Damian Fernandes

[music] Hello I'm Greg Bonnell and 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 here. We we'll take you through what's moving markets and answer your questions about investing. Coming up on today show: we will be joined by TD Asset Management's Damian Fernandes to get his take on earnings season so far. And in today's WebBroker education segment, Nugwa Haruna will show us how you can track global markets using the platform. Here's how you can get in touch with us with your questions and comments: just email moneytalklive@td.com or Philip that viewer response box ran into the video player right here WebBroker. Before we get to our guest of the day, let's get you an update on the market action. Let's see how we stand at this moment. On baster with the TSX Composite Index at 19,000, 386, a little more than half a percent to the upside. A lot of Canadian earnings this week as well, Crescent point, two days ago announcing a special dividend, the price of crude higher as well and we see money continue to move in this direction. Crescent in 10 bucks and $0.98 a share. Let's check in on the mining stocks. A bit of pressure in that space todayYamana gold down 3 1/2%. South of the border, the S&P 500 out of his MegaCap tech earnings keep rolling in. Rattling investor confidence in the tech space at least. The broader markets holding up a little bit better. We have dipped into negative territory. The S&P 500 down a modest 7 1/2 points about 1/5 of a percent. The NASDAQ taking it a little rougher. Let's see what's happening in that space down a full 1% right now. Credit Suisse, and the stick of a earning season, raising and planning to cut thousands of jobs, posting on expected loss, really being hit hard. Down to the tune of 19%. And that's your market update. We are nearing the halfway point of earning season in the United States with some of the biggest companies delivering their latest quarterly results. One of the big take away so far? Joining us now is Damian Fernandes, Portfolio Manager at TD Asset Management. Damian it's been a pretty interesting earning season. What's top of mind right now? >> Great to be here. Top of mind, you said in the opening comments, the markets kind of flat. Tech companies are off 20, Google was off 10 yesterday. So it's interesting that you have these really large MegaCap companies that are all significant degrees, justifiably so but the rest of the market is flat. Because there's a lot of good happening. In this recording season, we talk about earnings broadly but there've been a few surprises. Seven or 8% this morning on expected sales and orders. McDonald's up… I think broadly, people are so focused on what's been working in the last two years. Technology, Google, Facebook and so on. But, under the surface you are actually having this move away were earnings delivery is now coming from a sector outside. In fact, just looking at yesterday's report with Google and Facebook. There earnings are off high single digits. Revenues are just low signal digits up. So there is actually fundamental declines where is the rest of the market is benefiting from this inflationary backdrop. I can put some numbers to earnings but happy to take it in the direction you want. > It does sound like it is sort of a stock… Market. So many macro concerns guiding the tray throughout the year. You get to an earning season. It is shocking with a name like Mehta, the kind of influence it wields. Still the broader market not feeling all that pain. >> And I think specific to Mehta, just broadly, these very successful technology companies, they have had a wonderful last few years. Because of the pandemic and so on, you had increased usage on their platforms. They've never actually had to adjust to a slower economic environment. What they are facing right now… Mehta and Google in advertising… But Mehta yesterday said it will keep increasing capital expenditure. It's going to keep growing. Google is talking about increasing headcount. This is not conventionally what you do if you have your topline slowing and negative earnings. But they never had to face it. Where is a lot of rest of the market have been gone to the last decade of a slower, much more challenging economic backdrop. Has had to adjust. So I think, do I think at this point that we should be rushing in and Mehta down 20%? No because we have no clarity on the outlook. We have no clarity on how the advertising spending can go. Thinking about turning its capital expenditure. >> When it comes to those broader macro themes, probably as early as next week when the Fed has its meeting and comes out with its next decisions, a bit of push and pull the market now trying to decide "do I want to focus on the fundamental companies I own or focus on the Fed?" >> The Fed is likely to raise 75 basis points next week but we are closer to the finish line of rate increases right? When you think about the market pullback this year globally, we've had, it's because central bank is globally behind the curve in addressing by the time I didn't of inflation. They have ramped up quite significant lay. In fact, we had one of the highest, I'm not talking about the absent level rates, the change in rates has been one of the fastest change in rates over the last two or three decades depending on the country. Right? And the US Eagle for 25 basis points and expected to peak at 475 next year. That's a phenomenal level of increased, tightening of financial conditions in a very short period of time. But we are close to the end than we are. So I think, and that obviously is going to lead to slow and growth likely a recession. But that's not, that shouldn't surprise people at this point. The pain we have seen in markets has been a realization that we are going to see earnings slow, economic growth will slow. So we and we have time markets in the Fed when you have cash compound with companies, I think right now giving the pullback, we are seeing a lot of value in that. >> When we talk with the fact that the feds endgame is slowing the economy, endgame… Can we avoid recession? When we take it back to earnings and forecast, are we actually seeing companies prepare investors? Even admit to themselves in a slowdown is coming? Are we getting the revisions we think will get? >> Going into this third quarter, still, people had marked $230 and earnings for the S&P. That's down to 223. Probably had lower. I think where there will be a surprise in this is that the expectation for next year is still sitting at, I don't know, 240, 200 and… In earnings if we are discussing recession, and actually economic growth being in the negative, that's a recession is… The estimates are still calling for high single digits earnings growth. You know something doesn't feel right. You can't make lemonade without lemons. If you don't have economic growth, you're not going to get the earnings delivery. So I think, what happens is, most of the analysts adjust their numbers after Q4 reporting so as the year progresses, we are almost there, you will see sequential rationing down of revenue earnings numbers. I don't know where were going to end up. I just do know that the earnings numbers, as they are right now, there almost make believe. In a no recession scenario, inflation gets tamed, the economy doesn't go up. Everyone's happy and we keep our jobs. > In China announces a massive stimulus program. >> Let's have another one of those. Ha ha. >> We are ready no growth is slowing a real-time basis. You just look at the metrics and housing. The tip of the sphere of rate increases, auto loans, housing activity, that's a train wreck right now. In real time. So all of these earnings associate with those industries are holding back. Pulling back. Earnings estimates for next are a bit of fantasy. Does that make me bearish? We are it had a 20% correction. There's been a realization that those earnings numbers are, you know, probably going to get revised down. >> Great staff and fascinating start to the show. We will get to your questions about global stocks for Damian Fernandes in just a moment's time. A reminder that you can email us anytime@moneytalklive@td.com or fillet of your response box right into the video player) WebBroker. Right now, let's get you on some of the top stories in the world of business and take a look at the market string. Shares of Facebook parent company META Platforms are in the spotlight today. The social giant missed earnings estimates for its latest quarter and warning that this sales weakness will continue into the current quarter. 22% at this hour. Social media companies are facing a slowdown in online ad spending and met his commitment to the so-called Metaverse has raised some questions among investors. Shopify is reporting stronger-than-expected sales for its most recent quarter. That is the Ottawa-based tech company grew its subscription revenue and its gross merchandise volumes, a key metric for the company. Shopify had warned investors earlier this year that it had misjudge the longer-term demand for e-commerce tools coming out of the pandemic. And while the shares popped on today's news, there still well off their all-time highs. Suncor is boosting its stake in the Fort Hills oilsands project, paying some $1 billion to biotech resources interest in the operation. After the deal closes, Suncor's stake in its Fort Hills will rise from some 75%. Tech had previously indicated it was looking at existing in the Fort Hills project, that is it builds a multibillion-dollar copper mine in Chile. And let's take a look at the main benchmark index in Canada trading. Mathematically, south of the border, the S&P 500, that broader read, pushing its way back in a positive territory even though you are seeing some pressure for MegaCap names. Like Facebook and other supporting this week, the broader market showing a bit of resilience in the face of it. We are back now with Damian Fernandes now with TD Asset Management taking your questions on global stocks. So let's start with the big one: how do we know when we've hit a bottom in the market? We talked about the top of the show are there things we should be looking for? >> I think what got us into the situation is what's going to get us out. What I mean by that is what got us into this is elevated inflation, significant reading pieces by the Fed to slow growth and slow demand. That's probably what's going to get us out. You will need to see a moderation rate increases. For example, a bullish side if the Fed decides not to go the full degree of 475 peak next year. If those expectations are lowered, that would be bullish. If we start seeing inflation moderate from these really high levels… All of those things would provide some comfort and you won't see significant rate increases. The other thing, I was thinking what the save the day. Pre-pandemic, the highs of the US market, to use the US market as an example, were about 3450 or 3500. We actually went all the way down to that level and then bounced. 3800 as he said right now. So we are almost in this area right now, I don't know if that was the bottom, if that was a bottom as opposed to the bottom. But for me, I do think if we do see… Markets will move up and down but if we do see a level where we get to those things again, it feels almost psychologically interesting that we can buy the market at the same level it was pre-pandemic. That's where we were a few weeks ago. So to me, I know we've moved on from there. But what I'm watching for right now is: are we getting some comfort on Fed tightening. On some moderation at that level? Watching inflation very closely… Watching the earnings season. It's really interesting. Companies in seeing what they are doing and what the outlooks are and what they will be for the next year. I think all of those probably taken together will give us some sign of where the markets headed. >> When I think of the action of this year, in the Summer we thought it was a bear market rally but in the middle of the year, trying to think of this is the real deal or not the real deal. It fizzled but that seems to be such a hard part of the exercise right now. To go when you're experiencing the real thing in real time. >> Interestingly, we are in a bear market rally. That's the conventional wisdom. Every rally starts with a bear market rally by definition. In the midst of what we are experiencing right now. That's why the start, I think I'm much more comfortable looking at individual, given that opportunity, you talked about the market being up despite MegaCap being down. Looking much more broadly at individual companies are we have some confidence in free Cashel generation, dividend growth, earning strict ability, I am much more comfortable in that sector in identifying those names going into a slow economic environment that I am in saying "hey, let's just buy SP wise or participate in the broad market " I don't know what the direction is at this level. >> Another question now leading off we were just talking about: how much higher will central banks have to go with her interest rate? An interesting question given yesterday, the Bank of Canada, the market was sort of saying "we expect 75 and we welcome 75 but we will just go 50." Maybe having people change their mind about the broader…? >> Yesterday have central banks crying uncle… The RBA in the Australian central bank, you had because of what happened in the UK market, you had a change in QE over there rate so it's like central banks, metal is being tested. When I say metal I mean their conviction to keep raising rates. My own view is that, as a central banker, the adage "only hawks get to go to central-bank heaven"… What I mean by that is until they see inflation actually moderating, they are incentivized, especially given how unemployment has really ticked up, they are incentivized professionally and personally to cement their legacy. To continue raising rates. To make sure because they want to see the whites of the eyes of inflation moderate. Are we going to get there? That's a more interesting question. We are already seeing goods deflation. We have not yet seen service, services are still increasing. But if you see some moderation, you can actually see inflation moderate and that takes off the heat. To answer your question, I think what's priced in right now in the market is probably likely. We talked about 475, but I would go higher than that. That is actually, if we have some confidence that we are not going much higher, I do think that's because these interest rate increases often come with a lag. You're already seeing the damage they are causing in terms of slowing activity and this is before the Fed even goes 75 next week. >> All right. Let's get another question here: will companies raise their dividends if interest rates go up? Is there any kind of correlation here? >> We talked about companies, individual companies. I love what's happening at the individual company level. Visa, a company that I think visa benefits by the way from increased cross-border travel. You and I going on vacation, using our Visa cards in different locales It makes a lot of money from that. Visa rates at 20%. So inflation is high single digits, these companies are seeing much more opportunity to raise excessive inflation. McDonald's, we talked about earlier, I don't think collectively, both the US and the Canadian market leverage at the aggregate level. It's actually benign. A lot of the debt is turned out. So the rate increases right now really are changing their interest costs. And they are seeing growth. So you're actually seeing, you're actually seeing dividend increases continue across a broad set of companies and I think that's, only dividend stocks is one of the few, you know, in a storm, it's actually really worth it. I hope it continues. So to answer your question, yes. Company's will continue to raise dividends because they can and because the rate increases aren't really leaning to significant interest-rate costs for them. > Great. I haven't thought of those angles and that's what we have gaming here. Always make sure to do your own research before making investment decisions. We will get back to your questions for Damian Fernandes on global to stocks in just a moment's time. A reminder of course aging and touchless at any time, just email moneytalklive@td.com. Now let's get to our educational segment of the day. Geographic diversification is one way investors can try to whether volatility and WebBroker has tools which can help you track what's going on in the global markets. Joining us now for more as Nugwa Haruna, Senior Client Education Instructor at TD Direct Investing. Nugwa, great to have you on the show. Take us through it all. >> Great to be here. So for investors interested in diversifying in terms of their equity picks, they may consider some global stocks. Now, we do know that where there is volatility in the global markets, it could impact the North American markets. So investors want to keep track of that. They can do so within WebBroker. Once in WebBroker, an investor would click on the research tab and then click on "indices". An index is a portfolio which holds different Securities and their and mimics the performance of those Securities, giving you an average performance. So in WebBroker, investors have access to major North American indices. But, you can also check out the performance of some European indices. So I will click on this tab here and you can see things like what tracks the performance of the largest companies that trade on the Frankfurt stock exchange…If investors want to do an analysis to see how different indices are performing, they can just click right beside, on the left side, just to check that off and you will notice on the top of the screen, we now have the DAX being compared to the TSX Composite Index as well as the Dow Jones. We will choose now… Once I click on that, once again you will see that superimposed on here. And now investors can have a quick look on how these markets are performing. Comparable to one another and you can also change your timeframe. If investors want to do some more deep diving into the charts, for each of these, all they need to do is click on the index itself and click on charts. This will take them to a page where they can do some deeper analysis as well. >> Okay so we have the groundwork laid here now. How can investors get access to stocks that trade on international indices in the WebBroker platform? >> Investors who, as you mentioned, are interested in explain that option, they can purchase international stocks, just not on WebBroker. You need to call the trade index and they need to place those trades for you. Investors who still want to experience purchasing these equities and being able to get in and out of those positions really quickly, they may consider using things like exchange rate funds or mutual funds. And WebBroker, investors are able to find these global exchange rate funds by clicking on "research". Under investments, we are going to go exchange traded funds… Once on this page, investors can explore a little more by clicking on the international equity option or over here. Then choosing the different categories. But something else investors can do, they can actually filter for these specific exchange traded funds. One of our most popular tools that investors can use and actually a quick and many way to do that. I meant to do that on this page. I'm going to scroll down. Focusing on the right side of my screen here. I am then able to see my ETF quick screen tool. So I'm just going to choose a drop down in terms of exchange rating funds category. Clicking on this drop down. Now, I'm just going to explore and look for an exchange traded fund that focuses on international equities there. So we have one here which is a US exchange traded fund. It focuses on stocks or equities in the China region. I will click on that. It gives me 49 different exchange traded funds. All I need to do is scroll down. Click on "view 49 matches". That will bring me to a page to explore a little more. If I want to see how these performed I just need to click on the tab that says "summary". It gives me a breakdown on the extent of the ratio, the distribution yield, I can see some more in terms of performance by clicking on the performance tab here. So it allows investors to do some deep diving before they make it a decision on perceived purchasing these exchange rate funds. >> Itself is always Nugwa thanks for that. >> Thank you. >> Nugwa Haruna, Senior Client Education Instructor at TD Direct Investing. Make sure to check out the Learning Center and WebBroker for more educational videos, live interactive master classes and upcoming webinars. Before we get back to your questions with Damian Fernandes on global stocks, a reminder of hiking in a touch of us. Do you have a question about investing, or what is driving the markets? Our guests are eager to answer your questions so send them to us here at MoneyTalk Live. You can send your questions two ways: you can send us an email any time at moneytalklive@td.com or you can use the question box at the bottom screen right here on WebBroker just type your question and hit "send". We will see if one of our guests can get you the answer right here at MoneyTalk Live. Alright. We are back now is Damian Fernandes, taking your questions on global stocks, let's get back to them. Of you are asking: what else can actually be done to deal with the situation? >> That's a really good question Greg. I think people are experiencing very high inflation right now because we see it. It's visual. We see in the gas pump and we are driving… But inflation is a number where how it's calculated, it's inflation this year versus what's the price of goods this year versus what's the price of goods last year, the change: that's inflation. So as we progress into the next few months, you're going to see inflation moderate just because the base, the base effects of what it was… I'll give an example. The price of crude oil, the WTI, right now around 87 or $88 a barrel if memory serves me. That's the same price as last year. That's interesting right? We had a geopolitical event in Europe, war. But the headline number of WTI prices has already, so the price you're seeing in energy consumption for a consumer, for it, for that contribution in inflation to continue, energy has to go to increase of 40% from here. Now, I think given that's already over the last 12 months increased by that significant degree, I don't know if it's as likely to increase again. What I'm try to say is that central banks are raising rates to slow the economy down, to slow it down. But even outside of it… >> Comparables right? >> Even the price of stuff that Sardi moved out. Or moved up. They have to continue accelerating to have that same effect. Used car prices, the price of energy, all these really volatile things, you're already seeing moderation. So, it's a great question. I think inflation, people will be surprised by how much inflation moderates just because the base effects are coming off. But we still have, I want to be clear here. I don't expect inflation to get back to our benign under 2% level in the next 12 months. I just think you won't have an eight handle on it. > Alright. Let's get to another question. A lot coming in. Some wants to know but the big pandemic winners like Zoom, Netflix and Peloton. Clearly there was demand for their services during the pandemic. With the forecast look like? >> The forecast looks like, we have a Peloton at home… >> Do you still use it? >> It sometimes doubles as a clothes hanger. >> Ha ha. >> What happen with those stocks as you had an event. The pandemic that significant we pulled forward demand. For those services. Now, you're having the hangover. It's like "hey, everyone at home didn't have access to gyms because were quarantined at home said sure getting a Peloton is great, great idea, let me pay the membership fee" the but that's a one-time capital expenditure. I'm not to get to Peloton's. I don't need to close hangers. My point being that a lot of these companies that have these one-time benefits, for example, companies are using Zoom, that initial lifter all these companies transfer to improve digitization… I think a lot of these pandemic winners will face major stresses. Similar to how we talked about inflation, it's getting much more difficult. It's unlikely to see the same unique pandemic event, supercharging the revenue and their growth again. So I think they will have to, I know the valuations have come down a lot but you will probably see continued compression because this is all related. The rates and these highly valued companies cash learnings, they are in the eye of the storm for those affected by higher rates. >> We have a bit of a museum of unused gym equipment in our house as well. Another question of the platform. REITs, are these good for investors looking for income? The space and names like Rio Canada, distributions do they look attractive? >> I have this view. REITs, the REITs space is a little bit challenged right now. Because while the distribution yields a really high, at the back end, there is still the issuing of shares to pay for the distribution. RioCan space, look at the shares outstanding it keeps growing. It's not really a true distribution yield. the Canadian distribution banks have high yields. But those are real yields they are earning back. On the REITs case, even though they are high yields, high artificial yields, they are diluting in the back for REITs it's fixed income yields. >> No competition? >> Exactly. They won't grow their net operating that much more. It will be much more compared to some of the other sectors the market. >> Interesting stuff. We have a question about one of the big names. Is Apple after the close today? > Apple and Amazon today. >> We have a viewer wants to talk Apple what you think? >> Apple, it's interesting. What I think about Apple, the Apple is fine. I think Apple as an annuity. When anybody that is if you own an Apple iPhone which I'm pretty sure, I don't know your phone… > I do. >> What I mean by this is every three years you can replace your iPhone and probably at 10% premium. That to me sounds like an annuity. Every person in the Apple ecosystem will do that because there is high switching costs. You will never switch to android phone. So Apple has this wonderful annuity like stream. By the way, Apple doesn't manufacture phones. It's a capital business model that has a built-in user base that will keep increasing and now they have services… The iPod, the Apple music… I think Apple I know it's the biggest company. But it's profitable at scale. More importantly, I don't really see some of that profitability start to On a longer term basis I don't see that profitability going away. Unless you have an event where you have something to displace the iPhone. >> I was going to ask you about that. There was a time were Nokia orb BlackBerry, you could not beat them. But you could beat them. >> In my purview, I don't know what replaces it. Maybe VR platforms we can just talk to each other, I don't know what replaces it. But I do think Apple, as it stands right now, it's a high quality company capital business model buying back a boatload of shares, increasing its dividends and has a revenue base that is sticky. Because of its users. >> I was once out of the Apple force while the rest of my house was in it and it made my life hard. We will get back to your questions for Damian Fernandes on global stocks but as always make sure you do your own research before making investment decisions. A reminder that you send us your questions at any time: Do you have a question about investing, or what is driving the markets? Our guests are eager to answer your questions so send them to us here at MoneyTalk Live. You can send your questions two ways: you can send us an email any time at moneytalklive@td.com or you can use the question box at the bottom screen right here on WebBroker just type your question and hit "send". We will see if one of our guests can get you the answer right here at MoneyTalk Live. The US economy grew at a faster pace than expected in the third quarter. Accelerating to 2.6%. MoneyTalk's Anthony Okolie adjoins us with all the details Anthony? >> Yes growth in the third quarter from two consecutive declines in the first half. But recession fears still linger. As Greg mentioned, the reading came in at 2. 6% annual. That's above what the quarter forecasted. The US economy grew despite a slowdown in consumer spending during the Summer. And of course, consumer spending is the US economy's main engine. It was up 1.4%. But that's down from the 2% we saw. This suggests is the impact of the drop in household net worth to the tune of $6 trillion after the second quarter pull back in stock markets, combined with high interest rates, skyhigh inflation… That was all a big drag on consumer spending in the third quarter. Now, all gains in consumer spending was driven by services. Things like accommodation, restaurants, travel. Spending on goods was down across durables and non-durables. Damon alluded to this. Due to the shift in the pandemic spending habits. Where consumers were coming out of the pandemic from goods over to services. When you look at residential investing, it was down 26% of the third quarter. Of course home construction slowed, sales of new homes fell over 10%. According to TD Economics, this outsized pandemic was the biggest pullback since the first 1:45 thousand and 10 outside of the pandemic rather. When you look at the third quarter, nonresidential investing, those types of gains in intellectual-property products rebounding in Quitman investing, the chief source of GDP growth is kind of a scorecard of score of sorts for the US economy with a shrinking trade deficit. We saw exports down more than 40%. Imports were down 7% and the net trade actually added are nearly 3 percentage points to GDP. Of course GDP is a back looking indicator. So it's unlikely to impact the Fed's decision when we meet next week and TD Economics is calling for 75 basis point rate hike. >> All right. As a state of the US economy, the Canadian economy we will get the numbers fairly soon. What does TD Securities think you will get from this country? >> TD Securities thinks we can see a slight uptick in Canadian GDP growth. They are calling for Canadian GDP to rise .1% month over month in August. That's slightly above the flash estimate and market consensus which is calling for a flat print. They expect services to drive the growth and be the main driver of growth in August. Now, TD Securities also goes on to say in the report that should Canadian GDP be surprised to the downside, it would play the narratives of the Bank of Canada pivoting on rate policies. >> Interesting stuff Anthony thanks for that. >> My pleasure. >> MoneyTalk Live Anthony Okolie. Let's do a quick check on the market now let's check on the TSX Composite Index. Holding in a little more than half percent of the upside and 106 points, 19,386. Of course, Shopify, coming in with earnings that please to the street. Let's check on that right now at 46 bucks a share even. About 16 1/2% on the name. Big pop on the day, we can see that your today still off the highs earlier this year. Cenovus Energy some of the big names up one of the half percent, south of the border S&P 500, just down to put that breakeven line. Down 11 points about 30%. We are back now a Damian Fernandes from TD Asset Management take your questions by global equities. Let's get back to them. Given the recession worries, are you defensive with your portfolio? The viewer loves your tie by the way. >> Oh thanks ha ha. I think defensive stocks have already moved a significant amount. I find it more interesting to think about Anthony, what your colleague was talking about GDP numbers. Right now, we are likely going to slow into a recession. But is it going to be a shallow recession or a much deeper recession? I'm of the view that in a shallow recession, in companies that are going to see a step down in their revenue earnings functions, they will receive a fair amount of pain in the stock prices. Those to me, make more sense. Defensive companies here to date, have actually done really, really well. Consumer staples in the US, one of the best performing sectors. Their multiples. They are pricing in a much more, if you asked me if it's time to go defensive? They are pricing in a much more deeper recession scenario that I'm not yet seeing in the evidence. So I wouldn't say it's time to go defensive is really January 1 is the time to go defensive to be clear. But then there is defence like areas of the market where people can consider defensive but I think are still interesting. Defensive stocks might be interesting because geopolitical risks are not going away. So that's how I think about defensive. I think about balancing the portfolio. >> All right. I think I have to get back and up my tie game as well. > My wife has great style. >> That's the key right? Next is it too late? We did see a change in the price of crude in these energy names? Is it too late to invest in the energy sector? > Energy, what we've seen in the geopolitical tensions, the world is short of energy. You have significant lack of investment and extraction of energy now for multiple years. Energy companies are showing capital discipline. They are not buying each other like the previous. I think energy, even if you do see a decline in the oil price, these energy companies have completely lowered their cost base where they are extremely profitable at scale at these prices. Shell just reported this morning and it raises and generates both loads of cash flow. Even if we do have a recession scenario, oil prices come off a little bit, energy price will continue generating and they continue to generate to shareholders. Is now the time to rush and energy? I think energy will be with us or will continue to need energy and under should be part of your portfolio. For at least a multi-horizon just because the world is short. These defence stocks… You have these companies which are going to see secular tailwinds support their profitability. Energy company's to right? Lack of investment. In the energy space. > All right here's a follow-up question from a different viewer. Talking but Canadian crude trading in a discount. West Texas intermediate, and another company out of Europe. That is my rough translation with that question is. >> I wouldn't be able to speak to it, it's a matter of great. Our crew is a heavier grade. Its refining capacity. It's still up significantly. Which means Canadian companies like Suncor, you're talking about Suncor engine Ovis and see enqueue. They are still very, very profitable, even at these levels. Do I think it normalizes for the spread narrows? That's a function of refining capacity. > Okay. We have run out of time for questions but were not illegal just yet. Final thoughts about what we're living through and what's to come? >> Final thoughts of what we are living through… >> When it comes to the markets ha ha. >> This is just another that there is been a fair degree of corrections and markets and when you think of that, I'm not talking about significant bear markets. I'm talking what your conventional bear markets. They are normally the tune of about 28, 2025% corrections for the peak. We were close to that, in the US we passed that. Bear markets are defined both by time and price. We are nine months into the spare… Fair degree in pain and stuff. I guess my thoughts are if you are thinking about going defensive right now, running for the hills and selling everything and moving the cash and hiding the bunker : it's probably too late. In fact the more recent earnings season has shown companies generating decent profits. We have confidence and earnings raising in dividends. That's where, I'm not trying to not answer the question but I'm much more interested in what's happening on the individual stock level. With companies returning cash and the broader market. But even at the broader market, I do think the stuff that hold us back, rate hikes and inflation, those are becoming less painful as we move forward. > And Damian. Always great to have you. Great insights. >> Always a pleasure thank you. >> Damian Fernandes, Portfolio Manager at TD Asset Management. Stay tuned. On Monday, Derek Burleton, Deputy Chief Economist at TD Economics would be our guest. And a reminder they can get a head start just email MoneyTalk Live ATD. That's all the time we have today. Take care. [music]