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[theme 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, electric vehicles have been touted as the future but we have seen signs that consumer demand is waning. We are going to discuss that with TD asset management David Mau.
In today's liberal education segment, Bryan Rogers is going to show us how to find which stocks are in any given index using this 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.
Before we get to all that and the guest of the day, let's get you an update on the markets. We will start here with the TSX Composite Index.
We've got some green on the screen, about 123 points, more than half a percent, despite the pullback we are seeing in crude oil prices today. There was again and that yesterday.
Hudbay minerals not adding points to the top line, they are down about 2%. Earnings miss on higher taxes and lower sales away on the name.
Sun Life financial, a major lifeco and financial name, they carry a lot of weight in the financials basket, they are up a solid 4% on the back of its latest earnings report, $68.67 per share.
South of the border, we got some key economic data to weigh this week. The first one coming in this morning, producer prices, the index up .1%, a cooler reading than was expected by the market. Seems to be flowing to the market in terms of saying, okay, perhaps inflation is getting back to where we needed to be. The S&P 500 is up more than 1%, 60 points, on the back of that news. You will get the CPI tomorrow morning which will be another test for the United States.
The NASDAQ is up to the tune of 1.8%. I want to check in on Starbucks. I will tell you more later but they are getting a new boss and the street seems to like the new hire. He will start in September.
Starbucks is up almost 21% on the session.
And that's a market update.
It has been a challenging year for the electric vehicle market, some major automakers have been pulling back on their investment in the space due to slowing demand. The question becomes, is this a speedbump or a longer-term trend? David Mau, VP and Dir. for portfolio research at TD asset management joins us now. Great to have you back.
>> Always nice to be here.
>> The EV space, so fascinating. Over the last 12 months, EVs are the future, that was a narrative, and then something changed.
Walk us through that.
>> For the overall market, EV demand has certainly come down a little bit.
We are seeing a slowing. Like you said, it started probably halfway through last year and it has continued into this year. We are talking about the US and Canada. That doesn't mean that sales growth is actually negative, it just up the pace of sales growth has slowed significantly. A lot of people think-- or maybe people are thinking that this is a temporary blip and we will recover to a positive long-term trend.
As to exactly what's going on in the industry, it just seems that the market is a bit saturated now and demand from people who are not first adopters has definitely slowed. As far as the big players go, Tesla is always up there when we mention big players. Tesla is actually experiencing declining sales this year, something they have not really seen before.
Now, another big competitor out there is BYD, a Chinese company.
I would say they are has slowed is probably biggest competitor. They mainly sell their cars in China and other parts of Asia. BYD have not seen a decline in sales. Again, that will be a function of their geography where there biggest market is because in Asia and particularly in China, demand has not slowed as much as it has here in North America. The other thing is BYD actually sells hybrid vehicles as well which Tesla does not, so that has been supportive for BYD because we know demand for hybrids have been strong over the last couple of years.
>> Tesla is all in on the electric. Ford, GM, other big automakers said they were not going to let his will have all the fun and the market and they came out with their own EVs. I look back over the last year, announcement saying we have not abandoned the electric vehicle strategy but we are pulling back a little bit, we are going to focus on a mix, whether it's hybrids or whether there is still demand for the internal combustion engine. It is interesting what's happening with the North American players. Not necessarily stopping but may be making a new mix.
>> Those names you mentioned, they are seeing the market change right before them and what they are trying to do is maintain the most flex ability that they can so flexibility meaning in terms of production. It is EVs slow even more from here, they will probably cut back more on EVs and increase hybrid production.
Instead of cutting back on internal combustion engines as much as they plan, they might slow down and continue producing gasoline cars.
>> These are the big automakers obviously but we know and here at home in southern Ontario, but throughout a large part of the states too, there are a lot of suppliers to the big names. There are so many we don't know all the names. Surely they must be starting to feel this in terms of what these big companies want from them.
>> That's absolutely true. There is some disruption going on throughout the EV supply chain.
An example here in Ontario is there is a European battery materials company called Ubicore. They were in the middle of building and the EV battery it planned out by King Stan, not too far from here.
They have seen the change in the market and they have recently decided, we are going to pause on building of this plant because the industry is simply not growing as fast as they thought it would. Keep in mind, this plant is going to cost almost $3 billion and once it was up and running, it was going to provide 600 jobs in the Kingston area. That's pretty impactful.
Another Canadian example is Magna. Magna is a Canadian auto part supplier. They also assemble cars for OEMs. In a partnership with an EV startup, Fisker automotive, a US EV company.
Fisker recently announced I think it was in June that they have filed for bankruptcy. This is going to have an impact on Magna and Magnus future sales and profits. Not only that, with Fisker going into bankruptcy, that relationship ending, it's going to be cutting about 500 jobs. These are just two examples here that are close to home but there are numerous other examples out there of companies either cutting back existing capacity or regulate extending plan so starting to have a very real impact on the economy in terms of jobs and capital spending.
>> I want to get back to the China story too. You mentioned BYD and some other news. They have mostly been selling to the Chinese market and other Asian markets.
There seemed to be concerns over the last several months about the major automakers on the shores that automakers might start coming over here.
>> A real concern. The way the governments in Europe and North America have responded is by announcing their intentions to slap tariffs on imported Chinese electric vehicles. The Biden administration recently said that they will impose a 100% tariff on any Chinese EV coming into America. The European Union is also putting tariffs on Chinese EVs. There tariff rate is a bit lower. I think it will be around 30%, but still meaningful.
Canada will probably follow with the US is doing and impose a 100% tariff on any Chinese electric vehicle coming into the country. The reason that these Western governments are looking at these tariffs is they have felt that the Chinese EV industry has been unfairly subsidized by the Chinese government, giving these Chinese companies kind of an unfair playing field over the domestic companies we have here and in Europe.
Their solution to that is to basically double the price of any car that's coming in with the intention that this will make the appeal of Chinese EVs less appealing to consumers given that once this 100% tariff is in place, the selling price of these Chinese EVs will be comparable to the lower end EVs that we have right now here and in Europe.
>> You double the price of the Chinese EV product. The price point is the issue.
>> Electric vehicles that are coming out of China now are quite good. That was not the case may be five years ago but China has made, the Chinese automakers have made huge improvements over the last few years in terms of quality and build and the driver experience so what they offer is quite competitive.
>> Going forward, we put all that together, there is a competitive threat from the Chinese EV market and was going to happen on the terrace front, the slowing demand here, if an investor is looking at the EV space and trying to form a thesis, I don't see a clear path. Try to figure where we are going to be in a year, five years, 10 years.
>> It is a bit murky here.
What I would say is that I don't think this EV, I don't think EVs are simply a trend. It is a secular change that is happening in the industry so it's always going to be hard to project anything for a year, two years. But with a long-term view, the outlook is still pre-positive.
They're going to be bumps along the road.
People will go out of business or things will happen but ultimately I do think that we get to a point and it might not be as soon as what people think, but at some point in the future, electric vehicles will become the dominant, biggest form of cars were automobiles.
>> Fascinating stuff and a great start to the program. We are going to get your questions about industrial stocks, autos but also planes and trains, with David Mau in just a moment's time.
And a reminder that you can get in touch with us 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.
We've got shares of Starbucks in the spotlight today. He showed them off the top. Let's dig into the news. The coffee chain is bringing in the current Chipotle CEO, Brian Niccol, to run the company effect is December 9.
You know it's an impactful higher.
Chipotle finding out that he's leaving the company, goes down about 9%.
The fast food industry overall has been struggling in recent years but holy has seen its sales actually grow. Different story for Starbucks. It struggled to boost customer visits and Starbucks shares have fallen 21% under Laxman Narasimhan who is leaving the CEO post effective immediately.
On Home Depot warning investors of a sales slowdown. Cautious homeowners are delaying renovation projects.
The home-improvement retailer says the high cost of borrowing in the US, and also here but we have started to whittle it down, and economic uncertainty is putting pressure on customers. They are spending less as a result. Now Home Depot is forecasting up to a 4% drop in comparable store sales for the year on the unexpected weakness.
We got a Canadian lifeco in the headlines today as well, so my financial, though shares are on the move after handing in an earnings Buford's most recent quarter.
Right now we are up about 4.5%, 50 bucks and change. In a note to clients, TD Cowen said it was lower expenses that help that profit line, but it pointed out that the topline results were a bit more mix.
Quick check in on the market, we will start on Bay Street with the TSX Composite Index. We are up about half a percent, 126 points, despite an almost 2% pullback in the price of crude which one substantially higher yesterday, feeding into some of the energy plays. South of the border, the S&P 500, we got producer pricing index today, came in cooler than expect to. Everyone is so focused on inflation. Tomorrow we are going to get CEPI, the Consumer Price Index for the United States, and headline inflation. But the market likes the read today. You're up about 61 points on the S&P 500, more than one full percent.
We are back now with David Mau taking your questions about industrial stocks. First one here is about the airline. What is your view on Air Canada? They have had some issues as of late.
>> The stock has been an under performer as of late. The second-quarter results were not great. They cut guidance for the full year, saying expenses are higher than we thought. Demand is starting to weaken a little bit. We are getting lower passenger yields and lower load factors. Those things are not looking too great for Air Canada right now. The other thing that is on my mind when it comes to Air Canada is Air Canada is also in the middle of contract talks with their pilot union. In the next few weeks, if things don't work out, there is a possibility that the pilots could go on strike in the next few weeks or months. We know how disruptive a strike on any level can be for an airline.
WestJet mechanics went on strike at the end of June. I think it was for three days. But thousands of flights were disrupted and cancelled, hundreds of thousands of passengers were affected. So I think that potential threat of some strike action coming up. That said, Air Canada is Canada's national carrier.
They have a strong position in Canada.
Valuation is quite reasonable. The stock trades at about five times PE whereas the rest of the Canadian market, the S&P TSX as a whole trades at about 14, 15 times.
There is a big valuation gap and potential valuation upside. I do still like Air Canada. I would just be a little cautious over the short term until some of these uncertainties are resolved.
>> When you talk about how disruptive labour issues can be, I think about technology issues as well. It would have been in the middle of July, I was away for a week, it was a substantial week.
The CrowdStrike issue.
>> It was felt throughout industry. Most airport operations were quick to recover.
IT took about a week to get back on track.
They had to manually go and reset 40,000 computers.
I'm not sure why there case was so much different. They are going to sue CrowdStrike and Microsoft because they cannot absorb 1/2 $1 billion hit on something that was not really their fault.
We will see how that plays out.
It did have an outsized impact on Delta.
>> Let's take another audience question.
We will stick with planes, this one is about the playmakers. Your view on Boeing and Airbus? Has Boeing turned a corner on their past problems? Who is winning the race to dominate the global airline industry?
>> That's a good question. Both Boeing and Airbus are facing a tough environment now for different reasons. Airbus, they are facing supply chain issues. They have said they are seeing shortages and everything from cabin interiors to jet engines. That is putting a slowdown into how they operate. It Boeing, on the other hand, has its own issues with the US government and regulators around their production quality and their safety record. It's a tough time for both companies right now. I have no doubt that they will get through.
In terms of who is going to be a winner or dominate the industry, it's my view that I don't think either one of these guys will completely dominate the airline industry and that's because the airlines themselves, they don't like to have their fleet 100% Boeing or 100% Airbus. They like to diversify their fleet. And it's good risk prevention. Just in case something goes wrong on the repair side or supply-side for parts, they don't want their fleet to become fully grounded if, say, Airbus runs out of spare parts for something and you can't fly Airbus planes anymore or vice versa for Boeing.
>> On the Boeing side to, they're the ones with the spacecraft. I know it's not core to the business but considering all the negative headlines around Boeing for so long, it can't be helping.
>> That's an interesting story.
They sent up I think it was two astronauts to the international space station. They were supposed to be there for seven or eight days.
>> Now they might be there until next year.
>> A good six or eight months.
From a publicity front, it doesn't help Boeing or the relationship with the US government.
>> Let's get another question in from the audience. The fence legacy contract. If someone wants to talk about CAE. Our defence legacy contracts clouding the future outlook for CAE?
>> Yeah, good question from the viewers, Greg. There has been some talk around CAE's defence business in May or June. CAE had announced that they need to take a 600, around $600 million impairment charge related to legacy defence contracts.
These are contracts with I believe it was the government and these are contracts that were signed kind of five, six years ago, before COVID happened. Now, CAE, as they work through these contracts, they're going to realize that with the way that costs have risen over the last few years and inflation has affected their expenses and the supply chain has been disrupted these contracts that they have signed are not going to be profitable anymore.
They had agreed with the government, we will provide you this product for X dollars and that's it.
Now CAE still has to provide the product but they cannot renegotiate the price even though their costs have gone up so much more. I think this does keep a lid on the stock.
They want to give management and the company sometime to see if they can recover in the defence business. Basically what the market wants to see is a sustainable margin recovery around the defence business.
And that doesn't happen overnight. It will take quarters or possibly years.
I think that investors should be cautious on the stock for the near term.
>> Interesting stuff.
As always, make sure you do your own research before making any investment decisions.
we will get back to your questions for David Mau on industrial stocks in 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 our educational segment of the day.
If you are interested in finding out which stocks make up an index like the S&P 500 or the TSX Composite Index, web broker has tools which can help. Bryan Rogers, Senior client education instructor with TD Direct Investing joins us now with more. Great to see you, as always. Let's talk about figuring out what I mean when I throw terms like NASDAQ, S&P 500, TSX.
>> Absolutely, great. A lot of investors already know what those are. They have been following either the dowel or the S&P 500 or there's a lot of other indexes or indices when we refer to them as plural.
It's a small trick and web broker but I think it's a valuable one because I used 1/2 to, before I knew about this, you have to go to separate websites that look up up one of the companies on the dour one of the stock listed on the S&P 500.
They have their own internal websites we can find that information. But you can also get this on web broker. It's a quick, easy trick to find and see the companies listed on a lot of these indexes. If we don't want web broker, I will show you the trick on how to get there.
Then you can start to explore some of the other indexes as well.
You go here and you go to research. Click on indices under the markets tab on the left.
I will do that again to get to this page.
You can see that there is a number of, quite a bit of information, you can see the graphical views of all of the particular indices. You can see whether they are up or down right now today as an example you can see a low 52 week range, hi, etc. There is a ton of information just in terms of what of the company movers on particular indexes or one of the advances and declines are so on for the TSX Composite Index, the venture, New York Stock Exchange compensate, etc.
but if you scroll down here you can see a list of another bunch of indices that are available.
You can see that the dowel only has 30 members, it's only 30 stocks. If you want to see those are, click on the bottom, click on the link itself and then click on the bottom under members and you can see that these are the 30 stocks that are listed on the Dow.
So you get access to that right away. Once you click that, you don't have to go back to that page. You would drop down our you can look at a number of other indices that I want to find information on, like the TSX Composite Index.
Were interested in what are some stocks that we want to get more into Canadian stock trading, click on their and there are all the stocks listed on the TSX Composite Index. Or we can go to the most popular one we see all the time, the S&P 500. Now you can get a listing of all 500 stocks that are on the S&P 500 in a number of other indexes that could be by sector and other areas as you scroll through that list.
>> 500, Bryan, is obviously a big number.
It's nice he can pull up all the constituents there. There will be some a and B shares to you. You might be like, wiser more than 500? That's another story.
You want to start looking through the information. Now I know who is in the S&P 500, if you want to filter some of that.
How do I do that?
>> 500 is a big number. It's probably one of the most common indexes, the S&P 500, it's a broad-based index whereas the Dow Joan is narrow base, only 30.
There are other broader based indexes like some of the mid-cap stocks, the Russell 2000, Russell 1000. Those are all really big lists and you can filter them pretty easily.
Let's jump back into web broker and I will show you different ways to filter that.
We will go back to where we left off.
To get there, good research and then indices and then select the particular index and you will come to this page.
If you start using this drop-down, we use the S&P 500 because it's a good one to look at and filter. You can filter anything that you hover over. Some you cannot filter but most of these columns you can filter. There is a line underneath them, you can click on it and filter it by it could be alphabetically if you're looking at a list of the names, that might not be so useful. If you want filling out which ones are showing the highest percentage change, for example, or the lowest, there we go. We can see Starbucks is showing the highest as of today.
Or if we want to look at volume, I click it a couple times and I can see Nvidia, Starbucks and Chipotle are showing the highest level of volume today so you may be have an interest in exploring that a little bit further. You can also look at, this is something we talk about all the time, trying to figure out in the race who is the biggest company from a market cap perspective, this will settle the question really quickly.
We can see that it's actually Apple right now. They always seem to be going back and forth because their price moves up and down. I should've asked you that question ahead of time to see if you knew.
Exactly. We can get some wagers on that one.
If you're looking at dividend yield, for example, we have other more in-depth screeners but if you want to click dividend yield, you can see what stock within the S&P 500 has the highest dividend and then he can kind of go down the list.
Other than that, there is some performance indicators that you can do. Same logic there. You can go through one year here, your today. You can do this with the S&P 500, the Dow Jones, the Russell 2000.
It's a quick way to filters some of those columns when you have a big number of data points.
>> Great stuff as always. Thanks for that.
>> Thank you.
>> Bryan Rogers, Senior client education instructor at TD Direct Investing.
For more educational resources, you can check out the learning centre on web broker or you can use this QR code.
It will navigate to TD Direct Investing's Instagram page. Once you are there, you will find more informative videos.
Now before you get back your questions about industrial stocks for David Mau, a reminder of how you can get in touch with us.
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.
p.m. three 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.
Okay, we are back with David Mau, taking your questions about industrial stocks.
Outlook for the global travel companies like Royal Caribbean?
>> The outlook for the cruise industry has actually been quite positive. Who would have thought, four years ago, that cruises would be back?
But they actually are.
The volume of passengers going on cruises has actually more than fully recovered from pre-COVID levels. This year, 2024, it's estimated that 35 million people will go on a cruise. In 2019, which is the full year before COVID, that number was only 30 million. The industry has actually seen significant growth and what's interesting is that what the cruise lines are seeing is that their customer base is actually starting to change.
A few years ago, it was mostly kind of the older generation… >> It's not just boomers.
>> Exactly. It's not just a Boomer phenomenon.
Now, they are starting to see more and more younger clients come for the cruise experience and the companies are actually quite smart. They are seeing this, they recognize it and what they are doing is trying to offer more experiences that appeal to the younger generations, things like exclusive destinations, newer boats, mega boats that have more amenities and more entertainment that they think that these new customers, these new younger customers are going to like.
As far as the actual companies themselves go, there is, I would say, three big players that have most of the market share and a handful of small players.
The guys like Royal Caribbean, Norwegian or Carnival, those are the three big players.
You do have to be somewhat selective when picking stocks here.
Even though the industry has done well, not all of it stocks have done well. Royal Caribbean had I think it's the only one of those three big players that has outperformed the market.
And that's because they've been more aggressive on the cost side. They have been managing the operation more efficiently so the emergence up in higher.
You can see that in the stock. Whereas the other two guys are laying quite a bit.
>> I wanted to ask you about that because it's got to be very expensive as an endeavour to get one of those cruise ships to the ocean, fuel, resources, food, staff. They have the pricing power? That seems to be the issue. Costs are rising for everyone, but people are still willing to pay?
>> It seems they do have the pricing power and the other thing that these cruise lines can do, the operators can do, is run their operations more efficiently. They cut corners-- not cut corners but become more efficient where they can. It does definitely seem like the consumers willing to take these price increases and they are able to at least for the moment.
>> My parents are willing to. They're all fighting for the entire month of November for a cruise out of LA. It sounds like it will be pretty cool. There boomers though, they are in their cruising years.
>> The other important thing to remember about the vacation industry in general is that vacations are very discretionary.
When things get tough, the cruise is the first thing you're cutting, the annual cruise is the first in your cutting out of your budget.
You have to keep in mind the cyclicality that's embedded in these businesses.
>> Interesting stuff they are on the cruise lines. Another question, this one about the rails. However the rails looking right now? We heard about a freight recession and the other new headlines about perhaps labour disruptions.
>> Yeah. Look, the rails have gone through a tough patch over the last I would say four quarters. CN reported recently their second quarter and it was not great. They actually cut guidance. They said the expenses, a common theme, is higher-than-expected. They had some network congestion issues in the western part of Canada so they had to cut their full your outlook. CP, on the other hand, actually had a very decent second quarter.
They are running their operations well.
They are also continuing to benefit from the acquisition of Kansas City Southern that they did last year or will that close last year and so they are benefiting from synergies from that deal and I would expect the synergies to continue for the next little while. But in terms of you mentioned a freight recession, it looks like the freight recession has bottomed, probably or hopefully sometime mid to end of last year. Things look like they are getting a bit better this year. The Canadian grain crop, which is very material for the two Canadian rails, looks pretty good this year so that means there will be a lot of volume 4 CPN CN to move this year. You did mention the potential labour disputes. And that is an issue or both of the Canadian rails. The union workers of CN and CP do, I believe, have the right to go on strike sometime in the next few weeks as well. That is going to be pretty disruptive. I think it's about 9000 employees in total across the two rail lines so that's going to be impactful and quite negative if it does go ahead.
There is also talk about a strike by port workers in the two major ports on the West Coast of Canada and BC.
>> So if the trains are running, you need to have the ports to pick stuff up.
>> If that happens, it's another very big negative.
Usually strikes of this type do not last for very long but they can still be very disruptive because once a network has to shut down, it takes quite a bit of time to get the network back up and running when the workers come back so it's hard to say at the moment. Hopefully, neither one of these job actions occur but if they both do, it's going to be tough.
>> Interesting stuff to watch on the rails there. Let's take another question from the audience. This one about waste. I would like your guests thoughts on the waste management sector.
>> Listen, I'm a big fan of the waste companies.
Big fan of waste.
It's not a sexy business, but it's solid, reliable, dependable business.
The big names in the sector, waste connections, waste management, Republic services, GFL, those guys are good operators. They run their businesses very well.
The pricing environment, the business environment for these waste companies has actually been quite good. All of these guys have been able to raise prices 5 to 7% across the board which is very positive for margins.
An increase in prices much more meaningful for waste company than an increase in volumes, let's put it that way. They will done quite well. Like I said, I'm a big fan of waste companies. Generally, they are defensive in a downturn, but when the economy is strong they also do well so I think waste companies are an area people should look into. It could be a core part of your portfolio. Like I said, not a sexy business but they grind higher over time.
>> What is the risk for the space? We produce waste in good times or bad.
We know that.
But what is it, execution?
>> Part of it is execution.
The business has to be managed well.
Expenses have to be kept in check, like any other business.
But because what a company spends on its waste budget, so what it pays, small business might pay half of 1% to 1% of its annual sales to have its garbage collected. When prices go up or when business is not great, it doesn't tend to affect the waste companies too much because it's such a small portion of a company's expenses that waste is not something that you cut out of your budget.
Waste pickup is not something a company is going to cut out of their budget because you need it.
>> Interesting stuff indeed. We will get back to your questions for David Mau on industrial stocks 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.
You can now invest in fractional shares on my broker and TD Direct Investing has this explainer and how it works.
>> To buy or sell partial shares, also known as fractional shares and web broker, start by opening a trade ticket. Then, select your account. You can trade partial shares in Canadian and US dollars using a cash account, margin account, TFSA, RRSP, RIF, RESP or RESP. Next, enter the symbol or name of the stock or ETF you want to trade and check out the quote for the current price.
Partial trading is available in many stops and ETF listed on Canadian and US exchanges. You will find the complete list available for partial trading here.
Partial shares are available for a stock or ETF that you entered, the fractional icon will be green.
You can only buy and sell partial shares as a market order, meaning your trade will execute the best available price. If you switch to another order type such as limit, stock market or supplement, the partial quantity will round to a full share quantity.
You can place a buy order in one of two ways. One, enter the dollar amount you want to invest. The calculator will estimate how many shares you can buy, including factions up to five decimal places.
Or number two, enter a whole or partial quantity and the calculator will estimate the dollar amount you owe. Cell orders are always quantity base. The dollar amount will be estimated.
You can enter quantity based orders at any time, but the dollar-based order to get is only available during market hours. For all partial orders, the good till date will be set to date. Click preview order to review the details of your trade ticket. When you trade less than a share, there will be a flat fee of 199.
Otherwise, standard commissions apply.
Your order is placed as soon as you click the green sand and executed in real time during market hours. To check the status of your order, under the trading tab, select order status. Here you will find the details of your partial shares order and that's how you trade partial shares in my broker.
For more information on partial shares, check at the homepage for educational resources on how trading partial shares can work for you.
Have more questions? Browse your on-demand videos, live webinars and interactive master classes in the learning centre.
Now, let's get you updated on the markets.
We are having a look at TD's Advanced Dashboard, a platform designed for active traders available through TD Direct Investing.
This is the heat map function, and ICU of the market movers.
What is lifting us on the top line TSX number today? Let's dig into the TSX 60 and try to figure it out.
SLS is out with its quarterly earnings, please history, it's up 5%. Some other banks and rival lifeco Manulife also has some green on the screen. Nothing too dramatic but these are the heavyweights when it comes to the top line TSX competent number. Despite the fact that crude oil pulled back today, there was a big gain yesterday so a lot of the energy names are hanging in. If you're looking for the downside, you can find it in BCE, pulling back about 1.3%. South of the border, producer prices came in today in the month over month gain was a little cooler than expected. Seems to have the market a little bit reassured about the path of inflation and that allows the Fed to cut rates. We got corporate news as well, Starbucks taking up a lot of real estate today, getting a new CEO. The new CEO is from Chipotle, he's done quite a good job there if you are counting stock price. Devoutly over the last couple of years has done a good job and it seeming to get investors excited now about prospects for Starbucks.
Nvidia is up about 5%.
We are back now with David Mau from TD asset management.
Thoughts on aerospace and defence companies?
>> Yeah, where do I start? I think in terms of the defence companies, what we are seeing in the market is that the US defence companies have significantly lagged some of the European counterparts.
You look at someone like a Norse the Roman in the US versus a staff ran or BAE, BAE is a British company in San Fran is a French company, they are also involved in the defence base. The non-US companies have done quite well, while the US companies have legs. I think one of the big reasons for that is that people are starting to realize that maybe Trump was kind of right, that a lot of these NATO countries have not been spending their share on defence. The defence budget is nowhere near with the US spends on defence and one of the things that former Pres.
Trump wants to do if he comes back into power is to force these NATO countries to spend more of their budget on defence. In the US, the US is already spending at a fairly decent clip so there's not a ton of upside for the US defence companies but for some of these Cashel countries, France, UK, other parts of Europe that have been laying, people are expecting that those defence budgets will have to increase over time and those domestic defence companies are probably gonna be the ones to benefit from that while the US defence companies, the upside is probably not as much. That being said, there are always detentions ongoing in the Middle East, the US is always concerned about what's happening in North Korea, China, Taiwan because they have his interests to protect over there as well so I think in general defence companies are are ready well set up. Be selective. The US companies may have had a run, they may need to take more of a breather and then some of these other non-US companies catch up. I think the sector in general is still quite attractive. There are probably good opportunities if you were to look and for me right now, knowing where to look would be looking outside of the US. As far as aerospace goes, we talked about it earlier, I think Boeing and Airbus are having production issues whether it's due to the supply chain or regulations and safety. From an OEM side, it's not great but for suppliers, especially engine suppliers or other suppliers who provide parts and service to airlines is actually pretty good so with Boeing and Airbus not able to produce it as much as they thought they would, it means existing airlines are running their fleets for longer which means that those planes are gonna need more parts and servicing over time if they're not being replaced by new planes.
That's it for engine makers and suppliers.
My preference would be to look at suppliers over OEMs right now within commercial aerospace.
>> We are going to squeeze one more question in for our loyal long-term view were just. He wants to know if the Republicans when the next election and proceed with tariffs, will any sectors benefit from that?
>> That's a tough one.
Based on what I've seen, if Trump comes back into power, he is going to slap a 60% tariff on everything that comes in from China. This is into the US, not Canada, but a 60% flat rate tariff on any import from China and then a 10% flat rate tariffs on any import that is not from China.
So I don't think that's good for anyone because what we will see is we will see these countries retaliate with their own tariffs and ultimately with that does is drive up prices for the consumer.
It provides consumers with less choice and is a 2 Way St. A lot of domestic US manufacturing, which Trump is trying to protect, relies on imported raw materials or imported components to do their manufacturing and assembling in the US was going to push prices up for domestic US companies and then with the retaliation, US exporters are gonna get hit as well because these US exports are to be taxed or tariff at some undetermined rate right now but it will lower demand for US products so I don't think there's going to be a ton of winners out of a massive trade war. If you had to pick one or two, I think maybe US steel and aluminum might benefit a little bit but I don't think that's going to be too meaningful. I think overall it's bad for the economy, it's gonna slow down GDP and it's bad for the consumer.
>> Fascinating stuff as always.
Thanks for joining us.
>> Are welcome.
>> Our thanks to David Mau, VP and Dir.
for portfolio research at TD asset management.
And a reminder that you can get in touch with us any time. Just email moneytalklive@td.com.
If we did not get your question today, we will aim to get into future shows.
Tomorrow's show, we will have Michael Brown, VP, Dir. and code lead a fundamental equity research from TD Asset Management will be our guest taking your questions on global equities.
You get a head start on those questions.
Just email MoneyTalkLive@TD.com.
Thanks for watching.
We will see you tomorrow.
[theme 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, electric vehicles have been touted as the future but we have seen signs that consumer demand is waning. We are going to discuss that with TD asset management David Mau.
In today's liberal education segment, Bryan Rogers is going to show us how to find which stocks are in any given index using this 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.
Before we get to all that and the guest of the day, let's get you an update on the markets. We will start here with the TSX Composite Index.
We've got some green on the screen, about 123 points, more than half a percent, despite the pullback we are seeing in crude oil prices today. There was again and that yesterday.
Hudbay minerals not adding points to the top line, they are down about 2%. Earnings miss on higher taxes and lower sales away on the name.
Sun Life financial, a major lifeco and financial name, they carry a lot of weight in the financials basket, they are up a solid 4% on the back of its latest earnings report, $68.67 per share.
South of the border, we got some key economic data to weigh this week. The first one coming in this morning, producer prices, the index up .1%, a cooler reading than was expected by the market. Seems to be flowing to the market in terms of saying, okay, perhaps inflation is getting back to where we needed to be. The S&P 500 is up more than 1%, 60 points, on the back of that news. You will get the CPI tomorrow morning which will be another test for the United States.
The NASDAQ is up to the tune of 1.8%. I want to check in on Starbucks. I will tell you more later but they are getting a new boss and the street seems to like the new hire. He will start in September.
Starbucks is up almost 21% on the session.
And that's a market update.
It has been a challenging year for the electric vehicle market, some major automakers have been pulling back on their investment in the space due to slowing demand. The question becomes, is this a speedbump or a longer-term trend? David Mau, VP and Dir. for portfolio research at TD asset management joins us now. Great to have you back.
>> Always nice to be here.
>> The EV space, so fascinating. Over the last 12 months, EVs are the future, that was a narrative, and then something changed.
Walk us through that.
>> For the overall market, EV demand has certainly come down a little bit.
We are seeing a slowing. Like you said, it started probably halfway through last year and it has continued into this year. We are talking about the US and Canada. That doesn't mean that sales growth is actually negative, it just up the pace of sales growth has slowed significantly. A lot of people think-- or maybe people are thinking that this is a temporary blip and we will recover to a positive long-term trend.
As to exactly what's going on in the industry, it just seems that the market is a bit saturated now and demand from people who are not first adopters has definitely slowed. As far as the big players go, Tesla is always up there when we mention big players. Tesla is actually experiencing declining sales this year, something they have not really seen before.
Now, another big competitor out there is BYD, a Chinese company.
I would say they are has slowed is probably biggest competitor. They mainly sell their cars in China and other parts of Asia. BYD have not seen a decline in sales. Again, that will be a function of their geography where there biggest market is because in Asia and particularly in China, demand has not slowed as much as it has here in North America. The other thing is BYD actually sells hybrid vehicles as well which Tesla does not, so that has been supportive for BYD because we know demand for hybrids have been strong over the last couple of years.
>> Tesla is all in on the electric. Ford, GM, other big automakers said they were not going to let his will have all the fun and the market and they came out with their own EVs. I look back over the last year, announcement saying we have not abandoned the electric vehicle strategy but we are pulling back a little bit, we are going to focus on a mix, whether it's hybrids or whether there is still demand for the internal combustion engine. It is interesting what's happening with the North American players. Not necessarily stopping but may be making a new mix.
>> Those names you mentioned, they are seeing the market change right before them and what they are trying to do is maintain the most flex ability that they can so flexibility meaning in terms of production. It is EVs slow even more from here, they will probably cut back more on EVs and increase hybrid production.
Instead of cutting back on internal combustion engines as much as they plan, they might slow down and continue producing gasoline cars.
>> These are the big automakers obviously but we know and here at home in southern Ontario, but throughout a large part of the states too, there are a lot of suppliers to the big names. There are so many we don't know all the names. Surely they must be starting to feel this in terms of what these big companies want from them.
>> That's absolutely true. There is some disruption going on throughout the EV supply chain.
An example here in Ontario is there is a European battery materials company called Ubicore. They were in the middle of building and the EV battery it planned out by King Stan, not too far from here.
They have seen the change in the market and they have recently decided, we are going to pause on building of this plant because the industry is simply not growing as fast as they thought it would. Keep in mind, this plant is going to cost almost $3 billion and once it was up and running, it was going to provide 600 jobs in the Kingston area. That's pretty impactful.
Another Canadian example is Magna. Magna is a Canadian auto part supplier. They also assemble cars for OEMs. In a partnership with an EV startup, Fisker automotive, a US EV company.
Fisker recently announced I think it was in June that they have filed for bankruptcy. This is going to have an impact on Magna and Magnus future sales and profits. Not only that, with Fisker going into bankruptcy, that relationship ending, it's going to be cutting about 500 jobs. These are just two examples here that are close to home but there are numerous other examples out there of companies either cutting back existing capacity or regulate extending plan so starting to have a very real impact on the economy in terms of jobs and capital spending.
>> I want to get back to the China story too. You mentioned BYD and some other news. They have mostly been selling to the Chinese market and other Asian markets.
There seemed to be concerns over the last several months about the major automakers on the shores that automakers might start coming over here.
>> A real concern. The way the governments in Europe and North America have responded is by announcing their intentions to slap tariffs on imported Chinese electric vehicles. The Biden administration recently said that they will impose a 100% tariff on any Chinese EV coming into America. The European Union is also putting tariffs on Chinese EVs. There tariff rate is a bit lower. I think it will be around 30%, but still meaningful.
Canada will probably follow with the US is doing and impose a 100% tariff on any Chinese electric vehicle coming into the country. The reason that these Western governments are looking at these tariffs is they have felt that the Chinese EV industry has been unfairly subsidized by the Chinese government, giving these Chinese companies kind of an unfair playing field over the domestic companies we have here and in Europe.
Their solution to that is to basically double the price of any car that's coming in with the intention that this will make the appeal of Chinese EVs less appealing to consumers given that once this 100% tariff is in place, the selling price of these Chinese EVs will be comparable to the lower end EVs that we have right now here and in Europe.
>> You double the price of the Chinese EV product. The price point is the issue.
>> Electric vehicles that are coming out of China now are quite good. That was not the case may be five years ago but China has made, the Chinese automakers have made huge improvements over the last few years in terms of quality and build and the driver experience so what they offer is quite competitive.
>> Going forward, we put all that together, there is a competitive threat from the Chinese EV market and was going to happen on the terrace front, the slowing demand here, if an investor is looking at the EV space and trying to form a thesis, I don't see a clear path. Try to figure where we are going to be in a year, five years, 10 years.
>> It is a bit murky here.
What I would say is that I don't think this EV, I don't think EVs are simply a trend. It is a secular change that is happening in the industry so it's always going to be hard to project anything for a year, two years. But with a long-term view, the outlook is still pre-positive.
They're going to be bumps along the road.
People will go out of business or things will happen but ultimately I do think that we get to a point and it might not be as soon as what people think, but at some point in the future, electric vehicles will become the dominant, biggest form of cars were automobiles.
>> Fascinating stuff and a great start to the program. We are going to get your questions about industrial stocks, autos but also planes and trains, with David Mau in just a moment's time.
And a reminder that you can get in touch with us 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.
We've got shares of Starbucks in the spotlight today. He showed them off the top. Let's dig into the news. The coffee chain is bringing in the current Chipotle CEO, Brian Niccol, to run the company effect is December 9.
You know it's an impactful higher.
Chipotle finding out that he's leaving the company, goes down about 9%.
The fast food industry overall has been struggling in recent years but holy has seen its sales actually grow. Different story for Starbucks. It struggled to boost customer visits and Starbucks shares have fallen 21% under Laxman Narasimhan who is leaving the CEO post effective immediately.
On Home Depot warning investors of a sales slowdown. Cautious homeowners are delaying renovation projects.
The home-improvement retailer says the high cost of borrowing in the US, and also here but we have started to whittle it down, and economic uncertainty is putting pressure on customers. They are spending less as a result. Now Home Depot is forecasting up to a 4% drop in comparable store sales for the year on the unexpected weakness.
We got a Canadian lifeco in the headlines today as well, so my financial, though shares are on the move after handing in an earnings Buford's most recent quarter.
Right now we are up about 4.5%, 50 bucks and change. In a note to clients, TD Cowen said it was lower expenses that help that profit line, but it pointed out that the topline results were a bit more mix.
Quick check in on the market, we will start on Bay Street with the TSX Composite Index. We are up about half a percent, 126 points, despite an almost 2% pullback in the price of crude which one substantially higher yesterday, feeding into some of the energy plays. South of the border, the S&P 500, we got producer pricing index today, came in cooler than expect to. Everyone is so focused on inflation. Tomorrow we are going to get CEPI, the Consumer Price Index for the United States, and headline inflation. But the market likes the read today. You're up about 61 points on the S&P 500, more than one full percent.
We are back now with David Mau taking your questions about industrial stocks. First one here is about the airline. What is your view on Air Canada? They have had some issues as of late.
>> The stock has been an under performer as of late. The second-quarter results were not great. They cut guidance for the full year, saying expenses are higher than we thought. Demand is starting to weaken a little bit. We are getting lower passenger yields and lower load factors. Those things are not looking too great for Air Canada right now. The other thing that is on my mind when it comes to Air Canada is Air Canada is also in the middle of contract talks with their pilot union. In the next few weeks, if things don't work out, there is a possibility that the pilots could go on strike in the next few weeks or months. We know how disruptive a strike on any level can be for an airline.
WestJet mechanics went on strike at the end of June. I think it was for three days. But thousands of flights were disrupted and cancelled, hundreds of thousands of passengers were affected. So I think that potential threat of some strike action coming up. That said, Air Canada is Canada's national carrier.
They have a strong position in Canada.
Valuation is quite reasonable. The stock trades at about five times PE whereas the rest of the Canadian market, the S&P TSX as a whole trades at about 14, 15 times.
There is a big valuation gap and potential valuation upside. I do still like Air Canada. I would just be a little cautious over the short term until some of these uncertainties are resolved.
>> When you talk about how disruptive labour issues can be, I think about technology issues as well. It would have been in the middle of July, I was away for a week, it was a substantial week.
The CrowdStrike issue.
>> It was felt throughout industry. Most airport operations were quick to recover.
IT took about a week to get back on track.
They had to manually go and reset 40,000 computers.
I'm not sure why there case was so much different. They are going to sue CrowdStrike and Microsoft because they cannot absorb 1/2 $1 billion hit on something that was not really their fault.
We will see how that plays out.
It did have an outsized impact on Delta.
>> Let's take another audience question.
We will stick with planes, this one is about the playmakers. Your view on Boeing and Airbus? Has Boeing turned a corner on their past problems? Who is winning the race to dominate the global airline industry?
>> That's a good question. Both Boeing and Airbus are facing a tough environment now for different reasons. Airbus, they are facing supply chain issues. They have said they are seeing shortages and everything from cabin interiors to jet engines. That is putting a slowdown into how they operate. It Boeing, on the other hand, has its own issues with the US government and regulators around their production quality and their safety record. It's a tough time for both companies right now. I have no doubt that they will get through.
In terms of who is going to be a winner or dominate the industry, it's my view that I don't think either one of these guys will completely dominate the airline industry and that's because the airlines themselves, they don't like to have their fleet 100% Boeing or 100% Airbus. They like to diversify their fleet. And it's good risk prevention. Just in case something goes wrong on the repair side or supply-side for parts, they don't want their fleet to become fully grounded if, say, Airbus runs out of spare parts for something and you can't fly Airbus planes anymore or vice versa for Boeing.
>> On the Boeing side to, they're the ones with the spacecraft. I know it's not core to the business but considering all the negative headlines around Boeing for so long, it can't be helping.
>> That's an interesting story.
They sent up I think it was two astronauts to the international space station. They were supposed to be there for seven or eight days.
>> Now they might be there until next year.
>> A good six or eight months.
From a publicity front, it doesn't help Boeing or the relationship with the US government.
>> Let's get another question in from the audience. The fence legacy contract. If someone wants to talk about CAE. Our defence legacy contracts clouding the future outlook for CAE?
>> Yeah, good question from the viewers, Greg. There has been some talk around CAE's defence business in May or June. CAE had announced that they need to take a 600, around $600 million impairment charge related to legacy defence contracts.
These are contracts with I believe it was the government and these are contracts that were signed kind of five, six years ago, before COVID happened. Now, CAE, as they work through these contracts, they're going to realize that with the way that costs have risen over the last few years and inflation has affected their expenses and the supply chain has been disrupted these contracts that they have signed are not going to be profitable anymore.
They had agreed with the government, we will provide you this product for X dollars and that's it.
Now CAE still has to provide the product but they cannot renegotiate the price even though their costs have gone up so much more. I think this does keep a lid on the stock.
They want to give management and the company sometime to see if they can recover in the defence business. Basically what the market wants to see is a sustainable margin recovery around the defence business.
And that doesn't happen overnight. It will take quarters or possibly years.
I think that investors should be cautious on the stock for the near term.
>> Interesting stuff.
As always, make sure you do your own research before making any investment decisions.
we will get back to your questions for David Mau on industrial stocks in 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 our educational segment of the day.
If you are interested in finding out which stocks make up an index like the S&P 500 or the TSX Composite Index, web broker has tools which can help. Bryan Rogers, Senior client education instructor with TD Direct Investing joins us now with more. Great to see you, as always. Let's talk about figuring out what I mean when I throw terms like NASDAQ, S&P 500, TSX.
>> Absolutely, great. A lot of investors already know what those are. They have been following either the dowel or the S&P 500 or there's a lot of other indexes or indices when we refer to them as plural.
It's a small trick and web broker but I think it's a valuable one because I used 1/2 to, before I knew about this, you have to go to separate websites that look up up one of the companies on the dour one of the stock listed on the S&P 500.
They have their own internal websites we can find that information. But you can also get this on web broker. It's a quick, easy trick to find and see the companies listed on a lot of these indexes. If we don't want web broker, I will show you the trick on how to get there.
Then you can start to explore some of the other indexes as well.
You go here and you go to research. Click on indices under the markets tab on the left.
I will do that again to get to this page.
You can see that there is a number of, quite a bit of information, you can see the graphical views of all of the particular indices. You can see whether they are up or down right now today as an example you can see a low 52 week range, hi, etc. There is a ton of information just in terms of what of the company movers on particular indexes or one of the advances and declines are so on for the TSX Composite Index, the venture, New York Stock Exchange compensate, etc.
but if you scroll down here you can see a list of another bunch of indices that are available.
You can see that the dowel only has 30 members, it's only 30 stocks. If you want to see those are, click on the bottom, click on the link itself and then click on the bottom under members and you can see that these are the 30 stocks that are listed on the Dow.
So you get access to that right away. Once you click that, you don't have to go back to that page. You would drop down our you can look at a number of other indices that I want to find information on, like the TSX Composite Index.
Were interested in what are some stocks that we want to get more into Canadian stock trading, click on their and there are all the stocks listed on the TSX Composite Index. Or we can go to the most popular one we see all the time, the S&P 500. Now you can get a listing of all 500 stocks that are on the S&P 500 in a number of other indexes that could be by sector and other areas as you scroll through that list.
>> 500, Bryan, is obviously a big number.
It's nice he can pull up all the constituents there. There will be some a and B shares to you. You might be like, wiser more than 500? That's another story.
You want to start looking through the information. Now I know who is in the S&P 500, if you want to filter some of that.
How do I do that?
>> 500 is a big number. It's probably one of the most common indexes, the S&P 500, it's a broad-based index whereas the Dow Joan is narrow base, only 30.
There are other broader based indexes like some of the mid-cap stocks, the Russell 2000, Russell 1000. Those are all really big lists and you can filter them pretty easily.
Let's jump back into web broker and I will show you different ways to filter that.
We will go back to where we left off.
To get there, good research and then indices and then select the particular index and you will come to this page.
If you start using this drop-down, we use the S&P 500 because it's a good one to look at and filter. You can filter anything that you hover over. Some you cannot filter but most of these columns you can filter. There is a line underneath them, you can click on it and filter it by it could be alphabetically if you're looking at a list of the names, that might not be so useful. If you want filling out which ones are showing the highest percentage change, for example, or the lowest, there we go. We can see Starbucks is showing the highest as of today.
Or if we want to look at volume, I click it a couple times and I can see Nvidia, Starbucks and Chipotle are showing the highest level of volume today so you may be have an interest in exploring that a little bit further. You can also look at, this is something we talk about all the time, trying to figure out in the race who is the biggest company from a market cap perspective, this will settle the question really quickly.
We can see that it's actually Apple right now. They always seem to be going back and forth because their price moves up and down. I should've asked you that question ahead of time to see if you knew.
Exactly. We can get some wagers on that one.
If you're looking at dividend yield, for example, we have other more in-depth screeners but if you want to click dividend yield, you can see what stock within the S&P 500 has the highest dividend and then he can kind of go down the list.
Other than that, there is some performance indicators that you can do. Same logic there. You can go through one year here, your today. You can do this with the S&P 500, the Dow Jones, the Russell 2000.
It's a quick way to filters some of those columns when you have a big number of data points.
>> Great stuff as always. Thanks for that.
>> Thank you.
>> Bryan Rogers, Senior client education instructor at TD Direct Investing.
For more educational resources, you can check out the learning centre on web broker or you can use this QR code.
It will navigate to TD Direct Investing's Instagram page. Once you are there, you will find more informative videos.
Now before you get back your questions about industrial stocks for David Mau, a reminder of how you can get in touch with us.
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.
p.m. three 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.
Okay, we are back with David Mau, taking your questions about industrial stocks.
Outlook for the global travel companies like Royal Caribbean?
>> The outlook for the cruise industry has actually been quite positive. Who would have thought, four years ago, that cruises would be back?
But they actually are.
The volume of passengers going on cruises has actually more than fully recovered from pre-COVID levels. This year, 2024, it's estimated that 35 million people will go on a cruise. In 2019, which is the full year before COVID, that number was only 30 million. The industry has actually seen significant growth and what's interesting is that what the cruise lines are seeing is that their customer base is actually starting to change.
A few years ago, it was mostly kind of the older generation… >> It's not just boomers.
>> Exactly. It's not just a Boomer phenomenon.
Now, they are starting to see more and more younger clients come for the cruise experience and the companies are actually quite smart. They are seeing this, they recognize it and what they are doing is trying to offer more experiences that appeal to the younger generations, things like exclusive destinations, newer boats, mega boats that have more amenities and more entertainment that they think that these new customers, these new younger customers are going to like.
As far as the actual companies themselves go, there is, I would say, three big players that have most of the market share and a handful of small players.
The guys like Royal Caribbean, Norwegian or Carnival, those are the three big players.
You do have to be somewhat selective when picking stocks here.
Even though the industry has done well, not all of it stocks have done well. Royal Caribbean had I think it's the only one of those three big players that has outperformed the market.
And that's because they've been more aggressive on the cost side. They have been managing the operation more efficiently so the emergence up in higher.
You can see that in the stock. Whereas the other two guys are laying quite a bit.
>> I wanted to ask you about that because it's got to be very expensive as an endeavour to get one of those cruise ships to the ocean, fuel, resources, food, staff. They have the pricing power? That seems to be the issue. Costs are rising for everyone, but people are still willing to pay?
>> It seems they do have the pricing power and the other thing that these cruise lines can do, the operators can do, is run their operations more efficiently. They cut corners-- not cut corners but become more efficient where they can. It does definitely seem like the consumers willing to take these price increases and they are able to at least for the moment.
>> My parents are willing to. They're all fighting for the entire month of November for a cruise out of LA. It sounds like it will be pretty cool. There boomers though, they are in their cruising years.
>> The other important thing to remember about the vacation industry in general is that vacations are very discretionary.
When things get tough, the cruise is the first thing you're cutting, the annual cruise is the first in your cutting out of your budget.
You have to keep in mind the cyclicality that's embedded in these businesses.
>> Interesting stuff they are on the cruise lines. Another question, this one about the rails. However the rails looking right now? We heard about a freight recession and the other new headlines about perhaps labour disruptions.
>> Yeah. Look, the rails have gone through a tough patch over the last I would say four quarters. CN reported recently their second quarter and it was not great. They actually cut guidance. They said the expenses, a common theme, is higher-than-expected. They had some network congestion issues in the western part of Canada so they had to cut their full your outlook. CP, on the other hand, actually had a very decent second quarter.
They are running their operations well.
They are also continuing to benefit from the acquisition of Kansas City Southern that they did last year or will that close last year and so they are benefiting from synergies from that deal and I would expect the synergies to continue for the next little while. But in terms of you mentioned a freight recession, it looks like the freight recession has bottomed, probably or hopefully sometime mid to end of last year. Things look like they are getting a bit better this year. The Canadian grain crop, which is very material for the two Canadian rails, looks pretty good this year so that means there will be a lot of volume 4 CPN CN to move this year. You did mention the potential labour disputes. And that is an issue or both of the Canadian rails. The union workers of CN and CP do, I believe, have the right to go on strike sometime in the next few weeks as well. That is going to be pretty disruptive. I think it's about 9000 employees in total across the two rail lines so that's going to be impactful and quite negative if it does go ahead.
There is also talk about a strike by port workers in the two major ports on the West Coast of Canada and BC.
>> So if the trains are running, you need to have the ports to pick stuff up.
>> If that happens, it's another very big negative.
Usually strikes of this type do not last for very long but they can still be very disruptive because once a network has to shut down, it takes quite a bit of time to get the network back up and running when the workers come back so it's hard to say at the moment. Hopefully, neither one of these job actions occur but if they both do, it's going to be tough.
>> Interesting stuff to watch on the rails there. Let's take another question from the audience. This one about waste. I would like your guests thoughts on the waste management sector.
>> Listen, I'm a big fan of the waste companies.
Big fan of waste.
It's not a sexy business, but it's solid, reliable, dependable business.
The big names in the sector, waste connections, waste management, Republic services, GFL, those guys are good operators. They run their businesses very well.
The pricing environment, the business environment for these waste companies has actually been quite good. All of these guys have been able to raise prices 5 to 7% across the board which is very positive for margins.
An increase in prices much more meaningful for waste company than an increase in volumes, let's put it that way. They will done quite well. Like I said, I'm a big fan of waste companies. Generally, they are defensive in a downturn, but when the economy is strong they also do well so I think waste companies are an area people should look into. It could be a core part of your portfolio. Like I said, not a sexy business but they grind higher over time.
>> What is the risk for the space? We produce waste in good times or bad.
We know that.
But what is it, execution?
>> Part of it is execution.
The business has to be managed well.
Expenses have to be kept in check, like any other business.
But because what a company spends on its waste budget, so what it pays, small business might pay half of 1% to 1% of its annual sales to have its garbage collected. When prices go up or when business is not great, it doesn't tend to affect the waste companies too much because it's such a small portion of a company's expenses that waste is not something that you cut out of your budget.
Waste pickup is not something a company is going to cut out of their budget because you need it.
>> Interesting stuff indeed. We will get back to your questions for David Mau on industrial stocks 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.
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>> To buy or sell partial shares, also known as fractional shares and web broker, start by opening a trade ticket. Then, select your account. You can trade partial shares in Canadian and US dollars using a cash account, margin account, TFSA, RRSP, RIF, RESP or RESP. Next, enter the symbol or name of the stock or ETF you want to trade and check out the quote for the current price.
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Now, let's get you updated on the markets.
We are having a look at TD's Advanced Dashboard, a platform designed for active traders available through TD Direct Investing.
This is the heat map function, and ICU of the market movers.
What is lifting us on the top line TSX number today? Let's dig into the TSX 60 and try to figure it out.
SLS is out with its quarterly earnings, please history, it's up 5%. Some other banks and rival lifeco Manulife also has some green on the screen. Nothing too dramatic but these are the heavyweights when it comes to the top line TSX competent number. Despite the fact that crude oil pulled back today, there was a big gain yesterday so a lot of the energy names are hanging in. If you're looking for the downside, you can find it in BCE, pulling back about 1.3%. South of the border, producer prices came in today in the month over month gain was a little cooler than expected. Seems to have the market a little bit reassured about the path of inflation and that allows the Fed to cut rates. We got corporate news as well, Starbucks taking up a lot of real estate today, getting a new CEO. The new CEO is from Chipotle, he's done quite a good job there if you are counting stock price. Devoutly over the last couple of years has done a good job and it seeming to get investors excited now about prospects for Starbucks.
Nvidia is up about 5%.
We are back now with David Mau from TD asset management.
Thoughts on aerospace and defence companies?
>> Yeah, where do I start? I think in terms of the defence companies, what we are seeing in the market is that the US defence companies have significantly lagged some of the European counterparts.
You look at someone like a Norse the Roman in the US versus a staff ran or BAE, BAE is a British company in San Fran is a French company, they are also involved in the defence base. The non-US companies have done quite well, while the US companies have legs. I think one of the big reasons for that is that people are starting to realize that maybe Trump was kind of right, that a lot of these NATO countries have not been spending their share on defence. The defence budget is nowhere near with the US spends on defence and one of the things that former Pres.
Trump wants to do if he comes back into power is to force these NATO countries to spend more of their budget on defence. In the US, the US is already spending at a fairly decent clip so there's not a ton of upside for the US defence companies but for some of these Cashel countries, France, UK, other parts of Europe that have been laying, people are expecting that those defence budgets will have to increase over time and those domestic defence companies are probably gonna be the ones to benefit from that while the US defence companies, the upside is probably not as much. That being said, there are always detentions ongoing in the Middle East, the US is always concerned about what's happening in North Korea, China, Taiwan because they have his interests to protect over there as well so I think in general defence companies are are ready well set up. Be selective. The US companies may have had a run, they may need to take more of a breather and then some of these other non-US companies catch up. I think the sector in general is still quite attractive. There are probably good opportunities if you were to look and for me right now, knowing where to look would be looking outside of the US. As far as aerospace goes, we talked about it earlier, I think Boeing and Airbus are having production issues whether it's due to the supply chain or regulations and safety. From an OEM side, it's not great but for suppliers, especially engine suppliers or other suppliers who provide parts and service to airlines is actually pretty good so with Boeing and Airbus not able to produce it as much as they thought they would, it means existing airlines are running their fleets for longer which means that those planes are gonna need more parts and servicing over time if they're not being replaced by new planes.
That's it for engine makers and suppliers.
My preference would be to look at suppliers over OEMs right now within commercial aerospace.
>> We are going to squeeze one more question in for our loyal long-term view were just. He wants to know if the Republicans when the next election and proceed with tariffs, will any sectors benefit from that?
>> That's a tough one.
Based on what I've seen, if Trump comes back into power, he is going to slap a 60% tariff on everything that comes in from China. This is into the US, not Canada, but a 60% flat rate tariff on any import from China and then a 10% flat rate tariffs on any import that is not from China.
So I don't think that's good for anyone because what we will see is we will see these countries retaliate with their own tariffs and ultimately with that does is drive up prices for the consumer.
It provides consumers with less choice and is a 2 Way St. A lot of domestic US manufacturing, which Trump is trying to protect, relies on imported raw materials or imported components to do their manufacturing and assembling in the US was going to push prices up for domestic US companies and then with the retaliation, US exporters are gonna get hit as well because these US exports are to be taxed or tariff at some undetermined rate right now but it will lower demand for US products so I don't think there's going to be a ton of winners out of a massive trade war. If you had to pick one or two, I think maybe US steel and aluminum might benefit a little bit but I don't think that's going to be too meaningful. I think overall it's bad for the economy, it's gonna slow down GDP and it's bad for the consumer.
>> Fascinating stuff as always.
Thanks for joining us.
>> Are welcome.
>> Our thanks to David Mau, VP and Dir.
for portfolio research at TD asset management.
And a reminder that you can get in touch with us any time. Just email moneytalklive@td.com.
If we did not get your question today, we will aim to get into future shows.
Tomorrow's show, we will have Michael Brown, VP, Dir. and code lead a fundamental equity research from TD Asset Management will be our guest taking your questions on global equities.
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