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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 discuss what's next for the US Federal Reserve. Chair Jerome Powell again driving the point home over the weekend, he is in no rush to cut rates. MoneyTalk's Anthony Okolie going to have a look at what auto sales data is saying about the state of the economy.
And in today's WebBroker education segment, Hiren Amin is going to show us the different order types on Advanced Dashboard.
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.
The TSX Composite Index at a 221 point deficit, more than a full percent the downside.
Jerome Powell talking about taking their time. They don't need to rush to cut rates.
There has been a lot of processing in terms of strategies in the market. Scott the US bucket higher, gold lower and oil lower today. The most actively traded names are the minors. Kinross down 2% at 725 per share. Some energy names are liking as well, including Baytex energy.
$3.99, down 1.7%.
Taking points off the top line number.
South of the border, you are seeing bond yields move higher in the wake of a few things in the states. The S&P 500 right now down 23 points, about half a percent.
Nothing too dramatic. Let's check in on the tech heavy NASDAQ. It was just barely in positive territory but it's been losing that over the morning session. Down 100 points now, more than half a percent.
One name that was to the upside earlier in the session and it's still hanging onto those gains is and video. The street still likes it. A lot of potential going forward with a IN what they have to offer the world in terms of chips. The stock is up 3 1/2%, bucking the market trend.
And that's your market update.
Following another red-hot US jobs report, Fed chair Jerome Powell is once again saying he is in no rush to cut interest rates. Joining us now to discuss, Chris Whelan, senior Canada rate strategist and had a portfolio and ESG strategy at TD Securities. Great to see you.
>> Thanks for having me on.
>> We have a few things to weigh here.
We had hot US jobs, Jerome Powell driving the point home that there is no rush. What we make of it all?
>> I think what you just said is what we make of it all. They are in no rush.
They are not in no rush, but they would like to see more of the same and not see any indications that the economy is taking off again and inflation is going to go higher.
They would likes more room for safety, and I think that Jerome Powell's interview over the weekend that was on TV, I think he indicated exactly that. He would like to see more of the same.
When they see more of the same, that sets up the ability to cut as we head into the summer. At TD Securities, we have that set up for May. There are risks that that was a bit later.
It's not an if, it's a win, and we just need to see some stability and I think they would like to see inflation or reign around these levels and remains contained in that would give them the confidence to cut.
As long as you don't higher and inflation in a meaningfully or scary way, I think cuts are set up for the back half of the year. If not as soon as May.
To be determined.
>> There does seem to be a logic. One of the key passages from the 60 Minutes interview where Jerome Powell was driving the point home yesterday about waiting, is that the economy is strong. We got the strong jobs report.
We should dig into that. Inflation is cooling. That doesn't seem to be indication for them now that they have to rush.
At these levels, things are holding in. Is it surprising, particularly the jobs report?
>> I think at the end of the day, economies take longer than we think to turn down and I think that's what we are going through.
The Bank of Canada two, they don't want to impose any more interest rate pain on the economy than they need to and then pay the price for that in 2025 with an overly weak economy that wasn't necessary.
We have discussed this on the show before and I think the cycle is a little bit more confusing than past cycles that we are used to because right now, central banks globally are in restrictive territory.
They are in highly restrictive territory because inflation was much higher than we've been used to for the past decade plus.
So we are turning from restrictive to neutral which we achieve in a good economy. You can't have an economy that's accelerating at a rapid pace but have a healthy economy is still cut rates because you are moving towards neutral and I think that's exactly how you can have this sort of Goldilocks scenario this year where it's good for risk assets and you can of stocks doing well and you can have them cutting rates and that be okay.
I think what they want to do is just make extra sure and be extra careful before they do that so as to not regret it and have interest rates having to go higher next year and also not regret cutting them sooner and imposing more pain on the economy on a go forward basis. I think that's what they're trying to tread the line on and so far it makes a lot of sense and I think central banks have a pretty good game plan at the moment.
>> Does this scenario, you said it's not a matter of if but when, but if the rate cuts, little later than the market was thinking heading into this year, does that mean you will get fewer cuts and 24, this idea of getting back to a neutral place, do you think the bank knows what neutral is and what it's going to take to get there?
>> I don't think anyone knows what neutral is.
I like to think we have a good idea.
We had a 0% interest rate economy for a long time and now we have 5% overnight rates in North America. There is a lot of distance between zero and five, that's 500 basis points.
What if they had to go to 7%? That's not our base case at all but there is a lot of variability here on where neutral is.
But again, to be frank, I don't think anyone knows what neutral is.
>> That one is going to take some thinking through for the central banks as we push through the year.
We've been talking about the resilient US economy despite… You said it can take time for the economy to turn. It seems like a different story here in Canada. We have felt the turn. It's been tepid. How do the two economies compared to each other?
>> I think it's tricky to stack the two against each other.
They seem to be, Canada seems to be weaker at certain times and the US seems to be stronger and vice versa.
I think at the end of the day, we had TD Securities expect more cuts in the next 12 months by the Fed then we do the Bank of Canada. That's our house view.
Time will tell. There are some near-term risks to the Canadian economy.
The Bank of Canada might cut in July. We are happy with that call. I think they're really in this past, this holding pattern in markets where we need to see how the data evolves over the coming months and a few months from now it will tell us where both economies are on a relative basis. So far, relatively speaking, there is no reason to expect that this cut cycle should be nearly in tandem, is just the magnitude.
We expect a bit more magnitude in the US and Canada over the coming months.
>> I find that a really intriguing idea that there is more magnitude for rate cuts as of the board of despite them having a stronger economy than ours.
Do we have a sticky inflation problem in this country? What the Bank of Canada is trying to do is to bring inflation back down to two.
>> I think at the end of the day, we see the Fed being aggressive in their move back towards neutral which we see at least 200 beeps slower than here's so our views of neutral are around 3% to should give or take so we see the Fed moving aggressively on the way back there and we think the Bank of Canada will take more time to move back there.
Taking a step back 12 months from now, our overnight rates at the BOC and the Federal Reserve going to be lower? We would say yes.
>> Great start the program.
We will get back your questions 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.
McDonald's is handy in a rare miss on the top line for its most recent quarter.
The fast food giant says international sales growth is slowing in key markets such as China, India and the Middle East.
There was also a drop in foot traffic for McDonald's US stores during the final months of 2023.
Right now, the stock is down about 4 1/2%.
We have more news of layoffs today in the tech sector. This time it's the parent company of Snapchat. It says is going to cut 10% of its global workforce, representing more than 500 jobs. It's the latest round of cuts at Snap in recent years, including a 20% staff reduction in 2022.
That stock down about 3 1/2%. Let's take a look at shares of Estée Lauder. Not much on the move to the upside today.
They are holding onto their gains, up about 14%. The cosmetic giant is cutting up to 5% of its workforce as sales in China continue to lag expectations. Estée Lauder says net sales fell some 7% in the Asia-Pacific region in its most recent quarter.
That's the reason for the job cuts. 153 bucks and change per share. Let's take a look at the markets, we will start on Bay Street with the TSX Composite Index. We are 217 points on the hole on the top line number, gold and oil under pressure, the strongest bucket and rising bond yields.
What's it doing to the trade south of the border? Let's check in on the S&P 500.
Traders have to reassess some of their expectations, perhaps even hopes for one rate cuts will come. You're down 21 points, a little less than half a percent.
We are back with Chris Whelan, taking your questions about the economy and interest rates. Let's get to the first one.
A viewer wants to know your outlook for the loonie.
>> The teams outlook for the loonie is a bit, you have a couple of scenarios you have to take into account when you look at that. The US dollar, when the Fed is going to be more aggressively cutting, that is going to be initially week for the US dollar.
If we end up getting a deeper recession scenario than what we think were that we rebound out of one quickly, but if we get a deeper recession in the markets and the rate hikes has been harmful to the economy, then we go into risk off which is bad for stocks and there is a return back to the US dollar.
Weakness for the US dollar would be moving into the summer and then if the markets had a risk off event or the economy started falling following this stronger or positive growth state, then you would see a return to strengthen the dollar.
You kind of have a couple of scenarios. If we can have a soft landing, it's a weak dollar story. If you have a hard landing, that's a stronger dollar story or a firm dollar story. Those are both the angles that we are working on right now in terms of our base case.
>> Let's talk a bit about the energy sector. We talk about the loonie, obviously central bank policy has been driving the bus for the past while, but oil.
Does it have any importance anymore for our currency?
>> Over time, it has less importance. At the end of the day, strong oil prices will be a benefit to our economy and that will be part of the equation which is not a debated driver in the currency anymore.
That can come and go but it's less of a concern but it's still net it's still helpful, strong oil prices are helpful for the Canadian economy.
>> Let's take another question from the audience.
A viewer wants to know how concerned we should be about consumer debt. We hear a lot about of the resilience of the consumer and a lot about the debt they are carrying as well.
>> I think this is exactly why, as we discussed a few minutes ago, central banks need to start cutting. When they are in restrictive territory, moving back towards neutral, so consumer that doesn't become a a substantial problem.
Consumer debt is always going to be a risk to the economy and high interest rates are going to exacerbate the riskiness of that issue. So that's why it's really important that we don't stay at these restrictive levels for too long and that's the balance of the central banks are balancing now and hopefully they can cut without inflation going higher and cut that down sooner so we can get to the higher interest rate problem in 2025 a little bit better.
>> It's a fine calibration to make.
You can look at credit card data, balances. You can look at balances in banks. Is that a tough calibration for a central bank, trying to make different moves in the economy and trying to pick a move where if we keep these rates, it's going to stress out the consumer?
>> I think the good news is that they do really overstress the consumer. They can cut all the way back to zero.
They've got a lot on their side that they can do to stimulate the economy and help that out.
I think we don't need to worry about that right now because like we noted, the economic data is holding up. It may not be great. It's in between not great to pretty decent, it kind of fluctuates month-to-month.
But I think that's a fine balance that we are dealing with here and I think that's a long-term argument why interest rates are not going to stay at 5% levels because the consumer debt levels and the government debt levels make it very hard to sustain that. A lot has to go perfectly right for us to not have a material risk come from higher interest rate levels. That's the balancing act. I think if they stay here for a lot longer, then absolutely the consumer debt problem is going to be a material issue.
>> Another question now. This is the big one, we have created around a bit.
Are we going to get that recession in North America this year? It almost feels like we've been talking about it for so long that people are disappointed we haven't gotten it yet. I'm sort of happy we haven't.
>> Recession is no good. No one wants recession. Will we get a recession?
We do think it will come. It's not penciled in as a large recession. It's a smaller recession.
In nominal terms, you can actually still be growing.
GDP in real terms is inflation-adjusted so sometimes when you have growth nominally and you grow the economy in nominal terms not adjusted for inflation but adjusted for inflation it's shrunk so sometimes that feels a bit weird and you don't quite notice it as well. I think with the real?
Is what kind of job losses are we going to see? That's the real downside to the recession. So a mild recession or self landing, we might get by with tepid job losses so time will tell and I think a soft landing is better for everyone.
But yes, our base case calls for a small recession this year. Daphne talk about the different numbers that go into a calculation, economy is growing but adjusted for interest rates, when you adjusted for As well, there have been interesting discussions here in Canada about how GDP might be flatlined or growing just a little bit but when adjusted for capita, we but actually be in a recession. What do you make of all those numbers?
>> The per capita is more of a political metric because the Bank of Canada needs to manage it on the overall basis whereas the per capita, if you have an economy that is persistently and recession state per capita, your general population is not going to feel very happy and that becomes a political issue.
I think the per capita measure is a political item of the day.
Maybe even if we are not speaking to it in per capita terms, that can explain why people are unhappy. So we definitely struggle with that. However, Andrew Kelvin looking at global and Canadian rates, he made a great point to me the other day. He said when you increase immigration initially, you are not necessarily having, all the new people brought in are not necessarily operating at their maximum capacity, most efficient capacity. It takes several years for them to be employed at their maximum potential or much higher potential so sometimes there is a near-term hit that comes from a large spike in immigration numbers and there is so we can see as productivity increases from immigration as they settle in, we can get the return.
If we can see it for the future, hopefully that's what it is.
>> Interesting stuff. As always, make sure you do your own research before making any investment decisions.
we are going to get back your questions for Chris Whelan on interest rates and the economy 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.
In today's education segment, we are having look at TD's Advanced Dashboard, platform designed for active traders available through TD Direct Investing.
Hiren Amin, Senior client education instructor with TD Direct Investing has this look at some of the different types of orders available on Advanced Dashboard.
>> Hello and welcome to today's education hit. We are going to be talking about our platform Advanced Dashboard today.
Specifically, we are going to look at how to place conditional orders on our trading platform. Those are ones we are going to look at how to do profit taking orders and ones on how you can limit losses.
Conditional orders in general adds a certain level of automation to trading.
It takes the emotions out a little bit.
Let's hop into our platform today, advanced dashboard, we will bring up the order entry tool and show you how to do this.
I've got Advanced Dashboard pulled up and you can build any screen.
For me to get to the order entry, I'm going to pick a security. I'm on the markets tab over here. You can see all the major indices we have. I'm going to focus on one of the Dow 30 companies. He could see the Dow Jones here. We are going to expand that list to populate the companies. What I'm going to pick today is Nike.
Let's open up the bubble over here and enter our by order. With this order set up, and I'm going to minimize the index as well, so what we are going to do here is we want to add both to a profit-taking order as well as a loss minimizing order.
We could do either or and I will show you how to do that. First of all, we are looking to buy Nike.
We will skew this down to 10 shares.
We will put her to $100 against that price. There is a function that is attached profit loss exits. Once you do that, it's going to open up an additional set of orders you can input.
It is up to you to decide whether you just want to do a profit-taking order, so click the top half, or you can just simply click the bottom have to do a stop loss which is going to minimize losses or both.
Philip show you how you can do just the one first and we call this simply a one triggers another order. Let's do a profit loss order. Let's assume we get to buy Nike at 100 bucks and we want to put in order to sell that at a profit. If he gets up to 110, we want to take our profits and take that $10 off the table there.
By the same token as well, we are also going to do what we call a first triggers another order in which we are going to attach a stop loss.
What we see here is we are going to get this order here first box and then it's either going to get us our profit-taking order or stop loss.
The way stoploss works is we are going to set a trigger price. Let's say this is a downside in case the stock falls. If it falls to $90, alert me or get this order activated and at the very least I want to minimum price of we will go a just a dollar below, we will call it $89.
At the very least, getting $89 has my limit price once his order gets activated in the $19 threshold.
We can buy the order and set these up together. Whichever direction it goes in first, we will either take our profits or get out of the stock and lock in our losses at the $10 threshold.
Or $11 in this case.
And that is a look at how you can place these profit and minimize loss taking orders using the Advanced Dashboard platform.
It's especially useful and I would highly recommend or have traders consider this especially during heightened market volatility or to give you the peace of mind if you happen to be away relaxing on a sunny beach, you know those orders are going to be taken care of for you and your taking some time off the markets. And that's it for our hit for today.
>> Our thanks to Hiren Amin, Senior client education instructor with TD Direct Investing.
And make sure to check out the learning centre in WebBroker for more educational videos, live, interactive master classes and upcoming webinars.
Now, before you get back to your questions about the economy for Chris Whelan, a reminder of how you can get touch with us.
Do you have a question about investing or what's driving the markets?
Our guests are eager to hear what's on your mind, so send us your questions.
There are two ways you can get in touch with us.
You can send us an email anytime at moneytalklive@td.com or you can use the question box right below the screen here on WebBroker. Just write in your question and hit send.
We'll see if one of our guests can get you the answer right here at MoneyTalk Live.
Okay, we are back with Chris Whelan, taking your questions about the economy and interest rates.
People want to know about the health of the Canadian housing market. What are you thinking here?
>> I think the health of the Canadian housing market is not disastrous. It's holding up pretty well with the amount of increases in interest rates that we've been seeing. I think that the marginal buyer in the housing market is probably waiting until the central bank decides we won't get any more rate hikes in interest rates come down. We already are seeing, we have already seen the bond market and the five-year area, some rates have moved quite a bit and I have, you can get mortgage rates at fixed herbs around 5% are sometimes better. So when you have that condition, coming off of sixes and mid sixes and rates that look pretty high, I think that brings back more confidence to the housing market overall. I think once interest rates are down, the stress tests decreases the amount you can borrow when rates are high and the reverse is true. I think when you look ahead at our interest rate forecast, and you put together the the housing market hasn't fallen off a cliff so far, I think that there will be a soft landing for the housing market and prices going back up in the coming years. So I think that no, we don't have any overly large concerns on the housing market on our side.
>> You raise a great point. We have become such keen watches of central banks and they have paused but not cut, but if you look at the bond market and the price of five-year fixed mortgages off the five year bond yield, the bond market is giving us about 100 points of easing since the fall. We often overlook that when we think about parts of the economy and how they borrow?
>> I think if you are sitting there waiting for the BOC to cut rates before feeling better, you could look to five-year fixed mortgages and see where they've been coming in because the five-year bond market and be on anticipates where rates are going and it provided a bit of an easing factor already.
I think that's just as important to look at for mortgages. So I think I'm surprised maybe that it has an increase more so far with this market. It's a bit early to tell.
That may be just people overall really need a signal from the Bank of Canada to say, we are cutting now, the storm is over.
So I think maybe that all remain psychological.
We have strong immigration and what is considered low levels of inventory in general so that she keep his balance.
>> Here's another audience question, turning RI south of the border. The viewer wants to know, and he worries about the treasury issuance in the states this year?
>> A little bit of worry.
Not a huge worry but a little bit of a worry.
I think that the bond market has already priced in a bit of that. See can actually look at treasury bonds versus interest rates to get a feel for the impact that government bond issuance is going to be because it impacts the treasury bond yields.
You can already see in there that the market has priced the sin, that being the price above it, that being said, we have a view that the yield curve is going to move steeper in North America and it is basically we expect cuts to happen that bring the front and lower and then we expect heavier issuance to weigh on longer-term bond yields, tenant 30 year, so that's deepens out the yield curve so the implication from higher issuance by the US government is steeper yield curves and so part of that is already priced in, part of that should be priced in as the curve become steeper and talking about the U.S. Treasury side, the government of Canada has shifted to issuing more risk in the bond market, more in the 30 year sector.
Canada is going to feel that this year and we don't think that's priced in as much as the US has price for them. So we see the US yield curve moving steeper. In terms of issuance and concerns around that, those would be top of mind and they would be translating to steeper bond curves.
>> Interesting set. We have another question about divergence between our central banks. How divergent do you think the BOC and the Fed will get?
>> I think magnitude is really tough to call at this point. How divergent will they get?
12 months, 200 beefs expected out of the Fed and 150 beeps from the Bank of Canada is that the 50 beep divergence but we expect Canada to edge up afterwards. We expect the Fed to cut more first and then we expect Canada to cut to a similar neutral rate just a little bit later.
There's a bit of a lead leg there. If you look out a year and 1/2 from now, I don't think they are going to be that divergent.
>> It's just a matter timeline. We are going to get back to your questions for Chris Whelan on interest rates in the economy and just moments 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.
Let's talk new vehicle sales in the United States.
They slowed in January. Bit of a December hangover and cold weather keeping car and truck shoppers away from dealership lots.
Anthony Okolie is taking a look at TD Economics's view on the numbers for 2024.
>> New vehicle sales in January in the US came in below forecasts. Likely a pullback from what the strong holiday sales that we saw in December has great mention. We saw colder than expected weather across much of the United States in the middle of the month, that combined to hold consumers back in January.
The pull forward into December may have also been boosted by continuing affordability challenges in the market has buyers likely look for deals and incentives to offset some of those higher car prices.
Now, the US car sales pullback in January by more than 5% month over month to about 15 million annualized units coming in below consensus estimates. When you look at the unadjusted sales volumes, just over 1 million units or nearly 3% above year ago levels. Looking at the average daily selling rate, it came out around 43,000 cars sold over 25 days, that's down from the roughly 43000 Daily Rate in January of last year.
This marks the first daily selling rate drop in year-over-year terms in 16 months.
When we break it down by type of vehicles, passengers sales grew 1.4% year-over-year, meanwhile light trucks rose just over 3% on a year-over-year basis. Like trucks accounted for about 80% of last month's sales.
That's roughly equal to its share in January 2023.
After two years of outside constraints, US vehicle sales growth were more consistent last year, the best year of sales since 2019. The average transaction price only fell by 2.4% in 2023 as demand remained pretty solid and recovery incentives spelling help to offset the need for price concessions to motivate buyers.
When we look at some of the top sellers in 2023 across America, Americans maintain their love affair with full-sized pickup trucks. They took the top three spots, led by Ford F-Series as well as Chevrolet Silverado.
The Toyota RAV4 SUV came in fourth spot.
Despite slowing demand for EVs in 2023, Tesla Model Y had a huge year, taking the fifth spot.
>> Vehicles, as you were saying, they are pricier than they were the before the pandemic. It's a big purchase that people often financed with debt.
Their expectations of rate cuts this year.
He put all that together, what is TD Economics think about the sales outlook?
>> They see the 2024, they expected to be more positive for light vehicle sales.
They are seeing continued improvements in supply, rising incentives and real income growth, all of that is expected to support sales this year.
TD Economics believes that the start of monetary easing for the first time since the start of the pandemic could also improve vehicle affordability for Americans.
Now, it's unlikely to be a smooth ride as many of these improvements are expected to be slowly introduced but TD Economics anticipate a more positive trend going forward.
>> Interesting stuff. Thanks for that.
>> My pleasure.
>> MoneyTalk's Anthony Okolie.
Now, let's get you an update on the markets.
We are jumping back into TD's Advanced Dashboard, platform designed for active traders available through TD Direct Investing.
This is the heat map function, giving us a view of the market movers. We will start the TSX 60, screen by Price and volume.
It's a tough day out there. Wish we get started? The energy space. The price of crude is pulling back today. Got some big names like Enbridge down more than a full percent, trapped down almost 2%. Not much happening in the financials either.
Technology also getting hit..Shopify down about 2%. Let's go to the industrials. At least we bought some green on the screen there. You gotta get right down there into those little cubes.
CN and CP rail, they are up about half a percent each. South of the border, as investors think about what they have heard from Jerome Powell and think about that stronger-than-expected US jobs report on Friday and then try to extrapolate out of that when they are going to start seeing some rate cuts this year from the Fed, it's a mixed bag. The street is bullish on Nvidia and you can see Nvidia shares up more than 4%, bucking the larger market trend.
Some of the other tech stocks are taking part to the upside but you have a lot of stocks under pressure, whether it's the financials there, some of the heavyweights like Bank of America, Tesla's down to the tune of almost 4%.
Rough start to the week.
You can get more information about TD Advanced Dashboard by visiting TD.com/Advanced Dashboard.
We are back with Chris Whelan from TD Securities talking rates and the economy.
How are you thinking about the potential impact from the US election?
>> That's a tricky question.
>> That was one of those pregnant pauses there.
>> I think what's interesting is that is if Trump wins and comes out with very economically positive policies that are very stimulating for the economy, you go from an environment where you are concerned about a recession and economic weakness to a 180 way or you are right back in the mindset of economic growth again. And then, are we worried about inflation if the economic growth is coming back again?
And then, do we have the said increasing rates back again against that economic growth? I think there is more questions on a Trump win and then there is on a Biden win. It's never really clear in a US election, they are always close are they tend to be, it's going to be very close so it might be really hard to get a feel for what's ahead.
But if it becomes very likely that Trump is going to win, it's a different economic forecast as we get into the fall there.
I think the election is about what questions you ask and how that changes the economic backdrop. I think it changes a lot and I think there are a lot of questions that might be answered.
I think is going to be really hard with a lot of scenarios to analyse in the interim but the broader question is what would a bunch of positive economic policies do for the path forward of stocks, bonds, trades, etc.
>> Could that bring some volatility to the rates market for the year leading up to the election of the market starts to feel it's heading one way or another, there would you try to position themselves ahead of it and then perhaps have to change their position based on the poles?
>> I think in terms of bond market volatility, we are basically stuck in a state where we are at a sustained high level in the bond market because we have such a high unknown, we can go from 7% overnight to 0% overnight in the coming years so every day there is a possible 7% variation in the market.
We have a lot of volatility in the bond market.
It's hard to even say you could add more volatility to the bond market but you always can. In terms of stock market volatility, in terms of that volatility, that's quite low right now. We've actually seen a return to the more normal lows in stock market volatility, you can see an increase there in terms of what the shifts do you and depending on what the economic platforms are. If the economic platforms have a wide degree of economic impact, they are going to see more volatility. I think stock market volatility and increase bond market volatility doesn't have as much… >> Always great to have you on the show.
Look forward to next time.
>> Thank you.
>> Our thanks to Chris Whelan, Senior Canada rate strategist, had a portfolio and ESG strategy at TD securities.
As always, make sure you do your own research before making any investment decisions.
stay tuned for tomorrow show. Haining Zha is going to join us, VP and Dir. of asset allocation research at TD Asset Management.
He wants to talk about China's economy and markets.
You can get your questions in ahead of time. Just email MoneyTalkLive@TD.com.
That's all the time we have for the show today. Thanks for watching. We will see you tomorrow.
[music]
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 discuss what's next for the US Federal Reserve. Chair Jerome Powell again driving the point home over the weekend, he is in no rush to cut rates. MoneyTalk's Anthony Okolie going to have a look at what auto sales data is saying about the state of the economy.
And in today's WebBroker education segment, Hiren Amin is going to show us the different order types on Advanced Dashboard.
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.
The TSX Composite Index at a 221 point deficit, more than a full percent the downside.
Jerome Powell talking about taking their time. They don't need to rush to cut rates.
There has been a lot of processing in terms of strategies in the market. Scott the US bucket higher, gold lower and oil lower today. The most actively traded names are the minors. Kinross down 2% at 725 per share. Some energy names are liking as well, including Baytex energy.
$3.99, down 1.7%.
Taking points off the top line number.
South of the border, you are seeing bond yields move higher in the wake of a few things in the states. The S&P 500 right now down 23 points, about half a percent.
Nothing too dramatic. Let's check in on the tech heavy NASDAQ. It was just barely in positive territory but it's been losing that over the morning session. Down 100 points now, more than half a percent.
One name that was to the upside earlier in the session and it's still hanging onto those gains is and video. The street still likes it. A lot of potential going forward with a IN what they have to offer the world in terms of chips. The stock is up 3 1/2%, bucking the market trend.
And that's your market update.
Following another red-hot US jobs report, Fed chair Jerome Powell is once again saying he is in no rush to cut interest rates. Joining us now to discuss, Chris Whelan, senior Canada rate strategist and had a portfolio and ESG strategy at TD Securities. Great to see you.
>> Thanks for having me on.
>> We have a few things to weigh here.
We had hot US jobs, Jerome Powell driving the point home that there is no rush. What we make of it all?
>> I think what you just said is what we make of it all. They are in no rush.
They are not in no rush, but they would like to see more of the same and not see any indications that the economy is taking off again and inflation is going to go higher.
They would likes more room for safety, and I think that Jerome Powell's interview over the weekend that was on TV, I think he indicated exactly that. He would like to see more of the same.
When they see more of the same, that sets up the ability to cut as we head into the summer. At TD Securities, we have that set up for May. There are risks that that was a bit later.
It's not an if, it's a win, and we just need to see some stability and I think they would like to see inflation or reign around these levels and remains contained in that would give them the confidence to cut.
As long as you don't higher and inflation in a meaningfully or scary way, I think cuts are set up for the back half of the year. If not as soon as May.
To be determined.
>> There does seem to be a logic. One of the key passages from the 60 Minutes interview where Jerome Powell was driving the point home yesterday about waiting, is that the economy is strong. We got the strong jobs report.
We should dig into that. Inflation is cooling. That doesn't seem to be indication for them now that they have to rush.
At these levels, things are holding in. Is it surprising, particularly the jobs report?
>> I think at the end of the day, economies take longer than we think to turn down and I think that's what we are going through.
The Bank of Canada two, they don't want to impose any more interest rate pain on the economy than they need to and then pay the price for that in 2025 with an overly weak economy that wasn't necessary.
We have discussed this on the show before and I think the cycle is a little bit more confusing than past cycles that we are used to because right now, central banks globally are in restrictive territory.
They are in highly restrictive territory because inflation was much higher than we've been used to for the past decade plus.
So we are turning from restrictive to neutral which we achieve in a good economy. You can't have an economy that's accelerating at a rapid pace but have a healthy economy is still cut rates because you are moving towards neutral and I think that's exactly how you can have this sort of Goldilocks scenario this year where it's good for risk assets and you can of stocks doing well and you can have them cutting rates and that be okay.
I think what they want to do is just make extra sure and be extra careful before they do that so as to not regret it and have interest rates having to go higher next year and also not regret cutting them sooner and imposing more pain on the economy on a go forward basis. I think that's what they're trying to tread the line on and so far it makes a lot of sense and I think central banks have a pretty good game plan at the moment.
>> Does this scenario, you said it's not a matter of if but when, but if the rate cuts, little later than the market was thinking heading into this year, does that mean you will get fewer cuts and 24, this idea of getting back to a neutral place, do you think the bank knows what neutral is and what it's going to take to get there?
>> I don't think anyone knows what neutral is.
I like to think we have a good idea.
We had a 0% interest rate economy for a long time and now we have 5% overnight rates in North America. There is a lot of distance between zero and five, that's 500 basis points.
What if they had to go to 7%? That's not our base case at all but there is a lot of variability here on where neutral is.
But again, to be frank, I don't think anyone knows what neutral is.
>> That one is going to take some thinking through for the central banks as we push through the year.
We've been talking about the resilient US economy despite… You said it can take time for the economy to turn. It seems like a different story here in Canada. We have felt the turn. It's been tepid. How do the two economies compared to each other?
>> I think it's tricky to stack the two against each other.
They seem to be, Canada seems to be weaker at certain times and the US seems to be stronger and vice versa.
I think at the end of the day, we had TD Securities expect more cuts in the next 12 months by the Fed then we do the Bank of Canada. That's our house view.
Time will tell. There are some near-term risks to the Canadian economy.
The Bank of Canada might cut in July. We are happy with that call. I think they're really in this past, this holding pattern in markets where we need to see how the data evolves over the coming months and a few months from now it will tell us where both economies are on a relative basis. So far, relatively speaking, there is no reason to expect that this cut cycle should be nearly in tandem, is just the magnitude.
We expect a bit more magnitude in the US and Canada over the coming months.
>> I find that a really intriguing idea that there is more magnitude for rate cuts as of the board of despite them having a stronger economy than ours.
Do we have a sticky inflation problem in this country? What the Bank of Canada is trying to do is to bring inflation back down to two.
>> I think at the end of the day, we see the Fed being aggressive in their move back towards neutral which we see at least 200 beeps slower than here's so our views of neutral are around 3% to should give or take so we see the Fed moving aggressively on the way back there and we think the Bank of Canada will take more time to move back there.
Taking a step back 12 months from now, our overnight rates at the BOC and the Federal Reserve going to be lower? We would say yes.
>> Great start the program.
We will get back your questions 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.
McDonald's is handy in a rare miss on the top line for its most recent quarter.
The fast food giant says international sales growth is slowing in key markets such as China, India and the Middle East.
There was also a drop in foot traffic for McDonald's US stores during the final months of 2023.
Right now, the stock is down about 4 1/2%.
We have more news of layoffs today in the tech sector. This time it's the parent company of Snapchat. It says is going to cut 10% of its global workforce, representing more than 500 jobs. It's the latest round of cuts at Snap in recent years, including a 20% staff reduction in 2022.
That stock down about 3 1/2%. Let's take a look at shares of Estée Lauder. Not much on the move to the upside today.
They are holding onto their gains, up about 14%. The cosmetic giant is cutting up to 5% of its workforce as sales in China continue to lag expectations. Estée Lauder says net sales fell some 7% in the Asia-Pacific region in its most recent quarter.
That's the reason for the job cuts. 153 bucks and change per share. Let's take a look at the markets, we will start on Bay Street with the TSX Composite Index. We are 217 points on the hole on the top line number, gold and oil under pressure, the strongest bucket and rising bond yields.
What's it doing to the trade south of the border? Let's check in on the S&P 500.
Traders have to reassess some of their expectations, perhaps even hopes for one rate cuts will come. You're down 21 points, a little less than half a percent.
We are back with Chris Whelan, taking your questions about the economy and interest rates. Let's get to the first one.
A viewer wants to know your outlook for the loonie.
>> The teams outlook for the loonie is a bit, you have a couple of scenarios you have to take into account when you look at that. The US dollar, when the Fed is going to be more aggressively cutting, that is going to be initially week for the US dollar.
If we end up getting a deeper recession scenario than what we think were that we rebound out of one quickly, but if we get a deeper recession in the markets and the rate hikes has been harmful to the economy, then we go into risk off which is bad for stocks and there is a return back to the US dollar.
Weakness for the US dollar would be moving into the summer and then if the markets had a risk off event or the economy started falling following this stronger or positive growth state, then you would see a return to strengthen the dollar.
You kind of have a couple of scenarios. If we can have a soft landing, it's a weak dollar story. If you have a hard landing, that's a stronger dollar story or a firm dollar story. Those are both the angles that we are working on right now in terms of our base case.
>> Let's talk a bit about the energy sector. We talk about the loonie, obviously central bank policy has been driving the bus for the past while, but oil.
Does it have any importance anymore for our currency?
>> Over time, it has less importance. At the end of the day, strong oil prices will be a benefit to our economy and that will be part of the equation which is not a debated driver in the currency anymore.
That can come and go but it's less of a concern but it's still net it's still helpful, strong oil prices are helpful for the Canadian economy.
>> Let's take another question from the audience.
A viewer wants to know how concerned we should be about consumer debt. We hear a lot about of the resilience of the consumer and a lot about the debt they are carrying as well.
>> I think this is exactly why, as we discussed a few minutes ago, central banks need to start cutting. When they are in restrictive territory, moving back towards neutral, so consumer that doesn't become a a substantial problem.
Consumer debt is always going to be a risk to the economy and high interest rates are going to exacerbate the riskiness of that issue. So that's why it's really important that we don't stay at these restrictive levels for too long and that's the balance of the central banks are balancing now and hopefully they can cut without inflation going higher and cut that down sooner so we can get to the higher interest rate problem in 2025 a little bit better.
>> It's a fine calibration to make.
You can look at credit card data, balances. You can look at balances in banks. Is that a tough calibration for a central bank, trying to make different moves in the economy and trying to pick a move where if we keep these rates, it's going to stress out the consumer?
>> I think the good news is that they do really overstress the consumer. They can cut all the way back to zero.
They've got a lot on their side that they can do to stimulate the economy and help that out.
I think we don't need to worry about that right now because like we noted, the economic data is holding up. It may not be great. It's in between not great to pretty decent, it kind of fluctuates month-to-month.
But I think that's a fine balance that we are dealing with here and I think that's a long-term argument why interest rates are not going to stay at 5% levels because the consumer debt levels and the government debt levels make it very hard to sustain that. A lot has to go perfectly right for us to not have a material risk come from higher interest rate levels. That's the balancing act. I think if they stay here for a lot longer, then absolutely the consumer debt problem is going to be a material issue.
>> Another question now. This is the big one, we have created around a bit.
Are we going to get that recession in North America this year? It almost feels like we've been talking about it for so long that people are disappointed we haven't gotten it yet. I'm sort of happy we haven't.
>> Recession is no good. No one wants recession. Will we get a recession?
We do think it will come. It's not penciled in as a large recession. It's a smaller recession.
In nominal terms, you can actually still be growing.
GDP in real terms is inflation-adjusted so sometimes when you have growth nominally and you grow the economy in nominal terms not adjusted for inflation but adjusted for inflation it's shrunk so sometimes that feels a bit weird and you don't quite notice it as well. I think with the real?
Is what kind of job losses are we going to see? That's the real downside to the recession. So a mild recession or self landing, we might get by with tepid job losses so time will tell and I think a soft landing is better for everyone.
But yes, our base case calls for a small recession this year. Daphne talk about the different numbers that go into a calculation, economy is growing but adjusted for interest rates, when you adjusted for As well, there have been interesting discussions here in Canada about how GDP might be flatlined or growing just a little bit but when adjusted for capita, we but actually be in a recession. What do you make of all those numbers?
>> The per capita is more of a political metric because the Bank of Canada needs to manage it on the overall basis whereas the per capita, if you have an economy that is persistently and recession state per capita, your general population is not going to feel very happy and that becomes a political issue.
I think the per capita measure is a political item of the day.
Maybe even if we are not speaking to it in per capita terms, that can explain why people are unhappy. So we definitely struggle with that. However, Andrew Kelvin looking at global and Canadian rates, he made a great point to me the other day. He said when you increase immigration initially, you are not necessarily having, all the new people brought in are not necessarily operating at their maximum capacity, most efficient capacity. It takes several years for them to be employed at their maximum potential or much higher potential so sometimes there is a near-term hit that comes from a large spike in immigration numbers and there is so we can see as productivity increases from immigration as they settle in, we can get the return.
If we can see it for the future, hopefully that's what it is.
>> Interesting stuff. As always, make sure you do your own research before making any investment decisions.
we are going to get back your questions for Chris Whelan on interest rates and the economy 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.
In today's education segment, we are having look at TD's Advanced Dashboard, platform designed for active traders available through TD Direct Investing.
Hiren Amin, Senior client education instructor with TD Direct Investing has this look at some of the different types of orders available on Advanced Dashboard.
>> Hello and welcome to today's education hit. We are going to be talking about our platform Advanced Dashboard today.
Specifically, we are going to look at how to place conditional orders on our trading platform. Those are ones we are going to look at how to do profit taking orders and ones on how you can limit losses.
Conditional orders in general adds a certain level of automation to trading.
It takes the emotions out a little bit.
Let's hop into our platform today, advanced dashboard, we will bring up the order entry tool and show you how to do this.
I've got Advanced Dashboard pulled up and you can build any screen.
For me to get to the order entry, I'm going to pick a security. I'm on the markets tab over here. You can see all the major indices we have. I'm going to focus on one of the Dow 30 companies. He could see the Dow Jones here. We are going to expand that list to populate the companies. What I'm going to pick today is Nike.
Let's open up the bubble over here and enter our by order. With this order set up, and I'm going to minimize the index as well, so what we are going to do here is we want to add both to a profit-taking order as well as a loss minimizing order.
We could do either or and I will show you how to do that. First of all, we are looking to buy Nike.
We will skew this down to 10 shares.
We will put her to $100 against that price. There is a function that is attached profit loss exits. Once you do that, it's going to open up an additional set of orders you can input.
It is up to you to decide whether you just want to do a profit-taking order, so click the top half, or you can just simply click the bottom have to do a stop loss which is going to minimize losses or both.
Philip show you how you can do just the one first and we call this simply a one triggers another order. Let's do a profit loss order. Let's assume we get to buy Nike at 100 bucks and we want to put in order to sell that at a profit. If he gets up to 110, we want to take our profits and take that $10 off the table there.
By the same token as well, we are also going to do what we call a first triggers another order in which we are going to attach a stop loss.
What we see here is we are going to get this order here first box and then it's either going to get us our profit-taking order or stop loss.
The way stoploss works is we are going to set a trigger price. Let's say this is a downside in case the stock falls. If it falls to $90, alert me or get this order activated and at the very least I want to minimum price of we will go a just a dollar below, we will call it $89.
At the very least, getting $89 has my limit price once his order gets activated in the $19 threshold.
We can buy the order and set these up together. Whichever direction it goes in first, we will either take our profits or get out of the stock and lock in our losses at the $10 threshold.
Or $11 in this case.
And that is a look at how you can place these profit and minimize loss taking orders using the Advanced Dashboard platform.
It's especially useful and I would highly recommend or have traders consider this especially during heightened market volatility or to give you the peace of mind if you happen to be away relaxing on a sunny beach, you know those orders are going to be taken care of for you and your taking some time off the markets. And that's it for our hit for today.
>> Our thanks to Hiren Amin, Senior client education instructor with TD Direct Investing.
And make sure to check out the learning centre in WebBroker for more educational videos, live, interactive master classes and upcoming webinars.
Now, before you get back to your questions about the economy for Chris Whelan, a reminder of how you can get touch with us.
Do you have a question about investing or what's driving the markets?
Our guests are eager to hear what's on your mind, so send us your questions.
There are two ways you can get in touch with us.
You can send us an email anytime at moneytalklive@td.com or you can use the question box right below the screen here on WebBroker. Just write in your question and hit send.
We'll see if one of our guests can get you the answer right here at MoneyTalk Live.
Okay, we are back with Chris Whelan, taking your questions about the economy and interest rates.
People want to know about the health of the Canadian housing market. What are you thinking here?
>> I think the health of the Canadian housing market is not disastrous. It's holding up pretty well with the amount of increases in interest rates that we've been seeing. I think that the marginal buyer in the housing market is probably waiting until the central bank decides we won't get any more rate hikes in interest rates come down. We already are seeing, we have already seen the bond market and the five-year area, some rates have moved quite a bit and I have, you can get mortgage rates at fixed herbs around 5% are sometimes better. So when you have that condition, coming off of sixes and mid sixes and rates that look pretty high, I think that brings back more confidence to the housing market overall. I think once interest rates are down, the stress tests decreases the amount you can borrow when rates are high and the reverse is true. I think when you look ahead at our interest rate forecast, and you put together the the housing market hasn't fallen off a cliff so far, I think that there will be a soft landing for the housing market and prices going back up in the coming years. So I think that no, we don't have any overly large concerns on the housing market on our side.
>> You raise a great point. We have become such keen watches of central banks and they have paused but not cut, but if you look at the bond market and the price of five-year fixed mortgages off the five year bond yield, the bond market is giving us about 100 points of easing since the fall. We often overlook that when we think about parts of the economy and how they borrow?
>> I think if you are sitting there waiting for the BOC to cut rates before feeling better, you could look to five-year fixed mortgages and see where they've been coming in because the five-year bond market and be on anticipates where rates are going and it provided a bit of an easing factor already.
I think that's just as important to look at for mortgages. So I think I'm surprised maybe that it has an increase more so far with this market. It's a bit early to tell.
That may be just people overall really need a signal from the Bank of Canada to say, we are cutting now, the storm is over.
So I think maybe that all remain psychological.
We have strong immigration and what is considered low levels of inventory in general so that she keep his balance.
>> Here's another audience question, turning RI south of the border. The viewer wants to know, and he worries about the treasury issuance in the states this year?
>> A little bit of worry.
Not a huge worry but a little bit of a worry.
I think that the bond market has already priced in a bit of that. See can actually look at treasury bonds versus interest rates to get a feel for the impact that government bond issuance is going to be because it impacts the treasury bond yields.
You can already see in there that the market has priced the sin, that being the price above it, that being said, we have a view that the yield curve is going to move steeper in North America and it is basically we expect cuts to happen that bring the front and lower and then we expect heavier issuance to weigh on longer-term bond yields, tenant 30 year, so that's deepens out the yield curve so the implication from higher issuance by the US government is steeper yield curves and so part of that is already priced in, part of that should be priced in as the curve become steeper and talking about the U.S. Treasury side, the government of Canada has shifted to issuing more risk in the bond market, more in the 30 year sector.
Canada is going to feel that this year and we don't think that's priced in as much as the US has price for them. So we see the US yield curve moving steeper. In terms of issuance and concerns around that, those would be top of mind and they would be translating to steeper bond curves.
>> Interesting set. We have another question about divergence between our central banks. How divergent do you think the BOC and the Fed will get?
>> I think magnitude is really tough to call at this point. How divergent will they get?
12 months, 200 beefs expected out of the Fed and 150 beeps from the Bank of Canada is that the 50 beep divergence but we expect Canada to edge up afterwards. We expect the Fed to cut more first and then we expect Canada to cut to a similar neutral rate just a little bit later.
There's a bit of a lead leg there. If you look out a year and 1/2 from now, I don't think they are going to be that divergent.
>> It's just a matter timeline. We are going to get back to your questions for Chris Whelan on interest rates in the economy and just moments 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.
Let's talk new vehicle sales in the United States.
They slowed in January. Bit of a December hangover and cold weather keeping car and truck shoppers away from dealership lots.
Anthony Okolie is taking a look at TD Economics's view on the numbers for 2024.
>> New vehicle sales in January in the US came in below forecasts. Likely a pullback from what the strong holiday sales that we saw in December has great mention. We saw colder than expected weather across much of the United States in the middle of the month, that combined to hold consumers back in January.
The pull forward into December may have also been boosted by continuing affordability challenges in the market has buyers likely look for deals and incentives to offset some of those higher car prices.
Now, the US car sales pullback in January by more than 5% month over month to about 15 million annualized units coming in below consensus estimates. When you look at the unadjusted sales volumes, just over 1 million units or nearly 3% above year ago levels. Looking at the average daily selling rate, it came out around 43,000 cars sold over 25 days, that's down from the roughly 43000 Daily Rate in January of last year.
This marks the first daily selling rate drop in year-over-year terms in 16 months.
When we break it down by type of vehicles, passengers sales grew 1.4% year-over-year, meanwhile light trucks rose just over 3% on a year-over-year basis. Like trucks accounted for about 80% of last month's sales.
That's roughly equal to its share in January 2023.
After two years of outside constraints, US vehicle sales growth were more consistent last year, the best year of sales since 2019. The average transaction price only fell by 2.4% in 2023 as demand remained pretty solid and recovery incentives spelling help to offset the need for price concessions to motivate buyers.
When we look at some of the top sellers in 2023 across America, Americans maintain their love affair with full-sized pickup trucks. They took the top three spots, led by Ford F-Series as well as Chevrolet Silverado.
The Toyota RAV4 SUV came in fourth spot.
Despite slowing demand for EVs in 2023, Tesla Model Y had a huge year, taking the fifth spot.
>> Vehicles, as you were saying, they are pricier than they were the before the pandemic. It's a big purchase that people often financed with debt.
Their expectations of rate cuts this year.
He put all that together, what is TD Economics think about the sales outlook?
>> They see the 2024, they expected to be more positive for light vehicle sales.
They are seeing continued improvements in supply, rising incentives and real income growth, all of that is expected to support sales this year.
TD Economics believes that the start of monetary easing for the first time since the start of the pandemic could also improve vehicle affordability for Americans.
Now, it's unlikely to be a smooth ride as many of these improvements are expected to be slowly introduced but TD Economics anticipate a more positive trend going forward.
>> Interesting stuff. Thanks for that.
>> My pleasure.
>> MoneyTalk's Anthony Okolie.
Now, let's get you an update on the markets.
We are jumping back into TD's Advanced Dashboard, platform designed for active traders available through TD Direct Investing.
This is the heat map function, giving us a view of the market movers. We will start the TSX 60, screen by Price and volume.
It's a tough day out there. Wish we get started? The energy space. The price of crude is pulling back today. Got some big names like Enbridge down more than a full percent, trapped down almost 2%. Not much happening in the financials either.
Technology also getting hit..Shopify down about 2%. Let's go to the industrials. At least we bought some green on the screen there. You gotta get right down there into those little cubes.
CN and CP rail, they are up about half a percent each. South of the border, as investors think about what they have heard from Jerome Powell and think about that stronger-than-expected US jobs report on Friday and then try to extrapolate out of that when they are going to start seeing some rate cuts this year from the Fed, it's a mixed bag. The street is bullish on Nvidia and you can see Nvidia shares up more than 4%, bucking the larger market trend.
Some of the other tech stocks are taking part to the upside but you have a lot of stocks under pressure, whether it's the financials there, some of the heavyweights like Bank of America, Tesla's down to the tune of almost 4%.
Rough start to the week.
You can get more information about TD Advanced Dashboard by visiting TD.com/Advanced Dashboard.
We are back with Chris Whelan from TD Securities talking rates and the economy.
How are you thinking about the potential impact from the US election?
>> That's a tricky question.
>> That was one of those pregnant pauses there.
>> I think what's interesting is that is if Trump wins and comes out with very economically positive policies that are very stimulating for the economy, you go from an environment where you are concerned about a recession and economic weakness to a 180 way or you are right back in the mindset of economic growth again. And then, are we worried about inflation if the economic growth is coming back again?
And then, do we have the said increasing rates back again against that economic growth? I think there is more questions on a Trump win and then there is on a Biden win. It's never really clear in a US election, they are always close are they tend to be, it's going to be very close so it might be really hard to get a feel for what's ahead.
But if it becomes very likely that Trump is going to win, it's a different economic forecast as we get into the fall there.
I think the election is about what questions you ask and how that changes the economic backdrop. I think it changes a lot and I think there are a lot of questions that might be answered.
I think is going to be really hard with a lot of scenarios to analyse in the interim but the broader question is what would a bunch of positive economic policies do for the path forward of stocks, bonds, trades, etc.
>> Could that bring some volatility to the rates market for the year leading up to the election of the market starts to feel it's heading one way or another, there would you try to position themselves ahead of it and then perhaps have to change their position based on the poles?
>> I think in terms of bond market volatility, we are basically stuck in a state where we are at a sustained high level in the bond market because we have such a high unknown, we can go from 7% overnight to 0% overnight in the coming years so every day there is a possible 7% variation in the market.
We have a lot of volatility in the bond market.
It's hard to even say you could add more volatility to the bond market but you always can. In terms of stock market volatility, in terms of that volatility, that's quite low right now. We've actually seen a return to the more normal lows in stock market volatility, you can see an increase there in terms of what the shifts do you and depending on what the economic platforms are. If the economic platforms have a wide degree of economic impact, they are going to see more volatility. I think stock market volatility and increase bond market volatility doesn't have as much… >> Always great to have you on the show.
Look forward to next time.
>> Thank you.
>> Our thanks to Chris Whelan, Senior Canada rate strategist, had a portfolio and ESG strategy at TD securities.
As always, make sure you do your own research before making any investment decisions.
stay tuned for tomorrow show. Haining Zha is going to join us, VP and Dir. of asset allocation research at TD Asset Management.
He wants to talk about China's economy and markets.
You can get your questions in ahead of time. Just email MoneyTalkLive@TD.com.
That's all the time we have for the show today. Thanks for watching. We will see you tomorrow.
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