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[music] >> Hello, I'm Greg Bonnell. Welcome to MoneyTalk Live, brought to you by TD Direct Investing.
Every day, I'll be joined by guests from across TD, many of whom you'll only see here.
We're going to take you through what's moving the markets and answer your questions about investing.
Coming up on today's show, we will discuss what to expect from Wednesday's Federal Reserve right decision. TD Economics a Derek Burleton joins us.
In today's education segment, Hiren Amin is going to take us through how to set up a watchlist on Advanced Dashboard.
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 our guest of the day, let's get you an update on the markets.
First trading day of the week. Not a lot going on in Toronto. The TSX Composite Index right now basically flat, green on the screen if you want to be generous, up one take. Let's check out some of the most actively traded names, including Nuvei.
Ryan Reynolds as part of this operation.
The firm is saying is weighing a deal, they are not giving specifics, but there were unconfirmed reports adjusting a private equity firm wants to buy the name.
Right now I $39 and change, you've got them up about 33%.
Crescent Point Energy, a mixed picture in energy space today. It's not doing too much pricewise but it is one of the most actively traded names. At $10.43, it's down a little shy of a full percent. South of the border, the rally resumes. Don't know if it has anything to do with Nvidia's developer conference.
Nvidia is the superstar of AI. At 5162, you're up about 45 points on the S&P 500, good for almost a full percent.
The tech heavy NASDAQ carrying a bit better today, up 1.3%. Apart from that, this is also an AI story, let's take a look at Alphabet.
Shares of Google up about 6% right now on reports that Apple is looking at Google's Gemini AI engine for its iPhones perhaps as early as this fall it may get in there based on those reports.
And that's your market update.
Investors are awaiting this Wednesday's Federal Reserve right decision but was some inflation measures coming in hot, what are the central banks going to feel like it's time to start cutting rates?
Do any etc. discuss, Derek Burleton at TD economics. Great to have you back on the program.
>> Great to be here.
>> This is what the eyes are on. What is economic data telling us about what they might get up to this year?
>> You look at the data and they are certainly not screaming for rate cuts. You will be putting out a new forecast tomorrow, the quarterly march outlook, and it's a bit like Groundhog Day. Revising up the spending data, the GDP data for this year, not saying a whole lot of slow down and I think at the same time inflation had been fading away very quickly at the end of last year and then in the last few months, including February CPI data, it's been choppy of late. There was a bit of regression on some of the CPI measures, core measures.
We have been thinking all along that there is a risk that while inflation may not reignite, and I don't think it will, that that last wood to chop, 3% down to the 2% target, is going to take some time. That's where we stand now. Bringing it back to the Fed, it's going to mean patients.
That's what they've been indicating. I don't think it's certainly not going to take away from the rate cuts story, it's going to mean slower rate cuts than what many have thought two or three months ago.
>> When we were talking about headline inflation at eight or 9%, we have come a long way since then but the stickiness around three and above three, do we scratch our heads a little bit or do we have a good handle on that?
These restrictive borrowing costs have been here for some time, south of the border it's not slowing the economy near what we thought at the outset.
>> I think it boils down to the inflation data.
The Fed has been deemphasizing growth. I still think it does matter. To say it doesn't matter at all for the economy if it is doing well, we hear from Fed officials that it's another reason for patients but it really boils down to the inflation indicators. To your point, they have been improving.
They are still running as of last count around 3% on trend basis which we are almost there and Powell mentioned himself, we are nearly there. But I do wonder when we get to Wednesday whether that latest assessment was before the February inflation data which were worse than expected, does he modify that language at all? That certainly one of the questions I'm going to be paying particularly close attention to.
>> I guess the extent to which they push back against market expectations, I feel like market expectations have been shifting. But you have to remain nimble because the economy is fluid and it changes but we entered this year with I think expectations that perhaps now we would be talking about being on the cusp of a rate cut. Not quite all that cusp anymore.
>> The markets have already aligned to this. When you think about back in January at the peak, 150 basis points and rate cuts for this year. We certainly should be almost underway based on those early years of use. The markets one way over. They are pricing in about three quarters of a point this year.
I think all the focus as well is going to be on the change, so what we call the Fed Dodge, the Fed's median expectation for interest rates, it's not a forecast and that each individual Fed member could come up with their own view, so they bring them all together and what's the median? And there is a risk they could move from three quarter-point cuts baked into 2024 to 2 and I think if that happens, we may get yields adjusting a little further.
A lot of the heavy lifting has been done.
I think the markets are pretty well-positioned overall for what we are likely to see.
>> Keep an eye on that.plot when it comes out later in the week.
Before he moved to Canada, one more question about the states. Can an argument be made that if the economy in the states is performing this well with interest rates at this level that perhaps this is where interest rate should be?
>> The thing is that it comes down to estimates of the so-called neutral rate.
One of the things on Wednesday, the Fed comes up with their estimates on longer-term rates and that gives us a sense for what they are thinking and what that neutral rate is and at last count it was 2 1/2. I wouldn't be surprised if they nudge that up further. Whatever it is, it's a lot lower than now. But I think there have been some pounding the drum that why cut rates at all? But I think again the Fed needs to think, okay, in a years time, where are we going to be?
They don't want to be driving, looking always at the rear view mirror, and I think that comes out of this thinking that policy right now is restrictive, as inflation trends lower it remains restrictive unless they change the interest rate so the Fed is going to give their updated view on Wednesday. It's going to have rate cuts. I think the question is are they going to dial back moderately or leave it intact?
>> Let's talk about the Canadian situation because we saw headline inflation come down from dramatic peaks but our economy is not holding up nearly as well. What's going on with the Canadian example and what can we expect from the BOC?
>> Canada has a different set of challenges.
Our economy has not been doing nearly as well as the US. I don't think anybody has.
The US has really been exceptional.
That said, in our forecast, we will be nudging out Canadian growth not insignificantly for this year. That is based on the data we had very recently showing the fourth quarter came in a bit better than we expected. Our first quarter tracking is also a little bit better.
Going forward, we don't see a ton of growth because of the same constraints and interest sensitivity. Head I think they would like to cut rates but at the same time, the inflation data, we had a good January number, we will see what's going to happen with February. We get that out tomorrow.
But overall the data have been sticky as well. That has been due to shelter. When you look outside of shelter, the data has been better on the price side.
It puts them in a bit of a box. I think they are hawkish and at the same time, our view is that the inflation numbers will improve they will be able to cut rates but we are also dialling our view back to what extent we've only got now 100 basis points, you three 150 not that long ago, so a more slower decline in interest rates.
>> Once both banks begin, can we expect 25 basis points at each meeting?
>> We have a US election that is going to crop up. It is not an issue for the Fed? I don't think so. The November meeting falls right after the election.
I think they are going to respond to the data and thus suggests to me that it's not just going to be an automatic quarter-point every meeting beginning midyear that they are going to have to, it's going to be a little bit stop and start. That's not unusual for a cutting cycle. I don't think it's going to be every meeting but you think in Canada, we got 100 basis points this year beginning in July, that's going to be most meetings, maybe not everyone, and the Fed as well, three cuts to the end of the year is our latest thinking and that's not a cut every meeting after July so expect some stop and start.
>> Interesting stuff and obviously an intriguing year ahead of us. We are going to get your questions about the economy for Derek Burleton and just moments 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.
Is the so-called Woodstock of artificial intelligence and it is kicking off this week in California. This is chipmaker Nvidia holding its developer conference and it is expected to announce the next generation of AI processors. The keynote address from Nvidia's CEO is expected this afternoon. Right now you got Nvidia a little off of the ties of the session, up about a percent.
Let's take a look at shares of Google parent company Alphabet. They are in the spotlight today, up about 6%. There is an unconfirmed report that Apple is in talks to license Alphabet's Gemini artificial intelligence engine to power iPhone features that could be released later this year.
The CEO of United airlines trying to reassure travellers following a series of incidents including a tire falling off one of its Boeing 777's following takeoff. The CEO says safety is the airlines highest priority and they are going to strengthen safety training going forward. In a separate incident from the tire one just before the weekend, a missing panel from a Boeing 737 was found after the plane landed.
A quick check in on the markets, we will start the TSX Composite Index. Right now there's not a lot going on on Bay Street.
We will be generous and call that one point to the upside. The market is basically flat. South of the border, it seems like the rally is picking up some steam again. Some of the tech names notably. The S&P 500 is up 45 points, a little shy of a full percent.
We are back with Derek Burleton, take your questions about the economy.
As the first one. The state of the housing market. I think we got some fresh numbers to look at today.
>> Yes, we did get February data, resale data, sales prices.
It has been a bit choppy of late.
To add a bit of context around her, we, as rates kind of came down a bit, we had a bit of momentum heading into the December January numbers. They came in much better than expected. Sales prices looked like they were improving. When you look at the February data today, it looks like they took a significant step back so I think that's the kind of market we are in right now. Everybody is waiting for the Bank of Canada to get more direction until we get what I think is going to be a more sustained recovery. What we are seeing in the February data is perhaps a pull forward. I think the warmer weather in January pulled forward some sales from the spring so we may get March data a little bit soft as well.
I think when you take a step back, the market is doing okay.
We are likely to see a moderate rise in sales for the first quarter overall and I think as we move into the second half, things are going to pick up a bit. It's not going to be a huge V-shaped kind of rebound even with the Bank of Canada cutting fairly consistently I think in part because affordability is still a real challenge. Our models, if you throw in these kind of affordability numbers, it doesn't spin out a lot of growth in sales but I do expect an upward grind partly driven by ongoing population growth in the second half of this year.
>> You talk about affordability and obviously there was a big run-up in prices during the pandemic and even though the market has cooled it's still unaffordable in many places.
What about migration across the country?
You are the headlines about young people going west to invest in real estate, is a very out in the data? Are people finally saying, we can afford to live here and we are going somewhere else?
>> Yes, it is a bearing ad. There is a regional differentiation.
If you look at Alberta, it's all a very tight housing market. Saskatchewan, strong housing. In Ontario, it's softer, Southwestern Ontario is soft.
That reflects in part the migration flows.
I think Canada overall is benefiting from a lot of new migrants every year but disproportionate share of the population when you look at interprovincial heading to some more affordable markets like Alberta. There's a big difference in housing between Alberta, we see much stronger conditions going forward, I mean it's playing out. I think population is going to slow. I think the government there is taking some efforts to kind of slow the sheer number of migrants coming, particularly the nonpermanent residents, just given that infrastructure is having trouble keeping up and they are already limiting the number of international students. That's when have an impact. Not a great one, but it's going to slow down the number of new people coming to Canada and they are now looking at their temporary foreign worker program so we will see what kind of review that has.
Expect to step down in population but I think the impact on housing and the broader economy is going to be more of a story for 2025.
>> That's the impact on housing. We have a question from someone who wants to know what sort of impact we could see from this policy changes around international students? There's the housing part but what about the overall economy because we have been told that to sustain the Canadian way of life and grow the economy, we need to bring a lot of people.
>> I think we do. The government is not touching their permanent migration targets. Still pretty healthy, 500,000 a year.
The big area of growth has been in the nonpermanent residents, the inflows of students, and one could argue that it's been such a massive shift that it's leading to challenges in housing but to come back to the economy, it also adds to consumers. It certainly helping the economy, benefiting from some added demand. I think with the federal government is coming from his some of the offsetting costs and I think the government there is still going to be pro migration.
To your point, we need the skills longer-term but just may be moderating the extent of the increase wouldn't be a bad thing at this stage.
>> Issues on the table for politicians in Ottawa. This leads into the next question.
What are you going to be looking for in the federal budget? It's approaching, only one month away.
>> It is.
It's later than we would've expected. I'm not expecting a very large budget with a lot of new measures.
We got a bit of a glimpse in the fall economic statement where after the pandemic where there was an explosion of growth in spending, spending is now I think 100 billion higher this year than the government had targeted pre-pandemic so we have just seen a huge seachange in spending levels. I think the government, we don't expect an election in the coming months, maybe more of a 2025 story, it's going to be a bit of a placeholder budget where, like the full statement, they focus their priorities on housing and a few targeted areas, the farming care is something they want to build up as well, there's going to be some new spending there.
At the same time, they indicated they are going to be keeping their deficit targets unchanged, that's 40 billion this year in a very gradual decrease in that over time.
In terms of tax changes, not looking at anything to earth shattering either. The government every year we wonder if they are going to raise capital gains inclusion taxes. They haven't and I don't expect that they will this budget. If numbers were coming in a lot weaker maybe they would need to gain some new revenue but I don't see it being a major issue at the moment.
Not saying they won't do it at some point but I don't expect is going to be any broad-based tax changes either in this budget.
>> I remember last year's budget going into that release, the concentration was, the central bank is trying to balance inflation. Will the budget be inflationary? I think that was the first question I ask you on the other side of the budget release. Is this inflationary?
>> Free land herself did say that this budget, one of the objectives will be to create the conditions for interest rates to fall.
That's an interesting twist. They have been listening to economists. The extent to which they live up to that would suggest a restrictive budget. I don't think they will go that far either. I think it's going to be very status quo with a modest growth in spending, not particularly restrictive but not like a pandemic type expansionary budget either.
They will sell it like that. The question is, we will have to look at the numbers to see to what extent it might take away a little bit from growth. I'm not expecting anything too substantial on that front.
>> I'll be asking you all of the questions on the other side of the document as well.
This is a nice warm up.
As always, make sure you do your own research before making any investment decisions.
we went to park your questions for Derek Burleton on the economy 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.
In today's education segment, we are going to take a look at how to set up a watchlist on Advanced Dashboard. Joining us now to walk us through, Hiren Amin, senior client education instructor with TD Direct Investing. Great to see you.
Walk us through it.
>> Absolutely.
Watchlist are a fundamental part of any investors toolkit. They allow investors to track some of their favourite tickers or symbols and an easy way to monitor ideas they are researching as well as analyse them using the tools that are part of the platform.
It's a way to bookmark some symbols that are caught their eye. Let's take a look at how you can set up some of those I catches using the Advanced Dashboard platform today.
Coming up into the Advanced Dashboard platform, after you have done your basic set up, you will see this widget we have set up, watchlist tab. We have it in view.
I'm going to create a new list for us. One way you can do that is, the easiest ways to go up in this right corner, click on new watchlist and then give it a name. In this case, I'm just going to call it index ETF's.
We are going to call this one and he create. What you're going to see is a blank slate and this is where you can get started. There is a symbol box. We are going to type in the DIA for diamonds which is the ETF that tracks the Dow Jones index. We are what to put in the triple cues, this is the NASDAQ, we are going to put in SPY and one more other one here. We can do it one other way.
We'll put it towards the end of the list here words has had symbol, I'm going to type in IWM. You can create a singular list this way.
Another beauty of this is the grouping ability. You will notice beside each ticker symbol we have a menu with three dots. You click on those and what it does is gives you trade related options in the top section and the middle section allows you to organize your watchlist. If I go on the bottom part of this I can create a group. It says move to group. I'm going to create a group.
Let's am going to call this one broad-based indexes.
Call them broad.
And I will hit say. He creates a category at the top. Now I can simply click and move and drag from one to the other and push them over into that category that we want or you can come into this menu and say let's move this one into broad, this one will also be moved into broad. You can symbol fire list and just collapse it or expand it as you will when you are creating this list over here.
The one other thing that it allows is let's say I've got this other widget, the news. I can filter it based on my watchlist. If I come on the news gadget, I can hit the filter and come to where we created a list in the drop-down where we said index ETFs. Now I'm just finding news related to those index ETFs.
This is one of the ways you can get started and get your list created over here to get you going with some of your favourite symbols.
>> Now we know how to add the names to the list, how to create subgroups, what about customizing the information when people are doing some digging on all the different metrics?
>> I thought you would never ask!
Fantastic question. What we are referring to over here is you can see data columns which you can analyse. This is fully customizable. To do that, you can click on the left corner hamburger mania and in the very first one it says manage templates, click there. Within manage templates, I'm going to send to this, you will see that there is a preset part of the system defaults given to us and then you can create your own custom ones.
To create your own one, simply hit new, give it a title, we will call it today's date, March 18. Hit save.
Once you do that, there are a couple that are already given to us.
And then on the left, we have a number of different symbols and data points that we can look at.
We can add in day hi, click the arrow or double-click it.
I will add in ex dividend date and then go to the bottom and click on yield.
This is my basic view that I want to add in this is the way that I want to do it.
It saves automatically. You don't need to do anything further from here. You can choose to set it as the default. I click and safe. This is going to be my default.
Now when I go back to my watchlist, you will see there is a category that says template which is set to basic. This is where we can find all of our custom ones that we built. And when you click on March 18 over here which is the one we just created a moment ago and this is the view that's coming up.
Anytime you pull up a watchlist, let's go to my auto manufacturers, it's already going to be sent to the template for us.
There you have it. That's how you can customize some of those data points on the watch lists.
>> Great stuff as always. Thanks.
>> My pleasure.
>> Hiren Amin, senior client education instructor at TD Direct Investing.
And make sure to check out the learning centre in WebBroker for more educational videos, live, interactive master classes and upcoming webinars.
Know before get back to your questions about the economy for Derek Burleton, 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.
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.
Okay, we're back with Derek Burleton, take your questions about the economy. Next one here. Intriguing. There has been some discussion around the usefulness of GDP per capita as a measure.
Your thoughts? This morning I was on LinkedIn and a graph popped up comparing us to the Americans.
>> It has certainly been a focus I think in part because that denominator of that equation, population per capita has been growing so rapidly and certainly has not exactly flattered the numbers. We have seen since the pandemic, this wasn't just Canada but GDP per capita in particular has been on a big leg down when you compared to the US where they have now seen a recent court is productivity really bounce back and their GDP numbers have been growing so rapidly.
Does it matter? There are two sides to the story. The truth is, as usual, somewhere in the middle.
When you look at the type and where a lot of the growth has been a it's been students, temporary foreign workers, less so with permanent migrants.
I think the arguments given is think of the student coming and they set up shop here, they are not going to be massive spenders.
So maybe there's a bit too much emphasis of late in that GDP per capita equation.
At the same time, as economists, we pay attention to it because longer term, it's one of the key benchmarks of a standard of living.
That's how we kind of gauges, we don't look at growth but per capita numbers.
>> Share of the economic pie.
>> Right. I'm somewhere in the middle where I think we should not just brush this off as going through this population boom… This is the federal budget, going back to our last discussion, I think the government cannot just ignore the productivity, why GDP per capita is weak, what are they doing to try to boost that over time?
I don't think there's going to be anything bold in this budget to address it but with the governments going to be doing is taking all it's been doing, infrastructure investment, transfers to provinces to help with things like that, investment, green investment for some of the incentives, I think it's what address that up as look, we are doing all of this over time and hopefully we will gain traction and this is a first budget that we will keep ramping up.
>> Does leave pundit scratching their heads to some degree? The idea of the budget, if you can put a public dollar to work in the economy, that's going to create, for argument sake, 10 bucks or hundred bucks.
Go out there and build something. People are wondering, why isn't it happening?
>> And we did get investment intention numbers out of Canada recently and it showed some improvement.
I was impressed, certainly better than I expect. We factored some of that into our go forward forecast as part of our upgrade.
Maybe we are beginning to see things improve but it's been serial disappointment. Why is productivity so weak? We have been asking this question now for 20 years and factors given, it's regulatory, we thought very decentralized government arrangement with cities, provinces and that's a factor, small market, we've got a lot of smaller businesses which obviously are key to driving employment long run but to a large extent it's the big companies that do a lot of the research investment and the like so these are not easy things to factor in, no silver bullet, but I do you think if they can improve the business climate and cope with some regulatory issues it has to pay off over time so hopefully we will hear more about that in the budget.
>> A lot to look forward to in that document. Back to housing.
Not necessarily housing. Should we be worried about household debt with all the cost-of-living issues?
>> Household debt, the whole thing equals household debt burden, increases vulnerability to shocks. That said, I've been really surprised at how resilient the household has been through the fact we have seen rates going from effectively 0 to 5% on the short end, I would've thought, if you had told me that two years ago, I would've thought, we are in for some serious headwinds and deflation. It really hasn't happened yet. There are factors that are obviously helping. Some of them are legacies of the pandemic, the excess deposits are helping households at least cushion some of the impact of the rate hikes, strong job market, shift to services spending which is helped a lot of employment, this has all helped with some of the transition. We had quarterly numbers out on household debt, and it looks like it's peaked and flattened out and the debt service burden including principal interest actually has come down from the peak despite the rate so we may be getting over that hump where we are feeling optimistic about getting through this, hoping the world keeps it together, no anticipated shocks to upset the apple cart and I think you will get through the renewal challenge and I think you will get to the other end without too much damage.
We know that many households are struggling in this environment with inflation but at the same time, as long as our job market doesn't come undone, bends but doesn't break, I think households will get through without too much pain.
>> How are you viewing the upcoming US election?
>> Wow.
Here we are, how many months away.
>> You just have to find out who the players are going to be in the table is set.
>> We kind of know and there are big differences in platforms. We still don't know what the Congress makeup is going to be. Is going to be a very close election from our guard. But I look at the two platforms, what we know of, him and Trump hasn't really said that much but we have a good sense that he wants to keep the tax cuts he put in place while Biden wants Willow tax rates to, been many cases, particularly for larger corporations, wealthier Americans, you're going to see quite a difference in taxes, something like $6 trillion separates them if you do some of the raw numbers. Trade policy, even though Biden isn't particularly open to free-trade and is protectionist in that regard, you look at Trump or he's going to threaten 10% across-the-board tariff, allowing China to lose its most favoured nation in the status which would see a spike in Chinese tariffs.
Interim's first term, he said a lot, regarding how much he implemented, it depends on congressional approval… Something he can do through Executive Order.
They are quite different, the platforms, from this vantage point and we will have to wait and see. It could mean some meaningful changes to forecasts.
>> If there was a meaningful change in policy towards tariffs, that feels inflationary. Just as you're getting inflation back counter target, people would have to pay more for things.
>> I think at the end of the day implementing it… He was involved in the US Embassy in negotiations and now it's his deal.
I think at the end of the day he will give a carveout to Canada and maybe Mexico and focus his attention on other countries so the impact would be significant.
>> We'll get back to questions and just moments time. As always, make sure you do your own research before making any investment decisions.
And a reminder that you 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.
[music] We are having a look at TD's Advanced Dashboard, platform designed for active traders available through TD Direct Investing. This is the heat map function, gives you a few of the market movers. We will start with the TSX 60, we will screen by price and volume.
Right now the TSX is pretty much flat, it's a pretty mixed picture out there.
Even within certain sectors, Cenovus is up but then you've got other energy names modestly down. Financials are not showing us a lot today. Trying to find Shopify in that list. It's pretty much just flat.
That's the kind of day we are having right now. BCE has been on a downward path for quite some time now.
It's down about a percent on today's performance.
South of the border, the rally is resuming, we are going to hone in on the S&P 100.
There are some standout names here. Tesla has had a rough go lately but it bouncing up to the tune of about 6% today. Also Google, there are unconfirmed reports about a possible tie up between Google's Gemini AI tools and the Apple iPhone.
That seems to have some excitement around the name today.
Nvidia is starting its developer conference today, Keynote address from the CEO coming this afternoon.
Plenty to watch there. For more information on TD Advanced Dashboard, you can visit TD.com/Advanced Dashboard.
We are back now in Derek Burleton from TD Economics, talking the economy.
Are we getting recession?
>> I don't think so.
Of course, there's always a risk.
Even when you look at surveys, you go back even two times for the economy is improving and things are very benign, there are always going to be risks that you will be hit by unanticipated financial events.
A survey suggests 20% odds on the low end.
I think when we were at the peak when inflation was high, rates had to come up, survey showed at least a 60% chance, that's unusually high. That's usually a precursor of eventually seeing one.
But in recent quarters, particularly the US, those numbers have dial back to 40%.
Just given the fact that the US has been strong. I'm comfortable with that. I still think it's higher than normal.
I still worry about inflation stickiness.
I still worry that as long as rates remain this high, there is always a chance of something bubbling under the surface whether it's ERVE or the like.
Just given how strong the data has been and the fact that inflation has been improving surprisingly quickly on a trend basis, those odds are reasonable. As she mentioned CRE commercial real estate, I think that was the first question that was put to Tiff Macklem and his senior deputy at the last Bank of Canada rate decision.
They seem not as concerned as the Americans.
>> I think it's partly due to the structure of CRE in Canada. There's a lot more investments through pension funds in Canada which are better able to manage the risk and I think we tend, when you look at Canadian CRE, tend to put some of the eggs in that basket where is in the US there has been a lot of private money outside of pensions driving the growth, a lot of investment money flowing into it and I am worried about CRE. I think what gives us a little bit of comfort is the fact that here we are, again, well into the shock on rates in the market, while it has certainly weakened the office market, it hasn't shown any real tumult and I still think it's going to be one of those multiyear, I think Powell recently on 60 minutes referred to it and I agree with him, I think it's probably going to be a very long-standing shock in the office market. It's going to take years to recover.
But not expecting any crisis to come of it. But we will see. Some of the renewals that are coming up in the US are certainly going to be watched very carefully, how that debt gets rolled over.
>> Let's squeeze in one more question. Can your guests discuss the merits of GDP versus PCE, the Fed's preferred measure?
This is from our regular viewer, just.
Jeff, thanks for the question.
>> When you look at spending data, is PCE, personal consumer expenditure.
. . When I look back over time, we don't see great divergences on a sustained basis.
At the margin, I think PCE tends to be a little bit more closely related to price pressures just given that it's domestic spending, you're not dealing with inventory adjustment or exports which tend to export inflation pressures abroad are important but BCE is still the most important variable. I think that you you can almost take hand-in-hand because two, three, four quarter basis you don't tend to see big divergences.
>> We are at a time for questions. Before let you go, we have a rate decision on Wednesday and then the BOC will have one.
There will be inflation reports.
There's a lot to roll together. Use a lot of intriguing things but you were talking about the possibility that the Fed might dial back even their own expectations for how many cuts they will deliver this year.
>> That's where all eyes are going to be on Wednesday, it's went beyond the Fed.plot interest rate projection. The median dog, it would take to members moving off a three cut to a to cut and that would tip the median forecast for this year for cuts to 50 basis points and I do think the market yields would jump to some extent when that happens. Not dramatically but they will move to price some of that in.
>> 2 PM Eastern time on Wednesday, I'm going to jump straight to the top law.
Always a pleasure to have you and I look forward to our next conversation.
>> Thank you.
>> Our thanks to Derek Burleton. As always, make sure you do your own research before making any investment decisions.
if we didn't at the time today to get your questioning, we will aim to get it into future shows. Stay tuned for tomorrow show. Hussein Allidina, had commodities at TD Asset Management will be our Guest taking your questions about commodities.
You can get them in ahead of time.
Just email MoneyTalkLive@TD.com.
That's all the time we have the show today. Thanks for watching. We will see you tomorrow.
[music]
Every day, I'll be joined by guests from across TD, many of whom you'll only see here.
We're going to take you through what's moving the markets and answer your questions about investing.
Coming up on today's show, we will discuss what to expect from Wednesday's Federal Reserve right decision. TD Economics a Derek Burleton joins us.
In today's education segment, Hiren Amin is going to take us through how to set up a watchlist on Advanced Dashboard.
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 our guest of the day, let's get you an update on the markets.
First trading day of the week. Not a lot going on in Toronto. The TSX Composite Index right now basically flat, green on the screen if you want to be generous, up one take. Let's check out some of the most actively traded names, including Nuvei.
Ryan Reynolds as part of this operation.
The firm is saying is weighing a deal, they are not giving specifics, but there were unconfirmed reports adjusting a private equity firm wants to buy the name.
Right now I $39 and change, you've got them up about 33%.
Crescent Point Energy, a mixed picture in energy space today. It's not doing too much pricewise but it is one of the most actively traded names. At $10.43, it's down a little shy of a full percent. South of the border, the rally resumes. Don't know if it has anything to do with Nvidia's developer conference.
Nvidia is the superstar of AI. At 5162, you're up about 45 points on the S&P 500, good for almost a full percent.
The tech heavy NASDAQ carrying a bit better today, up 1.3%. Apart from that, this is also an AI story, let's take a look at Alphabet.
Shares of Google up about 6% right now on reports that Apple is looking at Google's Gemini AI engine for its iPhones perhaps as early as this fall it may get in there based on those reports.
And that's your market update.
Investors are awaiting this Wednesday's Federal Reserve right decision but was some inflation measures coming in hot, what are the central banks going to feel like it's time to start cutting rates?
Do any etc. discuss, Derek Burleton at TD economics. Great to have you back on the program.
>> Great to be here.
>> This is what the eyes are on. What is economic data telling us about what they might get up to this year?
>> You look at the data and they are certainly not screaming for rate cuts. You will be putting out a new forecast tomorrow, the quarterly march outlook, and it's a bit like Groundhog Day. Revising up the spending data, the GDP data for this year, not saying a whole lot of slow down and I think at the same time inflation had been fading away very quickly at the end of last year and then in the last few months, including February CPI data, it's been choppy of late. There was a bit of regression on some of the CPI measures, core measures.
We have been thinking all along that there is a risk that while inflation may not reignite, and I don't think it will, that that last wood to chop, 3% down to the 2% target, is going to take some time. That's where we stand now. Bringing it back to the Fed, it's going to mean patients.
That's what they've been indicating. I don't think it's certainly not going to take away from the rate cuts story, it's going to mean slower rate cuts than what many have thought two or three months ago.
>> When we were talking about headline inflation at eight or 9%, we have come a long way since then but the stickiness around three and above three, do we scratch our heads a little bit or do we have a good handle on that?
These restrictive borrowing costs have been here for some time, south of the border it's not slowing the economy near what we thought at the outset.
>> I think it boils down to the inflation data.
The Fed has been deemphasizing growth. I still think it does matter. To say it doesn't matter at all for the economy if it is doing well, we hear from Fed officials that it's another reason for patients but it really boils down to the inflation indicators. To your point, they have been improving.
They are still running as of last count around 3% on trend basis which we are almost there and Powell mentioned himself, we are nearly there. But I do wonder when we get to Wednesday whether that latest assessment was before the February inflation data which were worse than expected, does he modify that language at all? That certainly one of the questions I'm going to be paying particularly close attention to.
>> I guess the extent to which they push back against market expectations, I feel like market expectations have been shifting. But you have to remain nimble because the economy is fluid and it changes but we entered this year with I think expectations that perhaps now we would be talking about being on the cusp of a rate cut. Not quite all that cusp anymore.
>> The markets have already aligned to this. When you think about back in January at the peak, 150 basis points and rate cuts for this year. We certainly should be almost underway based on those early years of use. The markets one way over. They are pricing in about three quarters of a point this year.
I think all the focus as well is going to be on the change, so what we call the Fed Dodge, the Fed's median expectation for interest rates, it's not a forecast and that each individual Fed member could come up with their own view, so they bring them all together and what's the median? And there is a risk they could move from three quarter-point cuts baked into 2024 to 2 and I think if that happens, we may get yields adjusting a little further.
A lot of the heavy lifting has been done.
I think the markets are pretty well-positioned overall for what we are likely to see.
>> Keep an eye on that.plot when it comes out later in the week.
Before he moved to Canada, one more question about the states. Can an argument be made that if the economy in the states is performing this well with interest rates at this level that perhaps this is where interest rate should be?
>> The thing is that it comes down to estimates of the so-called neutral rate.
One of the things on Wednesday, the Fed comes up with their estimates on longer-term rates and that gives us a sense for what they are thinking and what that neutral rate is and at last count it was 2 1/2. I wouldn't be surprised if they nudge that up further. Whatever it is, it's a lot lower than now. But I think there have been some pounding the drum that why cut rates at all? But I think again the Fed needs to think, okay, in a years time, where are we going to be?
They don't want to be driving, looking always at the rear view mirror, and I think that comes out of this thinking that policy right now is restrictive, as inflation trends lower it remains restrictive unless they change the interest rate so the Fed is going to give their updated view on Wednesday. It's going to have rate cuts. I think the question is are they going to dial back moderately or leave it intact?
>> Let's talk about the Canadian situation because we saw headline inflation come down from dramatic peaks but our economy is not holding up nearly as well. What's going on with the Canadian example and what can we expect from the BOC?
>> Canada has a different set of challenges.
Our economy has not been doing nearly as well as the US. I don't think anybody has.
The US has really been exceptional.
That said, in our forecast, we will be nudging out Canadian growth not insignificantly for this year. That is based on the data we had very recently showing the fourth quarter came in a bit better than we expected. Our first quarter tracking is also a little bit better.
Going forward, we don't see a ton of growth because of the same constraints and interest sensitivity. Head I think they would like to cut rates but at the same time, the inflation data, we had a good January number, we will see what's going to happen with February. We get that out tomorrow.
But overall the data have been sticky as well. That has been due to shelter. When you look outside of shelter, the data has been better on the price side.
It puts them in a bit of a box. I think they are hawkish and at the same time, our view is that the inflation numbers will improve they will be able to cut rates but we are also dialling our view back to what extent we've only got now 100 basis points, you three 150 not that long ago, so a more slower decline in interest rates.
>> Once both banks begin, can we expect 25 basis points at each meeting?
>> We have a US election that is going to crop up. It is not an issue for the Fed? I don't think so. The November meeting falls right after the election.
I think they are going to respond to the data and thus suggests to me that it's not just going to be an automatic quarter-point every meeting beginning midyear that they are going to have to, it's going to be a little bit stop and start. That's not unusual for a cutting cycle. I don't think it's going to be every meeting but you think in Canada, we got 100 basis points this year beginning in July, that's going to be most meetings, maybe not everyone, and the Fed as well, three cuts to the end of the year is our latest thinking and that's not a cut every meeting after July so expect some stop and start.
>> Interesting stuff and obviously an intriguing year ahead of us. We are going to get your questions about the economy for Derek Burleton and just moments 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.
Is the so-called Woodstock of artificial intelligence and it is kicking off this week in California. This is chipmaker Nvidia holding its developer conference and it is expected to announce the next generation of AI processors. The keynote address from Nvidia's CEO is expected this afternoon. Right now you got Nvidia a little off of the ties of the session, up about a percent.
Let's take a look at shares of Google parent company Alphabet. They are in the spotlight today, up about 6%. There is an unconfirmed report that Apple is in talks to license Alphabet's Gemini artificial intelligence engine to power iPhone features that could be released later this year.
The CEO of United airlines trying to reassure travellers following a series of incidents including a tire falling off one of its Boeing 777's following takeoff. The CEO says safety is the airlines highest priority and they are going to strengthen safety training going forward. In a separate incident from the tire one just before the weekend, a missing panel from a Boeing 737 was found after the plane landed.
A quick check in on the markets, we will start the TSX Composite Index. Right now there's not a lot going on on Bay Street.
We will be generous and call that one point to the upside. The market is basically flat. South of the border, it seems like the rally is picking up some steam again. Some of the tech names notably. The S&P 500 is up 45 points, a little shy of a full percent.
We are back with Derek Burleton, take your questions about the economy.
As the first one. The state of the housing market. I think we got some fresh numbers to look at today.
>> Yes, we did get February data, resale data, sales prices.
It has been a bit choppy of late.
To add a bit of context around her, we, as rates kind of came down a bit, we had a bit of momentum heading into the December January numbers. They came in much better than expected. Sales prices looked like they were improving. When you look at the February data today, it looks like they took a significant step back so I think that's the kind of market we are in right now. Everybody is waiting for the Bank of Canada to get more direction until we get what I think is going to be a more sustained recovery. What we are seeing in the February data is perhaps a pull forward. I think the warmer weather in January pulled forward some sales from the spring so we may get March data a little bit soft as well.
I think when you take a step back, the market is doing okay.
We are likely to see a moderate rise in sales for the first quarter overall and I think as we move into the second half, things are going to pick up a bit. It's not going to be a huge V-shaped kind of rebound even with the Bank of Canada cutting fairly consistently I think in part because affordability is still a real challenge. Our models, if you throw in these kind of affordability numbers, it doesn't spin out a lot of growth in sales but I do expect an upward grind partly driven by ongoing population growth in the second half of this year.
>> You talk about affordability and obviously there was a big run-up in prices during the pandemic and even though the market has cooled it's still unaffordable in many places.
What about migration across the country?
You are the headlines about young people going west to invest in real estate, is a very out in the data? Are people finally saying, we can afford to live here and we are going somewhere else?
>> Yes, it is a bearing ad. There is a regional differentiation.
If you look at Alberta, it's all a very tight housing market. Saskatchewan, strong housing. In Ontario, it's softer, Southwestern Ontario is soft.
That reflects in part the migration flows.
I think Canada overall is benefiting from a lot of new migrants every year but disproportionate share of the population when you look at interprovincial heading to some more affordable markets like Alberta. There's a big difference in housing between Alberta, we see much stronger conditions going forward, I mean it's playing out. I think population is going to slow. I think the government there is taking some efforts to kind of slow the sheer number of migrants coming, particularly the nonpermanent residents, just given that infrastructure is having trouble keeping up and they are already limiting the number of international students. That's when have an impact. Not a great one, but it's going to slow down the number of new people coming to Canada and they are now looking at their temporary foreign worker program so we will see what kind of review that has.
Expect to step down in population but I think the impact on housing and the broader economy is going to be more of a story for 2025.
>> That's the impact on housing. We have a question from someone who wants to know what sort of impact we could see from this policy changes around international students? There's the housing part but what about the overall economy because we have been told that to sustain the Canadian way of life and grow the economy, we need to bring a lot of people.
>> I think we do. The government is not touching their permanent migration targets. Still pretty healthy, 500,000 a year.
The big area of growth has been in the nonpermanent residents, the inflows of students, and one could argue that it's been such a massive shift that it's leading to challenges in housing but to come back to the economy, it also adds to consumers. It certainly helping the economy, benefiting from some added demand. I think with the federal government is coming from his some of the offsetting costs and I think the government there is still going to be pro migration.
To your point, we need the skills longer-term but just may be moderating the extent of the increase wouldn't be a bad thing at this stage.
>> Issues on the table for politicians in Ottawa. This leads into the next question.
What are you going to be looking for in the federal budget? It's approaching, only one month away.
>> It is.
It's later than we would've expected. I'm not expecting a very large budget with a lot of new measures.
We got a bit of a glimpse in the fall economic statement where after the pandemic where there was an explosion of growth in spending, spending is now I think 100 billion higher this year than the government had targeted pre-pandemic so we have just seen a huge seachange in spending levels. I think the government, we don't expect an election in the coming months, maybe more of a 2025 story, it's going to be a bit of a placeholder budget where, like the full statement, they focus their priorities on housing and a few targeted areas, the farming care is something they want to build up as well, there's going to be some new spending there.
At the same time, they indicated they are going to be keeping their deficit targets unchanged, that's 40 billion this year in a very gradual decrease in that over time.
In terms of tax changes, not looking at anything to earth shattering either. The government every year we wonder if they are going to raise capital gains inclusion taxes. They haven't and I don't expect that they will this budget. If numbers were coming in a lot weaker maybe they would need to gain some new revenue but I don't see it being a major issue at the moment.
Not saying they won't do it at some point but I don't expect is going to be any broad-based tax changes either in this budget.
>> I remember last year's budget going into that release, the concentration was, the central bank is trying to balance inflation. Will the budget be inflationary? I think that was the first question I ask you on the other side of the budget release. Is this inflationary?
>> Free land herself did say that this budget, one of the objectives will be to create the conditions for interest rates to fall.
That's an interesting twist. They have been listening to economists. The extent to which they live up to that would suggest a restrictive budget. I don't think they will go that far either. I think it's going to be very status quo with a modest growth in spending, not particularly restrictive but not like a pandemic type expansionary budget either.
They will sell it like that. The question is, we will have to look at the numbers to see to what extent it might take away a little bit from growth. I'm not expecting anything too substantial on that front.
>> I'll be asking you all of the questions on the other side of the document as well.
This is a nice warm up.
As always, make sure you do your own research before making any investment decisions.
we went to park your questions for Derek Burleton on the economy 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.
In today's education segment, we are going to take a look at how to set up a watchlist on Advanced Dashboard. Joining us now to walk us through, Hiren Amin, senior client education instructor with TD Direct Investing. Great to see you.
Walk us through it.
>> Absolutely.
Watchlist are a fundamental part of any investors toolkit. They allow investors to track some of their favourite tickers or symbols and an easy way to monitor ideas they are researching as well as analyse them using the tools that are part of the platform.
It's a way to bookmark some symbols that are caught their eye. Let's take a look at how you can set up some of those I catches using the Advanced Dashboard platform today.
Coming up into the Advanced Dashboard platform, after you have done your basic set up, you will see this widget we have set up, watchlist tab. We have it in view.
I'm going to create a new list for us. One way you can do that is, the easiest ways to go up in this right corner, click on new watchlist and then give it a name. In this case, I'm just going to call it index ETF's.
We are going to call this one and he create. What you're going to see is a blank slate and this is where you can get started. There is a symbol box. We are going to type in the DIA for diamonds which is the ETF that tracks the Dow Jones index. We are what to put in the triple cues, this is the NASDAQ, we are going to put in SPY and one more other one here. We can do it one other way.
We'll put it towards the end of the list here words has had symbol, I'm going to type in IWM. You can create a singular list this way.
Another beauty of this is the grouping ability. You will notice beside each ticker symbol we have a menu with three dots. You click on those and what it does is gives you trade related options in the top section and the middle section allows you to organize your watchlist. If I go on the bottom part of this I can create a group. It says move to group. I'm going to create a group.
Let's am going to call this one broad-based indexes.
Call them broad.
And I will hit say. He creates a category at the top. Now I can simply click and move and drag from one to the other and push them over into that category that we want or you can come into this menu and say let's move this one into broad, this one will also be moved into broad. You can symbol fire list and just collapse it or expand it as you will when you are creating this list over here.
The one other thing that it allows is let's say I've got this other widget, the news. I can filter it based on my watchlist. If I come on the news gadget, I can hit the filter and come to where we created a list in the drop-down where we said index ETFs. Now I'm just finding news related to those index ETFs.
This is one of the ways you can get started and get your list created over here to get you going with some of your favourite symbols.
>> Now we know how to add the names to the list, how to create subgroups, what about customizing the information when people are doing some digging on all the different metrics?
>> I thought you would never ask!
Fantastic question. What we are referring to over here is you can see data columns which you can analyse. This is fully customizable. To do that, you can click on the left corner hamburger mania and in the very first one it says manage templates, click there. Within manage templates, I'm going to send to this, you will see that there is a preset part of the system defaults given to us and then you can create your own custom ones.
To create your own one, simply hit new, give it a title, we will call it today's date, March 18. Hit save.
Once you do that, there are a couple that are already given to us.
And then on the left, we have a number of different symbols and data points that we can look at.
We can add in day hi, click the arrow or double-click it.
I will add in ex dividend date and then go to the bottom and click on yield.
This is my basic view that I want to add in this is the way that I want to do it.
It saves automatically. You don't need to do anything further from here. You can choose to set it as the default. I click and safe. This is going to be my default.
Now when I go back to my watchlist, you will see there is a category that says template which is set to basic. This is where we can find all of our custom ones that we built. And when you click on March 18 over here which is the one we just created a moment ago and this is the view that's coming up.
Anytime you pull up a watchlist, let's go to my auto manufacturers, it's already going to be sent to the template for us.
There you have it. That's how you can customize some of those data points on the watch lists.
>> Great stuff as always. Thanks.
>> My pleasure.
>> Hiren Amin, senior client education instructor at TD Direct Investing.
And make sure to check out the learning centre in WebBroker for more educational videos, live, interactive master classes and upcoming webinars.
Know before get back to your questions about the economy for Derek Burleton, 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.
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.
Okay, we're back with Derek Burleton, take your questions about the economy. Next one here. Intriguing. There has been some discussion around the usefulness of GDP per capita as a measure.
Your thoughts? This morning I was on LinkedIn and a graph popped up comparing us to the Americans.
>> It has certainly been a focus I think in part because that denominator of that equation, population per capita has been growing so rapidly and certainly has not exactly flattered the numbers. We have seen since the pandemic, this wasn't just Canada but GDP per capita in particular has been on a big leg down when you compared to the US where they have now seen a recent court is productivity really bounce back and their GDP numbers have been growing so rapidly.
Does it matter? There are two sides to the story. The truth is, as usual, somewhere in the middle.
When you look at the type and where a lot of the growth has been a it's been students, temporary foreign workers, less so with permanent migrants.
I think the arguments given is think of the student coming and they set up shop here, they are not going to be massive spenders.
So maybe there's a bit too much emphasis of late in that GDP per capita equation.
At the same time, as economists, we pay attention to it because longer term, it's one of the key benchmarks of a standard of living.
That's how we kind of gauges, we don't look at growth but per capita numbers.
>> Share of the economic pie.
>> Right. I'm somewhere in the middle where I think we should not just brush this off as going through this population boom… This is the federal budget, going back to our last discussion, I think the government cannot just ignore the productivity, why GDP per capita is weak, what are they doing to try to boost that over time?
I don't think there's going to be anything bold in this budget to address it but with the governments going to be doing is taking all it's been doing, infrastructure investment, transfers to provinces to help with things like that, investment, green investment for some of the incentives, I think it's what address that up as look, we are doing all of this over time and hopefully we will gain traction and this is a first budget that we will keep ramping up.
>> Does leave pundit scratching their heads to some degree? The idea of the budget, if you can put a public dollar to work in the economy, that's going to create, for argument sake, 10 bucks or hundred bucks.
Go out there and build something. People are wondering, why isn't it happening?
>> And we did get investment intention numbers out of Canada recently and it showed some improvement.
I was impressed, certainly better than I expect. We factored some of that into our go forward forecast as part of our upgrade.
Maybe we are beginning to see things improve but it's been serial disappointment. Why is productivity so weak? We have been asking this question now for 20 years and factors given, it's regulatory, we thought very decentralized government arrangement with cities, provinces and that's a factor, small market, we've got a lot of smaller businesses which obviously are key to driving employment long run but to a large extent it's the big companies that do a lot of the research investment and the like so these are not easy things to factor in, no silver bullet, but I do you think if they can improve the business climate and cope with some regulatory issues it has to pay off over time so hopefully we will hear more about that in the budget.
>> A lot to look forward to in that document. Back to housing.
Not necessarily housing. Should we be worried about household debt with all the cost-of-living issues?
>> Household debt, the whole thing equals household debt burden, increases vulnerability to shocks. That said, I've been really surprised at how resilient the household has been through the fact we have seen rates going from effectively 0 to 5% on the short end, I would've thought, if you had told me that two years ago, I would've thought, we are in for some serious headwinds and deflation. It really hasn't happened yet. There are factors that are obviously helping. Some of them are legacies of the pandemic, the excess deposits are helping households at least cushion some of the impact of the rate hikes, strong job market, shift to services spending which is helped a lot of employment, this has all helped with some of the transition. We had quarterly numbers out on household debt, and it looks like it's peaked and flattened out and the debt service burden including principal interest actually has come down from the peak despite the rate so we may be getting over that hump where we are feeling optimistic about getting through this, hoping the world keeps it together, no anticipated shocks to upset the apple cart and I think you will get through the renewal challenge and I think you will get to the other end without too much damage.
We know that many households are struggling in this environment with inflation but at the same time, as long as our job market doesn't come undone, bends but doesn't break, I think households will get through without too much pain.
>> How are you viewing the upcoming US election?
>> Wow.
Here we are, how many months away.
>> You just have to find out who the players are going to be in the table is set.
>> We kind of know and there are big differences in platforms. We still don't know what the Congress makeup is going to be. Is going to be a very close election from our guard. But I look at the two platforms, what we know of, him and Trump hasn't really said that much but we have a good sense that he wants to keep the tax cuts he put in place while Biden wants Willow tax rates to, been many cases, particularly for larger corporations, wealthier Americans, you're going to see quite a difference in taxes, something like $6 trillion separates them if you do some of the raw numbers. Trade policy, even though Biden isn't particularly open to free-trade and is protectionist in that regard, you look at Trump or he's going to threaten 10% across-the-board tariff, allowing China to lose its most favoured nation in the status which would see a spike in Chinese tariffs.
Interim's first term, he said a lot, regarding how much he implemented, it depends on congressional approval… Something he can do through Executive Order.
They are quite different, the platforms, from this vantage point and we will have to wait and see. It could mean some meaningful changes to forecasts.
>> If there was a meaningful change in policy towards tariffs, that feels inflationary. Just as you're getting inflation back counter target, people would have to pay more for things.
>> I think at the end of the day implementing it… He was involved in the US Embassy in negotiations and now it's his deal.
I think at the end of the day he will give a carveout to Canada and maybe Mexico and focus his attention on other countries so the impact would be significant.
>> We'll get back to questions and just moments time. As always, make sure you do your own research before making any investment decisions.
And a reminder that you 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.
[music] We are having a look at TD's Advanced Dashboard, platform designed for active traders available through TD Direct Investing. This is the heat map function, gives you a few of the market movers. We will start with the TSX 60, we will screen by price and volume.
Right now the TSX is pretty much flat, it's a pretty mixed picture out there.
Even within certain sectors, Cenovus is up but then you've got other energy names modestly down. Financials are not showing us a lot today. Trying to find Shopify in that list. It's pretty much just flat.
That's the kind of day we are having right now. BCE has been on a downward path for quite some time now.
It's down about a percent on today's performance.
South of the border, the rally is resuming, we are going to hone in on the S&P 100.
There are some standout names here. Tesla has had a rough go lately but it bouncing up to the tune of about 6% today. Also Google, there are unconfirmed reports about a possible tie up between Google's Gemini AI tools and the Apple iPhone.
That seems to have some excitement around the name today.
Nvidia is starting its developer conference today, Keynote address from the CEO coming this afternoon.
Plenty to watch there. For more information on TD Advanced Dashboard, you can visit TD.com/Advanced Dashboard.
We are back now in Derek Burleton from TD Economics, talking the economy.
Are we getting recession?
>> I don't think so.
Of course, there's always a risk.
Even when you look at surveys, you go back even two times for the economy is improving and things are very benign, there are always going to be risks that you will be hit by unanticipated financial events.
A survey suggests 20% odds on the low end.
I think when we were at the peak when inflation was high, rates had to come up, survey showed at least a 60% chance, that's unusually high. That's usually a precursor of eventually seeing one.
But in recent quarters, particularly the US, those numbers have dial back to 40%.
Just given the fact that the US has been strong. I'm comfortable with that. I still think it's higher than normal.
I still worry about inflation stickiness.
I still worry that as long as rates remain this high, there is always a chance of something bubbling under the surface whether it's ERVE or the like.
Just given how strong the data has been and the fact that inflation has been improving surprisingly quickly on a trend basis, those odds are reasonable. As she mentioned CRE commercial real estate, I think that was the first question that was put to Tiff Macklem and his senior deputy at the last Bank of Canada rate decision.
They seem not as concerned as the Americans.
>> I think it's partly due to the structure of CRE in Canada. There's a lot more investments through pension funds in Canada which are better able to manage the risk and I think we tend, when you look at Canadian CRE, tend to put some of the eggs in that basket where is in the US there has been a lot of private money outside of pensions driving the growth, a lot of investment money flowing into it and I am worried about CRE. I think what gives us a little bit of comfort is the fact that here we are, again, well into the shock on rates in the market, while it has certainly weakened the office market, it hasn't shown any real tumult and I still think it's going to be one of those multiyear, I think Powell recently on 60 minutes referred to it and I agree with him, I think it's probably going to be a very long-standing shock in the office market. It's going to take years to recover.
But not expecting any crisis to come of it. But we will see. Some of the renewals that are coming up in the US are certainly going to be watched very carefully, how that debt gets rolled over.
>> Let's squeeze in one more question. Can your guests discuss the merits of GDP versus PCE, the Fed's preferred measure?
This is from our regular viewer, just.
Jeff, thanks for the question.
>> When you look at spending data, is PCE, personal consumer expenditure.
. . When I look back over time, we don't see great divergences on a sustained basis.
At the margin, I think PCE tends to be a little bit more closely related to price pressures just given that it's domestic spending, you're not dealing with inventory adjustment or exports which tend to export inflation pressures abroad are important but BCE is still the most important variable. I think that you you can almost take hand-in-hand because two, three, four quarter basis you don't tend to see big divergences.
>> We are at a time for questions. Before let you go, we have a rate decision on Wednesday and then the BOC will have one.
There will be inflation reports.
There's a lot to roll together. Use a lot of intriguing things but you were talking about the possibility that the Fed might dial back even their own expectations for how many cuts they will deliver this year.
>> That's where all eyes are going to be on Wednesday, it's went beyond the Fed.plot interest rate projection. The median dog, it would take to members moving off a three cut to a to cut and that would tip the median forecast for this year for cuts to 50 basis points and I do think the market yields would jump to some extent when that happens. Not dramatically but they will move to price some of that in.
>> 2 PM Eastern time on Wednesday, I'm going to jump straight to the top law.
Always a pleasure to have you and I look forward to our next conversation.
>> Thank you.
>> Our thanks to Derek Burleton. As always, make sure you do your own research before making any investment decisions.
if we didn't at the time today to get your questioning, we will aim to get it into future shows. Stay tuned for tomorrow show. Hussein Allidina, had commodities at TD Asset Management will be our Guest taking your questions about commodities.
You can get them in ahead of time.
Just email MoneyTalkLive@TD.com.
That's all the time we have the show today. Thanks for watching. We will see you tomorrow.
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