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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 discussed the potential opportunities in the alternative investments base with TD Asset Management Colin Lynch.
MoneyTalk's Anthony Okolie is going to take us through a TD economics report, their latest on the Canadian housing market.
And in today's WebBroker education segment, Caitlin Cormier is going to show us how the platform can help you stay on top of your investment goals. So here's how you can get in touch with us.
Just email moneytalklive@td.com or fill out the viewer response box under the video player on WebBroker.
Before we get to all that and our guest of the day, Let's start with blackberry, they got news about robotics sending the shares higher.
We will tell you more about that later in the show. $4.23, blackberries up about 8%.
Barrick Gold, how 2448, you've got Barrick up another almost 2% today.
You can see that since about February, it has been on the move higher.
The S&P 500, I want to take a look right now, we are going to get another read on US inflation tomorrow. Ahead of that a bit of caution in the markets.
Not a lot the downside, about one third of a percent. The tech heavy NASDAQ, how is it going against the broader market? Right now pretty much keeping pace percentage wise, down about .3%.
Nvidia is down about 3%, 846 bucks and change per share. Taking some points out the top line number. And that is your market update.
Beyond the world of stocks and bonds, there is an asset class known as alternatives that can include and freezing from investing in infrastructure to mortgages and private debt. Here to discuss opportunities in the spaces Colin Lynch, managing Dir. and head of alternative investments at TD Asset Management.
>> Thank you for having me.
>> Obviously you have a new mandate to discuss with us including alternatives.
Tell me about it.
>> Yeah, well, it's an exciting new mandate. I'm very excited to lead a broad team to invest in these different asset classes and as you mentioned, they can go beyond real estate and we do have Canadian realist a and international real estate but we also have commercial mortgages, we have private debt which provides debt to whether it's private companies, also participates in real estate lending, infrastructure debt as well, and we also have global infrastructure and that's a fascinating asset class which includes everything from renewable energy through to transportation to things like social infrastructure as well.
And so when you look and stepped back from that, these asset classes, beyond being ones that were not publicly traded are really ones that fit into the core themes that our society worldwide is embracing today. For instance, energy transition being one. He knew, housing shortage being another. Three, the availability of capital were limited from the government sector and needing to rely on of the participants beyond the government to help create society sustaining solutions and so the alternative space is an incredible space because not only are you able to help provide some of these solutions for all of society but investors increasingly realize that the alternative space plays a very interesting role, a diversification role, an attractive return generating rule for a portfolio.
>> Let's talk about some of those potential opportunities. You mentioned infrastructure which is interesting because particularly in North America, we have aging infrastructure. There are goals we want to meet in terms of climate and governments that are strapped for cash.
Let's start talking about that opportunity there.
>> Yeah, absolutely. It's a very significant opportunity. Let's start with energy transition.
We certainly have many forms of energy and traditional energy but we also have, I was going to say newer forms and actually if you think about it they are not actually that new.
>> The son has been around for a while. We are just starting to figure out how to harness its power.
>> Precisely and that we are now doing at scale and so infrastructure investors have been able to participate in some of the financial returns associated with participating at scale in a couple of different ways. Brownfield, i.e. existing assets that are generating power, but Greenfield, the development of new assets, and some of the returns on the Greenfield side tend to be quite attractive.
Solar is just one element of the renewable energy equation that includes windfarms as well, that includes biofuels, and then there is also the capture and storage of that energy is so think battery packs and investors in the space have the opportunity to help governments, for instance, when they have issues around the sustainability of the power grids. For instance, if there is a significant weather event like we saw in Western Canada earlier this year, some of those battery packs are able to provide power to those grids in their times of need.
And then beyond energy, there is transportation, so think ports and facilities like airports, think highways.
There is also the facilities that you frequent where you are driving along those highways, the service plazas.
All of that is and more part of infrastructure and those are call it the basic needs elements associated with living our day-to-day lives but without those basic needs satisfied, we really cannot live much of our day-to-day lives.
And so really infrastructure represents the ability to invest in providing high quality, whether it's power, whether it's transportation, whether it's social infrastructure, to help provide the basic needs of our day-to-day lives.
>> Now the average person can understand infrastructure is a part of their daily life. Talk to us about private debt opportunities.
>> We know about the fixed income market, for instance, which is providing debt to companies and that debt is publicly traded. Similarly, private companies, companies that are not publicly traded, also need debt. So private debt market provides debt to some of these companies.
They might be small business owners that do not have publicly traded companies, they might own their small business and they go out and get debt from different providers. Broadly put, that's part of the private debt universe but were we invest is typically a bit broader in terms of companies that are operating at some significant scale that might be doing nine figures of revenues or 10 figures of revenues and we have opportunity to provide tips those companies. But it goes beyond those private debt companies. If we go back to infrastructure on the equity side, see you have investors that are investing in for instance renewable energy, some of those investors use debt as well so instead of putting all the cash down, they might use some debt and that helps them amplify their cash by incentive investing in one portfolio project, they might be able to invest in three or four and that allows them to diversify and have higher returns but from a debt side, that allows a different investor to participate in some of that renewable energy without having some of the higher risk that is associated with the equity side while achieving greater diversification as well.
So there are multiple ways to kind of get exposure to some of those big themes. You can get exposure through direct ownership to the equity side, i.e. infrastructure, or you can get exposure on the dead side, perhaps a little bit lower in the risk spectrum, perhaps a little lower return but that might work for different types of investors as well according to what they are looking to accomplish.
So private debt is interesting because it can play in multiple different places, whether it's the real estate side, the infrastructure side, private equity companies providing debt to those companies, privately held companies, and therefore able to build a pretty diversified portfolio of exposures and therefore limit the risk side while looking for opportunities for amplified return on that side as well.
>> And other interesting space. You mentioned real estate in there, that is how the audience knows you before your mandate expanded.
Let's talk about mortgage investing.
>> Mortgage investing has really experienced quite the Renaissance.
And Renaissance it might not be the precisely accurate term because it is a space that has grown materially, commercial mortgages, and commercial mortgages funds in Canada in particular have grown dramatically over the past decade but particularly in the last five years.
Why is that? Well, number one, the yields have been quite incredible and part of that is being brought to you by the higher interest rate environment. Part of that is also because we have a lot of developments in this country, so whether it's building new rental housing or whether it's building new condominiums, developers tend to use mortgage financing. Some of that is really variable-rate and limited term financing. That attracts a higher level of yield associated to that, i.e. the interest rate tends to be higher because it tends to track variable rates. And so mortgage funds in general have benefited from some of that higher rate environment and that has been very attractive in terms of presentation of income and income yield for investors.
Has that space has evolved, it hasn't meant that the mortgage funds have not participated in other spaces, such as providing mortgages for retail sectors, and when we say retail, of course, there are many types of retail.
There is not just the shopping centres, the enclosed shopping centres, but there is also essential retail like the grocery stores, the pharmacies, etc.
Mortgage funds participate in providing loans to some of those centres as well.
And then you have industrial warehouses and we have seen the growth of e-commerce and the significant acceleration of that space over the last 4 to 5 years, but mortgage funds have also participated in lending to some of the developers, in addition to providing what we call term financing which can be on the more fixed rate side to some of the stabilized income producing warehouse properties. And then, of course, the office space which not a lot of mortgage lenders are stepping into that space these days but historically mortgage lenders have participated in that space as well.
When you step back from all of that, the default rates in Canada have been pretty contained. The yields have been pretty high. And now mortgage funds are generally looking to really capture and crystallize and lock in some of that high income yield that has been brought to you by the variable rates because the Bank of Canada has been increasing interest rates but as we sort of plateau in terms of where the rates are, the opportunity now presents itself to lock in some of those higher rates because in three or four or five years, if rates are lower it will look quite attractive.
>> Fascinating stuff and gives us a lot to talk to with Colin Lynch. We will get your questions for: 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.
Google is unveiling a custom-built processor in the hopes of growing its cloud computing business.
The search giant announcing the new arm based server chip at its cloud next conference in Las Vegas.
Google is going after market share in a space for rivals like Amazon and Microsoft have made sizable gains. You got Alphabet, the parent company of Google, up a little more than 1%. Shares of BlackBerry on the mood today. The Waterloo, Ontario-based company says it's collaborating with chipmaker AMD on robotics technology. The companies saying they'll work towards enhancing the real-time performance, precision and reliability of robotic systems. The street seems to like it.
BlackBerry is up 9.5%.
A new survey suggesting small business optimism is at an 11 year low in the United States.
Companies surveyed by the National Federation of Independent business cited inflationary pressures, including labour and input costs, among the top concerns.
Quick check-in on the market, we will start on Bay Street with the TSX Composite Index. We've got gold continuing to make new highs, the miners are rallying and it is keeping us above water.
50 points to the upside, about 1/5 of a percent. South of the border, head of yet another inflation reading coming tomorrow morning for the US, a bit of caution.
You down 14 points, 1/4 of a percent for the S&P 500.
We are back with Colin Lynch, take your questions about real estate and alternative investment. Let's start getting to them.
First one for you. What options do class B and C office properties have in renovating or trying to attract tenants?
>> Well, that's a good question.
It really depends.
So let's start with class C. There are very few options, I would say, if that class C building is vacant. If there are tenants in that class C building, they are occupied and paying rent, that's great.
There are class C buildings in smaller centres. Smaller centres, we tend to see a higher actual physical presence in the office so in those environments, you might be able to actually create a fairly attractive proposition for some tenants. I would call that nevertheless an exception to the broader rule. If you have a class C office properties today and it is vacant, then you have a couple of options.
One, you invest a lot of capital in the building and try to move class C to class B. Two, you really try to incentivize a tenant to come in by effectively giving them free rent. What do I mean by that?
The rent might be not free, it might be two dollars or three dollars. However, all of the costs associated with renting the building means that you as the owner of that building or effectively getting paid nothing.
Second option. Third option is to try to convert it to something else. The problem with that is it's not free and so it costs money to convert. And it takes time.
And so while you are converting and paying out money, you are receiving no money. And then hopefully what you have converted to hazy money and that works.
The fourth is effectively to demo and start again.
Those are the four option. None of them sound that great.
>> None of them sound inexpensive.
>> Exactly. Unfortunately, for class C, it's a bit tough.
For class B, a bit better.
It really depends on a few other components. One, location and geography.
So in a market that is tighter, meaning vacancy is lower, then much more propensity to try to tenants.
If the location is good, i.e. right on top of a sky train or subway or Metro stop, fantastic.
Better in terms of attraction to a tenant.
That doesn't mean you will still not need to put money into the building to make it more attractive.
That still doesn't mean that you may not get the whole building occupied, so you might have to look at some other conversion opportunities, so office to life-sciences or maybe a portion of the building turns into some form of collaborative working space or create an amenity.
Again, all of that costs money.
But you have a bit more options as a class B then you do as class C. I think if you summarize everything that I'm saying, the best place to be in the office market is class A, AA, AAA. If you are in class B or class C, it's a bit tougher and the further you go down the class spectrum, the tougher it's going to be.
>> Fascinating stuff. We have another question here on real estate. Someone wants to know the impact of student immigration curbs will have on real estate in this country.
>> Yeah, certainly, it's not nothing.
There is some impact, for sure.
But I would step back from that and say a few words. One, we have had, across all immigration, economic, student, and then whether it's refugee migration, historically high in absolute numbers, levels of immigration, levels that we haven't seen for decades and decades. And I would submit that we are beyond the capacity of the country to absorb a million new people here.
The country, the demand and supply perspective for housing is not a place where we can go year-over-year with a million more people arriving.
So something had to be done and I think the government has taken some of those actions already. From a student perspective, what the government has effectively done is sought to return as to where we were pre-pandemic and I would submit where we were pre-pandemic was at fairly robust immigration levels to begin with.
The other thing I would note is from an international student perspective, international student study at universities, they study a colleges, they also study at a variety of other places that bill themselves as colleges or other language learning facilities.
Have universities grow in this population?
Not as much as the colleges, and certainly not want to some of these other institutions. So when you look at where students go the study and where the government's focus on, it's very much focused on that third category, the language schools, the institutions that bill themselves as a college, etc. Then the question is, where do those students actually study and live?
So the international student studying at university might live, for instance, if they are coming to Toronto, in the downtown core. Where did the student studying at the language school live? And I would just step back to that and say there will be an impact, but the impact is going to be a bit more muted than I think what people anticipate.
And the reason is students will still be at fairly robust levels in terms of international students, vacancies very low across the market. Where the students that come from abroad to study in these language schools live is not necessarily the same place as purpose built student housing or even some of the condos in the major urban centres.
And so when I step back and look at the totality of the market, I'd say it's going to be a muted impact relative to the very severe housing crisis which is caused by not enough supply and a lot of demand.
>> Fascinating analysis there.
As always, make sure you do your own research before making any investment decisions.
we will get back to questions for Colin Lynch on real estate and alternative investments 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 our educational segment of the day.
If you are looking to stay on track to reach your investing goals, what broker has tools which can help.
Caitlin Cormier, client education instructor with TD Direct Investing has more.
>> As a self-directed investor, you kind of become your own portfolio manager but the good news is we have tools within web broker that can help you to build your portfolio so let's go ahead and hop in to web broker. We are going to look at the goals tool today. Right here at the top of the tabs on my broker. And what we are going to do is we're going to click on get started to start a goal.
Within this tool, you can select what you are saving for, whatever type of saving will you have, you can choose retirement, a major purchase or for your money to grow.
I'm going to select retirement, put in age, the income you are currently earning in the age you would like to retire at.
We will just those numbers in here. The next thing he will ask us is what we would like to earn as far as income in our retirement. It's giving us ideas here, a couple of different options, let's go with a little less, 80% of our current income.
There are helpful tips as you move along to help you choose and let's just go ahead and meet our goal. All right.
Next up, it's going to ask us to choose an investor profile. You kind of have to know a little bit about yourself here as far as what your risk tolerances, what your timeframe is and those are things to help you understand which of these portfolios might be the most appropriate for you. You can compare them, put them side-by-side and compare which one might make the most sense for you. It has quite a bit of information as far as historical returns, the risk levels, asset mix and then he can go ahead and choose whichever profile is appropriate for you to and go ahead and click save and continue. Next up we are going to say how much money we have that we are already using to save for this particular goal. In this case and when you say that we have somebody already, let's just say we have 30,000. We are going to put in a contribution amount that we are currently making into the account siliceous choose a biweekly contribution.
We are going to click save and continue.
And here we have the projection for what our plan is. It shows us how much money we are going to need to have for retirement and then how much we are projected to have. Obviously there's a bit of a gap here between the two so we need to make some adjustments to get a little closer in line.
When the going to show you is I can click here to view assumptions.
And I will see that this particular goal is taking into account the average amount of CPP per Canadian, the minimum amount of OAS and you can also add things like other income in here. For example, if you have a pension plan and you know how much money you will receive per year from the plan you can put it here. If you have rental properties, if you plan on working, any of those other types of income, you can add them here.
You can also change your life expectancy here.
Or if you know what your amounts of CPP would be, or OAS, you can go ahead and put it there. Once we click save you will notice that the gold is readjusted based on the fact that we will have that pension income.
Then we can go ahead and play with some of these numbers. Maybe we say maybe I can take a little less income and take a couple more years before I retire and click recalculate. We are a lot closer there is siliceous save a small amount more per contribution and there we go, we are over our goal.
That allows us to understand how we can make adjustments to our current plan in order to make that goal. We click start with this plan, we will be able to go to our goal dashboard to keep an eye on this goal as time goes on.
We will see whether we are on target or not to actually meet our goal. We can go in as well and click view details and make any adjustments as time changes and life changes. You can go in and make changes to any of these things that might have changed during the timeframe, maybe a little bit more conservative, maybe you want to change some of the other inputs, you can do that at any point in time. So this tool is a great tool in order for self-directed investors to use to keep track of their goals and make sure that you are on track to meeting them.
>> Our thanks to Caitlin Cormier, client education instructor at TD Direct Investing. For more, you can check out the learning centre on web broker or you can use this QR code to navigate TD Direct Investing's YouTube page where you will find more educational videos and investing resources.
Okay, we are back with Colin Lynch, taking your questions. I would like to get your guests thoughts on smart centres. We don't talk individual names but smart centres is in retail, we can talk about the retail space in Canada.
>> Absolutely. The retail space, very dynamic very diverse. We've got enclosed shopping centres, we've got more essential retail formats, the grocery store, the dollar store, you might have a pharmacy, bank branch, etc.
All formats have done very well but the central retail formats did very, very well while we were in the depths of the pandemic and have continued to do well as we have come out of the pandemic. Part of the reason is the retailers in those centres have done very, very well.
Now, why is that? A couple reasons.
Volume, price.
Prices have gone up because you had inflation, those retailers have captured some of that inflation, too, volume.
Volume has been up broadly across all retail centres. So that sector has done very well. Now, do you necessarily see it in the values for some of the centres? Not necessarily. Why? Income generated by those centres have gone up dramatically, but so have what we call the cap rates, And those have gone up because ultimately interest rates have gone up. So cap rates go up, income goes up so that you offset in the value is relatively flat. What does that mean going forward? If we see the same level of strength, the same level of sales growth, the same level of volumes in terms of people spending, that has a fairly bright outlook for the retail sector, especially relative to what we have seen over the past decade which has been pretty tough.
>> I hope that got some information for you there.
Someone want to know if there is a risk to office real estate if rates stay elevated?
There all these musings now, even out of fed speakers.
>> Yeah, and that seems to evolve by the day in terms of who is speaking.
It is a relevant question but I would say the most relevant question for office is who is actually in the office?
So you could have… Let's actually go back three years where we had rates that were at historical levels, zero, but yet we were in the middle of the pandemic and what happened was office values begin to trade down. So to the point… >> Due to the borrowing costs.
>> Precisely.
So much more important, who is actually in the office, what is the physical occupancy in the office in that market, in that city, etc. and then that drives the attractiveness of that building for tenants which drives the propensity to lease, which drives the value because leases create in, and that ultimately is the most important factor. For sure, if rates come down that is positive for the office market but much more of a positive is a high occupancy physically of office properties.
>> Interesting points on that front.
Another question now from the audience.
Someone wants to know do you expect more merger and acquisition activity in the real estate sector?
>> Of course with the important caveat that I don't have any insight as to what people are looking at doing but I would say this: if you look at where REITs have been trading generally and if we look at their value, you look at the private real estate funds and their asset value, there is a disconnect. And that disconnect, this day and age is not the first time we have seen this disconnect.
Every time there has been a period of economic uncertainty, what happens is those REITs trade down dramatically, quickly, beneath where the private funds trade.
So what that happens, a lot of the private entities look at the publicly traded entities, see that disconnect and then move in and buy. So again with the important caveat of no insight really to any discussions, what I would say is it would not surprise me that there are more M&A activities happening because you have entities not just private funds, you have sovereign wealth funds, you have large investors that have capital to be put to work, and you have publicly traded entities trading significantly beneath where they were trading two years ago, three years ago and historically we have always seen the public markets have much stronger and significant corrections. And also much stronger and significant bounce backs.
So yes, this is a time where it makes a lot of sense and we can anticipate more to come.
>> We will get back to your questions for Colin Lynch on real estate and alternative investments in just moments time.
As always, make sure you do your own research before making any investment decisions.
and a reminder that you 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.
Sales of homes in this country appears to have turned a corner following a better-than-expected first-quarter of growth.
Let's talk about the housing market. As a poise for recovery or could there be some weakness ahead? Anthony Okolie has been looking at the TD economics provincial housing outlook.
>> The report said that Q1 home sales and average home prices were actually tracking stronger-than-expected compared to their December forecast and there are a couple of reasons driving that strong started the year.
One was the unseasonably warm weather we saw in the first quarter.
Lower than anticipated borrowing costs as well is the rapid release of pent-up demand.
When we break it down regionally, BC and Ontario really drove that upside surprise that we saw in the first quarter. On the price growth side, Alberta, Québec and parts of the Atlantic provinces saw much greater strength. That helped to offset prices we saw elsewhere. TD economics expects that Canadian home sales and average home prices to see modest gains during the typical busy spring selling season which is in line with pre-March data. Particularly due to the pent-up demand we are seeing in BC and Ontario.
However, TD economics cautions that buyers and sellers will want clarity around the timing of the next BOC rate cut, keeping markets in somewhat of a holding pattern.
The warm weather in the first quarter that saw purchases pull forward could negatively impact near-term activity.
TD Economics thinks that the Bank of Canada will start cutting rates in July and that could provide a boost to Canadian home sales and average prices in the second half of this year. Additionally, they also mentioned affordability and we are seeing tough affordability conditions and a few markets which would limit overall home price gains to a below trend pace in 2025. TD Economics also sees some regional disparities that will persist over the next few years. One, they see price growth performance in the prairies and that is due to good affordability conditions there has well is a tight market and economic performance.
Alberta, the province continues to benefit from the fast of population growth in the country which is helping to boost home sales activity there.
Now, tight supply demand balances are expected to keep prices rising in Québec and the Atlantic provinces but declining affordability will likely cap the price of those gains.
In Ontario, price growth will be limited to this lowest growth among the provinces.
They expect relatively more upside on sales in BC and Ontario, but the government's move to reduce non-permanent resident levels could be a headwind for the two provinces given the larger weights of NPR's in the population and well immigration policy changes will directly impact rental markets, they could feed back to the resale market through reduced investor activity, according to TD economics.
>> Thus the outlook. There are always risks to this.
>> They see some risks but is more to the upside.
They believe that there is near-term upside risk to the forecast of inflation continues to moderate and yields dropped as they expect. TD Economics has built-in their projection to reflect affordability challenges.
The Bank of Canada communicated a conditional pause last spring. As a result, they believe that there is potential for another upside surprise that remains especially if we do get a BOC rate cut in the next couple of months.
>> Interesting stuff. Thanks for that.
>> My pleasure.
>> MoneyTalk's Anthony Okolie.
Now, for an update on the markets.
All right, we've got modest downward pressure on Wall Street and Don Bay Street, the top line on the TSX Composite Index, we are up about 56 points. What is doing the lifting today?
We looked at the basic materials bucket, you got tech, Barrett, First Quantum, American Eagle, just to say the price of gold keeps hitting new all-time highs. We are seeing industrial metals rallying as well. It is playing out favourably in the mining space. South of the border, and let's hone in on the S&P 100.
Try to get a sense at head of yet another inflation report coming out of the states tomorrow morning before the markets open.
What is holding back Wall Street today? It seems like at some of the big chipmakers including Nvidia, it is down about 2.5%.
Certainly a mixed board when you think about what is to the upside and what is to the downside. I guess inflation is important to investors and we will find out tomorrow morning how that is progressing south of the border.
You can find more information on TD Advanced Dashboard by visiting TD.com/advanceddashboard.
We are back with Colin Lynch from TD Asset Management. Let's take another question from the audience.
This one about affordability. Clearly an issue in this country. Is there anything we can do about it?
>> Well, yes. There is stuff we can do about it, for sure. The problem is it's not going to their results tomorrow, it's going to be a result over several years. I was part of a group last August and reproduced recommendations for the federal government. There are 15. We have seen one and a bit implemented to date, but all 15 I really do believe need to be implanted for us to see substantial change.
So we saw the HST that was part of our recommendations. That's partially accomplished because now all provinces have taken the PST off. But others like procurement of construction material, you know, construction labour and the importation of labour to this country that can help us accelerate the construction process, the government is talking about modular construction which is important in terms of modular housing but we also need municipal governments to accelerate the permitting process for a lot of these developments. We have development charges that are levied by several municipalities which are a very significant proportion of the purchase price of a new loan.
So I just laid five or six issues, I could go through 15, but all to say you need movement on all of these. Why? Because for years and years and years and years and years, we focused on demand, and we said, we need to make it easier to buy a house.
Then we said, we need to make it harder to buy a house, depending on who you were.
Now, we finally have recognized that regardless of whether we are making it easier or more difficult, that actually hasn't solved the problem.
The problem has been, we have not built enough. And so now we have to build.
The problem is, as we know, you can't just snap your fingers and there you go, 2 million new homes. It takes time.
So one, it takes time. But number two, it will take more time if you don't have all those tools in place that allow you to celebrate the delivery of new homes.
>> Always a pleasure having you. Always insightful.
On show going forward we will talk real estate, infrastructure, private debt. I'm looking forward to those discussions.
>> Likewise. I'm very excited to be here.
>> Always great to have Colin Lynch with us, managing Dir. and head of alternative investments at TD Asset Management.
As always, make sure you do your own research before making any investment decisions.
stay tuned for tomorrow show, Andrew Kelvin, head of Canadian and global rate strategy with TD Securities will be our guest.
He will be reacting to the Bank of Canada rate decision tomorrow morning. We will take your questions about that, the economy and interest rates.
You can get this questions in ahead of time.
Just email MoneyTalkLive@TD.com.
That's all the time we have to 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 discussed the potential opportunities in the alternative investments base with TD Asset Management Colin Lynch.
MoneyTalk's Anthony Okolie is going to take us through a TD economics report, their latest on the Canadian housing market.
And in today's WebBroker education segment, Caitlin Cormier is going to show us how the platform can help you stay on top of your investment goals. So here's how you can get in touch with us.
Just email moneytalklive@td.com or fill out the viewer response box under the video player on WebBroker.
Before we get to all that and our guest of the day, Let's start with blackberry, they got news about robotics sending the shares higher.
We will tell you more about that later in the show. $4.23, blackberries up about 8%.
Barrick Gold, how 2448, you've got Barrick up another almost 2% today.
You can see that since about February, it has been on the move higher.
The S&P 500, I want to take a look right now, we are going to get another read on US inflation tomorrow. Ahead of that a bit of caution in the markets.
Not a lot the downside, about one third of a percent. The tech heavy NASDAQ, how is it going against the broader market? Right now pretty much keeping pace percentage wise, down about .3%.
Nvidia is down about 3%, 846 bucks and change per share. Taking some points out the top line number. And that is your market update.
Beyond the world of stocks and bonds, there is an asset class known as alternatives that can include and freezing from investing in infrastructure to mortgages and private debt. Here to discuss opportunities in the spaces Colin Lynch, managing Dir. and head of alternative investments at TD Asset Management.
>> Thank you for having me.
>> Obviously you have a new mandate to discuss with us including alternatives.
Tell me about it.
>> Yeah, well, it's an exciting new mandate. I'm very excited to lead a broad team to invest in these different asset classes and as you mentioned, they can go beyond real estate and we do have Canadian realist a and international real estate but we also have commercial mortgages, we have private debt which provides debt to whether it's private companies, also participates in real estate lending, infrastructure debt as well, and we also have global infrastructure and that's a fascinating asset class which includes everything from renewable energy through to transportation to things like social infrastructure as well.
And so when you look and stepped back from that, these asset classes, beyond being ones that were not publicly traded are really ones that fit into the core themes that our society worldwide is embracing today. For instance, energy transition being one. He knew, housing shortage being another. Three, the availability of capital were limited from the government sector and needing to rely on of the participants beyond the government to help create society sustaining solutions and so the alternative space is an incredible space because not only are you able to help provide some of these solutions for all of society but investors increasingly realize that the alternative space plays a very interesting role, a diversification role, an attractive return generating rule for a portfolio.
>> Let's talk about some of those potential opportunities. You mentioned infrastructure which is interesting because particularly in North America, we have aging infrastructure. There are goals we want to meet in terms of climate and governments that are strapped for cash.
Let's start talking about that opportunity there.
>> Yeah, absolutely. It's a very significant opportunity. Let's start with energy transition.
We certainly have many forms of energy and traditional energy but we also have, I was going to say newer forms and actually if you think about it they are not actually that new.
>> The son has been around for a while. We are just starting to figure out how to harness its power.
>> Precisely and that we are now doing at scale and so infrastructure investors have been able to participate in some of the financial returns associated with participating at scale in a couple of different ways. Brownfield, i.e. existing assets that are generating power, but Greenfield, the development of new assets, and some of the returns on the Greenfield side tend to be quite attractive.
Solar is just one element of the renewable energy equation that includes windfarms as well, that includes biofuels, and then there is also the capture and storage of that energy is so think battery packs and investors in the space have the opportunity to help governments, for instance, when they have issues around the sustainability of the power grids. For instance, if there is a significant weather event like we saw in Western Canada earlier this year, some of those battery packs are able to provide power to those grids in their times of need.
And then beyond energy, there is transportation, so think ports and facilities like airports, think highways.
There is also the facilities that you frequent where you are driving along those highways, the service plazas.
All of that is and more part of infrastructure and those are call it the basic needs elements associated with living our day-to-day lives but without those basic needs satisfied, we really cannot live much of our day-to-day lives.
And so really infrastructure represents the ability to invest in providing high quality, whether it's power, whether it's transportation, whether it's social infrastructure, to help provide the basic needs of our day-to-day lives.
>> Now the average person can understand infrastructure is a part of their daily life. Talk to us about private debt opportunities.
>> We know about the fixed income market, for instance, which is providing debt to companies and that debt is publicly traded. Similarly, private companies, companies that are not publicly traded, also need debt. So private debt market provides debt to some of these companies.
They might be small business owners that do not have publicly traded companies, they might own their small business and they go out and get debt from different providers. Broadly put, that's part of the private debt universe but were we invest is typically a bit broader in terms of companies that are operating at some significant scale that might be doing nine figures of revenues or 10 figures of revenues and we have opportunity to provide tips those companies. But it goes beyond those private debt companies. If we go back to infrastructure on the equity side, see you have investors that are investing in for instance renewable energy, some of those investors use debt as well so instead of putting all the cash down, they might use some debt and that helps them amplify their cash by incentive investing in one portfolio project, they might be able to invest in three or four and that allows them to diversify and have higher returns but from a debt side, that allows a different investor to participate in some of that renewable energy without having some of the higher risk that is associated with the equity side while achieving greater diversification as well.
So there are multiple ways to kind of get exposure to some of those big themes. You can get exposure through direct ownership to the equity side, i.e. infrastructure, or you can get exposure on the dead side, perhaps a little bit lower in the risk spectrum, perhaps a little lower return but that might work for different types of investors as well according to what they are looking to accomplish.
So private debt is interesting because it can play in multiple different places, whether it's the real estate side, the infrastructure side, private equity companies providing debt to those companies, privately held companies, and therefore able to build a pretty diversified portfolio of exposures and therefore limit the risk side while looking for opportunities for amplified return on that side as well.
>> And other interesting space. You mentioned real estate in there, that is how the audience knows you before your mandate expanded.
Let's talk about mortgage investing.
>> Mortgage investing has really experienced quite the Renaissance.
And Renaissance it might not be the precisely accurate term because it is a space that has grown materially, commercial mortgages, and commercial mortgages funds in Canada in particular have grown dramatically over the past decade but particularly in the last five years.
Why is that? Well, number one, the yields have been quite incredible and part of that is being brought to you by the higher interest rate environment. Part of that is also because we have a lot of developments in this country, so whether it's building new rental housing or whether it's building new condominiums, developers tend to use mortgage financing. Some of that is really variable-rate and limited term financing. That attracts a higher level of yield associated to that, i.e. the interest rate tends to be higher because it tends to track variable rates. And so mortgage funds in general have benefited from some of that higher rate environment and that has been very attractive in terms of presentation of income and income yield for investors.
Has that space has evolved, it hasn't meant that the mortgage funds have not participated in other spaces, such as providing mortgages for retail sectors, and when we say retail, of course, there are many types of retail.
There is not just the shopping centres, the enclosed shopping centres, but there is also essential retail like the grocery stores, the pharmacies, etc.
Mortgage funds participate in providing loans to some of those centres as well.
And then you have industrial warehouses and we have seen the growth of e-commerce and the significant acceleration of that space over the last 4 to 5 years, but mortgage funds have also participated in lending to some of the developers, in addition to providing what we call term financing which can be on the more fixed rate side to some of the stabilized income producing warehouse properties. And then, of course, the office space which not a lot of mortgage lenders are stepping into that space these days but historically mortgage lenders have participated in that space as well.
When you step back from all of that, the default rates in Canada have been pretty contained. The yields have been pretty high. And now mortgage funds are generally looking to really capture and crystallize and lock in some of that high income yield that has been brought to you by the variable rates because the Bank of Canada has been increasing interest rates but as we sort of plateau in terms of where the rates are, the opportunity now presents itself to lock in some of those higher rates because in three or four or five years, if rates are lower it will look quite attractive.
>> Fascinating stuff and gives us a lot to talk to with Colin Lynch. We will get your questions for: 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.
Google is unveiling a custom-built processor in the hopes of growing its cloud computing business.
The search giant announcing the new arm based server chip at its cloud next conference in Las Vegas.
Google is going after market share in a space for rivals like Amazon and Microsoft have made sizable gains. You got Alphabet, the parent company of Google, up a little more than 1%. Shares of BlackBerry on the mood today. The Waterloo, Ontario-based company says it's collaborating with chipmaker AMD on robotics technology. The companies saying they'll work towards enhancing the real-time performance, precision and reliability of robotic systems. The street seems to like it.
BlackBerry is up 9.5%.
A new survey suggesting small business optimism is at an 11 year low in the United States.
Companies surveyed by the National Federation of Independent business cited inflationary pressures, including labour and input costs, among the top concerns.
Quick check-in on the market, we will start on Bay Street with the TSX Composite Index. We've got gold continuing to make new highs, the miners are rallying and it is keeping us above water.
50 points to the upside, about 1/5 of a percent. South of the border, head of yet another inflation reading coming tomorrow morning for the US, a bit of caution.
You down 14 points, 1/4 of a percent for the S&P 500.
We are back with Colin Lynch, take your questions about real estate and alternative investment. Let's start getting to them.
First one for you. What options do class B and C office properties have in renovating or trying to attract tenants?
>> Well, that's a good question.
It really depends.
So let's start with class C. There are very few options, I would say, if that class C building is vacant. If there are tenants in that class C building, they are occupied and paying rent, that's great.
There are class C buildings in smaller centres. Smaller centres, we tend to see a higher actual physical presence in the office so in those environments, you might be able to actually create a fairly attractive proposition for some tenants. I would call that nevertheless an exception to the broader rule. If you have a class C office properties today and it is vacant, then you have a couple of options.
One, you invest a lot of capital in the building and try to move class C to class B. Two, you really try to incentivize a tenant to come in by effectively giving them free rent. What do I mean by that?
The rent might be not free, it might be two dollars or three dollars. However, all of the costs associated with renting the building means that you as the owner of that building or effectively getting paid nothing.
Second option. Third option is to try to convert it to something else. The problem with that is it's not free and so it costs money to convert. And it takes time.
And so while you are converting and paying out money, you are receiving no money. And then hopefully what you have converted to hazy money and that works.
The fourth is effectively to demo and start again.
Those are the four option. None of them sound that great.
>> None of them sound inexpensive.
>> Exactly. Unfortunately, for class C, it's a bit tough.
For class B, a bit better.
It really depends on a few other components. One, location and geography.
So in a market that is tighter, meaning vacancy is lower, then much more propensity to try to tenants.
If the location is good, i.e. right on top of a sky train or subway or Metro stop, fantastic.
Better in terms of attraction to a tenant.
That doesn't mean you will still not need to put money into the building to make it more attractive.
That still doesn't mean that you may not get the whole building occupied, so you might have to look at some other conversion opportunities, so office to life-sciences or maybe a portion of the building turns into some form of collaborative working space or create an amenity.
Again, all of that costs money.
But you have a bit more options as a class B then you do as class C. I think if you summarize everything that I'm saying, the best place to be in the office market is class A, AA, AAA. If you are in class B or class C, it's a bit tougher and the further you go down the class spectrum, the tougher it's going to be.
>> Fascinating stuff. We have another question here on real estate. Someone wants to know the impact of student immigration curbs will have on real estate in this country.
>> Yeah, certainly, it's not nothing.
There is some impact, for sure.
But I would step back from that and say a few words. One, we have had, across all immigration, economic, student, and then whether it's refugee migration, historically high in absolute numbers, levels of immigration, levels that we haven't seen for decades and decades. And I would submit that we are beyond the capacity of the country to absorb a million new people here.
The country, the demand and supply perspective for housing is not a place where we can go year-over-year with a million more people arriving.
So something had to be done and I think the government has taken some of those actions already. From a student perspective, what the government has effectively done is sought to return as to where we were pre-pandemic and I would submit where we were pre-pandemic was at fairly robust immigration levels to begin with.
The other thing I would note is from an international student perspective, international student study at universities, they study a colleges, they also study at a variety of other places that bill themselves as colleges or other language learning facilities.
Have universities grow in this population?
Not as much as the colleges, and certainly not want to some of these other institutions. So when you look at where students go the study and where the government's focus on, it's very much focused on that third category, the language schools, the institutions that bill themselves as a college, etc. Then the question is, where do those students actually study and live?
So the international student studying at university might live, for instance, if they are coming to Toronto, in the downtown core. Where did the student studying at the language school live? And I would just step back to that and say there will be an impact, but the impact is going to be a bit more muted than I think what people anticipate.
And the reason is students will still be at fairly robust levels in terms of international students, vacancies very low across the market. Where the students that come from abroad to study in these language schools live is not necessarily the same place as purpose built student housing or even some of the condos in the major urban centres.
And so when I step back and look at the totality of the market, I'd say it's going to be a muted impact relative to the very severe housing crisis which is caused by not enough supply and a lot of demand.
>> Fascinating analysis there.
As always, make sure you do your own research before making any investment decisions.
we will get back to questions for Colin Lynch on real estate and alternative investments 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 our educational segment of the day.
If you are looking to stay on track to reach your investing goals, what broker has tools which can help.
Caitlin Cormier, client education instructor with TD Direct Investing has more.
>> As a self-directed investor, you kind of become your own portfolio manager but the good news is we have tools within web broker that can help you to build your portfolio so let's go ahead and hop in to web broker. We are going to look at the goals tool today. Right here at the top of the tabs on my broker. And what we are going to do is we're going to click on get started to start a goal.
Within this tool, you can select what you are saving for, whatever type of saving will you have, you can choose retirement, a major purchase or for your money to grow.
I'm going to select retirement, put in age, the income you are currently earning in the age you would like to retire at.
We will just those numbers in here. The next thing he will ask us is what we would like to earn as far as income in our retirement. It's giving us ideas here, a couple of different options, let's go with a little less, 80% of our current income.
There are helpful tips as you move along to help you choose and let's just go ahead and meet our goal. All right.
Next up, it's going to ask us to choose an investor profile. You kind of have to know a little bit about yourself here as far as what your risk tolerances, what your timeframe is and those are things to help you understand which of these portfolios might be the most appropriate for you. You can compare them, put them side-by-side and compare which one might make the most sense for you. It has quite a bit of information as far as historical returns, the risk levels, asset mix and then he can go ahead and choose whichever profile is appropriate for you to and go ahead and click save and continue. Next up we are going to say how much money we have that we are already using to save for this particular goal. In this case and when you say that we have somebody already, let's just say we have 30,000. We are going to put in a contribution amount that we are currently making into the account siliceous choose a biweekly contribution.
We are going to click save and continue.
And here we have the projection for what our plan is. It shows us how much money we are going to need to have for retirement and then how much we are projected to have. Obviously there's a bit of a gap here between the two so we need to make some adjustments to get a little closer in line.
When the going to show you is I can click here to view assumptions.
And I will see that this particular goal is taking into account the average amount of CPP per Canadian, the minimum amount of OAS and you can also add things like other income in here. For example, if you have a pension plan and you know how much money you will receive per year from the plan you can put it here. If you have rental properties, if you plan on working, any of those other types of income, you can add them here.
You can also change your life expectancy here.
Or if you know what your amounts of CPP would be, or OAS, you can go ahead and put it there. Once we click save you will notice that the gold is readjusted based on the fact that we will have that pension income.
Then we can go ahead and play with some of these numbers. Maybe we say maybe I can take a little less income and take a couple more years before I retire and click recalculate. We are a lot closer there is siliceous save a small amount more per contribution and there we go, we are over our goal.
That allows us to understand how we can make adjustments to our current plan in order to make that goal. We click start with this plan, we will be able to go to our goal dashboard to keep an eye on this goal as time goes on.
We will see whether we are on target or not to actually meet our goal. We can go in as well and click view details and make any adjustments as time changes and life changes. You can go in and make changes to any of these things that might have changed during the timeframe, maybe a little bit more conservative, maybe you want to change some of the other inputs, you can do that at any point in time. So this tool is a great tool in order for self-directed investors to use to keep track of their goals and make sure that you are on track to meeting them.
>> Our thanks to Caitlin Cormier, client education instructor at TD Direct Investing. For more, you can check out the learning centre on web broker or you can use this QR code to navigate TD Direct Investing's YouTube page where you will find more educational videos and investing resources.
Okay, we are back with Colin Lynch, taking your questions. I would like to get your guests thoughts on smart centres. We don't talk individual names but smart centres is in retail, we can talk about the retail space in Canada.
>> Absolutely. The retail space, very dynamic very diverse. We've got enclosed shopping centres, we've got more essential retail formats, the grocery store, the dollar store, you might have a pharmacy, bank branch, etc.
All formats have done very well but the central retail formats did very, very well while we were in the depths of the pandemic and have continued to do well as we have come out of the pandemic. Part of the reason is the retailers in those centres have done very, very well.
Now, why is that? A couple reasons.
Volume, price.
Prices have gone up because you had inflation, those retailers have captured some of that inflation, too, volume.
Volume has been up broadly across all retail centres. So that sector has done very well. Now, do you necessarily see it in the values for some of the centres? Not necessarily. Why? Income generated by those centres have gone up dramatically, but so have what we call the cap rates, And those have gone up because ultimately interest rates have gone up. So cap rates go up, income goes up so that you offset in the value is relatively flat. What does that mean going forward? If we see the same level of strength, the same level of sales growth, the same level of volumes in terms of people spending, that has a fairly bright outlook for the retail sector, especially relative to what we have seen over the past decade which has been pretty tough.
>> I hope that got some information for you there.
Someone want to know if there is a risk to office real estate if rates stay elevated?
There all these musings now, even out of fed speakers.
>> Yeah, and that seems to evolve by the day in terms of who is speaking.
It is a relevant question but I would say the most relevant question for office is who is actually in the office?
So you could have… Let's actually go back three years where we had rates that were at historical levels, zero, but yet we were in the middle of the pandemic and what happened was office values begin to trade down. So to the point… >> Due to the borrowing costs.
>> Precisely.
So much more important, who is actually in the office, what is the physical occupancy in the office in that market, in that city, etc. and then that drives the attractiveness of that building for tenants which drives the propensity to lease, which drives the value because leases create in, and that ultimately is the most important factor. For sure, if rates come down that is positive for the office market but much more of a positive is a high occupancy physically of office properties.
>> Interesting points on that front.
Another question now from the audience.
Someone wants to know do you expect more merger and acquisition activity in the real estate sector?
>> Of course with the important caveat that I don't have any insight as to what people are looking at doing but I would say this: if you look at where REITs have been trading generally and if we look at their value, you look at the private real estate funds and their asset value, there is a disconnect. And that disconnect, this day and age is not the first time we have seen this disconnect.
Every time there has been a period of economic uncertainty, what happens is those REITs trade down dramatically, quickly, beneath where the private funds trade.
So what that happens, a lot of the private entities look at the publicly traded entities, see that disconnect and then move in and buy. So again with the important caveat of no insight really to any discussions, what I would say is it would not surprise me that there are more M&A activities happening because you have entities not just private funds, you have sovereign wealth funds, you have large investors that have capital to be put to work, and you have publicly traded entities trading significantly beneath where they were trading two years ago, three years ago and historically we have always seen the public markets have much stronger and significant corrections. And also much stronger and significant bounce backs.
So yes, this is a time where it makes a lot of sense and we can anticipate more to come.
>> We will get back to your questions for Colin Lynch on real estate and alternative investments in just moments time.
As always, make sure you do your own research before making any investment decisions.
and a reminder that you 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.
Sales of homes in this country appears to have turned a corner following a better-than-expected first-quarter of growth.
Let's talk about the housing market. As a poise for recovery or could there be some weakness ahead? Anthony Okolie has been looking at the TD economics provincial housing outlook.
>> The report said that Q1 home sales and average home prices were actually tracking stronger-than-expected compared to their December forecast and there are a couple of reasons driving that strong started the year.
One was the unseasonably warm weather we saw in the first quarter.
Lower than anticipated borrowing costs as well is the rapid release of pent-up demand.
When we break it down regionally, BC and Ontario really drove that upside surprise that we saw in the first quarter. On the price growth side, Alberta, Québec and parts of the Atlantic provinces saw much greater strength. That helped to offset prices we saw elsewhere. TD economics expects that Canadian home sales and average home prices to see modest gains during the typical busy spring selling season which is in line with pre-March data. Particularly due to the pent-up demand we are seeing in BC and Ontario.
However, TD economics cautions that buyers and sellers will want clarity around the timing of the next BOC rate cut, keeping markets in somewhat of a holding pattern.
The warm weather in the first quarter that saw purchases pull forward could negatively impact near-term activity.
TD Economics thinks that the Bank of Canada will start cutting rates in July and that could provide a boost to Canadian home sales and average prices in the second half of this year. Additionally, they also mentioned affordability and we are seeing tough affordability conditions and a few markets which would limit overall home price gains to a below trend pace in 2025. TD Economics also sees some regional disparities that will persist over the next few years. One, they see price growth performance in the prairies and that is due to good affordability conditions there has well is a tight market and economic performance.
Alberta, the province continues to benefit from the fast of population growth in the country which is helping to boost home sales activity there.
Now, tight supply demand balances are expected to keep prices rising in Québec and the Atlantic provinces but declining affordability will likely cap the price of those gains.
In Ontario, price growth will be limited to this lowest growth among the provinces.
They expect relatively more upside on sales in BC and Ontario, but the government's move to reduce non-permanent resident levels could be a headwind for the two provinces given the larger weights of NPR's in the population and well immigration policy changes will directly impact rental markets, they could feed back to the resale market through reduced investor activity, according to TD economics.
>> Thus the outlook. There are always risks to this.
>> They see some risks but is more to the upside.
They believe that there is near-term upside risk to the forecast of inflation continues to moderate and yields dropped as they expect. TD Economics has built-in their projection to reflect affordability challenges.
The Bank of Canada communicated a conditional pause last spring. As a result, they believe that there is potential for another upside surprise that remains especially if we do get a BOC rate cut in the next couple of months.
>> Interesting stuff. Thanks for that.
>> My pleasure.
>> MoneyTalk's Anthony Okolie.
Now, for an update on the markets.
All right, we've got modest downward pressure on Wall Street and Don Bay Street, the top line on the TSX Composite Index, we are up about 56 points. What is doing the lifting today?
We looked at the basic materials bucket, you got tech, Barrett, First Quantum, American Eagle, just to say the price of gold keeps hitting new all-time highs. We are seeing industrial metals rallying as well. It is playing out favourably in the mining space. South of the border, and let's hone in on the S&P 100.
Try to get a sense at head of yet another inflation report coming out of the states tomorrow morning before the markets open.
What is holding back Wall Street today? It seems like at some of the big chipmakers including Nvidia, it is down about 2.5%.
Certainly a mixed board when you think about what is to the upside and what is to the downside. I guess inflation is important to investors and we will find out tomorrow morning how that is progressing south of the border.
You can find more information on TD Advanced Dashboard by visiting TD.com/advanceddashboard.
We are back with Colin Lynch from TD Asset Management. Let's take another question from the audience.
This one about affordability. Clearly an issue in this country. Is there anything we can do about it?
>> Well, yes. There is stuff we can do about it, for sure. The problem is it's not going to their results tomorrow, it's going to be a result over several years. I was part of a group last August and reproduced recommendations for the federal government. There are 15. We have seen one and a bit implemented to date, but all 15 I really do believe need to be implanted for us to see substantial change.
So we saw the HST that was part of our recommendations. That's partially accomplished because now all provinces have taken the PST off. But others like procurement of construction material, you know, construction labour and the importation of labour to this country that can help us accelerate the construction process, the government is talking about modular construction which is important in terms of modular housing but we also need municipal governments to accelerate the permitting process for a lot of these developments. We have development charges that are levied by several municipalities which are a very significant proportion of the purchase price of a new loan.
So I just laid five or six issues, I could go through 15, but all to say you need movement on all of these. Why? Because for years and years and years and years and years, we focused on demand, and we said, we need to make it easier to buy a house.
Then we said, we need to make it harder to buy a house, depending on who you were.
Now, we finally have recognized that regardless of whether we are making it easier or more difficult, that actually hasn't solved the problem.
The problem has been, we have not built enough. And so now we have to build.
The problem is, as we know, you can't just snap your fingers and there you go, 2 million new homes. It takes time.
So one, it takes time. But number two, it will take more time if you don't have all those tools in place that allow you to celebrate the delivery of new homes.
>> Always a pleasure having you. Always insightful.
On show going forward we will talk real estate, infrastructure, private debt. I'm looking forward to those discussions.
>> Likewise. I'm very excited to be here.
>> Always great to have Colin Lynch with us, managing Dir. and head of alternative investments at TD Asset Management.
As always, make sure you do your own research before making any investment decisions.
stay tuned for tomorrow show, Andrew Kelvin, head of Canadian and global rate strategy with TD Securities will be our guest.
He will be reacting to the Bank of Canada rate decision tomorrow morning. We will take your questions about that, the economy and interest rates.
You can get this questions in ahead of time.
Just email MoneyTalkLive@TD.com.
That's all the time we have to show today.
Thanks for watching. We will see you tomorrow.
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