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[music] >> Hello, I'm Greg Bonnell. Welcome to MoneyTalk Live, brought to you by TD Direct Investing.
Every day, I'll be joined by guests from across TD, many of whom you'll only see here.
We're going to take you through what's moving the markets and answer your questions about investing.
Coming up on today's show, we are going to discuss the outlook for gold as bond yields moved higher through the summer. TD Cowen's head of mining equity research Greg Barnes joins us. MoneyTalk's Anthony Okolie is going to have a look at the latest retail sales reported and in today'sWebBroker education statement, Ken Cormier will show us how you can research fixed income using the popper.
Here's how you 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 our guest of the day, let's get you an update on the markets.
We have some green on the screen, at least the last time I checked.
186 points of the upside on the TSX Composite Index, almost a full percent gain. Among most actively traded names right now on the TSX include Crescent Point Energy taking part in the rally but off the lows of the session, we see a bit of a pullback in the price of benchmark crew today. At 11 bucks and six cents per share, we've got Crescent Point down a little bit less than a percent. A couple of names feeding the topline number on the TSX to the upside include Barrick Gold.
A lot of the miners in positive territory today.
Good day for, we are going to be talking about mining stocks throughout the show.
We are seeing a boost in the price of gold as bond yields start to ease a little bit.
But Barrick up almost 2 1/2%.
South of the border, want to check in on the S&P 500. A bit of a rally on her hand.
I brought a read of the American market upalmost a percent, 43.2 a call that. The tech heavy NASDAQ might be fearing a bit better percentagewise.
Let's check in on it now. It's up almost 1 1/2%. The big event is going to come after the close of the markets today. Nvidia is on deck to report its latest quarterly earnings. Of course, they have set a lot of promising things about the demand for their chips because of the AI boom. So the stock has definitely been on quite a runthroughout the past year.
This will be one of those, okay, show us the results of all this demand you been talking about. So far, at 460 bucks in a penny per share, you got Nvidia up about 2 1/2% ahead of that. A lot riding on those earnings and perhaps a market sentiment going forward for the rest of the week.
And that's a market update.
Gold is getting abused today, but it is trading still near a five-month low.
Bond yields, of course, have moved higher over the summer. So what is the outlook for the precious metal and the mining sector as central bankers prepare to meet at Jackson Hole. Joining us now to discuss is Greg Barnes, head of mining equity research at TD Cowen. Great to have you back.
>> Good to be here.
>> Is a good day to have you on because we are talking about interest rates, bond yields, gold and you can see that gold is popping right now. Is that payments the trade in gold?
>> I think it has been tied to the 10 year yield. I think they are at 16 or 15 year highs. I think that just the market looking at what the Fed has done and what they are likely to do and I think there's an expectation that maybe the Fed wouldtake its foot off the brake and maybe start to ease at some point, not getting pushed out. And the strong economic numbers out of the US, that would be the case. So higher rates is a bit tougher for gold,so we think it will trade sideways in this kind of environment, may be slowly downward as it has. When we get to the point that the Fed started to ease up is generally a very good time to be in gold.
>> Do we need to be, as investors, if you are interested in gold, listening pretty closely to what Jerome Powell is going to have to tell as a Jackson Hole at the end of the week? Thou back to a year ago, he was pretty turned with us but a lot has happened in here.
>> Yeah.
Clearly, what he says will have an impact, so you should listen very, very carefully.
But I think the message has been higher for longer and they haven't wavered from that.
So I'm not sure I know what the Fed is going to say on Friday but I think that sort of the message I would expect.
>> If you're thinking about a sideways trade, if we want to be higher for longer, they stop and stick there for a while, when we expect gold to start moving in a direction that the gold bugs might want to see?
> As soon as you get the sense that the Fed is going to start to ease.
You probably don't have to wait for them to actually ease, but when we get to the point where it looks like at some point they will be easing, I think gold will start to respond to that, so sentiment and forward-looking view on where the Fed is going.
>> Waiting for that kind of price movement in the metal itself. What about the other miners, how are they faring in this environment?
>> They are doing fine.
That's the way to put it. The first half of the year, to get across the board when they were talking about how gold and base metals was tough, for various reasons, it great related, sequence issues, labour issues, permit issues, mechanical issues, but that was largely expected.
A week first half and a much stronger second half in most the companies you look at.
And that story really hasn't buried.
We got one guidance cut across the whole group.
So the companies are sticking to their message.
And on top of that, the cost pressures of the East, they are not coming down dramatically yet.
They are certainly not going up and in some cases, some of the input costs are going down.
They were pressures have eased. So we should see margins start to expand a little bit in this kind of environment.
>> When we talk about an eventual movement in gold on signs of the Fed is not only done but might start pulling back on rates, what's traditionally it leads that kind of space?
The precious metal itself, obviously, the miners are very sensitive to it. Do the equities move before or in reaction to the price of gold?
>> The equities tend to give you a bit of a leading indicator on what's going to happen.
I couldn't give you a timeframe, but they tend to be a little bit more reactive.
they tend to give you a signal when gold is going to move, so I would watch with the equities are doing.
yeah, gold does tend to lead in that type of environment, it's much more sensitive.
Copper is still sensitive, but gold is more sensitive to rates than the US dollar. So the challenges that you laid out in the first half of the year for the mining sector, what does the second half of this year look like?
>> It looks pretty good, in general, if we believe the guidance of the management teams have given us.
Production will live. A lot of companies are talking about production being waited roughly 5% to the first half and 55% to the second.
So if that plays out, which we think it largely well, that will help costs come down and margins go up.
Even in a flat gold price environment, that will look better than the first half of the year for sure.
>> What about the M&A activity, any dealmaking? At this point in the cycle, would you expect there to be much dealmaking?
There are a few things bouncing around.
>> We had a few big deals.
We obviously had Newmont bind Eucharist, which is a big, big deal in the gold space.
A few consolidation moves in the base metal space, a bit smaller, but still.
I think we will see a similar kind of pace, some consolidation, some acid exchange, things like that. When Newmont finally closes on Eucharist which will be later this year, there will be assets that they are going to sell so that's will spark a bit of activity as well.
So I think a steady pace of M&A's is what we should anticipate.
> Do you expect a healthy appetite for those assets when it comes time to sell them or will be a bit of a slog?
>> I think it will be reasonably healthy from the midcalf to small names, there should be interest in those assets.
>> Apart from what the Fed is going to have to say this week or at their next rate decision next month, we have some concerns about China.
> We do.
>> World's second-largest economy and it hasn't been able to turn the engines on, despite lifting the COVID restrictions.
How concerned we need to be about that from a commodities perspective you are >> It's clearly a concern and the rolling property crisis, the residential property crisis in China isn't helping, the biggest private commercial developer in China is running into problems as well, a lot of debt. That is a lingering concern.
I think to this point, demand impact on the base metals it has generally been offset by EV energy transition demand.
Inventories remain very low across the board, so I think that will be supportive.
We do need to see China pick up the pace, there is no question about that.
>> Always great insight. For full disclosure on the companies covered by TD Cowan, please see the link to the TD Securities website at the end of this program.
We are going to get your questions about mining stocks for Greg Barnes in just a moment's time.
And a reminder, of course, you can contact us at any time.
Just email moneytalklive@td.com or fill out the viewer response box under the video player on WebBroker.
Right now, let's get you updated on the top stories in the world of business and take a look at how the markets are trading.
It has been a big week for US retail earnings. We will get to a few of them for you. We'll start shares of Foot Locker in the spotlight today but perhaps not for the best reason.
Down about 32% at this hour. The athletic shoe and apparel retailers cutting his sales forecast for a second time this year. It's going to what calls consumer softness. Foot Locker is also reporting a nearly 10% drop in the sales for its most recent quarter, and the company, of course, have been relying on markdowns to try to move those shoes and clothing out of inventory and it has been hitting the margins as well. The street is not liking what it is hearing on Foot Locker today.
Let's get another company out there.
Peloton reporting a wider than inspected loss for its most recent quarter.
It says the bottom line was hit by a drop in new subscribers and it attributes that to seasonal factors, but also a recall of its bike seat post. Shares of Peloton soared during the pandemic, of course, trading of $160 per share at one point, amid the surging demand for home workouts.
A much different story for the name now.
Five bucks and $0.39 per share, pulling back the most 23% on the session alone.
This whole cautious consumer trend doesn't appear to be weighing on sales at Abercrombie and Fitch. The retailer delivering an earnings beat for its most recent quarter and is raising its annual sales forecast. Abercrombie and Fitch's new collections appear to be having some traction with customers at a time when many retailers are struggling with weak demand and bloated inventory. You can see the street likes the sounds that. At 50 bucks and $0.92 per share, you got Abercrombie and Fitch up almost 24%. A quick check in on the main benchmark indices. We'll start her at home with the TSX. A 173 point gain right now, up almost a full percent.
South of the border, we have a rally in some of the tech names but even the broader market with the S&P 500 up 40 points we will call that right now, just a little shy of a full percent.
We are back now with Greg Barnes, head of mining equity research at TD Cowen, taking your questions about mining stocks. Let's get to them. Off the bat here. What are your thoughts on Cameco and how about the outlook for Westinghouse, Canadian nuclear power and Bruce Power? Someone's clearly got their mind on uranium and nuclear power here.
>> Well, Cameco is obviously a great spot for uranium. The prices up to decade highs both on the spot and contract basis.
Demand has been strong particularly on the contract side.
They are the biggest Western supplier of uranium in the world, so they really are commanding big gains which they have shown in their contract book that they have grown aggressively in the past 18 months.
I think that will slow down now because they pretty much felt the book for the next several years, so it's a good position to be in. And the closing of the Westinghouse deal clearly is important to them. They continue to say that'll happen by the end of the air. That'll transform the company from being really just a uranium miner to become a full service supplier through the nuclear fuel supply chain.
Very impressive.
Bruce Power really isn't a factor for Cameco anymore. They sell uranium or nuclear fuel to them.
>> Things are still working in Cameco's favour.
What are the long-term risks for Cameco, Denison Mines, for the uranium space?
>> Longer-term risks, both positive and negative. Obviously, negative would be a nuclear accident, always weighs heavily on the sector, as we saw in the past decade with Fukushima. But upside risks, if there are sanctions placed on the supply of nuclear fuel from Russia to the US or to the West in general that would cause a significant supply squeeze, and we would see prices for uranium and other nuclear fuel component shoot higher quickly. So there are positives and negatives, but right now they are in a pretty good spot.
>> Okay, another question here. This one is about Sheritt. Is it a goodbye or not?
You're on the platform, we cannot give you buy or sell advice. We can talk about share it and what's going on with the company and maybe some of the pros and cons.
>> Sheritt, one of the fuel at ways to get exposure to nickel. the red Star there is that their biggest asset is based in Cuba, which does face US sanctions still today. Sheritt faces challenges getting supplies and technical help, particularly the consumer space, they cannot access that. That weighs on them a little bit.
demand has been strong. I think the biggest challenge for Sherittand Nicola is that supply is strong and there is growing supply particularly from Indonesia, largely driven by Chinese money.
You've got the outlook for nickel itself, it's a little bit challenged at the moment without additional supply coming in.
>> When I think about a name like Sheritt, their operating in Cuba, this is what you have to consider, when I think about global mining companies, different jurisdictions, different risks. When investors are doing their homework, does that have to be a part of it? See where they operate, with the current regime there and what are some of the rules of the place?
>> Obviously, you have to pay pretty close attention to that, but I will say that no matter where you are in the world, there is a risk, whether it's permitting risk, government risk, geological risk.
Some areas of the world are more challenging, areas in Africa are more difficult.
Areas in South America are more difficult.
But even in the US, it's very, very difficult to get a permit to build a new mine.
I wouldn't say anyways without risk but you see a lot of mining companies re-shoring, if you want to put it that way, coming back to Canada because they know they have a good legal government framework there where you know if you own a property, you own it and the government is going to take away from you.
>> Good points.
Let's take another question here from the audience.
The viewer wants to know what your guests view is on Ivanhoe?
>> Well, talking about risk areas of the world… [laughing] Ivanhoe's principal asset is the copper mine in the DRC, the Democratic Republic of the Congo.
That has a reputation as a very challenging place to operate.
I've been there several times. I would say over the past decade, the conditions there are definitely improved, particularly in the southern DRC, and the copperbelt. The company, quite frankly, has done a phenomenal job building a very large copper mine there for the last five years which is now top 10 copper mine globally producing 450,000 tons of copper per year.
It's a very well run company. It's met some significant political and technical challenges and succeeded.
>> Sometimes I'm talking to people about copper itself and the demand we are expecting out of it with electro vacation in the future, they are a little bit worried about here and now, the amount of supply out there perhaps beingin excess of demand. What is that situation looking like for the market?
>> We are not seeing that currently.
Inventories are remaining incredibly low.
Critically low, quite friendly.
There is a lot on the metal exchange or in Shanghai.
I think 20 or 30,000 tons of inventory which in a 25 million tons a year market, it's nothing.
There has been some improvements on the copper supply side of the past couple of years with several big mines being built, Ivanhoe being one of them.
Teck Resources with QB too, that is ramping up to you as we speak.
If we do see a surplus, it's a small one initially 24, a little bit of 25, and then we are into a period where we expect significant deficits because there hasn't been new supply built in recent times.
>> As always at home, your own research before you make any investment decisions.
We'll be back with you to your questions for Greg Barnes on mining stocks in just a moment.
Let's get to our educational segment of the day.
higher yields have made fixed income more attractive to some investors, and if you're looking to research the space, WebBroker can help. Joining us now to discuss is Caitlin Cormier, client education sector with TD Direct Investing.
>> Fixed income has definitely become more of a hot topic lately with interest rates increasing as they are.
let's demystify where we can find fixed income on the trading platform and how you can sort of navigate it.
let's go ahead and jump in.
We are going to go ahead and click on the second tab at the top, research, and we are going to go all the way down under investments to fixed income. Once we get here, this is kind of the home page foreverything to do with individual fixed income products within WebBroker.
You will see that there's kind of a quick pics list here where you can see different bonds, so agency, corporate bonds, all three levers of government bonds, strip bonds as well as some money market instruments that are available to purchase.
You can even though do a specific search.
If there is a specific kind of security that you're looking for, you can actually click here on the fixed income search, and I go in, for example, US Treasury bonds could be something that investors might be interested in.
I just simply click US treasury bonds, click submit, and I will see any treasury bonds that are available for purchase, so all different maturity dates and I've got a lot of information about those different investments there.
Another thing I could do, for example, is if I want to look for a particular company and I want may be a corporate bond for that company, I could come down to corporate bonds and type in, for example, it's prompting me for Apple so we will go with that, and I see any bonds that are available from Apple.
As you can see, there's quite a lot of different things here.
I choose specific maturity dates.
If I want to see any bonds that are available with maturity dates by the end of next year or something like that, I can do that.
So there's really quite a bit that we can do as far as search as well as kind of this front page here where we see, and again, these numbers here represent the time to maturity, so any bonds that are coming due in the next 0 to 5, 5 to 10 or 10+. I will click into one of the Canada bond so you can see, it's exactly the same idea. The issuer name, the coupon rate, the maturity date as well as the bid and ask prices available. There is quite a bit of information.
If you're having any trouble navigating, you can always contact our fixed income desk.
You see the number at the top here.
1-888-993-2663.
That desk will go to the process with you and there is no commission fee for purchasing these bonds.
You don't pay that 9.99. You can call and speak with one of them with no concern as far as extra cost, and they are available to be purchased between 8:30 AM and 5:00 PM Eastern time Monday to Friday.
>> If someone is looking for that, I'm sure it's a big help. They can call that number and if they don't feel they need that help, can you do the purchase on WebBroker yourself?
>> Absolutely. If you found what you want and you want to move forward with that purchase, you can do with that purchase on WebBroker. Let's run through that process.let's just go ahead and choose, I'm going to go back here to agency bonds.
I will choose 0 to 5 years, just randomly picking, of course, not suggesting anything.
I'm going to go ahead and pick this one here randomly. I'm gonna click the buy button. In case you didn't notice, I collected the left and had a little checkbox and then I click the little buy button.
and what I see here is kind of my entry ticket.
I have the option to put either the quantity, meaning what the face value will be at the end of the term for this particular investment or I can choose how much money I want to invest.
For example, if I put in $10,000 and click recalculate, it's gonna tell me how much it will cost me to buy an investment that will come to you and $10,000 on the maturity date.
In this case, this particular bond is priced at a discount was going to cost me less than 10,000.
So if I'm comfortable with everything here, comfortable with the pricing, comfortable with the yield and all that sort of stuff, I can actually go ahead and click next. There's going to be a final confirmation page here, an overview of everything that we've and put here and I can go ahead and click confirm and complete the purchase.
Pretty straightforward. Just need to choose whether you're going to put in an investment amount or quantity, review all of the information, make sure you're comfortable with it and go ahead and click next.
If some of the terminology that I've used here is a little over your head or you're not super comfortable with that, we have videos on the learning centre as well as a ton of master classes available, I say a time, there is for different fixed income master classes that we teach regularly that go over these terminologies if you want to be more comfortable with fixed income.
>> Great stuff as always, Caitlin.
Thanks for that.
>> Thanks, Greg.
>> Caitlin Cormier, 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. Before you get back to your questions about mining stocks for Greg Barnes, 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 are back with Greg Barnes, taking your questions about mining stocks. We have a viewer who wants to get your thoughts on First Quantum minerals.
>> Sure. First Quantum is one of the top producers in the world. Had a difficult start to the year with some political issues in Panama around the stability agreement which are now resolved. By the end of September, they will have that fully passed into law in Panama, so that will lift that concern off the stock.
Zambia has been pretty calm in the last couple of years. That's been a good place for them to be operating.
you have a company doing roughly 900,000 tons of copper per year. A cash passed in the middle of the curb.
Pretty stable politically at the moment.
Good leverage to copper. The focus for them now is paying down debtbecause they took on a lot of debt to build cobra so they are targeting reducing debt load by billion dollars over the next two years which we believe they can achieve. So yeah, if you want good exposure to copper, I think First Quantum is one way to get it.
>> Does this higher rate environment make paying down debt a bit tougher for some of these companies, whether it's First Quantum or others that have taken on a considerable amount of debt when rates were lower and now it's payback time?
>> It sure has an impact and that's one of the motivations to get the debt paid down quickly.
But also they are looking longer-term and they want to move on to the next phase of growth in a project they want to build and they need to get the balance sheet in shape to do that.
>> Any risk for them beyond getting debt levels down?
>> No, other than typical mining risks which there always are a lot of.
>> Like if you don't find what you think you're gonna find?
>> It geological risk, technical risk, mechanical risk, all of those things that we just deal with every day.
>> Another one here, one of the big one.
Barrick.
We talked about gold off the top of the show. What is your view on Barrick?
>> Barrick's inexpensive right now. I think it is underrecognized for some of the progress they've made particularly they have made combined operations in Nevada that they are sharing with Newmont.
It's taken a long time to turn those operations, 5+ years now, but I think they're getting to the end of that road and starting to show better performance there.
I think that needs to happen for the stock to really start to perform better.
Hopefully in the next year, we will see some of that performance.
>> are there some saying if I have a thesis about gold, the stock should do well in that environment, but then each of them has their own operational issues.
>>. Look, they doand they have their own unique challenges, but if gold goes up, they all go up to varying degrees. Look, I think one of the names that has more leverage to gold if you like because it tends to be higher cost and a little bit of shorter life, that would be Kinross. If you expect gold to have a good run, Kinross is a good place to be for that run.
>> How about the streamers compared to the miners?
>> In an environment where gold is going up and has a big rally that producers tend to do better inthat environment than the streamers. The streamers will do fine but the producers will outperform in that environment.
>> Interesting, I hadn't thought about that.
Here's a question you probably been asked for many years now. What is the potential in the Ring of Fire region? For those not familiar,Northern Ontario, it's mostly very rich in mineral deposits. We've been talking about it for a long time.
>> And I think we will continue to talk about it for a long time, Greg.
You need infrastructure. I know there are a lot of conversations going on at the federal and provincial level to get road access into that area.
And that really needs to happen to really unleash that potential in the Ring of Fire. No doubt, it significant, but it needs the infrastructure, it needs government help to get that infrastructure.
>> We were talking a couple of days ago about some of these issues and I was mentioning before the show, I was dropping off my youngest, 18 years old, for university this weekend. When he was born, I was a green smart reporter, that's the Ontario legislature, and we were asking politicians about the Ring of Fire. This kid is 18, he's leaving the house this weekend, he was a baby when I was talking to people about the Ring of Fire.
>> Well, look, it's money.
Cost billions of dollars to build access roads, the kind of access roads you need through that kind of wilderness in Northern Ontario. It's tricky ground.
Permafrost in some areas.
So yeah, it just takes a lot of money to put that kind of rode in and I think for a long time that hasn't been that motivation but energy transition, critical minerals, a big push from the US to get access to critical minerals, not just the US but Canada as well, I think this probably a little bit more mentor now than there has been in the past.
> Interesting stuff. We are going to pack your questions for Greg Barnes on mining stocks in a few moments time.
As always, make sure you do your own research before making any investment decisions.
and a reminder that you can get in touch with us at any time.
Do you have a question about investing or what's driving the markets?
Our guests are eager to hear what's on your mind, so send us your questions.
There are two ways you can get in touch with us.
You can send us an email anytime at moneytalklive@td.com or you can use the question box right below the screen here on WebBroker. Just write in your question and hit send.
We'll see if one of our guests can get you the answer right here at MoneyTalk Live.
We got the latest read on the health of the Canadian consumer today, retail sales, they did surprised mildly to the upside in June. Perhaps some resilience out there as we navigate these higher borrowing costs and persistent inflation.
Our Anthony Okolie has been digging into a TD Securities take on all this and the indications for the economy. Anthony, what did they say?
>> Thanks very much, Gr They mentioned it was a bit of a surprise, it was up .1% month over month, which matched TD Securities expectations. The headline print was a tad stronger versus stat Canada advance estimate and market consensus for a flat print.adjusting for inflation, retail sales volume was actually mildly lower, .1% lower in June.
When we look at it by sector, sales were upin only 3/9 subsectors.
The biggest surprise I think was in sales at motor vehicle and parts dealers. That defied excitation. They are up 2.5% month over month and TD Securities was looking for weakness there. Sales by new car dealers were up for the third consecutive month, saw that third consecutive monthly increase and they were driven by sales of light vehicles, vans and SUVs. Auto sales have been strong despite the fact that consumers have faced headwinds from higher energy prices, higher borrowing costs as well. Looking at retail sales at gas stations and fuel vendors, they were also up during the month, thanks to higher prices at the pump, but given their small wage, they had an impact on the headline number. When we exclude sales at car dealerships and gas station, core retail sales fell versus estimates of an increase.
all the categories were in the red with the deepest in electronics and appliance stores and building materials and garden equipment dealers.
Looking ahead, stats Canada is pointing to a solid reading of again in July but today's small gains reinforce expectations for second-quarter GDP to contract in June. That's a notable step down from the pace that we saw in the first quarter.
>> Some interesting stuff happening in that report, in fact that the advanced flash, more strength in July and cars, big ticket items and months were you got to, in June, Bank of Canada hydrates, in July, BOC hydrates, and we go out and buy automobiles. What does it all mean? My head is still swimming.
>> I think we are seeing some surprising resilience in certain categories but the growth outlook continues to show more signs of strain with second-quarter GDP tracking well below the Bank of Canada's projection. Now TD Securities believes that you give the Bank of Canada some added confidence that higher rates are working to slow demand.
TD Securities continues to look for the Bank of Canada to hold the overnight rate at 5% into 2024. But as I mentioned yesterday, they did warn that the risks remain skewed towards more tightening with October more likely than September.
>> A lot at stake.
Interesting stuff.
>> My pleasure.
>> MoneyTalk's Anthony Okolie.
Now for an update on the markets.
Okay, 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 us a nice picture of the market members. Right now we are taking a look at the TSX 60 and we are looking by price and volume.
What are we seeing here in terms of green on the screen? We are talking about mining names today. Let's start with the miners.
You have the price of gold moving higher.
10 year yields in the states pulling back a bit after that March day after day grind higher. You have a name like Barrett, ABX, up a little bit more than 2%.
Even a little more green on the screen lower down, Kinross is up 4.6%. And technology, we are awaiting some big earnings after the bell south of the border from Nvidia, but the entire space seems to be getting ahead of that including Shopify, which had some tough sessions as of recent days but today it is up 4%.
Can't ignore that big blocker read down at the bottom. Although it's a bit of a mixed picture in the energy space today. Saw some softness in the price of benchmark.
But right now you do have some names modestly higher but Cenovus Energy, CVE, down almost a full percent.
Let's take a look south of the border. We will screen through the S&P 100 and what are we getting here?
There's a name we are looking for on the screen, Nvidia, it's gonna be the big event after the market closed today. A lot of excitement around AI and the demand for their particular brand of chips, their GPU's.
Nvidia has said it anticipates very strong demand.
Well, now they have to show us with their quarterly earnings report habits all playing out.
Ahead of that, you have Nvidia up a little bit more than 2%. Another weekday for J&J down at the bottom of the screen. And Nike, perhaps guilt by association, footlocker coming out today and disappointing the market with his quarterly earnings, talking about dropping demand.
Nike would be one of those companies, it's down about 3 1/2%.
You can get more information on TD Advanced Dashboard by visiting TD.com/Advanced Dashboard.
We are back with Greg Barnes from TD Cowen, talking about mining stocks. I have of you are wondering, with all the forest fires and the devastating impacts on people in Canada, are they impacting the miners at all?
>> There were some modest impacts in Q2, some mines up in northern Ontario and Québec, lost few shifts, but overall the impact is been pretty minimal.
>> Are member some small headlines, shut for a few days, so caution, and pretty much open again without any damage.
>> No damage. There were some smoke issues and access issues but that was about it so it really didn't have a major impact on the sector.
>> All of the tough blows we have been dealt by the forest fires, it's good to know there is one area we are not getting hit too hard.
We talked about political risk before and things happening around the planet. What impact is this recent coup in Niger having on mining?
how do you analyse political risk as a factor?
>> When Niger, the coup is mostly related to the uranium space.
Niger is actually a fairly large supplier of uranium.
I don't number what it is presented-wise globally. But principally, they supply the French.
It has been or was a friendship colony and the French have been heavily involved.
So mostly the uranium produced by Niger goes directly to France. On a broader scale, there hasn't been much impact.
but there is a bit of a knock on the impact and potentially tightening supply a little bit. I think that's the biggest impact in the mining space as far as I can tell.
In terms of assessing political risk globally,you just have to know where the hotspots are in recognize the risks going in and looking at these names.
Various areas of Africa have political risk, generalities like that is what you have to approach it.
>> We are out of time for questions.
Before I let you go, we had a conversation off the top about the price of gold, where we think it might be headed.
And of course the, the central bank overhang. What should we watch out for in the next several months or even the rest of the year?
>> For gold specifically?
>> We will start with gold.
>> Obviously, we are looking for what the Fed is going to do and I think the base case is that we will start to see some easing sometime in 2024.
So I think we are in the late stages of a fed cycle and I think it's good to have exposure to gold and that type of environment but be prepared to add morewhen you start to get the sense that the Fed is actually going to ease, as we talked about earlier.
In terms of the base metals, clearly the Chinese situation is very important.
What we've been waiting for is significant stimulus measures from the Chinese government.
>> You got these little things here and there, cutting the one you're right but not the five year period >> It's been very incremental to this point but the pressures are up and they may have to come out with the big bazookas type stimulus in 2015, 2016, post-financial crisis. If that happens, it will be positive for commodities.
>> We have of your question based on the conversation we are having right here, Canadian miners with exposure to weakness in China. Is that something to be mindful of?
>> Any Canadian miner that is producing base metals, for example, is heavily exposed to China just by definition.
China consumes 50% plus of global copper, nickel, zinc.
Even if you are just a Canadian miner based in Canada, China is hugely important to your business.
As you really can't escape it.
>> You cannot.
>> Always a pleasure to have you. I look forward to the next time.
>> Our thanks to Greg Barnes, head of mining equity research at TD Cowen.
For full disclosure of the companies covered by TD Cowen, see the link to the TD Securities website at the end of this program.
As always, make sure you do your own research before making any investment decisions.
you want to stay tuned for tomorrow show.
Emin Baghramyan will be our guest, lead a quantitative portfolio management at TD Asset Management. Our topic will be quantitative strategies, that includes low volatility investing, dividend strategies, among some others. As a reminder, you can get a head start in some your questions for the show.
Just email moneytalklive@td.com. That's all the time we have for the program 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 are going to discuss the outlook for gold as bond yields moved higher through the summer. TD Cowen's head of mining equity research Greg Barnes joins us. MoneyTalk's Anthony Okolie is going to have a look at the latest retail sales reported and in today'sWebBroker education statement, Ken Cormier will show us how you can research fixed income using the popper.
Here's how you 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 our guest of the day, let's get you an update on the markets.
We have some green on the screen, at least the last time I checked.
186 points of the upside on the TSX Composite Index, almost a full percent gain. Among most actively traded names right now on the TSX include Crescent Point Energy taking part in the rally but off the lows of the session, we see a bit of a pullback in the price of benchmark crew today. At 11 bucks and six cents per share, we've got Crescent Point down a little bit less than a percent. A couple of names feeding the topline number on the TSX to the upside include Barrick Gold.
A lot of the miners in positive territory today.
Good day for, we are going to be talking about mining stocks throughout the show.
We are seeing a boost in the price of gold as bond yields start to ease a little bit.
But Barrick up almost 2 1/2%.
South of the border, want to check in on the S&P 500. A bit of a rally on her hand.
I brought a read of the American market upalmost a percent, 43.2 a call that. The tech heavy NASDAQ might be fearing a bit better percentagewise.
Let's check in on it now. It's up almost 1 1/2%. The big event is going to come after the close of the markets today. Nvidia is on deck to report its latest quarterly earnings. Of course, they have set a lot of promising things about the demand for their chips because of the AI boom. So the stock has definitely been on quite a runthroughout the past year.
This will be one of those, okay, show us the results of all this demand you been talking about. So far, at 460 bucks in a penny per share, you got Nvidia up about 2 1/2% ahead of that. A lot riding on those earnings and perhaps a market sentiment going forward for the rest of the week.
And that's a market update.
Gold is getting abused today, but it is trading still near a five-month low.
Bond yields, of course, have moved higher over the summer. So what is the outlook for the precious metal and the mining sector as central bankers prepare to meet at Jackson Hole. Joining us now to discuss is Greg Barnes, head of mining equity research at TD Cowen. Great to have you back.
>> Good to be here.
>> Is a good day to have you on because we are talking about interest rates, bond yields, gold and you can see that gold is popping right now. Is that payments the trade in gold?
>> I think it has been tied to the 10 year yield. I think they are at 16 or 15 year highs. I think that just the market looking at what the Fed has done and what they are likely to do and I think there's an expectation that maybe the Fed wouldtake its foot off the brake and maybe start to ease at some point, not getting pushed out. And the strong economic numbers out of the US, that would be the case. So higher rates is a bit tougher for gold,so we think it will trade sideways in this kind of environment, may be slowly downward as it has. When we get to the point that the Fed started to ease up is generally a very good time to be in gold.
>> Do we need to be, as investors, if you are interested in gold, listening pretty closely to what Jerome Powell is going to have to tell as a Jackson Hole at the end of the week? Thou back to a year ago, he was pretty turned with us but a lot has happened in here.
>> Yeah.
Clearly, what he says will have an impact, so you should listen very, very carefully.
But I think the message has been higher for longer and they haven't wavered from that.
So I'm not sure I know what the Fed is going to say on Friday but I think that sort of the message I would expect.
>> If you're thinking about a sideways trade, if we want to be higher for longer, they stop and stick there for a while, when we expect gold to start moving in a direction that the gold bugs might want to see?
> As soon as you get the sense that the Fed is going to start to ease.
You probably don't have to wait for them to actually ease, but when we get to the point where it looks like at some point they will be easing, I think gold will start to respond to that, so sentiment and forward-looking view on where the Fed is going.
>> Waiting for that kind of price movement in the metal itself. What about the other miners, how are they faring in this environment?
>> They are doing fine.
That's the way to put it. The first half of the year, to get across the board when they were talking about how gold and base metals was tough, for various reasons, it great related, sequence issues, labour issues, permit issues, mechanical issues, but that was largely expected.
A week first half and a much stronger second half in most the companies you look at.
And that story really hasn't buried.
We got one guidance cut across the whole group.
So the companies are sticking to their message.
And on top of that, the cost pressures of the East, they are not coming down dramatically yet.
They are certainly not going up and in some cases, some of the input costs are going down.
They were pressures have eased. So we should see margins start to expand a little bit in this kind of environment.
>> When we talk about an eventual movement in gold on signs of the Fed is not only done but might start pulling back on rates, what's traditionally it leads that kind of space?
The precious metal itself, obviously, the miners are very sensitive to it. Do the equities move before or in reaction to the price of gold?
>> The equities tend to give you a bit of a leading indicator on what's going to happen.
I couldn't give you a timeframe, but they tend to be a little bit more reactive.
they tend to give you a signal when gold is going to move, so I would watch with the equities are doing.
yeah, gold does tend to lead in that type of environment, it's much more sensitive.
Copper is still sensitive, but gold is more sensitive to rates than the US dollar. So the challenges that you laid out in the first half of the year for the mining sector, what does the second half of this year look like?
>> It looks pretty good, in general, if we believe the guidance of the management teams have given us.
Production will live. A lot of companies are talking about production being waited roughly 5% to the first half and 55% to the second.
So if that plays out, which we think it largely well, that will help costs come down and margins go up.
Even in a flat gold price environment, that will look better than the first half of the year for sure.
>> What about the M&A activity, any dealmaking? At this point in the cycle, would you expect there to be much dealmaking?
There are a few things bouncing around.
>> We had a few big deals.
We obviously had Newmont bind Eucharist, which is a big, big deal in the gold space.
A few consolidation moves in the base metal space, a bit smaller, but still.
I think we will see a similar kind of pace, some consolidation, some acid exchange, things like that. When Newmont finally closes on Eucharist which will be later this year, there will be assets that they are going to sell so that's will spark a bit of activity as well.
So I think a steady pace of M&A's is what we should anticipate.
> Do you expect a healthy appetite for those assets when it comes time to sell them or will be a bit of a slog?
>> I think it will be reasonably healthy from the midcalf to small names, there should be interest in those assets.
>> Apart from what the Fed is going to have to say this week or at their next rate decision next month, we have some concerns about China.
> We do.
>> World's second-largest economy and it hasn't been able to turn the engines on, despite lifting the COVID restrictions.
How concerned we need to be about that from a commodities perspective you are >> It's clearly a concern and the rolling property crisis, the residential property crisis in China isn't helping, the biggest private commercial developer in China is running into problems as well, a lot of debt. That is a lingering concern.
I think to this point, demand impact on the base metals it has generally been offset by EV energy transition demand.
Inventories remain very low across the board, so I think that will be supportive.
We do need to see China pick up the pace, there is no question about that.
>> Always great insight. For full disclosure on the companies covered by TD Cowan, please see the link to the TD Securities website at the end of this program.
We are going to get your questions about mining stocks for Greg Barnes in just a moment's time.
And a reminder, of course, you can contact us at any time.
Just email moneytalklive@td.com or fill out the viewer response box under the video player on WebBroker.
Right now, let's get you updated on the top stories in the world of business and take a look at how the markets are trading.
It has been a big week for US retail earnings. We will get to a few of them for you. We'll start shares of Foot Locker in the spotlight today but perhaps not for the best reason.
Down about 32% at this hour. The athletic shoe and apparel retailers cutting his sales forecast for a second time this year. It's going to what calls consumer softness. Foot Locker is also reporting a nearly 10% drop in the sales for its most recent quarter, and the company, of course, have been relying on markdowns to try to move those shoes and clothing out of inventory and it has been hitting the margins as well. The street is not liking what it is hearing on Foot Locker today.
Let's get another company out there.
Peloton reporting a wider than inspected loss for its most recent quarter.
It says the bottom line was hit by a drop in new subscribers and it attributes that to seasonal factors, but also a recall of its bike seat post. Shares of Peloton soared during the pandemic, of course, trading of $160 per share at one point, amid the surging demand for home workouts.
A much different story for the name now.
Five bucks and $0.39 per share, pulling back the most 23% on the session alone.
This whole cautious consumer trend doesn't appear to be weighing on sales at Abercrombie and Fitch. The retailer delivering an earnings beat for its most recent quarter and is raising its annual sales forecast. Abercrombie and Fitch's new collections appear to be having some traction with customers at a time when many retailers are struggling with weak demand and bloated inventory. You can see the street likes the sounds that. At 50 bucks and $0.92 per share, you got Abercrombie and Fitch up almost 24%. A quick check in on the main benchmark indices. We'll start her at home with the TSX. A 173 point gain right now, up almost a full percent.
South of the border, we have a rally in some of the tech names but even the broader market with the S&P 500 up 40 points we will call that right now, just a little shy of a full percent.
We are back now with Greg Barnes, head of mining equity research at TD Cowen, taking your questions about mining stocks. Let's get to them. Off the bat here. What are your thoughts on Cameco and how about the outlook for Westinghouse, Canadian nuclear power and Bruce Power? Someone's clearly got their mind on uranium and nuclear power here.
>> Well, Cameco is obviously a great spot for uranium. The prices up to decade highs both on the spot and contract basis.
Demand has been strong particularly on the contract side.
They are the biggest Western supplier of uranium in the world, so they really are commanding big gains which they have shown in their contract book that they have grown aggressively in the past 18 months.
I think that will slow down now because they pretty much felt the book for the next several years, so it's a good position to be in. And the closing of the Westinghouse deal clearly is important to them. They continue to say that'll happen by the end of the air. That'll transform the company from being really just a uranium miner to become a full service supplier through the nuclear fuel supply chain.
Very impressive.
Bruce Power really isn't a factor for Cameco anymore. They sell uranium or nuclear fuel to them.
>> Things are still working in Cameco's favour.
What are the long-term risks for Cameco, Denison Mines, for the uranium space?
>> Longer-term risks, both positive and negative. Obviously, negative would be a nuclear accident, always weighs heavily on the sector, as we saw in the past decade with Fukushima. But upside risks, if there are sanctions placed on the supply of nuclear fuel from Russia to the US or to the West in general that would cause a significant supply squeeze, and we would see prices for uranium and other nuclear fuel component shoot higher quickly. So there are positives and negatives, but right now they are in a pretty good spot.
>> Okay, another question here. This one is about Sheritt. Is it a goodbye or not?
You're on the platform, we cannot give you buy or sell advice. We can talk about share it and what's going on with the company and maybe some of the pros and cons.
>> Sheritt, one of the fuel at ways to get exposure to nickel. the red Star there is that their biggest asset is based in Cuba, which does face US sanctions still today. Sheritt faces challenges getting supplies and technical help, particularly the consumer space, they cannot access that. That weighs on them a little bit.
demand has been strong. I think the biggest challenge for Sherittand Nicola is that supply is strong and there is growing supply particularly from Indonesia, largely driven by Chinese money.
You've got the outlook for nickel itself, it's a little bit challenged at the moment without additional supply coming in.
>> When I think about a name like Sheritt, their operating in Cuba, this is what you have to consider, when I think about global mining companies, different jurisdictions, different risks. When investors are doing their homework, does that have to be a part of it? See where they operate, with the current regime there and what are some of the rules of the place?
>> Obviously, you have to pay pretty close attention to that, but I will say that no matter where you are in the world, there is a risk, whether it's permitting risk, government risk, geological risk.
Some areas of the world are more challenging, areas in Africa are more difficult.
Areas in South America are more difficult.
But even in the US, it's very, very difficult to get a permit to build a new mine.
I wouldn't say anyways without risk but you see a lot of mining companies re-shoring, if you want to put it that way, coming back to Canada because they know they have a good legal government framework there where you know if you own a property, you own it and the government is going to take away from you.
>> Good points.
Let's take another question here from the audience.
The viewer wants to know what your guests view is on Ivanhoe?
>> Well, talking about risk areas of the world… [laughing] Ivanhoe's principal asset is the copper mine in the DRC, the Democratic Republic of the Congo.
That has a reputation as a very challenging place to operate.
I've been there several times. I would say over the past decade, the conditions there are definitely improved, particularly in the southern DRC, and the copperbelt. The company, quite frankly, has done a phenomenal job building a very large copper mine there for the last five years which is now top 10 copper mine globally producing 450,000 tons of copper per year.
It's a very well run company. It's met some significant political and technical challenges and succeeded.
>> Sometimes I'm talking to people about copper itself and the demand we are expecting out of it with electro vacation in the future, they are a little bit worried about here and now, the amount of supply out there perhaps beingin excess of demand. What is that situation looking like for the market?
>> We are not seeing that currently.
Inventories are remaining incredibly low.
Critically low, quite friendly.
There is a lot on the metal exchange or in Shanghai.
I think 20 or 30,000 tons of inventory which in a 25 million tons a year market, it's nothing.
There has been some improvements on the copper supply side of the past couple of years with several big mines being built, Ivanhoe being one of them.
Teck Resources with QB too, that is ramping up to you as we speak.
If we do see a surplus, it's a small one initially 24, a little bit of 25, and then we are into a period where we expect significant deficits because there hasn't been new supply built in recent times.
>> As always at home, your own research before you make any investment decisions.
We'll be back with you to your questions for Greg Barnes on mining stocks in just a moment.
Let's get to our educational segment of the day.
higher yields have made fixed income more attractive to some investors, and if you're looking to research the space, WebBroker can help. Joining us now to discuss is Caitlin Cormier, client education sector with TD Direct Investing.
>> Fixed income has definitely become more of a hot topic lately with interest rates increasing as they are.
let's demystify where we can find fixed income on the trading platform and how you can sort of navigate it.
let's go ahead and jump in.
We are going to go ahead and click on the second tab at the top, research, and we are going to go all the way down under investments to fixed income. Once we get here, this is kind of the home page foreverything to do with individual fixed income products within WebBroker.
You will see that there's kind of a quick pics list here where you can see different bonds, so agency, corporate bonds, all three levers of government bonds, strip bonds as well as some money market instruments that are available to purchase.
You can even though do a specific search.
If there is a specific kind of security that you're looking for, you can actually click here on the fixed income search, and I go in, for example, US Treasury bonds could be something that investors might be interested in.
I just simply click US treasury bonds, click submit, and I will see any treasury bonds that are available for purchase, so all different maturity dates and I've got a lot of information about those different investments there.
Another thing I could do, for example, is if I want to look for a particular company and I want may be a corporate bond for that company, I could come down to corporate bonds and type in, for example, it's prompting me for Apple so we will go with that, and I see any bonds that are available from Apple.
As you can see, there's quite a lot of different things here.
I choose specific maturity dates.
If I want to see any bonds that are available with maturity dates by the end of next year or something like that, I can do that.
So there's really quite a bit that we can do as far as search as well as kind of this front page here where we see, and again, these numbers here represent the time to maturity, so any bonds that are coming due in the next 0 to 5, 5 to 10 or 10+. I will click into one of the Canada bond so you can see, it's exactly the same idea. The issuer name, the coupon rate, the maturity date as well as the bid and ask prices available. There is quite a bit of information.
If you're having any trouble navigating, you can always contact our fixed income desk.
You see the number at the top here.
1-888-993-2663.
That desk will go to the process with you and there is no commission fee for purchasing these bonds.
You don't pay that 9.99. You can call and speak with one of them with no concern as far as extra cost, and they are available to be purchased between 8:30 AM and 5:00 PM Eastern time Monday to Friday.
>> If someone is looking for that, I'm sure it's a big help. They can call that number and if they don't feel they need that help, can you do the purchase on WebBroker yourself?
>> Absolutely. If you found what you want and you want to move forward with that purchase, you can do with that purchase on WebBroker. Let's run through that process.let's just go ahead and choose, I'm going to go back here to agency bonds.
I will choose 0 to 5 years, just randomly picking, of course, not suggesting anything.
I'm going to go ahead and pick this one here randomly. I'm gonna click the buy button. In case you didn't notice, I collected the left and had a little checkbox and then I click the little buy button.
and what I see here is kind of my entry ticket.
I have the option to put either the quantity, meaning what the face value will be at the end of the term for this particular investment or I can choose how much money I want to invest.
For example, if I put in $10,000 and click recalculate, it's gonna tell me how much it will cost me to buy an investment that will come to you and $10,000 on the maturity date.
In this case, this particular bond is priced at a discount was going to cost me less than 10,000.
So if I'm comfortable with everything here, comfortable with the pricing, comfortable with the yield and all that sort of stuff, I can actually go ahead and click next. There's going to be a final confirmation page here, an overview of everything that we've and put here and I can go ahead and click confirm and complete the purchase.
Pretty straightforward. Just need to choose whether you're going to put in an investment amount or quantity, review all of the information, make sure you're comfortable with it and go ahead and click next.
If some of the terminology that I've used here is a little over your head or you're not super comfortable with that, we have videos on the learning centre as well as a ton of master classes available, I say a time, there is for different fixed income master classes that we teach regularly that go over these terminologies if you want to be more comfortable with fixed income.
>> Great stuff as always, Caitlin.
Thanks for that.
>> Thanks, Greg.
>> Caitlin Cormier, 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. Before you get back to your questions about mining stocks for Greg Barnes, 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 are back with Greg Barnes, taking your questions about mining stocks. We have a viewer who wants to get your thoughts on First Quantum minerals.
>> Sure. First Quantum is one of the top producers in the world. Had a difficult start to the year with some political issues in Panama around the stability agreement which are now resolved. By the end of September, they will have that fully passed into law in Panama, so that will lift that concern off the stock.
Zambia has been pretty calm in the last couple of years. That's been a good place for them to be operating.
you have a company doing roughly 900,000 tons of copper per year. A cash passed in the middle of the curb.
Pretty stable politically at the moment.
Good leverage to copper. The focus for them now is paying down debtbecause they took on a lot of debt to build cobra so they are targeting reducing debt load by billion dollars over the next two years which we believe they can achieve. So yeah, if you want good exposure to copper, I think First Quantum is one way to get it.
>> Does this higher rate environment make paying down debt a bit tougher for some of these companies, whether it's First Quantum or others that have taken on a considerable amount of debt when rates were lower and now it's payback time?
>> It sure has an impact and that's one of the motivations to get the debt paid down quickly.
But also they are looking longer-term and they want to move on to the next phase of growth in a project they want to build and they need to get the balance sheet in shape to do that.
>> Any risk for them beyond getting debt levels down?
>> No, other than typical mining risks which there always are a lot of.
>> Like if you don't find what you think you're gonna find?
>> It geological risk, technical risk, mechanical risk, all of those things that we just deal with every day.
>> Another one here, one of the big one.
Barrick.
We talked about gold off the top of the show. What is your view on Barrick?
>> Barrick's inexpensive right now. I think it is underrecognized for some of the progress they've made particularly they have made combined operations in Nevada that they are sharing with Newmont.
It's taken a long time to turn those operations, 5+ years now, but I think they're getting to the end of that road and starting to show better performance there.
I think that needs to happen for the stock to really start to perform better.
Hopefully in the next year, we will see some of that performance.
>> are there some saying if I have a thesis about gold, the stock should do well in that environment, but then each of them has their own operational issues.
>>. Look, they doand they have their own unique challenges, but if gold goes up, they all go up to varying degrees. Look, I think one of the names that has more leverage to gold if you like because it tends to be higher cost and a little bit of shorter life, that would be Kinross. If you expect gold to have a good run, Kinross is a good place to be for that run.
>> How about the streamers compared to the miners?
>> In an environment where gold is going up and has a big rally that producers tend to do better inthat environment than the streamers. The streamers will do fine but the producers will outperform in that environment.
>> Interesting, I hadn't thought about that.
Here's a question you probably been asked for many years now. What is the potential in the Ring of Fire region? For those not familiar,Northern Ontario, it's mostly very rich in mineral deposits. We've been talking about it for a long time.
>> And I think we will continue to talk about it for a long time, Greg.
You need infrastructure. I know there are a lot of conversations going on at the federal and provincial level to get road access into that area.
And that really needs to happen to really unleash that potential in the Ring of Fire. No doubt, it significant, but it needs the infrastructure, it needs government help to get that infrastructure.
>> We were talking a couple of days ago about some of these issues and I was mentioning before the show, I was dropping off my youngest, 18 years old, for university this weekend. When he was born, I was a green smart reporter, that's the Ontario legislature, and we were asking politicians about the Ring of Fire. This kid is 18, he's leaving the house this weekend, he was a baby when I was talking to people about the Ring of Fire.
>> Well, look, it's money.
Cost billions of dollars to build access roads, the kind of access roads you need through that kind of wilderness in Northern Ontario. It's tricky ground.
Permafrost in some areas.
So yeah, it just takes a lot of money to put that kind of rode in and I think for a long time that hasn't been that motivation but energy transition, critical minerals, a big push from the US to get access to critical minerals, not just the US but Canada as well, I think this probably a little bit more mentor now than there has been in the past.
> Interesting stuff. We are going to pack your questions for Greg Barnes on mining stocks in a few moments time.
As always, make sure you do your own research before making any investment decisions.
and a reminder that you can get in touch with us at any time.
Do you have a question about investing or what's driving the markets?
Our guests are eager to hear what's on your mind, so send us your questions.
There are two ways you can get in touch with us.
You can send us an email anytime at moneytalklive@td.com or you can use the question box right below the screen here on WebBroker. Just write in your question and hit send.
We'll see if one of our guests can get you the answer right here at MoneyTalk Live.
We got the latest read on the health of the Canadian consumer today, retail sales, they did surprised mildly to the upside in June. Perhaps some resilience out there as we navigate these higher borrowing costs and persistent inflation.
Our Anthony Okolie has been digging into a TD Securities take on all this and the indications for the economy. Anthony, what did they say?
>> Thanks very much, Gr They mentioned it was a bit of a surprise, it was up .1% month over month, which matched TD Securities expectations. The headline print was a tad stronger versus stat Canada advance estimate and market consensus for a flat print.adjusting for inflation, retail sales volume was actually mildly lower, .1% lower in June.
When we look at it by sector, sales were upin only 3/9 subsectors.
The biggest surprise I think was in sales at motor vehicle and parts dealers. That defied excitation. They are up 2.5% month over month and TD Securities was looking for weakness there. Sales by new car dealers were up for the third consecutive month, saw that third consecutive monthly increase and they were driven by sales of light vehicles, vans and SUVs. Auto sales have been strong despite the fact that consumers have faced headwinds from higher energy prices, higher borrowing costs as well. Looking at retail sales at gas stations and fuel vendors, they were also up during the month, thanks to higher prices at the pump, but given their small wage, they had an impact on the headline number. When we exclude sales at car dealerships and gas station, core retail sales fell versus estimates of an increase.
all the categories were in the red with the deepest in electronics and appliance stores and building materials and garden equipment dealers.
Looking ahead, stats Canada is pointing to a solid reading of again in July but today's small gains reinforce expectations for second-quarter GDP to contract in June. That's a notable step down from the pace that we saw in the first quarter.
>> Some interesting stuff happening in that report, in fact that the advanced flash, more strength in July and cars, big ticket items and months were you got to, in June, Bank of Canada hydrates, in July, BOC hydrates, and we go out and buy automobiles. What does it all mean? My head is still swimming.
>> I think we are seeing some surprising resilience in certain categories but the growth outlook continues to show more signs of strain with second-quarter GDP tracking well below the Bank of Canada's projection. Now TD Securities believes that you give the Bank of Canada some added confidence that higher rates are working to slow demand.
TD Securities continues to look for the Bank of Canada to hold the overnight rate at 5% into 2024. But as I mentioned yesterday, they did warn that the risks remain skewed towards more tightening with October more likely than September.
>> A lot at stake.
Interesting stuff.
>> My pleasure.
>> MoneyTalk's Anthony Okolie.
Now for an update on the markets.
Okay, 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 us a nice picture of the market members. Right now we are taking a look at the TSX 60 and we are looking by price and volume.
What are we seeing here in terms of green on the screen? We are talking about mining names today. Let's start with the miners.
You have the price of gold moving higher.
10 year yields in the states pulling back a bit after that March day after day grind higher. You have a name like Barrett, ABX, up a little bit more than 2%.
Even a little more green on the screen lower down, Kinross is up 4.6%. And technology, we are awaiting some big earnings after the bell south of the border from Nvidia, but the entire space seems to be getting ahead of that including Shopify, which had some tough sessions as of recent days but today it is up 4%.
Can't ignore that big blocker read down at the bottom. Although it's a bit of a mixed picture in the energy space today. Saw some softness in the price of benchmark.
But right now you do have some names modestly higher but Cenovus Energy, CVE, down almost a full percent.
Let's take a look south of the border. We will screen through the S&P 100 and what are we getting here?
There's a name we are looking for on the screen, Nvidia, it's gonna be the big event after the market closed today. A lot of excitement around AI and the demand for their particular brand of chips, their GPU's.
Nvidia has said it anticipates very strong demand.
Well, now they have to show us with their quarterly earnings report habits all playing out.
Ahead of that, you have Nvidia up a little bit more than 2%. Another weekday for J&J down at the bottom of the screen. And Nike, perhaps guilt by association, footlocker coming out today and disappointing the market with his quarterly earnings, talking about dropping demand.
Nike would be one of those companies, it's down about 3 1/2%.
You can get more information on TD Advanced Dashboard by visiting TD.com/Advanced Dashboard.
We are back with Greg Barnes from TD Cowen, talking about mining stocks. I have of you are wondering, with all the forest fires and the devastating impacts on people in Canada, are they impacting the miners at all?
>> There were some modest impacts in Q2, some mines up in northern Ontario and Québec, lost few shifts, but overall the impact is been pretty minimal.
>> Are member some small headlines, shut for a few days, so caution, and pretty much open again without any damage.
>> No damage. There were some smoke issues and access issues but that was about it so it really didn't have a major impact on the sector.
>> All of the tough blows we have been dealt by the forest fires, it's good to know there is one area we are not getting hit too hard.
We talked about political risk before and things happening around the planet. What impact is this recent coup in Niger having on mining?
how do you analyse political risk as a factor?
>> When Niger, the coup is mostly related to the uranium space.
Niger is actually a fairly large supplier of uranium.
I don't number what it is presented-wise globally. But principally, they supply the French.
It has been or was a friendship colony and the French have been heavily involved.
So mostly the uranium produced by Niger goes directly to France. On a broader scale, there hasn't been much impact.
but there is a bit of a knock on the impact and potentially tightening supply a little bit. I think that's the biggest impact in the mining space as far as I can tell.
In terms of assessing political risk globally,you just have to know where the hotspots are in recognize the risks going in and looking at these names.
Various areas of Africa have political risk, generalities like that is what you have to approach it.
>> We are out of time for questions.
Before I let you go, we had a conversation off the top about the price of gold, where we think it might be headed.
And of course the, the central bank overhang. What should we watch out for in the next several months or even the rest of the year?
>> For gold specifically?
>> We will start with gold.
>> Obviously, we are looking for what the Fed is going to do and I think the base case is that we will start to see some easing sometime in 2024.
So I think we are in the late stages of a fed cycle and I think it's good to have exposure to gold and that type of environment but be prepared to add morewhen you start to get the sense that the Fed is actually going to ease, as we talked about earlier.
In terms of the base metals, clearly the Chinese situation is very important.
What we've been waiting for is significant stimulus measures from the Chinese government.
>> You got these little things here and there, cutting the one you're right but not the five year period >> It's been very incremental to this point but the pressures are up and they may have to come out with the big bazookas type stimulus in 2015, 2016, post-financial crisis. If that happens, it will be positive for commodities.
>> We have of your question based on the conversation we are having right here, Canadian miners with exposure to weakness in China. Is that something to be mindful of?
>> Any Canadian miner that is producing base metals, for example, is heavily exposed to China just by definition.
China consumes 50% plus of global copper, nickel, zinc.
Even if you are just a Canadian miner based in Canada, China is hugely important to your business.
As you really can't escape it.
>> You cannot.
>> Always a pleasure to have you. I look forward to the next time.
>> Our thanks to Greg Barnes, head of mining equity research at TD Cowen.
For full disclosure of the companies covered by TD Cowen, see the link to the TD Securities website at the end of this program.
As always, make sure you do your own research before making any investment decisions.
you want to stay tuned for tomorrow show.
Emin Baghramyan will be our guest, lead a quantitative portfolio management at TD Asset Management. Our topic will be quantitative strategies, that includes low volatility investing, dividend strategies, among some others. As a reminder, you can get a head start in some your questions for the show.
Just email moneytalklive@td.com. That's all the time we have for the program today.
Thanks for watching. We will see you tomorrow.
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