Hafiz Noordin

[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 with the bond market is telling us about the future path of interest rates with Hafiz Noordin, portfolio manager with TD Asset Management. Moneytalk's Anthony Okolie is going to have a look at a new report over the price of copper is headed. And in today's WebBroker education segment, Bryan Rogers will show us the tools in WebBroker that can help you better analyse a company stock chart. 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 our guest today, let's get you an update on the markets. We will start here on Bay Street with the TSX Composite Index. You can see a modest gain of 54 points, about 1/4 of a percent. Got a few names in our sites, including Teck Resources. Right ahead of that scheduled shareholder vote on its plan to split itself into two companies, get the cold making business in a different area, they called off the vote. Teck is saying it isn't giving up its plans to try to separate the business. At the same time, it said it's heard shareholder feedback, I believe some commentary just came out of the CEOs saying they didn't feel they had the votes to go forward with the plan at this stage, and complicate in all of that is Glencore showing up and making an unsolicited bid so there's a lot more to come on the story. Right now for today, this mode is not going ahead as Teck reassesses its plans. Teck is up about 4 1/2%. Cenovus is faring a little bit better than the other energy companies. Cenovus came out, boosted the dividend but it is noticing a drop in terms of its earnings compared to the price of crude a year ago and when it was able to do in the last three months, as reported. Some of the border, in the S&P 500 there were some earnings after the bell yesterday. They were sort of impressive. Overall, the market is treading carefully. You are of 13 points right now, about 1/3 of a percent. Of course, what's happening with the First Republic, another US regional bank, has investors trying to figure out the path forward. Let's check in on Alphabet and see how it's faring today. Right now it hundred and four bucks and change, it is up a very modest third of a percent. And that is your market update. While we are in the thick of a earnings season, the path of interest rates is never far from investors mind. At the number of central banks on deck in the next coming days, including the US Federal Reserve a week from today. Joining us now to discuss with the bond market is telling us is Hafiz Noordin, Portfolio manager at TD Asset Management. Great to have you back on the program. >> Great to be here. >> I feel this is a learning season. While there is plenty happening with individual names and the backdrop is this large macro concern we have about what central banks are going to do next, which is the bond market say? >> We are trying to figure out the end of the rate hike cycle. We are getting close. The story is pretty straightforward in Canada here. We know the BOC is on hold for 1/2% since January and from what the market is pricing, it's going to stay that way until the second half of the year. But outside of Canada, there is still a number of big central banks trying to get those last few rate hikes in. And so the next ones that we have on deck, the Bank of Japan we will see on Thursday and like you said the Fed next week and also the ECB. Why is this important? As a Canadian investor to monitor this? We know the Bank of Canada can influence short and rates in Canada but longer dated bond yields, 10 and 30 year yield, can really be volatile based on what some of these larger global central banks do. >> Let's talk about the big one which is a week away, the US Federal Reserve. The indication seems to be that they are not done yet, but at the same time, you have some stress and showing up in the banking system so that the border, the regional banks. They have sort of specific things happening for those names but it's not something the Fed can dismiss. It did acknowledge it last time but it didn't stop there. >> That's right. The number one job still is inflation. There has been encouraging news at least out of the last CPI printed the US what was that inflation is elevated, but what are the big drivers of inflation, shelter inflation, did moderate downwards and we are starting to see what the market was hoping to see and what it was expecting which was a sort of gradual decline in housing related inflation. That usually is kind of the big macro, defines the big macro trend in the US CPI. Having said that, the breadth of inflation, the number of categories that are still elevated, it's still high. So for the Fed right now, maintaining their credibility around fighting inflation is still critical and so that is why we think they will deliver this 25 basis point height next week even though we are starting to see these issues around First Republic, as you mention. But they do need to deliver that. And I think the uncertainty is going to be after that where the market is interestingly pricing a reversal of that cut perhaps in September, maybe even as early as July because of… >> After we stop hiking, the market thinks he can be that quick in terms of the turnaround? The pivot, right? People were talking about the pivot last year. There was rallying, pivot hopes that faded. >> It even reads like a policy mistake. What's the point of this last height? Well, I think what the market is thinking is that over the course of the next few months, with this last rate hike helping to get inflation to come down in a more sustainable way, but also I think what's been happening is that there is an introduction to more downside risks to growth. It we've seen in the manufacturing sector and certainly all the stress around the banking sector amplifies the risk of downside growth, which is why we will see cut starting perhaps even the summer. >> Now, this gets a little bit more esoteric for those outside of fixed income, but the idea of yield curve control. I get a sense, correct me if I'm wrong, that maybe will be here for the Bank of Japan, we may get something a little different. >> It's definitely the most topical piece in terms of the Bank of Japan and going back is seven years or so of yield curve control policy, it's been there trying to keep the 10 year yield close to zero but it's been a very unsustainable policy, especially with global inflation rising. And moreover, because the Bank of Japan with that policy and with QE more broadly, now owns more than half of the Japanese government bond market. And so it's really a poster child of distorting the market and really that pressure is there to take that policy back. But it has to be done very gradually because it's been such a long-standing policy that it's very ingrained in terms of how investors, how big investors in Japan have been allocating capital. we may see, maybe not at this meeting, we will likely see an increase in the allowed band. Right now, it's half a percent of how much 10 Year Bond Yields in Japan can vary from the 0% target. So if they go from half a percent to 75 basis points, we will see a lot of volatility in the Japanese bond market and that will affect the bond market here. >> Would yield curve control become an issue or a tool that the Fed, the US Federal Reserve, would want to use? Other central banks? Or is this is a phenomenon unique to Japan? >> I think it was unique to them in terms of just how far they went with QED. They needed something else to be able to guide markets towards keeping borrowing conditions very loose. This goes back again seven years ago when inflation was completely nonexistent. I think that when you look at the US, Canada, Europe, clearly we have seen in the cycle that inflation has been alive and well, and I think going towards the next cycle, the standard tools that we have seen in terms the policy rate and QED are probably what we are looking at. I think the bar for why CC is very high. >> We talked about the cumulative effect of all these aggressive rate hikes and the fact that the market thinks they are going to have to pivot and turn direction that quickly, coming off of hikes and jumping into cuts almost right after they are done, what does this tell us about how we are supposed to think about central bank policy? There is this idea that we are going to hike today and not see the effect in the economy for 12, 18 months down the road. Are the rules thrown at the window if they have to be this reactive? >>they have to be data dependent and the reality is that as much as they like to provide for guidance, they don't know where things are going. They can provide a base case in their own projections. The Fed did that in their last meeting. The market itself is essentially an average of a number of different outcomes. So yes, there is a base case that they will hike and then growth will gradually come down and inflation will gradually come down, but there is definitely the hard landing type of scenario where they may have to even cut quicker than with the markets expecting. On the flipside, there is definitely a scenario where inflation stays stickier than what is priced in and we don't get to a 3 to 4% CPI by the end of the year. That would mean that rate cuts wouldn't come this year. So I think there is still a very much a wide range of scenarios and in terms of central banks, they just have to make sure that they are data dependent, and not overly commit to particular policy and be willing to be likable. >> Interesting times and a lot more to come from the central bank this year. We will get to your questions about fixed income for Hafiz Noordin in just a moment's time. A reminder, of course, even in touch with us at any time. Just email moneytalklive@td.com or fill out the viewer response box under the video player on WebBroker. 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. I jump in wireless subscribers drove an earnings be for Rogers Communications in its most recent court appeared the telco at a 95,000 postpaid wireless subscribersover those three months, more than 40% gain compared to the same period last year. Rogers says the post-pandemic return to travel also drove its roaming revenue higher. You can see the stock upa little more, almost 3 1/2%. Teck Resources is pressing pause on its plan to spin off its coal business just hours before a shareholder vote on the issue. The company says it will still pursue a separation of the company but through a simpler and more direct approach that's based on shareholder feedback. The separation plan is opposed by global mining giant Glencore, which is made and $23 billion US unsolicited takeover bid for Teck. And just as our show is beginning, we got some commentary from the tech CEO on a conference call, saying they didn't proceed with the vote today because they didn't have the final numbers for the voting result but tracking showed they weren't going to achieve the numbers they needed to get approval for that plan. So it seems that they are still in assessing notice to go forward. There will be a lot more of the story as well as Glencore is still in the picture. Shares of Microsoft in the spotlight today, that after the tech giant delivered quarterly revenue and profit that beat analyst expectations. Microsoft also providing an optimistic outlook, including for its artificial intelligence initiatives. You can see the stock is up 8 1/2 almost percent right now. Hanging in there, there's other news on the Microsoft front. Remember, they got the bid to buy Call of Duty maker Activision, and that has been dealt a setback. British regulators are opposing the deal. A quick check in on the markets. We will start here at home on Bay Street with the TSX Composite Index, we are up 51 point or quarter of a percent. And south of the border, there's lots going on with the broader read of the American market, the S&P 500 is up 17 points, a little shy of half a percent. All right, we are back now with Hafiz Noordin taking your questions about fixed income. This one very blunt off the top. Hard or soft landing? >> Well, when you look at how risk assets are priced right now, I think they are more price for the soft landing scenario, which is that we will see this moderation in inflation and then unemployment may take up a little bit but not in a huge way that causes a deep recession. So I think there's definitely more risks now and that can lead us towards a harder landing scenario. Certainly, we talked about banking sector stress and whenever there's anything around the banking sector, what you have to worry about from a growth perspective is a tightening in credit conditions, banks having to shore up their risk management and their balance sheet available to lend to the broader economy. And that in turn causing more of a slowdown. So certainly we are watching that particularly in the US. Smaller regional banks have been bumping up against issues. And the other piece would just be around growth concerns from the labour market actually started to crack more than what is expected. We are seeing leading indicators for jobless claims starting to go up, notices for layoffs, for instance, and so I think that's where consumption can then be the main impact afterwards in terms of people losing their jobs, then 70% of the economy is consumption. If that starts to get hit, that's not really fully priced into the market right now as a key growth downside scenario. So I think the important question then is if the market, if it is price for soft landing, how do you invest in this environment? You do have to kind of think about, yes, having some structural exposure inequities if you are a long-term investor but this is the time to be overweight in government bonds relative to equities and relative to corporate bonds to hedge against an acceleration in the probability of a hard landing scenario. >> MoneyTalk about credit tightening because of the banking stress, I think the Fed was willing to acknowledge last time we heard from them that that is sort of doing a bit of their job for them. I guess that some people took that further down to say, maybe you can stop hiking. But it doesn't really, one plus one doesn't equal two there? >> Well, definitely moderated humbly more hikes were going to be expected for the year. In March, it was maybe three more hikes or so. now we are talking about getting over the finish line for the last hike for the Fed. I think there has definitely been a bit of a balancing act there where, yes, credit conditions have to be monitored. Following the date to see with banks tightening lending conditions, are we actually seeing that impact? Consumption here in Canada, we are definitely watching household consumption. Knowing that more disposable income is being eaten away by mortgage interest costs. So there's those two factors that have to come into play, the tightening on households directly from higher… >> With everything going on, should we avoid high yield bonds? >> So high yield bonds in general are fairly correlated with equities. Over the long run, called around 60% correlation of total returns between high-yield bonds and equity. So they are kind of like the equity like part of the bond market. From the perspective, given what I've been talking about in terms of downside risks, yes, you have to be cautious with high-yield bonds right now. One of the key data points we walked around high-yield is default rates. So how much of the high-yield bond market is defaulting on their obligations to you as a bond investor? For a while, it's been fairly low. Call 1% default rate, which is historically very low, but it's been trending a little bit higher recently to getting close to 3% default rates. And if that continues, we should see bond spreads were corporate spreads and high-yield start to go up to compensate for that extra risk. And given the starting point for high-yield bonds which are about call at 500 basis points, that kind of right at the long-term average for high-yield. And so when we think of being in a recessionary environment, we should be well aware of that. But a different way, high-yield bonds should be much cheaper in a true recessionary environment to compensate you for those at higher default rates. >> If someone is looking at the high-yield bond spaceand they are looking through an issuer's financials, what are you looking for in there? Is it different than when an equity investor is looking forward to some of the things lineup? >> It's very similar in that you have to look at the earnings profile on the strength of the balance sheet. It's very similar to what an equity investor would be looking at. And the difference is that you're looking for that earnings to be there to cover your coupon payment and cover your principal payment one that comes to you versus an equity investor looking for growth in their dividend. So it's kind of the same fundamental data but with sort of a different outcome. So there's that piece around it and then there's also knowing that in a scenario where a company is getting in trouble, you have to know where you sit in the capital structure so that if it's getting to a point where they do default, you need to know what assets are behind the company to pay you back as a bond investor before it goes to the equity investors. And so those are the dynamics you really have to be careful about, especially in high yield where default rates are generally more higher. > Good stuff there. Let's get to another question now. Plenty coming in for Hafiz. This will coming and wants to know is it too late to get into the bond space? I guess a lot of people are hearing about the opportunity and fixed income this year and some people are afraid that they missed it. >> It's a fair question when we see total returns in a typical fixed income fund within eight or 10 year duration and has a return of a few percent this year. But now, I would say it's not too late. when you're at this point of the economic cycle, which is the light cycle, when we get towards a true downturn in growth and we get towards the point where we actually do see central banks having to cut because they are comfortable with the inflation outlook getting more towards target and when they are more concerned with supporting economic growth, that's when you definitely want to be in bonds because you'll really get those stronger returns not only on an absolute basis but they will be mitigating likely declines in equities and corporate bonds. >> When we talk about that return, because central banks are in a cutting mode,you're talking about a soft and hard landing. Soft to me would suggest that okay, they might realize they are already in restricted territory and would suggest to me they be a bit more aggressive with the cut. Could that play out in a bond portfolio? >> In a soft landing scenario, with you that your total return is closer to kind of where the coupon levels are right now. So if you think of the yield right now on a 10 year government bond, call it around 3%, and if we are in a soft landing scenario where we don't have to see a drastic amount of rate cuts to bring that 3% 10 year yield down to 2%, you're getting that income. You're getting the insurance out of it if you don't get the soft landing scenario. And so that would definitely be a sort of Goldilocks from a six C40 portfolio perspective and that your equities will be just fine. And then you're still getting a decent amount of income from the bond part of your portfolio. >> Had a question just come and based off of our conversation on government bonds of the possible opportunity there. I'm just going to throw it at you. Canada versus US government bonds. Someone looking at both countries. >> Yeah, so we look at that a lot because both government bond markets are very liquid but the U.S. Treasury bond market is the most liquid in the world with very attractive to have that as part of your bond portfolio. what we've seen over the past years that with the Bank of Canada gang to the pause part of their cycle quicker than the Fed, what that meant is that bond yields in Canada didn't rise as much as US bond yields did and so from a bond return perspective, Canada bonds outperformed compared to US bonds because yields didn't go up as much. So when you look at where we are today, because of that relative outperformance in Canada bonds, US bonds are looking cheaper. A 10 year US treasury is about 50 to 60 basis points higher than the Canadian 10 year government bond. So as a result, you are getting higher income with the US bond but you are also getting into a market that is more liquid and in a deep risk off scenario, the US government bond market is the flight to quality market of the world where that's a lot of capital goes. The US dollar tends to appreciate as well and that kind of time. So that helps to fit the bill in terms of portfolio construction around having a true insurance in your portfolio and you're getting paid to be there. >> As always, make sure you do your own research before making any investment decisions. we will get back to your questions for Hafiz Noordin on fixed income in just a moment's time. And reminder of course even in touch with us at any time. Just IMO MoneyTalk Live it to. Now let's get our educational segment of the day. One way to analyse a company is to have a look at its stock performance. WebBroker has toolswhich can help. Joining us now to discuss, Bryan Rogers, Senior client education instructor at TD Direct Investing. Bryan, great to see you again. I guess what we're really talking about here technical analysis, so let's talk about what WebBroker can do for us here. >> Yeah, Greg. There are definitely a lot of ways to analyse a stock. One of the main technical analysis, for those who have never heard of this before, technical analysis is looking at the charts on the stock and looking at the trend of a chart. So what are those trends that are happening in terms of momentum on buying and selling, a number of other different factors. But certain trends could indicate a future direction for that stock. So it is difficult, some of it is pretty hard to do for a beginner. I think even people that have been doing it for quite a while do find it difficult to do on their own. But fortunately there are a lot of tools in WebBroker that can help you with this. That's what I want to focus on today. If we do jump into WebBroker for a second, I'm going to share my screen, and I want to show you within the WebBroker platform, we go to research. Right at the top here, I'm already in the location. You go to research and then technicals, it's under the markets tab. Android to see here, this is just a general section. I have them put in a quote or anything like that. This is actually giving you, for a company called trading Central, it's going to show you my recently viewed. So it will be stocks that I looked at recently. If you haven't viewed any, that's okay. If you scroll down, you're going to have some. These are from all users in WebBroker. These are the most viewed bullish positions. This is an advice, just tools that they've used with their software saying, these are indicators that we are finding good indicators directionally for bullish or bearish or neutral, not necessarily, but you can see bearish or bullish, and up or down direction. And you could see most popular. What they are finding within their software that's me in the set. You have trending now and you have most viewed bearish and so on. You can click on any of these and get more details. Let's say for example I click on the one with Apple. Now what this is showing us is all the events. You can see it says up to the top of the chart, all the events that are available. Some may be a little bit older but as you scroll down, there really cool things that will show you. Red indicates a bearish indicator and showing the date that this was found, it said the price crosses the moving average, so she is telling you what it is and then you can drill down even further. This is what this tells me. I can read more and it's telling me a little bit more information. You can even click on learn more if you want to learn more about that particular indicator. So it's a great way to jump in, Greg. There's also a newsletter for bulls and bears. You can click on that and subscribed to that. You will get an email every day about stocks that are on the bullish side and on the bearish side. There tools to get you started into doing some were technical analysis on the charts. >> What you're showing right there has price crosses it moving average. I can understand that. My technical skills allow me to understand that but there's a lot more if you really start to dig in. So how can we learn more if we want to dig in on technical analysis in WebBroker? > That's a good point. Sometimes I feel the same way. You might have a little bit of knowledge but you might want some more. I find that the tools and there are really useful, especially from an education perspective. If we jump right back in again, to Greg's point, there are a couple of different areas. But right where we are at right now, I'm on this page which is perfect at the moment, there's the search button and there's a little hat, that's the universal education. Graduation cap. you can click on the technical tab. But you're gonna clip on this education tab. On the little hat there. And I noticed that you can see there is an introduction to the technical event, how it works, there's classic patterns. This is showing you all these hyperlinks that will tell me all of these different patterns. You may recognize some of those names. Their short-term, bullish and bearish. A lot of times people like to look at indicators and oscillators. Oscillators are unfamiliar to many people. Mac D and things like that. But the really cool thing is that as soon as you click on one of those comments going to give you a description but I really love that it also gives you trading considerations, just different ways that you can use that particular indicator to give you ideas on what's happening with the trend on the stock, which direction it may have moved. Lastly, the one less thing you can look at, Greg, if you're looking to learn more as you can go to the learn Centre, right here at the top in WebBroker. Everyone can watch these education sessions. Always talk about the learn Centre. You can click on webinars. There is a great series. They're all these webinars. I can apply the filters. You can see there is even a full course, a five-part course on technical analysis and a few other webinars on how to find more information. >> Great stuff as always, Bryan. Thanks that. >> My pleasure, Greg. Thanks. >> Bryan Rogers, Senior client education instructor at TD Direct Investing. And make sure to check out the learning centre in WebBroker for more educational videos, live, interactive master classes and upcoming webinars. Never forget about your questions about fixed income for Hafiz Noordin, a reminder of how he 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. All right, we are back with Hafiz Noordin, take your questions about fixed income. Lots of questions coming in. Let's start to get through them. How is the bond market looking on a geographic basis? >> Yeah, so we started to talk about the US as an opportunity versus Canada and you can look at differential yields there. But it's also interesting to look globally. Europe is a great example where we've talked about rate hikes in that economy as well. Something that was unheard of in the previous hiking cycle, 2017 2018. So now they are at a 3% policy rate. It has caused their bond yields become fairly attractive. What you can do is an investor is that you don't necessarily have to take on the currency exposure as well when you go to other markets. What's interesting with German government bonds, even though the 10 Year Bond Yield in Germany is lower than in Canada, when you actually hedge the currency exposure, you get an extra yield from hedging the currency, from selling the euro forward and buying in Canadian dollars to neutralize the currency exposure. And when you do that, the all in yield, the bond yield plus the currency has yield, you get about 100 basis points higher income compared to the Canadian 10 year bond yield. And so there interesting opportunities like that in other developed markets as well. You do still have to do the homework in terms of understanding what is the central bank doing in that economy. The ECB is still hiking, so that's right now causing bond yields to still trend higher in Germany and in Europe more broadly compared to the US and Canada. So I think there may be some entry points in the air that might help to mitigate some of those risks. and the more broadly geographically, there's emerging markets as well. Yields are very high in a number of countries because they have two they had to hike very early, they have a higher inflation rates, but there's a higher risk premium. So you do have to do the bottom-up research to know will you get your money back, the same way you would research a corporate bond. >> Interesting stuff. Let's get another question now, this one about money market funds. What's the outlook for money market funds? Before this aggressive rate hiking cycle, I can't think of anyone who ever asked questions about a money market fund on shows in the past decade. Now suddenly people are asking question. >> That's what happens. Rates were suppressed to zero for two will so long that it didn't play a great role in a portfolio except for maybe near-term Park year capital. But now you have policy rates at 4 1/2 here in Canada is so money market funds invest your cash in government securities, corporate commercial paper, other market securities that allow you to get an income level pretty close to that policy rate that the central bank sets and it's in a mutual fund structure compared to being in a checking account where, yes, you have your cash immediately available but you're not getting any income right now and checking accounts. So there's been a lot of demand for money market funds and similarly other type of cash instruments and I think the role they play is similar to any kind of cash allocation to the extent that you have some cash in your portfolio to give you flex ability, money market funds are one way to allocate the capital and earn that income where you're getting your monthly distributions equal to the yield on the fund and then that allows you to preserve your purchasing power in this high inflation environment. >> If someone was taking a look at a money market fund on the platform right now, they took a look at the yield, what do they need to be aware of when it comes to that yield? I imagine the central banks, if they were first course, we are going to be talking about a sort of different outlook for money market funds and those yields that they are paying. >> That's right. They are fairly well related. The benchmark on a money market fund is usually is 30 days, maybe 60 days or somewhere in between. So you are kind of exposed to that very, very short end of the curve. So yes, as soon as central banks start moving rates, yields a money market funds tend to move fairly soon with that. So it's just a matter of making sure that it's different, perhaps, than investing in a bond that has higher duration where your income level right now because of an inverted yield curve, your income might be lower but because you don't have duration, if interest rates start to cut more drastically, you will benefit from the price impact of yields going down, and so that would apply also to any type of cash industry were, yes, you will get a high income right now but you will have the price benefit in a deeper recessionary scenario. >> Interesting stuff. This one, so clearly listening to our discussion earlier about possible opportunities in US government debt, how big of a risk is the US debt ceiling for the markets? >> It's sad we have to talk about this yet again. >> It's on a cycle. >> Put it in your calendar. I think we've gotten used to a few of these and I think the market perception, and I think it's right, is that, yes, it causes noise, it causes volatility, but will the US government have a realistically default on their debt? No. There isn't really any kind of scenario where anyone in the US government on either side of the floor would benefit from that scenario. So we are seeing right now is that for major parts of the market, the main bond indices, the main equity indices, you are not seeing a real negative impact right now from all of the noise and headlines around the debt ceiling debate. But largely it's because we are still not quite there yet. Everybody's focus on is at what point does the U.S. Treasury actually run out of room to fund its liabilities, to funded spending? And we are not there yet because they have enough cash on hand for now, and they are also still using extraordinary measures to kind of push this down the road. But what's been happening is that there has been more attention on tax receipts, how much money is coming I can see you the U.S. Treasury and right now, it looks like that cross state in which the amount of cash available versus what they have to spend might become earlier than expected, it could be June or July versus before it was expected to be in August. So I think around that time frame when it does actually hit, we could see some volatility in fixed income particularly, but I think the volatility that we can generally whether through it and just be prepared not to panic too much in that environment. And it's just really a matter of realizing this is a lot of political theatre. >> We are going to get back to questions for Hafiz Noordin on fixed income in just a moment time. As always, make sure you do your own research before making any investment decisions. and 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. Copper prices had a strong start to the year, of course, the green energy transition does drive demand for the red metal. But now, we have these persistent recession fears. What could that do for the price? Our Anthony Okolie has been digging into a new TD Securities report on just that. What are we seeing, Anthony? >> Thanks very much, Greg. Copper has been one of the best performing industrial titles despite mixed economic signals and copper prices were averaging about four US dollars per pound, that's up 13% quarter over quarter. Copper is crucial for the transitioning economy, in larger vehicles, wind turbines and solar power grids. There has also been Chinese demand. But the copper market in China remains weak. copper could benefit from the seasonally stronger spring construction. It for the Chinese market. growing recession fears and we can than expected Chinese economic data pose headwinds to prices in the near term. Now, we recently interviewed Bart Melek who is the head of global commodity strategies at TD Securities about his take on prices. >>we have been talking about the strong likelihood that we areggoing to see a bit of correction in the price and then we seeacceleration at the latter part of the year as demand picks up and these markets tighten up. >> So despite some concerns about near-term corrections, TD Security still remains constructive on the price of copper and the sector longer term. Now, TD Securities has adjusted their price outlook to reflect higher copper prices in the first quarter that originally forecasted, as the next chart shows. TD Securities has raised its 2023 forecast 7% to just over four dollars US per pound. They've also increase the 2024 expectations two $4.10 US per pound, that's up to .5% versus their previous forecast. Now, TD Securities notes that the potential macro headwinds may be offset by a tapering of interest rates in the second half of the year combined with a weakening US dollar as well as low visible metal inventory. TD Securities also points to increasing M&A activity in the base metal spaces, coming to build out a pipeline of metals including copper. Now, TD Securities going forward does expect to make further adjustments to the target prices and recommendations as these copper, these companies begin to report the first quarter results over the next several weeks. Greg it? >> When it comes to those producers, what are some of the key risks when it comes to base metal? >> TD Security says that these base metal producing companies have forecast, financial, technical and political risks. TD Securities points to risks related to import costs and fuel prices. Other risks include market conditions, capital and operating costs, foreign exchange rates and for some basement companies, they may face financial, financing and access to capital risks going forward. Greg? >> Interesting stuff. Thanks, Anthony. >> My pleasure. >> Moneytalk's Anthony Okolie. Let's do a check in on the markets. The TSX Composite Index, when we have on our hands? Some modest green on the screen. Pretty modest. 21 points to the upside, about 1/10 of a percent. We had Rogers reporting today stronger subscriber additions to the quarter and also the fact that people are travelling and that increased roaming revenue. Rogers is upright now by 3 1/2%. Let's check in on Teck Resources, new developments freshen today. got the coal business separated, they are pulling back on that one. Tech basically acknowledge they didn't have the votes but they still want to find a way to make a bit of a split of the company. they are looking for a simpler way to do the split. Glencore is in the picture. They made an unsolicited bid for the company. a lot more drama around this one. Right now, Teck Resources is up a little more than 4%. South of the border, the earnings continue to roll in. The S&P 500 right now is just modestly in positive territory by seven points, a little shy of 1/5 of a percent. I want to check in on Activision. I told you earlier about Microsoft having a strong quarter but hitting a speed bump in its plans to acquire Activision. The UK regulators against the plan. Here's the other side of that. Here's what Activision shares are up to. At 77 bucks and change, they are down almost 11%. We are back now with Hafiz Noordin from TD Asset Management, take your questions but fixed income. Lots of questions coming in. Where would your guest add new money for the long-term? We can't give you specific advice but what you can do with your portfolio but we can take a look at the landscape and were some possible opportunities. >> If you're thinking long term, you have the advantage of worrying less about near-term changes in the market and thinking about where do you see economic growth and how can you hear your portfolio towards? And from that perspective, equities are still-- have a good case over the long term in that, especially in strong companies that are able to grow their dividends. You are looking for those companies that have strong balance sheets leading to high quality as a broad philosophy, something my equity qualities really focus on is dividend growth. I think that's a sound strategy over the long run but that's about being prudent over the next 12 to 18 months in this kind of elevated inflation environment and in an environment where high interest rates are impacting some parts of the economy, you have to see where pockets of stress, going back to where I was talking about high-yield bonds, those lower quality, lower credit quality companies, that's probably where you have to be cautious even as a long-term investor. And then on the fixed income side, I think it just about setting expectations, knowing that over the long run, the income level, the yield level on bonds is kind of what you can expect, but it it helps through certain parts of the cycle and having a strategy where you're looking at the correlations between your fixed income, your equities, your other asset classes, monitoring on it making sure, is likely to help you achieve your goals in the long run. >> Hafiz, was a pleasure having you here. Always learn something and I know the audiences as well. Look forward to the next time. >> Thank you very much. Our thanks to Hafiz Noordin, portfolio manager at TD Asset Management. As always, do your own research before you make any investment decisions. On tomorrow show, Colin Lynch, head of global real estate investments will take your questions about the real estate market. Our minute you can get questions into us ahead of time. Just email moneytalklive@td.com. That's all the time we have the show today. See tomorrow. [music]