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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, US inflation continuing to call. We are going to discuss what it means for the Fed and interest rates. Chris Whelan from TD Securities joins us.
And in today's WebBroker education segment,Nugwa Haruna's going to show us how you can keep on top of earnings using 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 you get our guest today, let's get you an update on the markets. We'll start here at home on Bay Street with the TSX Composite Index.
Triple digit gain of 112 points, little more than half a percent. Among the most actively traded names on the TSX today include B2Gold.
It was in negative territory earlier, starting to push itself modestly positive.
At four bucks and $0.
10 per share, it's up to Penny's. It Manulife out with his latest earnings.
Seems to be fairly well received by the street. At 2629, you got Manulife up 1.6%.
South of the border, another read on US inflation, the market seems to be taking it in stride. They are fine with what they saw. Got the S&P 500 up 19 point, almost half a percent.
Check in on the tech heavy NASDAQ. Got the NASDAQ up a little more than half a percent.
Disney reported after the bells yesterday, a bit of a mixed order between streaming subscribers coming off but they are also announcing they are planning on addingsome new services in Canada. They're going to raise the price on the service you've already got with an added add to your as well with the lower Montreat cost.
At 90 bucks and change, that stock is up almost 3 1/2%.
And that's your market update.
While US consumer prices did take a little higher in July, the increase was a little less than Wall Street was expecting. What does it all mean for the Federal Reserve?
Are they going to hold on rates going forward? Joining us now to discuss is Chris Whelan, Senior Canada rates strategist and had a portfolio and ESG strategy at TD Securities. Great to have you back.
>> Thanks for having me.
>> It was an interesting Prince. He got the take-up at the street was fully anticipating that take-up. They are seeming to take it in stride.
>> I think this is business as usual.
A keep calm and carry on kind of print today.
The bond market is not reacting too much to it which makes sense because it's fairly in line.
there is really nothing to take away there. I think it's we are… We have talked about this in the past, that we are kind of in a way to and see mode, data dependent.
We are in a global manufacturing recession right now and we are waiting for services to tip over. We are leaning towards that they do. That still has to materialize.
So I think that's the more important thing is we go forward in the coming months.
We don't have additional hikes expected in Canada or the US right now.
We feel comfortable with that for the next month or twowithholding that view, and then I think we would have to have some surprise data, basically a revitalization in the economy into the fall, winter, for us to kind of change our stance on that, that they are not done, that they could hike more. I think that's what we are waiting to see but manufacturing is certainly not doing well. She said it manufacturing recession. You said you're waiting for services to roll over.
>> Yes.
>> The central banks of said once they get to where they want to be with rates, they will hold them there for a very long time.
But if we start seeing this kind of weakness in manufacturing and if it falls to the services, how long can they stay at these restrictive levels?
>> I think… I can't speak for them, but I think when they say they want to hold them there for a long time, I think they are trying to be careful of not sending a message that they are going to relax interest rates too soon and then drive consumer behaviour. If they say, we are going to go back to lower rates next year, don't worry… >> Spend away… >> Spend away, I think what they are trying to do is take a tough stance on inflation and it's really just a tough stance but I think at the end of the day, you have a bond market that has refused to not praise Satan cuts shortly after.
It's a 2024 story. We will see. The cycle has been constantly pricing cuts and then time goes by and we move out the cuts.
This time, I would say that our conviction that it's getting a little stickier now, that this is the problem in rates, we are getting more confident in that story.
There is still a risk there.
We are more biased to hikes being done in North America than we are to further hikes coming but basically impossible to be fully confident that it's truly over.
But we are getting more and more confident that we are reaching the end.
>> We are going to hear from the Fed in terms of an actual rate decision next month in September, but we are going to get Jackson Hole in the coming weeks. It used to be to me, we would talk about in financial journals. It would come and go.
But last year, Jerome Powell laid it down, it was a short speech, very stern. The markets didn't like what he had to say.
There was a lot of tough talk. Are you watching for anything of that degree at Jackson Hole this year?
>> Last year, you had just started rate hikes, and rate hikes take time. There is a lag effects.
So Jackson Hole required a tough message.
This year, they are completely in the middle.
Generally, as a rough rule of thumb, you can have 18 months until the impact of rate hikes really can transpire into the market.
So we are at month nine, 10, 11 now, so you're not quite there in terms of the legs having enough time to come into play.
So I think Jackson Hole is very hard for them for how they deal with the messaging and I think this Jackson Hole, we are settling in, settling into a more neutral set up.
However, if there is a surprise at Jackson Hole, it's probably market moving because we are probably, the market is probably anticipating less of a surprise reaction.
So not ready for that.
time will tell. But I think that we won't have seen enough data come through for them to have confidence on a cutting narrative or anything, so a small risk to additional hikes, hiking rhetoric.
>> On top of the inflation print from today, estay the court kind of thing, we have been getting jobs out of the states as well. I think I might've been away but I try to keep on top of the headlines. The added jobs but they were a bit softer than what was expected.
Was that the case?
>> There's a bit of softening on the job front, we had softening in Canada as well.
I think at the end of the day, when you look at the headlines, we are seeing layoffs, we are seeing large companies announced layoffs. And then it's just a matter of time before it shows up in the data.
We do not see companies announcing large hiring plans.
We are seeing equilibrium, converging towards equilibrium on supply and demand in the wage market and we are getting there. So I think, at the end of the day, there is a phenomenon going on right now in corporate earnings. Revenue growth is strong but earnings growth is fairly mediocre.
What does that tell you? It tells you that companies, even though you, it kind of feels like companies are just passing on price increases, just hoping that we will accept them, they actually aren't fully at capacity on the true increase on their expenses. At the end of the day, when you can't grow earnings and you are growing revenue, it shows you that you have an expense issue. So that is layoff pressure, that is job pressure.
So then there is a lag to that.
Then you have the layoffs and the wage inflation pressure down, so it's another lagged effect.
so we are waiting that out. And the job data is not… It is not strengtheningand the headlines are layoff tilted and the revenue versus earnings, that, the revenue growth isn't much higher than the earnings growth. That gap is not a good fundamental if wages are going to go from the basis which goes back to the leg to argument that the pain and softness will come from the rate hikes.
We are in that middle zone.
We are getting closer… We are now past the midpoint so we are getting mid-to-late now in terms of the lag and so we are getting closer to game time of cuts becoming a discussion and so time will tell and I think the risk to that is a rejuvenation of the economy into the fall, that would be a surprise.
>> Great insights as always. We'll get to your questions about the economy and interest rates for Chris Whelan in just a moment's time. And a reminder that you can get in touch with us any time. Just email moneytalklive@td.com or fill out the viewer response box under the video player on WebBroker.
Right now, let's get you updated on the top stories in the world of business and take a look at how the markets are trading.
Cineplex is reporting better-than-expected revenue and profit for the second quarter.
It says the current quarter is reaping the benefits of Barbie and often higher.
The big draw for the movie theatre chain in the spring was the Mario Brothers film.
And total revenues were up some 21% compared to last year. The results were a solid beat.
Cineplex is down 4%. Cineplex it did pretty release the box office figures last month.
Softer sales of home-improvement and sporting goods weighing on Canadian Tire at its most recent quarter.
Retailers have seen household should their spending away from discretionary items towards the essentials in the face of these higher consumer prices.
That theme and weakness played out across several of Canadian Tire's banners including marks and sport check.
That stock down right now almost 5%. Also want to take a look at shares of Disney.
They are in the spotlight today. The company unveiling plans to hike the monthly cost of its streaming service, Disney plus. The stock is up 3 1/2%.
Their latest quarterly results were mixed but these plans to raise subscription costs and introduce and add tiered service in several markets, including here in Canada, do appear to be well received at least today by the street. Disney at 90 bucks and $0.55, making some gains. Check in on the market, we will start here in Toronto with the TSX Composite Index.
We had a triple digit game fading a little bit but still impulsive territory. 90 points are about half percent.
And south of the border, as investors take a look at that inflation print, try to figure out what it means going forward, you're up 17 points on the S&P 500, little more than 1/3 of a percent.
We are back with Chris Whelan from TD Securities, take your questions about the economy and interest rates. We talked about the fat off the top the show. A viewer wants to know if the BOC is now done with its rate hikes after that jobs report coming in weaker than expected?
>> I think as we basically alluded to a few moments ago, the Bank of Canada for us it is more likely than not done. So it's basically what would it take for them to hike again?
A core measure to look at is the three month average of core.
You're in the 3 to 4 range right now.
If you started moving above for, so the three month trend in core inflation was getting before again, that would be a problem.
But we are not forecasting that near term but that would be a risk. And GDP growth getting above 2% and being not just driven by inventories again but something more broad driven.
And so right now, we don't see either of those happening near term. So for us, it's more, will they be hiking near term?
We don't think so. Could they hike in the winter, in the late fall to winter? It's absolutely possible.
We think not and it's, like I said earlier, a rejuvenation or revitalization of economic growth coming in the fall, not our base case, but that's the risk to them hiking again. But we are more confident than not that they will not be hiking.
>> I've heard the case made that although the central banks at the beginning of the rate hiking cycle warned about pain, right, this is going to cause a slowdown in the economy, the jobless rate to take up, some people have sat in the chair, maybe even you, and talked about the robust immigration levels we have in this country so maybe you don't get a recession on the headline numbers but per capita you see a pullback on economic activity. I have to imagine the BOC is trying to figure out if it what it is doing is working has to take that into account.
>> GDP per capita is certainly under pressure, which is an issue.
However, when they are driving their interest rate policy, the overall GDP and inflation rate are the drivers for the policy. That kind of becomes the GDP per capita, it really becomes more of a political issue because that's how people are likely going to feel. And I think that that becomes politically driven and can drive federal government policy going forward as they seek to address that.
I think at the end of the day, the pain, I think having inflation run away on us is not helpful and so the pain certainly was not ideal but I think, to Bank of Canada's credit, this is a global phenomenon too.
We are all trying to deal with this globally. So even when you have central-bank coordination globally trying to fight it, it's more helpful than if they US… > You don't want to go it alone.
>> If the US decided, hey, we are not hiking, we would all be in trouble because then they would be pushing things further.
I think at the end of the day, the painis an unfortunate consequence of what is going on and I think that that is why they want to be careful. That is why they are not hiking more.
Quite frankly, that's why they are not hiking more and trying to be cautious and that's why they pause originally.
I think two addresses underlying concerns of we don't, they don't want to impose more pain than is necessary.
Some pain is necessary.
They are hoping to get the right amount of pain.
>> The right amount of pain.
Let's move on to a question about the United States.
If you are wants to know, talking about that US debt downgrade, how serious an issue is this?
I think a lot of powerful people dismissed it day of, but which we think?
>> I saw both. I saw excitement from some people thinking that that's going to push interest rates higher for the US government. I saw people dismissing it. I think one thing that I've always remembered from managing fixed income portfolios in the past is the if some of your largest holdings are downgraded, that makes your average rating your portfolio lower now, and so the US government treasury is going to be very large holding in the market. So that can impose overall portfolio credit rating issues where fixed income portfolio managers are not as able to hold high-yield bonds or as many triple B Mullins. And so I think it's a much bigger problem as, over time, if this continues, where your largest debt issuers are downgraded, I don't think it puts pressure on US treasuries. At the end of the day, they are so good to be strongly held and props to your assets and still going to be held and treated that way.
It's just a can actually way more on the smaller names and less credit, higher credit rating. That's where I really see the impact and when he saw that downgrade happen, you saw credit spreads go wider and you saw a backtrack and risks. So it's kind of that spillover to risk. At the end of the day, they are still very highly rated and so this is not contagion, this is not unable to pay bills.
This is fairly orderly markets. I just think it's a gradual, you had to put a slight increase in the risk environment for the credit names. That's what the market did.
And then otherwise, we carry on.
>> This is the backdrop. I think yesterday, we know there is a lot of treasury issuance coming and I think there have been some concerns from people about how the market will receive that.
Apparently yesterday it was well received.
Are you keeping an eye on that?
>>I think the one thing that people might be pointing to for issuance concerns about the treasury, we would push back and say there is also a strong demand-side and there is a demand-side that's actually going to be stronger than we've had it in years past and that factors that yields are high. So you have tensions, life insurance and, quite frankly, just the overall retirement investment community.
For the first time in a very long time, you can actually be conservative again.
Pensions can meet their obligations, can meet their obligations and walk in with high quality, low risk assets for 20, 30 years now.
Insurance companies can do the same. These have to go by bridges and look into alternative assets were you had 6040 funds having 60% equity and 40% bonds moving to you 8020 because bonds didn't have the return.
So now you have this return to 6040. You have tensions wanting to lock-in these long-term yields because it meets their obligations.
And the insurance side is the same thing.
So you're gonna have this return back to the bond market for higher yields and so I think, and additionally, on top of that, last year, the negative fund flow environment bonds, and this year it's positive fund flow environment bonds.
You have an overall attitude to put money into bonds. And so when you look at the demand supply, economics 101.
Demand and supply. The supply curve, there may be supply concerns, but I don't think people are appreciating how much the demand curve has shifted and how much long-term buyers of bonds are going to be coming back if they are, when they are making that argument.
That would be my pushback. Time will tell who is right or wrong there. But I do think at the end of the day there is very healthy demand for bond product across the car.
> That make sense to me as well.
We have another question here.
This one is about currency. What impact will the recent Fed hikes we have seen have on the Canadian dollar?
>> The Canadian dollar, we've had the same story for the last year.
It seems range bound.
The Bank of Canada started hiking again, we kind of realize that immigration was probably being a bit more helpful on the economic growth side.
Immigration can have a short-term economic demand problem and put pressure upwards and then over time, supply and demand are restoredby the immigration filling in the supply side and helping on the demand side.
Back on the Canadian dollar on strong footing. At the end of the day, you have both economies at near peak rates and we think that the US will cut first.
But when they are cutting, that's also going to be a risk off environment.
So the US dollar is going to be benefiting from that safety aspect in a risk off environment but than the US dollar is going to be weakening relative to the Canadian dollar because if they cut first on interest rates, that's our view.
If they cut first on interest rates, that's weaker for the US dollar.
The safe Haven drives a higher. There's a lot of sideways phenomenon going on in our relationship that we really see the Canadian currency versus the US. I think it's very much continued and we are talking about micro moves give or take care.
>> That interesting set. As always, at home, make sure you do your own research before making any investment decisions. we will get back to your questions for Chris Whelan on the economy and interest rates in just a moment sign. And a reminder that you can get in touch with us any time.
Just email moneytalklive@td.com.
Now let's get our educational segment of the day.
earnings season can be a busy time in the markets and if you want to stay on top of the news, WebBroker can help.
Joining us now with Moore's new arena, Senior client education instructor at TD Direct Investing.
let's talk about how WebBroker can help us in earning season.
>> So yes, with earnings season, investors can go into a record check online to see what companies are announcing her, with the estimates are, with the airport.
Even during the off-season, companies are still releasing earnings announcements so let's open to WebBroker and see where I can find this if I'm interested.
Once I'm in WebBroker, when you click on research. Under markets, I'm going to go Index. Once I come here, this brings me to a large calendar. There are a number of names that I find if I'm interested.
I find things like dividends, splits, ratings changes.
When want to focus on today will be earnings announcements.
So in the Canadian space, you will notice there's all Canadian flags here, we have 109 companies that have their earnings announcements today.
You will notice as I scroll down though that most of these are still blank and that's because typically when these companies are making these earnings announcements, they will do this before the markets open or after the markets close and they do this it to prevent the volatility that might happen if they don't hit these estimates orif they exceed the estimates. So you see what the estimates are. You will see how the company performed in terms of its earnings the previous year and, finally, you will be able to see how many analysts are actually tracking this company and have made a projection when it comes to the earnings.
Now keep in mind right now, we are looking at today's date. You can always look as far out as you like.
But once again, you can toggle over between Canadian and US market so let's talk delivered to the US space and once here, once again, when we go earnings announcements, you will see that it's almost 3 times as much as the Canadian space.
365 companies have earnings announcements today. A few more things you can do here.
You can actually filter this table. Maybe you want to filter it by some of the analyst estimates.
You see companies have estimates as high as 100 and something. But if you want to dig a little deeper about each of these companies, say you pay, we will go to the third one here, you can click directly on the company. Once you have that, you can click on overview. This will bring you to the page of that specific company. Now to get some more details about this company, maybe look at some previous quarters as well or previous years when it comes to the earnings.
Once you're on this page, you simply will go where it says earnings.
So once I'm here, I see some additional details about Alibaba.
I see what the last four quarters have been when it comes to earnings, I see for quarter estimates and, if I want to dig a little deeper, I go and look at annual numbers and take a look and see how the company has done in the last four years and how it's projected to do in the next quarter.
>> Alright, Nugwa. Obviously, earnings can be a catalyst for price action for a name.
What if somebody wanted to be notified in advance?
How do you do that?
> For investors who think that based on analysis they have done, they think the company may have earnings that may be exceeded with the estimate are, they may decide they want to go ahead and decide they want to purchase the stock before the earnings announcements. To do that, investors can utilize the alerts feature within WebBroker.
So sticking with the company that we have on screen, I'm simply going to click where it says set alerts.
So once you click on their, there are numerous alerts that you can set within WebBroker and you can have these sent to an email address or a cell phone.
We are going to click on the events tab here.
Once here, I'm going to scroll down and you will find an investor can be notified once quarterly earnings have been announced. You can check that off. But most quarterly, you can be notified days before an announcement is made. So once again, and investors able to stay on track and decide to buy or potentially sell a company depending on where they think the direction of the earnings will go.
You can decide to be notified as far as two weeks before or a week before the earnings announcement.
So it helps you stay on track when it comes to the companies you are interested in.
> Alright, great stuff as always, Nugwa.
Thanks that.
>> Thanks for having me.
>> Nugwa Haruna, Senior client education instructor at TD Direct Investing.
And make sure to check out the learning centre in WebBroker for more educational videos, live, interactive master classes and upcoming webinars.
Now before you get back to her questions about the economy and interest rates for Chris Whelan, a reminder of how you can get in touch with us.
Do you have a question about investing or what's driving the markets?
Our guests are eager to hear what's on your mind, so send us your questions.
There are two ways you can get in touch with us.
You can send us an email anytime at moneytalklive@td.com or you can use the question box right below the screen here on WebBroker. Just write in your question and hit send.
We'll see if one of our guests can get you the answer right here at MoneyTalk Live.
We are back with Chris Whelan. We are take your questions about the economy and interest rates. This one is coming in the past couple minutes.
What's your view on provincial bonds?
>> Provincial bonds is one of my favourite sectors.
It's a great sector. In terms of provincial bonds, the… The large part of was going to drive provincial bonds is going to beregistration.
In terms of our view on race, we see yields lower next year from where they are now, so that would drive a positive expectation. That's our view on interest rates.
Then, on the index component of parental bonds is the spread component.
So the additional amount of yield that you get for Government of Canada bonds.
When you are looking at five-year and under provincial bonds, the spread is quite small and it reflects that they are the government as well and there's not a lot of risk of default and given that they are fairly highly rated entities.
And there is a lot of demand for short and product. As you go further at the curve, you have tenure and 30 year provincial bonds and that's where the majority of the issuance is and it applies in Canada.
When we look at what drives that spread and that relative performance,, that performance differential.
the barometer of credit spreads or just looking at US IG investment grade credit spreads if one was to Google that. That general credit spread move, which really is extremely highly correlated to the S&P 500, so you have an extremely highly correlated relationship. How the S&P 500 going to move is going to drive credit spreads and provincial debt spreads are extremely correlated to that.
They just are much more muted.
They are much more muted.
The higher grade credit is, the less volatile it is to moves and risk. So provincial bonds are on the lower end of the spectrum but you can still get some movement from that.
In general, if we are expecting the economy to soften and we are expecting interest rates to have an impact on the economy, then we would expect equity is to be pressured lower as a result and then we would expect creditspreads to be pressured higher so we would expect provincial bonded credit spreads to be a higher.
That's in a riskier scenario and we've had some recent optimism and I believe some rallying credit is about to come in. So generally speaking, we would expect to see some weakness from the credit side's perspective on the provincial bonds and strong performance on the right side. At the end of the day, it's a fairly high quality bond product and a lot of the return is going to be rates driven.
>> Interesting stuff on provincial bonds there.
Let's take another question. This one about the state of the housing market.
What do you think about housing?
>> The housing market, I think the housing market has kind of been following more or less as we expected.
We expected bond yields were lower in the spring market. You had lower bond yields, like those six month over rate of change in the spring market this year in spring market dries activity and there was a feeling of the Bank of Canada pausing and so that generated a strong spring market.
>> It sort of got things going, right?
>> That we came in as expected and then we had the Bank of Canada kind of saying they paused.
That really helped that continue on. Then they hiked again. I think that really, quite frankly, scared people. I think that took someone that was ready to make a purchase and put them into the back seat or put them from willing to bid strongly on a house to bid a little bit lower.
I think you just change the overall attitude and we've seen a little bit of, we see that strength that was in the spring market dissipated. That makes a lot of sense. Rates are higher now to you.
We have higher five year fixed, it for your fix, to your face, higher variables.
The naturally put the pressure on the affordability and that takes some strength out of the housing market. Now, as we look forward to the spring market next year, that's exactly what we kind of said last year for the spring market.
We expect bond yields to be lower and then we expect a strong immigration story and a generally strong bond market to provide support.
So unless there is not risk that we've talked about already today, the revitalization of the economy into September, October, where that really gets interest rates up, that might scare the spring market away but for now, our view is lower bond yield meaning lower mortgage rates next spring market.
>> The supply side of that equation, we are hearing a lot about the fact that Canada's housing agency and others warned that we are not building enough to meet the demands of the housing market.
>> I don't know how they're going to meet needs of building some of these houses one, given how hard it is to build and trying to find the materials, the material stress, the labour difficulties. But the one issue I see you, that I've seen this point rates before and I do agree with it is that when you are pushing interest rates so high, it can push off projects from actually moving forward because it's difficult to fund these projects and also the cost environment is high and some of these projects almost seem nonviable and they might have a tendency for some builders were projects to wait it out which is the opposite of what we need and that might cause more problems later on.
time will tell.
But at the same time, when you build, you need more supply. That means you need more demand for building, for labour to build, there is more demand for building supplies. That can be cost pressure as well.
So just because you decided to build more houses doesn't mean that the build cost and go up. It's very difficult.
>> Interesting stuff. This is US focus.
What is the state of the US consumer?
Credit card debt is hitting new highs.
Total credit card debt in the states is above $1 trillion now.
>'s been hitting new highs for a while.
At the end of the day, this is exactly the anecdote there kind of leads us to have more confidence. Manufacturing is in a global recession and now we look to services. When you start seeing credit cards growing, that does mean that there is more spending room. Credit cards are growing, that mean spending is going into the economy and the economy is going to look stronger than it really is.
>> Stronger on borrowing.
>> Stronger on not exactly the highest-quality form of borrowed money.
Because credit card debts are expensive.
Credit card rates are high.
That, when we look at the anecdote or it kind of tells you that the lag impact of higher rates is working its way through the market.
People are having to be creative with how they sustain their living.
I think as humans, we want to sustain the lifestyle that we have and we do everything we can to sustain and then, eventually, kind of… It becomes less easy to sustain.
It's less easy to continuously pick up that second job or to cut here and there.
Once you've done everything you can, then eventually be slow. So I think that anecdote on the credit cards is exactly the same as we are mid to late cycle on mid-to-late innings on the legate coming in to hit the economy and then the pain transpiring and people running out of an ability to keep going.
>> We will get back to your questions for Chris Whelan on the economy and interest rates in just a moment's time.
As always, make sure you do your own research before making any investment decisions.
and a reminder that you can get in touch with us at any time.
Do you have a question about investing or what's driving the markets?
Our guests are eager to hear what's on your mind, so send us your questions.
There are two ways you can get in touch with us.
You can send us an email anytime at moneytalklive@td.com or you can use the question box right below the screen here on WebBroker. Just write in your question and hit send.
We'll see if one of our guests can get you the answer right here at MoneyTalk Live.
[music] We are taking a look at TD's Advanced Dashboard. This is a platform designed for active traders available through TD Direct Investing. This is the heat map function.
It gives us a view of the market movers.
We are taking a look at the TSX 60, screening by price and volume.
What are we seeing here? We are seeing some green on the screen. Algonquin, we will get to Algonquin first.
Algonquin Power down 1 1/3%.
Coming up the lives of the session. Still negative. News coming out of the main considering a sale or to a renewable energy business and the CEO has resigned.
But a pressure there. Shopify in the top corner after some money losing sessions with a modest gain of about 2% and then the deeper green on the screen as the Brookfield company, whether it's Brookfield Co. or asset management, they are solidly in positive territory. It's not only the TSX 60, there are a number of screens you can put on the heat map.
Let's take a look at the S&P 100 and see what we are seeing in the space. And right now, as far as this heat map is going, you see Disney. Disney is taking up some real estate there at the bottom with a solid 4%.
As we said, the earnings were mixed, but people seem to like the idea what they were doing with the streaming service trend, bringing ad-supported services to markets including ours. Tesla making some gains today as well.
You see some of the automakers including Ford and General Motors are at their.
For down almost 4 and General Motors approaching 85% deficit on the day.
For more information on TD Advanced Dashboard, go to TD.com/Advanced Dashboard.
We are back now with Chris Whelan from TD Securities, we are talking interest rates, we are talking economy. Another question here from a viewer.
Our Canadian policies around immigration and carbon taxes inflationary?
>> Immigration first. Immigration can be near term inflationary and then longer-term, there is an equilibrium restored from the new immigration creating new labour to restore and adjust for the supply and demand.
It's a near-term yes, a long term no.
And then on the carbon side, it does, the carbon taxes due increase the price of gasoline and so the carbon, however, over time, if the carbon taxes don't increase, then it has no impact on inflation. But while they are adding… >> Your comparison, your at stasis.
>> Yes. As they are adding carbon taxes it is inflationary, as they stop adding them, or they leave it as is, it's not inflationary.
So yes to both near term. Not so much longer-term.
> Okay.
That's probably an issue that will show up at some point in political discussions.
Recession watch.
When we will see a slowdown? This is the thing. We have been talking about the looming recession for a long time.
>> Yes.
Will we see a recession? Well, we already have the manufacturing sector there so it's when will we see the services recession to give us the overall recession? And so I think, anecdotally, I guess you've already kind of talked about this today, anecdotally, I feel like I'm starting to see indications of services in terms of hotels, hotel bookings further out, they seem to be less than they were when something is a look at, different demands from talking to different sources, whether it's supply stores, these are small sample sizes but I do try to get as many anecdotes.
>> Canadian tire was seeing the spending go down.
>> Before anecdotes were mixed.
I've seen that anecdotes are getting more tilted towards the services slowing coming and like you said, if there is an 18 month leg, it's not a science, just a figurative rule, say 18 month lag,for interest rate hikes to go through, we are now month 10, 11.
So we are getting closer to the end and so we should see that. So when do we see the recession come through?
We think we see it next year and the question becomes, do we see it show up as early as January or do we see it show up or in the spring?
I think that time will tell but we would expect to see it before the summer.
>> Chris, always a great conversation.
Always a pleasure having you. Look forward to next time.
> Thank you, great.
> Our thanks you Chris Whelan, Senior Canada rates strategist and had a portfolio and ESG strategy at TD Securities. Of course, at home, do your own research before you make any investment decisions.
We'll be back tomorrow with an update on the markets and some of our best interviews of the week.
Then on Monday's show, Tarik Aeta, global healthcare analyst at TD Asset Management will be answering your questions about healthcare stocks. If you want to get a head start with your questions, email moneytalklive@td.com. that's all the time we have the show today. Thanks for watching. We will see you tomorrow.
[music]
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, US inflation continuing to call. We are going to discuss what it means for the Fed and interest rates. Chris Whelan from TD Securities joins us.
And in today's WebBroker education segment,Nugwa Haruna's going to show us how you can keep on top of earnings using 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 you get our guest today, let's get you an update on the markets. We'll start here at home on Bay Street with the TSX Composite Index.
Triple digit gain of 112 points, little more than half a percent. Among the most actively traded names on the TSX today include B2Gold.
It was in negative territory earlier, starting to push itself modestly positive.
At four bucks and $0.
10 per share, it's up to Penny's. It Manulife out with his latest earnings.
Seems to be fairly well received by the street. At 2629, you got Manulife up 1.6%.
South of the border, another read on US inflation, the market seems to be taking it in stride. They are fine with what they saw. Got the S&P 500 up 19 point, almost half a percent.
Check in on the tech heavy NASDAQ. Got the NASDAQ up a little more than half a percent.
Disney reported after the bells yesterday, a bit of a mixed order between streaming subscribers coming off but they are also announcing they are planning on addingsome new services in Canada. They're going to raise the price on the service you've already got with an added add to your as well with the lower Montreat cost.
At 90 bucks and change, that stock is up almost 3 1/2%.
And that's your market update.
While US consumer prices did take a little higher in July, the increase was a little less than Wall Street was expecting. What does it all mean for the Federal Reserve?
Are they going to hold on rates going forward? Joining us now to discuss is Chris Whelan, Senior Canada rates strategist and had a portfolio and ESG strategy at TD Securities. Great to have you back.
>> Thanks for having me.
>> It was an interesting Prince. He got the take-up at the street was fully anticipating that take-up. They are seeming to take it in stride.
>> I think this is business as usual.
A keep calm and carry on kind of print today.
The bond market is not reacting too much to it which makes sense because it's fairly in line.
there is really nothing to take away there. I think it's we are… We have talked about this in the past, that we are kind of in a way to and see mode, data dependent.
We are in a global manufacturing recession right now and we are waiting for services to tip over. We are leaning towards that they do. That still has to materialize.
So I think that's the more important thing is we go forward in the coming months.
We don't have additional hikes expected in Canada or the US right now.
We feel comfortable with that for the next month or twowithholding that view, and then I think we would have to have some surprise data, basically a revitalization in the economy into the fall, winter, for us to kind of change our stance on that, that they are not done, that they could hike more. I think that's what we are waiting to see but manufacturing is certainly not doing well. She said it manufacturing recession. You said you're waiting for services to roll over.
>> Yes.
>> The central banks of said once they get to where they want to be with rates, they will hold them there for a very long time.
But if we start seeing this kind of weakness in manufacturing and if it falls to the services, how long can they stay at these restrictive levels?
>> I think… I can't speak for them, but I think when they say they want to hold them there for a long time, I think they are trying to be careful of not sending a message that they are going to relax interest rates too soon and then drive consumer behaviour. If they say, we are going to go back to lower rates next year, don't worry… >> Spend away… >> Spend away, I think what they are trying to do is take a tough stance on inflation and it's really just a tough stance but I think at the end of the day, you have a bond market that has refused to not praise Satan cuts shortly after.
It's a 2024 story. We will see. The cycle has been constantly pricing cuts and then time goes by and we move out the cuts.
This time, I would say that our conviction that it's getting a little stickier now, that this is the problem in rates, we are getting more confident in that story.
There is still a risk there.
We are more biased to hikes being done in North America than we are to further hikes coming but basically impossible to be fully confident that it's truly over.
But we are getting more and more confident that we are reaching the end.
>> We are going to hear from the Fed in terms of an actual rate decision next month in September, but we are going to get Jackson Hole in the coming weeks. It used to be to me, we would talk about in financial journals. It would come and go.
But last year, Jerome Powell laid it down, it was a short speech, very stern. The markets didn't like what he had to say.
There was a lot of tough talk. Are you watching for anything of that degree at Jackson Hole this year?
>> Last year, you had just started rate hikes, and rate hikes take time. There is a lag effects.
So Jackson Hole required a tough message.
This year, they are completely in the middle.
Generally, as a rough rule of thumb, you can have 18 months until the impact of rate hikes really can transpire into the market.
So we are at month nine, 10, 11 now, so you're not quite there in terms of the legs having enough time to come into play.
So I think Jackson Hole is very hard for them for how they deal with the messaging and I think this Jackson Hole, we are settling in, settling into a more neutral set up.
However, if there is a surprise at Jackson Hole, it's probably market moving because we are probably, the market is probably anticipating less of a surprise reaction.
So not ready for that.
time will tell. But I think that we won't have seen enough data come through for them to have confidence on a cutting narrative or anything, so a small risk to additional hikes, hiking rhetoric.
>> On top of the inflation print from today, estay the court kind of thing, we have been getting jobs out of the states as well. I think I might've been away but I try to keep on top of the headlines. The added jobs but they were a bit softer than what was expected.
Was that the case?
>> There's a bit of softening on the job front, we had softening in Canada as well.
I think at the end of the day, when you look at the headlines, we are seeing layoffs, we are seeing large companies announced layoffs. And then it's just a matter of time before it shows up in the data.
We do not see companies announcing large hiring plans.
We are seeing equilibrium, converging towards equilibrium on supply and demand in the wage market and we are getting there. So I think, at the end of the day, there is a phenomenon going on right now in corporate earnings. Revenue growth is strong but earnings growth is fairly mediocre.
What does that tell you? It tells you that companies, even though you, it kind of feels like companies are just passing on price increases, just hoping that we will accept them, they actually aren't fully at capacity on the true increase on their expenses. At the end of the day, when you can't grow earnings and you are growing revenue, it shows you that you have an expense issue. So that is layoff pressure, that is job pressure.
So then there is a lag to that.
Then you have the layoffs and the wage inflation pressure down, so it's another lagged effect.
so we are waiting that out. And the job data is not… It is not strengtheningand the headlines are layoff tilted and the revenue versus earnings, that, the revenue growth isn't much higher than the earnings growth. That gap is not a good fundamental if wages are going to go from the basis which goes back to the leg to argument that the pain and softness will come from the rate hikes.
We are in that middle zone.
We are getting closer… We are now past the midpoint so we are getting mid-to-late now in terms of the lag and so we are getting closer to game time of cuts becoming a discussion and so time will tell and I think the risk to that is a rejuvenation of the economy into the fall, that would be a surprise.
>> Great insights as always. We'll get to your questions about the economy and interest rates for Chris Whelan in just a moment's time. And a reminder that you can get in touch with us any time. Just email moneytalklive@td.com or fill out the viewer response box under the video player on WebBroker.
Right now, let's get you updated on the top stories in the world of business and take a look at how the markets are trading.
Cineplex is reporting better-than-expected revenue and profit for the second quarter.
It says the current quarter is reaping the benefits of Barbie and often higher.
The big draw for the movie theatre chain in the spring was the Mario Brothers film.
And total revenues were up some 21% compared to last year. The results were a solid beat.
Cineplex is down 4%. Cineplex it did pretty release the box office figures last month.
Softer sales of home-improvement and sporting goods weighing on Canadian Tire at its most recent quarter.
Retailers have seen household should their spending away from discretionary items towards the essentials in the face of these higher consumer prices.
That theme and weakness played out across several of Canadian Tire's banners including marks and sport check.
That stock down right now almost 5%. Also want to take a look at shares of Disney.
They are in the spotlight today. The company unveiling plans to hike the monthly cost of its streaming service, Disney plus. The stock is up 3 1/2%.
Their latest quarterly results were mixed but these plans to raise subscription costs and introduce and add tiered service in several markets, including here in Canada, do appear to be well received at least today by the street. Disney at 90 bucks and $0.55, making some gains. Check in on the market, we will start here in Toronto with the TSX Composite Index.
We had a triple digit game fading a little bit but still impulsive territory. 90 points are about half percent.
And south of the border, as investors take a look at that inflation print, try to figure out what it means going forward, you're up 17 points on the S&P 500, little more than 1/3 of a percent.
We are back with Chris Whelan from TD Securities, take your questions about the economy and interest rates. We talked about the fat off the top the show. A viewer wants to know if the BOC is now done with its rate hikes after that jobs report coming in weaker than expected?
>> I think as we basically alluded to a few moments ago, the Bank of Canada for us it is more likely than not done. So it's basically what would it take for them to hike again?
A core measure to look at is the three month average of core.
You're in the 3 to 4 range right now.
If you started moving above for, so the three month trend in core inflation was getting before again, that would be a problem.
But we are not forecasting that near term but that would be a risk. And GDP growth getting above 2% and being not just driven by inventories again but something more broad driven.
And so right now, we don't see either of those happening near term. So for us, it's more, will they be hiking near term?
We don't think so. Could they hike in the winter, in the late fall to winter? It's absolutely possible.
We think not and it's, like I said earlier, a rejuvenation or revitalization of economic growth coming in the fall, not our base case, but that's the risk to them hiking again. But we are more confident than not that they will not be hiking.
>> I've heard the case made that although the central banks at the beginning of the rate hiking cycle warned about pain, right, this is going to cause a slowdown in the economy, the jobless rate to take up, some people have sat in the chair, maybe even you, and talked about the robust immigration levels we have in this country so maybe you don't get a recession on the headline numbers but per capita you see a pullback on economic activity. I have to imagine the BOC is trying to figure out if it what it is doing is working has to take that into account.
>> GDP per capita is certainly under pressure, which is an issue.
However, when they are driving their interest rate policy, the overall GDP and inflation rate are the drivers for the policy. That kind of becomes the GDP per capita, it really becomes more of a political issue because that's how people are likely going to feel. And I think that that becomes politically driven and can drive federal government policy going forward as they seek to address that.
I think at the end of the day, the pain, I think having inflation run away on us is not helpful and so the pain certainly was not ideal but I think, to Bank of Canada's credit, this is a global phenomenon too.
We are all trying to deal with this globally. So even when you have central-bank coordination globally trying to fight it, it's more helpful than if they US… > You don't want to go it alone.
>> If the US decided, hey, we are not hiking, we would all be in trouble because then they would be pushing things further.
I think at the end of the day, the painis an unfortunate consequence of what is going on and I think that that is why they want to be careful. That is why they are not hiking more.
Quite frankly, that's why they are not hiking more and trying to be cautious and that's why they pause originally.
I think two addresses underlying concerns of we don't, they don't want to impose more pain than is necessary.
Some pain is necessary.
They are hoping to get the right amount of pain.
>> The right amount of pain.
Let's move on to a question about the United States.
If you are wants to know, talking about that US debt downgrade, how serious an issue is this?
I think a lot of powerful people dismissed it day of, but which we think?
>> I saw both. I saw excitement from some people thinking that that's going to push interest rates higher for the US government. I saw people dismissing it. I think one thing that I've always remembered from managing fixed income portfolios in the past is the if some of your largest holdings are downgraded, that makes your average rating your portfolio lower now, and so the US government treasury is going to be very large holding in the market. So that can impose overall portfolio credit rating issues where fixed income portfolio managers are not as able to hold high-yield bonds or as many triple B Mullins. And so I think it's a much bigger problem as, over time, if this continues, where your largest debt issuers are downgraded, I don't think it puts pressure on US treasuries. At the end of the day, they are so good to be strongly held and props to your assets and still going to be held and treated that way.
It's just a can actually way more on the smaller names and less credit, higher credit rating. That's where I really see the impact and when he saw that downgrade happen, you saw credit spreads go wider and you saw a backtrack and risks. So it's kind of that spillover to risk. At the end of the day, they are still very highly rated and so this is not contagion, this is not unable to pay bills.
This is fairly orderly markets. I just think it's a gradual, you had to put a slight increase in the risk environment for the credit names. That's what the market did.
And then otherwise, we carry on.
>> This is the backdrop. I think yesterday, we know there is a lot of treasury issuance coming and I think there have been some concerns from people about how the market will receive that.
Apparently yesterday it was well received.
Are you keeping an eye on that?
>>I think the one thing that people might be pointing to for issuance concerns about the treasury, we would push back and say there is also a strong demand-side and there is a demand-side that's actually going to be stronger than we've had it in years past and that factors that yields are high. So you have tensions, life insurance and, quite frankly, just the overall retirement investment community.
For the first time in a very long time, you can actually be conservative again.
Pensions can meet their obligations, can meet their obligations and walk in with high quality, low risk assets for 20, 30 years now.
Insurance companies can do the same. These have to go by bridges and look into alternative assets were you had 6040 funds having 60% equity and 40% bonds moving to you 8020 because bonds didn't have the return.
So now you have this return to 6040. You have tensions wanting to lock-in these long-term yields because it meets their obligations.
And the insurance side is the same thing.
So you're gonna have this return back to the bond market for higher yields and so I think, and additionally, on top of that, last year, the negative fund flow environment bonds, and this year it's positive fund flow environment bonds.
You have an overall attitude to put money into bonds. And so when you look at the demand supply, economics 101.
Demand and supply. The supply curve, there may be supply concerns, but I don't think people are appreciating how much the demand curve has shifted and how much long-term buyers of bonds are going to be coming back if they are, when they are making that argument.
That would be my pushback. Time will tell who is right or wrong there. But I do think at the end of the day there is very healthy demand for bond product across the car.
> That make sense to me as well.
We have another question here.
This one is about currency. What impact will the recent Fed hikes we have seen have on the Canadian dollar?
>> The Canadian dollar, we've had the same story for the last year.
It seems range bound.
The Bank of Canada started hiking again, we kind of realize that immigration was probably being a bit more helpful on the economic growth side.
Immigration can have a short-term economic demand problem and put pressure upwards and then over time, supply and demand are restoredby the immigration filling in the supply side and helping on the demand side.
Back on the Canadian dollar on strong footing. At the end of the day, you have both economies at near peak rates and we think that the US will cut first.
But when they are cutting, that's also going to be a risk off environment.
So the US dollar is going to be benefiting from that safety aspect in a risk off environment but than the US dollar is going to be weakening relative to the Canadian dollar because if they cut first on interest rates, that's our view.
If they cut first on interest rates, that's weaker for the US dollar.
The safe Haven drives a higher. There's a lot of sideways phenomenon going on in our relationship that we really see the Canadian currency versus the US. I think it's very much continued and we are talking about micro moves give or take care.
>> That interesting set. As always, at home, make sure you do your own research before making any investment decisions. we will get back to your questions for Chris Whelan on the economy and interest rates in just a moment sign. And a reminder that you can get in touch with us any time.
Just email moneytalklive@td.com.
Now let's get our educational segment of the day.
earnings season can be a busy time in the markets and if you want to stay on top of the news, WebBroker can help.
Joining us now with Moore's new arena, Senior client education instructor at TD Direct Investing.
let's talk about how WebBroker can help us in earning season.
>> So yes, with earnings season, investors can go into a record check online to see what companies are announcing her, with the estimates are, with the airport.
Even during the off-season, companies are still releasing earnings announcements so let's open to WebBroker and see where I can find this if I'm interested.
Once I'm in WebBroker, when you click on research. Under markets, I'm going to go Index. Once I come here, this brings me to a large calendar. There are a number of names that I find if I'm interested.
I find things like dividends, splits, ratings changes.
When want to focus on today will be earnings announcements.
So in the Canadian space, you will notice there's all Canadian flags here, we have 109 companies that have their earnings announcements today.
You will notice as I scroll down though that most of these are still blank and that's because typically when these companies are making these earnings announcements, they will do this before the markets open or after the markets close and they do this it to prevent the volatility that might happen if they don't hit these estimates orif they exceed the estimates. So you see what the estimates are. You will see how the company performed in terms of its earnings the previous year and, finally, you will be able to see how many analysts are actually tracking this company and have made a projection when it comes to the earnings.
Now keep in mind right now, we are looking at today's date. You can always look as far out as you like.
But once again, you can toggle over between Canadian and US market so let's talk delivered to the US space and once here, once again, when we go earnings announcements, you will see that it's almost 3 times as much as the Canadian space.
365 companies have earnings announcements today. A few more things you can do here.
You can actually filter this table. Maybe you want to filter it by some of the analyst estimates.
You see companies have estimates as high as 100 and something. But if you want to dig a little deeper about each of these companies, say you pay, we will go to the third one here, you can click directly on the company. Once you have that, you can click on overview. This will bring you to the page of that specific company. Now to get some more details about this company, maybe look at some previous quarters as well or previous years when it comes to the earnings.
Once you're on this page, you simply will go where it says earnings.
So once I'm here, I see some additional details about Alibaba.
I see what the last four quarters have been when it comes to earnings, I see for quarter estimates and, if I want to dig a little deeper, I go and look at annual numbers and take a look and see how the company has done in the last four years and how it's projected to do in the next quarter.
>> Alright, Nugwa. Obviously, earnings can be a catalyst for price action for a name.
What if somebody wanted to be notified in advance?
How do you do that?
> For investors who think that based on analysis they have done, they think the company may have earnings that may be exceeded with the estimate are, they may decide they want to go ahead and decide they want to purchase the stock before the earnings announcements. To do that, investors can utilize the alerts feature within WebBroker.
So sticking with the company that we have on screen, I'm simply going to click where it says set alerts.
So once you click on their, there are numerous alerts that you can set within WebBroker and you can have these sent to an email address or a cell phone.
We are going to click on the events tab here.
Once here, I'm going to scroll down and you will find an investor can be notified once quarterly earnings have been announced. You can check that off. But most quarterly, you can be notified days before an announcement is made. So once again, and investors able to stay on track and decide to buy or potentially sell a company depending on where they think the direction of the earnings will go.
You can decide to be notified as far as two weeks before or a week before the earnings announcement.
So it helps you stay on track when it comes to the companies you are interested in.
> Alright, great stuff as always, Nugwa.
Thanks that.
>> Thanks for having me.
>> Nugwa Haruna, Senior client education instructor at TD Direct Investing.
And make sure to check out the learning centre in WebBroker for more educational videos, live, interactive master classes and upcoming webinars.
Now before you get back to her questions about the economy and interest rates for Chris Whelan, a reminder of how you can get in touch with us.
Do you have a question about investing or what's driving the markets?
Our guests are eager to hear what's on your mind, so send us your questions.
There are two ways you can get in touch with us.
You can send us an email anytime at moneytalklive@td.com or you can use the question box right below the screen here on WebBroker. Just write in your question and hit send.
We'll see if one of our guests can get you the answer right here at MoneyTalk Live.
We are back with Chris Whelan. We are take your questions about the economy and interest rates. This one is coming in the past couple minutes.
What's your view on provincial bonds?
>> Provincial bonds is one of my favourite sectors.
It's a great sector. In terms of provincial bonds, the… The large part of was going to drive provincial bonds is going to beregistration.
In terms of our view on race, we see yields lower next year from where they are now, so that would drive a positive expectation. That's our view on interest rates.
Then, on the index component of parental bonds is the spread component.
So the additional amount of yield that you get for Government of Canada bonds.
When you are looking at five-year and under provincial bonds, the spread is quite small and it reflects that they are the government as well and there's not a lot of risk of default and given that they are fairly highly rated entities.
And there is a lot of demand for short and product. As you go further at the curve, you have tenure and 30 year provincial bonds and that's where the majority of the issuance is and it applies in Canada.
When we look at what drives that spread and that relative performance,, that performance differential.
the barometer of credit spreads or just looking at US IG investment grade credit spreads if one was to Google that. That general credit spread move, which really is extremely highly correlated to the S&P 500, so you have an extremely highly correlated relationship. How the S&P 500 going to move is going to drive credit spreads and provincial debt spreads are extremely correlated to that.
They just are much more muted.
They are much more muted.
The higher grade credit is, the less volatile it is to moves and risk. So provincial bonds are on the lower end of the spectrum but you can still get some movement from that.
In general, if we are expecting the economy to soften and we are expecting interest rates to have an impact on the economy, then we would expect equity is to be pressured lower as a result and then we would expect creditspreads to be pressured higher so we would expect provincial bonded credit spreads to be a higher.
That's in a riskier scenario and we've had some recent optimism and I believe some rallying credit is about to come in. So generally speaking, we would expect to see some weakness from the credit side's perspective on the provincial bonds and strong performance on the right side. At the end of the day, it's a fairly high quality bond product and a lot of the return is going to be rates driven.
>> Interesting stuff on provincial bonds there.
Let's take another question. This one about the state of the housing market.
What do you think about housing?
>> The housing market, I think the housing market has kind of been following more or less as we expected.
We expected bond yields were lower in the spring market. You had lower bond yields, like those six month over rate of change in the spring market this year in spring market dries activity and there was a feeling of the Bank of Canada pausing and so that generated a strong spring market.
>> It sort of got things going, right?
>> That we came in as expected and then we had the Bank of Canada kind of saying they paused.
That really helped that continue on. Then they hiked again. I think that really, quite frankly, scared people. I think that took someone that was ready to make a purchase and put them into the back seat or put them from willing to bid strongly on a house to bid a little bit lower.
I think you just change the overall attitude and we've seen a little bit of, we see that strength that was in the spring market dissipated. That makes a lot of sense. Rates are higher now to you.
We have higher five year fixed, it for your fix, to your face, higher variables.
The naturally put the pressure on the affordability and that takes some strength out of the housing market. Now, as we look forward to the spring market next year, that's exactly what we kind of said last year for the spring market.
We expect bond yields to be lower and then we expect a strong immigration story and a generally strong bond market to provide support.
So unless there is not risk that we've talked about already today, the revitalization of the economy into September, October, where that really gets interest rates up, that might scare the spring market away but for now, our view is lower bond yield meaning lower mortgage rates next spring market.
>> The supply side of that equation, we are hearing a lot about the fact that Canada's housing agency and others warned that we are not building enough to meet the demands of the housing market.
>> I don't know how they're going to meet needs of building some of these houses one, given how hard it is to build and trying to find the materials, the material stress, the labour difficulties. But the one issue I see you, that I've seen this point rates before and I do agree with it is that when you are pushing interest rates so high, it can push off projects from actually moving forward because it's difficult to fund these projects and also the cost environment is high and some of these projects almost seem nonviable and they might have a tendency for some builders were projects to wait it out which is the opposite of what we need and that might cause more problems later on.
time will tell.
But at the same time, when you build, you need more supply. That means you need more demand for building, for labour to build, there is more demand for building supplies. That can be cost pressure as well.
So just because you decided to build more houses doesn't mean that the build cost and go up. It's very difficult.
>> Interesting stuff. This is US focus.
What is the state of the US consumer?
Credit card debt is hitting new highs.
Total credit card debt in the states is above $1 trillion now.
>'s been hitting new highs for a while.
At the end of the day, this is exactly the anecdote there kind of leads us to have more confidence. Manufacturing is in a global recession and now we look to services. When you start seeing credit cards growing, that does mean that there is more spending room. Credit cards are growing, that mean spending is going into the economy and the economy is going to look stronger than it really is.
>> Stronger on borrowing.
>> Stronger on not exactly the highest-quality form of borrowed money.
Because credit card debts are expensive.
Credit card rates are high.
That, when we look at the anecdote or it kind of tells you that the lag impact of higher rates is working its way through the market.
People are having to be creative with how they sustain their living.
I think as humans, we want to sustain the lifestyle that we have and we do everything we can to sustain and then, eventually, kind of… It becomes less easy to sustain.
It's less easy to continuously pick up that second job or to cut here and there.
Once you've done everything you can, then eventually be slow. So I think that anecdote on the credit cards is exactly the same as we are mid to late cycle on mid-to-late innings on the legate coming in to hit the economy and then the pain transpiring and people running out of an ability to keep going.
>> We will get back to your questions for Chris Whelan on the economy and interest rates in just a moment's time.
As always, make sure you do your own research before making any investment decisions.
and a reminder that you can get in touch with us at any time.
Do you have a question about investing or what's driving the markets?
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[music] We are taking a look at TD's Advanced Dashboard. This is a platform designed for active traders available through TD Direct Investing. This is the heat map function.
It gives us a view of the market movers.
We are taking a look at the TSX 60, screening by price and volume.
What are we seeing here? We are seeing some green on the screen. Algonquin, we will get to Algonquin first.
Algonquin Power down 1 1/3%.
Coming up the lives of the session. Still negative. News coming out of the main considering a sale or to a renewable energy business and the CEO has resigned.
But a pressure there. Shopify in the top corner after some money losing sessions with a modest gain of about 2% and then the deeper green on the screen as the Brookfield company, whether it's Brookfield Co. or asset management, they are solidly in positive territory. It's not only the TSX 60, there are a number of screens you can put on the heat map.
Let's take a look at the S&P 100 and see what we are seeing in the space. And right now, as far as this heat map is going, you see Disney. Disney is taking up some real estate there at the bottom with a solid 4%.
As we said, the earnings were mixed, but people seem to like the idea what they were doing with the streaming service trend, bringing ad-supported services to markets including ours. Tesla making some gains today as well.
You see some of the automakers including Ford and General Motors are at their.
For down almost 4 and General Motors approaching 85% deficit on the day.
For more information on TD Advanced Dashboard, go to TD.com/Advanced Dashboard.
We are back now with Chris Whelan from TD Securities, we are talking interest rates, we are talking economy. Another question here from a viewer.
Our Canadian policies around immigration and carbon taxes inflationary?
>> Immigration first. Immigration can be near term inflationary and then longer-term, there is an equilibrium restored from the new immigration creating new labour to restore and adjust for the supply and demand.
It's a near-term yes, a long term no.
And then on the carbon side, it does, the carbon taxes due increase the price of gasoline and so the carbon, however, over time, if the carbon taxes don't increase, then it has no impact on inflation. But while they are adding… >> Your comparison, your at stasis.
>> Yes. As they are adding carbon taxes it is inflationary, as they stop adding them, or they leave it as is, it's not inflationary.
So yes to both near term. Not so much longer-term.
> Okay.
That's probably an issue that will show up at some point in political discussions.
Recession watch.
When we will see a slowdown? This is the thing. We have been talking about the looming recession for a long time.
>> Yes.
Will we see a recession? Well, we already have the manufacturing sector there so it's when will we see the services recession to give us the overall recession? And so I think, anecdotally, I guess you've already kind of talked about this today, anecdotally, I feel like I'm starting to see indications of services in terms of hotels, hotel bookings further out, they seem to be less than they were when something is a look at, different demands from talking to different sources, whether it's supply stores, these are small sample sizes but I do try to get as many anecdotes.
>> Canadian tire was seeing the spending go down.
>> Before anecdotes were mixed.
I've seen that anecdotes are getting more tilted towards the services slowing coming and like you said, if there is an 18 month leg, it's not a science, just a figurative rule, say 18 month lag,for interest rate hikes to go through, we are now month 10, 11.
So we are getting closer to the end and so we should see that. So when do we see the recession come through?
We think we see it next year and the question becomes, do we see it show up as early as January or do we see it show up or in the spring?
I think that time will tell but we would expect to see it before the summer.
>> Chris, always a great conversation.
Always a pleasure having you. Look forward to next time.
> Thank you, great.
> Our thanks you Chris Whelan, Senior Canada rates strategist and had a portfolio and ESG strategy at TD Securities. Of course, at home, do your own research before you make any investment decisions.
We'll be back tomorrow with an update on the markets and some of our best interviews of the week.
Then on Monday's show, Tarik Aeta, global healthcare analyst at TD Asset Management will be answering your questions about healthcare stocks. If you want to get a head start with your questions, email moneytalklive@td.com. that's all the time we have the show today. Thanks for watching. We will see you tomorrow.
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