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[music] >>Hello I'm Greg Bonnell and welcome to MoneyTalk Live, brought to you by TD Direct Investing.
Every day we will be joined by guests from across TD, many of whom you'll only see here.
We'll take you through with moving the markets and answer questions about investing.
Coming up on today's show.
We'll speak with Hussein Allidina of TD Asset Management on the escalating conflict involving Israel and Hamas and potential implications for the energy sector. Also today the latest TD directing investing indexes out an Anthony Okolie will tell us out about which way the trend is heading.
And Jason Hnatyk will be telling us about commodities in today's WebBroker education segment using the platform. Here's how you can get in touch with us.
Just email moneytalklive@td.com or Phil at the viewer response box in the video player and WebBroker.
Will get to our guests in a moment but will start with an update of the markets.
The TSX, a little shy of half a percent.
Among the most actively traded names of the TSX, this when standing to be Denison Mines today. It's been a choppy trade in the uranium place. There is something else going on.
Denison going down to the tune of 2%. They are selling at 37 million shares upon offering a buck 49 a share US. If you do the conversion, I'm not smart enough to do to my head but if you look at the American listing, trading at about 49 roughly US and that's up some of the downdraft you are seeing on Bay Street as well.
Checking on Manulife as well, some big financial names.
Right up a little more than 20 ^...
¸south of the border even though some wholesale data suggest there is still price pressures in the economy we have fed speakers pretty strongly indicating that they might be done and ready to go back on pause when it comes to rate hikes. The market right now, kind of lying flat on that news. 4358.
Up a little shy of a full point. A check on the tech heavy NASDAQ, seeing how it's bearing. Against the broader market, a little stronger with the gains but 36 points or 1/4 of a percent. And ExxonMobil, will tell you more later but there pioneering, $60 billion all stock deal, Exxon shares down almost to the tune of 5%.
And that's your market update.
The conflict involving Israel and Hamas in Gaza has been raising questions about the stability of the energy sector especially amid fears about broader Middle East violence. Hussein Allidina, Head of Commodities a TD Asset Management joins us now with some perspective. Hussein, obviously a pretty startling chain of events over the past few days and the oil market as well.
> It is been for sure.
Very depressing situation that we are seeing in the Middle East. I think from an oil perspective, we saw the market rally on the open on Sunday on the heels of the attacks on Saturday. The market has retreated a little bit as of late.
I think from a supply and demand point of view. Clearly there is production at risk in Israel or Palestine. You do have potential for this situation to escalate if Iran gets involved. Iran is producing and exporting more oil than they have of the last five years, north of 3 million barrels a day. So there is some risk there. Hopefully that is a sort of tail event, a worst case scenario. But I think given the tightness, given how fragile the balance is right now, it likely makes sense to embed a bit of a supreme around that.
> Is not what the market is trying to figure out? Early days with the events moving quickly as well.
You can't really just come to a thesis at this moment and say "this is happening so this will happen this will happen… Very fluid.
>> It's extreme we hard. I think we go back and look at prior events, a few years ago we had the drones that attacked the refinery in Saudi, you saw the market up pretty meaningfully. Typically the supply disruptions are when they occur, they are not long-lasting so you see the premium cut but there have been instances where, I'm sure a fresh in the minds of some.
Where you see material productions in production. Some 50 years ago, the Arab oil embargo contributed to sending oil prices from three dollars a barrel to $15 a barrel. So there is some of that risk in mind when you look at balances and you look at sort of the production of risk right now. It is very minimal.
I do think that the events that unfold over the weekend, you know, temper the likelihood of I push between Israel and Saudi which wasn't something that the ^...¸had been talking about as we look to the end of 2024. Add you know, I mentioned Uranian barrels in uranium production has been a source of supply to the market.
There is potential for those sanctions to be, the sanctions never disappeared but I think the US kind of turned an eye. You know, you might see some of those volumes come off which, you know, the oil balance really can afford.
> We are showing the audience right now, production in Iran and clearly from the timeline here, there definitely has been a ramp up.
>> There is been a material ramp up and that's part of the reason that the draws we've seen of not been more pronounced.
You know, I think that if that production is at risk, which I think the market, as you mentioned, is trying to figure out, it paints a very constructive picture of it again supply induced shortages are not great for growth. They are not great for inflation. Very different than sort of, prices going higher because of a demand supply.
>> You mention Saudi Arabia now they've been constraining production.
To meet goals. If you ended up in a situation where, say, Iranian barrels were taken off the market, what would Saudi Arabia perhaps do about that?
>> So I think the good thing about where we are today is that Saudi Arabia, Kuwait, UAE, some of the Gulf countries have reduced production intentionally. So they have spare capacity, OPEC a spare capacity is probably north of 3 million barrels a day that Iran is producing right now.
So, ultimately, if there was a disruption, I think that you could see an increase in production from Saudi and some of the other Gulf countries to alleviate that destruction but ultimately a spare capacity falls, the market worries because if there is another disruption, there is no, sort of, buffer to meet that. But absolutely, if you lose a rating production, study could increase the production to mitigate that loss, I think.
>> Also, if you're having this discussion a couple weeks ago or maybe only last week, we will be talking with the broader global economy, different global agencies pulling back there growth forecast saying words like "tepid" using that as an oil trade, does that get further complicated to this mix about worrying about demand if this recession that, I think you and I've been talking about for a year and 1/2, actually shows up?
>> Yeah. I think if oil prices are moving higher because of supply related concerns, that is not great for growth.
I think the thing that we have to keep in mind from a commodity perspective, oil demand is expected to decline next year.
Demand growth. The absolute level of demand though, on most forecasts, is still above supply. And that still on a full year basis for imagery draws. His so and in equity land, fixed income, we talk a lot about the second directed it a second derivative rather the rate of growth. But if oil demand slows but not enough to kind of, fall below supply, that I'm still drawing imageries and that still a constructive backdrop.
>> We may actually talk with as little later on but I want to squeeze in some right now apart from everything, very important things we've tackled so far this conversation, we actually have served in an activity.
We have some M&A activity.
(…) These> Yes Exxon is going a reserve based on their production profile but they are doing so by acquiring Pioneer. That's great for Exxon Mobil.
Potentially great for Exxon shareholders but does not change the oil balance right?
Exxon could've said "we're going to go look for incremental upstream production…" Instead they decided to buy Pioneer.
There might be some implications matched were it's easy to buy a company where it is to grow production in this environment.
I think that's telling.
>> Let's get into that. That is telling in the sense that we've seen all these oil and gas majors returning money to shareholders, now they are making acquisitions.
As you said, an acquisition that doesn't actually grow global production numbers.
> At the end of the day, we talked with us before.
We have to be able… If we believe in GDP growth and that it still requires oil demand, you know, that dialogue, that narrative has been broken.
People think that oil demand is speaking.
Oil demand reach record highs in July and August of this year notwithstanding the fact that the economy, is not as robust as we thought and China has not been firing on all cylinders. If you believe in GDP growth, then you implicitly believe in all demand growth. In order to meet federal demand growth we need to be investing in the supply side. If we don't, then prices have to ration demand to find equilibrium.
>> Fascinating stuff will be back with Hussein Allidina had a reminder that you get in touch with us any time by emailing moneytalklive@td.com or Phil at the viewer response box under the video player and WebBroker.
Now let's get you updated on some of the top stories. There is an old saying in broadcast journalism, I'd told you I will tell you again.
There is a multibillion-dollar transaction in the oil and gas sector today.
ExxonMobil is buying shale gas player Pioneer natural resources in an all stock deal valued at some $60 billion, US pioneer shares jumped higher earlier this month on reports the two companies were close to a deal. Shares of Spinmaster are in the spotlight today almost 6% up. The children's entertainment outfit is a deal to buy US toy company "Melissa and Doug" for $950 million US. Spinmaster which is best known for Paul patrol and Bakugan Brands says the acquisition will expand its presence in the early childhood toy segment and will immediately boost revenue.
Food court and restaurant operator MTY Food Group is reporting a 74% jump in sales compared to the same period last year. The company behind such names as Mucho Burrito and Thai Express saw positive sales growth in Canada and the US and its international segment was flat year-over-year.
Quick look at the markets. SPN rather S&P a little less than half a percent of the south of the border, that brought a read of the American market the S&P 500, right now just out 1/3 of a percent. Back with Hussein Allidina of TD Asset Management taking questions at all things related to commodities.
Let's start getting into them.
I guess wants to know about gold.
(Greg reads the question).
>> Gold has performed, following that is the weekend, roughly speaking, gold prices tend to reflect the value of the dollar.
The dollar has been quite strong so it's been a headwind for gold. Real rates are also positive out the curve. That's typically had been for gold. I think we've seen support in gold because you've seen it buying from emerging markets central banks and I believe that buying has continued.
They are looking to diversify their portfolios, they are holding a lot of US dollars, diversifying away from that part.
I think the gold plays a very interesting role in portfolio construction. Hedges against tail events.
Unlike most other asset classes that make up most portfolios. So I think gold has a place in your portfolio. I think that the dollar, if it starts to we can, we do see gold perform into year end but the outlook for gold is very much a function in the near term of what the dollar does and sort of, general appetite. The strength we've seen in recent days is a function of the increased geopolitical uncertainty that we are seeing. The weakness that we saw last week of the week prior was a function of rates moving higher. If you believe rates are near the highs, that is adaptations for the dollar. I think good applications for gold moving forward.
>> Has it been hard to peg a number on gold?
I think people throughout that US dollar run have been saying "surely it's topped out and met its match now" and just kept running higher.
>> So gold is a really interesting commodity relative to the 25 of the commodities that we track on a relatively regular basis.
Because a supply and demand of gold is a little less important in determining the price of gold.
Gold is almost a bit of a currency. You know, simple models look at gold price as a function of the dollar. As a function of real rates would tell you that gold should be trading 14, $1500 an ounce.
I think those models, historically, have worked but are broken today. And they are broken because using a tremendous amount of buying from EM central banks. The other piece, I think to think about is typically, when equities perform, the opportunity cost of holding gold which does not pay a dividend, is higher.
Similarly, when real rates are elevated the opportunity cost of holding gold is higher. Equities about a great run over the course of the year. I think to find many people's expectations.
If equities wobble, I would not be surprised ETF retail interest in gold pick up and support the gold price. It is been a very difficult commodity, I think, to peg and I think it a surprise to many.
Gold has done remarkably well given with the dollar has done and given what we rather rates real rates have done. I think those are closer to the highs the knotted I think that's why gold is interesting of the portfolio.
>> Before we leave, I want to ask you with that central-bank by. What are they going for?
>> I think it's diversification right?
Your portfolio, I Hope was diversified.
I try to diversify my portfolio. I try to talk a lot about portfolio construction.
The reserves of central banks, particularly EM central banks, they held nothing but the dollar historically. There diversifying away not because they believe necessarily the end of the dollar. That some were saying. There does diversifying away from green back to other currencies and gold.
And I think that diversification are that buying of gold has provided a tailwind or support of the gold price.
>> Good conversation there on gold. Thanks to the view for the question. Let's get another one here.
The viewer wants to know about China's economic troubles and where they can meet for commodities.
Before this year I thought it was China: game on.
It's a little different story.
>> If you look at a commodity by commodity basis in China, there is a material between the different commodities. The commodities like copper, Alleman human, steel, zinc, commodities that are used in the buildout of infrastructure, the development of real estate property, they have underperformed relative to expectations. If you look at the demand for petroleum products, gasoline, diesel, jet fuel, crude oil, that demand is quite firm. In July and August I mentioned the global oil demand was in a record high.
China's imports of crude in both July and August we have data available, were also at a record high.
So you are seeing this bifurcation as I think, China moves from old economy to morbid consumer economy. On the mental side, you know, you are seeing signs, going on now in London… One of my teammates is there. On the ground.
And there is a lot of Chinese they come for the first time for that week because they're allowed to travel. The sentiment is action quite positively from a low base.
I don't think we see China's demand for copper, for zinc… Look anything like it did in the last supercycle. But the metals don't need that.
Can't really afford that, given the increase in eat vite demand we are seeing for you know, metals like copper and nickel etc.
>> He talked about the fact for that, we count on ^...
¸not actually minding these companies. At the rates perhaps we need to mind them to get ready for all your changes.
>> A lot of folks, five years ago, he had a conversation about metals, it's all China.
China is the demand. Contributor for all these metals. Increasingly window but look at supply/demand balances for the next five or 10 years, China is important.
But the contribution to demand from TVs in the transition is meaningful and overtakes China in the 10/15 year window. So you're a single baton to be passed and you needed to be passed because again, there's not enough serial arguably to meet those EV protections with a readily relatively tepid China. If China was on fire as it was through the industrialization, in the 2000, copper, alley prices would be materially higher because we don't have the resources.
>> Okay we had a viewer who wants to turn our thoughts towards oil.
(Greg it reads the question).
> So time horizon is important. I think that over the course of the next couple of years, we will see oil prices well north of 100 given the imbalance of supply and demand. The supply side is relatively predictable. You don't wake up one morning and find 30,000 barrels a day.
He takes a very long time to bring greenfield production to market.
The production growth that we are seeing the balance this year, from Brazil and Guyana, that is stuff that we invested in five, seven, 10 years ago. It's coming to fruition now.
So in a multiyear view, I think oil prices go higher. Triple digits, not an issue.
It's an… The real price of oil is about 12 $13 a barrel above the average of 1970. So we are not actually that high.
On a percentage of consumption basis, how much is Greg, how much is… Very very low.
Because we've become far more efficient with our consumption of it. If you risk question may be more sort of near-term focus.
I think that if it's a situation in the Middle East, if it gets worse and we see a disruption in uranium production, or production of the region, I think you could see prices move higher.
But I don't think, base case, we get north of hundred dollars a barrel.
Over the course of the next couple weeks unless there is a supply-side disruption.
>> Even if we do get $200 and more a barrel longer term, does that incentivize energy companies to want to look for more oil?
Releasably saying "we are in share buyback mode" raising dividends… Special dividend mode. Exploration is behind them?
>> That needs to change.
So if you look at the relationship between how producers of the commodity are responding to the change in oil price or the increase in price, they become far more, far less responsive to price.
So they are not responding to price. They are not, you know, deploying rigs as they would historically, given the change in price that we've seen. And I think that is a symptom of ESG, energy transition etc.
If they don't start investing price have to go even higher to find that supply demand equilibrium.
>> As always at home make sure you do your own research before you make any investment decisions back with your questions from Hussein Allidina just a moment's time.
Talking commodities. Of course get those questions at any time. Just email MoneyTalk Live ATD.com. Now it's get to our educational segment of the day.
We are talking about commodities on the show. Let's talk about tracking commodities on the WebBroker platform.
Jason Hnatyk, Senior education instructor at TD Direct Investing.
Always great to see you.
Tell us what were looking at Jason.
>> Always a pleasure to be here. Whether or not you were just looking to kind of track global exposure to the commodities market, we know it's obviously been in the news and yourself and Hussein have done a great job detailing some of the overarching issues. If you got exposure, your own portfolio, let's take a look at WebBroker. We can find out where to find just those exact prices of those were you might be personally interested.
So to get yourself to the right spot, were going to go to the research tab at the top of the page.
We will choose our trustee overview page.
We've been there many times the past. So much good information here to track the commodities information. Once the page loads are gonna scroll down on the left-hand side.
Just beneath where the international indices are listed you will see a commodities section you'll see it lift list of the left-hand side. We have three commodities sections to kind of Peru is.
We have our agriculture so if you're looking at livestock… That's all there for you. Metal.
So your gold and silver prices, that's gonna be able to be available at your fingertips. But also importantly the energy sector.
Once again, we've been having a great discussion.
Our oil prices, here is every thing you need to know in terms of where they are tracking that presently. If we look at our West crude futures contract, these are October's contracts listed here. We have last trade, change from the previous sessions trading and we also are getting a bit of a sliding scale. We can see the high and low of this particular commodity over the life of its contract I will notice that we are trading just north of the 15% for the price of the West Texas crude specifically.
Now, this is pricing information, if you looking for a little bit more of a deep dive on how these prices might impact some of the important sectors in the economy, you can get more information by clicking on the research tab at the top of the page and under markets again, this time we will choose reports. On this page, there is so much year to dive into and review.
The two things I want to highlight her first going to be our MorningStar reports.
On the right-hand side, scrolling down half the way, there's all the different major sectors in the industries within the economy.
For whichever is most specific to the commodity of your choice. If you dive in a look at a detailed report. We have one available from MorningStar. If we scroll down just a little bit further, there is also another detailed report extension there from income research. So lots of information to stay informed for the investor using our WebBroker platform.
>> So people might be interested in the commodities.
They notified it on the platform.
Now they wanted to get that in the next step. Connect some stocks.
The specific commodities.
How do they do that?
>> That's a great question.
We decided we want to get a little exposure and let's put the platform to work so we can do a bit of a quick scan of the market.
So we can get some of that exposure that we are after.
Back to WebBroker we will go back to our trusted research page of this time, under tools, we are to choose screeners.
We can choose here for stocks as you mentioned… We can choose for technical advance and we've got mutual funds and ETF's. I want to focus on ETF's.
Once this loads for me and just one second.
It looks like we've got… A quick slowdown on WebBroker.
But that's okay.
It's a real quick easy step process to identify those opportunities. Okay we have a to load for us now. Once again, stocks technical events.
Jumping into the ETF section, we will create our own customs screen. We have an opportunity to really pass abroad… Into the market.
You can scan for specific MorningStar ratings.
But in this case will just jump in and scan for a specific fund categories.
You'll notice down here, in this fun category drop-down menu, we give this a bit of a scroll down, there are other opportunities for us to really narrow focus and if we want to look specifically commodities, you'll notice three specific sections. I'm gonna jump into the command Canadian commodity section.
We have 28 specific mutual funds and ETF's. Once we run this screen, we have a list in front of us.
We can even trade from the spot so it's a really great opportunity to get yourself that exposure to these different commodities.
See can be focused on for yourself.
>> Great stuff as always Jason.
>> Jason Hnatyk Senior Client Education Instructor TD Direct Investing. Make sure to check out the learning centre on WebBroker for more educational videos, live interactive master classes and some upcoming webinars.
Alright we are still looking at me.
Do you have a question about investing, or what is driving the markets? Our guests are eager to answer your questions so send them to us here at MoneyTalk Live. You can send your questions two ways: you can send us an email any time at moneytalklive@td.com or you can use the question box at the bottom screen right here on WebBroker just type your question and hit "send". We will see if one of our guests can get you the answer right here at MoneyTalk Live!
>> We are back with Hussein Allidina.
Backwardation… Can you explain what that is?
>> That's super important.
It's not just the change in the price of a commodity. When you are long in equity, you want the equity to go up, maybe a dividend yields will be paid but the shape of the curve is very important because you are always your exposure… You can hold your WTI futures contract which expires in December the shape of the curve, the word "backwardation" is the forward curve downward sloping. What does that mean, that means that in the future, trading at a lower price than what is trading currently or in the stock market. In the back related market, you collect a positive role yield because you've bought something at a discount in the future.
You've bought low. When it arrives to spot your selling high. So you collect that positive yield. The opposite of backwardation is the price of the commodity trading at a higher price in the future. Broadly speaking, the Greg, Greg the shape of the curve is the function of the underlying level. When imageries are tied, you as a consumer of the commodity will pay a premium to have that commodity today versus waiting for delivery in the future.
So when imageries are tied to get this backwardation positive yield today the case of oil.
Your backwardation is almost 10% to you can buy oil in a 10% discount despite a year fold. Nothing else changes and you collect that 10% role yield as the curve rolls out. I don't know if I did a good job explaining that.
Excellent job. I wish explaining 1012 years ago I shifted from general news into business news, you were there explaining that.
>> Nobody cared about that 10 years ago.
The market was in a bear market.
No one cared about it.
>> Great explaining there. Another question just came in in recent moments from the audience. Let's give a look at it. (Greg reads the question) now here the platform you can give specific investing advice and we won't talk about (…) If you look at >> If you look at wheat prices there relatively low, deftly material lower than where they were immediately following Russia's invasion of Ukraine.
Wheat balances today are relatively comfortable.
You have not seen any disruption out of Russia, out of Ukraine, cargoes are still making their way out. Notwithstanding kind of all the news around the deal etc. Wheat balances are heavy.
As a result, although wheat prices, the spot price is low, you have this entanglement in the curve. You have to think about buying this. I'm to be playing this negative role yield. There are reasons.
I think to look for appreciation wheat.
If it strengthens that does have potential implications on the production regularly and parts of Asia but today, the wheat balances relatively heavy. The grain balance, broadly speaking, if you look at it the oil balance extremely tight, these commodities, I'm not sure I would be showing these things but you have a disruption in Brazil. Or in Argentina.
Balances can be tied pretty quickly but to answer your question Greg, I'm not over wheat right now in the fund that we manage and partially because balances are heavy and that tangle is pretty significant.
> A question here is sort of a nice follow-up talking about commodities. You talked with the impact of extreme weather of the commodities.
You never know what could happen and where.
>> Yes so I guess the fun part about being a commodity analyst or following the commodity market, there is a host of unknowns. Like we've seen over the weekend. That impact balances what I would say in the different commodities that we cover. Over the course of the last five years supply assumptions more frequently than we have in the prior 15 years we be doing this because of the variability of the weather. Broadly speaking, the weather deviation from normal tends to be for soft commodities and grains, negative. You keep getting hotter than normal weather or less than expected precipitation or too much precipitation. Things away from the average and for most props you want average weather.
There are instances where weather deviates from normal in a bearish way. So we've seen, last year in Europe, we got normal warmer than normal weather. Safely from the extreme situation of material and power prices.
Broadly speaking, I think whether varied abilities will increase the volatility of the market and again, broadly speaking when I look on average of the weather disruptions that we've seen, they tend to be bullish for the commodity, either because it's challenging the supply side or its stimulating demand.
, We talked about before the show, Europe is seeing the first colds not kind of early in the season. To see a cold snob, that's good to support demand and part of the reason why you see natural gas prices in Europe over the course of the last couple of days rally the way they have.
>> To get back your questions with Hussein Allidina on commodities in just a moment's time. As always make sure you do your own research before you make any investment decisions and a reminder they can get in touch of us at any time.
Do you have a question about investing, or what is driving the markets? Our guests are eager to answer your questions so send them to us here at MoneyTalk Live. You can send your questions two ways: you can send us an email any time at moneytalklive@td.com or you can use the question box at the bottom screen right here on WebBroker just type your question and hit "send". We will see if one of our guests can get you the answer right here at MoneyTalk Live!
Well the latest of direct investing index has been released in our Anthony Okolie has been going over the numbers and joins us with more. Anthony.
>> Thinks very much Greg. The TD Direct Investing index has been released for the month of September the key take away is that self-directed investor sentiment remained in bearish territory for the second straight month. Here are some of the key details: first we will start with the overall TD Direct Investing index which measured sentiment from 100 for very bearish to +100 for a very bullish.
It came in at -31 in September.
That's a decline of eight points, month over month. But it is a big improvement from September of last year.
When sentiment was a very bearish, -56.
Now, we look at the components which make up the DI I, overall the core proxies were quite bearish and mostly down month over month.
Unlike the previous month, chasing trends or investors who bought stocks in a rising market was the most negative proxy at -11 in September after a modest two point drop month over month.
A few key points that stood out: first, sentiment across all sectors range from neutral to slightly bearish in September.
Seasonally, the worst month for markets.
But financials still placed among the lowest and overall sentiment.
Secondly, baby boomers or between 1964 is when they were born rather 1946 to 1964 Were Even More Pessimistic in September.
We break things up by sector, self-directed investors, sentiment for financials edged up 3 Points in September.
But remained slightly negative at -3.
The ramp up, hire in bond yields during the month put downward pressure on dividend paying equities like banks.
Meanwhile, the tech space suffer the biggest drop in sentiment following six points month of a month to -2. That's a slight shift into bearish territory. The artificial intelligence appeared to cool in September after sizzling for the first half of this year.
The most heavily sold stocks in financial sector last month including the Bank of Nova Scotia, TD Bank, CIBC and Bank of Montréal.
Among the most heavily sold names in the IT sector were Nvidia, the world's leading maker of chips for artificial intelligence as well as Advanced Micro Devices and Microsoft. Finally, when we look at trading activity based on age, baby boomers were once again the most pessimistic group in September. With overall sentiment following 2-20.
And that's your TD Direct Investing highlights for the month of September 2023.
Greg back to you.
> Thank you Anthony money talk markets editor Anthony Okolie. Now it's take a look at the markets.
Having a look at TD defence dashboard a platform available for TD Direct Investing.
This is the heat map function. Gives us a nice picture of the market boomers. A lot of ways you can screen through and will take a look at the TSX 60 by price and by volume.
We'll see a bit of a mixed session out there. Were seeing some strength and some of the financial names.
Really basic materials right now catching my eye. You have First Quantum up of 2 1/2%, you have Kinross Gold up a little more than two and a bit of a pullback for Shopify today. Down a little more than 1%.
Now, taking a look south of the border, we will screen through the S&P rather the S&P 100 a bit cleaner than the S&P 500 in terms of me try to figure out what's going on.
Taking a look at the S&P 100 now is generally a stand out of the upper corner and that would be XO and according to… ExxonMobil $60 billion acquisition Hussein was giving us some insight. Buying another producer and right now I have that stock down to the tune of almost 5%. Over the side of the screen some of the technology seen showing some strength including Nvidia.
Anthony was just talking about that when in Google up to the tune of almost 1 1/2%.
More information on TD advanced dashboard by visiting td.com/advanced dashboard.
Back with Hussein Allidina with TD Asset Management talking commodities.
Lots of questions coming in. What's your outlook for natural gas?
>> US natural gas?
>> Sure. Let's do US natural gas.
Guest choice.
>> US gas has actually rallied reasonably well over the course of the last couple of days on the heels of colder weather as we approach the winter. The forecast for the northeast, as he talked about before the show is gone quite a bit colder. And we've seen some sort of tempering in production.
Now, when you look at the winter season, November through March, there is a limited amount of demand, whether adjusted.
There's a limited amount of gas did you can export. So when I look at the balance, it looks reasonably well supplied. The risk, risk to prices, if we have a material deviation and whether for normal.
If we have normal weather, you know, I'd be very surprised to see gas going higher than we are right now because the balance is reasonably in equilibrium.
We are starting the winter with a decent amount of imagery and storage. Most of sort of demand forecast in the winter. If you model different weather scenarios, you end of the winter again with a reasonable amount of that. So there is a really a structural story in near-term and gas.
When you get out the 2025, 2026 and our LNG export capacity of the US it picks up, you see more of a linkage with US global prices which are trading materially higher than where we are in the US. But the US gas story is very much a weather story and if you don't have material deviation from weather, prices will probably stay where they are.
>> You mentioned LNG. I want to ask you this.
Natural gas.
At times of high prices, you start seeing a lot of headlines about "what about Canada's opportunities now? We have to ask. We have to ask.
You say as the market comes down, those conversations died down. Are we still making progress on that file even though the amount of the headlines?
>> We are making progress. We are building and constructing an LNG facility off the West Coast.
I think the frustrating, for me the frustrating pieces that Canada has the potential to produce far more gas than they are producing right now. Gas is a clean fuel relative to call that's being burned in China and the oil that's being burned in other parts of the world. If we were able to produce more gas to it unambiguously, I believe, be good for the Canadian economy and we would arguably reduce the carbon footprint globally because the more gas is available, at a competitive price, your potentially burning less cold. Again, these decisions, it's challenging Greg because these decisions are not things that we can kind of do overnight. It takes time. We need to have some for a side and we need to be making those investments now so that five, seven, 10 years from now, we don't find ourselves in a position where things are tied.
>> Another question from the audience. If you are much to know how much opportunity there is an rare earth and other EV metals.
>> So in our funds we trade these base metals. Not the rare earth minerals because there is in a forward market or derivative market that you can trade.
When I look at the metals specifically, copper to a lesser extent nickel, and then aluminum, those are three commodities that are integral to the energy transition.
There are rare earth minerals as well the go into the EV's that are going to be needing it but copper in particular is very challenging from the supply sent.
This is a five-year vehicle and it takes a long time to bring Greenfield copper production to market 78 are years.
If you look at how copper and nickel, to a lesser extent, is used in the batteries, we're transitioning away from conventional vehicles to electric vehicles, those electric vehicles require a greater amount of copper and we need to build up the power grid and green rather reinforce the power grid and that requires a tremendous amount of base metal. As we talked about earlier the show, China's demand for those metals has been relatively lacklustre.
Very robust growth out of China.
Because of the, sort of, increase in demand bursting already from the EV space which is only set to grow as we transition.
> Hussain, always a pleasure. Always great insights.
Looking forward to next time.
>> Thanks Greg.
> That was Hussein Allidina, Head of Commodities of TD Asset Management.
On tomorrow's show, Ben Gossack will be joining us from TD Asset Management.
I had a chat with Ben a couple of days ago.
Some interesting insights about what's happening there with some of the financial names.
Perhaps some financial times we don't think about quite a lot.
Managing Director, Portfolio Manager at TD Asset Management talking about strategy.
Get your questions in ahead of time by emailing MoneyTalkLive@td.com.
That's all the time after the show today.
Thanks for watching and we will see you tomorrow.
[music]
[music] >>Hello I'm Greg Bonnell and welcome to MoneyTalk Live, brought to you by TD Direct Investing.
Every day we will be joined by guests from across TD, many of whom you'll only see here.
We'll take you through with moving the markets and answer questions about investing.
Coming up on today's show.
We'll speak with Hussein Allidina of TD Asset Management on the escalating conflict involving Israel and Hamas and potential implications for the energy sector. Also today the latest TD directing investing indexes out an Anthony Okolie will tell us out about which way the trend is heading.
And Jason Hnatyk will be telling us about commodities in today's WebBroker education segment using the platform. Here's how you can get in touch with us.
Just email moneytalklive@td.com or Phil at the viewer response box in the video player and WebBroker.
Will get to our guests in a moment but will start with an update of the markets.
The TSX, a little shy of half a percent.
Among the most actively traded names of the TSX, this when standing to be Denison Mines today. It's been a choppy trade in the uranium place. There is something else going on.
Denison going down to the tune of 2%. They are selling at 37 million shares upon offering a buck 49 a share US. If you do the conversion, I'm not smart enough to do to my head but if you look at the American listing, trading at about 49 roughly US and that's up some of the downdraft you are seeing on Bay Street as well.
Checking on Manulife as well, some big financial names.
Right up a little more than 20 ^...
¸south of the border even though some wholesale data suggest there is still price pressures in the economy we have fed speakers pretty strongly indicating that they might be done and ready to go back on pause when it comes to rate hikes. The market right now, kind of lying flat on that news. 4358.
Up a little shy of a full point. A check on the tech heavy NASDAQ, seeing how it's bearing. Against the broader market, a little stronger with the gains but 36 points or 1/4 of a percent. And ExxonMobil, will tell you more later but there pioneering, $60 billion all stock deal, Exxon shares down almost to the tune of 5%.
And that's your market update.
The conflict involving Israel and Hamas in Gaza has been raising questions about the stability of the energy sector especially amid fears about broader Middle East violence. Hussein Allidina, Head of Commodities a TD Asset Management joins us now with some perspective. Hussein, obviously a pretty startling chain of events over the past few days and the oil market as well.
> It is been for sure.
Very depressing situation that we are seeing in the Middle East. I think from an oil perspective, we saw the market rally on the open on Sunday on the heels of the attacks on Saturday. The market has retreated a little bit as of late.
I think from a supply and demand point of view. Clearly there is production at risk in Israel or Palestine. You do have potential for this situation to escalate if Iran gets involved. Iran is producing and exporting more oil than they have of the last five years, north of 3 million barrels a day. So there is some risk there. Hopefully that is a sort of tail event, a worst case scenario. But I think given the tightness, given how fragile the balance is right now, it likely makes sense to embed a bit of a supreme around that.
> Is not what the market is trying to figure out? Early days with the events moving quickly as well.
You can't really just come to a thesis at this moment and say "this is happening so this will happen this will happen… Very fluid.
>> It's extreme we hard. I think we go back and look at prior events, a few years ago we had the drones that attacked the refinery in Saudi, you saw the market up pretty meaningfully. Typically the supply disruptions are when they occur, they are not long-lasting so you see the premium cut but there have been instances where, I'm sure a fresh in the minds of some.
Where you see material productions in production. Some 50 years ago, the Arab oil embargo contributed to sending oil prices from three dollars a barrel to $15 a barrel. So there is some of that risk in mind when you look at balances and you look at sort of the production of risk right now. It is very minimal.
I do think that the events that unfold over the weekend, you know, temper the likelihood of I push between Israel and Saudi which wasn't something that the ^...¸had been talking about as we look to the end of 2024. Add you know, I mentioned Uranian barrels in uranium production has been a source of supply to the market.
There is potential for those sanctions to be, the sanctions never disappeared but I think the US kind of turned an eye. You know, you might see some of those volumes come off which, you know, the oil balance really can afford.
> We are showing the audience right now, production in Iran and clearly from the timeline here, there definitely has been a ramp up.
>> There is been a material ramp up and that's part of the reason that the draws we've seen of not been more pronounced.
You know, I think that if that production is at risk, which I think the market, as you mentioned, is trying to figure out, it paints a very constructive picture of it again supply induced shortages are not great for growth. They are not great for inflation. Very different than sort of, prices going higher because of a demand supply.
>> You mention Saudi Arabia now they've been constraining production.
To meet goals. If you ended up in a situation where, say, Iranian barrels were taken off the market, what would Saudi Arabia perhaps do about that?
>> So I think the good thing about where we are today is that Saudi Arabia, Kuwait, UAE, some of the Gulf countries have reduced production intentionally. So they have spare capacity, OPEC a spare capacity is probably north of 3 million barrels a day that Iran is producing right now.
So, ultimately, if there was a disruption, I think that you could see an increase in production from Saudi and some of the other Gulf countries to alleviate that destruction but ultimately a spare capacity falls, the market worries because if there is another disruption, there is no, sort of, buffer to meet that. But absolutely, if you lose a rating production, study could increase the production to mitigate that loss, I think.
>> Also, if you're having this discussion a couple weeks ago or maybe only last week, we will be talking with the broader global economy, different global agencies pulling back there growth forecast saying words like "tepid" using that as an oil trade, does that get further complicated to this mix about worrying about demand if this recession that, I think you and I've been talking about for a year and 1/2, actually shows up?
>> Yeah. I think if oil prices are moving higher because of supply related concerns, that is not great for growth.
I think the thing that we have to keep in mind from a commodity perspective, oil demand is expected to decline next year.
Demand growth. The absolute level of demand though, on most forecasts, is still above supply. And that still on a full year basis for imagery draws. His so and in equity land, fixed income, we talk a lot about the second directed it a second derivative rather the rate of growth. But if oil demand slows but not enough to kind of, fall below supply, that I'm still drawing imageries and that still a constructive backdrop.
>> We may actually talk with as little later on but I want to squeeze in some right now apart from everything, very important things we've tackled so far this conversation, we actually have served in an activity.
We have some M&A activity.
(…) These> Yes Exxon is going a reserve based on their production profile but they are doing so by acquiring Pioneer. That's great for Exxon Mobil.
Potentially great for Exxon shareholders but does not change the oil balance right?
Exxon could've said "we're going to go look for incremental upstream production…" Instead they decided to buy Pioneer.
There might be some implications matched were it's easy to buy a company where it is to grow production in this environment.
I think that's telling.
>> Let's get into that. That is telling in the sense that we've seen all these oil and gas majors returning money to shareholders, now they are making acquisitions.
As you said, an acquisition that doesn't actually grow global production numbers.
> At the end of the day, we talked with us before.
We have to be able… If we believe in GDP growth and that it still requires oil demand, you know, that dialogue, that narrative has been broken.
People think that oil demand is speaking.
Oil demand reach record highs in July and August of this year notwithstanding the fact that the economy, is not as robust as we thought and China has not been firing on all cylinders. If you believe in GDP growth, then you implicitly believe in all demand growth. In order to meet federal demand growth we need to be investing in the supply side. If we don't, then prices have to ration demand to find equilibrium.
>> Fascinating stuff will be back with Hussein Allidina had a reminder that you get in touch with us any time by emailing moneytalklive@td.com or Phil at the viewer response box under the video player and WebBroker.
Now let's get you updated on some of the top stories. There is an old saying in broadcast journalism, I'd told you I will tell you again.
There is a multibillion-dollar transaction in the oil and gas sector today.
ExxonMobil is buying shale gas player Pioneer natural resources in an all stock deal valued at some $60 billion, US pioneer shares jumped higher earlier this month on reports the two companies were close to a deal. Shares of Spinmaster are in the spotlight today almost 6% up. The children's entertainment outfit is a deal to buy US toy company "Melissa and Doug" for $950 million US. Spinmaster which is best known for Paul patrol and Bakugan Brands says the acquisition will expand its presence in the early childhood toy segment and will immediately boost revenue.
Food court and restaurant operator MTY Food Group is reporting a 74% jump in sales compared to the same period last year. The company behind such names as Mucho Burrito and Thai Express saw positive sales growth in Canada and the US and its international segment was flat year-over-year.
Quick look at the markets. SPN rather S&P a little less than half a percent of the south of the border, that brought a read of the American market the S&P 500, right now just out 1/3 of a percent. Back with Hussein Allidina of TD Asset Management taking questions at all things related to commodities.
Let's start getting into them.
I guess wants to know about gold.
(Greg reads the question).
>> Gold has performed, following that is the weekend, roughly speaking, gold prices tend to reflect the value of the dollar.
The dollar has been quite strong so it's been a headwind for gold. Real rates are also positive out the curve. That's typically had been for gold. I think we've seen support in gold because you've seen it buying from emerging markets central banks and I believe that buying has continued.
They are looking to diversify their portfolios, they are holding a lot of US dollars, diversifying away from that part.
I think the gold plays a very interesting role in portfolio construction. Hedges against tail events.
Unlike most other asset classes that make up most portfolios. So I think gold has a place in your portfolio. I think that the dollar, if it starts to we can, we do see gold perform into year end but the outlook for gold is very much a function in the near term of what the dollar does and sort of, general appetite. The strength we've seen in recent days is a function of the increased geopolitical uncertainty that we are seeing. The weakness that we saw last week of the week prior was a function of rates moving higher. If you believe rates are near the highs, that is adaptations for the dollar. I think good applications for gold moving forward.
>> Has it been hard to peg a number on gold?
I think people throughout that US dollar run have been saying "surely it's topped out and met its match now" and just kept running higher.
>> So gold is a really interesting commodity relative to the 25 of the commodities that we track on a relatively regular basis.
Because a supply and demand of gold is a little less important in determining the price of gold.
Gold is almost a bit of a currency. You know, simple models look at gold price as a function of the dollar. As a function of real rates would tell you that gold should be trading 14, $1500 an ounce.
I think those models, historically, have worked but are broken today. And they are broken because using a tremendous amount of buying from EM central banks. The other piece, I think to think about is typically, when equities perform, the opportunity cost of holding gold which does not pay a dividend, is higher.
Similarly, when real rates are elevated the opportunity cost of holding gold is higher. Equities about a great run over the course of the year. I think to find many people's expectations.
If equities wobble, I would not be surprised ETF retail interest in gold pick up and support the gold price. It is been a very difficult commodity, I think, to peg and I think it a surprise to many.
Gold has done remarkably well given with the dollar has done and given what we rather rates real rates have done. I think those are closer to the highs the knotted I think that's why gold is interesting of the portfolio.
>> Before we leave, I want to ask you with that central-bank by. What are they going for?
>> I think it's diversification right?
Your portfolio, I Hope was diversified.
I try to diversify my portfolio. I try to talk a lot about portfolio construction.
The reserves of central banks, particularly EM central banks, they held nothing but the dollar historically. There diversifying away not because they believe necessarily the end of the dollar. That some were saying. There does diversifying away from green back to other currencies and gold.
And I think that diversification are that buying of gold has provided a tailwind or support of the gold price.
>> Good conversation there on gold. Thanks to the view for the question. Let's get another one here.
The viewer wants to know about China's economic troubles and where they can meet for commodities.
Before this year I thought it was China: game on.
It's a little different story.
>> If you look at a commodity by commodity basis in China, there is a material between the different commodities. The commodities like copper, Alleman human, steel, zinc, commodities that are used in the buildout of infrastructure, the development of real estate property, they have underperformed relative to expectations. If you look at the demand for petroleum products, gasoline, diesel, jet fuel, crude oil, that demand is quite firm. In July and August I mentioned the global oil demand was in a record high.
China's imports of crude in both July and August we have data available, were also at a record high.
So you are seeing this bifurcation as I think, China moves from old economy to morbid consumer economy. On the mental side, you know, you are seeing signs, going on now in London… One of my teammates is there. On the ground.
And there is a lot of Chinese they come for the first time for that week because they're allowed to travel. The sentiment is action quite positively from a low base.
I don't think we see China's demand for copper, for zinc… Look anything like it did in the last supercycle. But the metals don't need that.
Can't really afford that, given the increase in eat vite demand we are seeing for you know, metals like copper and nickel etc.
>> He talked about the fact for that, we count on ^...
¸not actually minding these companies. At the rates perhaps we need to mind them to get ready for all your changes.
>> A lot of folks, five years ago, he had a conversation about metals, it's all China.
China is the demand. Contributor for all these metals. Increasingly window but look at supply/demand balances for the next five or 10 years, China is important.
But the contribution to demand from TVs in the transition is meaningful and overtakes China in the 10/15 year window. So you're a single baton to be passed and you needed to be passed because again, there's not enough serial arguably to meet those EV protections with a readily relatively tepid China. If China was on fire as it was through the industrialization, in the 2000, copper, alley prices would be materially higher because we don't have the resources.
>> Okay we had a viewer who wants to turn our thoughts towards oil.
(Greg it reads the question).
> So time horizon is important. I think that over the course of the next couple of years, we will see oil prices well north of 100 given the imbalance of supply and demand. The supply side is relatively predictable. You don't wake up one morning and find 30,000 barrels a day.
He takes a very long time to bring greenfield production to market.
The production growth that we are seeing the balance this year, from Brazil and Guyana, that is stuff that we invested in five, seven, 10 years ago. It's coming to fruition now.
So in a multiyear view, I think oil prices go higher. Triple digits, not an issue.
It's an… The real price of oil is about 12 $13 a barrel above the average of 1970. So we are not actually that high.
On a percentage of consumption basis, how much is Greg, how much is… Very very low.
Because we've become far more efficient with our consumption of it. If you risk question may be more sort of near-term focus.
I think that if it's a situation in the Middle East, if it gets worse and we see a disruption in uranium production, or production of the region, I think you could see prices move higher.
But I don't think, base case, we get north of hundred dollars a barrel.
Over the course of the next couple weeks unless there is a supply-side disruption.
>> Even if we do get $200 and more a barrel longer term, does that incentivize energy companies to want to look for more oil?
Releasably saying "we are in share buyback mode" raising dividends… Special dividend mode. Exploration is behind them?
>> That needs to change.
So if you look at the relationship between how producers of the commodity are responding to the change in oil price or the increase in price, they become far more, far less responsive to price.
So they are not responding to price. They are not, you know, deploying rigs as they would historically, given the change in price that we've seen. And I think that is a symptom of ESG, energy transition etc.
If they don't start investing price have to go even higher to find that supply demand equilibrium.
>> As always at home make sure you do your own research before you make any investment decisions back with your questions from Hussein Allidina just a moment's time.
Talking commodities. Of course get those questions at any time. Just email MoneyTalk Live ATD.com. Now it's get to our educational segment of the day.
We are talking about commodities on the show. Let's talk about tracking commodities on the WebBroker platform.
Jason Hnatyk, Senior education instructor at TD Direct Investing.
Always great to see you.
Tell us what were looking at Jason.
>> Always a pleasure to be here. Whether or not you were just looking to kind of track global exposure to the commodities market, we know it's obviously been in the news and yourself and Hussein have done a great job detailing some of the overarching issues. If you got exposure, your own portfolio, let's take a look at WebBroker. We can find out where to find just those exact prices of those were you might be personally interested.
So to get yourself to the right spot, were going to go to the research tab at the top of the page.
We will choose our trustee overview page.
We've been there many times the past. So much good information here to track the commodities information. Once the page loads are gonna scroll down on the left-hand side.
Just beneath where the international indices are listed you will see a commodities section you'll see it lift list of the left-hand side. We have three commodities sections to kind of Peru is.
We have our agriculture so if you're looking at livestock… That's all there for you. Metal.
So your gold and silver prices, that's gonna be able to be available at your fingertips. But also importantly the energy sector.
Once again, we've been having a great discussion.
Our oil prices, here is every thing you need to know in terms of where they are tracking that presently. If we look at our West crude futures contract, these are October's contracts listed here. We have last trade, change from the previous sessions trading and we also are getting a bit of a sliding scale. We can see the high and low of this particular commodity over the life of its contract I will notice that we are trading just north of the 15% for the price of the West Texas crude specifically.
Now, this is pricing information, if you looking for a little bit more of a deep dive on how these prices might impact some of the important sectors in the economy, you can get more information by clicking on the research tab at the top of the page and under markets again, this time we will choose reports. On this page, there is so much year to dive into and review.
The two things I want to highlight her first going to be our MorningStar reports.
On the right-hand side, scrolling down half the way, there's all the different major sectors in the industries within the economy.
For whichever is most specific to the commodity of your choice. If you dive in a look at a detailed report. We have one available from MorningStar. If we scroll down just a little bit further, there is also another detailed report extension there from income research. So lots of information to stay informed for the investor using our WebBroker platform.
>> So people might be interested in the commodities.
They notified it on the platform.
Now they wanted to get that in the next step. Connect some stocks.
The specific commodities.
How do they do that?
>> That's a great question.
We decided we want to get a little exposure and let's put the platform to work so we can do a bit of a quick scan of the market.
So we can get some of that exposure that we are after.
Back to WebBroker we will go back to our trusted research page of this time, under tools, we are to choose screeners.
We can choose here for stocks as you mentioned… We can choose for technical advance and we've got mutual funds and ETF's. I want to focus on ETF's.
Once this loads for me and just one second.
It looks like we've got… A quick slowdown on WebBroker.
But that's okay.
It's a real quick easy step process to identify those opportunities. Okay we have a to load for us now. Once again, stocks technical events.
Jumping into the ETF section, we will create our own customs screen. We have an opportunity to really pass abroad… Into the market.
You can scan for specific MorningStar ratings.
But in this case will just jump in and scan for a specific fund categories.
You'll notice down here, in this fun category drop-down menu, we give this a bit of a scroll down, there are other opportunities for us to really narrow focus and if we want to look specifically commodities, you'll notice three specific sections. I'm gonna jump into the command Canadian commodity section.
We have 28 specific mutual funds and ETF's. Once we run this screen, we have a list in front of us.
We can even trade from the spot so it's a really great opportunity to get yourself that exposure to these different commodities.
See can be focused on for yourself.
>> Great stuff as always Jason.
>> Jason Hnatyk Senior Client Education Instructor TD Direct Investing. Make sure to check out the learning centre on WebBroker for more educational videos, live interactive master classes and some upcoming webinars.
Alright we are still looking at me.
Do you have a question about investing, or what is driving the markets? Our guests are eager to answer your questions so send them to us here at MoneyTalk Live. You can send your questions two ways: you can send us an email any time at moneytalklive@td.com or you can use the question box at the bottom screen right here on WebBroker just type your question and hit "send". We will see if one of our guests can get you the answer right here at MoneyTalk Live!
>> We are back with Hussein Allidina.
Backwardation… Can you explain what that is?
>> That's super important.
It's not just the change in the price of a commodity. When you are long in equity, you want the equity to go up, maybe a dividend yields will be paid but the shape of the curve is very important because you are always your exposure… You can hold your WTI futures contract which expires in December the shape of the curve, the word "backwardation" is the forward curve downward sloping. What does that mean, that means that in the future, trading at a lower price than what is trading currently or in the stock market. In the back related market, you collect a positive role yield because you've bought something at a discount in the future.
You've bought low. When it arrives to spot your selling high. So you collect that positive yield. The opposite of backwardation is the price of the commodity trading at a higher price in the future. Broadly speaking, the Greg, Greg the shape of the curve is the function of the underlying level. When imageries are tied, you as a consumer of the commodity will pay a premium to have that commodity today versus waiting for delivery in the future.
So when imageries are tied to get this backwardation positive yield today the case of oil.
Your backwardation is almost 10% to you can buy oil in a 10% discount despite a year fold. Nothing else changes and you collect that 10% role yield as the curve rolls out. I don't know if I did a good job explaining that.
Excellent job. I wish explaining 1012 years ago I shifted from general news into business news, you were there explaining that.
>> Nobody cared about that 10 years ago.
The market was in a bear market.
No one cared about it.
>> Great explaining there. Another question just came in in recent moments from the audience. Let's give a look at it. (Greg reads the question) now here the platform you can give specific investing advice and we won't talk about (…) If you look at >> If you look at wheat prices there relatively low, deftly material lower than where they were immediately following Russia's invasion of Ukraine.
Wheat balances today are relatively comfortable.
You have not seen any disruption out of Russia, out of Ukraine, cargoes are still making their way out. Notwithstanding kind of all the news around the deal etc. Wheat balances are heavy.
As a result, although wheat prices, the spot price is low, you have this entanglement in the curve. You have to think about buying this. I'm to be playing this negative role yield. There are reasons.
I think to look for appreciation wheat.
If it strengthens that does have potential implications on the production regularly and parts of Asia but today, the wheat balances relatively heavy. The grain balance, broadly speaking, if you look at it the oil balance extremely tight, these commodities, I'm not sure I would be showing these things but you have a disruption in Brazil. Or in Argentina.
Balances can be tied pretty quickly but to answer your question Greg, I'm not over wheat right now in the fund that we manage and partially because balances are heavy and that tangle is pretty significant.
> A question here is sort of a nice follow-up talking about commodities. You talked with the impact of extreme weather of the commodities.
You never know what could happen and where.
>> Yes so I guess the fun part about being a commodity analyst or following the commodity market, there is a host of unknowns. Like we've seen over the weekend. That impact balances what I would say in the different commodities that we cover. Over the course of the last five years supply assumptions more frequently than we have in the prior 15 years we be doing this because of the variability of the weather. Broadly speaking, the weather deviation from normal tends to be for soft commodities and grains, negative. You keep getting hotter than normal weather or less than expected precipitation or too much precipitation. Things away from the average and for most props you want average weather.
There are instances where weather deviates from normal in a bearish way. So we've seen, last year in Europe, we got normal warmer than normal weather. Safely from the extreme situation of material and power prices.
Broadly speaking, I think whether varied abilities will increase the volatility of the market and again, broadly speaking when I look on average of the weather disruptions that we've seen, they tend to be bullish for the commodity, either because it's challenging the supply side or its stimulating demand.
, We talked about before the show, Europe is seeing the first colds not kind of early in the season. To see a cold snob, that's good to support demand and part of the reason why you see natural gas prices in Europe over the course of the last couple of days rally the way they have.
>> To get back your questions with Hussein Allidina on commodities in just a moment's time. As always make sure you do your own research before you make any investment decisions and a reminder they can get in touch of us at any time.
Do you have a question about investing, or what is driving the markets? Our guests are eager to answer your questions so send them to us here at MoneyTalk Live. You can send your questions two ways: you can send us an email any time at moneytalklive@td.com or you can use the question box at the bottom screen right here on WebBroker just type your question and hit "send". We will see if one of our guests can get you the answer right here at MoneyTalk Live!
Well the latest of direct investing index has been released in our Anthony Okolie has been going over the numbers and joins us with more. Anthony.
>> Thinks very much Greg. The TD Direct Investing index has been released for the month of September the key take away is that self-directed investor sentiment remained in bearish territory for the second straight month. Here are some of the key details: first we will start with the overall TD Direct Investing index which measured sentiment from 100 for very bearish to +100 for a very bullish.
It came in at -31 in September.
That's a decline of eight points, month over month. But it is a big improvement from September of last year.
When sentiment was a very bearish, -56.
Now, we look at the components which make up the DI I, overall the core proxies were quite bearish and mostly down month over month.
Unlike the previous month, chasing trends or investors who bought stocks in a rising market was the most negative proxy at -11 in September after a modest two point drop month over month.
A few key points that stood out: first, sentiment across all sectors range from neutral to slightly bearish in September.
Seasonally, the worst month for markets.
But financials still placed among the lowest and overall sentiment.
Secondly, baby boomers or between 1964 is when they were born rather 1946 to 1964 Were Even More Pessimistic in September.
We break things up by sector, self-directed investors, sentiment for financials edged up 3 Points in September.
But remained slightly negative at -3.
The ramp up, hire in bond yields during the month put downward pressure on dividend paying equities like banks.
Meanwhile, the tech space suffer the biggest drop in sentiment following six points month of a month to -2. That's a slight shift into bearish territory. The artificial intelligence appeared to cool in September after sizzling for the first half of this year.
The most heavily sold stocks in financial sector last month including the Bank of Nova Scotia, TD Bank, CIBC and Bank of Montréal.
Among the most heavily sold names in the IT sector were Nvidia, the world's leading maker of chips for artificial intelligence as well as Advanced Micro Devices and Microsoft. Finally, when we look at trading activity based on age, baby boomers were once again the most pessimistic group in September. With overall sentiment following 2-20.
And that's your TD Direct Investing highlights for the month of September 2023.
Greg back to you.
> Thank you Anthony money talk markets editor Anthony Okolie. Now it's take a look at the markets.
Having a look at TD defence dashboard a platform available for TD Direct Investing.
This is the heat map function. Gives us a nice picture of the market boomers. A lot of ways you can screen through and will take a look at the TSX 60 by price and by volume.
We'll see a bit of a mixed session out there. Were seeing some strength and some of the financial names.
Really basic materials right now catching my eye. You have First Quantum up of 2 1/2%, you have Kinross Gold up a little more than two and a bit of a pullback for Shopify today. Down a little more than 1%.
Now, taking a look south of the border, we will screen through the S&P rather the S&P 100 a bit cleaner than the S&P 500 in terms of me try to figure out what's going on.
Taking a look at the S&P 100 now is generally a stand out of the upper corner and that would be XO and according to… ExxonMobil $60 billion acquisition Hussein was giving us some insight. Buying another producer and right now I have that stock down to the tune of almost 5%. Over the side of the screen some of the technology seen showing some strength including Nvidia.
Anthony was just talking about that when in Google up to the tune of almost 1 1/2%.
More information on TD advanced dashboard by visiting td.com/advanced dashboard.
Back with Hussein Allidina with TD Asset Management talking commodities.
Lots of questions coming in. What's your outlook for natural gas?
>> US natural gas?
>> Sure. Let's do US natural gas.
Guest choice.
>> US gas has actually rallied reasonably well over the course of the last couple of days on the heels of colder weather as we approach the winter. The forecast for the northeast, as he talked about before the show is gone quite a bit colder. And we've seen some sort of tempering in production.
Now, when you look at the winter season, November through March, there is a limited amount of demand, whether adjusted.
There's a limited amount of gas did you can export. So when I look at the balance, it looks reasonably well supplied. The risk, risk to prices, if we have a material deviation and whether for normal.
If we have normal weather, you know, I'd be very surprised to see gas going higher than we are right now because the balance is reasonably in equilibrium.
We are starting the winter with a decent amount of imagery and storage. Most of sort of demand forecast in the winter. If you model different weather scenarios, you end of the winter again with a reasonable amount of that. So there is a really a structural story in near-term and gas.
When you get out the 2025, 2026 and our LNG export capacity of the US it picks up, you see more of a linkage with US global prices which are trading materially higher than where we are in the US. But the US gas story is very much a weather story and if you don't have material deviation from weather, prices will probably stay where they are.
>> You mentioned LNG. I want to ask you this.
Natural gas.
At times of high prices, you start seeing a lot of headlines about "what about Canada's opportunities now? We have to ask. We have to ask.
You say as the market comes down, those conversations died down. Are we still making progress on that file even though the amount of the headlines?
>> We are making progress. We are building and constructing an LNG facility off the West Coast.
I think the frustrating, for me the frustrating pieces that Canada has the potential to produce far more gas than they are producing right now. Gas is a clean fuel relative to call that's being burned in China and the oil that's being burned in other parts of the world. If we were able to produce more gas to it unambiguously, I believe, be good for the Canadian economy and we would arguably reduce the carbon footprint globally because the more gas is available, at a competitive price, your potentially burning less cold. Again, these decisions, it's challenging Greg because these decisions are not things that we can kind of do overnight. It takes time. We need to have some for a side and we need to be making those investments now so that five, seven, 10 years from now, we don't find ourselves in a position where things are tied.
>> Another question from the audience. If you are much to know how much opportunity there is an rare earth and other EV metals.
>> So in our funds we trade these base metals. Not the rare earth minerals because there is in a forward market or derivative market that you can trade.
When I look at the metals specifically, copper to a lesser extent nickel, and then aluminum, those are three commodities that are integral to the energy transition.
There are rare earth minerals as well the go into the EV's that are going to be needing it but copper in particular is very challenging from the supply sent.
This is a five-year vehicle and it takes a long time to bring Greenfield copper production to market 78 are years.
If you look at how copper and nickel, to a lesser extent, is used in the batteries, we're transitioning away from conventional vehicles to electric vehicles, those electric vehicles require a greater amount of copper and we need to build up the power grid and green rather reinforce the power grid and that requires a tremendous amount of base metal. As we talked about earlier the show, China's demand for those metals has been relatively lacklustre.
Very robust growth out of China.
Because of the, sort of, increase in demand bursting already from the EV space which is only set to grow as we transition.
> Hussain, always a pleasure. Always great insights.
Looking forward to next time.
>> Thanks Greg.
> That was Hussein Allidina, Head of Commodities of TD Asset Management.
On tomorrow's show, Ben Gossack will be joining us from TD Asset Management.
I had a chat with Ben a couple of days ago.
Some interesting insights about what's happening there with some of the financial names.
Perhaps some financial times we don't think about quite a lot.
Managing Director, Portfolio Manager at TD Asset Management talking about strategy.
Get your questions in ahead of time by emailing MoneyTalkLive@td.com.
That's all the time after the show today.
Thanks for watching and we will see you tomorrow.
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