Daniel Ghali – 07/20/2022

[theme music] >> Hello, I'm Greg Bonnell and welcome to MoneyTalk Live, brought to you by TD Direct Investing. It's a new program broadcast daily on WebBroker. Every day, I will be joined by guests from across TD, many of whom you will only see here. We will take you through what's moving the markets and answer questions about investing. Coming up on today's show, we are going to discuss why the recent decline in the price of oil may not reflect the actual supply and demand realities of their with Daniel Ghali of TD Securities. And today's WebBroker education segment, we are going to have a look at how you can track commodity prices using the platform. So here's how you can get in touch with us. Just email moneytalklive@td.com. Or you can follow the viewer response box under the video player here on WebBroker. Before we get to our guest, let's get you an update on the markets. We had a nice rally yesterday. It was a mixed picture earlier this morning but we have some green on the screen. You will start here at home with the TSX Composite Index. It is modest at 18,974, up 36 points or 1/5 of a percent. The check name seem to be putting some points on the board on both sides of the border. Here at home, it is Shopify making some gains for us. Let's check in on those shares. They are up almost 9% at 48 bucks and $0.10. Barrick Gold keeping an eye on some of the energy and mining names today, there was a bit of weakness in that space. We will see how Baruch is faring as we head into the lunch hour here on Bay Street. At the moment, it is down 1 1/2%, 20 bucks and $0. 35 a share. Let's check in on the S&P 500, the broader read of the American market. We saw a nice rally yesterday and after it seemed like a decision out of the gates this morning, we are rallying again. We have 3969 points on the top line, that's good for a gain of a little shy of 1%. We will check in on the check names on Wall Street as well. They are putting points on the table and both sides of the board. A firmer performance here from the NASDAQ 100, up 1.6% at this hour. United Health, let's check in, saw some weakness it in this name earlier the session. Still underwater. Down 2.3%. 521 a share. That's your market update. all these recession fears have sparked a major outflow from commodities funds and that's pushed crude off of its recent highs. but our next guest says that price action isn't reflecting the truessupply demand in the sector. Joining us now as Daniel Ghali, Senior commodity strategist at TD Securities Pierre let's begin. people are trying to figure this out. Whatdoes a possible recession mean for accrued on the market? What swale? >> Thanks are having young. Over this last week, we have seen the deepest commodity outflows since 2014. That statement on its own is actually really significant because what it says is that the pace of outflows from broad commodity funds was steeper than observed during the COVID 19 panic. What's driving that? Certainly recession fears have been top of mind for most money managers. I think that's primarily the reason we are seeing this. What is concealing, however, is that behind-the-scenes, physical markets have actually tightened and they have sent a strong signal that crude, for instance, in physical markets, is actually scarcer today than it was a week ago. This is really a dichotomy between what the futures markets are signallingIn the physical markets. From a fundamentalist perspective, really nothing has changed. We see severe constraints to oil production over the next year or so. In the US, Shell patch is printing money and certainly that means thatthe incentive to reinvest that cash windfall into operations is at its highest levels thenin more than a decade. However, we are seeing capital expenditure projections rise only modestly. When you account for inflation, they've only risen to such an extent that you would expect the rate of production growth to remain stable. Let's talk about OPEC. OPEC has been under producing on a sustained basis for the past year. That's a result of a decade-long period of under productive, or underinvestment into the energy and for structure that is coming home to roost today. We know several nations within OPEC or having operational constraints, but geopolitics have also been a major barrier to increasing oil production. Not only with respect to Russia, which we will get to a just a little bit, But several nations including Iran, which of course the world is looking towards the Iranian nuclear deal as a potential avenue to increase oil production, but other countries such as Libya have been struggling amid a political crisis, and that is constrain the amount of oil that we can get out there. >> That's interesting, right, because people, in traditional times and even to the pandemic, will say, listen, if we are going to get into a situation where demand outstrips supply, we look to OPEC reserves. >> We are running at the lowest capacity levels then we have seen in a long time. What that says is that any oil shock will be hard to absorb. Even if you are looking towards a recession in the next year to bring down the pace of oil demand growth and therefore to balance markets in that way, well, looking historically, there's really only… Been four periods of time in which oil demand growth has been negative on a year on year basis. That's the OPEC embargo in the early 1970s, the Iranian revolution, also in the 70s, the global financial crisis and COVID 19. Outside of those extraordinary instances, every other recession has only translated into a slowdownIn demand growth, but yet, what that means, and that is a critical caveat, I'd say, is that we are still going to be eroding what little is remaining of the world's spare capacity. And the big picture here is that mean supply risk is going to remain in oil markets over the next year. >> Given that, why are we not seeing the investment into future production? are these timelines that companies don't want to commit to if they think we are moving to a future where we aren't as reliant on carbon? are they saying, these are big investments, we just want to make them? Gosh I don't think that's the case. I think that ESG has been a major driver of the decline in capital in the expenditures in the shale patch but also globally. what we have seen in it is that What that tells us is it's really the ESG team that is driving the higher cost of capital for reinvesting into your operations when you are in a carbon intensive industry. I would also say that right now, we are in a period of time where the supply chain, and the energy sector, is also constraining the ability for firms to increase their production. In the US, course, it's private firms and so there's clearly incentivized to raise their production growth. But we think that labour is scarce, equipment is scarce and, historically, you been able to cannibalize some spare parts from prior operations, but today, that's been done and supply chain disruptions are inhibiting their ability to grow production as well. >> It sounds like we are leaning towards a discussion about the refining part of the energy space. It's one thing to say, the production to get the crew, to get the crew and get it off the ground, but refining capacity takes the humans, the infrastructure breed are we keeping up on that front? No refineries are very expensive proposition. >> Right, absolutely. >> What does that mean about oil going forward? We have been on a wild ride this year. As it flows down to the averageperson, beyond our scope as investors we feel it when we fill up our cars and pay our energy bills. Where are we headed? >> the price is going to remain rooted in crude oil prices. In a recession, crude oil prices might decline 50 to 60%, but this time it will be like that. Oil priceswill remain elevated for the foreseeable future. As you talk about the disconnect we are seeing between the futures market in terms of telling us about demand for crude going forward and the actual physical market. Is there ever going to be a situation where we can sort of bridge that disconnect between what the futures are telling us, with the physical market? There's always a bit of friction there. > Absolutely. I don't think those kinds of disconnects don't occur for a long period of time. We expect the futures market to reprice in line with what the physical markets are saying. The reason that the futures markets are disconnected are the extremely steep outflows that we have seen from broad commodity funds. If you are familiar with those, they hold a basket of commodities and as the money managers holding these funds are concerned about recession, they are pulling their capital up. What the translate to is that in the indiscriminate selling across all commodities, so that's why there may have been a mispricing here. > It's hard to time markets at all. You are seeing these huge outflows. Are there any signs we're looking for of stabilization in that place? I think we are all looking for some stabilization at all, equities markets, are things coming down or are we in for a rocky ride still? >>we are still in for a rocky ride. The fact of the matter is that spare capacity is extremely low. What that means is that any shock is going to be very hard to absorb. We are also in a period of time where the likelihood of shock is extreme the elevated. We know that high energy prices, the high US dollar in the Fed that's hiking tend to be associated with unrest in the emerging-market world, and so emerging-market producer nations might start to face some unrest next year that might inhibit their ability to produce oil and that's one potential source of a supply shock on the horizon. >> Interesting stuff in a great start to the program. We are going to get your questions about commodities for Daniel Ghali from TD Securities in just a moment. Our mind is even get in touch with us anytime with this question. Email moneytalklive@td. com or Philip the viewer response box under the video player here on WebBroker. Let's get you updated on some of the top stories on the world of business. Take a look at how those markets are trading. we have inflation running at its hottest pace since 1983 as gasoline prices continue to pressure Canadian households. StatCan says it's consumer price index was up 8.1% in June while prices at the pump where the main driver, the causes were broad-based. Bank of Canada is going to continue hiking rates. The BOC's next decision is in September. Netflix says it expects to start adding subscribers to its service this quarter after the streaming giant lost more than 1 million customers in the first half of the year. The bulk of those subscriber losses came in the most recent quarter with Netflix losing 970,000 customers. That said, the loss wasn't as large as expect it. Netflix also says it's aiming to bring in less expensive tier of service that would be supported by advertisements. Baker Hughes says Component shortages and supply chain inflation are weighing on its operations. The oilfield services giant posted just a profit well below the expectations for its latest quarter. Baker Hughes also took a $365 million charge with its his subvention of operations in Russia. The company CEO is warning the demand outlook for the next 12 to 18 months is deteriorating, pointing to soaring inflation that erodes the consumer purchasing power and aggressive rate hikes for central banks. Here at home with the TSX composite index, a modest game, but it's green on the screen, up a little bit more than 1/5 of a percent or 40 points, and in the United States, the S&P 500,where we had a very nice rally yesterday at a bit of indecision in the early moments of the trade today, but now we are moving to the upside, 3971, up 35 points, almost a full percent. We are back now in Daniel Ghali,Senior commodity strategist at TD Securities, we are taking your questions on commodities. Here's a question about not only the recession but in particular what it can mean for the price of copper. Copper is one of those canaries in the coal mine sometimes. >> Yes, absolutely. I think copper prices and base metal prices in particular have been hard-hit by the recession fears. I think if we zoom back a little bit, it really isn't hard to see that Chinese economic growth, which of course drives the LME metals or base metal sector because China tends to consume about half the world's industrial metals, so China's economy has been slowing for more than a year, but it's just recently that we've seen the LME metals to climb. The reason why that might be the case is, and this is frankly not very often touted, is the fact that stockpiling was a major driver of demand earlier this year. There has been a lot mentioned about all ensuring to affirm our supply chains across the world, but what firms and governments have opted to do instead is to stock up. Today, firms are overstocked and what that means is that the supply risk premium that has kept copper prices elevated throughout the early part of the year has completely eroded since these firms now hold sufficient amount of inventories. Now, we see the price of copper and other industrial metals more closely correlated with global growth, which is of course slowing down and which is one of the reasons why recession fears have sparked the collapse in copper prices of the last few months. >> Do we get a sense of how big the stockpile is? With China, he talked about their big appetite when times are good for copper and other base metals, sometimes I feel like we get a little lack of clarity as to exactly was happening in China. We have a sense of how long it's been stockpiled and how long it might take to work back stockpile off? >> If you look at exchange inventories, they will show you an extremely low level of stocks across most of the metals. What that conceals is that commercial operations tend to stockpile for their own uses, and I think that that's really the area where we see stocks having built up over the last few months and particularly in the early part of the year. We shouldn't forget that we have seen successive waves of COVID 19 disrupting supply chains. Dad striven firms to stockpile, but we've also seen the war in Ukraine for rest in the global supply chain in a really extreme way. That's been another driver for stockpiling. After we think the stocks reside and that's one of the reasons we don't see commercials buying to the same extent as they were just a few months ago. >> Longer-term, as we hopefully put more of COVID further behind us,what do you think the demand for copper looks like? Obviously, there are widespread industrial uses. >> Absolutely. Right now, we are in the part of the cycle which is extremely correlated with the cyclical global growth environment. But over the longer term, we see the global energy transition as a major driver of structural demand growth across copper, aluminum, zinc and many of these metals. When we think about it, there are really four major ways that the global energy transition is going to impact the world. The first is the quite obvious industries, electric vehicle sales are expected to rise further and so on and so forth. A little bit less obvious are the component suppliers, so things that go into electric vehicles, such as battery metals, copper in particular and the electrification process itself is going to demand a substantial amount more of metals. That's going to impact copper and aluminum in particular since they are conducive metals. I'd say another way which is certainly not often touted is the trouble with some sectors. I'm talking here about the LME metals such as aluminum and zinc that are extremely energyintensive and carbon intensive as well. What we are seeing today, and I think this has just started to occur during the pandemic,is that governments are proactively curtailing their supply, so that's another source of positive returns for these metals since the supply side is being impacted. >> That's a nice segue to our next viewer question, wants to talk about the growth of electric vehicles. Will the continued growth of EVs be bullish for base metals? >> I think it's really undeniable that electric vehicle sales are expected to grow. The term electric vehicles is actually inclusive of many different types of vehicles. Oftentimes, we think of it in terms of the plug-in vehicles that we all know today. But it also includes plug-in hybrid vehicles and so on and so forth. So by 2030, we expect that the share of sales of electric vehicles in this broader term is going to be somewhere around 30% of all vehicle new sales. That is certainly going to draw if a massive amount of demand for copper and other metals. >> Let's talk about some of those metals that are needed for electric vehicles. obviously, electric vehicle market share has been growing. There are some concerns about can the grid handle? Others say they are working towards that as well. What about just the metals that are needed to go in to an electric vehicle? Do we feel that we have a robust enough global mining sector to make sure we are well supplied for these things? >> Absolutely not. >> Absolutely not? >> Absolutely not. I'd say that it's quite similar to what we discussed earlier. We've been in a decade-long bear market across many commodities but certainly across the metals sector. What that has translated to is a severe underinvestment in mining capacity across the world. So although prices are elevated today, we are still not seeing capital expenditures rise to the extent that you would expect. In fact, as we head into a recession, that makes it even less likely that long-term projects will get approved for funding. So what that tells you is the nickel mine for instance which takes 10 years to build might be delayed even further. That's going to be a supply crunch down the road that's going to translate into higher prices for the metal space. >> It's not like we just started talking about electric vehicles as a society yesterday. We've been talking about it for a while. So I find it fascinating that we don't have the mining capacity to meet the demand that is anticipated. Is this the fact that people haven't sort of subscribe to the faith of what the future holds? Or are there other structural things in the mining industry that are keeping them for making those investments? >> That touches on what we spoke about earlier. ESD is a major constraint to investments in growing mining capacity. The metals and mining sector is a carbon intensive sectors of the reinvestments into operations is a big constraint. >> Always make sure to do your own research before you make investment decisions. We will get back to your questions for Daniel Ghali at TD Securities on commodities in a moment. You can get in touch with us anytime. Email moneytalklive@td.com. Now let's get today's educational segment. Of course, we have been discussing today the commodity markets and how volatile they have been. They can move pretty quickly. WebBroker can help you stay on top of these latest developments. Here with more that is Jason Hnatyk, he's a client education instructor at TD Direct Investing. Jason, how can I use WebBroker to track the performance of commodities? >> Thank you, Greg. I appreciate the opportunity to be here. Whether or not you are a self-directed investor looking for a chance to diversify or the opportunity to stay abreast of what's going on in the market, tracking commodity prices can be a key point where key details to stay on top of so to find that within WebBroker, we will go to the research tab at the top of the page. under the markets column on the left-hand side, let's choose overview. On this overview page, this is where we will get some key news, key information that might be driving the market, in addition to looking at some of the major indices that we are tracking here, on the markets here. The page doesn't seem to be loading here. My apologies. >> The joys of life stuff, Jason. >> Absolutely. Let me refresh your get myself back into it. Once we are on the research page, we will be able to track some major commodities such as energy, such as agriculture as well as metals. My apologies here, Greg. Well, just to give you an overview of what we will be looking at, when we get to the research overview page, what we see here are some of the major commodities. We will be able to track how those commodities are performing, on how today's trading is going, how their last prices are doing, price increases for the previous day and you will also have the opportunity to track how the near term future contracts are trading from their historical highs and lows. So lots of information to get right from WebBroker. Additionally, we know that many investors don't have the opportunity to trade the commodities themselves. WebBroker will allow you to zone in on those sectors, industries that are focused on the use of those specific commodities. So we will be able to focus in on for example the energy sector and see the different companies and how they are performing from a broader sector perspective and how they are performing in today's session, we can see if they are up or down for the day across the sector as well as get a graphical representation of the advancers and decliners of the individual securities in that sector for today as well. >> Jason, I'm on my markets overview page and sometimes I forget, there it is, there's West Texas crude, you have a lot of nice division. That's where you can go to see the price movements. What about some explanationas to what might be behind all of the price movements we see daily? >> That's an excellent point. We want to have access to the information, but we also want to make sure that we have maybe a little bit of insight from whether it's industry professionals or the ability to do some additional reading on your own. It looks like I've been able… I've refreshed my page and got it working. So to get you to that next level of research, where we can get that WebBroker is once again clicking on the research tab at the top of the page and under the markets column on the left-hand side, we can see that there is a report section here. Now, if we go ahead and choose that, if we can scroll down on this particular page, I will direct your attention on the right-hand side, we have a MorningStar research report. This is third-party independent research beyond the scope of TD, so a great opportunity for you to get an unbiased view of what's going on in individual sectors and industries. If we are looking to get a little bit more on energy, per se, you will be able to choose that from the list. It's going to pop up the report for you to really get into the weeds if you would like and really get a detailed view of what's going on in the market or what's going on in that particular sector. So you can stay not only informed but hopefully make an educated decision for your next trading idea. >> Great stuff, Jason. This is Jason's debut on the show, live as always, trial by fire, my friend. You came through. Barely scorched at all. Thanks for that. >> We survive. Thank you very much for having me. >> See you again soon. That's Jason Hnatyk, client education instructor at TD Direct Investing. Check out the education section on WebBroker for master classes and webinars, including one on how to invest in foreign stocks with Canadian depository receipts, how to invest during volatile markets and how to apply common options Greeks. Before we get back to your questions for Daniel Ghali and commodities, a reminder of how you can get in touch with us. 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@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 will see if one of our guests can get you the answer right here at MoneyTalk Live. We are back now it TD Securities Daniel Ghali. We are taking your questions about commodities. One just coming in off the platform. We know the US dollar has been strong, obviously, this year. We've been talking about that a lot. How does a strong US dollar look for commodities? What's the relationship? >> I think that's a great question. Certainly, a stronger US dollar tends to be associated with lower commodity prices. There are a few reasons for that. The first is really quite obvious, commodities are priced in US dollar terms of a higher US dollar tends to be associated with lower commodities. Slightly less obvious transmission mechanism is that a high US dollar tends to be bad for emerging economies, many of which have debt services, obligations paid in US dollars. because emerging markets are so crucial to the commodity sector, after all, they do contribute and overwhelming proportion of demand growth, and so because of that, we tend to see a stronger US dollar associated with lower emerging market growth and therefore lower commodity prices. >> Then, as commodity investors, how much work you have to do in terms of just trying to be a currency exchange forecaster? >> Certainly, we worked very closely with our experts in TD Securities to inform that to you. >> Do we think that maybe the US dollar strengths we have seen so far, I know you're not a currency guy, but if you have to take that into a calculation, people are wondering where do we go from here? If we are talking about recession fears in the US dollar being that haven trade, which has been traditionally, but I feel like over the past two years or so, traditional stuff hasn't worked out. >> Absolutely. I think it depends on the time horizon you're looking at. The US dollar depends on… [video buffering] >> Let's do a quick look at the markets before we get back to your question. Obviously we have some green on the screen. It's a little firmer on Wall Street, but if we take a look at the TSX Composite Index, we are up 62 points, 1/3 of a percent, just cracking above 19,000 there. Let's check in on the S&P 500. After yesterday's strong rally, building on those gains again today at 3969. Up almost 33 points, a little shy of a full percent. There are a few sectors doing some good things to the topline numbers on both sides of the border. The tech sector is among them. Let's get back to your questions on commodities. We've got one coming in talking about the precious metal, gold. can you give us your outlook for the price of gold? A lot of people have been scratching their heads, the turmoil we've been through, they might've thought gold would do better in an environment like this. >> absolutely, and I think that's precisely why gold hasn't collapsed to the extent you would expect given the fact that we are facing the most hawkish central bank regimes since the 1980s. Gold tends to be associated with real rates. [video buffering] That being said, gold prices have actually remained relatively calm and obtainedThat being at recession since to be associated with a pivot in Fed policy. That's been true for the past decade. That's a critical question today. Are we still in the same set regime or will they be forced to continue hiking or keep rates otherwise higher than they would be for longer than you'd anticipate even if we are heading into a recession? >> Gold, of course, does have real-world uses but for a very long time, but you and I have been around, people have used it as a safety trait. Has that trade being eroded at all in recent years? some people structure their heads, when every thing was going wrong, they thought he needed to be in gold but that wasn't working either. >> Gold has 6000 years of the history of historic value and so when people ask has that historic value been eroded over the past two years, I'd say certainly not. bitcoin, people are worried that bitcoin has captured market share from Gold but what we have seen is that gold has remained relatively stable, even though prices have come off a little bit, certainly not as much as another alternative safe havens. >> When it comes to that global mining investment we were talking about earlier, what you were saying when it came to electric vehicles, the base metals that need to go in there, the mining capacity is falling behind with the projections are, what about for gold? Is it still lucrative enough that we are seeing money put into gold mining operations? >> It is certainly lucrative enough to do so, but notwithstanding that, we are not seeing capital expenditures to the extent that you'd expect given the profitability of investing in gold. Again, that's associated with the ESG teams that we previously described. >> Let's talk about the poor man's gold, silver. What we think about silver? >> I think people don't really recognizes that silver is very much an industrial metal as well. Far more than gold, but similarly to other industrial metals, it's very much driven by global growth, and so some of the seams we previously touched on in terms of stockpiling earlier in the year followed by global commodity demand becoming reconnected with global growth drivers, that's really what's driving silver here. That's one of the reasons that silver has substantially outperformed gold. >> That's a silver situation. We been talking about the metal. Got a question here taking us into a different space in the commodities. What is your view on natural gas? Natural gas is in the headlines on a daily basis because of the conflict in Ukraine. >> Absolute. That's been one sector that's been in the limelight recently. I'd say that Europe's energy infrastructure is in a really precarious position at the moment. Zooming out a little bit, they have actually managed, the Europeans have actually managed to raise the level of inventories almost to five year historical average levels, so that certainly promising. However, the forces that have allowed them to do so have started to dissipate. We know that the US has been a major export of LNG into Europe and that has eased the natural gas shortage there, but some constraints in terms of export facilities are starting to weigh on that driver. In terms of Russia flows, that's really the key event risk for this week and that has significant applications for other markets as well. The question is, are ignored stream one flows going to come back on or not? That really ties into the war in Ukraine and is an extremely political decision on the part of Russia and on the part of the Europeans as well. >> So I assume it we know that euro, it's not, we need some sort of resolution which are not getting in terms of their availability and supply of natural gas. Are we making an error as investors when we think of natural gas as a global market? Do we need to split the continents? >> All commodities markets are Christ on their local market. For natural gas, that has larger implications because gas can't be transported as easily as a metal can, for instance, so you need liquid vacation capacity, you need to put that on a ship, transported across the sea and re-gasify it in order for that to impact gas balances and so certainly, the local aspect of gas prices is very important. >> Where does Canada stand in all this? Talked about the fact that if you want to get your natural gas product out in the world, the look with occasion process to get it out there, we've been talking about elegy for a long time in this country. Where we actually aid in getting it out to the world on a large scale? >> I think we are getting it out to the world but not on the scale that we would like? And again, part of those reasons are political in nature. certainly, the probability of doing so goes into that. >> Interesting stuff. Give a question about investing or what's driving the markets? Our guests are eager to hear with on your mind, so send us your questions. There are two ways you can get in touch with us. You can send us an email any time at moneytalklive@td.com or you can use the question box right below the screen here on WebBroker. Just write your question and hit send. We will see if one of our guest can get your answer right here at MoneyTalk Live. We have a fresh read on Canadian inflation. Hottest level since January 1983, scorching 8.1%. Joining us now for more is money talks Anthony Okolie. Anthony. >> Thanks. Canadian inflation jumped 8.1% year-over-year in June, that's up from the May print. More importantly, it's below expectations of an 8.4% rise. TD Economics did say that higher inflation continues to be the biggest risk to their economic outlook after today's print. While gas prices were the key driver in the inflation print with prices up 6. 2% month over month, TD Economics actually noted that the June is CPI data actually showed less monthly price pressures in most categories and while things like car prices and vehicle prices rose, food and shelter costs actually showed signs of slowing. Shelter costs were up a little month over month, but they saw the smallest increase since November and that in part reflects the lower Real Estate Commission's and homeowners replacement costs as the housing market slowed this year. Now, TD Economics concludes that with inflation still elevated, the job market is still pretty tight. Wages are running at a +5% clip. They expect the Bank of Canada to continue to hike at an aggressive clinic again in September. Right now, the markets are pricing in at 75 basis point increase at the next meeting. >> Obviously, that can have economic repercussions. What is TD Economics saying in terms of growth for the rest of this year and the next year? >> They think that the hits to consumers, because of rising interest rates and higher inflation, will impact economic growth this year and into next year. When you look at their quarterly economic forecast, their forecast is that growth will slow in the third quarter before decelerating to 1.6% in the fourth quarter and for 2023, they are expecting economic growth to continue to take a hit and they are forecasting real GDP growth to come in at 1.7% >> Interesting stuff as always. Thanks. >> My pleasure. >> Anthony Okolie pre-let's get you updated on the market action. We will start at home with theTSX Composite Index. It's up 1/3 of a percent, safety six points. Let's look at the sectors doing the heavy lifting today. It is technology. it's firmly along with some healthcare names. What's holding us back from a better showing? You've got materials under pressure with utilities and telecom is sort of flat on the day. Let's check in on Baytex energy. All you see, this has been a bouncy trade in the energy names today at $6.67, Europe a pretty modest 1.7%. We said the tech stocks seem to be doing some lifting on both sides of the border. Shopify at the top of the show. Let's check out lightspeed, the point-of-sale business. Right now it $27.20 per share, the one-day session jump of 8 1/2%. Switch over to the S&P 500. See what's happening south of the border. After yesterday's pretty firm rally, we are building on that. We are right now up a . 84 basis points or 33 points in terms of the sectors that are making a difference in technology, also some cyclical consumers that stocks and industrial south of the border. Better showing on Wall Street to the telecom namesand some of their healthcare names. Different composition when you're talking about Bay Street and Wall Street when it comes to healthcare stocks. It is the tech stocks doing well today. Let's check on the NASDAQ 100. It's up 1.85%, 12,475 on the NASDAQ 100. And Netflix, of course after the close of bells yesterday, we got there latest quarterly earnings. Netflix had warned earlier that they could lose up to 2 million subscribers that quarter. That's behind them now. They came in a little shy of a loss of 1 million, it was 970,000 but the exact number on it, so it wasn't as bad as they expected. We see those shares up fairly firmly on the back of that earnings report. Also talking about adding that new tier of service perhaps into next year where it will be cheaper, less expensive, we should say, monthly fee but it would be ad supported. Right now, investors seem to be fine with what they are hearing. 216 box and change per share, Netflix of 7.3%. We are back now with Daniel Ghali from TD Securities taking your questions on commodities. Let's get to this one. We have touched on this a few times on the show. So let's run it down to the audience. Can higher commodity prices be blamed on the rise of ESG investing? You talked about underinvestment, what about the prices themselves? >> I think that certainly part of the story. We have touched upon it. Carbon intensity is inversely related to the reinvestment ratios that we have seen across different sectors in the economy. So metals and mining space in particular and the oil and gas base as well are some of the more carbon intensive industries and so as a result of that, we have seen reinvestment ratios declined. But that's not the whole story. Today's situation is also being impacted by supply chain shortages. Labour is scarce and equipment is scarce and that's also part of the reason why we are not seeing investment tenacity. >> Obviously, you are on the commodity side of the equation when you're taking a look at all these forces. We've had pure ESG gas on the program as well. The question I was put to them is do you think ESG is getting a bad rap when it comes to the situation we are facing right now with money prices? You said ESG as part of the mix but it's not the whole story. Is he getting too much of the blame? >> Is getting too much of the blame? I don't think it's getting too much of the blame, but I do think it's certainly a worthwhile proposition. What we've seen during 2020, and really, I think the pandemic helped accelerate this process, is that the world's share of carbon emissions that are pledged under net zero programs has risen substantially, and so this is really the public that is demanding that we start to erode the amount of carbon that we and mitts across the world and so I think it's something that the world wantsand these are markets responding to that. >> Okay. That's all the time we have to take your question. Of course, we had a lot of great discussions on the show. What you think, overall, Daniel, and he thought? We started the discussion on the fact that we have seen massive outflows from the commodity space. The question becomes for people where we headed from here? >> I think there is some evidence, in the imminent term, that the pace of outflows has already peaked and so what that suggests is that recession fears have started to be priced potentially fully soon. So with that, we would expect fewer liquidations on the horizon. >> Recession fears, obviously, if recession comes to pass, we haven't live through it yet. It's a bit of a bumpy ride ahead? >> I think what is going to depend on the pace of Chinese growth as well. We've touched upon that, but China has been contracting for a better part of you. They are now starting to stimulate as a result of that. The typical historical lead lag relationship between Chinese stimulus and globalgrowth is 5 to 9 months. With that yes is that by February March of next year, Chinese stimulus is going to start being a positive factor for global growth and so I think that is the next age for commodity markets. > Very interesting. Thank you for being here. >> Thanks for having me. >> Thanks to Daniel Ghali, Senior commodity strategist at TD security. Stay tuned for tomorrow, Marisa Jones from TD Asset Management will be on the show. We will take your questions on the utility space and fixed income. For your questions, you don't have to wait until 12 live tomorrow. You can send your questions in ahead of time for our guest. Email moneytalklive@td.com. That's all the time we have for the show today. Thanks for watching. We will see you tomorrow. [theme music]