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[music] >> Hello. I'm Greg Bonnell, and welcome to MoneyTalk Live, which is brought to you by TD Direct Investing. Coming up on today's show, We'll have a look at whether there's any signs of inflation pressure easing with TD Asset Management's Scott Colbourne. We'll hear from David Mau on the outlook for airlines amid chaos at the airports and rising concerns about a recession on the horizon. And we'll discuss whether the utilities sector is ready for the shift to electrification with TD Asset Management's Marisa Jones. Plus, in today's web-broker education segment, Caitlin Cormier will take us through how to find analyst ratings on the platform. Before we get to that let's get you an update on the marketaction. A bit of an indecisive day. To the downside on Bay Street and Wall Street. Let's start with the TSX Composite Index. Nothing too dramatic. We are down about 6 1/2 points, three tics, 19,056. There was earlier some strength and some mining names. We'll start with Ken Ross, presented above the group, at $4.32 per share, of almost 3%. Seeing some weakness on both sides of the border in the tax base. Here at home, the heavyweight is Shopify. Let's check in on Shopify this hour it is down to $47.81 per share. In the United States, the S&P 500, 25 points off of yesterday's close, down a little bit more than half a percent. The tech stocks seem to be an area of concern today so let's check in on the NASDAQ 100. It is down 1.7%. Meta-platforms, check in on this one. Meta does not have newsFruit specific platforms. We will talk more about snap later, Snapchat, raising concerns aboutsoftness in the digital advertising space. It seems to be weighing on a number of companies today, including the parent company of Facebook, no calling themselves meta-. That's your market update. Soaring fuel costs led Canadian retail sales higher in the month of May, with the economy notching five consecutive months of retail gains. Joining us now for more on this is MoneyTalk Anthony Okolie. Anthony. >> Yeah, we got the retail numbers today and I have to tell you, when we sell the numbers, we said this is great, it's up to 2.2% in May. But when you dig into the numbers, particularly when you are adjusting for inflation, we are seeing some different trends there. But that's why it's spring out of me. when you adjust for inflation, sales are down, goods are down, such as food, clothing. You really have to dig into those numbers and look at data adjusted on an inflation basis as opposed on a nominal basis. >> Had the same reaction when I first sat down until the headline above 2.2%, my mind works in journalism ways, I thought, despite soaring inflation, Canadians still are digging into their will us to spend. But when my newscaster boys. I looked at that and said, well, if you adjust it in terms of volume terms and take out the price influences, I think rolling up a very modest .4% across the board, and in other areas, I think there was pet food supplies, garden centres seeing a bit of a pullback in activity, so is interesting to start seeing, okay, yes, retail sales are higher on a price basis but we all know we are paying more for everything to get I know TD Economics has weighed in on all this. What's their view? >> TD Economics thinks that inflation is high, it's going to have an impact on consumer spending, particularly for the rest of this year and into 2023. because of that, they've actually lowered their growth outlook for Canada in the third quarter by 3%, the fourth quarter, deceleration down less than 2%, for 2023, they are looking at an anemic 1.23%. Inflation is going to have an impact on our will is going forward. >> This is anecdotal, but if we strike on something we can call it the Okolie index, have people been looking at expenses recently and been cutting certain things? >> Looking at error fair, prices are going higher, and one of the trends are seeing is that people are shifting from physical goods to experiences, restaurants and airfare. I'm not sure if I'm willing to pay actual money to go on a flight. I might wait a year down the road when the airlines get their things in order. So things like that. The other things like restaurants and probably travelling within the country, I think that's kind of where I'm looking to shell out my money. >> The bit of glamour that I've given up in my life in the face of all this is I just bring a sandwich to work every day. Look at you, getting ready to fly around the world, and I'm just making a sandwich in the morning, also drinking a cup of coffee to try to wake up. Thanks for that. >> My pleasure. >> Stay tuned, he'll be back later with some fresh commentary from TD Securities on what's happening in the mining market. Central banks have been delivering supersized rate hikes in an attempt to control those rising costs we were just talking about. While you can make the argument that inflation possibly has peak, Scott Colbourne, managing director of active fixed income at TD Asset Management, says higher consumer prices are not going away anytime soon. He joined us earlier to discuss. >> I'll start with positive news on the inflation side. We have seen some moderation on supply chains. So that's taking the edge off a little bit. And inflation expectations in the market have stabilized. They're actually back to levels where we saw sort of mid-summer. So there's some good news. And commodity prices are off their peaks as well. So, you know, there's evidence leading to focus that we've likely peaked on headline inflation. But I think the challenge for investors as well as policymakers is what do you do with the core? It's off its peak level, but it's sticky. You're talking about wages. You're talking about shelter, health care. These are things that are not just subject to the big ups and downs of demand. And so those are sticky and those are going to be a bit persistent. And that's going to be the big question for central banks and investors as we go along and we see headline inflation coming down, but the core being a little bit more sticky and as a fixed income investor, that's what we were trying to get our head around in terms of next year and the balance of this year. >> Is there much the central banks can do about that stickiness? At the core, it's one thing to aggressively raise rates like they have. And perhaps you start, we're seeing in the housing market, some of the demand backs off a bit, wait a minute, the game is changing, need to figure out where we're headed here. But as far as that core stickiness, wages, other places, the central bank will have much power there? >> No. I think at the end of the day, there's a limits to what you can do as a as a policymaker. They really obviously can't address the supply side, that we'll address over time as we sort things out. They have to deal with the demand side, you know, the tight labor market, the wage pressures and stuff like that. And so we've seen the response. We had the Bank of Canada do 100 basis points. We're going to get 75 from the Fed. Those are all things, that's the best they can do and they'll continue to push it. And we're going to see slower growth. And over time that will feed into shelter, it will feed into wages. We will see some adjustment. We're seeing some of the higher frequency data slow down for sure. But it's going to take a while, but central banks are playing catch up here. They they were slow to react and slow to deal with the changing dynamic of inflation. So, you know, they've still got some ways to go before they finish the tightening cycle here. >> You mentioned the expectation for the Fed next week is 75. I think it was a brief period where they thought maybe, hey, or they might they I mean, the market and all the participants, maybe they got 100 just like the Bank of Canada did. Is there a rationale in terms of what we're seeing, in terms of some of the data that the Fed will be watching, I don't think we need to go quite as hard as the BoC just went. >> It's a fine line. We went from 50 is the new 25 and now the 100 is the new 50. I think that the Fed did 75, they'll do 75 again. They there was a little bit of pushback from some of the central bank governors, the regional ones that just don't want to push the limit too far here. And so, will the terminal rate of where the market thinks that both Bank of Canada and the Fed will get to sort of by the end of this year and early next year has been pretty steady. It's around 3.5, 3.75%. So I think the Fed just wants to keep moving steadily above that neutral level that it has targeted for. >> I guess as humans, we like to look forward and look for any relief on the horizon. It is interesting that there's parts of the market pricing in, even though we're not even done with the rate hiking cycle, that don't worry. And then sooner rather than later, you're going to see cutting again. I mean, is that a bit too much optimism? The central banks keep riding to the rescue. Riding to the rescue. But I've heard a lot of people sitting in that chair and probably you the last time you were on saying, can't expect them to ride the rescue forever. >> Yeah, there's sort of a sense that they'll overshoot and really slow things down. And there's a possibility, lots of talk of recession. And then the market's natural inclination is to price in cuts. And in fact, next year they've priced in two cuts by the Fed. I don't think they're going to get there. I start back where we started off this conversation about sticky inflation. I think it's going to be a headwind for them. And one of the issues that investors are really going to have to get their heads around is, as we see slower growth and inflation, but core inflation remains sticky, is what are the policy levers that governments and monetary policy officials have as we potentially enter into a slow growth recessionary environment? And given the sticky inflation, the envelope is reduced actually in terms of what they can do. So I'm not a big believer that they're going to be cutting, but that's what's priced into the market at the moment. >> Is the term stagflation, which got thrown around and there's probably some people still throwing it around. Does it have any bearing on our forecast for the next little while, or is that just too dire a prediction? You cannot tame prices. You can't bring them down but the economy is not doing us any favors either. >> Yeah, there's lots of focus on what is it, stagflation? Is it a recession? There's different flavors, different issues around the globe. Canada has its own Achilles heel in the housing market. in Europe, we are dealing with the conflict as well as the Noord stream gas at how much is going to be coming into Europe during the winter. and in China, we've got basically flat growth andzero COVID policy. And so if you want to, you can really drill down into various parts of the globe in terms of what this will look like. Certainly, Europe and Asia don't have the same inflationary pressures that we have in North America. And so it's going to be different around the world. And I think that's… >> At the start of the show, showing the audience an ice market rally, I've no idea what's going to happen tomorrow based on the same conditions that we continue to live through. And I thought, at the back of my mind, why don't I get some clarity about what's happening in the world? Or am I just being overly optimistic on the point that I'll ever get sort of an idea? >> Yeah, we really want that clarity. But we used to have is so pretty low inflationary, low growth environment were central banks were always able to give us the put and we just don't have it anymore. We have so much uncertainty in some of that's geopolitical. It's just out of the realm of policymakers. Maybe if there is some resolution on the conflict or there's some element of relief when the commodity side, we'll get a little bit more clarity, but it's a very difficult environment that we are operating in with labour shortages, tight labour market, high supply chain challenges globally. It's not going to pop up around the corner anytime soon. >> Director for active fixed income at TD Asset Management. Now let's get you an update on some of the top stories in the world of business and a look at how the markets are trading. Softness in the digital advertising market is weighing on two U.S. social media names today. Twitter missed earnings expectations in its most recent quarter, that as advertising sales came in well below forecasts. And the parent company of Snapchat says soaring inflation and labour shortages are causing companies to cut back on ad spending. Snap fell short of estimates in its most recent quarter. And it warns sales in the current quarter will be flat compared to last year. It's a bit of a different story at American express. The credit card company raising its full-year revenue forecast, that as shoppers continue to charge purchases to their plastic. AMEX beat profit expectations as to return to travel and entertainment helped fuel growth. The company now expects annual revenue growth up to 25% compared to his earlier forecast of up to 20% growth. Freight traffic volume on Canada's Railways has rebounded to the highest level since 2019. Statistics Canada says this country's rails carried 32 million tons of freight in May. That's an 8.7% increase year-over-year. It also breaks an eight month streaks of decreases. The agency says higher shipments of iron ore and energy products more than offset the continued weakness that we have been seeing in agricultural product shipments. A quick check in on Bay Street and Wall Street. We will start here at home with the TSX Composite Index. Modestly to downside, 19,035. Down 27 points at this hour. The S&P 500, the broader read of the American market, it is being weighed down by some of those big social media and tech names. We showed you mess up platforms earlier in the show, even though it didn't come with anything specific, in its financial situation, it is feeling the weight of what we heard from Twitter and snapped today in terms of some softness in the digital ad space. That is weighing on the broader American market. The airline industry was hit hard by the pandemic, but the return of travellers hasn't been a smooth right either. Earlier, I spoke with David Mau, he's a portfolio manager at TD Asset Management. We got his outlook on airlines amid the chaos we are seeing at airports. >> It's not just the airline's fault, right? People are probably seen pages on the news of what's going on at Pearson, lines 4, 500 people deep, Leggett hauls full. Airlines bear summers possibility for it but there are government agencies involved in running the airports as well, the agencies like customs and border security, just the regular security lines to get through to your gate, from where you check in, and there is also the ground crews that are the responsibility of the airports as well as the contractors at the airlines contract out to you for things like cleaning the airplane and making sure that there is food on board. All of those moving parts, they both suffered, I guess, what you would call labour shortages because, at the beginning of the pandemic, when air travel almost completely stopped, a lot of those employees were put on furlough or laid off. And all of these different areas, they've all been slow to bring these employees back. And the ones that they have been able to bring back, maybe they are not as experienced as some of the employees that have left. So it's taken them a little bit longer to get up the curve and ensure that all of the operations are running smoothly as they used to. >> Now as investors are looking into the airlines face, how concerned should they be about the fact that there is now a demand for travelagain that just cannot be met by all the factories you just laid out? Perhaps some people might even be turned off travel by some of the images that they're seeing. Seems like a critical time. You want to make hay while the sun shines, but they can't make the hey. >> Yeah, you're right that they just can't handle the demand, the volume that's coming through. But the flipside is that the airlines have really increased ticket prices recently. So while volumes might be a little bit lower, your average ticket price is higher. So that kind of offsets each other. So the question is, how long can the tire ticket prices be sustained, right? So, you know, inflation is really having an impact on people's personal budgets, whether it's gas or food prices or anything else like that. And we know that in a recession, if there is potentially a recession around the corner, discretionary travel, vacations are one of the first things that people cut out their budget. >> Let's talk a bit about that. Obviously, it's not a done deal that we are entering recession. Everyone forgot their bets on the altar perhaps getting there, because central banks are acting so aggressively to try to tamp down inflation. it makes me think to you of the airline situation, what they are going through now. You're like, let's get back to business, okay, we can handle the volume of business because all of those factors that you laid out. And then you look on the horizon and you're saying, well, is the economy going to turn sour? How much of that is a challenge for the industry right now? >> It certainly a challenge. I mean, at this point, there are no indications that at least demand has been destroyed due to inflation or higher prices. But it's something that we certainly think is worth watching as you move forward into the third and fourth quarters. >> Now, in normal times, I guess normal times are hard to remember, but maybe before the pandemic, but if you look at the airline sector, obviously their largest cost is jet fuel itself. It's not been cheap and the energy space right now. What does that look like for the airline? Are they grappling with that kind of pressure? >> Yeah, I mean, that's a really good point. I mean, for an average airline, fuel is going to constitute somewhere between 25 and 40% of an airlines operating cost, depending on the mix of the fleet that they are operating. What that does is create a little bit of urgency for the airlines to bring in new planes, because new planes are much more fuel-efficient compared to a plane that is manufactured 15, 20 years ago. A new plane might save and airline 25 to 30% on the cost of fuel, which is really good news for the airplane makers, guys like Boeing and Airbus, because that's going to create strong demand for new planes to come into the fleet. >> Let's talk about that opportunity, then, because you been focusing on the airlines and the problems that everyone is having at the airport. You just said that obviously this is an environment where, okay, maybe there'll be a push. I think today deltas said they had put in an order for some of Boeing zero deaths, which are supposed to be more fuel-efficient. >> Yeah, so the Farnborough Air Show, which is a major industry event, is going on, actually, I think this week in England. And typically, what happens during these air shows is that airlines announce their new orders for the coming years. And the majority of these new orders will go to either Boeing or Airbus because there's really only two big air plane manufacturers in the world. If you're an airline and you want to order a new plane, you're kind of limited to either the Boeing product or the Airbus product. So it's going to be an interesting few days at the air show. And we'll probably get more headlines coming out over the next couple of days about airline intentions in terms of their ordering and how they're planning for the future. >> Farnborough is obviously a huge industry event that captures a lot of headlines every year when it happens. How closely should investors be watching? I mean, historically, is this something investors need to stay on top of, or is it sort of more of an interesting thing? >> It is an interesting thing because it gives an indication of what the airline expects in terms of their own travel volumes and their growth strategy going forward. But it is a very global thing, so it's not just North American airlines. You've got the Asian airlines. You've got the European airlines. Obviously, Russia is not going to be a part of the airplane ordering process, at least currently. But it does give you a good global perspective on how airlines are planning for their future. >> Longer-term, obvious to, we've had near-term disruptions because of COVID that we are hoping, for the most part, the worst of it is behind us. We cross our fingers on that. We may, perhaps, have some near-term challenges of the economy slows or falls into recession, but we don't know the outcome of that. If we are talking now five, 10, 15 years out, how should we be thinking about the airline industry? >> You know, generally, I'm quite constructive on the airline industry. If you look at some of the predictions out there from the big industry players, they are projecting a need for over 40,000 new passenger planes over the next 20 years. And that's going to be a mix of replacement planes for planes that are coming out of there, they are too old to operate and are going to come out of the fleet. And then, there's also going to be a portion that goes towards new growth. So we expect the airline industry to continue to grow. If you look at the last kind of pre-pandemic kind of 5 to 8 years, airline passenger traffic growth was 5 to 6% annually. The forecast going forward, it's a little bit lower. It might be somewhere between four and 5%. But that's still pretty good topline growth. And it's very predictable because as air travel becomes more accessible to more people,like when you think about countries in Africa or Southeast Asia, where traditionally they were a little bit priced out of the market because it's not cheap to fly, but as airfares have come down over time, let's say the last 10 or 20 years, it's become a lot more accessible to a lot more people. So we expect that kind of growth to continue for the next 20, 30, 40 years. >> That was David Mau, portfolio manager at TD Asset Management. Now let's get to today's educational segment. One way that investors can research a stock is by examining how industry analysts rate the company. WebBroker has tools that can help you find out what the street consensus is. Joining us now to discuss is Caitlin Cormier, client education instructor at TD Direct Investing. Caitlin, always great to have you with us. Let's jump into WebBroker. How is it going to help us find out what the analysts are saying about a stock? >> Called the analyst Centre, that is going who held take all that analyst information and put it in one spot to make it easier for us to see that information. let's go ahead and dive in on the platform. We are going to actually start by going to research and then, under investments, we are going to click on stocks. So we are going to actually search a particular security that we are looking to have that analyst information on. So when we get in here… You can go up here in the corner and you can type in the name or symbol of any security you are looking to search for, but let's go ahead and use Apple. That's a pretty actively traded stock. So we will go and see what analyst coverage there is on the security. So we are going to choose from the tabs here, we are going to choose analysts right here and that will take us, as I said, to this landing page for analyst information on the security. So we can see here that the 12 month price target for this particular security is $182.12. This is all based on 28 ranked analysts projections and these were all within the last three months. The average price target as we said, we have a high estimate of 210 a and a low estimate of 130 created a cunning gives us that scope of what analyst might be saying about security. It also gives us a snapshot of the last 12 months to kind of see what transaction history or price history has happened. On the far right, we can see kind of the overall rankings as far as sell, hold and buy for analysts. There is nobody currently recommending to sell a security, six Eric running to hold and 22 reckonings abide. So overall, they are saying this is a strong buy. So just again, this is one piece of the information as you are doing your research about a security, if you want to take the analyst views into consideration. As you scroll down here, you can see the individual analysts who have made these price targets, these recommendations and what their action was. It also showed the date that this happened. You can see some of these are as recent as yesterday and kind of a little bit back again, anyone that has a line beside it means is being used in the price projection, the ones that don't mean they are back further than three months. So just quickly scrolling through here. Another piece I want to point out is you can actually click on an individual analysts to get a little bit more information about them. So hard to click here on this analyst with J.P. Morgan, it showing what their rating is for this particular stock. It's giving us a win lost rating which means that this particular analyst has been successful in predicting the trend of a security hundred and 15 times at 209, who has a 55% successful rating and his average return for a rating is 12. 6%. So again, just kinda gives you a bit more insight on that individual. You can follow them or you can view their profile, which would show any other securities that they may be following as well and providing those recommendations on. So I will let this profile load. You will be able to see her again the success rating, there analyst ranking, there stock rating distribution and then some information about the different securities that they have recently rated. >> Alright, interesting stuff. So say I get in there after the show, Caitlin showed me how to do this. I start following a whole bunch of analysts. Where am I going to find those lists once I have sort of thrown the mall into the bucket? >> Right. So we've got a couple of key people, you've created your list of analysts you'd like to follow, let's figure out how you can find them. You can see here it says followed analysts, if you're starting from scratch, click on research, markets and we are scrolling all the way down to analyst centre here under the markets tab and that will bring you, we have covered this tab before, but it will actually bring you into the area where you can click on following analyst and you'll be able to see those individuals. so there's only one following on this particular account, but again, you can see that information about that analyst, all the information we saw in the previous screen. >> Interesting as always. Thanks. >> No problem. >> Our thanks to Caitlin Cormier, client education instructor at TD Direct Investing. Make sure to check out the Learning Center on WebBroker for more educational videos, live, interactive master classes and upcoming webinars. We are about halfway through the lunchtime trading session on Bay Street. Let's check in on the TSX Composite Index and see how it staring. Down a pretty modest 27 points, 19,034. Noticing some activity among interesting names that we don't focus on too much. Let's take a look at spin master, the toy. Their earnings are coming out next week. Right now, it's one of the gainers on Bay Street, $49.84 per share, a little more than 3%. Mullen Group continues to make gains. Remember yesterday, there was a market reaction to their latest quarterly earnings and it was a favourable one. This stock is making gains again today, Mullen Group up and others 6%, the $13 per share. South of the border, we are feeling the weight from big social media names, we had Twitter and snapped them out and give market concerns about digital ad spending. That is weighing down the broader indices, the S&P 500 down almost a full percent. As we said, a lot of that weight being felt by some big tech names. Let's check out the NASDAQ 100, it's down almost 1.8% at this hour. Let's show you snap. It seems to be the company that's taking the slow down and add sales the hardest. We showed you at the top of the show, not only did Snap disappointed in its most recent quarter,warning that this most recent snap is down almost 40% on the session. if the world is serious about meeting its net zero climate targets by 2050, then elective vacation is going to be key. so what opportunities is at present for investors interested in the utilities pace? Earlier, I spoke with Marisa Jones, utilities credit analyst with TD Asset Management. >> I think it's a very interesting time to be following utilities. When I started my career about 20 years ago, utilities were a boring sector largely. And that's great for fixed income. As a credit analyst it's good to have a sector that's very reliable and transparent, and you can predict what their revenues will be. But since that time, there have been a lot of changes. I'd still say one of the qualities of the electric sector is that it is still very stable and reliable. But I think especially now facing this energy transition globally and in North America, the regulated electric utilities have a lot of growth ahead of them. So I'd like to sort of focus both on the growth ahead of it as an opportunity for investors, as well as the specific role that utilities power, as well as transmission and distribution, play in the energy transition. So on the growth side alone, aside from the fact that we expect huge population growth globally, I think what you're seeing, particularly in North America, is that growth for the utilities will be outsized, meaning outsizing economic growth alone or population growth. And by that what I'm looking at is you have factors such as technology growth, so here I'm looking at data center use for power, and also the specific role utilities have in the transition in that they have to be able to adapt to climate change, become more resilient, hard in the grid they call it. Plus, they also have to… There is a huge role for power in particular, so this degeneration side of utilities, to green the grid. So yes, you want to have companies and households reducing their emissions, but you can only do that if you have the electricity that's flowing into their houses, and hopefully into electric vehicles going forward, that power has to be green as well. So I see a lot of upside in terms of growth, and with that comes a lot of spending. >> I was going to say, is the grid, is our power generation as it currently is, up to the job? Because when people talk about say electric vehicles, they say if you're going to meet these targets, then you got to electrify things. You got to electrify the vehicle fleet. But if everyone suddenly overnight in this country had an electric car plugged into their house, it raises the question, are we even up for that challenge at the moment? >> Yeah, and a very good question. It's interesting because we're moving more quickly towards EVs than I think was expected even five years ago. And I think this is a positive trend going forward, but yes, are we prepared? I think what is in the favor of utilities and for us as a society is that we have time. so for example, other jurisdictions, you're looking at Europe and China, are well ahead of usIn terms of us, us meaning North America, the US and Canada, in terms of adopting electric vehicles. So first of all, we can learn from mistakes made in other countries, that's number one. Number two is that we do have time. So for example, the cost curves of EVs have come down and there are estimates that show that the cost of an electric vehicle will be on par or reach parity with combustion engines as early as 2025 in most regions. So with that, you are seeing a shift in demand. It's not just policy driving adoption of electric vehicles. Now, you're actually seeing drivers wanting to drive them, and you're seeing this demand pull, so that's a good thing. But still, adoption is still going to take time because you have to produce these electric vehicles. And then the other factor is even if the actual sales continues to increase at the pace it is, we have time before… Cars last, and average combustion energy vehicle might last 10 years, so you're not going to see those being phased out as quickly as you're seeing the sales pickup. So that's number one, we do have time. But we are already investing in this. So in Ontario,We are seeing partnerships, and these go back a number of years, where Hydro One and OPD, Ontario Power generation, for example, have partnered to create something called the IV charging system. And they are rolling this out, in fact I think I saw a press release yesterday that they've added these past charging stations to I think 16 more OnRoute outlets. >> That's key, too. If you're going to get an electric vehicle, you're going to hit the road, I mean, it's summertime, you take the road trip. You got to make sure you can get some juice into that thing. >> Yeah, and it reduces range anxiety. So that's something that will make demand continue to increase. but my point is that we are already investing, but is not just by the utilities themselves. There is support. To that program I just mentioned has some federal support in it. So we are seeing that, because the policy will initiatives are pushing us this way as well. So there's an alignment between what the utilities want to do, hopefully what driving demand or consumers. So it's not just EVs, we are talking about electrify heating pumps and other ways to reduce emissions globally, and we are moving towards that trend, and policies pushing it that way too. So I think that there's a good balance there. There still might be hiccups, but I'm seeing that we are going to reach these milestones because everything is aligned that way. >> Obviously, the push in the direction for electrification is about trying to meet those commitments we've made for the environment and the emissions targets. You talked a second ago you mentioned about hardening the grid. >> Yes. >> Because as we move in this direction to try to lessen the effects of climate change, we are seeing some pretty intense weather. That sounds like an expensive proposition, to harden the grid. >>yes, select specific terminology refers to things such as in Jones for the might be flooding or hurricanes in the US. You are burying the cables, and that's very expensive. Or they may be putting in transmission towers that are more resilient, so a storm should not be taking them down as easily. To this a lot of money going into this. so again, for the regulated utilities as well as the unrelated power segment, there has been this need, and it's been seen for a while, because climate change has been impacting all the physical aspects of the grid for a while now. So this investment has been picking up and, indeed, 2021 was a peak year for CapEx, for the utilities in the US, and is not expected to come down. That spending will continue. And with that spending, again, this is why I'm saying you're going to see outsized growth in utilities. Outsized so you have a stable regulated sector for the most part, yet there's growth behind it. So I think that's why it's interesting both from my perspective, from a debt perspective, as well as some equity investors. Because you can see it's reliable cash flow, but supported by growth. >> I was thinking when you're talking about having to hardenthe grid and all the expansion needed to make, it point he some debt issuance there, isn't there, try to pay for all this. So from the investment point of view, then suddenly saying oh, then this could be a very active space. > Well, and regulated utilities, the one interesting perspective or maybe exciting from my perspective is, as a bond analyst, when they issue they have a CapEx program it's largely derisked. And by that I mean unlike other corporations not regulated, CapEx is largely assessed by the regulator ahead of time. This is deemed necessary, it's deemed prudent. There's a lot of derisking for that CapEx. So again, it's a fairly stable industry. But about 50% or 60% of that funding will be in the form of debt issuance. so when I'm looking at the corporate bond market, we want liquidity. So one of the aspects that affects the pricing of bonds is if there's not a little liquidity within a curve of an issuer, it might trade either more expensive than it should otherwise or just not trade at all. So I want that liquidity. So there's a balance between having too much issuance, which might push spreads wider or make the bonds cheaper, or not having enough liquidity. So I see if you have protectable issuance needs, it helps the market with liquidity and it helps our job as fixed income investors. >> That was Marisa Jones, utilities credit analyst with TD Asset Management. Of course, electric vehicles are one of the drivers of the metals demand that we are expecting going forward. TD Securities has a new report out with their outlook for the mining sector. Anthony Okolie joins us again with more on that. Anthony. > TD Securities says that the medium and long term outlook for the mining sector is very positive and they base this on the world decarbonisation. TD Securities does say that, look, there are still some risks that remained. Inrate hikes and inflation remain risks. But in their view, mines have discounted these concerns quickly and aggressively. And they believe that a sharp macro economic slowdown is reflected in valuation. So TDSI has lowered their commodity price forecast by about 5% for the second half of this year and 11% for 2023. Now, the lower price that reflects weaker growth expectations into 2023 and the current sharp selloffs in prices. Now as a result, TDSI, the target prices have also declined by an average of about 22%. Again, primarily based on their lower 2023 metal prices forecast. Greg? >> Given the fact that they have a chance to rethink the space given some of the challenges ahead, what about the recommendations for base metals overall? >> Yeah, so no change in the recommendations. They are still maintaining sector overweight for this particular sector based on the view that the metal sector, them base metal sector, isn't a sector in a bull market. >> Thanks. MoneyTalk Anthony Okolie. Before we say goodbye, let's check in on the market. We have the technology stocks weighing on the trade on both sides of the border. Nothing too dramatic to the downside. Here at home, 19,041 for the TSX Composite Index. Down a pretty modest 21 points. The tech and healthcare stocks and financials are waiting on the trade in Toronto. We do have some pushback from some other sectors including, drumroll please, utilities. Some of the consumer goods and the energy sector are putting some points on the table. South of the border, let's check on the S&P 500, of course, we are having some shock waves move through the market. Let's call it that. Some weight being felt across the broader indices because of the big social media names. Concern coming out of Twitter's later used round of earnings and snap, the S&P 500 down about three quarters of a percent, 30 points. Some of the telecom names and consumer stocks are under pressure. If you are looking for green on the screen on Wall Street, it is coming from the utilities, some of the non-cyclical consumer names, and a little bit of a push from energy as well. Make sure to stay tuned to MoneyTalk Live next week. On Monday, Colin Lynch, head of global real estate investment and TD Asset Management is going to be on the program discussing real estate. And a reminder, course, you can get a head start with your questions for Colin. Just send in your email to moneytalklive@td.com. That's all the time we have for the show today. Thanks for joining us. We will see you next week. [music]