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[music] >> Hello, I'm Greg Bonnell. Welcome to MoneyTalk Live, brought to you by TD Direct Investing.
Every day, I'll be joined by guests from across TD, many of whom you'll only see here.
We're going to take you through what's moving the markets and answer your questions about investing.
Coming up on today's show, we are going to talk about the one and only Dr. Copper, with the metals outlook is telling us about the global economy. Daniel Ghali, Senior commodity strategist with TD Securities joins us with some insights to share.
Also today, US auto sales coming in stronger in the third quarter. Our Anthony Okolie is going to tell us all about that.
And in today's WebBroker education segment, Nugwa Haruna is going to highlight some technical analysis tools you can use right here on the TD platform.
So here's how you can get in touch with us.
Just email moneytalklive@td.com or fill out the viewer response box under the video player on WebBroker.
Forget our guest of the day, let's get you an update on the markets.
We are on the eve of jobs Friday. It's an important one. Investors looking for signals from the broader economy that these aggressive interest rate hikes are working to will the economy. Ahead of that, you got the TSX up modestly, about 23 points, a little more than 1/10 of a percent. Among the most actively traded names on the TSX include blackberry.
Coming up this morning… After closing bells yesterday with a plan to split the company, take the Internet of everything, is self driving cars, but it over here, but the cyber security business over there. The street doesn't seem thrilled at the prospect.
At 537 per share, you've got the stock down a little more than a percent.
TransAlta Corp. was moving higher earlier and it's up almost 7% right now. They were telling us today that the transaction of TransAlta Renewables is complete.
While the market it was coming, it seemed please by the news. South of the border, traders are waiting jobs Friday. It was a pretty tough September.
In the equity market.
It hasn't been an easy ride in these early innings of October. Tomorrow morning will be a big one.
Just trying to see, the interest rates cooling the labour market? You're done 25 points on the S&P 500, little more than half a percent. The tech heavy NASDAQ, how is it sharing against the broader market?
A little bit weaker.
A 106 point deficit, almost a full point to the downside.
We are down another 2% today on West Texas intermediate, below 83 bucks per barrel.
Was I just telling you a few days ago we were above 90 bucks per barrel? This is an interesting market.
A name like Exxon right now hundred nine bucks, down a little more than 2%. And that's your market update.
You may have heard of Dr. Copper. It's called that because of the metals perceived ability to diagnose the health of the economy. Copper prices have been falling and inventories appear to be facing their largest surplus in years. So what does this tell us about the state of the economy?
Daniel Ghali, Senior commodity strategist with TD Securities is here to prescribe some knowledge for us.
Dr. Copper prescriptions, let's get our terms in order here.
What is happening right!
>> Yeah, thanks for having me on, Greg. So what is Dr. Copper telling us?
I think it's actually a signalling that storm clouds are building in the global economy.
I have to nuance that because the demand picture for copper has so many idiosyncratic stories thatwarrant mentioning.
On the one hand, in China, the construction sector, as we know, has been going through a prolonged period of pain.
The construction sector is actually the largest individual end use consumer of raw materials, copper is one of them.
But the story there is that the targeted stimulus that the government has implemented in the last several months isimproving the outlook for completions of construction.
So while the pipeline of future construction from which the pipeline of future copper demand might flow through from is stagnant, the completion rate has increased notably and that supports copper demand today.
elsewhere in the US, it's not a surprise that goods consumption is on the decline and that's been the case for a very long time. The same is true in Europe. Those are some areas where we do see the impact of interest rates flowing through into demand.
>> Alright, we have a few things at lay there in terms of copper. We talk about the surplus that we see in the headlines.
You said there are idiosyncrasies here in the copper trade. There are some nuances in the space to, aren't there?
> Yes. The biggest piece of the puzzle for copper analysts out there is that you hada substantial increase in mind supply, a substantial increase, particularly in China, in refined production, so that smelting copper.
China has an imported any less copper this year than last, but when you look at inventories on all the global exchanges, you can't see any sign of demand. If demand is we can supply it is improved, you would expect to see strengthen inventories.
Analysts may have been very wrong on the consumption from renewable energy sectors, electric vehicle sectors, which are some of the bright spots for copper demand as well.
What we see, however, is potential evidence of substantialbuilds in inventories, in visible inventories.
>> Let's talk about this. In my head, some going around and saying how much property you have in that room and going over to the next place. Is that what we are talking about here, the physical copper in the world?
>> In some ways, yes. The exchanges and physical commodities are typically seen as the market of last resort, meaning that a trader would only put in or take-out metal from there as a last resort because the fees are high.
you also have these commodities are consumed by real industries.
People talk about Dr. Copper because copper is used in almost everything that we have in the global economy.
So while you have inventories on the exchange and that is what is visible for analysts and traders in the world, you also have inventories or commercial sites, fabricators, smelters themselves, those who are producing it, have work in progress inventories and that's one of the explanations we see aware that missing copper actually is.
>> Where is it actually? Let's talk about China. We know they are huge consumers of commodities. Do they have the copper?
>>we do think a big chunk of that missing copper is located in China.
We spoke a little bit about how they haven't decreased their inventories. Their production of refined copper has come up substantially. The demand side from the construction sector etc. has been pretty weak so where is that missing copper? Part of it, part of that explanation might be that because the refined production has increased, the new capacity at smelters means more inventories. That might be were part of the largest surplus in years is actually located.
The other explanation is that you've heard an increasing trend of these producers trading directly with manufacturers.
They have some refined copper that they would sell directly to a fabricator of some end use product.
>> One more piece of the puzzle, China's economy. Obviously, we do and heard this year, China'seconomy open for business and people thought it was came back on. It hasn't happened.
>> It absently hasn't played out that way.
I would say that earlier this year, the optimism surrounding China's reopening and optimism around the stimulusin China was behind the rise in copper prices. Copper prices today don't seem to be reflecting the supply demand balance that we are forecasting and that a lot of these statistical agencies out there… We are talking about the larger surplus in several years and that surplus is likely to increase into next year.
So what impact did China's economy have?
Well, the construction sector, we spoke about that a little bit. You have some offsetting forces. Right now, the rise in completions is supporting copper demand but looking a bit further out, China is dependent on the real estate sector for so long to grow their economy and that has probably changed on the secular horizon such that we won't be able to depend on that sector for future copper demand growth.
>> I know you don't have a crystal ball or if you do, I'd love to get in on that, but if you take all of this together, what could it mean for the price of copper in the near, medium and long terms?
>> Well, copper prices can come under a period of substantial weakness.
We think that's the case particularly in the short term horizon. In the medium term and longer term horizon, that notion of a supercycle driven by the energy transition is really compelling.
In fact, it wouldn't be surprising over a longer term horizon that the slump in copper prices that is likely in the short term appears is just a blip on the chart.
>> Always great insights with Daniel Ghali. We are going to get to your questions for Daniel and commodities in just a moment's time. A reminder that you can get in touch with us at any time.
Just email moneytalklive@td.com or fill out the viewer response box under the video player on WebBroker.
Right now, let's get you updated on the top stories in the world of business and take a look at how the markets are trading.
Blackberry planning to split its business into.
It wants to shine a spotlight on a connected car technology.
The Waterloo Ontario based tech company says it will pursue a public offering for its Internet of things division, that's where you would find software for cars connected to the Internet.
Blackberry cyber security division would be a separate business under the plan.
This has all been a part of the strategic review. Right now, the street doesn't seem thrilled with the news. He got blackberry down about 9% at this hour.
Clorox is highlighting how costly a cyber attack can be for a company. The household products giant is warning investors that the cyber breach back in the summer, which continues to hamper production right now, is going to weigh on sales and profit for its most recent quarter. Clorox says it expects to post a loss for the three months ended September 30. The higher price for a bottle of Corona helped global beer giant consolation Brands beat earnings excitations. The company has raised prices on its offerings to combat higher input costs and consumer demand for corona and Modela, some of its other brands, has remained strong. That means constellation is also raising its full-year profit forecast. They are down 3%.
A quick check in on the markets, we will start here at home on Bay Street with the TSX Composite Index. We have a very modest 15 points on the screen, just about 1/10 of a percent in the green ahead of jobs Friday. A little more cautious tone south of the border. Let's check out the S&P 500.
Right now we have a 24 point deficit, down a little more than half a percent.
We are back with Daniel Ghali, Senior commodity strategist with TD Securities.
We are taking your questions about commodities, plenty coming in so let's get to them.
What's happening with the oil prices?
They were climbing and now they are back down. A substantial pullback yesterday.
>> A very substantial pullback yesterday and today.
What's happening there, when we are talking about the pullback specifically, we are estimating that we've seen a very large stop out from trend followers which happens to be the largest dominant speculative force in commodity markets. We think this is purely technical. The DEI a report had some conflicting tones as well but the extent to which prices have fallen suggest this is a position squeeze more than anything else.
>> I look at your positioning tracker on a daily basis.
what are we talking that there in terms of the oil traded commodity trades?
>> This is actually one of the largest or dominant speculative Ford's is in commodities markets.
When we are talking about our algorithmic… Exactly, this is one of the cohorts of machines thatare looking at historical trends and inferring that that is going to give them some advantage in terms of predicting future trends. That is the basis by which they trade.
>> Only couple of days ago, I was telling the audience that West Texas intermediate, American benchmark, was above 90 bucks per barrel and now we are below 83 per barrel.
If we look at the algorithm on these gyrations on a daily basis and can take out the use were volatile gyrations, what does it look like in the longer term? It seems like they're fighting forces here.
>> There are some offsetting forces. We spoke about global demand deteriorating.
That's probably true for most commodities out there. Energy is one sector where we have seen some insulation from the supply side.
We spoke about Saudi Arabia and Russia together having significantly tighten global oil markets and that is the catalyst for the rally we have seen. Money managers of which CTA trend follows which we do spoke about have contributed to the upswing in recent sessions but we also suspected buying exhaustion from that cohort around the highs.
So that helps to explain why the fundamental aspect, the tightening from Saudi Arabia and Russia was a catalyst but these money managers are playing a role on a daily basis.
>> You mentioned the tightening supply and you get the sense that they want to see the higher oil price and they were getting in the past couple of days, trades turn the other way.
Could we expect OPEC to take any further action to try to support the price?
> I think that's actually one of the arguments for If you think about Saudi Arabia's actions, they been pretty dramatic.
They are share of global supply right now is essentially at its lowest levels When it was clearly evident we were in a global recession. So they are doing pretty much as much of the heavy lifting as they can at the moment.
Now their energy minister has been on the record saying they could go deeper but it remains to be seen if this is as much pain as they are willing to take in terms of the burden of oil supplies historically so that's one of the risks out there.
>> Of course I think it was even earlier this year, Washington would like to see the lower price of oil. Western economies want to bring inflation down.
different administrations, different governments want to see different things in the price of crude.
>> Absolutely.
Iran's nuclear file is probably at the centre of the geopolitical angle.
If you think about the progress that Iran has made under nuclear capabilities, that is a security risk for their archrival, Saudi Arabia.
They had a détente in their relationship over the last several months brokered by China, interestingly, and we've also seen a close thinning of ties between Saudi Arabia and Israel. All of this is in the context of some security concerns surrounding the Middle East.
>> That's why the commodities discussion is always fascinating, it ties into everything. Let's get to another audience question.
I viewer wants to know, can use when the connection between interest rates and commodities and if the Fed starts cutting at some point, what happens then?
>> Yeah, that's a great question.
There are several channels by which interest rates impact commodities and one of which is demand. Interest rates are the cost of money.
Higher cost of money implies that it's more expensive to buy or to fund your purchases of goods.
That's one angle. So higher interest rates, lower demand. Another angle which hasn't been a big part of the story for quite some time has been today because financing costs are so high, the cost of holding these commodities, the inventories that we spoke about earlier, is elevated.
So that's potentially one of the reasons why you are seeing traders offload their metal from their warehouse into the exchange.
>> Because a bar of gold in and of itself does not pay you a yield, it doesn't pay you interest. I think people forget sometimes that when they are trading commodities, the commodity is somewhere, it's being stored somewhere.
>> The storage cost is a component but the financing cost of purchasing it in the first place is a large component.
>> So we did see at some point next year, who knows, it seems like the time he is getting pushed out further and further by the Fed and the market, that you start seeing some cuts, the interest rate hike start working, the economy is slowing and they can come out of restrictive territory.
Where would we see this impact first?
>> Precious metals would be one of the asset classes that would perform quite well. If you think about Golden particular, its relationship with interest rates has deteriorated over the last several years. One of those reasons has been extremely elevated central bank demand.
Over the second half of last year, it was the largest central bank demand for gold on the record. Early into the first half of this year, it was also the largest first-half central bank demand on record.
So central banks are providing a bid and that is restoring the relationship between interest rates and gold itself which tend to be hyper- charged by money managers primarilyand if you do you will have a situation where the Fed is going to cut rates, it's probably going to realign money manager position, they won't return it to buyers at a time when rates might still be elevated.
That's quite a compelling story.
>> Forget off of this, what story is central bank selling us today? If we see this elevated central bank demand to buy physical gold, what is that telling us about the economy?
>> That's probably telling about global geopolitics once again. The war in Ukraine might have catalyzed a mind shift for many of the central banks, particularly in the eastern part of the world.
Having seen the US sanctioned Russia and sanctioned their reserves they might have catalyzed a change of mindset such that they might not necessarily be selling their US dollar reserves but future reserve gains might be more inclined to be distributed in other currencies such as gold.
>> It's all connected together.
Another question from the audience.
Sometimes called the poor man's gold, silver. Where do you see the silver prices going?
I would be the poor man. I'll put my hand up for that.
>> 60% of silver demand is industrial in nature.
A growing part of that story has been coming from renewable technologies, solar cells in particular.
So as time progresses, that's going to be, that 60% of total silver demand is going to actually grow such that silver is going to become increasingly an industrial model and less of a precious metal.
That makes sense. The interesting story over the medium term has been the change in the technology of the solar cell such that they are going to consume more silver, so what we call the silver loading in the cells is going to increase and that's a positive demand story.
>> That in a way may be breaks the relationship with gold a little bit.
Break is probably too strong a world, but silver fights its own place in the economy apart from gold.
>> Yeah.
The reason why silver and gold, 60% of the demand is industrial butover the last 20 years, let's say, the volatility of the industrial component is dwarfed by the volatility of the money manager component which tends to be associated with gold.
Over time you have the structural tailwinds and money managers are going to catch on.
That should argue for outperformance of silver.
>> Fascinating stuff.
As always at home, make sure you do your own research before making any investment decisions.
we will get back to your questions for Daniel Ghali on commoditiesin just a moment's time.
And a reminder that you can get in touch with us any time. Just email moneytalklive@td.com.
Now let's get to today's education segment. Today we are going to look at screening for technical events using the WebBroker platform. Traders may use these indicators to try it to find buy or sell signals for securities. Nugwa Haruna, Senior client education instructor TD Direct Investing joins us. Walk us through a, technical analysis on WebBroker.
>> Right, so if you are a traitor and to use technical analysis, there different kinds of traders. You might have swing traders, ittrend traders, but daytraders are those for whom time is of the essence and so for these investors, they really want to be able to make decisions, buying and selling decisions, really quickly so WebBroker has tools that investors could use to make those decisions. So starting off, we are going to hope into WebBroker to take a look at that.
In WebBroker, if you are looking to find the technical screeners that we have, you can click on research and under markets, you will have the technicals tab.
So under the technicals tab here, you were able to see the most bullish events, and bullish events essentially meaning where indicators are pointing at potential by signals for long-term investors. You are also able to see securities with bearish bets. Which is the opposite. If you are a long investor, these are securities you might be looking to exit your positions.
If you want to use the technical screener here, you simply want to click on these three lines here and you can go screener.
So once you do that, you are presented with the option of screening for events.
So what we're going to do is I'm going to choose a specific exchange. Under Canada, I'm going to click on the Toronto Stock exchange and this filters down information to securities trading on the TSX but now I also want to look for those securities that have any bullish indicators. So once we click on here, I'm presented with a list now the different indicators have pointed bullish or by signals for. You see it's a list. It might not be very intuitive. So you can actually change this to different charts and you can take a look to see, okay, what kinds of indicators are pointing at bullish or bearish events?
If you take a look at Dundee Corp., you can see that this points to a short-term bullish event and that happened yesterday.
Investors can decide, I see different indicators here. What are these different indicators? If you want to know more about different technical indicators, especially those who are newer, you can scroll to the top, click on the little hat we have over here, you will be presented with the different options to find things like that simply click on oscillators, you will find the Mac D and see how you can get bullish and bearish events and learn more about these indicators.
>> They get to WebBroker clients into technical analysis on the platform. Are there other ways they can find technical event here?
>> Yeah, so I mentioned that this is just one way and there's another way which I would say might be a little simpler so if you just simply want the information to be sent to you, you can also use a different kind of screener within WebBroker.
Telescope back into the platform and I'll show us what that looks like.
So once in WebBroker, we will click research again but this time we are going to click, we are going to focus on tools and we will click where it says screeners.
It's going to bring us to the stock screener where you can look for different securities using criteria that matter to you.
Instead of starting from scratch, you can actually use what we call preset screeners. These are already created screeners that investors can use.
So when I scroll down, you're able to see we have a screener already created for bullish chart patterns, bearish chart patterns, upside and downside momentum.
I'm going to focus on the upside momentum preset screen in this instance.
You will see that it is filtering in the US and Canada. And it is showing, it's giving off bullish events once again. If you want to get some additional indicators include, you can simply click on here and once you do that, you will see that there are some other indicators that you can add or remove from your list. Because we talked about the Mac D, I'm going to add that.
I want to bullish Mac D events that have occurred. Once I do that, my result, I have 163 securities.
That might be too many so maybe I actually want to break down my filter and maybe filter now by specific industries. So I'm going to go more criteria here.
Under company it basics, I'm going to go sector and industry, I'm going to clear this and I will just highlight the basic materials sector.
When I do that I have only 11 results which is more manageable for me.
what this is now showing me is securities in the basic materials sector that have bullish events based on the Mac D and the momentum indicators. What I do is save the screener because once I save it, I always then go aheadand set up alerts to make sure I'm alerted anytime new companies pop into this list or fall out of this list.
Just a great way to use different tools to get yourself comfortable using technical analysis and technical indicators in WebBroker.
>> Great stuff as always, Nugwa. Thanks for that.
>> Thanks for having me.
>> Nugwa Haruna, Senior client education instructor at TD Direct Investing.
And make sure to check out the learning centre in WebBroker for more educational videos, live, interactive master classes and upcoming webinars.
October is also investor education month for TD Direct Investing. Here's a preview of what to expect.
[music] Okay, we are back with Daniel Ghali, Senior commodity strategist with TD Securities. We are taking your questions on all things related to commodities. This one coming up in the past couple of minutes.
Where do you see gold going? A while back… What does he see with gold to the end of the year and into next year? We had another viewers saying it was 2000 bucks recently, what's going on?
>> Yeah.
Gold prices have come under pretty sustain pressure over the last month or so.
What's behind that has been the extreme rise in US treasury yields that we've seen. The story there, in my view, has been associated with the Fed pretty much pricing in the soft landing as the consensus narrative.
I think it's pretty evident that the market is severely underpriced for any economic scenario apart from a soft landing at this point.
But the other story is actually being one that's a little bit more technical it's about liquidity.
The fact that the US deficit has been so significant and that the treasury is now finally catching up to financing that deficit with a longer duration bonds is starting to sap liquidity out of global markets. That is one negative aspect for gold in near term. Looking further out on the horizon, we are actually expecting a US recession in the first half of next year that should again realign those investor positions with a strong central bank activity that we are seeing year to date and that is a positive story for gold.
> In terms of the economic scenarios, you said there is pricing in the soft landing, escaping without too much damage.
If interest rates cool the economy just enough, just enough people lose their jobs… If we get a hard landing and a pretty tough recession, is as a catalyst for gold?
>>it's a catalyst for gold inasmuch as it allows the Fed to cut interest rates.
So the concern right there is even if we do have some slowing, if that slowing is not significant enough to elicit a change in the inflation outlook which allows the Fed to cut interest rates more deeply, then that's not a positive scenario for gold.
We actually need the Fed to cut interest rates more significantly than is currently priced.
The caveat I'd mentioned there and I think this is what the Fed is trying to message is that they are looking at the Fed funds rate on a real basis. So if they were just to keep interest rates exactly where they are today, if inflation softens, next year versus the early months of next year, then that's actually in real terms in inflation-adjusted terms a tightening of policy. So that's one of the reasons why even though soft landing is the consensus, the market is still penciling in a few cuts for next year. The question is, can those few cuts, in the event of a recession, become many more cuts?
And that would be very positive.
>> Okay, we have a lot coming up on the horizon.
Interesting times indeed.
Always interesting times. Another question here about geopolitics. Which you political issues are likely to have an impact on the commodity space that you are watching? Dr. of course, first that comes to mind is the war in Ukraine.
There is that sentiment out there that if the war in Ukraine were to be resolved that that perhaps would be negative for energy prices inasmuch as there might be some sanctions relief for Russian production. In our view, Russian production is having no challenge finding its way to global markets. Crude oil is a global market after all. So that downside risk is probably mitigated by that fact.
But you ran and the Middle East is probably another area where geopolitics could ignite some flames. We had a relative period of stability over the last year despite the cinderblocks there for some potential frictions.
But that's not necessarily going to be the case for the next year and beyond.
I would also say one more thing which is a pandemic that's followed by a period of high interest rates and pressures from the higher US dollar, these are the global macro building blocks for a period of unrest and what would be concerning as if that unrest unfolds in commodity producing nations such that you might have another supply shock on the horizon driven by unrest.
>> Interesting stuff.
We are going to get back to your questions for Daniel Ghali on commodities in just a moment's time.
As always, make sure you do your own research before making any investment decisions.
and a reminder that you can get in touch with us at any time.
Do you have a question about investing or what's driving the markets?
Our guests are eager to hear what's on your mind, so send us your questions.
There are two ways you can get in touch with us.
You can send us an email anytime at moneytalklive@td.com or you can use the question box right below the screen here on WebBroker. Just write in your question and hit send.
We'll see if one of our guests can get you the answer right here at MoneyTalk Live.
We saw a rebound in US car sales in September, this despite a combination of strikes, high prices and rising interest rates. Our Anthony Okolie has been digging into the latest sales numbers and the take from TD Economics on all this. What are we seeing there?
> Thanks. Despite some of those headwinds, we saw US car sales up more than 2% month over month in September to just over 15 million annualized and that came in slightly above estimates.
When we take a look at the unadjusted sales volumes, the game is slightly higher, just over 1 million units, that is equivalent to roughly 19% above year ago levels. We are seeing some improvements there.
With dealership inventories continuing to improve over the past year, we also saw some underlying signs of strength in the average daily selling rate which rose to roughly 51,000 cars sold over 26 days, that's up from roughly 25,000 daily rate from September of last year. When we break it down by vehicles, passenger vehicle sales rose about 60% year-over-year, light trucks also edged higher, they are up roughly 19% year-over-year.
Again, light trucks accounted for the bulk of September's sales at 80%, that's a touch higher than the 79% we saw a year ago.
These sales are only slightly behind what we saw in Q2.
Q3 sales were boosted by strong demand for the latest models of automobiles.
We also saw improve supplies which help meet some of that pent-up demand that we have seen since the pandemic.
Breaking it down by vehicles, we will take a look at some of the big US automakers.
GM, for example, they extended a strong year. Despite the strike, their sales rose 21% in the third quarter versus one year ago. They benefited from strong demand for its pickup trucks. Also there are affordable crossover SUVs. They are electric vehicles were also quite strong, up 20% in the third quarter versus one year ago.
Looking at Toyota which is the second-largest automaker in terms of US sales, it's combined Toyota Lexus Brands, US sales were up by 12%.
We also saw, for it is not up there, but it's Q3 sales were also pretty strong, of more than 7%. Stellantis, they actually bucked the upward trend.
Their sales of Jeep, RAM and Dodge brands were down.
taking a look at Tesla, they don't break down their sales by region,but there sales were down 7%. the auto industry faces some key headwinds. The ongoingstraight, higher interest rates and borrowing costs.
. . >> If south of the border United auto workers strike action continues, could that impact sales?
>> Yes.
Right now we are not seeing the impact of the strike in the sales.
That could change.
Inventories over the past year have allowed the backlog of demand to be slowly reduced but the prospect of an extended strike has raised uncertainty over the continuation of this trend a and that the roughly 14 vehicle models that are impacted by the strike to date, they account for nearly 13% of US automotive production.
Now, while most of these models entered the strike with above average supply levels, TD Economics expects that the sales will begin to be impacted more materially and October if the strike persists.
>> Interesting stuff. Thanks.
my pleasure.
>> That was MoneyTalk's market editor, Anthony Okolie.
Let's check in on the markets. We are having a look at TD's Advanced Dashboard, platform designed for active traders available through TD Direct Investing.
This is the heat map function, and a picture of the market movers. You can look at them a lot of different ways. We will go to the TSX 60 by price and volume.
It's a bit of a mixed bag today.
Why do we start off with energy after the big pullback we saw in yesterday's session and continuing today in the headline price in the barrel of American benchmark crude, we are not actually seeing that much downward momentum.
There is green on the screen. It's pretty modest if you are taking a look at Cenovus Energy, up a little bit less than half a percent, Suncor up just 1/4 of a percent.
After the substantial pullback in crude, they are hanging in there.
Energy is not only about oil and gas. You got Cameco, a uranium play, of about 1.7%.
over in the technology bucket, you can see names like BCE, tell us getting a modest bid but Shopify, when you think of Canadian tech you probably think of Shopify, down about 2% at this hour. We can also screen through the S&P 100, let's take a look at what's happening on Wall Street.
A day ahead of jobs Friday, investors are looking for some sort of indication through the labour market report that all of these aggressive rate hikes are actually starting to cool the economy so it's going to be a pretty key one tomorrow morning.
Ahead of that, it's a really mixed bag out there.
Let's look at technology. Got Nvidia up to the tune of a little more than a percent but it's rival AMD down 1 1/2. Some of the other more traditional tech names really mixed.
Apple is a little bit on the upside. For more information on TD Advanced Dashboard, visit TD.com/Advanced Dashboard.
We are back now in Daniel Ghali, Senior commodity strategist with TD Securities.
We are taking your questions about commodities. Plenty coming in. Which commodity do you see out there that is potentially undervalued and why?
>> Undervalued, that's interesting because our mindset right now is actually you trying to evaluate which ones are most overvalued. But thinking about undervalued, there is some niche commodities out there like the platinum group metals where we have seen substantial money manager liquidations which may have contributed to some undervaluation.
This week, of course, as you know, is Golden week which is one of China's eight day long holiday periods, China being one of the largest buyers of commodities is out of the market. So the question is, are they going to buy the dip when they get back into the office on Monday?
So that's one area where… >> They are the wildcard, I guess.
>> He, of course. But that's one area where we do see a small undervaluation.
> If there is a small undervaluation, what is the risk that that undervaluation persists?
>>that's quite possible as well.
The platinum group metals in particular are typically used for auto catalysts, so that is emissions reduction systems in vehicles.
higher interest rates I have constrained the production of internal combustion engines which use these raw materials. But another part of the story has actually been in glass fabrication which hasbeen about 50% of the demand growth for platinum group metals this year.
That story has actually been purely a stockpiling story out of China and in turn, you might have a stockpiling hangover into next year that can constrict demand for these models over that time frame.
>> Interesting stuff on the platinum group there. At home, always do your own research before you make any investment decisions.
Almost out of time for questions, we will squeeze one more in. Of you want to know where you see aluminum prices heading.
>> Aluminum, the interesting part there is that China, Russia, they are among the largest producers of aluminum in the world. The sanctions on Russia have constrained Russian aluminum to come into the exchanges where they are actively traded but most of Russia's aluminum exports are now headed into China, similarly to what we spoke about on the copper story, we are not seeing a huge buildup in aluminum inventories so that begs the question, is more aluminum being consumed by electric vehicles then was previously assumed? But we also see a small picture there were there might be a larger amount of aluminum in invisible inventories.
>> Always fascinating having you here.
I love how you talk about how commodities play and everything going on. I look forward to our next conversation.
>> Thank you very much.
>> That was Daniel Ghali, Senior commodity strategist from TD Securities.
We thank him for being here.
As always at home, make sure you do your own research before you make any investment decisions. Stay tuned for tomorrow show. On Fridays, we show you the best interviews of the week and will get you up-to-date on those jobs figures out tomorrow morning. We have jobs out in Canada as well. We will take a look at the market action. On Monday we will not have a show for the thanks giving holiday.
We will be back on Tuesdaywith Alexander Gorewicz, VP and Dir., active fixed income portfolio management at TD Asset Management.
you can get a head start with your questions, just email moneytalklive@td.com That's all the time we have for today.
Thanks for watching and we'll see you tomorrow.
[music]
Every day, I'll be joined by guests from across TD, many of whom you'll only see here.
We're going to take you through what's moving the markets and answer your questions about investing.
Coming up on today's show, we are going to talk about the one and only Dr. Copper, with the metals outlook is telling us about the global economy. Daniel Ghali, Senior commodity strategist with TD Securities joins us with some insights to share.
Also today, US auto sales coming in stronger in the third quarter. Our Anthony Okolie is going to tell us all about that.
And in today's WebBroker education segment, Nugwa Haruna is going to highlight some technical analysis tools you can use right here on the TD platform.
So here's how you can get in touch with us.
Just email moneytalklive@td.com or fill out the viewer response box under the video player on WebBroker.
Forget our guest of the day, let's get you an update on the markets.
We are on the eve of jobs Friday. It's an important one. Investors looking for signals from the broader economy that these aggressive interest rate hikes are working to will the economy. Ahead of that, you got the TSX up modestly, about 23 points, a little more than 1/10 of a percent. Among the most actively traded names on the TSX include blackberry.
Coming up this morning… After closing bells yesterday with a plan to split the company, take the Internet of everything, is self driving cars, but it over here, but the cyber security business over there. The street doesn't seem thrilled at the prospect.
At 537 per share, you've got the stock down a little more than a percent.
TransAlta Corp. was moving higher earlier and it's up almost 7% right now. They were telling us today that the transaction of TransAlta Renewables is complete.
While the market it was coming, it seemed please by the news. South of the border, traders are waiting jobs Friday. It was a pretty tough September.
In the equity market.
It hasn't been an easy ride in these early innings of October. Tomorrow morning will be a big one.
Just trying to see, the interest rates cooling the labour market? You're done 25 points on the S&P 500, little more than half a percent. The tech heavy NASDAQ, how is it sharing against the broader market?
A little bit weaker.
A 106 point deficit, almost a full point to the downside.
We are down another 2% today on West Texas intermediate, below 83 bucks per barrel.
Was I just telling you a few days ago we were above 90 bucks per barrel? This is an interesting market.
A name like Exxon right now hundred nine bucks, down a little more than 2%. And that's your market update.
You may have heard of Dr. Copper. It's called that because of the metals perceived ability to diagnose the health of the economy. Copper prices have been falling and inventories appear to be facing their largest surplus in years. So what does this tell us about the state of the economy?
Daniel Ghali, Senior commodity strategist with TD Securities is here to prescribe some knowledge for us.
Dr. Copper prescriptions, let's get our terms in order here.
What is happening right!
>> Yeah, thanks for having me on, Greg. So what is Dr. Copper telling us?
I think it's actually a signalling that storm clouds are building in the global economy.
I have to nuance that because the demand picture for copper has so many idiosyncratic stories thatwarrant mentioning.
On the one hand, in China, the construction sector, as we know, has been going through a prolonged period of pain.
The construction sector is actually the largest individual end use consumer of raw materials, copper is one of them.
But the story there is that the targeted stimulus that the government has implemented in the last several months isimproving the outlook for completions of construction.
So while the pipeline of future construction from which the pipeline of future copper demand might flow through from is stagnant, the completion rate has increased notably and that supports copper demand today.
elsewhere in the US, it's not a surprise that goods consumption is on the decline and that's been the case for a very long time. The same is true in Europe. Those are some areas where we do see the impact of interest rates flowing through into demand.
>> Alright, we have a few things at lay there in terms of copper. We talk about the surplus that we see in the headlines.
You said there are idiosyncrasies here in the copper trade. There are some nuances in the space to, aren't there?
> Yes. The biggest piece of the puzzle for copper analysts out there is that you hada substantial increase in mind supply, a substantial increase, particularly in China, in refined production, so that smelting copper.
China has an imported any less copper this year than last, but when you look at inventories on all the global exchanges, you can't see any sign of demand. If demand is we can supply it is improved, you would expect to see strengthen inventories.
Analysts may have been very wrong on the consumption from renewable energy sectors, electric vehicle sectors, which are some of the bright spots for copper demand as well.
What we see, however, is potential evidence of substantialbuilds in inventories, in visible inventories.
>> Let's talk about this. In my head, some going around and saying how much property you have in that room and going over to the next place. Is that what we are talking about here, the physical copper in the world?
>> In some ways, yes. The exchanges and physical commodities are typically seen as the market of last resort, meaning that a trader would only put in or take-out metal from there as a last resort because the fees are high.
you also have these commodities are consumed by real industries.
People talk about Dr. Copper because copper is used in almost everything that we have in the global economy.
So while you have inventories on the exchange and that is what is visible for analysts and traders in the world, you also have inventories or commercial sites, fabricators, smelters themselves, those who are producing it, have work in progress inventories and that's one of the explanations we see aware that missing copper actually is.
>> Where is it actually? Let's talk about China. We know they are huge consumers of commodities. Do they have the copper?
>>we do think a big chunk of that missing copper is located in China.
We spoke a little bit about how they haven't decreased their inventories. Their production of refined copper has come up substantially. The demand side from the construction sector etc. has been pretty weak so where is that missing copper? Part of it, part of that explanation might be that because the refined production has increased, the new capacity at smelters means more inventories. That might be were part of the largest surplus in years is actually located.
The other explanation is that you've heard an increasing trend of these producers trading directly with manufacturers.
They have some refined copper that they would sell directly to a fabricator of some end use product.
>> One more piece of the puzzle, China's economy. Obviously, we do and heard this year, China'seconomy open for business and people thought it was came back on. It hasn't happened.
>> It absently hasn't played out that way.
I would say that earlier this year, the optimism surrounding China's reopening and optimism around the stimulusin China was behind the rise in copper prices. Copper prices today don't seem to be reflecting the supply demand balance that we are forecasting and that a lot of these statistical agencies out there… We are talking about the larger surplus in several years and that surplus is likely to increase into next year.
So what impact did China's economy have?
Well, the construction sector, we spoke about that a little bit. You have some offsetting forces. Right now, the rise in completions is supporting copper demand but looking a bit further out, China is dependent on the real estate sector for so long to grow their economy and that has probably changed on the secular horizon such that we won't be able to depend on that sector for future copper demand growth.
>> I know you don't have a crystal ball or if you do, I'd love to get in on that, but if you take all of this together, what could it mean for the price of copper in the near, medium and long terms?
>> Well, copper prices can come under a period of substantial weakness.
We think that's the case particularly in the short term horizon. In the medium term and longer term horizon, that notion of a supercycle driven by the energy transition is really compelling.
In fact, it wouldn't be surprising over a longer term horizon that the slump in copper prices that is likely in the short term appears is just a blip on the chart.
>> Always great insights with Daniel Ghali. We are going to get to your questions for Daniel and commodities in just a moment's time. A reminder that you can get in touch with us at any time.
Just email moneytalklive@td.com or fill out the viewer response box under the video player on WebBroker.
Right now, let's get you updated on the top stories in the world of business and take a look at how the markets are trading.
Blackberry planning to split its business into.
It wants to shine a spotlight on a connected car technology.
The Waterloo Ontario based tech company says it will pursue a public offering for its Internet of things division, that's where you would find software for cars connected to the Internet.
Blackberry cyber security division would be a separate business under the plan.
This has all been a part of the strategic review. Right now, the street doesn't seem thrilled with the news. He got blackberry down about 9% at this hour.
Clorox is highlighting how costly a cyber attack can be for a company. The household products giant is warning investors that the cyber breach back in the summer, which continues to hamper production right now, is going to weigh on sales and profit for its most recent quarter. Clorox says it expects to post a loss for the three months ended September 30. The higher price for a bottle of Corona helped global beer giant consolation Brands beat earnings excitations. The company has raised prices on its offerings to combat higher input costs and consumer demand for corona and Modela, some of its other brands, has remained strong. That means constellation is also raising its full-year profit forecast. They are down 3%.
A quick check in on the markets, we will start here at home on Bay Street with the TSX Composite Index. We have a very modest 15 points on the screen, just about 1/10 of a percent in the green ahead of jobs Friday. A little more cautious tone south of the border. Let's check out the S&P 500.
Right now we have a 24 point deficit, down a little more than half a percent.
We are back with Daniel Ghali, Senior commodity strategist with TD Securities.
We are taking your questions about commodities, plenty coming in so let's get to them.
What's happening with the oil prices?
They were climbing and now they are back down. A substantial pullback yesterday.
>> A very substantial pullback yesterday and today.
What's happening there, when we are talking about the pullback specifically, we are estimating that we've seen a very large stop out from trend followers which happens to be the largest dominant speculative force in commodity markets. We think this is purely technical. The DEI a report had some conflicting tones as well but the extent to which prices have fallen suggest this is a position squeeze more than anything else.
>> I look at your positioning tracker on a daily basis.
what are we talking that there in terms of the oil traded commodity trades?
>> This is actually one of the largest or dominant speculative Ford's is in commodities markets.
When we are talking about our algorithmic… Exactly, this is one of the cohorts of machines thatare looking at historical trends and inferring that that is going to give them some advantage in terms of predicting future trends. That is the basis by which they trade.
>> Only couple of days ago, I was telling the audience that West Texas intermediate, American benchmark, was above 90 bucks per barrel and now we are below 83 per barrel.
If we look at the algorithm on these gyrations on a daily basis and can take out the use were volatile gyrations, what does it look like in the longer term? It seems like they're fighting forces here.
>> There are some offsetting forces. We spoke about global demand deteriorating.
That's probably true for most commodities out there. Energy is one sector where we have seen some insulation from the supply side.
We spoke about Saudi Arabia and Russia together having significantly tighten global oil markets and that is the catalyst for the rally we have seen. Money managers of which CTA trend follows which we do spoke about have contributed to the upswing in recent sessions but we also suspected buying exhaustion from that cohort around the highs.
So that helps to explain why the fundamental aspect, the tightening from Saudi Arabia and Russia was a catalyst but these money managers are playing a role on a daily basis.
>> You mentioned the tightening supply and you get the sense that they want to see the higher oil price and they were getting in the past couple of days, trades turn the other way.
Could we expect OPEC to take any further action to try to support the price?
> I think that's actually one of the arguments for If you think about Saudi Arabia's actions, they been pretty dramatic.
They are share of global supply right now is essentially at its lowest levels When it was clearly evident we were in a global recession. So they are doing pretty much as much of the heavy lifting as they can at the moment.
Now their energy minister has been on the record saying they could go deeper but it remains to be seen if this is as much pain as they are willing to take in terms of the burden of oil supplies historically so that's one of the risks out there.
>> Of course I think it was even earlier this year, Washington would like to see the lower price of oil. Western economies want to bring inflation down.
different administrations, different governments want to see different things in the price of crude.
>> Absolutely.
Iran's nuclear file is probably at the centre of the geopolitical angle.
If you think about the progress that Iran has made under nuclear capabilities, that is a security risk for their archrival, Saudi Arabia.
They had a détente in their relationship over the last several months brokered by China, interestingly, and we've also seen a close thinning of ties between Saudi Arabia and Israel. All of this is in the context of some security concerns surrounding the Middle East.
>> That's why the commodities discussion is always fascinating, it ties into everything. Let's get to another audience question.
I viewer wants to know, can use when the connection between interest rates and commodities and if the Fed starts cutting at some point, what happens then?
>> Yeah, that's a great question.
There are several channels by which interest rates impact commodities and one of which is demand. Interest rates are the cost of money.
Higher cost of money implies that it's more expensive to buy or to fund your purchases of goods.
That's one angle. So higher interest rates, lower demand. Another angle which hasn't been a big part of the story for quite some time has been today because financing costs are so high, the cost of holding these commodities, the inventories that we spoke about earlier, is elevated.
So that's potentially one of the reasons why you are seeing traders offload their metal from their warehouse into the exchange.
>> Because a bar of gold in and of itself does not pay you a yield, it doesn't pay you interest. I think people forget sometimes that when they are trading commodities, the commodity is somewhere, it's being stored somewhere.
>> The storage cost is a component but the financing cost of purchasing it in the first place is a large component.
>> So we did see at some point next year, who knows, it seems like the time he is getting pushed out further and further by the Fed and the market, that you start seeing some cuts, the interest rate hike start working, the economy is slowing and they can come out of restrictive territory.
Where would we see this impact first?
>> Precious metals would be one of the asset classes that would perform quite well. If you think about Golden particular, its relationship with interest rates has deteriorated over the last several years. One of those reasons has been extremely elevated central bank demand.
Over the second half of last year, it was the largest central bank demand for gold on the record. Early into the first half of this year, it was also the largest first-half central bank demand on record.
So central banks are providing a bid and that is restoring the relationship between interest rates and gold itself which tend to be hyper- charged by money managers primarilyand if you do you will have a situation where the Fed is going to cut rates, it's probably going to realign money manager position, they won't return it to buyers at a time when rates might still be elevated.
That's quite a compelling story.
>> Forget off of this, what story is central bank selling us today? If we see this elevated central bank demand to buy physical gold, what is that telling us about the economy?
>> That's probably telling about global geopolitics once again. The war in Ukraine might have catalyzed a mind shift for many of the central banks, particularly in the eastern part of the world.
Having seen the US sanctioned Russia and sanctioned their reserves they might have catalyzed a change of mindset such that they might not necessarily be selling their US dollar reserves but future reserve gains might be more inclined to be distributed in other currencies such as gold.
>> It's all connected together.
Another question from the audience.
Sometimes called the poor man's gold, silver. Where do you see the silver prices going?
I would be the poor man. I'll put my hand up for that.
>> 60% of silver demand is industrial in nature.
A growing part of that story has been coming from renewable technologies, solar cells in particular.
So as time progresses, that's going to be, that 60% of total silver demand is going to actually grow such that silver is going to become increasingly an industrial model and less of a precious metal.
That makes sense. The interesting story over the medium term has been the change in the technology of the solar cell such that they are going to consume more silver, so what we call the silver loading in the cells is going to increase and that's a positive demand story.
>> That in a way may be breaks the relationship with gold a little bit.
Break is probably too strong a world, but silver fights its own place in the economy apart from gold.
>> Yeah.
The reason why silver and gold, 60% of the demand is industrial butover the last 20 years, let's say, the volatility of the industrial component is dwarfed by the volatility of the money manager component which tends to be associated with gold.
Over time you have the structural tailwinds and money managers are going to catch on.
That should argue for outperformance of silver.
>> Fascinating stuff.
As always at home, make sure you do your own research before making any investment decisions.
we will get back to your questions for Daniel Ghali on commoditiesin just a moment's time.
And a reminder that you can get in touch with us any time. Just email moneytalklive@td.com.
Now let's get to today's education segment. Today we are going to look at screening for technical events using the WebBroker platform. Traders may use these indicators to try it to find buy or sell signals for securities. Nugwa Haruna, Senior client education instructor TD Direct Investing joins us. Walk us through a, technical analysis on WebBroker.
>> Right, so if you are a traitor and to use technical analysis, there different kinds of traders. You might have swing traders, ittrend traders, but daytraders are those for whom time is of the essence and so for these investors, they really want to be able to make decisions, buying and selling decisions, really quickly so WebBroker has tools that investors could use to make those decisions. So starting off, we are going to hope into WebBroker to take a look at that.
In WebBroker, if you are looking to find the technical screeners that we have, you can click on research and under markets, you will have the technicals tab.
So under the technicals tab here, you were able to see the most bullish events, and bullish events essentially meaning where indicators are pointing at potential by signals for long-term investors. You are also able to see securities with bearish bets. Which is the opposite. If you are a long investor, these are securities you might be looking to exit your positions.
If you want to use the technical screener here, you simply want to click on these three lines here and you can go screener.
So once you do that, you are presented with the option of screening for events.
So what we're going to do is I'm going to choose a specific exchange. Under Canada, I'm going to click on the Toronto Stock exchange and this filters down information to securities trading on the TSX but now I also want to look for those securities that have any bullish indicators. So once we click on here, I'm presented with a list now the different indicators have pointed bullish or by signals for. You see it's a list. It might not be very intuitive. So you can actually change this to different charts and you can take a look to see, okay, what kinds of indicators are pointing at bullish or bearish events?
If you take a look at Dundee Corp., you can see that this points to a short-term bullish event and that happened yesterday.
Investors can decide, I see different indicators here. What are these different indicators? If you want to know more about different technical indicators, especially those who are newer, you can scroll to the top, click on the little hat we have over here, you will be presented with the different options to find things like that simply click on oscillators, you will find the Mac D and see how you can get bullish and bearish events and learn more about these indicators.
>> They get to WebBroker clients into technical analysis on the platform. Are there other ways they can find technical event here?
>> Yeah, so I mentioned that this is just one way and there's another way which I would say might be a little simpler so if you just simply want the information to be sent to you, you can also use a different kind of screener within WebBroker.
Telescope back into the platform and I'll show us what that looks like.
So once in WebBroker, we will click research again but this time we are going to click, we are going to focus on tools and we will click where it says screeners.
It's going to bring us to the stock screener where you can look for different securities using criteria that matter to you.
Instead of starting from scratch, you can actually use what we call preset screeners. These are already created screeners that investors can use.
So when I scroll down, you're able to see we have a screener already created for bullish chart patterns, bearish chart patterns, upside and downside momentum.
I'm going to focus on the upside momentum preset screen in this instance.
You will see that it is filtering in the US and Canada. And it is showing, it's giving off bullish events once again. If you want to get some additional indicators include, you can simply click on here and once you do that, you will see that there are some other indicators that you can add or remove from your list. Because we talked about the Mac D, I'm going to add that.
I want to bullish Mac D events that have occurred. Once I do that, my result, I have 163 securities.
That might be too many so maybe I actually want to break down my filter and maybe filter now by specific industries. So I'm going to go more criteria here.
Under company it basics, I'm going to go sector and industry, I'm going to clear this and I will just highlight the basic materials sector.
When I do that I have only 11 results which is more manageable for me.
what this is now showing me is securities in the basic materials sector that have bullish events based on the Mac D and the momentum indicators. What I do is save the screener because once I save it, I always then go aheadand set up alerts to make sure I'm alerted anytime new companies pop into this list or fall out of this list.
Just a great way to use different tools to get yourself comfortable using technical analysis and technical indicators in WebBroker.
>> Great stuff as always, Nugwa. Thanks for that.
>> Thanks for having me.
>> Nugwa Haruna, Senior client education instructor at TD Direct Investing.
And make sure to check out the learning centre in WebBroker for more educational videos, live, interactive master classes and upcoming webinars.
October is also investor education month for TD Direct Investing. Here's a preview of what to expect.
[music] Okay, we are back with Daniel Ghali, Senior commodity strategist with TD Securities. We are taking your questions on all things related to commodities. This one coming up in the past couple of minutes.
Where do you see gold going? A while back… What does he see with gold to the end of the year and into next year? We had another viewers saying it was 2000 bucks recently, what's going on?
>> Yeah.
Gold prices have come under pretty sustain pressure over the last month or so.
What's behind that has been the extreme rise in US treasury yields that we've seen. The story there, in my view, has been associated with the Fed pretty much pricing in the soft landing as the consensus narrative.
I think it's pretty evident that the market is severely underpriced for any economic scenario apart from a soft landing at this point.
But the other story is actually being one that's a little bit more technical it's about liquidity.
The fact that the US deficit has been so significant and that the treasury is now finally catching up to financing that deficit with a longer duration bonds is starting to sap liquidity out of global markets. That is one negative aspect for gold in near term. Looking further out on the horizon, we are actually expecting a US recession in the first half of next year that should again realign those investor positions with a strong central bank activity that we are seeing year to date and that is a positive story for gold.
> In terms of the economic scenarios, you said there is pricing in the soft landing, escaping without too much damage.
If interest rates cool the economy just enough, just enough people lose their jobs… If we get a hard landing and a pretty tough recession, is as a catalyst for gold?
>>it's a catalyst for gold inasmuch as it allows the Fed to cut interest rates.
So the concern right there is even if we do have some slowing, if that slowing is not significant enough to elicit a change in the inflation outlook which allows the Fed to cut interest rates more deeply, then that's not a positive scenario for gold.
We actually need the Fed to cut interest rates more significantly than is currently priced.
The caveat I'd mentioned there and I think this is what the Fed is trying to message is that they are looking at the Fed funds rate on a real basis. So if they were just to keep interest rates exactly where they are today, if inflation softens, next year versus the early months of next year, then that's actually in real terms in inflation-adjusted terms a tightening of policy. So that's one of the reasons why even though soft landing is the consensus, the market is still penciling in a few cuts for next year. The question is, can those few cuts, in the event of a recession, become many more cuts?
And that would be very positive.
>> Okay, we have a lot coming up on the horizon.
Interesting times indeed.
Always interesting times. Another question here about geopolitics. Which you political issues are likely to have an impact on the commodity space that you are watching? Dr. of course, first that comes to mind is the war in Ukraine.
There is that sentiment out there that if the war in Ukraine were to be resolved that that perhaps would be negative for energy prices inasmuch as there might be some sanctions relief for Russian production. In our view, Russian production is having no challenge finding its way to global markets. Crude oil is a global market after all. So that downside risk is probably mitigated by that fact.
But you ran and the Middle East is probably another area where geopolitics could ignite some flames. We had a relative period of stability over the last year despite the cinderblocks there for some potential frictions.
But that's not necessarily going to be the case for the next year and beyond.
I would also say one more thing which is a pandemic that's followed by a period of high interest rates and pressures from the higher US dollar, these are the global macro building blocks for a period of unrest and what would be concerning as if that unrest unfolds in commodity producing nations such that you might have another supply shock on the horizon driven by unrest.
>> Interesting stuff.
We are going to get back to your questions for Daniel Ghali on commodities in just a moment's time.
As always, make sure you do your own research before making any investment decisions.
and a reminder that you can get in touch with us at any time.
Do you have a question about investing or what's driving the markets?
Our guests are eager to hear what's on your mind, so send us your questions.
There are two ways you can get in touch with us.
You can send us an email anytime at moneytalklive@td.com or you can use the question box right below the screen here on WebBroker. Just write in your question and hit send.
We'll see if one of our guests can get you the answer right here at MoneyTalk Live.
We saw a rebound in US car sales in September, this despite a combination of strikes, high prices and rising interest rates. Our Anthony Okolie has been digging into the latest sales numbers and the take from TD Economics on all this. What are we seeing there?
> Thanks. Despite some of those headwinds, we saw US car sales up more than 2% month over month in September to just over 15 million annualized and that came in slightly above estimates.
When we take a look at the unadjusted sales volumes, the game is slightly higher, just over 1 million units, that is equivalent to roughly 19% above year ago levels. We are seeing some improvements there.
With dealership inventories continuing to improve over the past year, we also saw some underlying signs of strength in the average daily selling rate which rose to roughly 51,000 cars sold over 26 days, that's up from roughly 25,000 daily rate from September of last year. When we break it down by vehicles, passenger vehicle sales rose about 60% year-over-year, light trucks also edged higher, they are up roughly 19% year-over-year.
Again, light trucks accounted for the bulk of September's sales at 80%, that's a touch higher than the 79% we saw a year ago.
These sales are only slightly behind what we saw in Q2.
Q3 sales were boosted by strong demand for the latest models of automobiles.
We also saw improve supplies which help meet some of that pent-up demand that we have seen since the pandemic.
Breaking it down by vehicles, we will take a look at some of the big US automakers.
GM, for example, they extended a strong year. Despite the strike, their sales rose 21% in the third quarter versus one year ago. They benefited from strong demand for its pickup trucks. Also there are affordable crossover SUVs. They are electric vehicles were also quite strong, up 20% in the third quarter versus one year ago.
Looking at Toyota which is the second-largest automaker in terms of US sales, it's combined Toyota Lexus Brands, US sales were up by 12%.
We also saw, for it is not up there, but it's Q3 sales were also pretty strong, of more than 7%. Stellantis, they actually bucked the upward trend.
Their sales of Jeep, RAM and Dodge brands were down.
taking a look at Tesla, they don't break down their sales by region,but there sales were down 7%. the auto industry faces some key headwinds. The ongoingstraight, higher interest rates and borrowing costs.
. . >> If south of the border United auto workers strike action continues, could that impact sales?
>> Yes.
Right now we are not seeing the impact of the strike in the sales.
That could change.
Inventories over the past year have allowed the backlog of demand to be slowly reduced but the prospect of an extended strike has raised uncertainty over the continuation of this trend a and that the roughly 14 vehicle models that are impacted by the strike to date, they account for nearly 13% of US automotive production.
Now, while most of these models entered the strike with above average supply levels, TD Economics expects that the sales will begin to be impacted more materially and October if the strike persists.
>> Interesting stuff. Thanks.
my pleasure.
>> That was MoneyTalk's market editor, Anthony Okolie.
Let's check in on the markets. We are having a look at TD's Advanced Dashboard, platform designed for active traders available through TD Direct Investing.
This is the heat map function, and a picture of the market movers. You can look at them a lot of different ways. We will go to the TSX 60 by price and volume.
It's a bit of a mixed bag today.
Why do we start off with energy after the big pullback we saw in yesterday's session and continuing today in the headline price in the barrel of American benchmark crude, we are not actually seeing that much downward momentum.
There is green on the screen. It's pretty modest if you are taking a look at Cenovus Energy, up a little bit less than half a percent, Suncor up just 1/4 of a percent.
After the substantial pullback in crude, they are hanging in there.
Energy is not only about oil and gas. You got Cameco, a uranium play, of about 1.7%.
over in the technology bucket, you can see names like BCE, tell us getting a modest bid but Shopify, when you think of Canadian tech you probably think of Shopify, down about 2% at this hour. We can also screen through the S&P 100, let's take a look at what's happening on Wall Street.
A day ahead of jobs Friday, investors are looking for some sort of indication through the labour market report that all of these aggressive rate hikes are actually starting to cool the economy so it's going to be a pretty key one tomorrow morning.
Ahead of that, it's a really mixed bag out there.
Let's look at technology. Got Nvidia up to the tune of a little more than a percent but it's rival AMD down 1 1/2. Some of the other more traditional tech names really mixed.
Apple is a little bit on the upside. For more information on TD Advanced Dashboard, visit TD.com/Advanced Dashboard.
We are back now in Daniel Ghali, Senior commodity strategist with TD Securities.
We are taking your questions about commodities. Plenty coming in. Which commodity do you see out there that is potentially undervalued and why?
>> Undervalued, that's interesting because our mindset right now is actually you trying to evaluate which ones are most overvalued. But thinking about undervalued, there is some niche commodities out there like the platinum group metals where we have seen substantial money manager liquidations which may have contributed to some undervaluation.
This week, of course, as you know, is Golden week which is one of China's eight day long holiday periods, China being one of the largest buyers of commodities is out of the market. So the question is, are they going to buy the dip when they get back into the office on Monday?
So that's one area where… >> They are the wildcard, I guess.
>> He, of course. But that's one area where we do see a small undervaluation.
> If there is a small undervaluation, what is the risk that that undervaluation persists?
>>that's quite possible as well.
The platinum group metals in particular are typically used for auto catalysts, so that is emissions reduction systems in vehicles.
higher interest rates I have constrained the production of internal combustion engines which use these raw materials. But another part of the story has actually been in glass fabrication which hasbeen about 50% of the demand growth for platinum group metals this year.
That story has actually been purely a stockpiling story out of China and in turn, you might have a stockpiling hangover into next year that can constrict demand for these models over that time frame.
>> Interesting stuff on the platinum group there. At home, always do your own research before you make any investment decisions.
Almost out of time for questions, we will squeeze one more in. Of you want to know where you see aluminum prices heading.
>> Aluminum, the interesting part there is that China, Russia, they are among the largest producers of aluminum in the world. The sanctions on Russia have constrained Russian aluminum to come into the exchanges where they are actively traded but most of Russia's aluminum exports are now headed into China, similarly to what we spoke about on the copper story, we are not seeing a huge buildup in aluminum inventories so that begs the question, is more aluminum being consumed by electric vehicles then was previously assumed? But we also see a small picture there were there might be a larger amount of aluminum in invisible inventories.
>> Always fascinating having you here.
I love how you talk about how commodities play and everything going on. I look forward to our next conversation.
>> Thank you very much.
>> That was Daniel Ghali, Senior commodity strategist from TD Securities.
We thank him for being here.
As always at home, make sure you do your own research before you make any investment decisions. Stay tuned for tomorrow show. On Fridays, we show you the best interviews of the week and will get you up-to-date on those jobs figures out tomorrow morning. We have jobs out in Canada as well. We will take a look at the market action. On Monday we will not have a show for the thanks giving holiday.
We will be back on Tuesdaywith Alexander Gorewicz, VP and Dir., active fixed income portfolio management at TD Asset Management.
you can get a head start with your questions, just email moneytalklive@td.com That's all the time we have for today.
Thanks for watching and we'll see you tomorrow.
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