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[music] >> Hello, I'm Greg Bonnell, and welcome to MoneyTalk Live which is brought to you by TD Direct Investing. It's a new program broadcast daily on WebBroker. Every day I'll be joined by guests from across TD, many of whom you'll only see here. We'll take you through what's moving the markets and answer your questions about investing. coming up on today's show, we're going to discuss whether a combination of soaring borrowing costs and rising construction costs could lead to a significant pullback in the real estate sector. Colin Lynch from TD Asset Management as our guest. And in today's WebBroker education segment, we will have a look at how you can use WebBroker to research real estate investment trust. So here's how you get in touch with us with your question. Just email moneytalklive@td.com or you can fill out that viewer response box right under the video player here on WebBroker. Before we get to our Guest of the day, let's give you an update on what's happening in the market. A lot of big events on the horizon this week. to start off the trading week, we have some green on the screen on Bay Street, 19,105 for the TSX Composite Index, a gain of a little more than half a percent. A bit of a rally in crude oil prices today and a bit of a rally in some of the big energy names, we could've chosen any of them but let's take a look at Cenovus Energy at this hour. We will get that around up to 5%, $22.90 per share. Seeing some pressure though in some of the gold-mining names. We are going to get to Newmont a little bit later in the show, but it seems to be what they had to tell investors about their latest quarter, perhaps weighing on the sector as a whole. $19.18 per share for Barrett, down 2% to start. It south of the border, let's look at the broader read of the American market, the S&P 500, it is sitting up modestly in positive territory, up a little bit less benefits of a percent. As we said, it is a big week, not only are we really, really get into the thick of corporate earnings season, some of the big tech heavyweights are on deck this week, and then there's the Federal Reservespeaking this week, a 75 basis point rise expected. The broader market is showing… Down almost half a percentage point. Among the names that are weighing on the tech space are the chipmakers, Nvidia among them. Right now we've got Nvidia at $168.53 per share, down a little bit shy of 3%. That's your market update. Central bank height aimed at combatingsoaring inflation are impacting many elements of the economy, but no sector is more exposed perhaps in real estate. Joining us now is Colin Lynch, head of global real estate investments at TD Asset Management. Colin, great to have you back on the program. This is an interesting time with the central banks getting so aggressive in the face of inflation, how to those two factors work when it comes to real estate? Perhaps they even work against real estate. >> First off, great to be here again, and thanks for having me. Certainly those two factors are relevant to real estate. Let's start with inflation. When you are building a new building, there are construction costs and those are labour costs, there are also material costs, think about steel and cement. All of those are inputs into the cost of building a new building and so ultimately, the costs of construction and prices… Now, you can look at the other side, the completion of the building, ultimately in a high inflationary environment, at least in theory, the value of this building should increase, partially because the cost of constructing a new building also increases. The other driver is around income. So when you look at the value of anything, if the income increases over time, in theory, the value should increase over time as well. In real estate, what generates income? Well, it's those rents. And so when a highly inflationary environment, if rents are increasing due to inflation, in theory, the income should be increasing as well and the capital value should be increasing as well. Now there's a caveat, which is just like any other business, you have revenue and expenses. So what are the revenue and expenses? The expenses are cleaning and maintaining the building, repairs and all those, those can increase as well. In theory, the income should increase and the capital value should increase. So that's all on inflation. >> That's interesting. The way inflation has is worried about so many things as investors, but it doesn't have to be a complete negative for real estate. It can be a positive. >> Precisely. And the key there… Inflation is generally okay for real estate because ultimately those rents will grow faster than the expenses. If the economy is shrinking and we have high inflation, that's when you get into some trouble because ultimately, what drives rents is the growth of the economy. So if your expenses are rising due to inflation but your rents aren't going up as fast as your expenses, then you have some issues. That's all on inflation. Then we got central banks. And what does a rate hike mean? Ultimately, it means the costs of doing business in general increases. For real estate that's the cost of borrowing money, and that's borrowing money either to operate the building or to construct the building, and so that just increases the expense line, whether you are building or operating, depending on whether you have leverage or not. And so that does increase the risk profile for real estate and it becomes really important to understand: is leverage being used, is that being taken out to build or operate the building and what form is that taking? so not necessarily negative, but certainly more challenging as interest rates go up. >> Now a year ago, maybe 18 months ago, the conventional wisdom would have been that yes, at some point, the central banks will begin raising rates. At some point, the year 2023, we haven't gotten there yet, was thrown about as lift off. It was thought to be slow and gradual. The magnitude we've seen in a short period of time, we pulled forward a lot of that. Are there certain real estate projects in this kind of environment with costs moving that's deeply higher in such a short period of time in jeopardy of not getting done? >> Yes. So certainly, there are projects that are in jeopardy of not getting done. Have we seen the outcome yet? No. Because we are still relatively… Early into the cycle. And by that I don't mean the absolute number of hikes, but from a time perspective from where we were when we weren't even thinking about raising rates to today, that's been a very short period of time relative to prior cycles. And it takes time for the implications of rates to make their way through the system. And in the case of developers of real estate, it takes time for numbers to begin readjusting. So today, we are seeing a lot of pause. We are seeing a lot of things that were going to be brought to the market, thinking about condominium construction and the like,some people are saying not now. It hasn't produced a lot of outright cancellations, but my hunch is there will be some cancellations as the math will have changed for a few folks in the market. >> Now, if we were doing the show in front of a live audience and taking the questions of people watching us, you have to know if you are discussing real estate in this environment, the run-up we've had, someone is going to bring up the word crash. At one of the dangers we could see real estate crash? Are we to concern on that front? What are the fundamentals? >> Yeah, I would say we have seen crashes, clearly, in the past. There were different reasons that drove some of those crashes. Today, I would say the risk of a crash is relatively low. The risk of a decline is relatively substantial. And so what gives me the difference between decline and a crash? In Canada, we still have a few things going for us. One, robust demographic growth. And what drives? Well, our immigration. Canada is viewed as a very attractive place to be. When you have robust demographic growth, the chance that you continue to see good economic growth increases. It's not certain, but it is more likely. And ultimately, given real estate serves the economy and more broadly serve society, so it serves the economy by being a place for people to work and distribute goods through and to sell goods, but it also serve society by being a place for people to live. So there are more people coming to the country and that means more people taking on jobs, etc. That means in the longer term that provides a good foundation for real estate. In the short term, also provides a good foundation because the government federally has been driving immigration targets higher and so that helps. Clearly, you have some headwinds, and the headwinds are higher borrowing costs, concerns about economic growth in the near term. Certainly out West,we have energy prices increasing and that has added some optimism. The balance that out and you say, certainly risk of a decline in the short-term,but an outright crash? Hard to say. Look around the world and that draws similar conclusions. In the US, they went through the global financial crisis in 2008. Look to the UK and the amount of the leverage in the system is substantially lower today than it was in 2008. And in a moment like now when those borrowing costs are rising, that's a good thing. So you go market by market and you could say, yes, there are risks for sure, outright crash? Can't see it yet. >> Great start to the program. We are going to get to your questions about real estate for Colin Lynch from TD Asset Management in a moment. A reminder, you can get hazardous anytime with your questions. Just email moneytalklive@td. com or fill out the viewer response box under the video player here on WebBroker. Right now, I want to get you updated on the top stories in the world of business and a look at how the markets are trading. Soaring inflation and lacklustre gold prices are hitting the bottom line at Newmont. The miner missed profit expectations in its second quarter, and Newmont is raising its Allin sustaining costs for the year as it points to higher labour, materials and energy cost. In addition to those pressures, the miners also reducing its production guidance for the year. Gold prices have been under pressure in the face of soaring US dollar and these rate hikes that we are always talking about. Newmont at this hour down almost 12%. It is a big week for US earnings with some mega-cap tech stocks on deck to report. It's been a tough year for technology shares after soaring to heights during the pandemic. Interest rate hikes are taking a toll and there are concerns about slowing digital advertising demand. All told, it will be a key week for tech investors for alphabet and Microsoft set to report after the closing bell tomorrow, Meta, Apple and Amazon are on deck later this week. Corporate earnings are gonna have to share the spotlight with the US Federal Reserve on Wednesday. The market is anticipating a 75 basis point hike to the central banks trendsetting rate. Keefer investors will be any insights on the path for future rate hikes from the Fed. Central banks of course have been aggressively hiking borrowing costs in an attempt to tamp down soaring consumer costs and now there's going to be brewing in the market over whether we have actually seen peak inflation for the cycle. Let's check in on the market action right now. Was so much ahead of us this week, we do have some green on the screen on Bay Street. We have the TSX Composite Index being led by some of the energy names at 19,109. Good for a gain of more than half a percent. South of the border, let's check in on the S&P 500, we are seeing some downside movements Intact names, the broader read of the market is hanging in positive territory, S&P 500 up a very modest viewpoint. We are back now with Colin Lynch, head of global real estate investments at TD Asset Management. We are taking your questionsOn real estate. They are starting to come in from the platform. Here's the first one. I work in a downtown tower and it seems pretty empty even with the back to work trend. Will hybrid work put a permanent cap on office demand? >> Too early to tell because we are still living in an environment whereCOVID those around us, COVID is endemic and a not insignificant portion of the population is still concerned about contracting the virus. And so recognize a lot of us have moved into a pre-pandemic way of living, but there still is some concern out there in society, I think it's important to recognize that, and so when corporate occupiers are making plans on how they occupy a physical space, that is to look? The many are going through. So that's why I say it's still too early to tell. Now that being said, do I have conviction that all occupiers are going to go back to an office environment five days a week? No, I do not have conviction. Put differently, I do think that there are fundamental changes that have arrived in our society on how we work, where we work, how many days in the office we work at, and I think that varies both by geography and by industry that you are involved in. So take geography. There are places in the world, namely Hong Kong, Tokyo, Seoul, most people live in 300 ft.², 400 scruffy departments. >> Maybe want to get out once in a while. >> Exactly. So the notion of working and living in that environment is a little bit more challenging. In those cities, I think there will be a lot more folks working in the office then there will be in cities such as Toronto or in the USA, such as Chicago or even Houston. So I think that's important. Now, will this cap office demand? Got older office, not a lot of amenities, it's really difficult to get to, that's going to be pretty tough to drag folks into the office for and we think those offices are going to be challenged in this environment. >> Before the pandemic hit, I remember in Toronto, there was substantial investment going into may be taking some of those older office properties in the court and sprucing them up, making them a little more attractive, track some key tenants. How is that playing out? Obviously, the pandemic comes and it's the brakes on so many things, perhaps even the people coming in to make those offices look nicer. >> Yeah, that's right, that continues today. So call at the race to compete to create that attractive office environment continues. And we've seen, here in Toronto but across the country and around the world, continued investment, London is a good market where a lot of the office property there is in excess of 100, 150 years old, and there is a continual reinvestment in the interior environments to make that attractive. We see that continuing back to the point. One has to create an environment that attracts somebody. And today, that's become even more important where the option is, you know, work in the office or work at a coffee shop or work at home or work someplace else geographically in a different place. What's going to convince somebody to come into the office? It's that great, welcoming environment that you can go down and get great food options or coffee options that are easy to get to, but when you come in, that's nice, it's inviting, both for me to core perspective but also from the layout of the office. So yes, not just us but many in the market have realize you have to continue to make those investments to make that office environment attractive. >> Interesting stuff. I noticed last week, and this is completely anecdotal. . . [video buffering] >> Yeah, it's meant a short-term change in the industrial landscape for real estate. So the industrial sector is that sector wherea lot of those warehouses are located, so that's industrial real estate, which includes long-term trajectory,is that e-commerce will continue to grow. And we see that across the world. But there is revenge shopping happening right now and folks are going out and going to shopping malls and getting that in and we are seeing that in the numbers in the shopping malls. Conversely, that means folks are spending proportionally less on the Amazons of the world and the like. And that means that there is right now less packages that are flowing through warehouses, and so you seen some of those statements from the tech company's own growth. That does impact industrial real estate in the short term. The question is: what is the longer term impact? We see it as it dipped down in the short term as regards the number of factors flowing through industrial real estate and eventually that will revert and grow, both as the economy comes out of whatever it's going through, whether it's a slowdown or recession, but also as the proportion of e-commerce spending grows over time. >> That sets us up nicely for a question that came in off the platform. It is brick and mortar real estate making a comeback? You talked about recent revenge shopping. Are we in a place that may be more balanced? One doesn't have to win everything at the expense of the other? >> Yeah, so certainly, the exact opposite to what I just mentioned, the retail space is seeing a bit of a bounce back. We are seeing it particularly pronounced in large, enclosed destination shopping malls. Which were doing, relative to community malls and smaller format retail, they were doing better pre-pandemic and right now, they are doing quite well. Why? Because yes, people want to get up and shop, but they also want to go to the place which is at a destination in and of itself, where there is a movie option and a restaurant option, where you can go and go to a centre course and it's a great place to be. You can have an Instagram photo session with your friends, and then you can go to Sephora or to the Apple Store or to wherever. So we are saying that bounce back quite materially both in terms of volume, we are now at 2019, effectively, foot traffic and spent patterns are well above 2019. Now, how long does that persist? Ultimately, I do think e-commerce is going to continue to growand I think those retail formats that our destinations will perform much better than the retail formats that aren't that destination, the smaller shopping malls, the community malls, those will be more challenged. And that's all call in one bucket, and then you got the grocers and necessities, like pharmacies and the like. Those did well pre-pandemic, better during the pandemic and we think will continue to do well because there's a lot of folks, both day-to-day folks that go and shop, that began chopping a lot of the pandemic, and we think some of those will continue, but then there's institutional owners and investors that realize, hey, actually, that grocery store that was doing a 6 1/2, 7% income yield, is actually quite attractive. And so there's been a lot of interest in that space and I think people continue to propel interest in what we call necessity retail, the grocery stores, the pharmacies, that retail that has to be open. >> Everyone's got eat. As always, make sure you do your own research before making any investment decisions. We'll get back to your questions for Colin Lynch from TD Asset Management on real estate in a moment. A reminder that you can get in touch with us with your questions at any time. Email moneytalklive@td. com. Now let's get to today's educational segment. Talking real estate today, so if you are interested in getting exposure to the property market, real estate investment trust could be an option. WebBroker does have tools which can help you do your homework on the space. Joining us now for more as Nugwa Haruna, Senior client education instructor at TD Direct Investing. Nugwa, always a pleasure to have you with us. Let's jump right in and find the easy way now to get through WebBroker and find some REITs. >> Hi Greg, it's always a pleasure being here. Colin has been talking a lot about real estate today and real estate investment trusts give investors, individual investors, an opportunity to actually earn a share of income from commercial real estate instead of actually stepping out and buying these and that's because REIT as, for companies to qualify as this, it must have invested 75% of its assets in real estate and it is required to pay at least 90% of its taxable income as some kind of distribution to shareholders. So investors who may be looking for someone steady kind of stream of income could potentially consider using or investing in REITs. I will mention a word of caution before we step into a WebBroker. Even though REITs could provide a steady stream of income,investors may have a little capital appreciation and there's a possibility that these distributions``1may be taxed as normal income. But once in WebBroker, an investor is able to actually filter down for REITs by actually clicking on the research tab. We are going to be using one of our most popular tools within WebBrokerand that's the screeners tool. It's very versatile and let's investors filter down the different kinds of securities out there. so now we are down to searching investments that are important to them. Once in WebBroker, I'm going to click on screening. Now, the screener tool will populate preset criteria. I'm going to clear all of that so we can start from scratch. We want to focus on Canadian Real Estate today. So I'm going to focus on the Canadian exchange. Now I'm going to click on more criteria. Once here, under company basics, I'm going to click on sector and industry. I will scroll down and clear out all of the preset sectors that we have there because we are focusing on real estate, and once they are I'm going to click on REITs. let's add a few more criteria. If you have investors who may be considering REIT S, it could be because of the distributions or yields that these REITs would yield so investors can filter down in terms of yield. For this example, we will focus on REITs with a distribution yield of at least 5%. So once I do that, you are able to see that my search now reduces 231 matches. I'm going to add one more filter here because I want us to focus on the earnings of these REITs. Now going to focus on the earnings per share growth over the last five years and, for this incident, we want to sort through companies that even though they may not… They have not seen a reduction in the earnings-per-share. So once I do that, that reduces my searches to 12 companies. And once here, an investor can scroll down, explore a little more about these companies. These companies are actually rated from 1 to 12, they are ranked. If investors want to find out why these companies are ranked the way they are, all you need to do is click on each of these companies. You will actually see a breakdown. You can visit the website of these companies and then you can scroll down and see why this company was ranked the way it was compared to the others on your list. >> All right, so investors get in there, they do their research, they compile a list of names that they are interested in. How do you use WebBroker than to see how they would have performed had they bought those names? >> Right, as he mentioned, when it comes to REITs, there may be little potential for capital appreciation but investors who want to do their homework may want to take a look and see how did these REITs perform over time. You're able to do that within WebBroker and using the screeners tool. While on the screeners page, where we just scroll down. Once we scroll down, we will see that we actually have the opportunity to take a look at the historical performance and you can compare the historical performance of the top 10 resultsin your screener to a specific index. So in this instance, we are going to compare them to the TSX S and P 60. So once I click calculate and click okay, is going to create a mock portfolio with this top 10 matches and give me an idea of how these companies have performed in the last five years compared to the TSX 60. So there I'm able to see that the top 10 companies on my screen have actually had a return of 40% when it comes to the stock price performance as compared to 29% when you compare that to the top 60 companies within the TSX, the Toronto Stock exchange. This could give investors an idea of how companies have performed and they can do some more exploration to see if they want to add these companies to their portfolio. > Of course, that chart shows us as well, the REITs, while there can be capital appreciation, they are not immutable back in the market. Thanks. >> Thank you. >> Check out WebBroker for more educational videos, live, interactive master classes and upcoming webinars, including a stocks Master class series, WebBroker demo and an options on master class series. Give a question about what's driving the markets? Argus are eager to hear what's on your mind. Sen. questions. There are two ways to get in touch with us. Send us an email any time at moneytalklive@td.com or you can use the question box right below the screen here on WebBroker. Just writing your question and its end. We will see if one of our guests can get you your answer right here at MoneyTalk Live. We are back now TD Asset Management's Colin Lynch. We are taking your questions about real estate. Here's another one coming off the platform. Much has been said about the affordability crisis in residential real estate. What is your take on what we are seeing right now? >> We are seeing an increase in the affordability crisis. And what's created that? Well, ultimately, we had growth in values, in housing in general, and that has made buying a house a lot more unaffordable for a lot of folks around the world. Now if you go back before the pandemic, we heard things like housing shortage, housing crisis. Then we had the pandemic which increased the housing prices. And so today, relative to income, we are seeing some of the most stretched affordability ratios that we've seen in a long time. In addition to all of that, we have central banks increasing interest rates and so for those that are looking to buy a house, not only did the capital values increase, now, you have to fund that with a lot more debt and the debt's costing more so certainly that's an affordability issue. >> A central banks raise the cost of borrowing, that means the cost of borrowing on property, people say watch the values fall back. The Canadian meals to a market, for example, has pulled back pretty dramatically in terms of volume of transactions and the prices are coming back to. But as one still outpacing the other in terms of trying to get to a place of affordability? >> Yeah, so… The decline that we've seen in the last 3 to 4 months, but we are only 3 to 4 months in. So I would say there is a chance that we will continue to see further declines. Will houses decline all the way back to where they were at the start of the pandemic? [video buffering] We've seen declining vacancy in those apartments and we also have seen folks moving back into downtowns. And so some folks moved back preemptively on the view that they might get called back into their office, and others moved back because there is a little bit of a funny expression. Some folks call it the… [video buffering] We call it instead of the CPT, some folks call it the CSD, the central social district. So those restaurants have opened up and sporting events returned and parades etc. happen, folks have moved back to experience that. And so what's that mean? Well, that means that in downtown, the vacancy rate has actually declined materially for apartments. And we've seen rents increase as well. And so back to the affordability question, generally put, rents are still affordable relative to where they were pre-pandemic, i.e. we are just coming back to where we were and 2019, and in some places we are in excess, but generally put, we are around the 2019 levels. But the story will continue to unfold, and as buying a house becomes a lot more unaffordable, folks have to live someplace. That creates more demand for rentals. >> In a world of rental demand and rising rents, it occurs to me there's two different parts to the problem. Obviously, there's the condo space which has sort of become the place where people find their rentals without the purpose built rental being robust enough. So what about those two sectors? If we are in the situation, rising rents, rising rental demand, you mentioned immigration earlier, do we look to the condo market to provide those units or are we seeing some purpose built rental coming online? Is there opportunity to? >> Yeah, great question. Historically, over the last 25 years, in many parts of the country, this would include British Columbia and Ontario, we looked to the condo market to provide new rental units. At that is individual landlords who are doing what they want to do to try to increase the rents as much as they can. That's very different than an institutional landlord who reports to the shareholders or to the market or who have pension investors of the like, who operate a uniform building or set of buildings according to a standard, a code, ethics, framework, etc. So we've seen a lot of condo and individual condo owners who are renting out the units. Only recently have we begun to see more new apartments owned by institutional owners renting out full buildings with property managers, amenities and the like. If you look at the US, you've seen a lot more apartments and if you look at the quality of those apartments, they are newer, they have more amenities, more services relative to what we have here in Canada, where a lot of our apartments are older, some don't have air conditioning, for instance, and the amenities are a lot lower. We have to build more apartments in this country. Why? Because there's more people coming to this country and we have to deliver a better tenant experience. And condos are great, but we need more institutions, more apartments to help deliver that, to provide the supply to meet the demand. >> Our next question goes nicely with this conversation. It is about rent control and your views on it. In an age where we are seeing increasing demand for rents, rising rents, but also rising costs across the board, you have to imagine rent controls have become part of the conversation. What effect does rent control have if you are trying to get people to build more apartments? >> Yes, so rent control is definitely in the conversation. Certainly, we have rent control in different ways pre-pandemic then we had a temporary rent controls, some of them have changed, some of them are still with us. Ultimately, what does rent control do? Well, mechanically, it says, unless somebody is moving out, you can only increase rent either by 0% or by a set percent. In Ontario, the go forward is 2 1/2% for the upcoming year. What does that do? Well, it means that the revenue line is kept in terms of how much revenue can they increase unless you have a lot of turnover. And this is where you get into sometimes an individual landlord will try to incentivize people to move out and create that turnover so that they can increase the rent with a new tenant. The key is where our expenses and how are they going? And are the expenses growing faster than the revenue? So if your revenue is going to be capped, then you have to look at the operation. Is the maintenance, the labour, and by the maintenance I don't mean just cleaning the floors, etc., but things break down in the building and so was the quality of the construction of the building? What's the age of the building? Etc. and you have to look at that relative to the revenue. Certainly from an owner of residential perspective, it makes running each building a little bit more complex because the revenue is ultimately capped. But you could also say from a societal perspective that there is some short-term benefit to that, particularly if you are in an economic distress situation. The question is longer-term. If you are expenses always outpace your revenues, then any owner is going to be less inclined to put money into repairs into that property and over a longer period of time, that becomes challenging, both for the owner but more especially for a tenant because that degrades the quality of the building over time and if you look around the world, there are plenty of examples of that where you have some dilapidated properties largely because there wasn't that investment made into key repairs, into the neighbourhood in the light, and as a result, the quality of the experience degrades over time. so it's a question about short-term and what does the government need to do if we are going through a period of economic distress, that's one thing, versus the long term. And ultimately, buildings need to be reinvested and money needs to be put into upkeep. Ultimately, you need to have some revenue growth to be able to do that. >> Great perspective on that. We'll get back to your questions for Colin Lynch from TD Asset Management on real estate in a moment. As always, make sure you do your own research before making any investment decisions and a reminder, you get in touch with us anytime. You have question about investing or what's driving the market? 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 any time via moneytalklive@td.com a or you can use the question boxright below the screen here on WebBroker. Just writing your question and hit send. We will see if one of our guest can get your answer right here at MoneyTalk Live. China's economy has been under pressure from constant COVID 19 lockdowns and now, TD Securities is warning that its housing market is showing signs of trouble. Joining us now to break it all down, money talks Anthony Okolie. >> TD Securities says that the Chinese housing market uncertainty is increasingly acting as a drag on the consumer, and a growing number of homeowners that are holding their mortgage payments. And driving this behaviour is that properties are taking longer to complete or might not be finished at all. TD Securities says that right now, there is approximately 305 projects that are reportedly being impacted at the present and that number is actually growing and developers are under pressure as cash flows are falling from a week housing sales but this mortgage strike has seriously hurt financing flows, and in fact construction as reportedly paused on about 40% of presold properties. And developers are increasingly defaulting as well. Chinese banks are facing increasing bad loans and state owned asset management companies or AMC's are also under stress because of the high exposure to the real estate sector. China's economy is on track to sharply undershoot official growth targets of 5.5%. TDSI says that the more realistic outcome for growth this year is around 3.8%, though they do see downside risks to that forecast. >> What about the credit market? >>It is increasingly feeling the strain. Bond yields have fallen. Chinese government bond curve is steep because we are seeing foreigners have been net sellers of Chinese government bonds for five straight months and TD Securities sees very low prospects of resumption of inflows anytime soon. >> Thanks. >> My pleasure. >> MoneyTalk Anthony Okolie. let's check in on the markets now. About halfway to the lunchtime trading session on Bay Street. We will start here at home with the TSX Composite Index. It's up a handsome 110 points to start the trading week, 19,093, getting a boost from some energy names including Crescent Point. It is making gains as our to the to know we'll call a little bit more than 5 1/2. Some of the tech names under pressure. Let's check the big one here in Canada, Shopify. Nothing too dramatic and $47.18, down about 2%. We have a big week ahead of us for corporate US earnings, the US Federal Reserve on deck on Wednesday, so you get the broader read of the American market right now up cautiously about 6 1/2 points. The tech stocks taking some wind out of our sails in Toronto, seems to be the same thing in New York on Wall Street. The NASDAQ 100 down a little bit more than half a percent. Let's check in on Newmont, ladies quarterly results and pressing investors, talking about increased cost for the rest of the years. Though shares down a pretty substantial 12% right now in New York. We are back with Colin Lynch from TD Asset Management. We've been talking about real estate and inflation. Here's a question that goes to the heart of the matter. His real estate a good hedge against inflation? >> It depends. It depends if we have great economicgrowth or modest economic growth or we have poor economic growth. So generally put, long-term expectation is that we are going to have relatively modest economic growth going forward. And in that environment, with high inflation, real estate is a good hedge. Ultimately, why? Because real estate serves the economy. If you have economic growth, your rising rents, you have increased occupancy and that is constrictive for real estate. What doesn't do so well is if we have an economic contraction. Because ultimately then, your expenses are increasing, you have greater vacancy, so you are not collecting revenue, and those that are in the office or shopping mall, even your apartments have more trouble paying the rent. And so your revenue line is flat or declining in your expenses are decreasing. Software becomes a little bit more challenging for real estate. So the key question I think is less about what is inflation doing and more what is the economy doing and how is the economy performing going forward? > Great show as always. Colin, great to have you back. Any quick final thoughts for the audience before we say goodbye? >> I would encourage folks to really think long-term rather than short-term when you think about real estate. It is very, very difficult to have a crystal ball as to what next month or the month after is going to do. We have even seen central bank governors have had some trouble predicting that with accuracy. > A little bit of trouble. >> And so if you don't have that crystal ball, it doesn't make things easier. If you think about what is the road going to look like in three, four, five years? Will we have more e-commerce? Will there be more people in the country? Will we be doing in person events or not? And if you can think about those questions and think about answers to those questions, then it makes investing in real estate a lot more easy because you can't predict what happens in a month, but if you do have a view on where the world looks like and three, four, five years, then you can orient how you would vest and have a lot more confidence and a lot more peace and be able to sleep well at night. >> Alright, Colin Lynch, always a pleasure to have you here. Our thanks to Colin Lynch, head of global real estate investments at TD Asset Management. Stay tuned, tomorrow, Justin Flowerday of TD Asset Management will be our guest on the program discussing asset allocation. A reminder, of course, you don't have to wait until noon Eastern time when we are live on the platform. Get your questions and well in advance. Email moneytalklive@td.com. As all the time we have for the show today. Thanks for watching. We will see you tomorrow. [music]