Show Transcript
Print Transcript
[theme music] >> It's a new program broadcast daily on WebBroker. Every day, I will be joined by guests from across TD… [video buffering] And in today's WebBroker education segment, Nugwa Haruna is going to take us through how you can examine your portfolios asset mix. So here's how you can get in touch with us with your question. Just email moneytalklive@td.com or you can fill out the viewer response box right under the video player here on WebBroker. Before we get to our guest of the day, let's get you an update on the markets. It's not a bad way to start the trading week. We will start with the TSX composite index. Pretty much strength across the board when it comes to sectors. 329 points to the upside, up almost a full 2%. You see it in the energy stocks, financials, mining stocks working together, the big three, along with other sectors to put us in firmly positive territory on this first trading day of the week. As we said, there's a big push in oil. This has been a choppy tray but it's an upside day for crude and we are seeing it in some of the big energy names. Athabasca Oil at this hour right now two bucks and $0.27, up almost 12%. Check in on the tax base as well, Shopify, obviously, the stock is off of its highs from late last year but it is making… 43 bucks and $0.29, to more than 6%. Check in on the broader read of the American market, the S&P 500, course we are now getting into a… The real sake of the earnings season south of the border, some big bangs out today and some weak spots but some strength as well. [video buffering] Of course everyone is still trying to figure out what's going to come next from the US Federal Reserve. We hear from them next week and the market bets when is it 75 basis points, is it 100? There will be a lot more intrigue on that front before we get to the July 27 announcement. Let's check on the tech sectors as of the border, the NASDAQ 100, up about 1 1/4%. Freeport-McMoRan, let's check in on those shares, making them healthy gains today at 27.79 a share, up more than 7 1/2%. That's your market update. the airline industry was hit hard by the pandemic, but the return of travellers hasn't been a smooth ride either. Joining us now to discuss the outlook for the airlineamidst what we are seeing at the airport, rising concerns about a recession on the horizon, David Mau, Portillo manager at TD Asset Management. David, great to have you on the program. The airline is such an interesting one. As we said in the intro, obviously the pandemic was very tough on the industry. Now people want to travel again and they are running into a lot of difficulties. What's going on out there? >> Yeah, I mean, he put it exactly right. But the thing to understand is it's not just the airlines fall, right? When you look at, people are probably seeing the pictures on the news of what's going on at Pearson, you know, lineups around four, 500 people deep and the baggage hall full of unclaimed bags, the airlines do bear a lot of the responsibly for it. But there are the government agencies involved in running the airport as well, the agencies like the customs and border security, just the regular security lines to get through to your gate from where you check-in, and then there's also the ground crews that are the response abilities of the airports as well as the contractors that the airlines contract out to for things like cleaning the airplane and making sure there is food on board. All of those moving parts have sufferedwhat you would call labour shortages because at the beginning of the pandemic, when air travel almost until he stopped, a lot of those employees were put on a furlough or laid off. And all of these different areas, they've all been slow to bring these employees back in the ones that they have been able to bring back may be they are not as experienced as some of the employees that have left, so maybe taking a little bit longer to get the curve and ensure all of the operations are running smoothly as they used to. >> As investors look into the airline space, how concerned should they be about the fact that there is a demand for travel again that just cannot be met for all the factors that you have just laid out, perhaps some people might even be turned off by travel by some of the images they've seen? This seems like a critical time. You want to make hay while the sun shines, but they can't make the hay. >> Yeah, you're right that they just can't handle the demand, the volume that's coming through. But the flipside is that the airlines have really increased ticket prices recently. So while volumes might be a little bit lower, your average ticket price is higher so that kind of offset each other. So the question is, how long can these higher ticket prices be sustained? Right? So inflation is really having an impact on people's personal budgets, whether it's gas or food prices or anything else like that. And we know that in a recession, if there is potentially a recession on the corner, discretionary travel, vacations are one of the first things that people cut out of the budget. >> Let's talk about that. Obviously, it's not a done deal that we are entering a recession. Everyone got their bets on the odds on perhaps getting there because the central banks are acting so aggressively to try to tamp down inflation. It makes me think to about the airline situation, what they're going through right now, let's get back to business, we can't handle the volume of business because of the factors you laid out, you look on the horizon, is the economy going to turn sour? How much is at an issue? >> It certainly a challenge. At this point,there are no indications that demand has been destroyed due to inflation or higher prices. But it's something that we certainly is worth watching as we move forward into the third or fourth quarters. >> Normal times, normal times are hard to remember, but maybe life before the pandemic. If you look at the airline sector, their largest cost is jet fuel itself. It has not been cheap. [video buffering] Love and airlines operating cost depending on the mix of the fleet that they are operating. So what that does is it creates a little bit of a sense of urgency to bring in new planes because new planes are much more fuel-efficient compared to a plane that was manufactured 15, 20 years ago. I knew plane might save and airline 25 to 30% on the cost of fuel. Which is really good news for the airplane makers like Boeing and Airbus because that's going to create strong demand for new planes to comment the fleet. > Let's talk about that opportunity because we have been focusing on the airlines and the problems everyone is having at the airport. You just said obviously this is an environment where, okay, maybe there will be a push. I think Delta just came in today and said it had put in an order for Boeing's newer jets which are supposed to be more fuel-efficient. >> So the Farnborough airshow which is a major industry event is going on actually I think this week in England and typically what happens during these airshows is airlines announced their orders for the coming years andthe majority of these new orders will go to either Boeing or Airbus because there are really only two big airplane manufacturers in the world if you are in airline and you want to order a new plane, you are kind of limited to either the Boeing product or the Airbus product. It's going to be an interesting few days at the air show and we will probably get more headlines coming out over the next few days about airline intentions in terms of their ordering and how they are planning for the future. >> Farnborough is obviously a huge industry event. It captures a lot of headlines every year when it happens. How closely should investors be watching? I mean historically, is this something investors need to stay on top of or is it more of an industry thing? >> It is interesting because it gives an indication of what the airline expects in terms of their own travel volumes and their growth strategy going forward, but it is a very global thing so it's not just American airlines, you got the Asian airlines, the European airlines, obviously Russia is not going to be a part of the airplane ordering process at least currently. But it does give you a good global perspective on how airlines are planning for the future. >> Longer-term, obviously we've had near-term disruption because of COVID that we are hoping for the most part the worst of it is behind us, cross our fingers on that. We may have some near-term challenges if the economy slows or falls into recession, but we don't know the outcome of that. If we are talking five, 10, 15 years out, how should we be thinking about the airline industry? >> Generally, I'm quite constructive on the airline industry. If you look at some of the predictions out there from the big industry players, you know, they are projecting a need for over 40,000 new passenger planes over the next 20 years. And is going to be a mix of replacement planes or planes that are coming out of, they are too old to operate and are going to come out of the fleet. And there is also good to be a portion that goes towards new growth, so we expect the airline industry to continue to grow. If we look back at the last kind of pre-pandemic kind of 5 to 8 years, airline passenger traffic growth was 5 to 6% annually. The forecast going forward, it's a little bit lower. It might be somewhere between 45%. But that's still pretty good topline growth and interpretable because as air travel becomes more accessible to more people, you think about countries in Africa or Southeast Asia where traditionally they were a little bit priced out of the market because it's not cheap to fly, but as air fares have come down over time, let's the last 10 or 20 years, it's become a lot more accessible to a lot more people, so we expect that kind of growth to continue for the next 20, 30, 40 years. >> Interesting stuff indeed and a great start to the show. You will get your questions about industrial stocks for David Mau from TD Asset Managementin just a moment. We started with the airlines but the industrials are the rails and so many other things. You can get in touch with us with your questions at any time. Email moneytalklive@td.com or Philip the viewer response box under the video player your own WebBroker. Now let's get you an update on the top stories in the world of business and a look at how themarkets trading. Suncor's says that it has struck a deal with the activist investor pushing for change with the activist. . . three new and amended directors join Suncor's board and the company will begin a strategic review of its retail business which could include a potential sale. Two of the new directors will also take part in the search for a new CEO. Mark Little resigned last week from the top job at Suncor after a worker was killed at its mine near Fort McMurray. Earnings continue to roll in from Wall Street's biggest banks today. It's Goldman Sachs and Bank of America. Both are showing a slowdownIn their lucrative dealmaking divisions but that said, Goldman's bond trading debts had a strong quarter, helping the Wall Street giants earnings increase. Health its interest margins in the quarter. Shares of Boeings selling today after the aircraft maker said it has an order for 100 of its 137 Max 10 Jets from Delta Airlines with an option for many more. They are still working on regulatory approval for the Max 10 Jets would it's hoping to win later this year. To crashes with the jet eight planes… Check in now on Bay Street and Wall Street. Will start at home with the TSX composite index. We are seeing a nice rally and energy names but also the miners and the financials. That sector a moment ago was in the green. 309 points to the upside, 18,704, gain of 1.7%, and south of the border, let's check in on the S&P 500.. We were just talking about the big Wall Street banks continuing to rule through earnings season. We had a gain of 29 points or three quarters of a percent. We are back now with David Mau from TD Asset Management taking your questions about the industrial stocks. Over that's aerospace, airlines and the rails. Let's get our first question here. What is your take on the Canadian rails? >> Yeah, I mean, the rails are generally a leading indicator for the economy because rails transport a lot of commodities and consumer goods that we end up buying and using and the commodities that go in as inputs for manufacturing. So rail volumes are watched closely as an indicator for where the economy is going. So if we look at what the numbers look like this year, on a year-to-date basis, rail volumes are kind of where they were the last year, within a percent or so, so we haven't seen any significant drop off in volumes. So up until this point, it doesn't seem like there is big trouble for the economy yet, but it does certainly bear watching for any potential signs of deterioration because if we start to see a slowdown in carloads, it could mean that the overall demand in the economy is starting to slow. >> Of course, the 2 Big Companies in Canada, CN Rail and CP, let's talk about that. For CN Rail, what are some of the opportunities or challenges for CN Rail? >> CN has a new management team this year. They had made a bid for, they actually competed with CP rail last year to try to buy Kansas City Southern, CP came out victorious. So now there is any management team at the end. They are focusing on improving internally, improving their operations, improving their operating ratio, taking down costs and trying to win new business, and just generally running a more leaner, more efficient railway. So there's definitely an opportunity for them to improve. >> Let's talk about CP. Obviously, the big rival. As you said, that heated battle for Kansas City South throughout the pandemic. What is the situation look like for them? >> So their health is actually quite good. The expectation is that they will get approval for this Kansas City Southern merger from the US transportation Board hopefully sometime by the end of this year, possibly to the first quarter of next year, and they will be able to close that deal. And then they will have a lot of integration to do because it's a hold of the railroad that they've got to put together with their current operations. But there growth prospects are also pretty good because the Kansas City Southern acquisition will open up new avenues of growth for them. > Apart from a recession, which obviously as you said, if we are talking about economic bellwethers here, looking at the railroads for moving things, commodities, any of the risks for the railroad? >> The recession risk is obviously the first big one. But just like any other company other than the economy right now, CP, CN Rail's in general, they are also facing inflationary pressures. So there is higher fuel cost, higher labour costs. All the things that are affecting everybody else in the economy is also affecting the rails as well. But in terms of anything specific, it's really… Nothing comes to mind that I can think of that poses a real, joint threat other than the potential for a slowdown. >> That's Canada's two biggest railways. We got a question coming in again about the rails. What's the outlook for some of the US rail companies? What does it look like south of the border? >> I think south of the border actually looks pretty similar to what we are seeing in Canada. Demand is still really quite strong. The rails both in Canada and the US have been able to increase prices, so their customers, their shipping customers, every year or every couple of years depending on what the contract is, they will renew contracts and they'll usually take a prices in accordance to inflation and demand. So what we've seen so far is that the rails have been able to increase prices at a rate faster than inflation. So it's generally been good because not only are they able to cover their higher operating costs, they are also able to improve their margins a little bit. > It's interesting that their customers are able to absorb that. Because if you think of the people who are buying space on the train to move their goods, their facing inflationary pressures as well. Is it surprising that they are like, okay, we can afford to pay these higher rates, don't worry about it? >> I think that is a reflection of how strong the demand is. If you are shipping electronic from the East Coast to West Coast and your market is in the east, you are willing to pay whatever the rails are asking you to pay to get your product to market. Will it last forever? We don't know. We could be in a recession in six months or a year. But at least for the moment, that's with the rails are telling us. >> When it comes to consolidation, we talked about the battle for Kansas City Southern, is there much room left, in North America, for further consolidation of the industry? Is there's been a lot of activity in the past decade or so. >> Yeah, I mean, when you look across North America, there really six large railways, we call them the class one rails. With this recent takeover of Texas City southern by CP, it doesn't look like there's going to be much room left for more consolidation. And you mentioned UNP earlier as part of your question, you know, when CP is able to close this deal with Kansas City Southern, they are gonna have a real true North American network with rail… Or track and rail network in Canada, in the US and in Mexico. So I think specifically about UNP, the threat they are or one of the risks is because UNP is the only other I guess class one rail that has a presence in Mexico, if CP really decides to try to squeeze UNP and increase the competition there, that could be a potential threat for UNP. >> A great look there at the North American rails. We have another question coming in from the platform. If you are asking does the end of the pandemic e-commerce boom mean trouble ahead for the likes of FedEx and UPS? Everyone trying to figure out now that we are getting back to normal, what does it mean for some of these big names? >> Yeah, so look, that's a great question. It's absolutely right that the pandemic has accelerated e-commerce growth, e-commerce penetration in general. The package delivery guys like FedEx, UPS, have benefited, at least on the volume side, greatly from this e-commerce growth. But you know, let me put some numbers out there for you. today, 2 1/2, three years later, here in 2022, e-commerceaccounts for about 23% of retail sales in the US. So that's a pretty big jump, up more than 15to 20%. This is in the US. Very aggressive growth over the last couple years from the pandemic. People obviously staying at home and ordering whatever they can online to avoid going out. But sitting here at 20% doesn't mean that we are at the ceiling of e-commerce growth. If we look at some of the other countries, particularly in Asia, e-commerce penetration is actually much higher. South Korea is a good example. South Korea e-commerce as a percentage of retail sales is about 37%, and is forecasted to grow well into the 40%, but 40%, in the next two years. [video buffering] For the guys like FedEx and UPS because in the last few years, they've invested heavily in their operations. They've invested in their warehousing, they've invested in other efficiency initiatives, automation and so on and so forth, so I think that that's them up really nicely for the next few years because maybe North America doesn't get 40% e-commerce penetration, but it could easily go from 23% to something in the 30s over the next 5 to 10 years. Naturally think about those two names, FedEx and UPS in this context, are we thinking of them in similar terms are they different in terms of range and geography? >> FedEx is a bit more international. They have more operations overseas. the other thing to note is that FedEx doesn't have too much business with Amazon,where is UPS still does. I think, in the last couple of years, FedEx realize thatit wasn't profitable for them and it didn't make too much sense and there's so much business to go around that they don't have to rely on Amazon. And Amazon has been very aggressive in building up their own network. >> I want to ask you about that. Anytime Amazon gives the slightest inkling that it might be interested in moving into someone else's territory, that sends shockwaves, a member a while ago when it sent shockwaves through shippers. Is that a real threat? >> It is, but like I said, the growth in e-commerce is so big and it's growing so quickly that Amazon can barely handle their own volumes. So there's still plenty of business to go around for the FedEx is and UPS is of the world. >> For me, e-commerce, it became important during the pandemic and it became sticky too. Right now, I don't actually enjoy going to a mall. Sorry for those who have investments in that area, I just don't like it. >> Same thing with grocery shopping. UPS and FedEx were not involved in delivering groceries but that's another segment of the market where a ton of people have transitioned to shopping for their weekly groceries online and having them delivered. >> It definitely makes me feel a bit lazy but that's the way the world is. We will take a break in the questions. Make sure you do your own research before making investment decisions. We're going to get back to your questions for David Mau from TD Asset Management on industrial stocks in a moment. Get in touch with us anytime. Email moneytalklive@td.com. Now let's get to today's educational segment. In today's choppy markets, you may be reconsidering your portfolios asset mix. While broker has tools that can help you, joining us now is Nugwa Haruna, Senior client education instructor at TD Asset Management. Nugwa, always great to see you. Happy start to the week. Let's jump in. If you want to have a look at your portfolio breakdown, how do you do that in WebBroker? >> Hi Greg. It's always a pleasure being here. For investors who typically would have an investment plan and are looking to hit some kind investment goal, these investors may potentially consider using asset allocation as well is diversification. The idea behind these is using different asset classes to potentially help them meet their financial goals, and that's because different asset classes tend to respond to different conditions in different ways. Different asset classes available would be things like equities where these would… This would denote ownership in certain companies, things like fixed income, wherein investment could potentially be receiving some kind of fixed income over a set period of time, investors could consider things like cash and cash equivalents which may help investors reserve their wealth while waiting to write out certain conditions in the market. There are also things like commodities and real estate that investors could consider as well. So once in WebBroker, an investor can take a look and see what that asset allocation breakdown is in their portfolio. Once they are there, an investor would click on the accounts tab and once they do that, they would click on the asset allocation link. Once here, an investor would be able to see what the breakdown in their portfolio is. For instance, they would see how much they have in Canadian, US and international equities. They would see with the breakdown in the portfolio is for fixed income, both global and Canadian, and finally they would also be able to see things like cash or cash equivalents of what they will. Investors wanting to learn more about asset allocation and what exactly these asset classes mean for their portfolio, they could do so by clicking on the learn more tab. Now this would actually bring up a breakdown of these different asset classes but it's actually letting investors know about the risks and considerations could be holding these asset. Finally, an investor, once they are in their portfolio, could scroll down and see more about each of these asset classes. They can actually click on the asset class and see the specific securities they are holding as well as with the makeup on that asset allocation is on their portfolio. >> Alright, so this gives us a nice picture of how we've allocated our assets. What if you're interested in seeing the historical returns of a portfolio with a similar asset mix and how it's performed in the last couple of years? >> Right, so we talked about how investors may have an investment plan to potentially help them meet an investment goal. Within WebBroker, there's actually a tool called a goals tool. What an investor could do is they could actually match up different investor profiles to potentially see if they are able to hit their investment goals. Now, these investor profiles are made up of things like a conservative investor profile, potentially with the return has been the last 15 years, an investor could also choose things like a larger investing profile or a more aggressive one. They can also go ahead and create their own custom investor profile. The idea again being that they can use different asset classes and different regions as well as industries to potentially see how these portfolios have performed in the last 15 years. Once in WebBroker, once an investor tries to create a goal, once they get the second step, they are actually able to click on specific assets, so in this case, Canadian equities, if an investor decides that this portfolio is going to 130%, they are able to see in the last 15 years what a portfolio that held 30% in Canadian equities, how it performed. So in this instance, you can see that the best year was just over 27%, worst year almost -22% with an average return of 6.2. Now an investor can actually make adjustments. If you up that to about 40% of your portfolio holding Canadian equities, the investor can see in the last 15 years that a portfolio of this kind would have had a return of over 29%, a negative potential return of just over 22% but an average return of 6%. Finally, if you decide to be even more weighted in the Canadian equities, that kind of portfolio historically what and how to best return of almost 35%, worst year in the last 15 years of 26% with an average return of 5.7%. This will give an investor potentially an idea of how they would go round and construct their portfolio as well as if they need to do any readjustment or rebalancing to the purply. >> Great stuff as always, no go. Thanks. >> Is always a pleasure. >> Nugwa Haruna is a senior client education instructor. Here is some of plumbing at master classes. He got one on portfolio management, another on investing strategies and another one on mutual funds and ETFs. Make sure to check out the Learning Center in WebBroker for even more educational videos and webinars. Before get back to your question from David Mau on industrial stocks, or might even get in touch with us at any time. Have a question about investing or what's driving the markets? Our guests are eager to hear with on your mind. Send us your question. 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 writing your question and hit send. we'll see if one of our guests can get you the answer right here at MoneyTalk Live. We're back now with TD Asset Management's David Mau. We are taking your questions on industrial stocks, that's the rails, airlines, Aerospace. Let's get another one off a WebBroker. With the turbulence at the Canadian airports, will there be a negative impact on Air Canada longer-term? >> Definitely a good question. I think people do understand… the airlines themselves certainly do have a lot of response ability for how poorly the operations have been running lately. but again, it's not just the airlines, it's the airport, the government as well. And the other thing is it's not just happening in Canada. I know we see Pearson and possibly Vancouver, Montréal a lot in the news, but this is happening all over the US, all over Europe. In fact, Heathrow Airport in London recently asked all of the airlines that fly out of there to reduce the number of flights over the summer because the airport simply can't handle the volume of passengers that are going through. So they have asked all of the airlines to limit, they want to limit the number of passengers going through Heathrow to 100,000 a day. So many of the European airlines have had to cut a number of flights at Heathrow. So there's always going to be somebody who's had a really bad experience on Air Canada… >> It seems to be touch and go. Some people say, I just sailed through Pearson airport. No problem. But Saturday, my sister sent me a picture of my niece and nephew asleep on the floor at Pearson because there for 20 a. m. flight didn't take off till four in the afternoon. Others say they flew right through the place. >> A lot of it depends on luck and when the time of day as you land or depart. There are busier times of day. That's going to put more strain on airport operations. Like I said, there will be some people who probably swear off Air Canada and say they will never fly Air Canada again. But you have to remember, especially within Canada, if you are flying domestic, there's always a lot of options. If you are flying to somewhat less urban areas, Air Canada might be your only choice, Air Canada or West jet, and which is facing the same issue. We don't see them as much in the news but they certainly are facing the same issues. So I think over the long-term, to answer your question or to answer the question, will this have a huge negative impact on Air Canada? My guess is maybe in the short term, sentiment towards Air Canada is quite poor, negative, but over the long term, I think people will come to realize that's just how things went and it's not all Air Canada's fault. And they'll forget about it after a while. So short answer is I don't think it has a huge negative impact. >> Talked about the dominance of Air Canada and West jet in this country dramatically. How does Air Canada stack up internationally? What does that business look like again some of the biggest airlines in the world? > If we think about recent performance, it's pretty similar. but if we looktwo Q3 and Q4, all of the global airlines are still seeing strong demand. I mentioned Delta earlierordering planes of the airshow and they were one of the first to report the result last week. There revenue was online with the earnings front. Is a bit low because they are facing some higher fuel costs and operational issues so earnings stalled a little bit. But the important thing is that the guidance they gave the third quarter exactly quite strong. What they are saying is they are not seeing any drop off in demand. Q2 was very robust. In fact, it was almost the same levels as we saw in 2019. So almost a full recovery. And then that Q3 is actually looking really good as well. They are seeing a recovery and international traveland recovery in corporate travel. So those are two big segments that have lagged at the domestic travel segment. So it's good to see those going up. so I think the outlook is very positive now, barring any potential recession. >> Let's talk more. we have another viewer who wants to you talking on the US airlines saying with the return of travel, is this a good time to look at those US airlines? >> Yeah, I mean, I think everyone will face some challenges in terms of higher costs and like we spoke about earlier, the airlines are still ramping up on hiring employees. We know it's a pilot shortage, there's a shortage of qualified Capt. crews, so all of those have to come back into equilibrium for performance to improve but that will slowly happen over time. If you are considering airlines as an investment, I think now is definitely a good time to at least spend a little bit of time and look at it and understand with the market dynamics are going forward because it does look like things are going to improve from here out. >> As David said, make sure to do your own research if you are looking into the space before you make any investment decision. We will get back to your question for David Mau from TD Asset Management in just a moment's time. Industrial stocks is the topic of the day. And a reminder, you get in touch with us at any time. Give a question about investing or what's driving the market? 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 this screen here on WebBroker. Just writing your question and hit send. We will see if one of our guests can get you the answer right here at MoneyTalk Live. Let's check in on the market. We will start on Bay Street with the TSX composite index. Not a bad way to start the week if you are on the market. 18,703. Of 308 points or 1.7%, being led by the energy names, the minors, financial. Last time I checked, all the sectors were pretty much in positive territory. As he said, the energy names get a big boost today because we are seeing crude prices and bouncing back after a very turbulent week. We got West Texas intermediate on my screen of two bucks a barrel, so nice pop on the day. Baytex among the names with a higher release, six bucks and $0.25 per share, it's up 7%. We are seeing some financial lanes including the life companies moving up, Manulife at 2260 a share, a little more than 2 1/2% up. South of the border, earnings season continues to ramp up on Wall Street. We heard from some of the biggest banks out there, the S&P 500 is in positive territory. We've got the NASDAQ 100 behind it as well also in positive territory. The S&P 500 of three quarters of a percent. Let's check on the NASDAQ 100. last time we checked it was to the upside, TSX up 1.7%. We are going to get back your questions now with David Mau from TD Asset Management. we haven't talked about the automakers. Someone has a question in particular about Tesla. Tesla's been through a… Has been a volatile name. Your thoughts on this one? >> Yeah, look, Tesla has really shown itself over the last few years as being a very capable competitor and innovator in the electric vehicle space. They have been able, in 2021, they were able to double their output from about 500,000 to just under a million units, which they delivered. So that was… You can't understand, that was at a time when most of the other automotive names were struggling with supply chain issues, labour issues and outsourcing parts and materials and so on. So for Tesla to a come through last year in the way that they did is, in my opinion, very impressive. This year, the stories a little bit different on Tesla. They've been impacted… They have a factory production factory facility in Shanghai which was impacted by the COVID lockdowns in China, so they are a little bit behind track this year. Last year, they forecasted that they would grow by another 50% in 2022, so does look like they are going to get there this year. But overall, Tesla is a high beta name and it has performed quite well. It's obviously pulled back a lot this year in terms of the share price, but going forward, when I look at the EV space and the growth that's out there for manufacturers of electric vehicles, it's very positive. >> What about the competition? That would been a time when you would say, quickly, namely an electric vehicle maker, they would've said Tesla. Straightforward. The F1 50 lightning. You see a lot of automakers. How competitive is the space getting? >> That's absolute right. So probably three, four years ago, the space was not very competitive. Tesla was the only game in town. But within the last couple of years, all of the guys that you named, Ford, GM, BMW, Mercedes, they've all come into the space and they all have good products. The one company I'm looking out for right now is Volkswagen. Volkswagen has spent a ton of money over the last years, they have invested heavily in the EV space and they continue to heavily invest, and the thing to know about Volkswagen is it isn't just Volkswagen. It isn't just your VW Golf or Jetta. They are the parent brand for guys like Lamborghini, for Bentley, for Porsche, for some of the other mass-market brands in Europe. So Volkswagen represents the whole entire spectrum of automobile offerings and they are going to electrify everything, so from your small mass-market two or four door a class sedan all the way up into supercars like Porsche and Lamborghini. So I think they set themselves up really nicely for all the growth that's yet to come in the electric vehicle space. >> One criticism you hear about the electric vehicle space or maybe even a concern is that at this level of penetration in the market with the amount of EVs, there are a few in my neighbourhood, you go on a walk and you see some, I don't have one, most my neighbours don't have one, once you get that kind of adoption the people are talking about, the grid itself, people say, the grade can handle it. Is this something we need to be worried about as investors or are we sort of hopeful that we will figure that piece out as we move along? >> It's probably a little bit of both. I think a lot of the grid operators recognize that the coming demand for electricity is much more than they can handle right now, so they been, you know, they've been spending time and money to upgrade their government. So that's going to benefit a lot of guys in the electrical machinery and component sector. so for example, there is companies in Europe, accompanied by the name of Schneider,another company by the name of Eden, that provide this electrical architecture for utilities to be able to produce and transmit and distribute all of this electricity that is going to be needed over the next two years, as you said, as more people get into this electric vehicle space,, so there's lots of players out there. You have to search for them, but there lots of players out there that are going to benefit from all this change in technology and the evolution of electric vehicles. >> Fascinating stuff. We are of time for taking your question. Any final thoughts for our viewers about industrials overall? >> Yeah, industrials are critical sector, so obviously they… It will move with the economy. So as you think about investing in industrial stocks, just be aware that, you know, economic shocks tend to impact these higher beta cyclical names a bit more than if you were to invest in healthcare, which tends to be more defensive or italic mutations which tends to be more defensive and lower beta. So always remember, you should have some kind of balance in your portfolio or at least recognize the risk. >> Great staff. Really appreciate you joining us today. >> Thank you. >> Thanks to David Mau, portfolio manager at TD Asset Management. Tootoo and Ford tomorrow's episode. Scott Colborne is going to be our guest on the program. He's taking your questions on fixed income. That's all the time we have for the show today. Thanks for watching MoneyTalk Live. We will see you tomorrow. [theme music]
