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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'll take you through what's moving the markets and answer your questions about investing.
Coming up on today show, prices and sales are down, but are things looking up for the housing market or could there be more pain ahead? We will discuss that with TD senior economist Francis Fong. MoneyTalk Anthony Okolie is going to have a look at what recent car sales data says about the health of the economy. And in today's low broker education segment, Caitlin Cormier will take us to the different price quote info you can find using this platform.
So here's how you can get in touch with us. It just email moneytalklive@td.com or you can fellow that viewer response box under the video player here on WebBroker.
Before he gets our guest of the day, let's get you an update on the markets. We are still in the thick of earnings season. We are still wondering where the Fed is headed next considering how strong the labour market has been so investors are wrestling with this and there hasn't been much drama on bay or Wall Street today.
We'll start with his TSX Composite Index.
Right now it is down a modest 5.4 points or just the retakes but we do have individual earnings to parse through, including Cameco. There was a beat for the uranium producer.
Those shares last time I looked were in positive territory. Right now let's look together.
Cameco, up 5% right now, 38 bucks and $0.58 per share.
Also earnings out from Telus. Here's the reaction on the street to this one right now. Decidedly not the same direction at 27 bucks and $0.33, you got tell is trading down about 2.7%.
South of the border, of course, there are worries about inflation. We have seen the peak as it rolls off with the labour market getting in the way of what the Fed is trying to do or making them have to go more aggressively? A lot of questions being wrestled with but also corporate earnings. S&P 500 up a very modest seven points right now, a little shy of 1/5 of a percent.
The tech heavy NASDAQ, this is a bit interesting. It's a bit of a mixed bag.
Right now got the NASDAQ up 1/3 of a percent because while some names including Google getting hit the other day on the whole AI thing, you got chipmakers making some games today. Let's take a look at Nvidia and see how it's faring.
It is up to the tune of 3.2%. That is your market update.
While the Bank of Canada has signalled a pause in rate hikes, some are concerned that the real hardship to the housing market is yet to come, that as households deal with higher debt payments. Joining us now to discuss why he's not seeing those cracks in the real estate market at this point is TD senior economist Francis Fong.
Great to have you back on the program.
>> Great to be here.
> Let's talk about that.
There are a lot of musings and reports I've seen lately that okay, the Bank of Canada says we are going to pause now but as households digest the sheer enormity of what gotten into with rate hikes, the worst is yet to come. How should we be viewing this?
>> It's an excellent question and a great place to start.
If we look at were debt service costs are headed, the dramatic increase in interest rates that we have seen over the last year or so is really going to drive that ratio significantly higher, to a point that we haven't seen in quite a few decades. That obviously has a lot of people, is giving a lot of people cause for concern.
If we take a flipside approach to it, there are some key ingredients we need to see before we can kind of conclude that there might be a more systemic decline in home prices. If we look at home price crashes around the world historically, one of the key ingredients preceding this crashes was always a buildup of bad credit.
So take the 2006 run up to home prices in the US, we saw a lot of subprime mortgages gaining share in originations and ultimately when problems arose that is where we sell the problem.
If we look at Canada, we just don't see that major ingredient. If anything, it's going the opposite direction. Credit quality is getting, and baby this is a bit maddening for people, is getting better.
The most recent data we have is a bit delayed.
It's the second quarter 2022. About the time, we saw the ratio of new mortgage originations with a beacon score of bad credit quality, it was just .
6 percentage points of mortgage originations wears on the flipside, new mortgages with good credit quality year mortgage originations was at 89%.
Notionally, if we are hit with this kind of shock, then there is at least that buffer.
That is not a guarantee that we won't have a systemic problem.
If we roll back the clock five, 10 years, a US economist, what would drive a systematic decline in the housing market?
If you would say, an increase in the unlimited rate. In combination with increasing industry. But historically, that hasn't panned out either. Look at Alberta.
After 2014, oil prices crashed. We saw an increase in interest rates to a level that a lot of people said they couldn't necessarily afford and we saw a essentially flatlining in home prices.
In that province alone. Everyone else was doing fine but Alberta a single handedly went to this mini crisis and home prices didn't fall that much. Where are we today?
We have seen home price pullback quite a lot but we haven't even kind of unwound the 50% price gain that we saw just since 2020. So there could potentially still be more downward pressure but with the Bank of Canada being positive in the labour market still being strong, it is difficult to envision a situation where we have a systemic problem.
>> How much of that pause, in your estimation, from the Bank of Canada, was the very fact that we have this dynamic market? A big run-up in prices, people took out big lives including mortgages, and they told us before the pandemic, if you need to borrow a large amount of money, go for it. Things turn quick. Is that concern?
>> I would say yes but a lot of it has to do with timing.
As many people would be familiar, it does take about 12 to 18 months for the full impact of interest rate increases to filter into the economy. We are about one year out from that first interest rate increase.
Inflation has turned, as you noted, in the US and Canada.
Now is kind of the perfect time for the Bank of Canada's pause and say we have this vulnerability. Household debt is as high as it's ever been.
It's far higher than many of our counterparts. We have seen the sharpest increase rate in interest rates in decades.
This might be a good time to pause and see how those hikes trickled through and readjust from there.
Our baseline forecast, we don't have… Like many forecasters, we are anticipating some decreases down the line.
But from a positive perspective, it's kind of a timing thing too.
>> How much has the stress test played into any theories we might have of resilience?
We have seen sales activity falter medically. We have seen prices come down.
But this idea that you are not going to see forced selling, does that help?
There were some industry players who said 2%, are you joking? And what scenario where would you see interest rates jump 2% in short order? And then we saw an increase in 4%.
>>we did toy with a lot of ideas, potential variations of scenarios that the higher interest rates. Did we kind of forecast at the time that they would increase by this much and inflation would be a size it is?
I think this is certainly a lot higher than we would've projected even in the stress test. That being said, to your point, the results of those exercises does give regulators and central banks that capital buffers are sufficient enough to absorb some of the impact. Again, because you're not protecting necessarily this huge crash in all sorts of different kinds of assets, those capital buffers won't ever be tested to the point where we are in that kind of deep stress scenario.
But even if we were, notionally, there is some confidence for regulators to lead on.
>> The Canadian housing market won't see a more dire consequence because of our elevated immigration levels and robust targets?
Is something there?
>> There's probably a nugget of truth to that. There's kind of this double whammy impact of the pandemic that we still haven't seen 100% of folks returned to office.
Work from home is now a standard across all workplaces in the advanced world and that has had an interesting dynamic in terms of driving home prices up not just in major metropolitan areas which we would've been used to in the years prior to the pandemic but elsewhere.
We have seen this. Combine that with our continued high immigration numbers I think there is a nugget of truth that there is potentially a floor that gets put under housing because of that consistent demand.
I would always point to the notion that housing is a very unique asset in this regard.0 it is the only asset, it acts in the same way as a financial asset that you also consume. You consume housing services when you live in your own home.
So a housing asset can act as capital preservation. You can rented out but there is an extremely tight rental market.
We are seeing this in the listings data, but a lot of folks can just sit on that asset as a form of capital preservation.
There are a lot of ways in which housing performs differently than a traditional financial asset.
>> Fascinating stuff. A great start to the program. You will get your questions about the economy for Francis Fong in a moment, including one central banks may begin cutting rates, the chances of a recession and the outlook for inflation. You get in touch any time. Just email moneytalklive@td.com or fill out the viewer response box under the video player on Whataburger. Right now let's get you updated on some of the top stories in the world of business and take a look at how the markets are trading.
Sun Life financial reporting and beat on the bottom line for its most recent quarter. The life Co. benefited from several factors including its acquisition of Dentaquest, Improve growth in Asia and lower COVID deaths. However there was weakness in the asset management business.
Shares of Disney are the spotlight today as the entertainment giant announces plans to slash 7000 jobs as it targets $5.5 billion in cost savings.
Disney is also reorganizing the business into three divisions: entertainment, parks and it sports property ESPN. I've only got two divisions there.
That's bad on me. PepsiCo managed to beat earnings expectations on those higher prices for its snacks, but those higher sticker prices did weigh on demand. The food giant posted a 2% drop in sales volumes in its most recent quarter.
PepsiCo says it's not planning any further price hikes for its products.
Let's check in on the main benchmark index here in Toronto.
We will start on Bay Street.
We are up a very modest right now 17 points, just a takes. South of the border, the S&P 500, which we have going on there?
That brought a read of the American market, we got some grid on the screen but it's modest, about 10 points or 7:45 percent.
We are back now with Francis Fong, to your questions about the economy, so let's get to them.
I hope you're going to talk about how Biden's buy America is going to fit in with the new NAFTA.
We have the state of the union address the other night. The president did, once again, mentioned by America. As Canadians, we are concerned sometimes. With the context here?
>> Absolutely. This is a great place to start as well.
Obviously for the state of the union, by American showed up many times throughout the entire speech and it does give people pause.
I think we do need to take a step back and kind of consider what the two key pieces of legislation were passed recently and was actually in them, namely the build back better and infrastructure bill and inflation reduction act, the IRA. The IRA in particular had strong domestic content requirements that a lot of people focus on. So when you have things like technology investment tax credits or hydrogen production tax credits, battery production, EV tax credits, all of these wonderful things that the environmentalist were touting as being key components of helping drive the key energy transition America, many of us in Canada were concerned that the domestic content requirements at the time would have led to a lot of those economic benefits being constrained to the US and ignoring the fact that many of those industries see a tremendous amount of vertical integration between Canada and the US and of course Mexico.
Excuse me. A tremendous amount of lobbying from all levels of government did turn buy America into by North America so the IRA, we did skirt a lot of those things and that was a major positive. So now, all of those benefits, that $370 billion it's going to go out into North America, notionally, Canada could and if it from developing their supply chains from mining to minerals to refining and all sorts of clean technology manufacturing, potentially energy sources as well. All of those things are in the mix.
That being said, I think there still is a concern and certainly think many politicians at all levels of government will continue to be concerned about incoming pieces of legislation and whether domestic content requirements will remain North American.
On the other side of the pond, if you are eu exposed, there is a lot of hubbub being made right now that there component requirements does not include their allies in Europe. Anything about the energy transition, all these countries are thinking this is going to be the next phase of our economic growth.
As we divest from fossil fuels, GDP growth, jobs are going to come from clean renewable energy.
There is some notion that it will be in part a zero-sum game where some supply chains develop here, it will take away from other regions in the world.
I don't necessarily believe that. I tend to take a bit of more globalist approach to this.
Any action bein taken anywhere to develop more reliable domestic supply chains for clean technologies and tax credits going into a building the stuff up, we all benefit from that from a emissions reduction and decarbonisation perspective.
I understand there are some concerns on the eve side that they want to see some of those benefits.
>> Interesting set. Let's take another question.
Lots coming in. This one is one of the questions of the year, probably going to remain one of the questions of beer. When is your guessing that the Bank of Canada or Fed will begin to lower interest rates?
>> >> This is going to be a common question over the coming weeks and months if it hasn't been already. It's been a hotbed for us to say that we are following the trajectory of inflation but unfortunately am going to have to say we are following the trajectory of inflation.
we have essentially inflation fighting banks and they are overly concerned with how high it is.
That's just the bare minimum. Now, where have we seen it come down today?
Obviously you mentioned earlier that we did TP Canada is coming down and we kind of had this dual impact where we had supply chain labour market shortages kind of driving up inflation, what we would call cyclical factors driving up inflation post-pandemic and post-COVID. And then on the same token, we just had a tremendously strong overheated labour market and broader economic growth that was kind of underpinning the supply chain issues resulting in a 40 year high inflation.
So we have started to see a turn. A lot of the supply chain issues have started to work their way out of the data. Commodity prices are down. Gasoline prices are down.
But we are still seeing a lot of strength in the labour market. Here is where we have some divergence between Canada and the US. Canada is comfortable given the level of high household debt to stay put and see how those first interest rate hikes are filtering through the economy.
Where is in the US, the labour market is still externally strong, wage growth is still extremely strong, and the Fed things that will be a leading indicator for sustained high pressure on inflation. We are anticipating the Fed to continue a little bit more, bringing the Fed funds rate to 5 1/4 in the second quarter of this year, but given the trajectory of inflation is notionally the same in both countries, we are anticipating decreases later in the year towards the end of the year and then through the end of 2024.
> How do we square that not only resilient labour market in the United States but downright strong?
Over 500,000 in one month in face of all this aggressive tightening. Our things not really making sense of the moment?
>> I'm glad you brought that up because there is quite a significant debate happening in the economics industry. Among my peers.
On Twitter, commentary happening all over the place, about this exact issue.
Can you notionally bring down inflation without impacting the unpleasant rate?
There are a lot of traditionalists who believe in a more traditional relationship where inflation and the employment rate have to be inverse related. Whereas there are other folk certainly in the Fed who put a commentary that have said given the kind of inflation that we are facing today it is notionally possible that we might not be able to… Sorry, that we will be able to bring down inflation without a serious impact on the unpleasant rate.
We are somewhere in the middle where in our forecast, we do anticipate there to be some economic pain, particularly in Canada where we have such a high level of household debt.
There is such a high increase in the debt service ratio that we are projecting that there is no way that we feel that Canadian consumers will be able to continue standing at the rate that they are, but they will have to divert so much discretionary spending into servicing debt payments. That fact alone I think is going to be difficult to square.
But I would say it's not a done deal.
There is a lot of debate happening about whether the traditionalists are right or whether there is kind of this new view of the relationship between inflation and the on employment rate.
>> Every four weeks to get a new number to chew on so those will be the next numbers we look at. Next question.
Until 2022, Canadian interest rates were low and quite stable for many years. We were talking about the forward trajectory for rates and should the Canadian prime rate be expected to regularlyfluctuate over the next 5 to 10 years?
>> Potentially have a lot of younger folks that have only been in the market for 10 or 15 years… >> Borrowing costs.
>> Is I've ever seen, myself included.
I'm in the bucket.
But if you roll back the clock a bit, interest rates were a lot more volatile.
The prime rate is the spread over the overnight rate. It will move in line with the overnight rate.
So the question is, will we see more volatility in the overnight rate? Just give a bit of an insight track as to how economists tend to think about the overnight rate over kind of the long term.
There is always a notion of what we call a neutral rate, which is what you think your long-term kind of perspective is in terms of real GDP growth and inflation?
And that kind of guides you are anchor in terms of where interest rates are because at the end of the day, the goal setting your interest rate policy is to ensure that you have a stable rate of growth in a non-inflationary environment. So what interest rate is consistent with stable growth, consistent with long-term growth and is not inflationary? I will always be constant because you have some sort of long-term view about what that is.
And in the interim, you will see fluctuations relative to what that Detroit looks like. So it's difficult for me to say, based on that notion of the neutral rate, whether we would see more volatility over time but there is one perspective that I could potentially give you, one aspect, and that is the notion of climate change impacting our economic outlook over the long term. For several years now, we have seen extreme weather. More specifically, droughts and water stress impact everything from supply chains to broader economic growth to natural disasters and culturally yields all sorts of things.
We scroll back the clock and we were talking about chip shortages, part of that was driven by water stress in places like Taiwan where chip manufacturing is incredibly fresh water intensive so you need fresh water resources.
And the monsoons that refill reservoirs in Taiwan happen to miss the island entirely so they were going through a lot of water stress and production was down.
Last year, we had low water levels in major European shipping routes and basically ships couldn't get through. So you have everything from production issues to shipping issues to labour force issues related to labour shortages and COVID and went on and so we have all sorts of things that are kind of climate change extreme weather related and that is likely going to be a perennial issue over time. So I would anticipate that supply chain issues are going to be something that we are going to be hearing about every year and potentially for longer period of time as these extreme weather runs tend to get more unprintable and more extended, if you will.
Now, whether central banks will actually need to address that is kind of up for grabs because at the end of the day, they look through these kinds of cyclical factors to supply chain impacts and things like that and they will say, well, it's not within the scope of a central bank to address supply chain issues.
By the same token, if there is the notion that you can has sustained high inflation as a result of these things, and doesn't force their hand?
They could say we can't stand having this high inflation and we need to do something about it and we will use the only tool we have available to us. Conversely, may be low economic growth as a result of extreme weather forces them to move in the opposite direction.
Extreme weather suitable wildcard for me as to how variable interest rates move over time.
>> Fascinating stuff. Do your own research on or before making investment decisions.
We'll get back to questions for Francis Fong in a moment.
You get in touch anytime.
just email moneytalklive@td.com.
now let's get to our educational segment of the day.
The price will you see first talk on WebBroker has more info in it than just the value of the shares. Here to explain is Caitlin Cormier, client education structure with TD Direct Investing.
>> For sure, if we look at the quote on WebBroker, there's a lot of information there and investors may know or have a general idea what some of the stuff means but let's dive in and really look at each individual piece and what it actually represents and why it might be important to investors to know a little bit more about it. So let's jump into WebBroker first off.
I'm going to go under research and I'm going to click on underinvestment I'm going to click on stocks and that's going to take us, again, to a homepage for any investment that we are looking at and so what we are going to focus in on today is, of course, right across the top here. So the first thing we see is the last price.
So a lot of people may devote a lot of weight in this number but at the past number, it's something that happened in the past, it's the last trade that happen.
We don't put too much weight in this because it's kind of like a, it's no longer the most accurate piece of information that we can see.
That's the last price that a trade was completed at the time I came to this page.
This particular stock is up by .02, so two cents for the day.
Of course in green, moving that it is moving positive, red meeting negative, and we into the percentage change as well.
That is all just from today from obit.
The next thing that we are going to see here is we are going to see the bid and lots underneath the last price. So the bid is actually quite important. The bid price is what people are willing to pay in order to purchase the stock from you.
So if you are selling, that's an important number to look at.
And then there's the ask price here and the ask price is what people are expecting you to pay in order to actually purchase that stock. That would be something to look at if you are buying.
This would be a what people are asking you to pay in order to purchase the stock and this is what people are willing to pay in order to buy the stock from you so if you are selling.
Beside both of those we see lots. This means we see nine lots here and for lots here. A lot for stock over a dollar represents 100 shares. So in this case, if there nine lots of the bed, that means there are 900 shale shares available at that price.
previous close is the last traded place at whatever the previous close is. That would be yesterday for now.
On Monday would be the Friday before or whatever the last trading day was.
We are going to see a day range here. So 52.99 was the lowest of the stock has traded for today and the highest that it has traded for today it would be the 5354.
We also see the 52 week range. So you get a bit more perspective on how this particular stock has traded over the last year. Finally the volume, so the volume is showing us here that this is how many shares have traded hands today, so over 5 million of the shares of traded hands and that's average for this particular stock.
So we see it's pointing towards Gray which means that's an average trading day. If it's in red it means it's a lot for the trading day.
If it's green it means it's over the average, so that's the case.
So one thing I just want to correct myself here on is the change in prices actually from the previous close.
You can see here 5316 was the previous close and we are up to sense from that so that's that differences. One last thing before we move on is just as quick refresh button here at the top.
That's just to say that when we look at this quote it's what we call a snap quote.
As of the moment we pull this page up, that was the most accurate information. As time passes as I've talked, I've gone through all of these different pieces, this is no longer the most accurate number, so I have to click this refresh button and then I will get a stock quote up-to-date as of the second.
So you will see that things will change.
You see the change in prices moved a little bit.
Lots of different factors can move in this quote.
But anytime I want to get a more up to date I just have to hit refresh and that will give me a brand-new snap quote with the most current information on the stock.
>> Alright. So Caitlin there's a lot of information on the page that you went to.
Including a buy and sell button.
It's not the only place in terms of order tickets on the platform.
Tell me about the other ones and how they differ.
>> Yeah, for sure.
There are a lot of different places within WebBroker that you can pull up a ticket.
Can pull up on the main screen, there is a buy sell ticket, within your holdings, they're all of these different places. If you were to choose to go ahead and click the buy sell button from this page, there are a couple of things that can be a benefit.
You have done your research, you figured out that this is a stock you would like to move forward to purchase, if I click the buy button from here, it's going to pre-populate a bit of information, namely the symbol or name.
So it's pre-populating that in for me so I don't have to type that in. It saves me a tiny bit of work in the end.
Not a ton, but at least a little bit. So this is the same on the holdings page. If it says buy or sell, if you click directly from there, it will pre-populate whichever action you chosen as well as the symbol information.
Quickly again just on the right-hand side, we are seeing very similar information as we saw on the previous page and again, this is a snap quote as well. We see the refresh button down here so we can always update that information to get the most current as we are filling out our order entry. You want to make sure we still have the most accurate information so we can click refresh.
If you are looking at the quote and kind of wondering what sort of information from the quote might be relevant, often times investors might, if they are not going to the market price, if they choose to use a limit price to go ahead and purchase a stock, they could look at for example the high low as well as what the current ask prices to kind of figure out what that limit price that they might look at would be.
For example, if they want to have perhaps a maximum price that they are going to pay for the stock but they don't want to be too far off what the current trade price is, they still want the order to go through so they want to sake kind of close, they could look at the high low up for the day and the ask price and make a decision about what might be a reasonable filled price to have the order completed today and that's all right on the screen.
They can put that in and the system information that can help an investor to understand.
>> Thanks for that.
>> Thanks so much.
>> Caitlin Cormier, client education instructor at TD Direct Investing.
Make sure to check out the learning centre on WebBroker for more educational videos, live, interactive master classes and upcoming webinar. Before you back to your questions on the economy for Francis Fong, a reminder about how you can get in touch with us. You have a question about investing or what's driving the markets?
Our guests are eager to hear was on your mind, so send us your questions.
There are two ways you can get in touch with us.
Send us an email anytime at moneytalklive@td.
com or you can use the question box right below the screen here on WebBroker.
Just writing your question and its end.
We will see if one of our guest can get you the answer here at MoneyTalk Live.
We are back that was Francis Fong, taking your questions about the economy. This one coming in in the past couple of minutes.
As the supply chain continues to evolve and this reassuring onshoring continuing to rise in Canada, what sectors will be affected by that?
> That's an astute observation. For those who might not be overly familiar with the term, it's basically a reversal of what we saw through the 80s, 90s and early 2000's when advanced economies were off shoring and moving lower value manufacturing jobs mainly to developing companies like China, Vietnam, Indonesia, Bangladesh, India, places like that.
And over the past let's call a decade or so, we have started to see a bit of a reversal in that regard and certainly I think that's a very astute observation to note that.
Going forward, I think it's really going to be interesting is how all of these government policies aimed at the clean energy transition are going to drive that even further. So where we have seen onshoring already is it more the high value added manufacturing side? Anything from the automotive industry to chip manufacturing to all sorts of like basically those types of high value added manufacturing. But if you look at for example the inflation reduction act or the last federal budget from the Canadian government here, a lot of it was targeting clean technology manufacturing, everything from wind turbines to solar panels, electrolyzers and basically things that we are going to use to decarbonized all different sectors of the economy.
And in a way, we're sort of in a competition globally to try to attract all of these new and emerging manufacturers and producers of a lot of this type of agreement.
So a lot of what I would expect to see is new industries, supply chains, jobs and firms that will be cropping up as a consequence to take advantage of a lot of these tax breaks.
In Canada, for example, we have 15% special small business tax break aimed at clean technology firms, around carbon capture or what have you. When the German Chancellor visited Canada a couple months ago, they were striking a deal about producing green hydrogen which a number of producers on the East Coast are already producing offshore wind energy were jumping on top of. So we could potentially see a bit of a resurgence in a lot of these things that potentially we haven't seen in many years.
>> Fascinating stuff there. Another question coming in on the platform.
Will a commodity Super Bowl market be good for Canada and the loonie?
>> That's another great question. I will probably just pay off my last answer here and talk about the demand for commodities as it pertains to the energy sector. We are in this next phase of economic growth.
We are all trying to decarbonized and reached net 0 x 20 50.
That transition is incredibly resource heavy. Less fossil fuel intensive because they are trying to shift away from that but the technologies we need to make this happen are far more resource intensive than the kind of technologies that we are traditionally used to. For example, the average electric vehicle has eight times the critical mineral content that a traditional internal combustion engine vehicle has.
Critical minerals are specifically those related to clean technologies, everything from lithium to cobalt, manganese, chromium, platinum group metals and things of that nature.
So demand for those kinds of things as we move all these industries towards net zero is likely going to continue to increase and anyone who's been following the markets and looking at the price of lithium will or any pure play lithium names will see that that has really bucked the trend of the broader market over the last year or so.
And that is likely to impact all sorts of other kinds of minerals related to the energy transition.
>> Will that benefit our economy?
>> Notionally, yes. The challenge that we are all facing right now is how do we access all the stuff?
So we have a lot of those kinds of minerals that we will need, things like nickel and cobalt and there are even some lithium mines that are starting to come online here in Canada, but it's difficult.
We have very long development times for new mines.
The International energy agency for example estimates in a report talking about more reliable supply and for critical minerals are not necessarily depending on countries outside of the advanced world that maybe have a spotty record related to environmental degradation or human rights abuses and things like that.
They basically estimate that it's very unlikely that we will see a dramatic increase in new suppliers because it just takes so long to develop a new mind from exploration all the way through to permitting environmental assessments, Indigenous consultation, things of that nature.
It does take quite a long time. So notionally, Canada does have that and can benefit from that and it certainly something we can see from the federal government to try to tap that but it is kind of an open question as to how fast we get the stuff online.
>> Fascinating stuff. We'll go back to more questions for Francis Fong on the economy in a moment.
Make sure you do your own research before you make 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 writing your question and hit send. We will see if one of our guest can get you the answer right here at MoneyTalk Live.
Last year's new vehicle sales in the United States were the worst over a decade as supply chain was hobbled the industry but now inventories are growing apart supplies are improving.
can the automakers be optimistic about 2023?
Anthony Okolie joins us with the new it TD Economics report on the subject.
>> US vehicle sales got off to a strong start in 2023. Despite January historically being one of the weakest months of the year for sales while December is one of the strongest, sales actually rose nearly 18% month over month in January to almost 16 million annualized units.
That slightly topped market estimates.
When we break it down by type of vehicle, passenger vehicle sales rose nearly 3% year-over-year as dealerships slowly began to restock their inventories. But light trucks rose 4 1/2% year-over-year and notably light trucks accounted for 80% of January sales according to TD Economics which is roughly equal to its share in January just one year ago.
Dealership inventories improving from last summer's lows, we also saw an improvement in the average daily selling rate.
And when we look at the best-selling models in January in the US, the light trucks took the top three spots with the Ford F series at number one, followed by the Chevrolet and the ram pickups. Now the Tesla models why and three, Toyota, Nissan, Honda, GMC, they rented out the rest of the top 10.
EV makers like Tesla are looking to benefit from the tax credits of up to $7500 on certain EVs with the passage of the inflation reduction act passed in 2022 by the Biden administration. While automakers are cautiously optimistic for 2023 rebound, they are still dealing with some sticky prices in commodities when building the vehicles and our past, a lot of those costs on to consumers which makes vehicles more expensive. Greg?
>> It's interesting that once you get past the supply chain woes and you have some cars to sell to the public and now you are looking at an environment where maybe the economy will continue to soften.
People are facing higher borrowing costs.
What is the report say about that? Fresh new set of challenges, aren't they?
>> Yes.
Inventory levels are expected to gradually improve this year. That will help ease supply constraints and kind of alleviate some of the production problems. This would help satisfy some of the pent-up demand that we have seen in the market over the past couple of years.
High interest rates are making vehicle purchases far more challenging for mainstream buyers and less economical for more wealthy consumers.
Vehicle affordability has been a big concern when it comes to interest rates.
When interest rates were low. This issue has grown more concerning as fed hikes have to fight inflation and have raise that concern as well.
TD Economics says that a slowing labour market and existing inventory skewing towards higher priced models will prevent a return to pre-pandemicstatistics this year.
>> MoneyTalk Anthony Okolie.
A quick check in on the markets. We will start here at home on Bay Street with the TSX Composite Index. Not a very outsized day in either direction.
Right now you're down a modest 29 points, down of 14 ticks. Let's take a look at the market reaction to Sun Life.it's up a modest 1.4% to the upside.
We are back now is your questions for Francis Fong. Is Dale Hall by the Bank of Canada going to cause another type of inflation if the Fed keeps raising the rates, increasing the value of the US dollar vis-à-vis CAD? We do a lot of trade with US, so yeah, are we going to import some inflation here?
>> It's a good question and one that comes up quite often in hiking cycles because there can often be divergences, at least light, between the Fed and the BOC.The specific concept that the question refers to is exchange-rate Passover, where basically all sorts of things go into an exchange rate calculation, one of which is interest rate differentials and that could potentially let you import some of that inflation, although I would say it is a little bit less of a concern on my side for a number of reasons.
Number one, the interest rate differential that we are seeing right now is not overly sizable and there's not a huge divergence in our view between the Fed and the Bank of Canada as of yet.
Given the more hawkish the language that we are seeing from chair Powell, we do anticipate an additional hike but we still anticipate them to pause afterwards and then continue to cut towards the end of the year just like Bank of Canada mainly because the trajectory of inflation is anticipated to move likewise. So without kind of this major divergence in exchange differentials and then onto currently a similar trajectory for inflation, we don't anticipate the exchange rate to be moving to depreciate significant more. If anything, a more stable profile for the economy in which we start to see inflation moderate and economic growth continues on a very kind of below trend modest path, leads to a slight strengthening and commodity prices which we anticipate actually be CAD positive. So all things considered, we don't anticipate there to be significant exchange rate pass-through although that of course is going to be very data dependent if we start to see the Fed move significantly differently than the Bank of Canada.
>> We are almost out of time for questions but we will squeeze one more in, do you think there's going to be a slowdown or recession this year?
>> Yeah, and this is what a lot of clients are asking, a lot of folks are going to be concerned about on the street.
The recession specifically I think is perhaps the wrong way to think about this.
Let's look at reality here. We are dealing with a 40 year high for inflation.
Something that most of us have never seen before.
And to combat that, we are seeing a 40 year high in terms of the sharpest increase in interest rates that we have seen for decades.
That is going to lead to economic pain. Do anticipate a recession recession?
It is not in our baseline forecast. But we do anticipate a softening in growth that's going to be below trend for two years and an increase in the unemployment rate from its current level to about 6 1/2% in Canada.
Is that materially different from a recession? Is it going to feel different than recession? Probably not. A lot of folks are going to see that data, they will potentially lose their job or get laid off and it's going to feel like one regardless of whether the specific data says recession or not. Either way, we are in for some economic pain as a consequence of trying to fight this 40 or high inflation.
>> Always a pleasure to have you here and I look forward to the next time. Our thanks to Francis Fong, Senior economist with TD. Make your own research decisions before making investment decision. We will be back tomorrow with insight analysis on the Canadian Jobs Report. Then on Monday, Michael Craig, head of TD asset allocation will take your questions about that topic.
You get a head start with your questions.
Email moneytalklive@td.com.
That's all the time we have for 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'll take you through what's moving the markets and answer your questions about investing.
Coming up on today show, prices and sales are down, but are things looking up for the housing market or could there be more pain ahead? We will discuss that with TD senior economist Francis Fong. MoneyTalk Anthony Okolie is going to have a look at what recent car sales data says about the health of the economy. And in today's low broker education segment, Caitlin Cormier will take us to the different price quote info you can find using this platform.
So here's how you can get in touch with us. It just email moneytalklive@td.com or you can fellow that viewer response box under the video player here on WebBroker.
Before he gets our guest of the day, let's get you an update on the markets. We are still in the thick of earnings season. We are still wondering where the Fed is headed next considering how strong the labour market has been so investors are wrestling with this and there hasn't been much drama on bay or Wall Street today.
We'll start with his TSX Composite Index.
Right now it is down a modest 5.4 points or just the retakes but we do have individual earnings to parse through, including Cameco. There was a beat for the uranium producer.
Those shares last time I looked were in positive territory. Right now let's look together.
Cameco, up 5% right now, 38 bucks and $0.58 per share.
Also earnings out from Telus. Here's the reaction on the street to this one right now. Decidedly not the same direction at 27 bucks and $0.33, you got tell is trading down about 2.7%.
South of the border, of course, there are worries about inflation. We have seen the peak as it rolls off with the labour market getting in the way of what the Fed is trying to do or making them have to go more aggressively? A lot of questions being wrestled with but also corporate earnings. S&P 500 up a very modest seven points right now, a little shy of 1/5 of a percent.
The tech heavy NASDAQ, this is a bit interesting. It's a bit of a mixed bag.
Right now got the NASDAQ up 1/3 of a percent because while some names including Google getting hit the other day on the whole AI thing, you got chipmakers making some games today. Let's take a look at Nvidia and see how it's faring.
It is up to the tune of 3.2%. That is your market update.
While the Bank of Canada has signalled a pause in rate hikes, some are concerned that the real hardship to the housing market is yet to come, that as households deal with higher debt payments. Joining us now to discuss why he's not seeing those cracks in the real estate market at this point is TD senior economist Francis Fong.
Great to have you back on the program.
>> Great to be here.
> Let's talk about that.
There are a lot of musings and reports I've seen lately that okay, the Bank of Canada says we are going to pause now but as households digest the sheer enormity of what gotten into with rate hikes, the worst is yet to come. How should we be viewing this?
>> It's an excellent question and a great place to start.
If we look at were debt service costs are headed, the dramatic increase in interest rates that we have seen over the last year or so is really going to drive that ratio significantly higher, to a point that we haven't seen in quite a few decades. That obviously has a lot of people, is giving a lot of people cause for concern.
If we take a flipside approach to it, there are some key ingredients we need to see before we can kind of conclude that there might be a more systemic decline in home prices. If we look at home price crashes around the world historically, one of the key ingredients preceding this crashes was always a buildup of bad credit.
So take the 2006 run up to home prices in the US, we saw a lot of subprime mortgages gaining share in originations and ultimately when problems arose that is where we sell the problem.
If we look at Canada, we just don't see that major ingredient. If anything, it's going the opposite direction. Credit quality is getting, and baby this is a bit maddening for people, is getting better.
The most recent data we have is a bit delayed.
It's the second quarter 2022. About the time, we saw the ratio of new mortgage originations with a beacon score of bad credit quality, it was just .
6 percentage points of mortgage originations wears on the flipside, new mortgages with good credit quality year mortgage originations was at 89%.
Notionally, if we are hit with this kind of shock, then there is at least that buffer.
That is not a guarantee that we won't have a systemic problem.
If we roll back the clock five, 10 years, a US economist, what would drive a systematic decline in the housing market?
If you would say, an increase in the unlimited rate. In combination with increasing industry. But historically, that hasn't panned out either. Look at Alberta.
After 2014, oil prices crashed. We saw an increase in interest rates to a level that a lot of people said they couldn't necessarily afford and we saw a essentially flatlining in home prices.
In that province alone. Everyone else was doing fine but Alberta a single handedly went to this mini crisis and home prices didn't fall that much. Where are we today?
We have seen home price pullback quite a lot but we haven't even kind of unwound the 50% price gain that we saw just since 2020. So there could potentially still be more downward pressure but with the Bank of Canada being positive in the labour market still being strong, it is difficult to envision a situation where we have a systemic problem.
>> How much of that pause, in your estimation, from the Bank of Canada, was the very fact that we have this dynamic market? A big run-up in prices, people took out big lives including mortgages, and they told us before the pandemic, if you need to borrow a large amount of money, go for it. Things turn quick. Is that concern?
>> I would say yes but a lot of it has to do with timing.
As many people would be familiar, it does take about 12 to 18 months for the full impact of interest rate increases to filter into the economy. We are about one year out from that first interest rate increase.
Inflation has turned, as you noted, in the US and Canada.
Now is kind of the perfect time for the Bank of Canada's pause and say we have this vulnerability. Household debt is as high as it's ever been.
It's far higher than many of our counterparts. We have seen the sharpest increase rate in interest rates in decades.
This might be a good time to pause and see how those hikes trickled through and readjust from there.
Our baseline forecast, we don't have… Like many forecasters, we are anticipating some decreases down the line.
But from a positive perspective, it's kind of a timing thing too.
>> How much has the stress test played into any theories we might have of resilience?
We have seen sales activity falter medically. We have seen prices come down.
But this idea that you are not going to see forced selling, does that help?
There were some industry players who said 2%, are you joking? And what scenario where would you see interest rates jump 2% in short order? And then we saw an increase in 4%.
>>we did toy with a lot of ideas, potential variations of scenarios that the higher interest rates. Did we kind of forecast at the time that they would increase by this much and inflation would be a size it is?
I think this is certainly a lot higher than we would've projected even in the stress test. That being said, to your point, the results of those exercises does give regulators and central banks that capital buffers are sufficient enough to absorb some of the impact. Again, because you're not protecting necessarily this huge crash in all sorts of different kinds of assets, those capital buffers won't ever be tested to the point where we are in that kind of deep stress scenario.
But even if we were, notionally, there is some confidence for regulators to lead on.
>> The Canadian housing market won't see a more dire consequence because of our elevated immigration levels and robust targets?
Is something there?
>> There's probably a nugget of truth to that. There's kind of this double whammy impact of the pandemic that we still haven't seen 100% of folks returned to office.
Work from home is now a standard across all workplaces in the advanced world and that has had an interesting dynamic in terms of driving home prices up not just in major metropolitan areas which we would've been used to in the years prior to the pandemic but elsewhere.
We have seen this. Combine that with our continued high immigration numbers I think there is a nugget of truth that there is potentially a floor that gets put under housing because of that consistent demand.
I would always point to the notion that housing is a very unique asset in this regard.0 it is the only asset, it acts in the same way as a financial asset that you also consume. You consume housing services when you live in your own home.
So a housing asset can act as capital preservation. You can rented out but there is an extremely tight rental market.
We are seeing this in the listings data, but a lot of folks can just sit on that asset as a form of capital preservation.
There are a lot of ways in which housing performs differently than a traditional financial asset.
>> Fascinating stuff. A great start to the program. You will get your questions about the economy for Francis Fong in a moment, including one central banks may begin cutting rates, the chances of a recession and the outlook for inflation. You get in touch any time. Just email moneytalklive@td.com or fill out the viewer response box under the video player on Whataburger. Right now let's get you updated on some of the top stories in the world of business and take a look at how the markets are trading.
Sun Life financial reporting and beat on the bottom line for its most recent quarter. The life Co. benefited from several factors including its acquisition of Dentaquest, Improve growth in Asia and lower COVID deaths. However there was weakness in the asset management business.
Shares of Disney are the spotlight today as the entertainment giant announces plans to slash 7000 jobs as it targets $5.5 billion in cost savings.
Disney is also reorganizing the business into three divisions: entertainment, parks and it sports property ESPN. I've only got two divisions there.
That's bad on me. PepsiCo managed to beat earnings expectations on those higher prices for its snacks, but those higher sticker prices did weigh on demand. The food giant posted a 2% drop in sales volumes in its most recent quarter.
PepsiCo says it's not planning any further price hikes for its products.
Let's check in on the main benchmark index here in Toronto.
We will start on Bay Street.
We are up a very modest right now 17 points, just a takes. South of the border, the S&P 500, which we have going on there?
That brought a read of the American market, we got some grid on the screen but it's modest, about 10 points or 7:45 percent.
We are back now with Francis Fong, to your questions about the economy, so let's get to them.
I hope you're going to talk about how Biden's buy America is going to fit in with the new NAFTA.
We have the state of the union address the other night. The president did, once again, mentioned by America. As Canadians, we are concerned sometimes. With the context here?
>> Absolutely. This is a great place to start as well.
Obviously for the state of the union, by American showed up many times throughout the entire speech and it does give people pause.
I think we do need to take a step back and kind of consider what the two key pieces of legislation were passed recently and was actually in them, namely the build back better and infrastructure bill and inflation reduction act, the IRA. The IRA in particular had strong domestic content requirements that a lot of people focus on. So when you have things like technology investment tax credits or hydrogen production tax credits, battery production, EV tax credits, all of these wonderful things that the environmentalist were touting as being key components of helping drive the key energy transition America, many of us in Canada were concerned that the domestic content requirements at the time would have led to a lot of those economic benefits being constrained to the US and ignoring the fact that many of those industries see a tremendous amount of vertical integration between Canada and the US and of course Mexico.
Excuse me. A tremendous amount of lobbying from all levels of government did turn buy America into by North America so the IRA, we did skirt a lot of those things and that was a major positive. So now, all of those benefits, that $370 billion it's going to go out into North America, notionally, Canada could and if it from developing their supply chains from mining to minerals to refining and all sorts of clean technology manufacturing, potentially energy sources as well. All of those things are in the mix.
That being said, I think there still is a concern and certainly think many politicians at all levels of government will continue to be concerned about incoming pieces of legislation and whether domestic content requirements will remain North American.
On the other side of the pond, if you are eu exposed, there is a lot of hubbub being made right now that there component requirements does not include their allies in Europe. Anything about the energy transition, all these countries are thinking this is going to be the next phase of our economic growth.
As we divest from fossil fuels, GDP growth, jobs are going to come from clean renewable energy.
There is some notion that it will be in part a zero-sum game where some supply chains develop here, it will take away from other regions in the world.
I don't necessarily believe that. I tend to take a bit of more globalist approach to this.
Any action bein taken anywhere to develop more reliable domestic supply chains for clean technologies and tax credits going into a building the stuff up, we all benefit from that from a emissions reduction and decarbonisation perspective.
I understand there are some concerns on the eve side that they want to see some of those benefits.
>> Interesting set. Let's take another question.
Lots coming in. This one is one of the questions of the year, probably going to remain one of the questions of beer. When is your guessing that the Bank of Canada or Fed will begin to lower interest rates?
>> >> This is going to be a common question over the coming weeks and months if it hasn't been already. It's been a hotbed for us to say that we are following the trajectory of inflation but unfortunately am going to have to say we are following the trajectory of inflation.
we have essentially inflation fighting banks and they are overly concerned with how high it is.
That's just the bare minimum. Now, where have we seen it come down today?
Obviously you mentioned earlier that we did TP Canada is coming down and we kind of had this dual impact where we had supply chain labour market shortages kind of driving up inflation, what we would call cyclical factors driving up inflation post-pandemic and post-COVID. And then on the same token, we just had a tremendously strong overheated labour market and broader economic growth that was kind of underpinning the supply chain issues resulting in a 40 year high inflation.
So we have started to see a turn. A lot of the supply chain issues have started to work their way out of the data. Commodity prices are down. Gasoline prices are down.
But we are still seeing a lot of strength in the labour market. Here is where we have some divergence between Canada and the US. Canada is comfortable given the level of high household debt to stay put and see how those first interest rate hikes are filtering through the economy.
Where is in the US, the labour market is still externally strong, wage growth is still extremely strong, and the Fed things that will be a leading indicator for sustained high pressure on inflation. We are anticipating the Fed to continue a little bit more, bringing the Fed funds rate to 5 1/4 in the second quarter of this year, but given the trajectory of inflation is notionally the same in both countries, we are anticipating decreases later in the year towards the end of the year and then through the end of 2024.
> How do we square that not only resilient labour market in the United States but downright strong?
Over 500,000 in one month in face of all this aggressive tightening. Our things not really making sense of the moment?
>> I'm glad you brought that up because there is quite a significant debate happening in the economics industry. Among my peers.
On Twitter, commentary happening all over the place, about this exact issue.
Can you notionally bring down inflation without impacting the unpleasant rate?
There are a lot of traditionalists who believe in a more traditional relationship where inflation and the employment rate have to be inverse related. Whereas there are other folk certainly in the Fed who put a commentary that have said given the kind of inflation that we are facing today it is notionally possible that we might not be able to… Sorry, that we will be able to bring down inflation without a serious impact on the unpleasant rate.
We are somewhere in the middle where in our forecast, we do anticipate there to be some economic pain, particularly in Canada where we have such a high level of household debt.
There is such a high increase in the debt service ratio that we are projecting that there is no way that we feel that Canadian consumers will be able to continue standing at the rate that they are, but they will have to divert so much discretionary spending into servicing debt payments. That fact alone I think is going to be difficult to square.
But I would say it's not a done deal.
There is a lot of debate happening about whether the traditionalists are right or whether there is kind of this new view of the relationship between inflation and the on employment rate.
>> Every four weeks to get a new number to chew on so those will be the next numbers we look at. Next question.
Until 2022, Canadian interest rates were low and quite stable for many years. We were talking about the forward trajectory for rates and should the Canadian prime rate be expected to regularlyfluctuate over the next 5 to 10 years?
>> Potentially have a lot of younger folks that have only been in the market for 10 or 15 years… >> Borrowing costs.
>> Is I've ever seen, myself included.
I'm in the bucket.
But if you roll back the clock a bit, interest rates were a lot more volatile.
The prime rate is the spread over the overnight rate. It will move in line with the overnight rate.
So the question is, will we see more volatility in the overnight rate? Just give a bit of an insight track as to how economists tend to think about the overnight rate over kind of the long term.
There is always a notion of what we call a neutral rate, which is what you think your long-term kind of perspective is in terms of real GDP growth and inflation?
And that kind of guides you are anchor in terms of where interest rates are because at the end of the day, the goal setting your interest rate policy is to ensure that you have a stable rate of growth in a non-inflationary environment. So what interest rate is consistent with stable growth, consistent with long-term growth and is not inflationary? I will always be constant because you have some sort of long-term view about what that is.
And in the interim, you will see fluctuations relative to what that Detroit looks like. So it's difficult for me to say, based on that notion of the neutral rate, whether we would see more volatility over time but there is one perspective that I could potentially give you, one aspect, and that is the notion of climate change impacting our economic outlook over the long term. For several years now, we have seen extreme weather. More specifically, droughts and water stress impact everything from supply chains to broader economic growth to natural disasters and culturally yields all sorts of things.
We scroll back the clock and we were talking about chip shortages, part of that was driven by water stress in places like Taiwan where chip manufacturing is incredibly fresh water intensive so you need fresh water resources.
And the monsoons that refill reservoirs in Taiwan happen to miss the island entirely so they were going through a lot of water stress and production was down.
Last year, we had low water levels in major European shipping routes and basically ships couldn't get through. So you have everything from production issues to shipping issues to labour force issues related to labour shortages and COVID and went on and so we have all sorts of things that are kind of climate change extreme weather related and that is likely going to be a perennial issue over time. So I would anticipate that supply chain issues are going to be something that we are going to be hearing about every year and potentially for longer period of time as these extreme weather runs tend to get more unprintable and more extended, if you will.
Now, whether central banks will actually need to address that is kind of up for grabs because at the end of the day, they look through these kinds of cyclical factors to supply chain impacts and things like that and they will say, well, it's not within the scope of a central bank to address supply chain issues.
By the same token, if there is the notion that you can has sustained high inflation as a result of these things, and doesn't force their hand?
They could say we can't stand having this high inflation and we need to do something about it and we will use the only tool we have available to us. Conversely, may be low economic growth as a result of extreme weather forces them to move in the opposite direction.
Extreme weather suitable wildcard for me as to how variable interest rates move over time.
>> Fascinating stuff. Do your own research on or before making investment decisions.
We'll get back to questions for Francis Fong in a moment.
You get in touch anytime.
just email moneytalklive@td.com.
now let's get to our educational segment of the day.
The price will you see first talk on WebBroker has more info in it than just the value of the shares. Here to explain is Caitlin Cormier, client education structure with TD Direct Investing.
>> For sure, if we look at the quote on WebBroker, there's a lot of information there and investors may know or have a general idea what some of the stuff means but let's dive in and really look at each individual piece and what it actually represents and why it might be important to investors to know a little bit more about it. So let's jump into WebBroker first off.
I'm going to go under research and I'm going to click on underinvestment I'm going to click on stocks and that's going to take us, again, to a homepage for any investment that we are looking at and so what we are going to focus in on today is, of course, right across the top here. So the first thing we see is the last price.
So a lot of people may devote a lot of weight in this number but at the past number, it's something that happened in the past, it's the last trade that happen.
We don't put too much weight in this because it's kind of like a, it's no longer the most accurate piece of information that we can see.
That's the last price that a trade was completed at the time I came to this page.
This particular stock is up by .02, so two cents for the day.
Of course in green, moving that it is moving positive, red meeting negative, and we into the percentage change as well.
That is all just from today from obit.
The next thing that we are going to see here is we are going to see the bid and lots underneath the last price. So the bid is actually quite important. The bid price is what people are willing to pay in order to purchase the stock from you.
So if you are selling, that's an important number to look at.
And then there's the ask price here and the ask price is what people are expecting you to pay in order to actually purchase that stock. That would be something to look at if you are buying.
This would be a what people are asking you to pay in order to purchase the stock and this is what people are willing to pay in order to buy the stock from you so if you are selling.
Beside both of those we see lots. This means we see nine lots here and for lots here. A lot for stock over a dollar represents 100 shares. So in this case, if there nine lots of the bed, that means there are 900 shale shares available at that price.
previous close is the last traded place at whatever the previous close is. That would be yesterday for now.
On Monday would be the Friday before or whatever the last trading day was.
We are going to see a day range here. So 52.99 was the lowest of the stock has traded for today and the highest that it has traded for today it would be the 5354.
We also see the 52 week range. So you get a bit more perspective on how this particular stock has traded over the last year. Finally the volume, so the volume is showing us here that this is how many shares have traded hands today, so over 5 million of the shares of traded hands and that's average for this particular stock.
So we see it's pointing towards Gray which means that's an average trading day. If it's in red it means it's a lot for the trading day.
If it's green it means it's over the average, so that's the case.
So one thing I just want to correct myself here on is the change in prices actually from the previous close.
You can see here 5316 was the previous close and we are up to sense from that so that's that differences. One last thing before we move on is just as quick refresh button here at the top.
That's just to say that when we look at this quote it's what we call a snap quote.
As of the moment we pull this page up, that was the most accurate information. As time passes as I've talked, I've gone through all of these different pieces, this is no longer the most accurate number, so I have to click this refresh button and then I will get a stock quote up-to-date as of the second.
So you will see that things will change.
You see the change in prices moved a little bit.
Lots of different factors can move in this quote.
But anytime I want to get a more up to date I just have to hit refresh and that will give me a brand-new snap quote with the most current information on the stock.
>> Alright. So Caitlin there's a lot of information on the page that you went to.
Including a buy and sell button.
It's not the only place in terms of order tickets on the platform.
Tell me about the other ones and how they differ.
>> Yeah, for sure.
There are a lot of different places within WebBroker that you can pull up a ticket.
Can pull up on the main screen, there is a buy sell ticket, within your holdings, they're all of these different places. If you were to choose to go ahead and click the buy sell button from this page, there are a couple of things that can be a benefit.
You have done your research, you figured out that this is a stock you would like to move forward to purchase, if I click the buy button from here, it's going to pre-populate a bit of information, namely the symbol or name.
So it's pre-populating that in for me so I don't have to type that in. It saves me a tiny bit of work in the end.
Not a ton, but at least a little bit. So this is the same on the holdings page. If it says buy or sell, if you click directly from there, it will pre-populate whichever action you chosen as well as the symbol information.
Quickly again just on the right-hand side, we are seeing very similar information as we saw on the previous page and again, this is a snap quote as well. We see the refresh button down here so we can always update that information to get the most current as we are filling out our order entry. You want to make sure we still have the most accurate information so we can click refresh.
If you are looking at the quote and kind of wondering what sort of information from the quote might be relevant, often times investors might, if they are not going to the market price, if they choose to use a limit price to go ahead and purchase a stock, they could look at for example the high low as well as what the current ask prices to kind of figure out what that limit price that they might look at would be.
For example, if they want to have perhaps a maximum price that they are going to pay for the stock but they don't want to be too far off what the current trade price is, they still want the order to go through so they want to sake kind of close, they could look at the high low up for the day and the ask price and make a decision about what might be a reasonable filled price to have the order completed today and that's all right on the screen.
They can put that in and the system information that can help an investor to understand.
>> Thanks for that.
>> Thanks so much.
>> Caitlin Cormier, client education instructor at TD Direct Investing.
Make sure to check out the learning centre on WebBroker for more educational videos, live, interactive master classes and upcoming webinar. Before you back to your questions on the economy for Francis Fong, a reminder about how you can get in touch with us. You have a question about investing or what's driving the markets?
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We are back that was Francis Fong, taking your questions about the economy. This one coming in in the past couple of minutes.
As the supply chain continues to evolve and this reassuring onshoring continuing to rise in Canada, what sectors will be affected by that?
> That's an astute observation. For those who might not be overly familiar with the term, it's basically a reversal of what we saw through the 80s, 90s and early 2000's when advanced economies were off shoring and moving lower value manufacturing jobs mainly to developing companies like China, Vietnam, Indonesia, Bangladesh, India, places like that.
And over the past let's call a decade or so, we have started to see a bit of a reversal in that regard and certainly I think that's a very astute observation to note that.
Going forward, I think it's really going to be interesting is how all of these government policies aimed at the clean energy transition are going to drive that even further. So where we have seen onshoring already is it more the high value added manufacturing side? Anything from the automotive industry to chip manufacturing to all sorts of like basically those types of high value added manufacturing. But if you look at for example the inflation reduction act or the last federal budget from the Canadian government here, a lot of it was targeting clean technology manufacturing, everything from wind turbines to solar panels, electrolyzers and basically things that we are going to use to decarbonized all different sectors of the economy.
And in a way, we're sort of in a competition globally to try to attract all of these new and emerging manufacturers and producers of a lot of this type of agreement.
So a lot of what I would expect to see is new industries, supply chains, jobs and firms that will be cropping up as a consequence to take advantage of a lot of these tax breaks.
In Canada, for example, we have 15% special small business tax break aimed at clean technology firms, around carbon capture or what have you. When the German Chancellor visited Canada a couple months ago, they were striking a deal about producing green hydrogen which a number of producers on the East Coast are already producing offshore wind energy were jumping on top of. So we could potentially see a bit of a resurgence in a lot of these things that potentially we haven't seen in many years.
>> Fascinating stuff there. Another question coming in on the platform.
Will a commodity Super Bowl market be good for Canada and the loonie?
>> That's another great question. I will probably just pay off my last answer here and talk about the demand for commodities as it pertains to the energy sector. We are in this next phase of economic growth.
We are all trying to decarbonized and reached net 0 x 20 50.
That transition is incredibly resource heavy. Less fossil fuel intensive because they are trying to shift away from that but the technologies we need to make this happen are far more resource intensive than the kind of technologies that we are traditionally used to. For example, the average electric vehicle has eight times the critical mineral content that a traditional internal combustion engine vehicle has.
Critical minerals are specifically those related to clean technologies, everything from lithium to cobalt, manganese, chromium, platinum group metals and things of that nature.
So demand for those kinds of things as we move all these industries towards net zero is likely going to continue to increase and anyone who's been following the markets and looking at the price of lithium will or any pure play lithium names will see that that has really bucked the trend of the broader market over the last year or so.
And that is likely to impact all sorts of other kinds of minerals related to the energy transition.
>> Will that benefit our economy?
>> Notionally, yes. The challenge that we are all facing right now is how do we access all the stuff?
So we have a lot of those kinds of minerals that we will need, things like nickel and cobalt and there are even some lithium mines that are starting to come online here in Canada, but it's difficult.
We have very long development times for new mines.
The International energy agency for example estimates in a report talking about more reliable supply and for critical minerals are not necessarily depending on countries outside of the advanced world that maybe have a spotty record related to environmental degradation or human rights abuses and things like that.
They basically estimate that it's very unlikely that we will see a dramatic increase in new suppliers because it just takes so long to develop a new mind from exploration all the way through to permitting environmental assessments, Indigenous consultation, things of that nature.
It does take quite a long time. So notionally, Canada does have that and can benefit from that and it certainly something we can see from the federal government to try to tap that but it is kind of an open question as to how fast we get the stuff online.
>> Fascinating stuff. We'll go back to more questions for Francis Fong on the economy in a moment.
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Last year's new vehicle sales in the United States were the worst over a decade as supply chain was hobbled the industry but now inventories are growing apart supplies are improving.
can the automakers be optimistic about 2023?
Anthony Okolie joins us with the new it TD Economics report on the subject.
>> US vehicle sales got off to a strong start in 2023. Despite January historically being one of the weakest months of the year for sales while December is one of the strongest, sales actually rose nearly 18% month over month in January to almost 16 million annualized units.
That slightly topped market estimates.
When we break it down by type of vehicle, passenger vehicle sales rose nearly 3% year-over-year as dealerships slowly began to restock their inventories. But light trucks rose 4 1/2% year-over-year and notably light trucks accounted for 80% of January sales according to TD Economics which is roughly equal to its share in January just one year ago.
Dealership inventories improving from last summer's lows, we also saw an improvement in the average daily selling rate.
And when we look at the best-selling models in January in the US, the light trucks took the top three spots with the Ford F series at number one, followed by the Chevrolet and the ram pickups. Now the Tesla models why and three, Toyota, Nissan, Honda, GMC, they rented out the rest of the top 10.
EV makers like Tesla are looking to benefit from the tax credits of up to $7500 on certain EVs with the passage of the inflation reduction act passed in 2022 by the Biden administration. While automakers are cautiously optimistic for 2023 rebound, they are still dealing with some sticky prices in commodities when building the vehicles and our past, a lot of those costs on to consumers which makes vehicles more expensive. Greg?
>> It's interesting that once you get past the supply chain woes and you have some cars to sell to the public and now you are looking at an environment where maybe the economy will continue to soften.
People are facing higher borrowing costs.
What is the report say about that? Fresh new set of challenges, aren't they?
>> Yes.
Inventory levels are expected to gradually improve this year. That will help ease supply constraints and kind of alleviate some of the production problems. This would help satisfy some of the pent-up demand that we have seen in the market over the past couple of years.
High interest rates are making vehicle purchases far more challenging for mainstream buyers and less economical for more wealthy consumers.
Vehicle affordability has been a big concern when it comes to interest rates.
When interest rates were low. This issue has grown more concerning as fed hikes have to fight inflation and have raise that concern as well.
TD Economics says that a slowing labour market and existing inventory skewing towards higher priced models will prevent a return to pre-pandemicstatistics this year.
>> MoneyTalk Anthony Okolie.
A quick check in on the markets. We will start here at home on Bay Street with the TSX Composite Index. Not a very outsized day in either direction.
Right now you're down a modest 29 points, down of 14 ticks. Let's take a look at the market reaction to Sun Life.it's up a modest 1.4% to the upside.
We are back now is your questions for Francis Fong. Is Dale Hall by the Bank of Canada going to cause another type of inflation if the Fed keeps raising the rates, increasing the value of the US dollar vis-à-vis CAD? We do a lot of trade with US, so yeah, are we going to import some inflation here?
>> It's a good question and one that comes up quite often in hiking cycles because there can often be divergences, at least light, between the Fed and the BOC.The specific concept that the question refers to is exchange-rate Passover, where basically all sorts of things go into an exchange rate calculation, one of which is interest rate differentials and that could potentially let you import some of that inflation, although I would say it is a little bit less of a concern on my side for a number of reasons.
Number one, the interest rate differential that we are seeing right now is not overly sizable and there's not a huge divergence in our view between the Fed and the Bank of Canada as of yet.
Given the more hawkish the language that we are seeing from chair Powell, we do anticipate an additional hike but we still anticipate them to pause afterwards and then continue to cut towards the end of the year just like Bank of Canada mainly because the trajectory of inflation is anticipated to move likewise. So without kind of this major divergence in exchange differentials and then onto currently a similar trajectory for inflation, we don't anticipate the exchange rate to be moving to depreciate significant more. If anything, a more stable profile for the economy in which we start to see inflation moderate and economic growth continues on a very kind of below trend modest path, leads to a slight strengthening and commodity prices which we anticipate actually be CAD positive. So all things considered, we don't anticipate there to be significant exchange rate pass-through although that of course is going to be very data dependent if we start to see the Fed move significantly differently than the Bank of Canada.
>> We are almost out of time for questions but we will squeeze one more in, do you think there's going to be a slowdown or recession this year?
>> Yeah, and this is what a lot of clients are asking, a lot of folks are going to be concerned about on the street.
The recession specifically I think is perhaps the wrong way to think about this.
Let's look at reality here. We are dealing with a 40 year high for inflation.
Something that most of us have never seen before.
And to combat that, we are seeing a 40 year high in terms of the sharpest increase in interest rates that we have seen for decades.
That is going to lead to economic pain. Do anticipate a recession recession?
It is not in our baseline forecast. But we do anticipate a softening in growth that's going to be below trend for two years and an increase in the unemployment rate from its current level to about 6 1/2% in Canada.
Is that materially different from a recession? Is it going to feel different than recession? Probably not. A lot of folks are going to see that data, they will potentially lose their job or get laid off and it's going to feel like one regardless of whether the specific data says recession or not. Either way, we are in for some economic pain as a consequence of trying to fight this 40 or high inflation.
>> Always a pleasure to have you here and I look forward to the next time. Our thanks to Francis Fong, Senior economist with TD. Make your own research decisions before making investment decision. We will be back tomorrow with insight analysis on the Canadian Jobs Report. Then on Monday, Michael Craig, head of TD asset allocation will take your questions about that topic.
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That's all the time we have for the show today.
Thanks for watching. We will see you tomorrow.
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