
We talked about gold but more broadly, is it going to be a catalyst to the upside for more commodities?
>> I think so. I think for a lot of them, because typically speculative money will try to position itself ahead of the actual supply demand tightening. Lower rates or easier monetary policy tends to be followed by stronger economic numbers just as weakness follows tighter monetary policy.
We are also looking at someone higher inflation numbers certainly on the headlines because we do think energy picks up a little bit during that recovery so we are going to have a Federal Reserve that's kind of in a tricky situation where on the one end, they want to get more accommodating as the macroeconomy deteriorates and on the other they might see stubborn headline inflation, especially of energy moves higher. For gold, that is an ideal situation. It rates going lower and prices if not going higher stay put and then you will get all sorts of credibility questions, rightfully or wrongfully, it doesn't matter, but people will question the feds willingness to hit the 2% target if, I have every confidence that they will want to, it just may not be a straight path.
So we like gold. We think it goes to the 2100 range and the risk is to the upside.
>> Let's take a look at another audience question. If you are want to get your outlook for Chinese commodity demand.
Heading into last year this time, there was an idea that China's appetite would be ferocious with the reopening but it didn't play out. What do you think?
>> China did not play out after the reopening and I think to the disappointment of money, but there are good reasons for that. It looks like the Chinese set of stimulus during the lockdowns were not as robust as we have seen many Western countries and there seems to have been maybe not a permanent but at least the longer term damage to confidence in everything from housing to consumption has suffered so the Chinese economy, broadly, has underperformed the expectations we had a year ago and there is weakness relative to where we thought but ultimately we do you think it will be a bit of a recovery. We do expect some stimulus to come out of China and helps out market along. I'm thinking of things like copper, aluminum, nickel all should benefit down the road. We like copper here quite a bit. We still think there is some downside pressure but longer term, we think that one looks pretty good along with silver when that economy picks up and we've all heard what happened.
>> That's a wildcard, waiting for the stimulus from China?
>> I think we are all waiting.
>> We've been waiting for a while.
>> We are waiting and we will see what happens.
I'm pretty sure it will happen but we are not certain of what form that will take or on what timeline.
>> Interesting stuff. As always, make sure you do your own research before making any investment decisions.
We are going to get back to questions for Bart Melek on commodities in just a moment's time.
And a reminder that you can get in touch with us any time. Just email moneytalklive@td.com.
Now, let's get to our educational segment of the day.
We are talking commodities. If you are looking to keep track of the commodities market, WebBroker has tools which can help. Joining us now with more: Jason Hnatyk, Senior client education instructor with TD Direct Investing. Great to see you. Walk us through.
>> Great to be here, as always.
While we can't trade commodities here at TD Direct Investing, that doesn't mean it's any less important to stay abreast of how they are doing, whether or not you got exposure in your portfolio Weatherby stock for ETFs that you own or you were looking to use it as a bellwether for how the markets are performing or maybe the economy at large. I'm going to walk you through three different ways that WebBroker gain help keep you informed and so let's jump in and take a look. The first way we are going to know how commodities are performing is going to the research tab at the top of the page.
Under markets, we are going to go to the markets overview page.
On this page, there is a wealth of information from looking at how some of the major indices are doing to some of the top news stories to the global exchanges.
Going down here below the global exchange is, you will notice there are three different sectors of commodities that are available. We have agricultural commodities, metals, as well there is the energy sector.
Under the energy sector, we are looking at West Texas crude, just highlighting what you mentioned earlier in the show, it is showing down for the day, $70.30, down just over three dollars for the session.
Looking further to the right, we can identify the lifetime range and where the cost is sitting in that range. I like to share the news from the research section.
The reason I like it here is because you have the opportunity to search. I'm going to search for commodities.
I went to test my spelling here on the live show. If researcher commodities, we are getting a broad sector view of what's going on here. We can see that there is a report from earlier in the morning around the market open.
The last thing I want to show everybody here is under reports. There is a wealth of information available that's just one click away.
In the report section, there are three key areas. The first is going to be under the MorningStar reports on the right-hand side. There are different sectors and industries within the economy and you can look to see what's important to the particular commodity of your choice. The next is the TD Economics area. Our friends at TD Economics but thoughtful reports together so you can stay abreast of the ever-changing commodities market. Lastly, similar to the MorningStar report, there are the ink research reports where you can dig into the different sectors to see how commodity prices are impacted and how they are projected to make themselves felt in the broader economy as a whole.
>> Lots of places they are not of your can do some research on commodities.
What if they want to start making some investments related to specific commodities? How can WebBroker help there?
>> Absolutely. We've done our work and research and now we want to see how the rubber is going to meet the road.
I will bring us to our screeners tool within the platform to see how we can identify commodity specific ETFs. To access the screeners, we will go to the research tab at the top of the page.
Underneath the tools column on the right hand side, we are going to choose screeners.
We've been here many times before in the program. This is where we have the opportunity to screen for stocks, technical events as well as mutual funds and ETFs. I'm going to click on ETFs for our purposes today.
And when you create a new custom screen.
From here, once we have it loading on our screen, I'm going to choose under the overview section there is a fund category selection. Once I add that criteria to my screen, down below, I'm going to isolate for Canadian investments.
Under fund category, we can scroll through all sorts of different categories that are available.
I'm going to scroll down the and as I continue to go down in the Canadian section, let's see if we can find it quickly.
My apologies. If we go and find the one, let's keep going down. Here it is, United States broad basket is the first one that came to mind. Then he flipped the taco back to the US to keep this in mind. From here, the last thing to point out is that at the bottom of the screen for ETFs, it automatically includes mutual funds so we don't that included, we uncheck that box and then we can look at the matches that meet the very broad screen that I've created. We've got an extensive list for commodity ETFs that are available. You can click on the symbol to start your purchasing process.
Alternatively, you can choose up to five funds and click the checkbox is on the left-hand side and it gives you the ability to compare those funds against each other, you can peel back the onion to make sure you are putting your money in the most efficient place for you. Lots of information available, just dive into web broker and find it. After tough as always, Jason. Thanks for that.
>> My pleasure.
>> Jason Hnatyk, Senior client education instructor with TD Direct Investing.
And make sure to check out the learning centre in WebBroker for more educational videos, live, interactive master classes and upcoming webinars.
Now before we get back to your questions about commodities for Bart Melek, a reminder of how you can get in touch with us.
Do you have a question about investing or what's driving the markets?
Our guests are eager to hear what's on your mind, so send us your questions.
There are two ways you can get in touch with us.
You can send us an email anytime at moneytalklive@td.com or you can use the question box right below the screen here on WebBroker. Just write in your question and hit send.
We'll see if one of our guests can get you the answer right here at MoneyTalk Live.
Okay, we're back with Bart Melek, taking your questions about commodities. This one just came in.
If you are says, lithium keeps going down.
If we need more electric vehicles, is it a good time to buy for 2024? Why does he keep going down?
This is a good reminder for the first show of the year, we cannot give specific buy or sell recommendations on the program or the platform but we can talk about lithium and EVs and what's going on with that market.
>> Sure.
We've had a disappointing set of circumstances for EVs broadly.
As we have seen in the United States, inventories have surged. We are hearing announcements from producers that they are reducing production. They are worried about the distance the saints can travel.
The performance, we recently read a lot in the media about the massive cost of replacing batteries in some models so I think for the next little while, inventories will continue to be high and we are probably going to see reduced production by major auto manufacturers and that ultimately means that demand for these battery metals could very well be temporary. It isn't as robust as I think many had priced or expected. That means that there's downward pressure. Now, does it recover? I think ultimately as we move into 24 or 25 or 26 and these new regulations like the ones in Canada kick in mandating higher sales as a percentage of total sales. I think that means prices rebound with higher markets in higher demand.
One that exactly will happen, we haven't done the exact work but it's tricky because I think a lot of the assumptions we had of how quickly this happens may be recalculating now.
>> Tempered expectations on that front.
This could be part of the EV conversation as well. What is your outlook for copper over the next one to three years? Copper is going to be part like vacation.
>> Copper to me as the elector vacation metal because electrification is not possible without copper.
It is used in transformers, and electrical motors, switchgear, you name it. There are a massive amount of uses. An average EV uses much more copper than a standard gas vehicle. As we shift into copper, I think demand moves higher and we are not really seeing an awful lot of new investment. In fact, we've, I'm sure many of us would follow this, have heard about the goings-on in Panama.
>> There was supposed to be a massive copper project.
>> And it's done. So when we look at it, we are probably--We were surprised, we did not see it coming. Unfortunately, the crystal ball doesn't tell us everything, but certainly that market is going to be significantly tighter this year and then I think many thought this year. We are probably going to have subdued demands at some point and the consensus view was that probably means a bit of a surplus.
Production use comes out and I think we are talking deficits again. That means copper on the margin is probably stronger this year than otherwise. It doesn't mean for the next quarter or two we are not going to see downward pressure as the global economy goes into a trough, a gross trough, but I think the recovery will be more robust as inventories are low and the supply side and new production isn't there. So I even like it a year out. As we move into the second year, they're going to be some increases in production.
So it may be flat age for the next two years due to this recession and I think significantly higher, may be beyond three years here because in order to incentivize new investment in mining, you're going to need much higher prices than we are seeing today. Increasingly, mining projects are significantly lower grade than they have been 20 years ago. We took the good stuff out already.
They are quite often located in risky parts of the world where the discount rates are higher and they are also in parts of the world that are not easy to access. You're going to need to build infrastructure, roads, power, there are water shortages you're going to have to deal with so the costs are going to be higher. To the extent that you're going to have a market that is going to be potentially in a deficit and one that will need, will be needed to feed new demand, we are going to have to have incentives to build these projects. Firms aren't going to invest millions unless there is money on it so I like copper, I like it for the long term, but always over the next year or two, it's always tricky because things quite often surprise us. There's a bit of instability relative to where we thought we were going to be.
>> Great discussion on it there. I know if you are had a question about supply and demand in the copper market, pretty robust discussion there. I think Bart got you covered on their tea. We are going to get back to your questions for Bart Melek on commodities and just moments time.
As always, make sure you do your own research before making any investment decisions.
and a reminder that you get in touch with us at any time.
Do you have a question about investing or what's driving the markets?
Our guests are eager to hear what's on your mind, so send us your questions.
There are two ways you can get in touch with us.
You can send us an email anytime at moneytalklive@td.com or you can use the question box right below the screen here on WebBroker. Just write in your question and hit send.
We'll see if one of our guests can get you the answer right here at MoneyTalk Live.
Canada's job growth stalled in the final month of last year, adding just 100 new jobs while the unemployment rate held steady. Our Anthony Okolie has been digging into those numbers and also the implications we might see for the Bank of Canada on the right decision later this month.
>> It was a disappointing jobs report that surprised to the downside. It was virtually flat in December versus roughly 14,000 jobs expected by Bay Street analysts. The employment rate stayed steady and it was up seven percentage points since April.
The employment rate fell for the third consecutive month as the country's working age population, age 15 and older, rose by 74,000. Of course, the employment rate has risen consistently over the last year as rapid population growth continues to outstrip job creation. Some of the key highlights, full-time employment was down which was offset by the roughly 24,000 net new part-time jobs in December. Of course, the biggest gains by sector were in three areas: professional, scientific and tax services. We also saw some gains in healthcare and social assistance as well as other services. Those gains were offset by weakness in wholesale and retail trade, manufacturing. Total hours worked rose month over month. When you look at the key wage growth, it was up 5.4% year-over-year, that compares to 4.8% in November. That's the fastest pace of wage growth we have seen since last February.
Of course, the Bank of Canada has said that wage growth above 4% is not compatible with a 2% inflation target unless they see a significant jump in labour productivity.
Looking ahead, despite wages remaining elevated in the 4 to 5% range, TD Economics has seen signs that the job market is gradually losing momentum.
Over the past year, TD expects the labour force growth to outpace employment gains.
That will put pressure on the employment rate, moving at higher than current levels. Meanwhile, job vacancies are falling across the country although it has not been consistent across provinces. TD Economics believes the effects of the cumulative 475 basis points of interest rate hikes are taking hold on the economy.
We are seeing the consumers and businesses pull back. Growth is slowing away that's consistent with inflation inching closer to the Bank of Canada's 2% target.
>> That leads us to the big question. You probably get this question two.
So, tell me what's gonna happen with the Bank of Canada in 2024? What is the rate policy look like? What's the outlook?
>> That's the big question. The BOC is going to meet eight times this year with the first policy decision on January 24.
TD Economics believes today's report does little to change the thinking of the Bank of Canada. As the chart shows, currently markets are pricing in the first rate cuts to occur at the Bank of Canada's third meeting of the year in April which is in line with TD Economics forecast. They expect the BOC to cut rates by the April meeting. Looking ahead, TD Economics expects measured 25 basis point cuts to bring the endpoint a 3 1/2% from the current overnight policy rate of 5%.
That's slightly lower than the market expectations of 3.75% but it is normally tighter than pre-pandemic levels.
>> Interesting stuff. To be an interesting year. MoneyTalk's Anthony Okolie.
Now, for an update on the markets.
We are having a look at TD's Advanced Dashboard, platform designed for active traders available through TD Direct Investing. We are looking at the heat map function here which gives you a view of the market movers on the TSX 60 by Price and volume. Some pressure from the energy space. Crude prices pulling back pretty dramatically, weathered Suncor, CNQ or Cenovus, all down to the tune of about 2% or more. It wears the green on the screen coming from? Shopify showing strength today and some of the mining names including Barrick and First Quantum, also the banks.
It's not a big jump higher for the banks but they are heavyweights. They are in the green putting points on the table. South of the border, the chipmakers were leading the charge, there was AMD or Nvidia or Intel, all showing strength. Billing is the standout with the problems they had on Friday with airplanes panel blowing out and jets being grounded for inspection.
You can find more information on TD Advanced Dashboard by visiting TD.com/Advanced Dashboard.
We are back now with Bart Melek from TD Securities talking commodities. How do you view political risk for commodities production? Can countries like Panama live with that the tax revenue if they are shutting down mind? This is one of the big stories of last fall.
>> I don't know if they can live without it or live with it but certainly it's something that they are going to have to take a look at and see what the policy is and perhaps rework the regime that allocates revenue from these resources and we will see.
Certainly we know in other countries there is quite a bit of resource nationalism emerging where companies basically will be asked to share more of their resources.
Increasingly countries are viewing resources as belonging to the people of those countries as opposed to the mining interests and ultimately compromises will have to be reached where those funds get redistributed to the nations and they get distributed to investors as well.
Ultimately what that probably means is that the cost structures will increase. At the end of the day, if I'm investing a dollar and a risky asset and I have to pay more to a government, that means I get less, so ultimately the price is going to have to go up for me to be profitable, essentially. So ultimately, on the margin, that is probably going to be less projects done, a tighter market and a higher incentive price is going to be baked in to this because I'm now paying more revenue to other parties and I still have to make a fixed rate of return or some sort of percentage of the risks that I'm taking.
>> It's always great to get your insights.
Great to kickoff the year of shows with you as our first guest. Look forward to more conversations.
>> I'm looking forward to being here again. Thank you very much.
>> Our thanks to Bart Melek, global head of commodity strategy at TD Securities. As always, make sure you do your own research before making any investment decisions.
stay tuned for tomorrow show, Andres Rincon, head of ETF sales and strategy of TD Securities will be our guest. He wants to take your questions about exchange traded funds. You can get a head start on this question. Just email moneytalklive@td.com. That's all the time we have for the show today. Thanks for watching. We will see you tomorrow.
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