Damian Fernandes

[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 will only see her.

We will take you through its moving the markets and answer your questions about investing.

Coming up on today show, TD Asset Management Damian Fernandes will give us his view on earnings season and what corporate America saying about the health of the economy.

And the Okolie will have a look at a new TD Economics report on whether the Bank of Canada will actually cut rates this year.

And in today's WebBroker education segment, Jason Hnatyk will show us how you can track global exchanges on the platform.

Here's how you can get in touch. Email moneytalklive@td.com or feel of the viewer response box under the video player on what broker.

before we get our guest of the day, let's get you an update on the markets. Of course, the big event of the day will be remarks fromFed chair Jerome Powell. This event that has already begun, we will see where those remarks start to land. We were modestly negative on the bay and Wall Street ahead of that but we have pushed into positive territory.

Right now the TSX is of 25 points, of 1/10 of a percent. Noticing a fairly substantial push into American prude.

Got West Texas intermediate of 3.7%, it continues to gain on the session.

This should play out on some of the energy names in Toronto. Got Cenovus right now 2575, up almost 3%.

Noticing some weakness in Shopify. It had a pretty good run lately. At 6764, got that text play here down on Bay Street by 2 1/2%. South of the border, Wall Street is eagerly awaiting anything Jerome Powell has to say about the state of everything and anything, but we are positive as well. It's pretty modest at the S&P 500, up four points right now, 1/10 of a percent.

The tech heavy NASDAQ, some of the mega-cap Tech names not doing too poorly today. It is up almost shy of half of a percent, including Microsoft.

We had the mega-cap Tech names reporting all through last week. Microsoft right now up about 2% during the lunch hour trading session, 264 bucks and change per share. That's your market update.

One of the trends we have seen this earnings season is layoffs and growth warnings from big Tech names, but should that worry investors about where the broader markets are headed? Joining us now to discuss his Damian Fernandes, portly manager with TD Asset Management. Great to have you back.

>> Pleasure as always.

>> This was the earnings season where everyone was saying brace yourselves, we are going to hear from the corporate leaders. What should we be thinking about?

>> The last time I was on the show was earnings season.

I feel a trend here, a consistency in dissecting earnings. The last time I was on the show, if you recall, was Q3 earnings.

The questions then were, how bad is going to get?

Are we going to have positive earnings? We are in the thick of Q4 now and they are bad. But the market is not collapsing.

I will put the numbers to it. 70% of US companies by market Have reported.

The top line is growing about 5 1/2%, so think in line with inflation.

But the earnings-per-share are down about six, so you had a massive spread, five, -6, that spread is margin degradation across the board.

When I think about it, we are far enough into earnings season right now that we can probably draw some inferences.

The biggest sectors of the US market, whether it be communication services, Google, Facebook, consumer discretionary, Amazon, Tesla, information technology, Microsoft, Apple, these bellwether stocks, all of those stocks have registered earnings declines, double-digit earnings declines, some even much worse. So I think that's what's really, the reason earnings have taken a step down and are negative and are likely to continue for the rest of the year is because the stocks that were previously helping pull up the earnings number are now facing some real headwinds.

>> Okay, so let's talk about some of the announcements.

Obviously intact, it's become pretty routine, I'm not surprised when I login in the morning, Dell is cutting jobs among all these other companies. What does that tell us? There these companies with the broader economy and then you get the jobs report and people are wondering, how do I square the two?

>> There was a slew of different announcements.

I think about this in two ways.

Let's talk about the economy first and lots then talk about it in terms of the companies. In terms of the economy, I told it up the other day, just the public announcement so far, and there are about 91,000 jobs that have been announced.

91,000 jobs when last Friday the jobs report was over 500. Just for that in perspective. Yes.

Those jobs are not necessarily immediately there. We will see attrition over time.

But there were half a million jobs announced on Friday.

But I think the economy structurally broad-based is doing fine. We are seeing pockets of weakness.

We are not seeing evidence of whether those displacements in the technology sector that we are seeing right now are moving or affecting other sectors.

The jobs number on Friday was broad-based.

It was health, healthcare, education, services.

We are not seeing that yet.

When I think about the companies, though, I think this is probably a good thing because a lot of these technology companies were spending and hiring at will because they believed the pandemic, really, what happened in the pandemic was the tech games were the only game in town.

>> And change their lives but I bet that they thought it would change their lives forever.

>> Yes. They obviously over hired and overspent and now they are retrenching.

They still have very profitable companies. In your opening remarks, you said micro soft up on the day.

Microsoft has been up since earnings.

And earnings were negative.

the investor base is seeing the actual changes the company has madeto reduce the cost base to get back to the positive earnings trajectory.

> Considering that we have been through and what we are hearing this earnings season, what should we be thinking as investors about earnings longer-term?

>> So this year, most definitely we are likely going to have an earnings recession. It's a?.

If we have an economic recession or soft landing, full disclosure, I hate the term soft landing.

Nothing is soft about you losing your job or a downtrend in consumption. But likely, given the pace and magnitude of rate hikes that have already been announced, we probably have one or two more coming down, that is going to weigh on economic activity,which means growth is going to slow, earning so far negative, going to continue. When I think about earnings going forward, right, what is the trend? Not for earnings in 2023 but 2024? Are earnings in 2024 going to be higher than earnings in 2022?

Let's call this year the pivot or the transition year.

The market right now, the market multiple is elevated but it's elevated on this year's earnings.

On next year's earnings, there is as much positive as negative that I'm looking at and right now I don't the you can make any strong inferences either way.

>> Is also so tell us what we are living through right now because we know that but looking ahead to what it expects out of these companies going forward.

>> Historically, when you look at the data, and I don't like calendar rising years, but in years where, because the market doesn't care about January 1 and December 31, but if you look at historical data, in negative earnings years, more likely than not, the market is up.

There have been a few examples or a few years where that hasn't held. It's 2001, 2008, 1990.

If memory serves me, those years were pivotal.

There is a tech collapse, collapse and earnings, negative earnings.

2008, the trauma associated with the financial crisis.

1990 for those with longer memories, were… But every other time the market has had negative earnings, it's actually been positive. It was positive in January so might be flat for the year.

When you hear about negative earnings, the immediate reaction is like, oh my God, this is devastating.

But last year we had positive earnings in negative markets.

It's your point, forward-looking.

>> Let's talk a little bit about… I'm not going to talk about the term you don't like, but if you get inflation going back to where the central banks want to see, you get the Goldilocks scenario, what part of the market would work in that environment?

>> We have to find another adjective for soft.

>> Non-hard landing.

>> So the areas of the marketplace that we are most interested in to this day continues to be like our process is identifying dislocations in cash flow generation.

We think about the marketplace, people assume that the marketplace is we talked about Powell coming up, is going to be holding to Powell or what's happening in China or geopolitical stuff.

Ultimately, the marketplace is a collection of cash flows and where we can trade values is finding companies where those cash flows are misunderstood. The fastest areas of this continue to be in areas not like tech which is in a downshift, hopefully those expense cuts will lead to faster, higher free cash low generation, but in areas like oil and gas, financials.

In our not hard landing scenario, the tip of the spear is going to be financials because there is still the fear that if you are not in a hard landing, the Fed might not cut rates aggressively, they still benefit from that interest margin, credit costs are probably a little less bad than forecasted, revenues will be higher, and US banks were already buying back shares and paying you north of a 3% dividend.

That to me is good option analogy. A good skew, if you don't have a very traumatic economic outcome.

>> Fascinating stuff and a great start to the show.

You'll get to your questions about global talk for Damian Fernandes in a moment, including his you on travel stocks, Microsoft and Tesla.

A reminder that you get in touch with us anytime. Email moneytalklive@td.com or filler the viewer response box under the video player on WebBroker.

Right now, let's get you updated on some of the top stories in the world business and take a look at how the markets are trading.

The new Avatar movie help Cineplex beat earnings expectations in its most recent quarter. The movie theatre operator says it's all record box office and concessions and revenue per customer over those three monthsand total revenue was up nearly 17% compared to the same period last year. The name is up to the tune of about 3%. Global energy giant BP is boosting its dividend after reporting a record profit of $28 billion for 2022. BP is joining a growing chorus of oil and gas companies posting massive profits following the surge in energy prices last year.

BP is also trimming its targets to reduce oil production. Recall that it was once aiming for a reduction of output of 40% by 2030 and now it has taken that down to a 25% reduction by that time.

Then, Bath and beyond says it hopes to raise more than $1 billion from a new stock offering. The move comes as the beleaguered retailer tries to avoid bankruptcy after missing a $25 million interest payment last week.

Shares of bed, Bath and beyond have been highly volatile as management struggles to turn the business around.

A check in on the markets, let's check in on Bay Street with the TSX Composite Index. We pushed into positive territory and are holding there. It's pretty modest.

We will be hearing from Tiff Macklem, our central banker, today as well in addition to Jerome Powell. I have a feeling that the planet will listen to Jerome more closely.

The TSX Composite Index up right now. South of the border we are not seeing any hell headlines yet. There is a momentum to the upside. It is modest, up six points on the S&P 500, a little bit more than 1/10 of a percent.

We are back now with Damian Fernandes, take your questions about global stocks so let's get to them. Can we get Damian's view on travel stocks?

>>Yeah, travel stocks continue to be… The cash flows there remain underestimated for the sole reason that if you recall last year, late last year, we had signs of a China reopening, right? And most people thought it would be measured, when China reopening. But instead, it has been quite rapid.

They basically went from a zero covert policy to we are opening up. So travel stocks, luxury stocks.

If history is any guide, then what happens in developed countries after reopening after COVID, there has been an increase in spending, revenge consumption.

That probably holds true for China.

Now there are 300 million people, middle-class consumers, who have been quarantined away for three years now looking to probably step out and adventure out. So I think travel broadlyis benefiting.

>> In this environment, we've seen a big year for energy prices, the cost forward the travel industry, labour costs. How are they working through all that?

>> It depends on which travel companies we are talking about.

Obviously, the airlines, which are capital-intensive, have to deal with, yes, they have increased passengers coming through and they can charge higher prices, but their expenses are similarly capped.

There are the expenses of fuel and labour.

Travel companies that are interesting our capital light. Think about booking.com which will clip a coupon from you taking that airline or booking the hotel but it isn't really involved in providing that service.

But generally even the airlines probably have some underestimation. They will likely see some upgrades just because demand looks to improved.

>> This question is about consumer products companies.

It General Mills, Colgate, Kellog, etc. Are these companies now on the downward trend?

>> I'm not sure about the downward trend but broadly speaking, when we think about those companies, they benefited from the pandemic. People were at home and were worried about not having goods on the shelves so you obviously overbought.

Toothpaste doesn't expire.

Or maybe, I'm not sure, it lasts a long time.

>> Doesn't go off in two weeks.

>> You asked about Colgate, so if you're worried about what actually happened is you've had a pull forward in demand as consumers during COVID and now working through this very similar to other industries where you've pulled forward demand and now you are working through your inventories except the inventories in this case are consumer pantries. Like cans of soup, toothpaste, etc.

So generally, those companies are going to face challenges in terms of their topline growth just because they benefited in the pandemic, so did the tech companies.

Now you see a more return to normal environment.

>> It's a tough comparison if you can. To the.

Overall, people are buying a little extra toothpaste and toilet paper.

whether the economy is good or the economy is bad, hopefully I'm going to brush my teeth every day before I come to work and every night before I go to bed.

>> Exactly.

So I do think you need a place for them.

A part of your portfolio, consumer staples, whether it's packaged goods or just conventional, light, Pepsi, as snacks, chips and pop, those companies have shown much better operational efficiency. They are holding costs, they are able to price.

Those companies are fine. Just that we need to be cognizant that there was a pull forward in demand.

>> Let's take another question no.

Someone has sent in the tickers CRWD. This is the ticker for crowd strike.

>> Great company, leader in providing security at the front end.

It is a victim of its own success. It gets basket it into this group of companies, we will call them high-growth tachy, and in a lot of companies, that basket was unprofitable.

Our own industry leader, Shopify, is still forecasting negative cash flows this year and next.

Crowd straight, like a lot of the basket, the group it's in, is actually very profitable.

It is generating free cash flow and a lot of it because and there is no we are not racing… It is a high multiple stock and its peers are held to the whims of Fed policy. So what has happened to crowd strike is you are getting a fair amount of disdain because people associated as an unprofitable fast-growing text stock that people write options on versus what it is, it's a true cyber security company, at the leading edge of providing solutions for corporate's that's actually very profitable and growing.

>> How competitive is this base?

When I think of traditional tech, you always think everybody is going to carry a Nokia phone for the rest of their lives, then it's Black Barry, and then everything changes.

>> Crowd strike is a disrupter to the Palo Alto's of the world.

They would be the disrupter to your Nokia.

We think they are in a much better position.

>> What could trip them up though?

>> There's obviously new technology.

With most of these things, with all of this technology, these things are in early-stage growth.

So if there is a better mousetrap, the expectations of future cash flow generation will be impaired.

>> Interesting stuff as always. At home, do your own research before making any investment decisions.

We will get back to your questions for Damian Fernandes down global stocks in a moment. A reminder that you can get in touch anytime.

Email moneytalklive@td.com.

Now, let's get our educational segment of the day.

If you're looking for more geographic diversification in your stock portfolio, WebBroker has tools which can help.

joining us now with Maurice Jason Hnatyk, Senior client education instructor at TD Direct Investing.

Great to see you.

Let's talk about global changes using the law firm.

>> Let's do that.

Whether or not you are a driver survive globally already or are looking to spot some trends ahead of the market opening, sometimes checking at those global indices can be a bit of a bellwether to see how things are going to take off for the day. Let's jump into WebBroker. I can show you where you can get what is an ample amount of information.

We will start by on the research tab and then under markets we are going to be on the overview tab. It's a great catchall, lots of information.

Good updates on the markets.

Lots of updates on global commodities, things like that. But focusing on the indices here we can notice if we scroll down on the left-hand side we see at a glance a broad list of some major indices.

We've got to Britain, the Germany. We get a sense of how they are performing throughout the day. We are getting the percentage changes. As well, we are provided a 52 week range for these particular indices so we can see where they are at in terms of their annual performance.

If you are looking to dive a little deeper and look at some other global indices, you have the opportunity to click on the market indices tab above the graph we have there on the screen. In this section, we can get outside of some of those major markets.

We can see how some of the emerging markets are performing. We can get geographic specific, look at some of the specific indices. Let's say you want to go further and start comparing them on a graph to implement some technical insight.

The way you can do that is by selecting the indices name and then you will get a brief chart again but below that there is a chart option for us to select.

One thing I like to show off when we get looking at here is the ability to do comparisons on the chart.

We look up above the chart itself. There is a comparisons drop down and we bring this all the way down to the bottom of the menu.

We have many of the major foreign indices that are available.

I will put three additional comparisons. Now we have the opportunity to compare the major indices against themselves over a long period of time.

If you have favour technical indicators or patterns that you are looking for, this can be a useful tool to help with your research.

>> All right, that's a great primer on getting started on that in WebBroker. I know we can always go deeper on the platform. Where do we go to get those additional insights?

>> Yeah, you're right. Now, we've got a bit of numbers.

Let's start generating some opinions and information to act on.

The first place I would like to bring everybody and this is one thing that I don't want you to sleep on it here. So from the research page again is let's not discount the ability to get news within the platform.

We will start back at the overview page. There is a news tab right at the top of the page.

We will go ahead and choose that.

When we come in to then use section specifically, we have the opportunity to search for news.

If we just put in Europe, for instance, we get some information that's going to relate specifically back to the topic and then we get to maybe there are some other ideas we can begin to filter down on.

The next thing I want to highlight and this is timely because Anthony coming up later is going to touch on this as well, I want to give some time to our friends at TD Economics and we can see the valuable information they've got as well.

We go to research at the top of the page and then reports under markets. If we scroll down on the right-hand side of the screen, but halfway down the page, there is a TD Economics section.

If we go in here, there are great amounts of insights, not just about the Canadian marketplace but down south of the border as well as globally.

From here, we are going to select the go there button now and from here just quickly while it loads, we got the opportunity to filter geographically.

We have a high level amount of information here to really kind of drill down to really be informed about the decisions we are making.

> Great stuff as always. Thanks.

>> My pleasure.

>> Jason Hnatyk, Senior client education instructor at TD Direct Investing. Make sure to check out the Learning Center in WebBroker for more educational videos, live, interactive master classes and upcoming webinars.

Now before you back your questions about global stocks for Damian Fernandes, a reminder on how you can get in touch with us.

Do you have a question about investing or with 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 writing your question and hit send. We can see if one of our guests can get you the answer right here at MoneyTalk Live.

We are back with Damian Fernandes, taking your questions about global stocks. This one coming in in the last couple of minutes, what does Damian think of Lightspeed Commerce getting back to 90 to 120 per share,Especially with Shopify recovery? I don't know if you want to break out a crystal ball, we probably want to pull up a one-year graph of Lightspeed. It's a $23 per share on the Canadian… >> We were talking about crowd strike earlier.

Lightspeed is in the cohort of profitable tech that is probably overextended.

They would pursue growth at any cost with acquisitions and they are now facing some serious competition.

You have companies that are not generating free cash flow and are facing some serious competition at their POS terminals and more importantly it you have changes in capital allocation management. I think we have to separate, maybe taking a step back and then we will get to this.

I don't believe that the leaders of the past bull market will be the generals that lead the next bull market. Technology and comms service led the last bull market for the last 10 years, 2010 to 2021.

The next bull market, we are not sure if we are in, if it starts, it's unlikely that the initiative will come from the same place. The last part of the bull market was speculative tech names, light speeds and stuff that went parabolic.

Those companies are now facing comeuppance. They have to demonstrate free cash flow and earnings growth.

I would rather separate tech into profitable tech and tech that is still challenged and need to prove their mettle.

I would much rather play in the space. We started the show talking about large Tech companies that are embarking on cost savings programs to demonstrate earnings growth and possibility. I would much rather be in that basket than the companies that are still unsure, like the smaller, high valuation companies are still generating negative free cash flow. Lightspeed falls into that.

No idea, by the way, what this will get back to it. I think it would be unlikely.

>> Part of the question to you is the viewer had been seeing Shopify shares rally as of late.

The overall trend of the last several weeks has been to the upside. We don't have a lot of publicly traded tech companies in Canada but is it important to say this company does this and this company does this, it's not all in the same basket.

Because you said if they are not going to lead this time around, they're probably not going to move in tandem.

>> Yes, which is a good thing.

We have more ability to stock pick, identify the winners from the losers.

Interestingly though, January, the companies that outperformed in January collectively as a basket were the same companies that under performs materially the last year.

All will sector agnostic.

So January was what we call the risk reversal rally.

Shopify benefited from them.

But now we have to see that continue.

And that is going to be beholden to fundamentals.

And I'm not sure we are still seeing evidence of that.

>> Look at another question now, still of the tax base.

This is about one of the big ones, Microsoft.

Why has it been going down, will it come back? Let's pull up the trackers. I think a lot of these names benefited in January but the viewers are maybe looking at when you're charts and are wondering about what happened to tech and what will happen going forward.

>> The one your chart looks dramatic. If we pull up Microsoft's five year chart, you've had the compounding of cash flows manifest in higher stock prices. So Microsoft last year was under pressure because it had probably overextended itself in expenses.

But to be clear, Microsoft is still the leader in enterprise cloud adoption.

Every single large enterprise who uses Microsoft or Windows for their office products, their chief technology officers also use Microsoft to do the cloud transition.

That is going to continue.

In Microsoft's case, you have a company that has a higher credit rating than the US government, more cash than debt, that has raised its dividend every year, that buys back shares at a nice amount and now is showing evidence of improving the cost structure.

So in Microsoft's case, I think it's a high-quality company that is poised to benefit. To be clear, Microsoft last year isn't… Last year was difficult, but I don't think it gives you any signals about the long-term profitability, which is based on the secular trends of cloud adoption, gaming and so on.

>> What's the biggest risk to a name like Microsoft?

>> The biggest risk is execution.

Regulatory risk.

But I think Microsoft crossed that two decades ago.

The other biggest challenge Microsoft is what happened last year. Last year, a lot of these tech stockssaw significant drawdowns as rates rose.

As the discount rates rose and the tenure value moved out, the valuations of tech stocks went the other way.

If we have another cycle which is not in my cards, I have no idea, but if rates materially move higher, then obviously these tech companies, they are above market valuations.

Microsoft still has an above market valuation, it will come under pressure.

>> This next name is 1 foot in tech and 1 foot in autos. It's the future of Tesla.

>> Tesla.

Not entirely sure but I can tell you broadly speaking the competition for its EV products is increasing.

Tesla is a leader in this market. It captured a lot of market share and probably has the best market. But every single automaker is aggressively investing to catch up with Tesla. That construct is not great because we are talking about every OEM, whether it's Germans or Japanese, are looking to build competing products with Tesla and so Tesla, which had a monopoly on providing the best manufactured EV cart no longer has that. And I think that has to be factored in.

We are very constructive on the EV transition.

There are many ways to play it in terms of the picks and shovels. The companies that contribute or make components that go into these EV vehicles rather than trying to pick winners which is going to be the next leader in manufacturing the EV car.

>> So with picks and shovels, your thing about the batteries, the chips, all that?

>> The batteries, the chips, the wiring.

And each of those has components. Car companies or car suppliers deal with chips and taxes, component parts for electric vehicles, like wiring.

There are a few companies that will benefit from rising electrification as opposed to picking the which company, car company it is.

>> Interesting stuff. We'll get back to your question for Damian Fernandes on global stocks in just a moment's time.

I'm sorry, Jerome Powell started speak so I got distracted. At home, do your own research before making investment decisions.

Don't have anything to sell yet but I will keep my own it. You can get in touch with us anytime.

Do you have a question about investing or what's driving the markets? Argus or ear 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 writing your question and hit send. We will see if one of our guest can get you the answer right hereat MoneyTalk Live.

Of course, our central bank, the Bank of Canada, spent most of last year raising their key rate and this year it's at 4 1/2%, a 15 year high.

But now they said they are going to pause,Trying to figure out what they're up to you and whether we get that soft landing. Anthony Okolie joins now to discuss TD Economics latest report and their outlook for inflation and where this economy could be headed.

>> Thanks very much.

TD Economics is the Bank of Canada pausing their rate hiking cycle acknowledges high interest rate sensitivity of Canadian households.

TD Security says the Paul speaks to the Bank of Canada's confidence that the path of inflation. The current chart that I brought along shows that the January monetary policy report for the Bank of Canada projected their inflation outlook in the project that inflation will drop to about 3% by summer and to 2.6% by the end of this year. They also have a target of 2% in 2024 which will meet their inflation target. TD Economics said that in the near term, the possibilities open to raise interest rates if inflation is to hear than expected.

One of the challenges being a strong job market which has yet to ease. Despite the revision in the December numbers, the employment continues to trend upwards as we can see in the chart in December. The total number of employed people rose to just under 20 million.

Meanwhile well you take a look at the unemployment rate in Canada, it slipped to 4.5%. One area of concern continues to be the strong connection between wages and inflation on services. If the labour market stays tight, according to TD Economics, wages could be a roadblock to the Bank of Canada reaching its 2% inflation target.

Now here TD Economics highlights the need for an economic slowdown. They point to the slowdown in real estate activity and construction data.

These are areas that are very sensitive to interest rates and first respond to higher rates that we have seen over the past year. Also manufacturing has contracted in the last five of six months here in Canada.

The final step is moderating hiring, which creates sustained anchoring of inflation expectations.

The Bank of Canada governor acknowledge that a mild recession could happen this year and TD Economics stresses the importance of getting the policy right to avoid a hard landing.

Back to you, Greg.

>> If we do get a mild recession scenario, what is the thinking around the cut?

When will they start cutting again?

>> TD Economics says that with the greater interest in sensitivity of Canadian households, TD Economics says the Bank of Canada needs to be more careful than the Fed in keeping rates too high for too long. They are forecasting that the Bank of Canada will cut slightly more than the Fed in the latter half of this year.

>> Interesting stuff.

Thanks.

>> My pleasure.

>> Money talks Anthony Okolie.

Let's check in on the markets. Jerome Powell has begun speaking but I'm not seeing any headlines out on that speech at the moment.

The markets are modestly positive heading in on that event.

We are staying in the green but just barely.

In Toronto, we are up eight points, four ticks to the upside.

want to check in on sunlight. A little earlier was under some pressure.

It's basically flat at this hour.

Lithium Americas getting quite a bid today.

In the markets view, there was a court ruling for one of their projects in Nevada which was favourable for Lithium Americas. They are up 8% on the session. South of the border, when checking in the S&P 500 as Jerome Powell speaks and we wait for any kind of labour from it.

It's just about flat while waiting to see what he will say if anything about the economy.

The S&P 500 is in the red, down 1%.

Let's check in on the tech heavy NASDAQ. It's up 41 points or .35%. In Amazon, we showed you Microsoft earlier was positive but not all the boats are moving in the same direction. Got Amazon down by 2 1/2% now.

We are back now with Damian Fernandes from TD Asset Management taking your questions, so let's get to them.

What is your guest's view on Nike?

>> Well, Nike benefits from China reopening. A big part of its business comes from there and, obviously, with reopening there, you should see some gains. They also benefit from you've had this last year Nike's cost-base increase because raw materials increased. This year we are seeing the reverse of that.

There are a few things working in Nike's favour. One of its customer countries is open. You have the cost base which leads to higher gross margins and three of the secular trends of athletic leisure, of Nike moving to more of its good being purchased from its own stores as opposed to third-party retailers.

So actually using the Nike app to buy new shoes and stuff like that. All of those things move in Nike's favour. Nike should benefit as long as consumption doesn't collapse.

>> What about brand strength?

Obviously it's a very strong brand and has been for a while. As of the kind of thing that could trip you up?

Could kids end up liking something else, like Adidas?

>> Nike is captured market share.

It's hired spokespeople, whether it's tennis, basketball, they have maintained their brand.

The thing is that right now, that brand, for example, if you buy directly from Nike, you will get first releases for a lot of the new product.

They are creating engagement with you as a customer to deal with them directly.

In terms of marketing and personalization, I think Nike as a brand is doing fine, phenomenal job.

>> Is the biggest threat than just the China economy reopening doesn't go and there are more lacklustre times ahead?

>> I think the biggest threat is that.

That would be the biggest threat.

Or missed execution, for example.

A lot of the last few years with questions about the supply chain. The supply chain was fettered during COVID. The profitability of Nike was more volatile than historically.

One of his biggest customers is China. Facing headwinds, China reopening not as optimistic, also missed execution.

>> MP materials, can you commenton this one?

>> I don't actually follow this.

>> Real-time TD. Let's get to another question now.

What does your guest like for the fixed income portion of a portfolio and the following to that is what you think the Fed and the BOC will lower interest rates?

A pause would be one thing for fixed income and a cut would be an entirely different thing.

>> This is going to make my bond portfolio managers blush, I think fixed income is back in that part where you are earning a healed where fixed income will do what it's supposed to do.

The role of fixed income in an asset allocation framework which we all should have, depending on your risk tolerance, is to provide security, safety of income and provide some offsets when equity is under pressure.

So a few years ago in fixed income yields in the US were 1/2% in September 2021 and inflation was four and rising, that was a difficult condition.

But now fixed income in the US and Canada is 3 1/2, you get corporate bonds yielding you 200 more than that. So you are running yield is 5 1/2%. You are getting paid some income and more importantly, there is sufficient yield that if things do slow, you might even participate in some capital returns. So I think fixed income at these levels should be a core part of the portfolio.

Wall we don't want to forecast these things, even if growth accelerates, you have a sufficient cushion in fixed income yields where they are today where it wouldn't be, you wouldn't lose significant amounts of money even if yields move a little higher.

>> The biggest threat to the fixed income part of the portfolio is the same thing that plagued it last year, that rates have to continue moving higher.

Inflation turns on us.

>> Rates have to continue moving higher.

The current disinflation area. We are enjoying, where you are seeing the goods inflation moderate, if that turns up or if that's temporary, that would be the biggest risk to fixed income.

>> No time for more questions. Final thoughts about how we should be framing our thinking for this year?

>> Yeah, so look. There puts and takes. This year is going to be challenging. Earnings are going to be negative.

That will breed volatile markets. But from our conversation today, I think stockpicking, not all things are going to move in the same direction.

So I think stockpicking will be a much bigger influence. The things I'm thinking longer term and whether we call that a benign landing or a soft landing is that what happens if growth is actually fine? Right now, the market is expecting the Fed to cut rates until the end of the year, but if growth is fine and inflation remains north of 3% for example, those rate cuts that are priced into the market probably have to be scaled back which means that we might be in that scenario where markets get volatile again. That's I'm thinking.

But in general, I think it's a stockpicking market.

I think you will see companies moving in different direction.

>> Great insight. Thanks for being here.

>> My pleasure.

>> Our thanks to Damian Fernandes, portfolio manager with TD Asset Management. A reminder to do your own research before making any investment decisions.

I was hoping to bring you something from Jay Powell.

I'm watching the live stream now. He has begun speaking.

He has sat down in the past two minutes and it has begun. So you're going to want to keep your eye on that one.

You want keep your eye on us because tomorrow, Justin Flowerday, head of public equity is at TD Asset Management is going to be taking your questions about market trends. You can get a head start. Email moneytalklive@td.com and get this questions then.

That's all the time we have for the show today. Thanks for watching and we will see you tomorrow.

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