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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, TD Cowen's Craig Hutchison will join us and discuss the outlook for the mining sector as it grapples with cost pressures. And in today's WebBroker education segment, head of Reddit's highly anticipated market debut, Caitlin Cormier is going to show us where to find new stocks here on the platform. Here's how you can get in touch with us.
Just email moneytalklive@td.com or fill out the viewer response box under the video player on WebBroker.
Before we get to all that and our guest of the day, let's get you an update on the markets.
We will start here with the TSX Composite Index.
Of course, it is fed day. We are awaiting that interest rate decision at 2 PM Eastern time.
Not in anticipation of a change of the Fed's key rate but more so with their language is around potential rate cuts this year.
Right now we have 40 points on the table for the TSX Composite Index, up about 1/5 of a percent.
Nothing too impressive to the upside.
Among some of the movers, we have one up and one down.
Aritzia, let's check in on the women's retailer.
It's got a boost of 5%, $38.30 per share.
Crescent Point Energy, I am noticing a pullback. Crude has been on a run lately.
West Texas intermediate down about 2%, taking down some of the energy names.
$10.63 per share for Crescent Point, down a little more than 1%. South of the border, the market is pretty flat waiting to see what will get at 2 PM Eastern time as the US Federal Reserve emerges from their two day meeting.
Up less than 1/3 of a percent to the upside. The NASDAQ is also pretty much flat as well, trying to figure out what's going to happen, with the Fed will tell us about the future path.
In terms of stocks that are moving, there aren't many outsized movements. Ford is getting a bit of a bid, at $12.57 per share, for it is up about 2 1/4%. And that is your market update.
Rising costs have been an issue for many sectors, including mining, but are there some signs that those pressures may be easing? 20 etc. discusses Craig Hutchison, Dir. for equity research at TD Cowen.
Welcome to the program. First time here.
>> Things are having me on the show.
>> Tell me about your coverage area.
>> I cover metals for the most part, copper, silver, uranium and iron ore names.
>> Tell me a bit about what they have gone through and where we might be headed.
>> If you look back about three years ago, the start of the pandemic, you had a lot of supply chain disruptions.
You later on on the fact that we had the war in Ukraine, all of that has contributed to very high inflation in the mining area specifically.
Take a look back, say last year, mining inflation costs were up maybe around 10%.
That is starting to come off the boil now.
Most companies are sort of guiding to inflation to be at that 3 to 5% range, above CPI, but it has come off.
Some of those are currencies coming off relatives the US dollars.
It's still an issue. Particularly the North American market, it's very difficult, as you can imagine, to get minors to go to the sites. It's a very tight labour market.
You're competing against other industries like oil and gas, it's difficult to secure people in places in North America and Australia were the market is tight.
>> Interesting backdrop. We've had questions from people who watch the program that they look at the say he rallied the price of gold, or any metal that's been rallying lately, then they look at the actual stocks connected to the commodity and they wonder why they are not fully participating. It is cost inflation part of that story?
>> Absolutely. The average price last year for gold was 1840, up 8% year-over-year, but costs were up almost the same amount, so margins remain flat despite rising gold price environment. I think equities, for them to appreciate, you need to see that margin expansion happening. We think that will happen if gold starts to rise and the Fed starts cutting later this year which is our expectation.
It's been challenging for gold also competing against other asset classes.
It's been competing against the S&P 500 which was up more than 20% last year, it's competing against bitcoin, it's competing against money market funds which are at 5% and gold does not give you an earnings yield so you have to basically, Golda performed an inflationary environment, it will perform when real rates are to fall and we think that will happen.
>> Let's talk about that interest rate path and delivery of cuts later this year which is the expectation. When it comes to the equity side of things, you wonder how much of it was already priced in and how much room there is to run. When it comes to the price of gold, how much have the expectation of cuts been priced in?
>> We've done some work on that. We have looked at previous cycles over the past four years.
On average, gold tends to rally around 34% when the Fed starts to make those first cuts.
The last hike was July of last year. Since that point, gold has rallied 10%.
So I still think there is a long way to go for gold.
The issue has been I think expectations for rate cuts have been, they haven't happened so far.
>> They are dialled back from where we were at the start of the year.
>> If you look at the consensus view, we should've had rate because last year.
TDC right now is for three cuts this year, 75 basis points this year, 75 basis points next year. But the expectations around that keep getting pushed out. I think the latest is now June or July.
I think we need to see those actual rate cuts to see.
>> Let's talk about copper. We have seen some movement there as well.
>> Copper has some good supply demand dynamics.
One interesting thing, in terms of what is the incentive price to bring a new supply and that's something that has come up when he talked about inflation. If you look back a few years ago, I think the incentive price for copper to generate decent return on a project was probably around 350 per pound.
Today, that incentive price is probably north of 450 to 5 dollars per pound.
What that means is a lot of projects are not going to get sanctioned at the current prices so we need to see prices move higher in order to incentivize new supply.
The positive aspect of that is those who are in it now, you're not gonna see a flood of new supply on the market so supply will hold firm given the supply demand dynamics will be positive for the foreseeable future.
>> When it comes to central bank rate cuts, our other commodities as sensitive as gold?
>> If it results in the US dollar weakening, that's usually a positive for the commodities more broadly but if the Fed is cutting because the economy is slowing, copper does heavily tied to global GDP, that's not great for copper.
But if it is more of a soft landing, we started to see some stimulus happening in China, that could cause prices to go higher.
>> Where do we think we may going forward here?
>> It's been very topical. I think the fundamentals for uranium are the best they've been in 15 years, going back to the Fukushima disaster.
If you go back to say 2018, uranium prices were under $20 per pound, some of the big producers in the world like Cameco took leadership, they curtail production, took a big step to tightening up supply and then a couple of years after that we had a bunch of ETFs come to the market and start to acquire pounds. They have taken out almost 60 billion pounds and hundred and 80 to 200 million pound for your market so that's substantial. They've tightened up the market.
Uranium touch over $100 per pound about two months ago. It's come back a little bit but I think if you just look at the overall demand that you are seeing going forward, the first time in my career when you see governments unilaterally sponsoring uranium at the Cobb 28 conference a couple months back, you had 22 different countries coming out in support of nuclear, pledging to triple their nuclear capacity by 2050, including Canada and the US, there is bipartisan support in the US, both under abided and potentially trump if he gets back into power. I know there are concerns about the ministration change but there is bipartisan support.
>> TD Cowen covers Cameco.
For full disclosure on the companies covered by TD Cowen, a division of TD Securities, please see the link to the TD Securities website at the end of this program.
In terms of nuclear, what is the biggest risk here?
Is the risk that the governments somehow turn away from it?
>> Yeah, if there was another Black Swan event, another Fukushima or issue in Ukraine, that would derail it.
But I guess the rise of renewable power has cut into nuclear, the demand and outlook in the past, but I think the view is that the wind doesn't always blow in the sun doesn't always shine so for baseload no carbon intensive power, there is no substitute for nuclear.
>> Interesting stuff in a great start to the program.
We are going to get your questions about mining stocks for Craig Hutchison in just a moment 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.
Investors are awaiting another rate decision from the US Federal Reserve at 2 PM Eastern time. While the market is not accepting a change to the Fed's key lending rate, attention is turning to the top floor, the projections for how many rate cuts could be delivered this year. A strong US economy and sticky inflation has some investors questioning if the Fed is going to stand by his projection of three possible cuts this year.
A lot more will be known in less than two hours. Intel has been awarded up to $8.5 billion under CHIPS Act funding in the United States. The White House says the chipmaker is also in line to receive an additional $11 million in loans.
The funding is aimed at bringing more microchip production back to the US and Intel, for its part, says it plans to spend $100 billion across four states to build and expand its chipmaking facilities.
Chipotle Mexican Grill is announcing a 50 for one stock split. The faster company has seen its stock at record highs over the past year on strong earnings. A stock split is often seen as a strategy to make a company shares a little more accessible to the average investor. Right now in $2909 per share, one share of AAA, you're getting about a 4% bounce on this news.
Go check on the markets, we will check in on the TSX Composite Index first, up about one quarter of a percent.
South of the border, it's wait and see mode.
Right now the S&P 500 just sitting flat at 5178.
We are back with Craig Hutchison taking your questions about mining stocks. First one here. If you want to know if you are seeing any impact from the slowdown in China?
>> Yeah, absolutely.
China consumes more than 50% of most commodities, zinc, iron ore.
I think most evidence is probably in steel, steel prices out of China, and what that means for iron ore generally.
Iron ore, about 70% of all seaborne iron ore is imported to China and so you have seen the property market slowdown and that's been most prevalent over the last say two years, prices continue to fall, so I think this more has to do with iron ore.
40% of all the steel in China goes to the property market.
Other things like copper has offsets, electric vehicles and the greening of the grid.
It's probably been most prevalent with iron ore.
>> We are trying to figure out the dynamics of the Chinese economy. Has it been a bit of a surprise that officials in Beijing haven't been more active?
I think for a long time, every time you got a sense they might make a move, people were waiting for a big one but it never came in terms of stimulus.
>> A couple weeks back, they pledged 5% GDP growth but they did not provide any stimulus and people were hoping for that, particularly for the property market.
But there have been moves in the last few weeks. There was a mortgage cutback in February, so they are making some small moves to support that part of the economy.
The property market is around 25% of GDP so they have to make sure to support it to some degree but we haven't seen the stimulus that we hoped to see. Maybe later this year, depending on how things play out, if the property market continues to weaken I think there will be some kind of stimulus.
>> I think you were just mentioning iron ore. Those of you are wondering about Labrador Iron Ore. Can it be viewed as a defensive stock to benefit from infrastructure renewal efforts underway in North America and the world?
>> Yeah, I think to a certain degree.
It's still quite volatile, heavily exposed to the iron ore price but the fact that they have a topline dividend, pays about 8% dividend yield, provide some support here.
Half their production goes to North America and Europe, the rest goes to China.
So they are not too heavily focused on North America. I think was really interesting with iron ore royalty Corp. is the fact that we are seeing an energy transition here. There is a move to decarbonized the steel value chain and they produce a high iron ore concentrate, pellets, which will be a demand as the world shifts away from carbon intensive processes. You need very high quality iron ore material to go into those electric furnaces and that bodes well for Labrador due to their exposure.
>> When I think about how the viewer frame the question in terms of infrastructure, when you get into election cycles, it seems like politician villains like to talk about renewing aging infrastructure.
And then you're waiting on the other side of the election to see commitments in terms of cash. It is not always hard to gauge, with the difference between what's being promised and what showing up?
>> Yes. You are seeing that in China.
He talked about the weakness in the property sector. One way that China has been able to offset that is by infrastructure spending. Last year of the structure growth was 8 to 10% year-over-year, they are still spending a lot in terms of inter-structure, roads, bridges, etc., so that has propped up the market and supported steel and iron ore prices. In America, it's hard to gauge that.
The US is just not as big a steel producer as they once were.
>> Another question from the audience. Can you please explain why silver is more volatile than gold?
What is your general view on silver here?
>> Silver is about 1/10 of the market size of gold so that is part of it.
It has a higher beta, much smaller market.
Silver is also exposed to different dynamics than gold. Gold is stored value, precious metal. Silver has two aspects.
If the percent of demand comes from industrial applications, so think solar panels, solar panels are now 10% of all demand for silver, so it can underperform.
If the economy starts to soften because of the industrial component, I obviously could also outperform because it can be more volatile. We have seen silver underperform gold. That could easily reverse. One element missing from the silver market is ETFs.
Last year was a record year for industrial demand with ETFs that do tie up some silver, that has weakened since the hashtag silver squeeze we saw back in 2021.
If that were to reverse, you could see a tight market for silver. Overall, supply demand elements are quite strong for silver going forward.
It's high conductivity so is used in electric vehicles and solar panels and other applications for the future.
>> I know part of the gold story has been central bank buying over the past two years but central banks don't really hold that much silver?
>> No, not as much as gold.
You have seen in the last two months that imports have picked up from India year-over-year.
We have seen a strong demand in January and February.
That bodes well for silver prices.
>> Interesting stuff. TD Cowen covers Labrador Iron Ore.
For full disclosure on the companies covered by TD Cowen, a division of TD Securities, please see the link to the TD Securities website at the end of this program.
As always, make sure you do your own research before making any investment decisions.
we are going to get back to your questions for Craig Hutchison on mining stocks 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.
Reddit highly anticipated public offering is set for tomorrow.
If you are interested in finding new issuance on WebBroker, there is a way to do that. He and Cormier will tell us about that.
>> TDI client can participate in IPOs. The only thing to keep in mind especially right now and you're talking about Reddit is most US IPOs do not file prospectuses in Canada so they are typically only available to US residents and investors.
For this particular instance, we have to wait for the secondary market to participate.
However, there are a lot of common stocks as well as other types of investments that do you have what is called new issues in the market and you can participate within WebBroker.
Let's hop in and see where you can find that information. We are going to hop into trading on the website and we are going to go on the left under buy and sell and click new issues.
If you have never been to this page before, you're going to see something more like this which is going to show you an option to put an email address in here, to choose notifications for different types of new issues that you would like to be notified of if they are coming up and then once you have gone through all of that we are going to see our current offerings.
This is a listing of different types of new issues that are currently available.
You will notice that they are not all common shares. There are limited partnerships, fixed income, equity linked notes. If we come over here to historical offerings, you will see that there are some common shares as well that have been issued.
In these cases, they are not necessarily IPOs. In some cases, they could be treasury issuances or something like that for a company that is already live and they are issuing some additional shares as well.
There is a lot of information here or you can kind of find out what's coming up, what has been available recently.
If you are going under and putting your email address in there and requesting those, that information about those new issues, you will receive an email to direct you to come here to see what is available and go through the whole process.
>> And if someone is taking a look at initial public offerings, may be getting used to the space in the market for the first time, they may come across the phrase an expression of interest. Can you explain to the audience what that is?
>> Absolutely.
Always with any self-directed investor, with any decision you make, you want to make sure you are doing your research to understand the company, understanding what's going on with this particular company. Once you've done all that, in the case of an IPO or a new issue, you're going to do with called an expression of interest. The topic of the platform and look at what that looks like.
For example, let's just go into one of these. I know they are not stocks but we will use one of these for an example.
I'm just going to click here on one.
You will notice as we go through we've got information about the issue. We got the prospectus here. This is where we can get a lot of information about the specific issue. As we scroll down at the bottom, you will notice the term place expression of interest.
The one thing you need to be cautious here, the name might suggest that expression of interest means you're only expressing interest but it is actually a firm commitment to buy the number of shares, units, bonds or metrics that you requested.
An expression of interest doesn't necessarily mean it's just saying maybe, it's an actual guarantee that you will participate if you fill in this type of offer. What happens is when you click to place an expression of interest, you click on the account you would like to participate with and then he put the quantity that you would like to be able to participate with. The other thing to keep in mind is once you've submitted your expression of interest, there is not a guarantee it will actually be filled. You could either be not filled at all, partially filled or totally filled. He thought in mind as we go through this process.
An impression of interest as you saying yes, absolutely, I do want to do this but it doesn't mean that that will actually work out.
While we are on this whole process of talking about these IPOs, let's take a quick look, you mentioned read it, so let's take a minute to look at what that particular stock looks like right now before it's actually gone live.
Under research, I'm going to click on stocks and I actually think I have… I don't have it.
Let's see… I think it's RDDT. Let's go ahead and click. This page has no information really yet.
It's brand-new, it's not live, it's not being traded yet.
But we've got some news available and once it's trading live, this is where you will start to be able to see some information about pricing and be able to go in and participate on the secondary market and buy the stock after the IPO has taken place.
>> Interesting stuff. Thanks for that.
>> Thanks, Greg.
>> Our thanks to Caitlin Cormier.
And make sure to check out the learning centre in WebBroker for more educational videos, live, interactive master classes and upcoming webinars.
Before we get back to your questions about mining stock for Craig Hutchison, a reminder of how you can get in touch with us. Do you have a question about investing or what's driving the markets?
Our guests are eager to hear what's on your mind, so send us your questions.
There are two ways you can get in touch with us.
You can send us an email anytime at moneytalklive@td.com or you can use the question box right below the screen here on WebBroker. Just write in your question and hit send.
We'll see if one of our guests can get you the answer right here at MoneyTalk Live.
We are back with Craig Hutchison, take your question about mining stocks.
Gold has been strong. What is your opinion on investing in the metal versus mining companies? Here on the platform we cannot give investing advice but we can talk about the differences between investing in gold or investing in a gold miner.
>> It depends what you are looking for. If you're looking for more beta, I think you want to look at the equities.
They haven't really performed well with commodity price.
So I think there is a bit of a catch-up trade relative to historical paths. A lot of companies are trading at a discount.
It depends on your risk tolerance and what you are looking for.
If you are looking for more leverage, I need a way to play it would be more the equities versus the gold price itself.
You mentioned the miners trading at a discount, the net asset value, for someone not familiar with those metrics, did you say more?
>> We are looking for more positive free cash flow. I think that will happen if there is a move in the gold price.
There is a hesitance in the market given that over the past couple of years companies are not delivered on growth or free cash flow but that could change quickly.
>> Another question from the audience. He talked uranium earlier.
We have viewers saying, I already OWN Cameco, are there other ways to play in the uranium space?
>> There are a lot of good developers out there. I would point to Denison Mines, namely cover. They have a high quality, high grade, highest grade project in the world called wheel River. They are developing it through a leech and recovery method. It's a low-cost method of recovery used extensively in Kazakhstan. They are applying that to their acid in the Athabasca Basin. They are moving that project to the permitting process right now.
They are a year, year and 1/2 away from getting the permits. That's when you could look at. Uranium energy Corp. is one as well, they have a diversified asset base, a lot in the US. They have two permanent production spoke operations and they have assets as well in the Athabasca Basin.
They hold some physical uranium on their balance sheet as well.
Provide some sort of tangible value there which can be used. They are looking to restart one of their operations in August of this year.
And then there's NexGen Energy, and other namely cover.
They have the biggest higher grade projects in the world. That's advancing very quickly through the permitting process.
It's possible they will get the permits of the next six months and they are looking to put that asset into production in the 2028, 2029 timeframe and it has the potential to be the highest producing uranium asset in the world.
>> Is the issue of mostly around execution and getting permits?
>> Permitting is the biggest hurdle. In Canada, it can take years. Federal approvals take longer than Prudential approvals. In the case of Next Gen, they have a lot of support from their Indigenous partners, they have agreements with four Indigenous groups in the area.
That helps them in the process but permitting is one of these unknowns.
I think these guys are doing a good job moving through that process.
>> Question on Copper. What do you expect in the next two years?
>> Late last year, you had issues around First Quantum's Cobre Panama mine. There is social issues with that project. The company had to put her on care maintenance.
At this point, it's unclear if or when or effort that project comes online. Then you have AngloAmerican. They cut the production quite substantially for 2024 and 2025.
If you put those two projects together, that effectively took out almost 2% of the global supply, very substantial, in a very short period of time.
What happened is the concentrate market, what they are producing, has gone very tight. When the market gets tight, smelters, particularly in China, are bidding for the concentrate.
Dave had to lower their treatment and refining charges to about $20 per ton which are levels that are effectively not profitable for smelters. You have seen China, some smelters announce closures or putting smelters on care maintenance and there are issues in Africa as well around smelter production just given some power supply constraints. What that will end up doing is really tightening up the refined market.
Market spiky leaders are certainly moving on that we have seen copper rally strongly.
The supply demand dynamics are strong.
There is a tailwind with electric vehicles. Electric vehicle uses three times the amount of copper that internal combustion engines would use. Tailwinds with EVs, with wind turbines, solar panels and all the infrastructure required to tile those things together, charging stations.
So there is a very nice talent for copper in an industry that is oversupplied, it's a diversified industry, there is no one big project that will overwhelm the market so it bodes well for the future for copper.
>> We are going to see on copper here because we have of you are asking about your thoughts on Capstone Copper.
>> Certainly, if you are looking for exposure to copper, Capstone is a name worth looking at, 95% plus of their revenue comes from copper.
They have four minds, all in good jurisdictions in the US, Mexico and two in Chile.
Right now, their key focus is there ramp-up of projects moving from construction to ramp up. We are getting a 40% increase in production. That's going to drive down costs because right now they have one operation at high cost. Switching to sulfide is a low-cost method and what you will see in the next 12 months is what a big transformation with regard to Capstone. The plan is to exit this year at around 250,000 tons of copper which is quite meaningful for a mid-cap copper name.
It certainly one that's worth looking at.
Long-term, Capstone has other small, organic project they could bring online.
If you look constructive you on copper, Capstone's got a lot of projects in the queue that they could bring online to satisfy the demand.
>> What would be the risk surrounding them like this? Is it execution, the copper market itself?
>> It's a mix. Ramp ups are always challenging. The flowsheet they are bringing on a similar to what their contractor has done in the past.
It's largely de-risk but ramp ups are always an issue. Certainly, it copper prices were to check back in a meaningful way, given their leverage, the share prices would pull back.
>> TD Cowen covers Cameco, Capstone Copper and others.
For full disclosure on the companies covered by TD Cowen, a division of TD Securities, please see the link to the TD Securities website at the end of this program.
Are going to get back to your questions for Craig Hutchison on mining stocks and just moments time.
As always, make sure you do your own research before making any investment decisions.
and a reminder that you can get in touch with us at any time.
Do you have a question about investing or what's driving the markets?
Our guests are eager to hear what's on your mind, so send us your questions.
There are two ways you can get in touch with us.
You can send us an email anytime at moneytalklive@td.com or you can use the question box right below the screen here on WebBroker. Just write in your question and hit send.
We'll see if one of our guests can get you the answer right here at MoneyTalk Live.
[music] We are having a look at TD's Advanced Dashboard, a platform designed for active traders available through TD Direct Investing.
This is the heat map function, it gives us a view of the market movers.
We will start with the TSX 60, we will go through price and volume. A bit of a pullback today on the price of West Texas intermediate.
It has been rallying in recent sessions for this little downward pressure in the energy space.
In terms of price movements, nothing too dramatic. 10 he was down one third of a percent.
Trapp, TRP, down about two thirds of a percent.
Let's try to find some green on the screen. A bit of a rally in Shopify, it's up 1% right now.
GAL, that would be Gildan Activewear, we don't talk about them a lot on the show, it's been an interesting story though.
Yesterday, there was news that there have been expressions of interest in buying the name and that the board is set up a special committee at Gildan Activewear to explore those expressions of interest in buying the name.
This happens from time to time in the market. What makes the story more interesting is that the cofounder and CEO was dismissed by the board late last year and shareholders are trying to get Mr.
Chamandy back in the top job and now this is happening. A lot going on with the story. The stock was up about 2% today.
It popped yesterday on the needs of a possible sale. I have a feeling we will hear more on this one in days to come.
A quick check in on the S&P 100.
The S&P 500 and NASDAQ are flat ahead of the Fed at 2 PM Eastern time. As we tripped through the board here, we have some movers. Nvidia is holding what is been billed the Woodstock of AI this week, a developer conference. They announced a new chip.
It has not done a lot for Nvidia share price but it seems to have get some of their competitors including AMD down about 4% today.
In terms of green on the screen, you got a little bit going on with Ford, it's up about 2 1/2%. You can get more information on TD Advanced Dashboard by visiting TD.com/advanceddashboard.
We are back now with Craig Hutchison from TD Cowen, talking mining stocks. Let's get to another work question.
Can we get your view on Ero Copper?
>> Ero Copper, yeah, certainly. It's similar to Capstone.
It's a mid-cap growth story in the copper space.
They have two assets right now in production.
They are bringing on a new asset. It's an open pit copper mine in Brazil.
That's going to be their main growth driver. The project is largely de-risk, about 90% of construction is complete.
They are looking to commission that for the first half of this year and then bring it onto production for the second half of this year.
The company is moving from around 45,000 tons of copper production year, they are going to double that up to 100,000 tons of copper per year.
It also has a lot of expiration upside.
Major discoveries at their gold operation and another operation as well which is a joint venture with another organization.
Lots of growth for the name. It's also generally a lower-cost operation then names like Capstone just given that the cost structure in Brazil. If you are looking for exposure to copper the, that the name to look at.
>> What risks should people be aware of?
>> Similar to Capstone, to ramp-up story.
It should be finished by the first half of this year. If there are any issues, it could be around the ramp-up and delivering on that. If copper prices were to check back, there might be some concerns over financing or balance sheets and you can may be read into that.
Lower copper prices, concerns over balance sheets, this is the things to look at.
>> Let's take another question from the audience. If your wants to know if your guest sees any opportunity in the materials considering the EV push? We talked a little bit about copper and EVs.
What's going on in that?
>> Certainly, I think EVs touches a lot of spaces. We talked about copper, the tripling of demand from internal combustion engine, more material in an electric vehicle.
Certainly positive tailwinds. Batteries in North America tend to use nickel, magnesium, cobalt chemistry and it gives you that energy density so they are nickel intensive batteries here. In China they use iron phosphate batteries. They don't have nickel. But here give the cold temperatures, there is a lot of demand coming from the nickel space. The one issue with nickel that was too much supply has been coming out of Indonesia.
It's possible that you could see nickel as a bifurcation of the market.
The inflation reduction act has put in certain provisions that require the nickel, the cobalt, manganese, lithium to be sourced from either the US or from free-trade countries so Indonesia would not qualify. If you want those credits that you get for your cars, tenses, etc., you need to purchase materials that come from this free-trade agreements.
That should help hopefully balance the marketing of positive tailwinds for producers in Australia or the US.
Obviously, cobalt is another metal that's going to benefit from and has benefited from electric vehicles.
Lithium is another one as well.
It had an incredible run up the last couple of years. It's come back quite substantially. There have been, with higher prices, a supply response. We have seen the supply response. The man from EVs is still growing.
13+ million vehicles on the road last year. That's up 30% from 2022 levels.
The forecast this year's for 17 million. A lot of that growth is still coming from China. We have seen some issues around the North American demand but as you look forward to the future, there is going to be a long tailwind in demand spikes from electric vehicles and the whole EV transition in general.
That's kind of why prices have come back.
>> Before he let you go, we have so many questions that came in during the show, it's a nice way to run back to the beginning of the show. We have the US Federal Reserve giving us or a decision in about an hour and 20 minutes time. We are not expecting any changes today. It's all about the cuts going forward.
What kind of impact, if we do start to see those cuts, can we expect perhaps in the commodity space later this year?
>> I think that the most natural sort of commodity to look at would be gold and maybe silver as well, the precious metals.
They tend to outperform said cutting cycles. The other quantities obviously we talked about earlier, if you do get a weakening of the US dollar, there is usually tailwind for copper and other commodities as well.
But I think it's difficult to say.
Hopefully the cuts come because we are having a soft landing in a hard landing because again, these commodities are very intensive.
>> Great having you on the program.
>> Thank for having me.
>> Our thanks--first I will tell you that TD Cowen covers Ero Copper and Capstone.
For full disclosure on the companies covered by TD Cowen, a division of TD Securities, please see the link to the TD Securities website at the end of this program.
As always, make sure you do your own research before making any investment decisions.
our thanks to Craig Hutchison, director of equity research at TD Cowen, for joining us.
Stay tuned for tomorrow show. We didn't get a chance to get your questions today, we'll try to get them into later chose of course.
Later today, we have a lot going on. Later this afternoon, we will be talking about the Fed. Andrew Hencic will join me, Senior economist from TD Economics, we will get his reaction to the US Federal Reserve rate decision at 2 PM Eastern and what could be in for rates going forward.
Keep an eye out for the video.
On tomorrow's show, Scott Colbourne, Managing Director and head of fixed income at TD Asset Management wants to take your questions about fixed income. There will be a Fed flavour to that discussion as well. A writer that you get a Headstart with your questions. Just email MoneyTalkLive@TD.com. That's all the time you have the program today. Thanks for watching. We'll 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, TD Cowen's Craig Hutchison will join us and discuss the outlook for the mining sector as it grapples with cost pressures. And in today's WebBroker education segment, head of Reddit's highly anticipated market debut, Caitlin Cormier is going to show us where to find new stocks here on the platform. Here's how you can get in touch with us.
Just email moneytalklive@td.com or fill out the viewer response box under the video player on WebBroker.
Before we get to all that and our guest of the day, let's get you an update on the markets.
We will start here with the TSX Composite Index.
Of course, it is fed day. We are awaiting that interest rate decision at 2 PM Eastern time.
Not in anticipation of a change of the Fed's key rate but more so with their language is around potential rate cuts this year.
Right now we have 40 points on the table for the TSX Composite Index, up about 1/5 of a percent.
Nothing too impressive to the upside.
Among some of the movers, we have one up and one down.
Aritzia, let's check in on the women's retailer.
It's got a boost of 5%, $38.30 per share.
Crescent Point Energy, I am noticing a pullback. Crude has been on a run lately.
West Texas intermediate down about 2%, taking down some of the energy names.
$10.63 per share for Crescent Point, down a little more than 1%. South of the border, the market is pretty flat waiting to see what will get at 2 PM Eastern time as the US Federal Reserve emerges from their two day meeting.
Up less than 1/3 of a percent to the upside. The NASDAQ is also pretty much flat as well, trying to figure out what's going to happen, with the Fed will tell us about the future path.
In terms of stocks that are moving, there aren't many outsized movements. Ford is getting a bit of a bid, at $12.57 per share, for it is up about 2 1/4%. And that is your market update.
Rising costs have been an issue for many sectors, including mining, but are there some signs that those pressures may be easing? 20 etc. discusses Craig Hutchison, Dir. for equity research at TD Cowen.
Welcome to the program. First time here.
>> Things are having me on the show.
>> Tell me about your coverage area.
>> I cover metals for the most part, copper, silver, uranium and iron ore names.
>> Tell me a bit about what they have gone through and where we might be headed.
>> If you look back about three years ago, the start of the pandemic, you had a lot of supply chain disruptions.
You later on on the fact that we had the war in Ukraine, all of that has contributed to very high inflation in the mining area specifically.
Take a look back, say last year, mining inflation costs were up maybe around 10%.
That is starting to come off the boil now.
Most companies are sort of guiding to inflation to be at that 3 to 5% range, above CPI, but it has come off.
Some of those are currencies coming off relatives the US dollars.
It's still an issue. Particularly the North American market, it's very difficult, as you can imagine, to get minors to go to the sites. It's a very tight labour market.
You're competing against other industries like oil and gas, it's difficult to secure people in places in North America and Australia were the market is tight.
>> Interesting backdrop. We've had questions from people who watch the program that they look at the say he rallied the price of gold, or any metal that's been rallying lately, then they look at the actual stocks connected to the commodity and they wonder why they are not fully participating. It is cost inflation part of that story?
>> Absolutely. The average price last year for gold was 1840, up 8% year-over-year, but costs were up almost the same amount, so margins remain flat despite rising gold price environment. I think equities, for them to appreciate, you need to see that margin expansion happening. We think that will happen if gold starts to rise and the Fed starts cutting later this year which is our expectation.
It's been challenging for gold also competing against other asset classes.
It's been competing against the S&P 500 which was up more than 20% last year, it's competing against bitcoin, it's competing against money market funds which are at 5% and gold does not give you an earnings yield so you have to basically, Golda performed an inflationary environment, it will perform when real rates are to fall and we think that will happen.
>> Let's talk about that interest rate path and delivery of cuts later this year which is the expectation. When it comes to the equity side of things, you wonder how much of it was already priced in and how much room there is to run. When it comes to the price of gold, how much have the expectation of cuts been priced in?
>> We've done some work on that. We have looked at previous cycles over the past four years.
On average, gold tends to rally around 34% when the Fed starts to make those first cuts.
The last hike was July of last year. Since that point, gold has rallied 10%.
So I still think there is a long way to go for gold.
The issue has been I think expectations for rate cuts have been, they haven't happened so far.
>> They are dialled back from where we were at the start of the year.
>> If you look at the consensus view, we should've had rate because last year.
TDC right now is for three cuts this year, 75 basis points this year, 75 basis points next year. But the expectations around that keep getting pushed out. I think the latest is now June or July.
I think we need to see those actual rate cuts to see.
>> Let's talk about copper. We have seen some movement there as well.
>> Copper has some good supply demand dynamics.
One interesting thing, in terms of what is the incentive price to bring a new supply and that's something that has come up when he talked about inflation. If you look back a few years ago, I think the incentive price for copper to generate decent return on a project was probably around 350 per pound.
Today, that incentive price is probably north of 450 to 5 dollars per pound.
What that means is a lot of projects are not going to get sanctioned at the current prices so we need to see prices move higher in order to incentivize new supply.
The positive aspect of that is those who are in it now, you're not gonna see a flood of new supply on the market so supply will hold firm given the supply demand dynamics will be positive for the foreseeable future.
>> When it comes to central bank rate cuts, our other commodities as sensitive as gold?
>> If it results in the US dollar weakening, that's usually a positive for the commodities more broadly but if the Fed is cutting because the economy is slowing, copper does heavily tied to global GDP, that's not great for copper.
But if it is more of a soft landing, we started to see some stimulus happening in China, that could cause prices to go higher.
>> Where do we think we may going forward here?
>> It's been very topical. I think the fundamentals for uranium are the best they've been in 15 years, going back to the Fukushima disaster.
If you go back to say 2018, uranium prices were under $20 per pound, some of the big producers in the world like Cameco took leadership, they curtail production, took a big step to tightening up supply and then a couple of years after that we had a bunch of ETFs come to the market and start to acquire pounds. They have taken out almost 60 billion pounds and hundred and 80 to 200 million pound for your market so that's substantial. They've tightened up the market.
Uranium touch over $100 per pound about two months ago. It's come back a little bit but I think if you just look at the overall demand that you are seeing going forward, the first time in my career when you see governments unilaterally sponsoring uranium at the Cobb 28 conference a couple months back, you had 22 different countries coming out in support of nuclear, pledging to triple their nuclear capacity by 2050, including Canada and the US, there is bipartisan support in the US, both under abided and potentially trump if he gets back into power. I know there are concerns about the ministration change but there is bipartisan support.
>> TD Cowen covers Cameco.
For full disclosure on the companies covered by TD Cowen, a division of TD Securities, please see the link to the TD Securities website at the end of this program.
In terms of nuclear, what is the biggest risk here?
Is the risk that the governments somehow turn away from it?
>> Yeah, if there was another Black Swan event, another Fukushima or issue in Ukraine, that would derail it.
But I guess the rise of renewable power has cut into nuclear, the demand and outlook in the past, but I think the view is that the wind doesn't always blow in the sun doesn't always shine so for baseload no carbon intensive power, there is no substitute for nuclear.
>> Interesting stuff in a great start to the program.
We are going to get your questions about mining stocks for Craig Hutchison in just a moment 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.
Investors are awaiting another rate decision from the US Federal Reserve at 2 PM Eastern time. While the market is not accepting a change to the Fed's key lending rate, attention is turning to the top floor, the projections for how many rate cuts could be delivered this year. A strong US economy and sticky inflation has some investors questioning if the Fed is going to stand by his projection of three possible cuts this year.
A lot more will be known in less than two hours. Intel has been awarded up to $8.5 billion under CHIPS Act funding in the United States. The White House says the chipmaker is also in line to receive an additional $11 million in loans.
The funding is aimed at bringing more microchip production back to the US and Intel, for its part, says it plans to spend $100 billion across four states to build and expand its chipmaking facilities.
Chipotle Mexican Grill is announcing a 50 for one stock split. The faster company has seen its stock at record highs over the past year on strong earnings. A stock split is often seen as a strategy to make a company shares a little more accessible to the average investor. Right now in $2909 per share, one share of AAA, you're getting about a 4% bounce on this news.
Go check on the markets, we will check in on the TSX Composite Index first, up about one quarter of a percent.
South of the border, it's wait and see mode.
Right now the S&P 500 just sitting flat at 5178.
We are back with Craig Hutchison taking your questions about mining stocks. First one here. If you want to know if you are seeing any impact from the slowdown in China?
>> Yeah, absolutely.
China consumes more than 50% of most commodities, zinc, iron ore.
I think most evidence is probably in steel, steel prices out of China, and what that means for iron ore generally.
Iron ore, about 70% of all seaborne iron ore is imported to China and so you have seen the property market slowdown and that's been most prevalent over the last say two years, prices continue to fall, so I think this more has to do with iron ore.
40% of all the steel in China goes to the property market.
Other things like copper has offsets, electric vehicles and the greening of the grid.
It's probably been most prevalent with iron ore.
>> We are trying to figure out the dynamics of the Chinese economy. Has it been a bit of a surprise that officials in Beijing haven't been more active?
I think for a long time, every time you got a sense they might make a move, people were waiting for a big one but it never came in terms of stimulus.
>> A couple weeks back, they pledged 5% GDP growth but they did not provide any stimulus and people were hoping for that, particularly for the property market.
But there have been moves in the last few weeks. There was a mortgage cutback in February, so they are making some small moves to support that part of the economy.
The property market is around 25% of GDP so they have to make sure to support it to some degree but we haven't seen the stimulus that we hoped to see. Maybe later this year, depending on how things play out, if the property market continues to weaken I think there will be some kind of stimulus.
>> I think you were just mentioning iron ore. Those of you are wondering about Labrador Iron Ore. Can it be viewed as a defensive stock to benefit from infrastructure renewal efforts underway in North America and the world?
>> Yeah, I think to a certain degree.
It's still quite volatile, heavily exposed to the iron ore price but the fact that they have a topline dividend, pays about 8% dividend yield, provide some support here.
Half their production goes to North America and Europe, the rest goes to China.
So they are not too heavily focused on North America. I think was really interesting with iron ore royalty Corp. is the fact that we are seeing an energy transition here. There is a move to decarbonized the steel value chain and they produce a high iron ore concentrate, pellets, which will be a demand as the world shifts away from carbon intensive processes. You need very high quality iron ore material to go into those electric furnaces and that bodes well for Labrador due to their exposure.
>> When I think about how the viewer frame the question in terms of infrastructure, when you get into election cycles, it seems like politician villains like to talk about renewing aging infrastructure.
And then you're waiting on the other side of the election to see commitments in terms of cash. It is not always hard to gauge, with the difference between what's being promised and what showing up?
>> Yes. You are seeing that in China.
He talked about the weakness in the property sector. One way that China has been able to offset that is by infrastructure spending. Last year of the structure growth was 8 to 10% year-over-year, they are still spending a lot in terms of inter-structure, roads, bridges, etc., so that has propped up the market and supported steel and iron ore prices. In America, it's hard to gauge that.
The US is just not as big a steel producer as they once were.
>> Another question from the audience. Can you please explain why silver is more volatile than gold?
What is your general view on silver here?
>> Silver is about 1/10 of the market size of gold so that is part of it.
It has a higher beta, much smaller market.
Silver is also exposed to different dynamics than gold. Gold is stored value, precious metal. Silver has two aspects.
If the percent of demand comes from industrial applications, so think solar panels, solar panels are now 10% of all demand for silver, so it can underperform.
If the economy starts to soften because of the industrial component, I obviously could also outperform because it can be more volatile. We have seen silver underperform gold. That could easily reverse. One element missing from the silver market is ETFs.
Last year was a record year for industrial demand with ETFs that do tie up some silver, that has weakened since the hashtag silver squeeze we saw back in 2021.
If that were to reverse, you could see a tight market for silver. Overall, supply demand elements are quite strong for silver going forward.
It's high conductivity so is used in electric vehicles and solar panels and other applications for the future.
>> I know part of the gold story has been central bank buying over the past two years but central banks don't really hold that much silver?
>> No, not as much as gold.
You have seen in the last two months that imports have picked up from India year-over-year.
We have seen a strong demand in January and February.
That bodes well for silver prices.
>> Interesting stuff. TD Cowen covers Labrador Iron Ore.
For full disclosure on the companies covered by TD Cowen, a division of TD Securities, please see the link to the TD Securities website at the end of this program.
As always, make sure you do your own research before making any investment decisions.
we are going to get back to your questions for Craig Hutchison on mining stocks 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.
Reddit highly anticipated public offering is set for tomorrow.
If you are interested in finding new issuance on WebBroker, there is a way to do that. He and Cormier will tell us about that.
>> TDI client can participate in IPOs. The only thing to keep in mind especially right now and you're talking about Reddit is most US IPOs do not file prospectuses in Canada so they are typically only available to US residents and investors.
For this particular instance, we have to wait for the secondary market to participate.
However, there are a lot of common stocks as well as other types of investments that do you have what is called new issues in the market and you can participate within WebBroker.
Let's hop in and see where you can find that information. We are going to hop into trading on the website and we are going to go on the left under buy and sell and click new issues.
If you have never been to this page before, you're going to see something more like this which is going to show you an option to put an email address in here, to choose notifications for different types of new issues that you would like to be notified of if they are coming up and then once you have gone through all of that we are going to see our current offerings.
This is a listing of different types of new issues that are currently available.
You will notice that they are not all common shares. There are limited partnerships, fixed income, equity linked notes. If we come over here to historical offerings, you will see that there are some common shares as well that have been issued.
In these cases, they are not necessarily IPOs. In some cases, they could be treasury issuances or something like that for a company that is already live and they are issuing some additional shares as well.
There is a lot of information here or you can kind of find out what's coming up, what has been available recently.
If you are going under and putting your email address in there and requesting those, that information about those new issues, you will receive an email to direct you to come here to see what is available and go through the whole process.
>> And if someone is taking a look at initial public offerings, may be getting used to the space in the market for the first time, they may come across the phrase an expression of interest. Can you explain to the audience what that is?
>> Absolutely.
Always with any self-directed investor, with any decision you make, you want to make sure you are doing your research to understand the company, understanding what's going on with this particular company. Once you've done all that, in the case of an IPO or a new issue, you're going to do with called an expression of interest. The topic of the platform and look at what that looks like.
For example, let's just go into one of these. I know they are not stocks but we will use one of these for an example.
I'm just going to click here on one.
You will notice as we go through we've got information about the issue. We got the prospectus here. This is where we can get a lot of information about the specific issue. As we scroll down at the bottom, you will notice the term place expression of interest.
The one thing you need to be cautious here, the name might suggest that expression of interest means you're only expressing interest but it is actually a firm commitment to buy the number of shares, units, bonds or metrics that you requested.
An expression of interest doesn't necessarily mean it's just saying maybe, it's an actual guarantee that you will participate if you fill in this type of offer. What happens is when you click to place an expression of interest, you click on the account you would like to participate with and then he put the quantity that you would like to be able to participate with. The other thing to keep in mind is once you've submitted your expression of interest, there is not a guarantee it will actually be filled. You could either be not filled at all, partially filled or totally filled. He thought in mind as we go through this process.
An impression of interest as you saying yes, absolutely, I do want to do this but it doesn't mean that that will actually work out.
While we are on this whole process of talking about these IPOs, let's take a quick look, you mentioned read it, so let's take a minute to look at what that particular stock looks like right now before it's actually gone live.
Under research, I'm going to click on stocks and I actually think I have… I don't have it.
Let's see… I think it's RDDT. Let's go ahead and click. This page has no information really yet.
It's brand-new, it's not live, it's not being traded yet.
But we've got some news available and once it's trading live, this is where you will start to be able to see some information about pricing and be able to go in and participate on the secondary market and buy the stock after the IPO has taken place.
>> Interesting stuff. Thanks for that.
>> Thanks, Greg.
>> Our thanks to Caitlin Cormier.
And make sure to check out the learning centre in WebBroker for more educational videos, live, interactive master classes and upcoming webinars.
Before we get back to your questions about mining stock for Craig Hutchison, a reminder of how you can get in touch with us. Do you have a question about investing or what's driving the markets?
Our guests are eager to hear what's on your mind, so send us your questions.
There are two ways you can get in touch with us.
You can send us an email anytime at moneytalklive@td.com or you can use the question box right below the screen here on WebBroker. Just write in your question and hit send.
We'll see if one of our guests can get you the answer right here at MoneyTalk Live.
We are back with Craig Hutchison, take your question about mining stocks.
Gold has been strong. What is your opinion on investing in the metal versus mining companies? Here on the platform we cannot give investing advice but we can talk about the differences between investing in gold or investing in a gold miner.
>> It depends what you are looking for. If you're looking for more beta, I think you want to look at the equities.
They haven't really performed well with commodity price.
So I think there is a bit of a catch-up trade relative to historical paths. A lot of companies are trading at a discount.
It depends on your risk tolerance and what you are looking for.
If you are looking for more leverage, I need a way to play it would be more the equities versus the gold price itself.
You mentioned the miners trading at a discount, the net asset value, for someone not familiar with those metrics, did you say more?
>> We are looking for more positive free cash flow. I think that will happen if there is a move in the gold price.
There is a hesitance in the market given that over the past couple of years companies are not delivered on growth or free cash flow but that could change quickly.
>> Another question from the audience. He talked uranium earlier.
We have viewers saying, I already OWN Cameco, are there other ways to play in the uranium space?
>> There are a lot of good developers out there. I would point to Denison Mines, namely cover. They have a high quality, high grade, highest grade project in the world called wheel River. They are developing it through a leech and recovery method. It's a low-cost method of recovery used extensively in Kazakhstan. They are applying that to their acid in the Athabasca Basin. They are moving that project to the permitting process right now.
They are a year, year and 1/2 away from getting the permits. That's when you could look at. Uranium energy Corp. is one as well, they have a diversified asset base, a lot in the US. They have two permanent production spoke operations and they have assets as well in the Athabasca Basin.
They hold some physical uranium on their balance sheet as well.
Provide some sort of tangible value there which can be used. They are looking to restart one of their operations in August of this year.
And then there's NexGen Energy, and other namely cover.
They have the biggest higher grade projects in the world. That's advancing very quickly through the permitting process.
It's possible they will get the permits of the next six months and they are looking to put that asset into production in the 2028, 2029 timeframe and it has the potential to be the highest producing uranium asset in the world.
>> Is the issue of mostly around execution and getting permits?
>> Permitting is the biggest hurdle. In Canada, it can take years. Federal approvals take longer than Prudential approvals. In the case of Next Gen, they have a lot of support from their Indigenous partners, they have agreements with four Indigenous groups in the area.
That helps them in the process but permitting is one of these unknowns.
I think these guys are doing a good job moving through that process.
>> Question on Copper. What do you expect in the next two years?
>> Late last year, you had issues around First Quantum's Cobre Panama mine. There is social issues with that project. The company had to put her on care maintenance.
At this point, it's unclear if or when or effort that project comes online. Then you have AngloAmerican. They cut the production quite substantially for 2024 and 2025.
If you put those two projects together, that effectively took out almost 2% of the global supply, very substantial, in a very short period of time.
What happened is the concentrate market, what they are producing, has gone very tight. When the market gets tight, smelters, particularly in China, are bidding for the concentrate.
Dave had to lower their treatment and refining charges to about $20 per ton which are levels that are effectively not profitable for smelters. You have seen China, some smelters announce closures or putting smelters on care maintenance and there are issues in Africa as well around smelter production just given some power supply constraints. What that will end up doing is really tightening up the refined market.
Market spiky leaders are certainly moving on that we have seen copper rally strongly.
The supply demand dynamics are strong.
There is a tailwind with electric vehicles. Electric vehicle uses three times the amount of copper that internal combustion engines would use. Tailwinds with EVs, with wind turbines, solar panels and all the infrastructure required to tile those things together, charging stations.
So there is a very nice talent for copper in an industry that is oversupplied, it's a diversified industry, there is no one big project that will overwhelm the market so it bodes well for the future for copper.
>> We are going to see on copper here because we have of you are asking about your thoughts on Capstone Copper.
>> Certainly, if you are looking for exposure to copper, Capstone is a name worth looking at, 95% plus of their revenue comes from copper.
They have four minds, all in good jurisdictions in the US, Mexico and two in Chile.
Right now, their key focus is there ramp-up of projects moving from construction to ramp up. We are getting a 40% increase in production. That's going to drive down costs because right now they have one operation at high cost. Switching to sulfide is a low-cost method and what you will see in the next 12 months is what a big transformation with regard to Capstone. The plan is to exit this year at around 250,000 tons of copper which is quite meaningful for a mid-cap copper name.
It certainly one that's worth looking at.
Long-term, Capstone has other small, organic project they could bring online.
If you look constructive you on copper, Capstone's got a lot of projects in the queue that they could bring online to satisfy the demand.
>> What would be the risk surrounding them like this? Is it execution, the copper market itself?
>> It's a mix. Ramp ups are always challenging. The flowsheet they are bringing on a similar to what their contractor has done in the past.
It's largely de-risk but ramp ups are always an issue. Certainly, it copper prices were to check back in a meaningful way, given their leverage, the share prices would pull back.
>> TD Cowen covers Cameco, Capstone Copper and others.
For full disclosure on the companies covered by TD Cowen, a division of TD Securities, please see the link to the TD Securities website at the end of this program.
Are going to get back to your questions for Craig Hutchison on mining stocks and just moments time.
As always, make sure you do your own research before making any investment decisions.
and a reminder that you can get in touch with us at any time.
Do you have a question about investing or what's driving the markets?
Our guests are eager to hear what's on your mind, so send us your questions.
There are two ways you can get in touch with us.
You can send us an email anytime at moneytalklive@td.com or you can use the question box right below the screen here on WebBroker. Just write in your question and hit send.
We'll see if one of our guests can get you the answer right here at MoneyTalk Live.
[music] We are having a look at TD's Advanced Dashboard, a platform designed for active traders available through TD Direct Investing.
This is the heat map function, it gives us a view of the market movers.
We will start with the TSX 60, we will go through price and volume. A bit of a pullback today on the price of West Texas intermediate.
It has been rallying in recent sessions for this little downward pressure in the energy space.
In terms of price movements, nothing too dramatic. 10 he was down one third of a percent.
Trapp, TRP, down about two thirds of a percent.
Let's try to find some green on the screen. A bit of a rally in Shopify, it's up 1% right now.
GAL, that would be Gildan Activewear, we don't talk about them a lot on the show, it's been an interesting story though.
Yesterday, there was news that there have been expressions of interest in buying the name and that the board is set up a special committee at Gildan Activewear to explore those expressions of interest in buying the name.
This happens from time to time in the market. What makes the story more interesting is that the cofounder and CEO was dismissed by the board late last year and shareholders are trying to get Mr.
Chamandy back in the top job and now this is happening. A lot going on with the story. The stock was up about 2% today.
It popped yesterday on the needs of a possible sale. I have a feeling we will hear more on this one in days to come.
A quick check in on the S&P 100.
The S&P 500 and NASDAQ are flat ahead of the Fed at 2 PM Eastern time. As we tripped through the board here, we have some movers. Nvidia is holding what is been billed the Woodstock of AI this week, a developer conference. They announced a new chip.
It has not done a lot for Nvidia share price but it seems to have get some of their competitors including AMD down about 4% today.
In terms of green on the screen, you got a little bit going on with Ford, it's up about 2 1/2%. You can get more information on TD Advanced Dashboard by visiting TD.com/advanceddashboard.
We are back now with Craig Hutchison from TD Cowen, talking mining stocks. Let's get to another work question.
Can we get your view on Ero Copper?
>> Ero Copper, yeah, certainly. It's similar to Capstone.
It's a mid-cap growth story in the copper space.
They have two assets right now in production.
They are bringing on a new asset. It's an open pit copper mine in Brazil.
That's going to be their main growth driver. The project is largely de-risk, about 90% of construction is complete.
They are looking to commission that for the first half of this year and then bring it onto production for the second half of this year.
The company is moving from around 45,000 tons of copper production year, they are going to double that up to 100,000 tons of copper per year.
It also has a lot of expiration upside.
Major discoveries at their gold operation and another operation as well which is a joint venture with another organization.
Lots of growth for the name. It's also generally a lower-cost operation then names like Capstone just given that the cost structure in Brazil. If you are looking for exposure to copper the, that the name to look at.
>> What risks should people be aware of?
>> Similar to Capstone, to ramp-up story.
It should be finished by the first half of this year. If there are any issues, it could be around the ramp-up and delivering on that. If copper prices were to check back, there might be some concerns over financing or balance sheets and you can may be read into that.
Lower copper prices, concerns over balance sheets, this is the things to look at.
>> Let's take another question from the audience. If your wants to know if your guest sees any opportunity in the materials considering the EV push? We talked a little bit about copper and EVs.
What's going on in that?
>> Certainly, I think EVs touches a lot of spaces. We talked about copper, the tripling of demand from internal combustion engine, more material in an electric vehicle.
Certainly positive tailwinds. Batteries in North America tend to use nickel, magnesium, cobalt chemistry and it gives you that energy density so they are nickel intensive batteries here. In China they use iron phosphate batteries. They don't have nickel. But here give the cold temperatures, there is a lot of demand coming from the nickel space. The one issue with nickel that was too much supply has been coming out of Indonesia.
It's possible that you could see nickel as a bifurcation of the market.
The inflation reduction act has put in certain provisions that require the nickel, the cobalt, manganese, lithium to be sourced from either the US or from free-trade countries so Indonesia would not qualify. If you want those credits that you get for your cars, tenses, etc., you need to purchase materials that come from this free-trade agreements.
That should help hopefully balance the marketing of positive tailwinds for producers in Australia or the US.
Obviously, cobalt is another metal that's going to benefit from and has benefited from electric vehicles.
Lithium is another one as well.
It had an incredible run up the last couple of years. It's come back quite substantially. There have been, with higher prices, a supply response. We have seen the supply response. The man from EVs is still growing.
13+ million vehicles on the road last year. That's up 30% from 2022 levels.
The forecast this year's for 17 million. A lot of that growth is still coming from China. We have seen some issues around the North American demand but as you look forward to the future, there is going to be a long tailwind in demand spikes from electric vehicles and the whole EV transition in general.
That's kind of why prices have come back.
>> Before he let you go, we have so many questions that came in during the show, it's a nice way to run back to the beginning of the show. We have the US Federal Reserve giving us or a decision in about an hour and 20 minutes time. We are not expecting any changes today. It's all about the cuts going forward.
What kind of impact, if we do start to see those cuts, can we expect perhaps in the commodity space later this year?
>> I think that the most natural sort of commodity to look at would be gold and maybe silver as well, the precious metals.
They tend to outperform said cutting cycles. The other quantities obviously we talked about earlier, if you do get a weakening of the US dollar, there is usually tailwind for copper and other commodities as well.
But I think it's difficult to say.
Hopefully the cuts come because we are having a soft landing in a hard landing because again, these commodities are very intensive.
>> Great having you on the program.
>> Thank for having me.
>> Our thanks--first I will tell you that TD Cowen covers Ero Copper and Capstone.
For full disclosure on the companies covered by TD Cowen, a division of TD Securities, please see the link to the TD Securities website at the end of this program.
As always, make sure you do your own research before making any investment decisions.
our thanks to Craig Hutchison, director of equity research at TD Cowen, for joining us.
Stay tuned for tomorrow show. We didn't get a chance to get your questions today, we'll try to get them into later chose of course.
Later today, we have a lot going on. Later this afternoon, we will be talking about the Fed. Andrew Hencic will join me, Senior economist from TD Economics, we will get his reaction to the US Federal Reserve rate decision at 2 PM Eastern and what could be in for rates going forward.
Keep an eye out for the video.
On tomorrow's show, Scott Colbourne, Managing Director and head of fixed income at TD Asset Management wants to take your questions about fixed income. There will be a Fed flavour to that discussion as well. A writer that you get a Headstart with your questions. Just email MoneyTalkLive@TD.com. That's all the time you have the program today. Thanks for watching. We'll see you tomorrow.
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