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[music] >> Hello, I'm Greg Bonnell. 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'll only see here.
We're going to take you through what's moving the markets and answer your questions about investing.
Coming up on today's show, we are going to be joined by TD Wealth to Chief wealth strategist Brad Simpson. We are going to discuss why investors may be sitting in too much cash and therefore missing out.
And in today's WebBroker education segment, Ryan Massad is going to show us where you can find tax information here on the platform.
So here's how you can 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 to all that and our guest of the day, let's get you an update on the markets.
Let's start with Bay Street, back about 35 points. We have gold prices easing their rally over recent days, oil pulling back a bit as well so let's check in on some energy and mining names. We will start with Baytex energy, pulling back a little more than 3%, to $5.28. You can see the stock has been on a rally in recent weeks along with many oil and gas names with the price of crude moving higher in the session. I also want to check in on new gold, gold has been making new all-time highs but a Pospisil minors today. New gold is pulling back about 2.8%.
But you can still see that in recent weeks, quite a rally in this name as well.
South of the border, let's check in on the S&P 500.
A bit of a mixed session on the S&P 500, it is pretty much flat. It is often less than half of one point. Tech heavy NASDAQ, what's happening here?
Not a big day to write home about but 29 points on the table, almost 1/5 of a percent.
I want to show you in a we don't talk about a lot of the show, Apartment Income REIT. Blackstone is taking the name private in a $10 billion deal that has Apartment Income REIT at $38.45, up almost 23%. And that's your market update.
Despite strong US economy and market sitting at near all-time highs, many investors have large cash position. Our future guest today refers to this divergence as the vibecession. Let's dig into this with Brad Simpson, chief strategist at TD Wealth.
Great to have you back.
>> Great to be here.
>> Let's talk about a vibecession. We were told there was going to be a recession that we didn't get. Explain vibecession to me.
>> I'm not taking credit for that. It started to enter the vernacular about a year ago, let's call it the summer of 2023. Really the idea of a vibecession is ultimately about not what the facts are around how the economy is doing but how the economy makes you feel. So vibecession is, forget the facts, how do you feel about it?
That is consistent often with I think our new reality which is increasingly how you feel about something is more important than the facts around something.
The problem with that is an investment terms is financial markets ultimately move and equity markets move on having greater earnings down the road and ultimately how the economy is doing is usually a huge part of that, of course, and so facts around the economy really do matter.
So if you look at it in those terms, that I think one of the things that are having a huge impact on investors is that the facts are that the economy, in particular the United States, is pretty darn good!
You can almost go as far as to say it's probably been great.
We publish something a few weeks ago.
We publish a lot of stuff but sometimes you really like something and I really like this because it took this idea of vibecession and said here is two problems with this and the first one is on the front cover we had this telephone that said just the facts.
The problem is that I think the phone quite frankly and the fact that we get for our phone and let's say social media are really taking investors to a place that we know there's been social consequences but we think there are starting to be financial one.
>> I wanted to ask about where this coming from. This data is released all the time, the economy is going like this, the labour market is resilient like this.
>> So why do you feel so bad, right?
I think there are many reasons for that but I think if you look at one that we kind of tackle and say this is the elephant in the room and this is the upcoming election in the United States.
You have the world's media centre and have the world's superpower and I think we are all aware of the turmoil and political angst that we have there but ultimately I think that angst and that kind of turmoil around it is starting to have an impact on investing and the way we looked at it, first and foremost, we took something called the Michigan consumer Index.
This is a survey that Michigan has been doing all the way back to 1942 and, consistently, over and over and over again, and so looking at the questions they ask and the response they are getting, they noticed that starting at the end of 2019, not when they were doing the survey, the way that questions were being answered, the tone started to change and it got negative and more negative and more negative between 2020 22.
>> You can't even blame the pandemic. This was before the pandemic.
>> No, what we can see it is during the pandemic at home, on the other you can see increasing usage of where you are getting your news to Mark not so much on television or the newspaper but more more on social media and even the 60+ that skewed higher, of course the younger you get, the more and more went up.
And so you look at today when you get a Michigan consumer Index survey that comes out, on average, the type of economy that we are in now, pre-pandemic, if you were in a similar scenario getting those questions that the score would be about 30 to 35 points higher than what was coming out as and I think a lot of that has to do with, of course, reading that machine but when you look at the way the politics are going in the United States, there's this famous quote from James Carvel, the campaign manager for Clinton in the 90s, and he said, the economy is stupid. We have heard that a lot of times.
Both parties know this. Republicans are constantly talking about how terrible the economy is there. The Democrats are trying get reelected and so they want to seems sympathetic and talk negatively about the economy.
Look at yourself, look at every dinner party you go to, any social event you go to.
You get into trump within the first five minutes almost anywhere and then you're talking about the US election.
I think a lot of that ultimately is and there are other sources of course, but I think that when you look at the facts around it, to your point, unemployment, 3.9%, 3.8%.
Look at GDP growth, 3.2%. Look at equity markets.
You are opening here today, markets are a little bit soft today. The S&P 500's at 5200, the closest >> One day of a pullback, oh man, what's going on?
>> Between October and today, the S&P 500 has put on $12 trillion of market cap.
Stop and think about that. That's wealth creation.
All those things, if you look at them, is that the negativity we have around this is the bad news of it is that if you let that set how you are going to allocate, you're going to sit in massive amounts of cash… >> Is that what we are seeing? Let's talk about that. What are investors doing right now?
>> So I think when you look at what investors are doing is they got 1 foot in and 1 foot out.
Yeah, they are participating in some of this movement but when you look at money market funds in the United States, you look at money market funds in Canada, you look at brokerage accounts, you look at investment accounts, bank accounts, look at the high 18 percentage of cash that people have held onto over all of this.
Based on that, it tells you something and the second part on that is that negativity in the price of it also highlights that one of the things that happens is with where we are getting this emotional news, and I put news in quotes, this is in fact based. Just because you think it so doesn't mean it so.
In financial markets, how do you counteract that? One of the neat things about my jobs is that I can oversee for giant investment platforms, all of the movements of the capital, what people are doing, how they are thinking about it and looking at it.
Right before I came here today, I was at a meeting with one of the guys that I work with and we were having a discussion where we were looking at what is the one determinant over the last five years that was the greatest predictor of return for clients across our financial planning enterprise, our advisory, our counselling enterprise, what is that law of gravity?
What was the Newton Law that would be that? Asset allocation.
I've said it a million times here, right?
But if you look at that over a month, not so much. Three months, no. Then all of a sudden, one year starts to correlate, three years, after five years, it's all in, it's how you're allocated.
>> Is that the key here, to start thinking long term? We were joking earlier but the amount of capital put on, is the point try to get people to think that life is long?
>> I think it's two things. Having a longer term time horizon but when people hear that, it's almost like their ears are closed, like your parents tell you to eat vegetables.
>> It'll pay off.
>> You know what I mean? So after a while it kind of wears off a little bit, i.e.
nothing but had burgers and French fries for a decade, you'll be like, wait a minute, I understand what they were saying. I think there are two parts of that.
One, we do need to start broadening out our time horizons again.
I think about what I used to do the DIY investment presentation 20 years ago, you could walk through data, facts and ideas that would be a couple of months old and it would still be relevant in a way of looking at things. I mean, I almost have to do, when I do anything today, have to have a team running behind me updating on the fly, by the minute.
The second part of the lesson is it doesn't have to be just a long-term time horizon.
I think it also has to be, sit back, and I know we talked about this year before in the past but I just can't tell you how important it is to actually sit down and take a look at your money when you're investing and put it in some buckets and a bucket is that instead of running at 20% in cash, you have the bucket that says what is the amount of money I'm going to need over the next year if something really terrible happens? Whatever that is, loss of life, loss of my job, something very critical and terrible, I need to have another bucket that says, in the next three years, where's the capital and going to need?
And then another bucket that says, five years from now, that bucket there, how am I going to allocate based on letting that money grow over the next five years and not worry about any of this noise, and then I have to have a bucket over here that says what is the long-term growth where I'm not worried about getting access to that money, what that's going to look like and allocating to that. And I can tell you consistently over and over again, if you do that and look at it in these terms, take that phone, put it away somewhere, take that person on Instagram, these people who done pain on their heads and now talk about the markets, ignore those folks and follow and do something along those lines, 20 make all the difference.
>> Great insights with Brad Simpson. We are going to get your questions about market strategy for broad and just moments 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.
Alright, we've got shares of Tesla in the spotlight today on the promise of a long-awaited Robo taxi.
Heading into the weekend, you may have missed it, Elon Musk posted on X that design for an economist taxi are coming in August.
Tesla shares have lost ground this year amid a tough market for electric vehicles.
That seems to be stirring some interest, you're up about 4.5% on Tesla.
Taiwan Semiconductor is also on the move.
The company subsidiary in Arizona is in line to receive billions of dollars in funding from the Biden administration's CHIPS Act.
The funding comes amid Taiwan Semi vowing a $25 billion expansion of a chip making facilities in Arizona. It's at $143, up about 1.5%.
Let's talk artificial intelligence. It's been talked about by North America's top bankers.
Say can be transformational as the printing press was.
This is from the annual letter to shareholders at J.P. Morgan Chase, CEO Jamie Dimon says well it's hard to predict the full impact of AI on society, he is convinced it will be asked Renee. He also commented on geopolitics, saying it may be the riskiest error the second world war.
Let's check in on the markets, starting with the TSX Composite Index.
Up about 30 points. The price of crude oil pausing it's run today. The S&P 500 is flat, three quarters of one point to the upside.
We are back with Brad Simpson, take your questions about market strategy. First question at the top, someone wants to know, is there a chance that the central banks won't cut rates this year? I think one central bank governor talked about the possible need for a hike. The conversation is getting more complicated.
>> First and foremost, let's unbundle that with things we've talked about over the past year.
That is you can almost look at your comments that you are having when were going into this, de-globalization, one of the reasons Dimon is talking about this as being an area of increased strife since the second world war, which I agreed, we published a document a couple of years ago about that, it's this idea of de-globalization.
I think you could comfortably say that the European Central Bank and the Bank of Canada are going to be cutting interest rates.
You have Germany basically in a recession right now. Looking at the employment numbers that came out of Canada last week, that starting to increase.
If there something, the one thing their productive bodies rising unemployment which is never a good sign.
So I think we could swear that away and try to narrow this question down that says that could there be in the United States and how would the market react?
The first point is we are still of the belief that they are going to be three interest rate cuts this year.
Yeah, cuts.
I can see it on… Yeah, three.
The potential for them to be much later is highly probable. But if you look at it, we were three months ago 67 interest rate cuts. Now we are at three. Futures markets are at two.
So from seven to let's a consensus 32 futures at two, there is a lot of movement between there and there so I think part of that question then is if we didn't cut, it's like we are still sitting at seven, an announcement hits and if that were so, the market would behave terribly.
>> I wanted to ask you about that. This is the market that has run up quite a bit. If you to get those rate cuts, do you get pulled back?
>> The long and short of it is that what would happen is the ideas that you are sitting on futures at two rate cuts means already a lot of the steam and the expectation of this has been kind of taken out of it. When you talk to the private capital folks, many of them are in the zero camp and so I would say there's more of this reality in public markets, they are in this 2 to 3 zone.
I guess it talked to lots of different allocators of capital all the time.
They are in the zero zone.
I share that to say that the likelihood then is let's put a 60% probability that your somewhere between two or three.
You probably had a 10% probability of a rate hike. The rest of those are probably on the no side.
Probably a lot of that is priced in.
I don't think that's where you would see a massive selloff if this occurred.
However, it could lead off a little bit of steam along the way.
I don't see this as a would be this big surprise because we've already seen some of this guidance start to come in and I think we have to be careful with that.
That being said, at the end of the day, I think you still need to be a little bit cautious and I am sure we are going to get into this. I mean, you do have risk assets right now looking for any reason to sell off, which makes a lot of sense.
>> American exceptionalism.
The fact that the economy you can perform this well despite all the rate hikes coming from the central banks. Part of this question to you when people say, what if we don't get any rate cuts this year, it's part of the argument that if an economy can form this well with borrowing costs at this level, should borrowing cost be at that level?
>> One of the things I think that we have to remember is we are in a let's call it six month pattern here where we are slowing.
We have done this unbelievable job of managing inflation and so if you look at your core inflation right now, you're in around that 3% zone which is kind of not at the desired end state but very close, you look in Canada, you're looking at around 3%. If you take the rents out of there, like we used to do, you'll be sitting at 2% already and so when you look at it in what's the trend has been while it's really healthy, you have experienced a slowdown underneath of that and why I think that's important, why no one can quite predict what the future is going to be, is reality is is that as we are setting interest rates, as we are trying to choke things off a little bit, it isn't immediate, right? It takes some time to filter through the system.
And so you think about four months ago, a year ago, consensus was somewhere between definitely a landing but this could be a hard landing. Then, I would say the last time I was on here it was a soft landing.
I'd say consensus now is a no landing, you just don't worry about it.
I have to admit, I'm a little bit sympathetic to that, that one of the things is that we always talk a lot of the way you talk about the world is through a business cycle but it's a business cycle that is ultimately manipulated by monetary policy and fiscal policy.
Those two realities take that business cycle and it isn't that beautiful smooth thing you learned in university.
It looks an awful lot like this.
Except if you have a crisis of some sort, so look at the great financial crisis and the pandemic. Most other times, there have been off the charts periods of expansion, so I think we have to be very careful on using this chart the looks of business cycles these ways and ultimately in the United States, the reality is that of the nations, when you look at the comps, what is the one consistent thing they have, they are the most capitalist oriented countries, their markets are the most capitalist oriented of countries and you kind of put those pieces together, he threw that was a pretty good job of monetary policy in the last couple of years by Jerome Powell and the others central bank governors of the banks in the US, they've done I think a pretty tremendous job there.
>> As always, make sure you do your own research before making any investment decisions.
we will get back your questions for Brad Simpson nonmarket strategy 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.
It is tax season. Joining us now to show us where you can find some tax forms on the web broker platform is Ryan Massad, Senior client education instructor with TD Direct Investing.
Let's talk about tax forms and where they are here on the platform.
>> Spring is in the air. Whether it's clearing leaves again that last shovel of snow out of your driveway or some parts of the country, there is nothing other than the constant for April and taxes.
Let's go into a broker and find where we can find that tax information in there.
In web broker, we are going to go over to the accounts tab.
Under the self-service call, were going to go over to tax information Centre.
In this tax information Centre, we would have a bunch of frequently asked questions that are already out there. One of the most important ones is going to be that first one under filing taxes column and is going to be when are the key tax dates and when should I expect my documents.
Most of you will need that information to know exactly when all of those different tax documents are going to come in.
If you're curious about that, you can scroll down to the tax document that you're waiting for. You will get those exact dates where these documents will be available to you on the web broker platform.
We've also got this nice little ask us open box that you can even ask a question and maybe get that answer within the system here. Scroll through and find maybe those answers to the questions that you might be asking yourself. In order to get those tax documents, you can look at those in different spots on the website. If you're doing it from the main area, you can click again on accounts in that first column for account details, you're going to go down to documents e-services and here is where you're going to be able to find those tax documents.
Under this tax documents tab, this is where you get your investment income summaries, your trading summaries and again, if you want to know when those are available you will take that list that we were looking at before. You can scroll through and filtered by tax year just in case you need to go back maybe a year or two to find some documents just to put some trades together but this is where you're going to be able to find that kind of information when it comes to going for your taxes and it is the time of year to get started on getting this tax documents ready.
>> I'm a bit of a tax nerd.
I've been doing a little bit at a time for several weekends in a row. I think I got all my ducks in a row.
What other supports are here on the platform for doing taxes?
>> On the platform, it's a good idea to do a little bit at a time.
Or maybe just rip that Band-Aid clean off in one shot, do this all in one shot.
Regardless of how you do it, if we go back into a broker, just to show you a couple more areas, specifically under the.
. . If I click there, they're going to be a bunch of resources here for you. More recently if I go under the webinar section, we had a webinar last week talking about fixing five tax mistakes that can cost you money. Go ahead and click on that, that's already on demand and ready for you to view. If you want to know anything more, you can go into this learned section, go into the learning paths. We've got video lessons, a number of featured elements.
Go into the search box and type tax and you will see there's a whole bunch of resources from videos to the tax information Centre that we were on and you can go ahead and click on those and get the up-to-date information that you would like to get ready this month for tax season.
It is time, it is April. Spring is in the air but so are taxes.
>> Great stuff as always. Thanks for joining us.
>> Thanks a lot, Greg.
>> Ryan Massad, 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.
We are back with Brad Simpson, taking your questions about market strategy. Next one here for you, Brad.
This is a simple one. How should we be weighing to political risk as investors?
>> They always ask me the fun questions.
[laughing] >> Brad, what's the meaning of life?
>> I think we have to look at this in a couple of different ways, frame or bucket them in a certain way. Starting out first and foremost is the best way to prepare for geopolitical risk, bringing this conversation full-circle, is asset allocation.
I think a great starting point of this is that one of the things when we are moving through an environment like we are today is that there is interest rate volatility right now, which means wants the questions around rate hikes and concerns around that, equity market volatility, there is none, it's almost nonexistent, and then really there is almost no currency volatility either and you can look at those two things and go, well, one of the best ways to start thinking about duplicate risk, and there's a lot of geopolitical risk and there, and so one of the things where I have a bit of a hard time getting my head around is that if you have an environment where you had a pretty good move in equity markets and you've had a decent move in fixed income after a difficult 18 months, why don't you put some hedges on. Right now when you look at flows, it's very low and people are kind of unhedged. I think the best way to prepare and think about do political risk is in an environment is first and foremost is have an asset allocated portfolio, then if you have an asset allocated portfolio, you got some government bonds in there, that in itself is a risk diversifier in an environment like that, the second to follow that is in your credit side, say to investment grade bonds and that sort of thing, have some long shorts and their.
Then looking over into her equity portfolio, really the same thing.
This is along for portfolio. If you look at the way equity markets… We are not just solely talking about the Magnificent Seven anywhere. In fact, if you take a look at the way equity markets moved over the last quarter, way more dispersion has started to happen, cyclical names have really started to move out which is a real positive and even and when you look at that even more so in this dispersion is single name activity has really started to move. One of the things you were talking about in the news when you were talking about Musk and Tesla, there is a great example of a single name move.
So I think that running along short portfolios and equity, having exposure to that, makes an awful lot of sense there and then the third one is that we think that a lot of people are really, really under allocated in commodities. When you look at it, think about it.
Walk this out a little bit.
We are going to be going through for the next 30 years this incredible buildout and infrastructure globally. So you know that there is an automatic cash flow that's running into these things. One of the things we were talking about, cash balances, that individual investors have, you look into private equity markets and private debt markets, there is just an enormous amount of capital there, looking for a home. So much of this is going to be in that infrastructure play. Part of that infrastructure play is that if you are trying to build any commodity capacity over the last 20 years, good luck. You couldn't do it.
So we are going to have to build on that capacity. Even on the oil side, even if we said, look, we are converting it to electric cars and putting solar on top of people's roots, even if we kept the usage at the rate that we are now and you just had the modest population growth that we have now in the usage of that, you're going to have increased demand and fossil fuels.
All of that is important to making sure that you have a well allocated portfolio into commodities.
Commodities, when you compare that to fixed income, whether along short duration or investment grade bonds versus equities are even a better diversified or of a portfolio if you are in the middle of anything that's geopolitical.
So in that scenario there, you are actually adding something that alphas or growth potentials your portfolio and you are also adding a much better diversified.
So however this pans out, and maybe the last part of this is to frame that one of the things when it comes to geopolitical and let's call it as it is, we have a war in Ukraine right now, a war in the Middle East right now, markets are pretty agnostic. One of the things, unfortunately, as human beings, is that we have waged war against one another for a long, long time. Markets almost read those like a given, like, this is what's going to happen.
So if you have that as a given, one of the things is that ultimately, nations still have to borrow, often to fund, look at the case in Ukraine right now, with massive capital needs that they have, they have to go to markets to be able to do that. The equity markets are the same thing, you have to raise money to build.
To the reality of that is that you can't just take and circle investments and go if we are in the middle of warfare, which I'm not saying likely in any way, but the reality is is capital markets and capital continues to flow.
The best part ultimately then, and I didn't know this was a theme for our show, ultimately, stop trying to determine what that one main outcome is going to be.
I look at what I do all day. We have something called the asset allocation committee.
This asset allocation committee is made up of our thought leaders from the organization, where we think we are going to go from here. Many folks come on here and have chats with you. We have a policy committee that I chair that says, how are we going to allocate, what percentage of asset allocation are we going to allocate to? We have an investor management committee that I chair and they look at passive and active investments all around the world.
We do our utmost to think about where to allocate but the most important one is the policy committee saying this is that what we are going to have to fixed income, this is how much we are going to have to equity, this is how much we're going to have two alternatives and will change our allocations only a couple of points on the margin and I think that's the ultimate answer to these questions.
>> We will get back to your questions or Brad Simpson or market strategy and just a moment's time. As always, make sure you do your own research before making any investment decisions.
Now, let's get you updated on the markets.
We are having a look at TD's Advanced Dashboard, a platform designed for active traders available through TD Direct Investing.
Let's jump into the heat map function and get a few of the market movers here on the TSX 60.
Obviously today, we got a bit of a downdraft but nothing too dramatic in the energy and materials basis. We have seen a rally on oil in recent sessions, bit of a pause on the gold front. Financial zone showing some strength today, keeping us from a poor showing on the TSX Composite Index topline number. South of the border, let's check out the S&P 100, drill down into some of the names in the 100. Seeing Tesla in the middle taking a bullet territory on screen. 4.5% to the upside, Elon Musk posting on X before we headed into the weekend that Robo taxi, long-awaited for them, they will have some designs in August.
You can find more information on TD Advanced Dashboard by visiting TD.com/advanceddashboard.
Back with Brad Simpson, G. It is said TD Wealth. Another simple one. Once the potential market impact from the US presidential election?
>> Yeah, so maybe as a starting point, we published document every year called the year ahead. This year, it's called The Baker's Dozen, which is 13 things that we think are likely or possible.
So trump and the Republicans winning the election, if you look at what that scenario analysis is today, we are still in that same zone about 60% probability of trump winning and then you have to think about where you're going to be on the house and Senate. If he wins, it's a 90 to 95% probability that they win the Senate and 50-50 on the house.
Why I kind of share that, that's kind of our probability analysis right now, that probability analysis that we are doing, there would be other folks coming to similar scenarios to that hedging large pools of capital like we are doing.
If anything, what might surprise folks is that the surprise, the question probably should be, what would happen if Biden one, right? Because the likelihood that were markets trading on today, is trading the the Republicans win.
It's a discount mechanism. Going forward and saying what do we think the most likely outcome is going to be. So I think that has to be your starting point of thinking about this.
So if you look at it and Biden did win, you probably have a big rally off of that because it would be a surprise but it would be a surprise where you would go, ultimately, again, we are back to be agnostic, ultimately, this one is kind of why the selection is so interesting, well there's a lot of reasons why it's interesting, is markets like a known knowns. Just tell me what it is, I'll work with that. That's what market participants like.
Known knowns.
>> Whoever wins, they have been president before.
>> That's right.
So the second part of this is, I think, and it goes back to this is so that the house you. Then as an allocator of capital, if I was somebody concerned about this, I certainly have my concerns, my biggest concern with this is ultimately gaze I do believe and I have written this in a couple of different commentaries over the last few months that democracy might be on the ballot. That's a very different scenario. If that's what your concern is, there's would be a theme here. I think the reality is is that there could be more volatility in November than meets the eye.
There certainly could be more volatility than what the market is pricing right now.
5200 on the S&P, you can put options for free almost, very little hedging going on and shorting activity is pretty low as well.
That means they are inexpensive and so for me, that scenario I knocked out is a really good one.
And we can go into the potential between the two as well but I think the best way to prepare for that: make sure your running a well diversified investment portfolio with well allocated quality on your duration were government guaranteed side, make sure that you have some hedging going on in your fixed income component, same thing on your equity component and at the end of the day, make sure that you are going out and adding some commodity exposure to your portfolios.
And I think if you do those two things, and ultimately think about our scenario analysis is that is if the oh, is and you have the potential that the selection has, you are well-positioned for it, but if that doesn't happen, this has the potential to have less volatility than you think. Two different extremes.
>> Always a fascinating discussion.
Appreciate you dropping by and I look forward to the next time.
>> Thank you, Greg.
>> Our thanks to Brad Simpson, cheap all strata just with TD Wealth. As always, make sure you do your own research before making any investment decisions. if you don't have time to get your questions today, we will aim to get them into future shows. Stay tuned for tomorrow's program.
Colin Lynch, managing director and head of alternative investments with TD Asset Management will be here, you want to take your questions about real estate. You can get them in ahead of time. Just email MoneyTalkLive@TD.com. That's all the time we have the show today. Thanks for watching and will see you tomorrow.
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Every day, I'll be joined by guests from across TD, many of whom you'll only see here.
We're going to take you through what's moving the markets and answer your questions about investing.
Coming up on today's show, we are going to be joined by TD Wealth to Chief wealth strategist Brad Simpson. We are going to discuss why investors may be sitting in too much cash and therefore missing out.
And in today's WebBroker education segment, Ryan Massad is going to show us where you can find tax information here on the platform.
So here's how you can 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 to all that and our guest of the day, let's get you an update on the markets.
Let's start with Bay Street, back about 35 points. We have gold prices easing their rally over recent days, oil pulling back a bit as well so let's check in on some energy and mining names. We will start with Baytex energy, pulling back a little more than 3%, to $5.28. You can see the stock has been on a rally in recent weeks along with many oil and gas names with the price of crude moving higher in the session. I also want to check in on new gold, gold has been making new all-time highs but a Pospisil minors today. New gold is pulling back about 2.8%.
But you can still see that in recent weeks, quite a rally in this name as well.
South of the border, let's check in on the S&P 500.
A bit of a mixed session on the S&P 500, it is pretty much flat. It is often less than half of one point. Tech heavy NASDAQ, what's happening here?
Not a big day to write home about but 29 points on the table, almost 1/5 of a percent.
I want to show you in a we don't talk about a lot of the show, Apartment Income REIT. Blackstone is taking the name private in a $10 billion deal that has Apartment Income REIT at $38.45, up almost 23%. And that's your market update.
Despite strong US economy and market sitting at near all-time highs, many investors have large cash position. Our future guest today refers to this divergence as the vibecession. Let's dig into this with Brad Simpson, chief strategist at TD Wealth.
Great to have you back.
>> Great to be here.
>> Let's talk about a vibecession. We were told there was going to be a recession that we didn't get. Explain vibecession to me.
>> I'm not taking credit for that. It started to enter the vernacular about a year ago, let's call it the summer of 2023. Really the idea of a vibecession is ultimately about not what the facts are around how the economy is doing but how the economy makes you feel. So vibecession is, forget the facts, how do you feel about it?
That is consistent often with I think our new reality which is increasingly how you feel about something is more important than the facts around something.
The problem with that is an investment terms is financial markets ultimately move and equity markets move on having greater earnings down the road and ultimately how the economy is doing is usually a huge part of that, of course, and so facts around the economy really do matter.
So if you look at it in those terms, that I think one of the things that are having a huge impact on investors is that the facts are that the economy, in particular the United States, is pretty darn good!
You can almost go as far as to say it's probably been great.
We publish something a few weeks ago.
We publish a lot of stuff but sometimes you really like something and I really like this because it took this idea of vibecession and said here is two problems with this and the first one is on the front cover we had this telephone that said just the facts.
The problem is that I think the phone quite frankly and the fact that we get for our phone and let's say social media are really taking investors to a place that we know there's been social consequences but we think there are starting to be financial one.
>> I wanted to ask about where this coming from. This data is released all the time, the economy is going like this, the labour market is resilient like this.
>> So why do you feel so bad, right?
I think there are many reasons for that but I think if you look at one that we kind of tackle and say this is the elephant in the room and this is the upcoming election in the United States.
You have the world's media centre and have the world's superpower and I think we are all aware of the turmoil and political angst that we have there but ultimately I think that angst and that kind of turmoil around it is starting to have an impact on investing and the way we looked at it, first and foremost, we took something called the Michigan consumer Index.
This is a survey that Michigan has been doing all the way back to 1942 and, consistently, over and over and over again, and so looking at the questions they ask and the response they are getting, they noticed that starting at the end of 2019, not when they were doing the survey, the way that questions were being answered, the tone started to change and it got negative and more negative and more negative between 2020 22.
>> You can't even blame the pandemic. This was before the pandemic.
>> No, what we can see it is during the pandemic at home, on the other you can see increasing usage of where you are getting your news to Mark not so much on television or the newspaper but more more on social media and even the 60+ that skewed higher, of course the younger you get, the more and more went up.
And so you look at today when you get a Michigan consumer Index survey that comes out, on average, the type of economy that we are in now, pre-pandemic, if you were in a similar scenario getting those questions that the score would be about 30 to 35 points higher than what was coming out as and I think a lot of that has to do with, of course, reading that machine but when you look at the way the politics are going in the United States, there's this famous quote from James Carvel, the campaign manager for Clinton in the 90s, and he said, the economy is stupid. We have heard that a lot of times.
Both parties know this. Republicans are constantly talking about how terrible the economy is there. The Democrats are trying get reelected and so they want to seems sympathetic and talk negatively about the economy.
Look at yourself, look at every dinner party you go to, any social event you go to.
You get into trump within the first five minutes almost anywhere and then you're talking about the US election.
I think a lot of that ultimately is and there are other sources of course, but I think that when you look at the facts around it, to your point, unemployment, 3.9%, 3.8%.
Look at GDP growth, 3.2%. Look at equity markets.
You are opening here today, markets are a little bit soft today. The S&P 500's at 5200, the closest >> One day of a pullback, oh man, what's going on?
>> Between October and today, the S&P 500 has put on $12 trillion of market cap.
Stop and think about that. That's wealth creation.
All those things, if you look at them, is that the negativity we have around this is the bad news of it is that if you let that set how you are going to allocate, you're going to sit in massive amounts of cash… >> Is that what we are seeing? Let's talk about that. What are investors doing right now?
>> So I think when you look at what investors are doing is they got 1 foot in and 1 foot out.
Yeah, they are participating in some of this movement but when you look at money market funds in the United States, you look at money market funds in Canada, you look at brokerage accounts, you look at investment accounts, bank accounts, look at the high 18 percentage of cash that people have held onto over all of this.
Based on that, it tells you something and the second part on that is that negativity in the price of it also highlights that one of the things that happens is with where we are getting this emotional news, and I put news in quotes, this is in fact based. Just because you think it so doesn't mean it so.
In financial markets, how do you counteract that? One of the neat things about my jobs is that I can oversee for giant investment platforms, all of the movements of the capital, what people are doing, how they are thinking about it and looking at it.
Right before I came here today, I was at a meeting with one of the guys that I work with and we were having a discussion where we were looking at what is the one determinant over the last five years that was the greatest predictor of return for clients across our financial planning enterprise, our advisory, our counselling enterprise, what is that law of gravity?
What was the Newton Law that would be that? Asset allocation.
I've said it a million times here, right?
But if you look at that over a month, not so much. Three months, no. Then all of a sudden, one year starts to correlate, three years, after five years, it's all in, it's how you're allocated.
>> Is that the key here, to start thinking long term? We were joking earlier but the amount of capital put on, is the point try to get people to think that life is long?
>> I think it's two things. Having a longer term time horizon but when people hear that, it's almost like their ears are closed, like your parents tell you to eat vegetables.
>> It'll pay off.
>> You know what I mean? So after a while it kind of wears off a little bit, i.e.
nothing but had burgers and French fries for a decade, you'll be like, wait a minute, I understand what they were saying. I think there are two parts of that.
One, we do need to start broadening out our time horizons again.
I think about what I used to do the DIY investment presentation 20 years ago, you could walk through data, facts and ideas that would be a couple of months old and it would still be relevant in a way of looking at things. I mean, I almost have to do, when I do anything today, have to have a team running behind me updating on the fly, by the minute.
The second part of the lesson is it doesn't have to be just a long-term time horizon.
I think it also has to be, sit back, and I know we talked about this year before in the past but I just can't tell you how important it is to actually sit down and take a look at your money when you're investing and put it in some buckets and a bucket is that instead of running at 20% in cash, you have the bucket that says what is the amount of money I'm going to need over the next year if something really terrible happens? Whatever that is, loss of life, loss of my job, something very critical and terrible, I need to have another bucket that says, in the next three years, where's the capital and going to need?
And then another bucket that says, five years from now, that bucket there, how am I going to allocate based on letting that money grow over the next five years and not worry about any of this noise, and then I have to have a bucket over here that says what is the long-term growth where I'm not worried about getting access to that money, what that's going to look like and allocating to that. And I can tell you consistently over and over again, if you do that and look at it in these terms, take that phone, put it away somewhere, take that person on Instagram, these people who done pain on their heads and now talk about the markets, ignore those folks and follow and do something along those lines, 20 make all the difference.
>> Great insights with Brad Simpson. We are going to get your questions about market strategy for broad and just moments 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.
Alright, we've got shares of Tesla in the spotlight today on the promise of a long-awaited Robo taxi.
Heading into the weekend, you may have missed it, Elon Musk posted on X that design for an economist taxi are coming in August.
Tesla shares have lost ground this year amid a tough market for electric vehicles.
That seems to be stirring some interest, you're up about 4.5% on Tesla.
Taiwan Semiconductor is also on the move.
The company subsidiary in Arizona is in line to receive billions of dollars in funding from the Biden administration's CHIPS Act.
The funding comes amid Taiwan Semi vowing a $25 billion expansion of a chip making facilities in Arizona. It's at $143, up about 1.5%.
Let's talk artificial intelligence. It's been talked about by North America's top bankers.
Say can be transformational as the printing press was.
This is from the annual letter to shareholders at J.P. Morgan Chase, CEO Jamie Dimon says well it's hard to predict the full impact of AI on society, he is convinced it will be asked Renee. He also commented on geopolitics, saying it may be the riskiest error the second world war.
Let's check in on the markets, starting with the TSX Composite Index.
Up about 30 points. The price of crude oil pausing it's run today. The S&P 500 is flat, three quarters of one point to the upside.
We are back with Brad Simpson, take your questions about market strategy. First question at the top, someone wants to know, is there a chance that the central banks won't cut rates this year? I think one central bank governor talked about the possible need for a hike. The conversation is getting more complicated.
>> First and foremost, let's unbundle that with things we've talked about over the past year.
That is you can almost look at your comments that you are having when were going into this, de-globalization, one of the reasons Dimon is talking about this as being an area of increased strife since the second world war, which I agreed, we published a document a couple of years ago about that, it's this idea of de-globalization.
I think you could comfortably say that the European Central Bank and the Bank of Canada are going to be cutting interest rates.
You have Germany basically in a recession right now. Looking at the employment numbers that came out of Canada last week, that starting to increase.
If there something, the one thing their productive bodies rising unemployment which is never a good sign.
So I think we could swear that away and try to narrow this question down that says that could there be in the United States and how would the market react?
The first point is we are still of the belief that they are going to be three interest rate cuts this year.
Yeah, cuts.
I can see it on… Yeah, three.
The potential for them to be much later is highly probable. But if you look at it, we were three months ago 67 interest rate cuts. Now we are at three. Futures markets are at two.
So from seven to let's a consensus 32 futures at two, there is a lot of movement between there and there so I think part of that question then is if we didn't cut, it's like we are still sitting at seven, an announcement hits and if that were so, the market would behave terribly.
>> I wanted to ask you about that. This is the market that has run up quite a bit. If you to get those rate cuts, do you get pulled back?
>> The long and short of it is that what would happen is the ideas that you are sitting on futures at two rate cuts means already a lot of the steam and the expectation of this has been kind of taken out of it. When you talk to the private capital folks, many of them are in the zero camp and so I would say there's more of this reality in public markets, they are in this 2 to 3 zone.
I guess it talked to lots of different allocators of capital all the time.
They are in the zero zone.
I share that to say that the likelihood then is let's put a 60% probability that your somewhere between two or three.
You probably had a 10% probability of a rate hike. The rest of those are probably on the no side.
Probably a lot of that is priced in.
I don't think that's where you would see a massive selloff if this occurred.
However, it could lead off a little bit of steam along the way.
I don't see this as a would be this big surprise because we've already seen some of this guidance start to come in and I think we have to be careful with that.
That being said, at the end of the day, I think you still need to be a little bit cautious and I am sure we are going to get into this. I mean, you do have risk assets right now looking for any reason to sell off, which makes a lot of sense.
>> American exceptionalism.
The fact that the economy you can perform this well despite all the rate hikes coming from the central banks. Part of this question to you when people say, what if we don't get any rate cuts this year, it's part of the argument that if an economy can form this well with borrowing costs at this level, should borrowing cost be at that level?
>> One of the things I think that we have to remember is we are in a let's call it six month pattern here where we are slowing.
We have done this unbelievable job of managing inflation and so if you look at your core inflation right now, you're in around that 3% zone which is kind of not at the desired end state but very close, you look in Canada, you're looking at around 3%. If you take the rents out of there, like we used to do, you'll be sitting at 2% already and so when you look at it in what's the trend has been while it's really healthy, you have experienced a slowdown underneath of that and why I think that's important, why no one can quite predict what the future is going to be, is reality is is that as we are setting interest rates, as we are trying to choke things off a little bit, it isn't immediate, right? It takes some time to filter through the system.
And so you think about four months ago, a year ago, consensus was somewhere between definitely a landing but this could be a hard landing. Then, I would say the last time I was on here it was a soft landing.
I'd say consensus now is a no landing, you just don't worry about it.
I have to admit, I'm a little bit sympathetic to that, that one of the things is that we always talk a lot of the way you talk about the world is through a business cycle but it's a business cycle that is ultimately manipulated by monetary policy and fiscal policy.
Those two realities take that business cycle and it isn't that beautiful smooth thing you learned in university.
It looks an awful lot like this.
Except if you have a crisis of some sort, so look at the great financial crisis and the pandemic. Most other times, there have been off the charts periods of expansion, so I think we have to be very careful on using this chart the looks of business cycles these ways and ultimately in the United States, the reality is that of the nations, when you look at the comps, what is the one consistent thing they have, they are the most capitalist oriented countries, their markets are the most capitalist oriented of countries and you kind of put those pieces together, he threw that was a pretty good job of monetary policy in the last couple of years by Jerome Powell and the others central bank governors of the banks in the US, they've done I think a pretty tremendous job there.
>> As always, make sure you do your own research before making any investment decisions.
we will get back your questions for Brad Simpson nonmarket strategy 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.
It is tax season. Joining us now to show us where you can find some tax forms on the web broker platform is Ryan Massad, Senior client education instructor with TD Direct Investing.
Let's talk about tax forms and where they are here on the platform.
>> Spring is in the air. Whether it's clearing leaves again that last shovel of snow out of your driveway or some parts of the country, there is nothing other than the constant for April and taxes.
Let's go into a broker and find where we can find that tax information in there.
In web broker, we are going to go over to the accounts tab.
Under the self-service call, were going to go over to tax information Centre.
In this tax information Centre, we would have a bunch of frequently asked questions that are already out there. One of the most important ones is going to be that first one under filing taxes column and is going to be when are the key tax dates and when should I expect my documents.
Most of you will need that information to know exactly when all of those different tax documents are going to come in.
If you're curious about that, you can scroll down to the tax document that you're waiting for. You will get those exact dates where these documents will be available to you on the web broker platform.
We've also got this nice little ask us open box that you can even ask a question and maybe get that answer within the system here. Scroll through and find maybe those answers to the questions that you might be asking yourself. In order to get those tax documents, you can look at those in different spots on the website. If you're doing it from the main area, you can click again on accounts in that first column for account details, you're going to go down to documents e-services and here is where you're going to be able to find those tax documents.
Under this tax documents tab, this is where you get your investment income summaries, your trading summaries and again, if you want to know when those are available you will take that list that we were looking at before. You can scroll through and filtered by tax year just in case you need to go back maybe a year or two to find some documents just to put some trades together but this is where you're going to be able to find that kind of information when it comes to going for your taxes and it is the time of year to get started on getting this tax documents ready.
>> I'm a bit of a tax nerd.
I've been doing a little bit at a time for several weekends in a row. I think I got all my ducks in a row.
What other supports are here on the platform for doing taxes?
>> On the platform, it's a good idea to do a little bit at a time.
Or maybe just rip that Band-Aid clean off in one shot, do this all in one shot.
Regardless of how you do it, if we go back into a broker, just to show you a couple more areas, specifically under the.
. . If I click there, they're going to be a bunch of resources here for you. More recently if I go under the webinar section, we had a webinar last week talking about fixing five tax mistakes that can cost you money. Go ahead and click on that, that's already on demand and ready for you to view. If you want to know anything more, you can go into this learned section, go into the learning paths. We've got video lessons, a number of featured elements.
Go into the search box and type tax and you will see there's a whole bunch of resources from videos to the tax information Centre that we were on and you can go ahead and click on those and get the up-to-date information that you would like to get ready this month for tax season.
It is time, it is April. Spring is in the air but so are taxes.
>> Great stuff as always. Thanks for joining us.
>> Thanks a lot, Greg.
>> Ryan Massad, 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.
We are back with Brad Simpson, taking your questions about market strategy. Next one here for you, Brad.
This is a simple one. How should we be weighing to political risk as investors?
>> They always ask me the fun questions.
[laughing] >> Brad, what's the meaning of life?
>> I think we have to look at this in a couple of different ways, frame or bucket them in a certain way. Starting out first and foremost is the best way to prepare for geopolitical risk, bringing this conversation full-circle, is asset allocation.
I think a great starting point of this is that one of the things when we are moving through an environment like we are today is that there is interest rate volatility right now, which means wants the questions around rate hikes and concerns around that, equity market volatility, there is none, it's almost nonexistent, and then really there is almost no currency volatility either and you can look at those two things and go, well, one of the best ways to start thinking about duplicate risk, and there's a lot of geopolitical risk and there, and so one of the things where I have a bit of a hard time getting my head around is that if you have an environment where you had a pretty good move in equity markets and you've had a decent move in fixed income after a difficult 18 months, why don't you put some hedges on. Right now when you look at flows, it's very low and people are kind of unhedged. I think the best way to prepare and think about do political risk is in an environment is first and foremost is have an asset allocated portfolio, then if you have an asset allocated portfolio, you got some government bonds in there, that in itself is a risk diversifier in an environment like that, the second to follow that is in your credit side, say to investment grade bonds and that sort of thing, have some long shorts and their.
Then looking over into her equity portfolio, really the same thing.
This is along for portfolio. If you look at the way equity markets… We are not just solely talking about the Magnificent Seven anywhere. In fact, if you take a look at the way equity markets moved over the last quarter, way more dispersion has started to happen, cyclical names have really started to move out which is a real positive and even and when you look at that even more so in this dispersion is single name activity has really started to move. One of the things you were talking about in the news when you were talking about Musk and Tesla, there is a great example of a single name move.
So I think that running along short portfolios and equity, having exposure to that, makes an awful lot of sense there and then the third one is that we think that a lot of people are really, really under allocated in commodities. When you look at it, think about it.
Walk this out a little bit.
We are going to be going through for the next 30 years this incredible buildout and infrastructure globally. So you know that there is an automatic cash flow that's running into these things. One of the things we were talking about, cash balances, that individual investors have, you look into private equity markets and private debt markets, there is just an enormous amount of capital there, looking for a home. So much of this is going to be in that infrastructure play. Part of that infrastructure play is that if you are trying to build any commodity capacity over the last 20 years, good luck. You couldn't do it.
So we are going to have to build on that capacity. Even on the oil side, even if we said, look, we are converting it to electric cars and putting solar on top of people's roots, even if we kept the usage at the rate that we are now and you just had the modest population growth that we have now in the usage of that, you're going to have increased demand and fossil fuels.
All of that is important to making sure that you have a well allocated portfolio into commodities.
Commodities, when you compare that to fixed income, whether along short duration or investment grade bonds versus equities are even a better diversified or of a portfolio if you are in the middle of anything that's geopolitical.
So in that scenario there, you are actually adding something that alphas or growth potentials your portfolio and you are also adding a much better diversified.
So however this pans out, and maybe the last part of this is to frame that one of the things when it comes to geopolitical and let's call it as it is, we have a war in Ukraine right now, a war in the Middle East right now, markets are pretty agnostic. One of the things, unfortunately, as human beings, is that we have waged war against one another for a long, long time. Markets almost read those like a given, like, this is what's going to happen.
So if you have that as a given, one of the things is that ultimately, nations still have to borrow, often to fund, look at the case in Ukraine right now, with massive capital needs that they have, they have to go to markets to be able to do that. The equity markets are the same thing, you have to raise money to build.
To the reality of that is that you can't just take and circle investments and go if we are in the middle of warfare, which I'm not saying likely in any way, but the reality is is capital markets and capital continues to flow.
The best part ultimately then, and I didn't know this was a theme for our show, ultimately, stop trying to determine what that one main outcome is going to be.
I look at what I do all day. We have something called the asset allocation committee.
This asset allocation committee is made up of our thought leaders from the organization, where we think we are going to go from here. Many folks come on here and have chats with you. We have a policy committee that I chair that says, how are we going to allocate, what percentage of asset allocation are we going to allocate to? We have an investor management committee that I chair and they look at passive and active investments all around the world.
We do our utmost to think about where to allocate but the most important one is the policy committee saying this is that what we are going to have to fixed income, this is how much we are going to have to equity, this is how much we're going to have two alternatives and will change our allocations only a couple of points on the margin and I think that's the ultimate answer to these questions.
>> We will get back to your questions or Brad Simpson or market strategy and just a moment's time. As always, make sure you do your own research before making any investment decisions.
Now, let's get you updated on the markets.
We are having a look at TD's Advanced Dashboard, a platform designed for active traders available through TD Direct Investing.
Let's jump into the heat map function and get a few of the market movers here on the TSX 60.
Obviously today, we got a bit of a downdraft but nothing too dramatic in the energy and materials basis. We have seen a rally on oil in recent sessions, bit of a pause on the gold front. Financial zone showing some strength today, keeping us from a poor showing on the TSX Composite Index topline number. South of the border, let's check out the S&P 100, drill down into some of the names in the 100. Seeing Tesla in the middle taking a bullet territory on screen. 4.5% to the upside, Elon Musk posting on X before we headed into the weekend that Robo taxi, long-awaited for them, they will have some designs in August.
You can find more information on TD Advanced Dashboard by visiting TD.com/advanceddashboard.
Back with Brad Simpson, G. It is said TD Wealth. Another simple one. Once the potential market impact from the US presidential election?
>> Yeah, so maybe as a starting point, we published document every year called the year ahead. This year, it's called The Baker's Dozen, which is 13 things that we think are likely or possible.
So trump and the Republicans winning the election, if you look at what that scenario analysis is today, we are still in that same zone about 60% probability of trump winning and then you have to think about where you're going to be on the house and Senate. If he wins, it's a 90 to 95% probability that they win the Senate and 50-50 on the house.
Why I kind of share that, that's kind of our probability analysis right now, that probability analysis that we are doing, there would be other folks coming to similar scenarios to that hedging large pools of capital like we are doing.
If anything, what might surprise folks is that the surprise, the question probably should be, what would happen if Biden one, right? Because the likelihood that were markets trading on today, is trading the the Republicans win.
It's a discount mechanism. Going forward and saying what do we think the most likely outcome is going to be. So I think that has to be your starting point of thinking about this.
So if you look at it and Biden did win, you probably have a big rally off of that because it would be a surprise but it would be a surprise where you would go, ultimately, again, we are back to be agnostic, ultimately, this one is kind of why the selection is so interesting, well there's a lot of reasons why it's interesting, is markets like a known knowns. Just tell me what it is, I'll work with that. That's what market participants like.
Known knowns.
>> Whoever wins, they have been president before.
>> That's right.
So the second part of this is, I think, and it goes back to this is so that the house you. Then as an allocator of capital, if I was somebody concerned about this, I certainly have my concerns, my biggest concern with this is ultimately gaze I do believe and I have written this in a couple of different commentaries over the last few months that democracy might be on the ballot. That's a very different scenario. If that's what your concern is, there's would be a theme here. I think the reality is is that there could be more volatility in November than meets the eye.
There certainly could be more volatility than what the market is pricing right now.
5200 on the S&P, you can put options for free almost, very little hedging going on and shorting activity is pretty low as well.
That means they are inexpensive and so for me, that scenario I knocked out is a really good one.
And we can go into the potential between the two as well but I think the best way to prepare for that: make sure your running a well diversified investment portfolio with well allocated quality on your duration were government guaranteed side, make sure that you have some hedging going on in your fixed income component, same thing on your equity component and at the end of the day, make sure that you are going out and adding some commodity exposure to your portfolios.
And I think if you do those two things, and ultimately think about our scenario analysis is that is if the oh, is and you have the potential that the selection has, you are well-positioned for it, but if that doesn't happen, this has the potential to have less volatility than you think. Two different extremes.
>> Always a fascinating discussion.
Appreciate you dropping by and I look forward to the next time.
>> Thank you, Greg.
>> Our thanks to Brad Simpson, cheap all strata just with TD Wealth. As always, make sure you do your own research before making any investment decisions. if you don't have time to get your questions today, we will aim to get them into future shows. Stay tuned for tomorrow's program.
Colin Lynch, managing director and head of alternative investments with TD Asset Management will be here, you want to take your questions about real estate. You can get them in ahead of time. Just email MoneyTalkLive@TD.com. That's all the time we have the show today. Thanks for watching and will see you tomorrow.
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