Ben Gossack

[music] Hello I'm Greg Bonnell and welcome to MoneyTalk Live, brought to you by TD Direct Investing. every day I'll be joined by guests from across TD, many of whom you only see here. We we'll take you through what's moving the markets and answer your questions about investing. Coming up on today's show. Ben Gossack will take us through the pocket of strength he's seeing in a most downmarket. And in today's WebBroker education segment, Nugwa Haruna will show us how you can research income investing opportunity on platform. Parasite get in touch with us, email moneytalklive@td.com or Philip at your response box under the video player on WebBroker. Now before our guest today, let's get you an update on the markets of course. Of course two hours away from the federal reserves rate decision, coming out of that today meeting. Understandably, a little bit of caution in the market right now. Pretty much a flat rate on the TSX Composite Index. 19,521, walking 2.86 points or one take. Watching crude prices for a little above 90 bucks a barrel from West Texas intermediate but again, waiting for 2 PM Eastern time. Any decisions on what could happen in the market. Although we are still in the thick of earning seasons. Let's check on Martinrea International. … Suncor feeling the pull of energy prices. Some of these names were underwater in terms of the energy space. But now you have crude firming up almost to the tune of 2% of the upside. A bit of positive momentum. Not much though. South of the border, check out the S&P 500 of course in the Fed. That is the big show of the day for investors. Right now, looking at flat bond yields on the 10 year, you have the S&P 500 with a little bit of pressure down 19 points or half a percent. The tech heavy NASDAQ, some moves on this one this side of the Fed depending on what we get from Jerome Powell. Probably more importantly it seems to be baked in that you're going to get 75 basis points. What you gonna get in terms of the Fed saying "we need to stop and take a look around and figure where we are, full speed ahead. That'll be the key one to watch for. The NASDAQ right now a little more than 100 points, almost a full percent. In Tupperware, as we said, still learning season difference despite the Fed disappointment for Tupperware, down almost 41% on the menu. And that's a market update. It's been a pretty rough year for the markets with the S&P 500 close to 20% down but if you look beneath the surface, there are actually some pockets of strength. Joining us now for more as Ben Gossack, Portfolio Manager at TD Asset Management to tell us more but the push and pull. Great to have you back. We see the TSX Composite Index, the S&P 500, beneath the surface, what kind of story are they saying? >> The S&P 500 is supposed to represent the top 500 companies in the US. However it's not equally weighted and some companies take of a bigger share. For example, Apple is about 7% of the index. So while most people will say the market had peaked in January 3 or fourth of this year, I would argue that is when Microsoft or Apple peaked. Many stocks or sectors within the S&P 500 had been falling well into 2021. Which was sort of picking up the reasons why we are where we are today. What's interesting about this year, yes, I think we were down almost 25 to 30%. We are a 20% today. We will see where we go with the next couple of events. But it doesn't mean there are not opportunities inside the market for you to invest and free to create value. One of the areas that is seen the biggest amount of strength is in energy. I think it's the only sector now, to date, that's up. All the other sectors are below zero. But when we compare to the S&P 500, >> As we are doing in this chart right? The energy versus the S&P 500 and the broader market. >> Right. What you're looking at here, I take the sector and put it over the S&P 500. So the scale itself doesn't really matter, Greg. What really matters is the direction. Think of it is the first to record derivative rather second derivative. For a long time energy had been underperforming at the S&P 500. At its lowest point it was 2% of the index. We've seen energy rally in 2021 and 2022. It's only a 5% of the index. So you think: "okay, can the stocks continue to do well?" It just started. So while we are off the peak of oil at $120, supply has remained constrained. OPEC has demonstrated discipline and while there are still unknowns about a recession, the companies are delivering financial results and shareholders are being rewarded with dividends and buybacks. That's why the sector has continued to work. >> Alright. That's the energy sector. You have a few more to go through. Let's talk with the financials. Would've they look like? > If I were to tell you Greg that the economy is slowing down, there's a lot of doubt, interest rates are going up and you think "I get that, I'm a little more worried with the credit provisions because them come right off the bottom of the financial model. So we have seen a weakness in the banks earlier in the year and that has helped to sort of way down the performance of financials relative to the S&P. But what we are seeing lately is that there is a pocket of strength right now in the financials. And when I say financials, most people think of banks. But what they often overlook as insurance companies. And so, the market again, down 20%, insurance companies are breaking to new highs. So they have not seen the impact of our Russia/Ukraine war. They have benefited from our rising interest rates. They have had to worry but the fears of provisions. We have had natural disasters like the recent hurricane in Florida. But sometimes that's treated as a one-off event. But for the insurance companies, especially companies that do property, their asset book is quite short in duration. So they are able to reprice their book and a 4% interest rate is a lot more purse better than an… So insurance on both sides of the board, we are seeing in Canada and in the US, and recently in the US banks with earnings, while credit provisions are concerned, they are not a concern yet. Probably in 2023 it looks more. In the meantime, they are able to lend great rates and they are still offering meagre interest on our deposits and that's creating a nice spread for that interest income. >> Great look at the financials there. This next one, I'm not going to prejudge what this chart is gonna look like but I think I have an idea. The tech space. >> We are looking at technology relative to the S&P 500. I would argue that this chart should look a lot worse. The reason why the chart is not as bad is, again, you have to look through the contribution of certain stocks to the sector. This is not equal weight. Apple is a large chunk of the exposure in US technology. Apple has been a source of strength. It has remained a source of strength relative to its sector. Meanwhile, we have seen Microsoft take a step back after earnings. Most people are well aware of the underperformance of semiconductors and so, this is a very important thing to understand. The trends, the cycles… Technology as a sector shall look a lot worse than it does right now. > Now, this next one, will this be part of the reason to? We talk about MegaCap tech coming out with the big earnings of last week and the big disappointments. Some of those names find themselves in different compartments don't they? >> The companies and organizations that classifies nobodies into sectors decided that the the telecommunication sector is gotten too small. Usually companies such as Google, Facebook and Meta are in the communication sector. This is one of those situations when you look at the performance of communications relative these the S&P 500 and you say "it can't get worse. And it gets worse. So we have seen the challenges. SNAP is not in the S&P 500. But the same challenges for SNAP extended to Meta. We have seen the challenges for Netflix as well. This is a sector that continues to try to fight headwinds and has made matters worse is that Google has held up. Now Google is struggling and many have the same issues that met ahead as well. So communication just communications just continues to weaken. >> Let's take a look at healthcare. South of the border, it's a different kind of composition of stocks and we have here. >> Most investors in Canada will look to US healthcare to sort of make up a more complete portfolio. What's interesting about healthcare is its typically considered a defensive sector. But it has not been easy. If you look at healthcare relative to the S&P 500, you say "this is great. It's doing what we thought it was supposed to do, which is provide us relative outperformance… But there is a bifurcation. So the farmer -related businesses have been holding up well and the reason they've been holding up well is, I mean, most of their cost is an R&D and it's the first pill that costs the most. After that margins are quite strong. So there is visibility from an earnings perspective. So even if your drug might be coming patent 56 years from now, the thought of problem for now and I know cash flows are steady. The med tech has a lot of secular trends. Real competitive advantages in areas from orthopedics to diabetes, they have really struggled. They have struggled on a margin side and that's what we've seen for all earnings. Any company that has issues with margins and cost pressures have underperformed. So companies, again, well-known companies… Abbett and such you can see it in the sector but you will know it if you on those stocks. >> All right. And last but not least, utilities. I won't even make a bet as to how this trend will look. Enlighten us. >> I would lump utilities and REITs as what we've seen in the year. It wasn't lost on anyone that growth was slowing and all of a sudden central banks have to act and people were seeking defence. now what we've seen is it's come apart. The sector has just underperformed and now, I think the interest rates are becoming a bigger issue now. So it was okay at 2%, 3%. But now with inflation re-accelerating and the Fed and other central banks really have to tighten. I would rather own 4% US government bonds then worry about the utility company, worry about their input cost, worry about how they might have been affected by hurricanes, worry about a government coming in saying: "hey, it's a problem that people have to pay these utilities bills so we are going to Your returns. And so I think that starting to affect the utility companies and that's why were seeing in underperformance. >> Great insights they are in a great start to the show. We will get your questions about income growth strategies with Ben Gossack in just a moment's time. A reminder of course that you can get in touch with us any time by emailing moneytalklive@td.com or fill out that viewer response box right here on WebBroker. Right now let's get you updated on some of the top stories on the world of business and checking on how the markets are trading. Shares of Canada goose are in the spotlight today. That is a high-end parka maker cut its full-year sales forecast. Pointing to COVID restrictions in China and global economic uncertainty. Canada goose CEO Danny Reis says it will focus on things it can control including disciplined investment spending. Soaring energy prices drove nearly threefold surge in profit for Canopus energy in its last quarter. Oil production fell compared to the same period last year with the company citing planned maintenance and an unexpected power outage in one of its facilities in August. Air B&B is warning investors that bookings could moderate over the important holiday travel season. While the short-term rental company didn't beat expectations for its latest quarters, booking growth has slowed since the surging demand seen in the spring. Air B&B also noted the strong US dollar is pressuring the business. And now with the market update, the TSX : down… The US Federal Reserve in its latest rate decision. The markets right now, the S&P 500 down 25 points, a little more than half a percent. We are back now with Ben Gossack, taking your questions about income growth strategies. Let's get to them. We are beginning to get to the end of the earnings season. Are we seeing any big trends so far? >> Right. So I would say just about over 75% of companies have reported and I think we have a good sense for how the financial outcomes have been. The topline growth has been about 10%. So you would say "well that's pretty amazing considering all the macroeconomic data I'm seeing." But given the rate of inflation, a lot of that is benefiting from the inflation and a lot of companies put in pricing increases. So I don't look to 10% thinking the water is safe. What's interesting is that earnings-per-share has come out to 5% growth. So clearly there is an operating leverage problem. But 3% of that number was coming from share buybacks. So for me, the real big story is that there has been a margin compression. So again, to your point about strong dollar, higher interest rates, higher input costs, this is affected I would say the majority the market. If we take out the energy companies which of them really well, earnings-per-share growth is actually negative. The other thing I noted this morning was that all these are based on estimates that were already lowered by 8% going into the earnings. So, >> A lower bargain over. >> Exactly. Repeating off that lower bar. In terms of stock reactions, with been surprising is if you missed the markets severely punish you. On average it's been about 6%. But if you're a shareholder of let's say Amazon, Meta, some other big highflying stocks, you are down, 10, 15 or 20%. So it's been quite vicious. I would say it's interesting. At the beginning of the year what interest rates were zero, not so much though… Managing the expenses and now all anyone cares about is what is your cost discipline can you preserve margins, how you can preserve margins and manage costs is doing really well. So a company like Pepsi is doing well, companies like McDonald's are doing really well. Companies to keep wanting to spend like Meta, yes they are getting punished. >> Next earnings season, as we take our crystal balls, not so much what we get a report of but in terms of expectations, is there a further takedown of the earnings expectations to get to a more realistic level as we head into what could be a tough economy? Perhaps it already is a tough economy? >> I think perhaps it is a tough economy getting even tougher. Q4 expectations are coming down but the number that I'm really focused on, Greg, the number that hasn't come down is the full-year forecast for 2023. When I compare that estimate today as to where was earlier in the year, full or earnings for 2023 have only fallen by about 6%. I've seen reports that an average recession, we should expect earnings expectations to fall by 20%. So, I think companies are still trying to, sort of, defer, delays saying "2023 will be a problem." I still hear reports of the first half might be a challenge but don't worry, Greg, the second half will be really great. You will see a second half in 2023 where things will really accelerate. And I don't have the crystal ball. I haven't found anyone with an actual crystal ball up to tell me that the back half of 2023 will be a lot better. > Let's get to another question. We are just mentioning a few of them. What is your view on the FAANG stocks? The S&P 500 used to be driven by the stocks. >> I'm a big fan of focusing on secular trends and then finding stocks that can exploit those secular trends. For the longest time it's been the cloud, etc. we have seen social… We've seen media advertising dollars move money or TV to online. Again, a lot of the FAANG companies allowed to consolidate and get rewarded. I think we have seen us and catch up in terms of business models. So Netflix was part of that. I find it wild that when Netflix started, they were the disruptor. People don't want to watch shows week to week. They want it now. We need to binge. And now the new fashion and streaming is "let's go back to waiting for it. >> Let's wait for it. >> We have literally reinvented the linear TV model and are calling it fresh. >> Ha ha. >> My challenge with Netflix and Facebook/Meta is it was always competing for people's attention. And now, with the likes of tick-tock leaving our house has been a challenge. I think Apple remains a source of strength. We we talk about continuing to do that and they have a financial model that allows them to generate cash flow. We still have, we still believe in Microsoft in terms of executing. So while they did underperform last week, they have flexibility in terms of their operating model in 2023. And then the most disappointing when I would say for ourselves as Amazon. You can clearly see the trends of e-commerce. The trends of the cloud… They are building their own logistics business. I think what happened there was management Miss execution. Which was the idea that COVID could last forever. And I do think that it is a fixable problem. So I would say there is hope for some but not for all. >> Interesting stuff. We hear of volatility. Will volatility… How come the VIX is so low despite the selloff that we've seen in 2022? >> Clearly there is an inverse correlation. S&P 500 goes up, the VIX which is supposed to be a measure of 30 day volatility goes down and then when the market falls, the VIX spikes. People built products around this almost as an insurance given that correlation. It worked really well in COVID. We had a market that fell 30/40%. But we had the VIX spiked up to an 80 level. Anyone that, they call them telltale strategies, that you're preparing for the worst outcome in preparing for the hundred year flood, you are paid off and cover for your losses and then some. So, we come into this year and it's the slow moving train. I can see in the horizon that things are slowing down. I know interest rates are biting I know there's a war pushing up energy costs. Everyone takes out flood insurance. Everyone takes out hurricane insurance. So with the markets being down 25 or more in technology, there is too much insurance and we haven't seen the VIX spike. What's interesting is when we break these out, on days when we rip higher in the market, that is out of the norm with historical volatility on the upside. So all of a sudden, you hear China will reopen in the markets will run. We are not going to hike as much. Bank of Canada says they will slow down so it must mean the Fed will slow down. All of a sudden the spikes are really high and the one thing's disappoint, the falls are not as deep. That's a reflection of not many people having exposure to the upside. Everyone is bearish and having to prepare for the downside. That is kind of why this year is very different and people that sought those products are probably asking themselves: "what happened?" >> Fascinating stuff as always. Always your member to do your own research before making investment decisions. We will get right back to your questions for Ben Goss second just a moment's time. Reminder of course they can get in touch with any time by emailing moneytalklive@td.com. Now let's get to our educational segment today. If you're interested in investing strategies that may create income, WebBroker has tools which can help. Turning is now as Nugwa Haruna, Senior Client Education Instructor at TD Direct Investing. Nugwa, always great to have you here. Let's get started with what would fall into the income investing strategy? >> Right. So investors, when starting off, may consider different investment strategies to utilize and help them meet their plans and goals that may have been set up. They want to take into consideration what the risk intolerances. Some of the investing strategies that there would be things like growth investing which focuses more on capital appreciation, there is value investing where investors who practice that strategy are potentially looking for Securities trading at a discount. Then there is income investing. So when it comes to income investing, this is an investing style that focuses on income generation. So investors utilize this style and will be looking to receive things like dividend payments, coupon payments from bonds as well as interest payments from things like guaranteed investment certificates. They are risks as with every investing strategy style. So for instance, things like dividend payments are not guaranteed because companies can cancel them without notice. Also, coupon payments, companies that issue these bonds and default on those payments… At the end of the day, this investing style in general is considered more on the low to moderate risk level in terms of risk tolerance. Now, I will also mention that even investors looking for an opportunity to practice income investing, there's different kinds of investment Securities out there. Things like stocks will provide those dividend payments I talked about. Investors could consider fixed income which would be things like bonds or guaranteed investment certificates that pay interest. They may consider things like real estate investment trusts that should pay their rental income out as dividends. They could also consider mutual funds and exchange that may give out distribution… So different investment products out there for investors who want to practice the strategy depending on the risk level. >> We've seen how we can get deeper into this strategy on WebBroker. What about someone trying to execute the strategy who now wants to know "if I'm investing for income, what is the expected income from these investments?" >> Right, so if investors considering income investing in they want to track it over time to see if they are meeting your goal, they are able to do that in WebBroker. They can track how much income their portfolio is generating. So once in WebBroker, an investor would click on "accounts". Then they would click on "projected income". Once they do that it will take them to a summary of their accounts and they can select a specific account that they want to see projected. That information will appear at the bottom of their screen. So, once here, the projected income tool will show investors a rolling 12 month information on the amount of income that investor will receive. You can choose to see it in Canadian or US dollars. And it gives you a quick summary. So it gives you things like what that projected income is for the next 12 months and a breakdown of a differentiation between dividends as well as interest income and it also gives you an idea of what the monthly average would look like based on the amount you're going to be receiving the specific account. If investors want to see what that looks like for 12 months, they can see that information at the lower portion of their screen. To see the Securities that are paying them income and what months to expect the income to come in. Finally, investors are able to see a more holistic view of their whole portfolio. You can actually select the all accounts option to see what the projected income would be for all of the Securities in your account. Then, investors practising the strategy may set up some kind of monthly target because essentially, that can help meet whatever their goal is. They could compare that to what their monthly averages. This can help them in making decisions where they are looking to reevaluate the holdings are in the portfolio as well is doing some more rebalancing. >> Great stuff as always Nugwa. Thank you so much for that. >> Thanks for having me. >> Nugwa Haruna, Senior Client Education Instructor at TD Direct Investing. Make sure to check out the learning sector on WebBroker for more educational videos, master classes and upcoming webinars. Now before we get back to questions about income growth strategies with Ben Gossack, a reminder of how you can get in touch with us. Do you have a question about investing, or what is driving the markets? Our guests are eager to answer your questions so send them to us here at MoneyTalk Live. You can send your questions two ways: you can send us an email any time at moneytalklive@td.com or you can use the question box at the bottom screen right here on WebBroker just type your question and hit "send". We will see if one of our guests can get you the answer right here at MoneyTalk Live. We are back now with Ben Gossack taking your questions about income strategies. How do you select income stocks? What are the screenings, I guess? > Good question I think it goes back to your objectives. My objective in the mandates that I manage is to try to deliver consistent sources of income that grows over time. We are also trying to deliver total returns. So it's very important to me that the price of each of these stocks also grows over time. So, if you are just an individual and you don't care about your principal, you just want income to come in, typically we see people gravitate to high skip… That's not where we like to fish. You might see five, six, seven or 8% yields. In our experience, that comes at a cost. It could be that the market already anticipates a problem with the core business. And that dividend might need to be cut. It rarely is it ever finding a gem hidden somewhere and the stock price rising, the dividend yield will fall. The stuff that we focus, are companies that can consistently grow their dividends over time. The way that our checklist, the way we try to screen for those stocks, we need to find stocks that have a competitive advantage. So that gives them a reason for why they can generate those cash flows. We screen then on the balance sheet. You need your company to be able to arrive and ride the waves of the business cycle, the economic cycle, interest rate cycle. It's great if a company can raise and pay you a dividend when times are good. You need that company to pay and raise that dividend when times are bad. Clearly, the economy is in a challenge right now. You can have a company like Visa that raises their dividend by 20%. Companies can still raise their dividend in tough times. You need to have that and that so that it doesn't ruin the compounding magic. You also need a company that can consistently grow that dividend. So there has to be "what is their product? What is their strategy?" So passed the screening they have to understand what they're trying to do. Then make sure that that payout ratio, that is to say the dividends over the earnings don't get too high. Or is in keeping with the business model. So, utility staple can run a higher payout ratio, a more cyclical company like a discretionary company might've to run 30 to 40% payout ratio. But that's typically how we are screening. So we focus less on the dividend yield. We focus more in the dividend growth. It's our experience that the amount that you compound here dividend aligns very well with your total return. So a company that can grow dividends 10% might be compounding on a total return basis of 10% after seven years of doubling your money. >> All right. Great stuff. Let's get another question off the platform. This one about US Pres. Joe Biden. Will Biden's tax on oil profits be a headwind for this sector? >> No coincidence that we have a midterm election next Tuesday. I think it's politics and it's not surprising. We have seen talk about taxes on energy companies that are under new jurisdiction. In fact, in Canada, we've seen the federal government tax the Canadian banks. Again, these are political scores, banks do really well in the pandemic so they have to give something back. Energy companies, I disagree with the reasons for the tax. They are not the reasons why we have higher energy crisis. It's not energy companies themselves, it's the issues surrounding the energy companies. And to windfall tax them, I think also prevents them from doing what the government really wants which is for them to try to invest more. I think these are just for political scores and, if anything will be very difficult to pass. There are still some Democrats in the Senate that are in certain jurisdictions that wouldn't want that tax. So I think it's interesting, I think it creates a great headline. It might create some volatility. It won't change the fact that production is very tight, it doesn't solve the war, it doesn't solve the move to renewables and all this type of stuff. It's just something to say "can I get your vote on Tuesday?". Here at home, we RBC have concerns about energy prices. Grocery prices also seem to be even more the front burning issue for governments. The competition then we take a look at the grocers. How should we view that? Some people may have some of these stocks in your portfolio. Loblaw's etc. >> Anytime of the collections come around, it's the pharma companies. A lot of voters have prescription so let's go after those companies. Let's go to the banks… Go after the energy companies because we are paying at the pump and also, given again, inflation, we've seen issues where we get other goods outside of Ukraine. We have seen the cost of eggs and bread all go up. Now you are seeing the government sort of create an investigation on the grocers. Grocers have done really well. I would say they've raised their prices more to maintain their margins. Maybe they will find an instance of one grocer charging more than they should of, but for the overall industry, it looks like prices were raised in keeping with the cost. So it's just one of these things that we should expect. When the government becomes challenged for various issues, you start to look for people that are affecting voters. >> Interesting stuff. We will get back to your questions with Ben Gossack on income investing in just a moment's time. As always, make sure you do your own research before making an investment decisions and a reminder of course if you can get in touch with us at any time: Do you have a question about investing, or what is driving the markets? Our guests are eager to answer your questions so send them to us here at MoneyTalk Live. You can send your questions two ways: you can send us an email any time at moneytalklive@td.com or you can use the question box at the bottom screen right here on WebBroker just type your question and hit "send". We will see if one of our guests can get you the answer right here at MoneyTalk Live. Some of the big e-commerce companies bet the pandemic would permanently change shopping behaviour. But with most common restrictions a thing of the past, will the in-store experience make a big return this holiday season? Anthony Okolie is a more in-depth report from TD Economics looking at this topic. >> Thanks Greg. TD Economics says that US in-store shopping has regained some ground versus e-commerce. For the third anniversary of the pandemic nearing, we are seeing a gradual normalization of US retail sector to a more sustained level. I brought along a chart that highlights this reversed trend between online versus in-store. As you can see, online shopping has given up some ground to the brick-and-mortar stores over the past year versus the pandemic peak back in 2020. The chart shows the store-based sales continue to trend upwards with spending according to TD Economics up approximately 30% versus pre-pandemic levels. When you look at the share of shopping online, it's actually down from a record high of just over 60% back in the second 1:45 thousand 20, around the height of the pandemic. It fell down to approximately 14 1/2% in the past year. Now, it still above pre-pandemic levels. But what we are seeing is the share is actually starting to narrow over time. Of course, one of the big beneficiaries of this trend that's reemerging is the emergence of in person shopping in the commercial space. Particularly growth where TD Economics, web growth is the highest rate in 15 years. Another thing also benefiting the commercial retail spaces is we've seen lower construction of retail space. The pipeline in particular during pandemic. It's also helping to support vacancy rates and rent growth. Looking ahead at the holiday shopping season, of course this is a big. For many retail stores which can make up more than half of their year sales during this holiday. TD Economics says excluding gas,… Other businesses tied to holiday shopping is expected to rise about 6% year-over-year between October to December. As you can see, the chart, that significantly below the 2020 levels in the 2021 level. One of the big headwinds of course the holiday shopping season is red-hot inflation. It is likely to prop up sales rather than increasing volumes during the period. This will obviously take a big bite of consumer's wallet. Another big head when the TD Economics points out to for retail shoppers will be higher interest rates. When you see the Fed aggressively hiding interest rates, that's the reason consumers have costs… It's also likely an impact on the wealth effect. Particularly as high rates way on real estate. It will hit risk assets like equities as well as consumer contents going forward. So there is a challenge for the retail sector going into the holidays. Greg? >> Anthony you should mention the Fed, they might have something to tell us in less than 90 minutes time. The next rate decision on the path forward. We will see what James Marple has to say he will speak to him after? >> Yes we will have to wait and see what they have to say. Certainly will be a big, big decision coming up after this. >> We are getting forward getting ready look forward to it thanks Anthony. >> Thanks Greg. >> Of course a decision at 2 PM Eastern time. For James's interview will have the field WebBroker. Let's see the markets now. Less than 90 minutes to go. We hear from the Fed then. The S&P, seeing money move back into the average energy stocks affirming the price of crude but the real sense that investors are waiting for the big sale. Cenovus Energy, it had been negative and now it's pretty much just flat. Let's check out Canada goose. Top of the show with them taking down their sales projections. COVID projections in China and their overall global macroenvironment, down almost 7% right now. South of the border, the S&P 500, let's check in as we await for a word from Jerome Powell. Down almost a full percent. The tech heavy NASDAQ, of course the stocks very sensitive to the interest rate moves we've seen this year. Right now you have the NASDAQ sliding a bit further into negative territory down almost 2%. ExxonMobil, just sort of sitting flat right now. We get a real sense that we are just waiting to see what we will get at 2 PM Eastern time. Let's get back to Ben Gossack now from TD Asset Management document income stocks. One of the best US bank or financial stocks for dividends? >> We focused on large-cap US financials and again, the reason why we prefer those that they look a lot like our Canadian banks. They call them "money centre banks." Again, the secular trends we've been following and we worry about for the smaller banks is the need to upgrade all of your systems. So someone like J.P. Morgan, Bank of America… Spending $10-$12 billion a year on technology and so I think there is still four, 5000 US companies and so for them to try to maintain that is quite difficult. So if you're looking for, again, we talked about a competitive advantage, a source of growth, good balance sheets that are well-managed, the history of dividend growth is going to be in the large-cap banks. Then, as I said before, I don't think people should, when they think financials, just think of banks. I think there's an opportunity to look at insurance companies. So one of the ones we own is a… Many people know the commercials and are familiar with that. But again, it's their best in class. So just because that one works, you buy another one, you might not… It depends on how they are managed. How they evaluate the risks and how they reward shareholders. So all that has to be taken into account. >> What would be the biggest risk for a name like that right now? >> Sometimes it's just going for growth. So, in writing any type of credit or any type of policy insurance or bank, anyone can do it. We see lots of people pop up online saying "I can create a marketplace, I can give you a loan in 10 seconds. That's great. You get your money. And I think anyone can do that. The problem is your risk model. We've seen "buy now, pay later" this became a really big deal during the pandemic. A lot of young people thought that was great. It might cost $1000, I make equal payments of $10 or something. Now we are seeing that become an issue in terms of credit. Too many people have now these "buy now, pay later" and their credit scores go down because if you miss one payment all of a sudden this panel kicks in. This is where it goes back to doing the research on institutions, looking at their credit provisions history and then their net charge. So what I really sort of have to charge? And understanding those trends is really important. Right now, the weakness we are seeing is in auto loans. We are seeing credit issues really start to pick up and so who has the exposure? Is it containable? Where are the areas of risk? These are all really important things that you need to consider when you invest in the stocks. > Been. Always a pleasure to have you. Great insights. >> Love chatting with you looking forward to being back. >> You will be back sooner than you probably expect. > Ha ha. >>our thanks to Ben Gossack, Portfolio Manager at TD Asset Management stay tuned for Thursday, Scott Colbourne, Managing Director for Active Fixed Income at TD Asset Management will be be our guest talking about fixed income. And reminder they can get a head start. Email us at moneytalklive@td.com. That's all the time we have for today. Thanks for watching the show and take care! [music]