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[music] >> Hello, I'm Greg Bonnell. Welcome to MoneyTalk Live, brought to you by TD Direct Investing.
Every day, I'll be joined by guests from across TD, many of whom you'll only see here.
We're going to take you through what's moving the markets and answer your questions about investing.
Coming up on today show, will discuss whether a more significant change in Fed policy may be on the horizon with TD Securities James Dixon.
MoneyTalk Anthony Okolie is going to have a look at a new report on the uranium market.
And in today's WebBroker education segment, Nugwa Haruna will show us the technical analysis tools available on the platform. So here's how you can get in touch with us.
Just email moneytalklive@td.
com or fill out the viewer response box under the video player on WebBroker.
Before we get our guest of the day, let's get you an update on the markets. We are back at it, first trading day of the week.
Got a pretty nice bump on the Friday session on Bay and Wall Street. Today, we are up about 67, 68 points, 1/3 of a percent to the upside. Nothing too dramatic but it is green on the screen in Toronto.
Noticing a sentiment among the street when it comes to airline stocks, whether it's here at home or south of the border, with their turn to travel there is strong demand from customers. You're getting a bit of a bid into those names today.
At 21 bucks and seven cents on Air Canada, the stock is up about 3%.
It had a nice pop last week when it was saying somebody optimistic things about the travel season going forward this year. Tell us under some pressure today, it's done by 2%.South of the border, we are going to get some more data this week. If the Fed is as data dependent to this week as it was last week,we'll see. Right now we are flat on the broader read of the American market.
aa bit of downside on the NASDAQ, 21 points, about a 50%. The airline stocks seem to be getting a bit in recent days.
the sentiment on the street seems to think there could be some good news for them as we continue to fly. Or at least we are getting back to it, we will see if we stick to it.
About four points on American Airlines at about $14 per share. That's a market update.
Investors are weighing the odds that the US Federal Reserve will be on pause after last week's rate hike, but our future guest today says we may see a more significant shift in the fed strategy. Joining us now with more James Dixon, director of family offer solutions with TD Securities. Let's talk about what's happening with the Fed.
last week, the market was reading the tea leaves and thinking we might be on a pause after last week. You think there may be more positive change in the months to come?
>> I do.
Last week, I think it was a policy mistake. The last time I was on the show,… >> The hike itself being a mistake?
> That's correct.
The last time I was on the show, I communicate pretty clearly that I thought the Fed was done.
The Fed hiked 25%, well, 25 basis points.
Again, we have a dovish communiqué.
But what I thought was really interesting is how will come seven and he talks about stability for banks, banks being in good shape.
I think this is quite troubling.
I thought this is really a bit of lipservice.
The reason I say that is we still have the commercial real estate problem that we talked about last time I was on the show.
We've still got a problem with deposit flights, and we still have a big mismatch between assets and liabilities on maturity transformation policies. So I mean, the real question is… What now?
We've got slowing growth, we've got very tight credit conditions.
On my team, we still believe there is going to be a big said pivot.
And as I talked about the last time I was on the show, there's a limit to how much they can do in terms of rate policy.
I think the more significant shifts actually going to come in the form of purchases.
>> We may be back to quantitative easing in short order, you think are that's a big difference between saying it may be we pause after this and see how it transpires to getting back to rate cuts, which may be the bond market things you will be doing by the summer and then actually buying up bonds.
>> Correct. So we are actually on our own in this camp.
That's our house view. we think this pivot is coming because there is a wall of maturity is coming due in the next couple of years. Over $9 trillion,so the problem is, who buys this debt?
Is that the Fed? If the Fed doesn't buy it, I don't know where the issuance is going to go. So the Treasury issues new bondsto soak up the old debt, make the repayments and put more down on the books. But on that sort of size of an investment, I'm not sure how much the market absorbs it.
You don't have the same buyers that you had the last time around because you've got this cold war with China and the US weapon eyes the dollar when they froze the dollar-denominated assets which isolates a lot of previous buyers. Even if investors went in and soaked up that full issuance, what happens to credit spreads?
You will see the yields on most corporate bonds go through the roof which is going to make funding incredibly difficult and kill any growth prospects.
>> What would the market do with that information?
Because obviously get the sense that there are market participants that want to see if it pivot, that want to see them get out of restrictive territory in terms of their rate policy and that they follow that thinking through thinking that this will be constructed for equities. Is it this simple, the kind of situation your liking?
>> 100%.
If the Fed does, and by all of these bonds, this is a huge amount of liquidity injected into the market.
It's a very big risk.
It means a weaker US dollar.
It means equities will rally.
The problem is, it's also inflationary.
So where it could get a little choppy is you might have an announcement of the one buying program that sort of spikes in inflation and then they have to taper back on that. And it could lead to quite choppy market.
> Inflation, let's talk about that.
Headline has been coming down for several months now.
The thinking is that just to get it back to where you want, around the 2% is the tougher game.
Is this something they can achieve?
>> Well, I think we spoke about this the last time I was on the show, Greg.
We do believe inflation is sticky. Some of the bigger themes are out there. Re-shoring of supply chains, re-militarization, the building of critical infrastructure at home, commodities, prices remaining innovative.
These are all inflationary.
the problem with demographics is a big issue in this will play out.
So while we think inflation pushes lower,we do think we settle around the three, 4% mark.
What's really quite interesting is when we first came out with that thesis, that was over a year ago, and my team and I, no one bought into that narrative and that seems to be almost the street narrative now.
Sticky inflation prints, pushes lower, eventually settled around three, four and that's going to be the Fed policy.
>> This term got thrown abound near the beginning of the big spike we saw in inflation when people stop talking about transitory and started going, we have a bigger problem on our hands. Central banks started to react. Some people throw the term stagflation. As some generations don't know what that term means.
Is that a concern going forward?
>> 100%.
If you take a step back, and economy can be in one of four phases.
So you got inflation going higher and growth going higher, you got inflation going higher and growth stagnant, stagflationary environments, you got inflation going lower and high-growth or you've got inflation going lower and growth going lower.
The stagflationary environment is a real problem.
What do you do? This is, if I look back to what we talked about on the last show, I think it'salmost an environment where central banks have to become comfortable with higher inflation rates.
that's because balance sheets have balloon. If you have a ballooned balance sheet, the only way to erode your debt is to inflate it away.
>> If they had to become more comfortable with a higher rate of inflation, let's say whether it was three or four, is that an official policy move you have to make?
>> That's a tricky one.You can make the same comments about the debt ceilings. They have rates continuously.
But has there ever been a policy change? The answer is no.
Settling around these rates, they can't suddenly change policy because I think it would be politically highly unpalatable.
>> Fascinating stuff in interesting times.
go about your questions for James Dixon and just the most time.
A reminder that you can have us at any time.
Just email moneytalklive@td.com or fill out the viewer response box under the video player on WebBroker.
Now is get you updated on some of the top stories in the world of business and take a look at how the markets are trading.
there are new developments in the management led biotech Cannacord Genuity.
In a statement today, the company says it may not be able to receive quick approval for the plan because of what he calls an ongoing regulatory matter at a foreign subsidiary. Canaccord says it expects the regulatory matter to be resolved, adding it is unrelated to the buyout offer.
Lower selling prices for beef and pork are hitting the bottom line at Tyson Foods. The American meatpacking giant also facing cost pressures as livestock cost increase amid smaller herd sizes.
Tyson is lowering a sales forecast of his clear, saying it's a challenging market. The shares down right now.
Shares of the US regional bank PacWest are in the spotlight today. The stock moved higher at the opening following a more than 80% gain on Friday. PacWest is cutting its dividend to firm up its capital position.
The stock sold off sharply last week after the bank said it was exporting strategic options, including a potential sale.
Now let's get you a market update.
the TSX Composite Index is up and the S&P 500 is just about flat right now.
We are back with James Dixon, take your questions about market trends. Let's get to them.
Here is one the people have been batting around in recent weeks. De dollarization, is this a trend we should be watching? The end of the dominance of the American buck.
> That's a great question.
That something my clients have been asked me a lot in the past weeks.
I can understand the concern on why people don't want the dollar anymore. You have the weaponization of the dollar when the war in Ukraine broke out in all the Russian assets were frozen. You really removed the rule of law by making the change.
I can understand the pushback because it gives the US unfair advantage.
There's been a lot of talk about a Brits currency forming to challenge the dollar. I think these are all valid points, but doesn't mean a de dollarization? I think the answer is no. Fundamentally, what other country can really challenge the dollar?whether it's the Brits currency or the euro, both of those currencies are fragmented.the US is consolidated. I think you have a situation where global transactions take place in dollars. Even if that drop down to 60 or 7%, does that mean de-dollarization? The answer is no.
the most important is plumbing. When other nations export commodities or goods, they get paid in dollars.
Some of those dollars are held in cash.
A large portion are invested into high-quality liquid assets. Now, those assets have to be quickly convertible into cash. So either through sale or through repo.
And the only central bank that can facilitate that sort of size of transaction globally is the Fed.
So in my opinion, the dollars here to stick.
There is no better alternative. It's the cleanest option.
>> Longer term, what would it take, what would you have to see in terms of changes of the financial plumbing of the global economy for the US dollar to lose its dominance?
It doesn't seem like it's something that's going to happen overnight, as much people bat it around that way.
>> Well, you have to have a total loss of faith in the Fed.
and you would have to ask yourself, like, what is the alternative? It really can't be… The BBOC or the Brits consolidation because just capital controls make it really at muddy about what's going on in the background. I think that the Fed is still the only one with credibility and it would be really tough to challenge that.
Don't get me wrong, it doesn't mean I don't think the US dollar is going to get weaker.
if the Fed does, and start the bond buying program again, it means a huge amount of liquidity and the dollar will trade significantly lower. That is a narrative we've held for a long time. Short-term, we will probably see that momentum curbed. It's a while before the Fed will be looking at policies like that.
I'm talking about a Q3, Q4, that's when you have the announcement of maybe a bond buying program. In the short term, there's nothing. In the short term, we are going into a recession and that's supportive of the dollars so any downward momentum would be capped just on the flight to quality as people by some short-term treasuries.
>> Here's a question that just came in. What is your view on the commodity space right now?
>> We are extremely bullish commodities.
Once again, this is a midterm trend.
For all the reasons we highlighted, re-militarization, re-shoring of supply chains, building of critical infrastructure at home. These are all supportive of commodities. There's also the fact that Biden needs to rebuild the SPR. This should give commodities and a strong bid and it will.
But this is a midterm trend.
I think in the short term, some pain could continue.
We are going into a recession in the West.
And yet, this puts a little bit of a damper on demand and because of that you've seen some big players shift from cyclical like commodities and into defensive's.
For retail investors, it's very tough to time the market.
So… If anyone that was interested in the commodity trade and they were looking to start there, you just gotta say, what levels are you comfortable with?
Is between 60 and 70?
If so, okay.
If you don't take that exposure via equities, at least you're getting paid a dividend to hold it.
You can wear the pain in the short term.
Knowing that that long-term trend is there, commodities are going significantly higher.
>> The gold trade has been interesting in the last several weeks, and that's a question we get a lot on the show too.
We get a lot of questions about oil and gold.
Where can you possibly go from here?
>> I'm no gold bug. The last time we had spoken, I mentioned that gold trades are a reflection of real rates.
If you got inflation higher, rates going lower, then yeah, gold will do well.
We already seen central banks load up on their gold reserves. I think that that's stopping. If we do find that the fed steps in and buys bonds and eject a whole lot of liquidity into the market, people are going to be forced to load up on inflation hedges like gold..
It's very tough for investors because gold is an asset that pays you nothing. So how do you buy gold one you could be in money markets and get a juicy yield?
Because really you've got a look at gold as a cash product over a commodity, in my opinion.
>> Interesting read there.
We had someone ask you about your thoughts on oil. We touch on it a little bit. Maybe give us some of the context.
You're talking about the Western world falling into recession. It was a pretty intense trade in oil last week.
It firmed up a bit and started rising again but it's been really changeable. What's going on?
>> It's tough. You got this question of people worried about how the… Is going to play a. At the same time, you of supply issues.
Those aren't going away.
Last time we were on the show, OPEC had just in a major cut of over a million barrels. I think there's continued commitment to limiting that supply and keeping prices elevated.
I think that we've still got Biden dipping into that SPR just on the rebuild.
It's a huge bid to oil prices.
I think we are setting ourselves up for a very tough period because when the SPR is rebuild and provides that support, it could be at the point where the Fed is doing a pivotand, at the same time, they are forced to buy bonds on the short end to try and steepen the curve and inject some financial health into the system.
So you have all of these inflationary pressures. I think they painted themselves into a very tough spot right now.
>> As always, make sure you do your own research before making any investment decisions.
we are going to back your questions for James Dixon on market trends in just a moment's time. Armida, of course, you can contact us at any time.
Just email moneytalklive@td.com.
Now let's get our educational segment of the day.
Technical analysis is one potential strategy that investors can use on WebBroker.
Joining us now with more is Nugwa Haruna, Senior client education instructor at TD Direct Investing. Nugwa, always great to see you.
let's talk about technical analysis. If investors are curious, what does WebBroker have for them?
> Right.
It's always a pleasure being here, Greg.
As you mentioned, we talked about trends and so technical analysis is a way that investors can actually utilize the price chart to find trends in the market.
For instance, an investor might be able to identify an uptrend that could, for a long investor, indicate a potential position for them to enter the markets.
They might be able to identify downtrends, which could be an indication for a long investor to exit the market or there might be what we call sideways trends where investors, there's not exactly an uptrend or downtrend but some investors still trade using subordinate resistance. So investors can find all of this information in WebBroker.
Let's go into WebBroker and take a look at where investors can find information on technical analysis.
Once in WebBroker, you're able to click on the tablets is research and under markets, we are going to go technicals.
So the technical staff is dedicated to technical analysis and when you are on this homepage, you are able to see some information.
So information such as your most recently viewed securities, you are able to see their five-day price chart, how that security is performing. You can see things like the most viewed bullish events.
So the securities that have certain indicators pointing at the securities potentially going up. You can see the most popular as well as most of bearish event. So these are just some of the things you can see. So sticking to the most bullish column here, if you are curious to see you Cenovus Energy, they have a bullish indication here and you want to see a little bit more, you can actually click on this chart. So let's do that. Once you do that, you will be brought to a more extensive page. He gives you some additional information into the specific indicator that is pointing at a bullish event for the security.
If you want to see some more, you can close this out and then once here, you're able to see other indicators that may also be pointing a bullish events.
If you want to identify a bullish event it will be were presented by a green dot but a bearish event will be a Red Square, and when you scroll down, you will see additional information such as support and resistance, how many events are bullish and how many are bearish.
I will have it one more thing. For investors who are not too sure about what all of these indicators are present, you're able to learn a little more just using this graduation had here. It goes into some more detail about each of these indicators to give you more of an understanding what they are presenting.
>> When we talk about technical analysis, we are also talking about price action. Is there way to be notified of a specific security you have your ion has a change in its trend?
>> Yes.
Right now, with in WebBroker, there is the general alert Centre where you can actually set up different alerts. But if you want to get technical with your alerts, you can do that using the technicals tab. So I'm just going to pull up the specific security in WebBroker. I will use the last one I viewed here which is Shopify and so once I pull it up, if you recall the first time we pulled up the technicals tab, we went under the research tab. But this time when you have a specific security on screen, you can actually go directly to the technicals tab that security.
So I'm going to click on technicals here.
Anna brings me back to a similar chart here, showing me the different events for the security, but I can set an alert now using the bell at the top right-hand corner here. So when I click on set alert, I'm presented with the option to either set technical event opportunities, so I can use oscillators. If I click the drop-down, maybe I want to get a notification if, let's say the price chart crosses over the top band of a Bollinger band, or I can select select all, and I can just call this, I will just call this oscillators.
And then once you do that, you're able to set that alert.
You can look at all your alerts under the alert Centre for technicals and that is represented by the three lines at the top left-hand corner.
When I click on that, I'm able to go to my alert Centre, see the different alerts I set up. Now, one more thing you can do is also create a watchlist specific to technical events.
And you will also find that under the three lines here.
If I click on it, I can create a watchlist and if I have specific securities there, I can look at what their support and resistance are as well as some technical insights, you know, how many indicators are pointing at bullish or bearish event. There is something for you if you really want to dive into technical analysis.
The tool that you are able to utilize to make your life easier will be the technicals tab.
> Nugwa Haruna, Senior client education instructor with 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.
Now before you get back to your questions about market trends for James Dixon, a reminder of how you 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.
We are back with James Dixon.
We are taking your questions about market trends, plenty coming in so let's get to some of the ones fresh in the inbox. If there is a debt ceiling default, will that her demand for US debt and will undermine the dollars global standing? Here's the big fight that we've got in Washington.
>> Right, so I think the debt ceiling is an incredibly hot topic right now. It's funny.
We talk about… That was initially thought to be August and it's now move forward to June.
Tax receipts haven't quite been there.
It's really interesting.
There is always noise around the debt ceiling, but at the end of the day, can you really afford to default?
And the answer is no. In the short term, there are accounting tricks you can use so that you don't default on your debt and I think in the long run, Republicans don't want to be the ones that allow the US to default.
I mean, that creates… Huge concerns around the trust.
We talked about loss of faith in the Fed.
And the US government. And default in your debt certainly will cause a loss of faith.
So I think it's highly unlikely that they will default.
I also think that as with any allocation, you want to ask yourself, where you put your money?
It can't be under your mattress. There's only so much you can put in cash.
>> The mattress isn't paying interest.
>> Exactly. You gotta ask yourself, where do you allocate that capital?
So if I was looking at allocating it to bonds, I mean, I still think rates look very attractive, especially US rates.
I think that if I'm right about the Fed stepping in, I think focus should be on the front end, and I'm talking about durations of up to 2 years. That would seem like the right place to get involved. I also's struggle to see long-duration assets and performing if inflation is sticky because there's only so much you can do in terms of rate policy. You probably want to stay away from the far end of the curve. In terms of demand for debt, if anything, we still favour an overweight, rates holding.
we talked about this during the la show.
And every year that follows, compared with stocks and bonds have sold off in lockstep, bonds outperform stocks.
We do like an overweight and we don't think there will be any lack of demand.
And we do think the Fed will step in and soak up that additional issuance.
If anything, if the Fed doesn't step in and buy those bonds on the short end, we've got a problem in the corporate space. Credit has already been struggling.
Credit spreads will blow out to the head of those corporate to raise funds?
It can be crippling.
>> Definitely high stakes around all that.
Here's a question a little closer to home.
A viewer wants to know what your outlook is for Canadian energy stocks.
>> So I think you, as I said earlier, we are bullish for oil in the midterm.
That rising tide will lift all the energy stocks.
Once again, this is a midterm trade.
I think in the short term, investors have to brace for a little bit of pain heading into a recession, knowing that structurally, the trade seems to be the right trade.
Loading up and layering in seems to be the right thing to do. Knowing that in the long run it seems like the right trade. In terms of Canadian stocks versus US stocks, we still favour US energy over Canadian energy just because there is less structural headwinds. We have struggled with pipelines for years, since before I arrived in Canada.
We don't have the same sort of structural problems in the US.
On that perspective, we favoured the US over Canada, but bullish on all energy stocks.
>> Longer term, what could be the challenge?
There is the discussion around the elect vacation of things, what people have said will be good for certain commodities, and they wonder about energy longer-term being a sunset industry.
>> Right.
To build that infrastructure, you need oil, you need steel.
You need copper more than anything.
If you want to really electrify all of your cars, if you want to go to completely green energy, this is what you need.
There is a huge copper shortage. To build that infrastructure, you need oil.
So if you're looking at a 10, 20 or trade, there is still a lot of scope for oil.
>> Interesting stuff. Another question here. This was a topic that's never far from Canadians minds. Your guests take on the risks in real estate?
There so many pockets to talk about, residential, commercial… > It's important to draw a clear line between the two.
We are really worried about commercial real estate.
I discussed on the last show. We are really worried about the cracks that are going to affect the banking sector because there are going to be big write-downs of those assets.
Residential, we are bullish.
>>last time we had the discussion about the US regional banks and how correlated they are to commercial.
>> All banks have exposure to commercial real estate through loans. Canadian banks also have exposure to commercial real estate via loans. If you start to have strong write down the list assets, the outlook is not great.
For residential real estate, we are actually quite bullish, as I mentioned, and it's funny because the first question I will get asked is interest rates are rising. A won't you see house prices collapse? People are going to default on their mortgages.
I think what we've seen is all the banks have done is they've extended the mortgage periods to keep pricing consistent, to keep those payments consisted, to avoid default.
I don't know if that just means by the time that they eventually renew their mortgages, maybe rates are lower, because I do think there will be a pivot from the Bank of Canada.
But I do think the reason I most bullish is we've still got the same old supply problem, especially in Canada.
We still got a large amount of immigration into Canada.
This is why I am so bullish about our economy.
we do not have enough supply. And because rates are higher, people aren't moving, so that limits apply further. Because rates are higher, there is less new big housing development being built, which is further squeezing supply.
So anyone looking to buy a house, there's just no inventory out there and this is the challenge. This should keep prices supported.
>> How about a recession? We always hear that one thing… It's been an interesting decade in housing.
how would the unemployment rate changing affect that?
>> Typically a strong recession kills things like inflation because consumption is gone.
but you gotta ask yourself, what is the real impact on the jobs market?
Will there be some job losses? Sure. We have already started to see some movement in the street.
I think the job market will be generally supported.
We have a shortage of skilled labour.
This is why think countries that have strong immigration policies like Canada will do really well in the long run. We need young, intelligent workers. As long as we have that, we can grow.
I think there's a shortage across the developed world of young, skilled people and because of that, I think that labour markets will hold up and that will prevent a deep recession or a hard landing. I think it's a soft landing.
Less consumption and… To put that in context, because I think this is important, if you talk about a hard landing, this is large layoffs across the board.
A soft landing would be, all right, you get paid 30% less than you got paid last year.
And then no recession, everything takes a long.
I think it's either hard or soft landing.
We continue to lean toward self.
>> We will get back to your questions for James Dixon on market trends in just a moment's time. As always, make sure you do your own research before making any investment decisions. and a reminder that you can get in touch with us at any time.
Do you have a question about investing or what's driving the markets?
Our guests are eager to hear what's on your mind, so send us your questions.
There are two ways you can get in touch with us.
You can send us an email anytime at moneytalklive@td.com or you can use the question box right below the screen here on WebBroker.
Just write in your question and hit send.
We'll see if one of our guests can get you the answer right here at MoneyTalk Live.
The uranium industry continues to build momentum as acceptance of nuclear energy increases.
Our Anthony Okolie is joining us now at the latest TD Securities report on why they remain optimistic about the sector. Anthony.
>> Thanks very much, Greg. TD Securities Outlook for uranium prices and the nuclear sector in general is the best that it's been in 15 years.
Driving that view is that governments around the globe and across political spectrums are acknowledging the central role that nuclear power will play in a low carbon, stable, electrical grid.
TD Securities says that many governments are reviewing and updating their nuclear power policies to support the nuclear power sector. TD Securities is forecasting some prices, uranium prices.
For 2023, they are forecasting a price above just over $53 US per pound. Through 2024, little higher, at $58 US per pound.
The longer term sits at higher than 60 per pound.
TD Securities notes the total term contracting volumes surged by 33 million in April and it currently sits at around 88 million here today.
This is the most contracted volume to the end of April that TD Securities has recorded dating back to 2010.
2011, for example, 88 million pounds of uranium was contracted to the end of April.
Now TD Securities does note that the uranium price has been relatively quiet of late. Only about 16 million pounds have been transacted here today. That's well below the five-year average of around 28 million to the end of April.
But TD Securities says that the spot price has recently been moving upwards.
They've seen some upward pressure in the last week.
Now TD Securities says that buying interest has returned to the market last week from a number of market players that includes traders, producers and utilities with an expected increased in the uranium contracting, TD says there could be renewed upward pressure on uranium term prices going forward.
>> Optimistic take there.
Any risks outlined in the report?
>> I think the key risk continues to be geopolitical risk.
That is something that will continue to be a key risk for the market. In the past, we've seen the uranium price react strongly to the Russia Ukraine crisis.
TD Securities noted in a previous report that the risking and repositioning their nuclear supply chains away from Russia in what is already a tight market.
Great. That interesting report there. Thanks, Anthony.
>> My pleasure.
>> MoneyTalk's Anthony Okolie.
Let's check in on the markets.
The TSX Composite Index is up 63 points or about 1/3 of a percent. Shopify made a big move last week on the back of not only its latest earnings release but talking about cutting the workforce, getting back to the core mission of the company.
At 86 bucks and change, they are of 4% today on the name.
In Cenovus Energy, we are seeing a move into American crude after a rocky ride last week.
At 2178, Cenovus is up a little bit more than 2%.
Of the border, we have a Fed that has told us it is data dependent going forward.
We are going to get another read on US inflation this week on Wednesday.
A fairly significant one.
Ahead of all that, you're talking about a flat rate on the bottom.
Right now it's down about two points or five takes. The tech heavy NASDAQ, Lisieux it sizes up. It's about the same.
For Tyson Foods, using a substantial pullback in the name to the tune of almost 16% right now.
We are back now James Dixon from TD Securities talking about market trends.
Someone has an eye on Europe, thinking of adding to their position in Europe and/or emerging markets for the long term.
Is this a good time or would you hedge to CAD? We can give specific advice but there are some interesting themes here.
What do you think about a hedging strategy in terms of international investing?
>> We have this dichotomy between East and West where the West is struggling to grow and the east is growing quite nicely. We've seen strong growth out of China and India will continue to watch them. Europe is interesting because your benefits directly from a reemergence Tory reopening of China because you have strong travel into Europe and the Chinese are strong consumers of luxury goods and that's what Europe produces.
We just talked about, we just had a statement on uranium.
We also believe that on this big building of critical infrastructure, things like energy, Europe is going to be very committed to this because they have structural problems. They have energy problems right now.
They have been fortunate that we had this warm winter and they seem to have gotten out of it fairly unscathed but right now you have big support programs for consumers to bring prices down.
There will be problems in the long run unless they build green infrastructure.
We talked a few minutes ago and you just had that statement on uranium and I thought that was all good for growth in Europe, building infrastructure, building… Whether it's energy infrastructure or re-shoring of supply chains, these are all good for growth and I think that that's positive for Europe. And I think that Europe probably sees a stronger benefit than Canada does, at least in the short term, just on the back of Chinese consumption of luxury goods and travel.
>> Fascinating stuff as always, James.
It was a pleasure having you here. I look forward to next time.
>> Thanks. Thanks for having me. It's always lovely to be here. I appreciate it.
>> We will talk soon. Our thanks to James Dixon, director family office solutions that TD Securities.
Stay tuned for tomorrow's show, Damian Fernandes, portly manager at TD Asset Management will be our guest taking your questions about global stocks. You can get a head start on your questions. Just email moneytalklive@td.com. that's all the time we have for the show today. Thanks for watching and will see you tomorrow.
[music]
Every day, I'll be joined by guests from across TD, many of whom you'll only see here.
We're going to take you through what's moving the markets and answer your questions about investing.
Coming up on today show, will discuss whether a more significant change in Fed policy may be on the horizon with TD Securities James Dixon.
MoneyTalk Anthony Okolie is going to have a look at a new report on the uranium market.
And in today's WebBroker education segment, Nugwa Haruna will show us the technical analysis tools available on the platform. So here's how you can get in touch with us.
Just email moneytalklive@td.
com or fill out the viewer response box under the video player on WebBroker.
Before we get our guest of the day, let's get you an update on the markets. We are back at it, first trading day of the week.
Got a pretty nice bump on the Friday session on Bay and Wall Street. Today, we are up about 67, 68 points, 1/3 of a percent to the upside. Nothing too dramatic but it is green on the screen in Toronto.
Noticing a sentiment among the street when it comes to airline stocks, whether it's here at home or south of the border, with their turn to travel there is strong demand from customers. You're getting a bit of a bid into those names today.
At 21 bucks and seven cents on Air Canada, the stock is up about 3%.
It had a nice pop last week when it was saying somebody optimistic things about the travel season going forward this year. Tell us under some pressure today, it's done by 2%.South of the border, we are going to get some more data this week. If the Fed is as data dependent to this week as it was last week,we'll see. Right now we are flat on the broader read of the American market.
aa bit of downside on the NASDAQ, 21 points, about a 50%. The airline stocks seem to be getting a bit in recent days.
the sentiment on the street seems to think there could be some good news for them as we continue to fly. Or at least we are getting back to it, we will see if we stick to it.
About four points on American Airlines at about $14 per share. That's a market update.
Investors are weighing the odds that the US Federal Reserve will be on pause after last week's rate hike, but our future guest today says we may see a more significant shift in the fed strategy. Joining us now with more James Dixon, director of family offer solutions with TD Securities. Let's talk about what's happening with the Fed.
last week, the market was reading the tea leaves and thinking we might be on a pause after last week. You think there may be more positive change in the months to come?
>> I do.
Last week, I think it was a policy mistake. The last time I was on the show,… >> The hike itself being a mistake?
> That's correct.
The last time I was on the show, I communicate pretty clearly that I thought the Fed was done.
The Fed hiked 25%, well, 25 basis points.
Again, we have a dovish communiqué.
But what I thought was really interesting is how will come seven and he talks about stability for banks, banks being in good shape.
I think this is quite troubling.
I thought this is really a bit of lipservice.
The reason I say that is we still have the commercial real estate problem that we talked about last time I was on the show.
We've still got a problem with deposit flights, and we still have a big mismatch between assets and liabilities on maturity transformation policies. So I mean, the real question is… What now?
We've got slowing growth, we've got very tight credit conditions.
On my team, we still believe there is going to be a big said pivot.
And as I talked about the last time I was on the show, there's a limit to how much they can do in terms of rate policy.
I think the more significant shifts actually going to come in the form of purchases.
>> We may be back to quantitative easing in short order, you think are that's a big difference between saying it may be we pause after this and see how it transpires to getting back to rate cuts, which may be the bond market things you will be doing by the summer and then actually buying up bonds.
>> Correct. So we are actually on our own in this camp.
That's our house view. we think this pivot is coming because there is a wall of maturity is coming due in the next couple of years. Over $9 trillion,so the problem is, who buys this debt?
Is that the Fed? If the Fed doesn't buy it, I don't know where the issuance is going to go. So the Treasury issues new bondsto soak up the old debt, make the repayments and put more down on the books. But on that sort of size of an investment, I'm not sure how much the market absorbs it.
You don't have the same buyers that you had the last time around because you've got this cold war with China and the US weapon eyes the dollar when they froze the dollar-denominated assets which isolates a lot of previous buyers. Even if investors went in and soaked up that full issuance, what happens to credit spreads?
You will see the yields on most corporate bonds go through the roof which is going to make funding incredibly difficult and kill any growth prospects.
>> What would the market do with that information?
Because obviously get the sense that there are market participants that want to see if it pivot, that want to see them get out of restrictive territory in terms of their rate policy and that they follow that thinking through thinking that this will be constructed for equities. Is it this simple, the kind of situation your liking?
>> 100%.
If the Fed does, and by all of these bonds, this is a huge amount of liquidity injected into the market.
It's a very big risk.
It means a weaker US dollar.
It means equities will rally.
The problem is, it's also inflationary.
So where it could get a little choppy is you might have an announcement of the one buying program that sort of spikes in inflation and then they have to taper back on that. And it could lead to quite choppy market.
> Inflation, let's talk about that.
Headline has been coming down for several months now.
The thinking is that just to get it back to where you want, around the 2% is the tougher game.
Is this something they can achieve?
>> Well, I think we spoke about this the last time I was on the show, Greg.
We do believe inflation is sticky. Some of the bigger themes are out there. Re-shoring of supply chains, re-militarization, the building of critical infrastructure at home, commodities, prices remaining innovative.
These are all inflationary.
the problem with demographics is a big issue in this will play out.
So while we think inflation pushes lower,we do think we settle around the three, 4% mark.
What's really quite interesting is when we first came out with that thesis, that was over a year ago, and my team and I, no one bought into that narrative and that seems to be almost the street narrative now.
Sticky inflation prints, pushes lower, eventually settled around three, four and that's going to be the Fed policy.
>> This term got thrown abound near the beginning of the big spike we saw in inflation when people stop talking about transitory and started going, we have a bigger problem on our hands. Central banks started to react. Some people throw the term stagflation. As some generations don't know what that term means.
Is that a concern going forward?
>> 100%.
If you take a step back, and economy can be in one of four phases.
So you got inflation going higher and growth going higher, you got inflation going higher and growth stagnant, stagflationary environments, you got inflation going lower and high-growth or you've got inflation going lower and growth going lower.
The stagflationary environment is a real problem.
What do you do? This is, if I look back to what we talked about on the last show, I think it'salmost an environment where central banks have to become comfortable with higher inflation rates.
that's because balance sheets have balloon. If you have a ballooned balance sheet, the only way to erode your debt is to inflate it away.
>> If they had to become more comfortable with a higher rate of inflation, let's say whether it was three or four, is that an official policy move you have to make?
>> That's a tricky one.You can make the same comments about the debt ceilings. They have rates continuously.
But has there ever been a policy change? The answer is no.
Settling around these rates, they can't suddenly change policy because I think it would be politically highly unpalatable.
>> Fascinating stuff in interesting times.
go about your questions for James Dixon and just the most time.
A reminder that you can have us at any time.
Just email moneytalklive@td.com or fill out the viewer response box under the video player on WebBroker.
Now is get you updated on some of the top stories in the world of business and take a look at how the markets are trading.
there are new developments in the management led biotech Cannacord Genuity.
In a statement today, the company says it may not be able to receive quick approval for the plan because of what he calls an ongoing regulatory matter at a foreign subsidiary. Canaccord says it expects the regulatory matter to be resolved, adding it is unrelated to the buyout offer.
Lower selling prices for beef and pork are hitting the bottom line at Tyson Foods. The American meatpacking giant also facing cost pressures as livestock cost increase amid smaller herd sizes.
Tyson is lowering a sales forecast of his clear, saying it's a challenging market. The shares down right now.
Shares of the US regional bank PacWest are in the spotlight today. The stock moved higher at the opening following a more than 80% gain on Friday. PacWest is cutting its dividend to firm up its capital position.
The stock sold off sharply last week after the bank said it was exporting strategic options, including a potential sale.
Now let's get you a market update.
the TSX Composite Index is up and the S&P 500 is just about flat right now.
We are back with James Dixon, take your questions about market trends. Let's get to them.
Here is one the people have been batting around in recent weeks. De dollarization, is this a trend we should be watching? The end of the dominance of the American buck.
> That's a great question.
That something my clients have been asked me a lot in the past weeks.
I can understand the concern on why people don't want the dollar anymore. You have the weaponization of the dollar when the war in Ukraine broke out in all the Russian assets were frozen. You really removed the rule of law by making the change.
I can understand the pushback because it gives the US unfair advantage.
There's been a lot of talk about a Brits currency forming to challenge the dollar. I think these are all valid points, but doesn't mean a de dollarization? I think the answer is no. Fundamentally, what other country can really challenge the dollar?whether it's the Brits currency or the euro, both of those currencies are fragmented.the US is consolidated. I think you have a situation where global transactions take place in dollars. Even if that drop down to 60 or 7%, does that mean de-dollarization? The answer is no.
the most important is plumbing. When other nations export commodities or goods, they get paid in dollars.
Some of those dollars are held in cash.
A large portion are invested into high-quality liquid assets. Now, those assets have to be quickly convertible into cash. So either through sale or through repo.
And the only central bank that can facilitate that sort of size of transaction globally is the Fed.
So in my opinion, the dollars here to stick.
There is no better alternative. It's the cleanest option.
>> Longer term, what would it take, what would you have to see in terms of changes of the financial plumbing of the global economy for the US dollar to lose its dominance?
It doesn't seem like it's something that's going to happen overnight, as much people bat it around that way.
>> Well, you have to have a total loss of faith in the Fed.
and you would have to ask yourself, like, what is the alternative? It really can't be… The BBOC or the Brits consolidation because just capital controls make it really at muddy about what's going on in the background. I think that the Fed is still the only one with credibility and it would be really tough to challenge that.
Don't get me wrong, it doesn't mean I don't think the US dollar is going to get weaker.
if the Fed does, and start the bond buying program again, it means a huge amount of liquidity and the dollar will trade significantly lower. That is a narrative we've held for a long time. Short-term, we will probably see that momentum curbed. It's a while before the Fed will be looking at policies like that.
I'm talking about a Q3, Q4, that's when you have the announcement of maybe a bond buying program. In the short term, there's nothing. In the short term, we are going into a recession and that's supportive of the dollars so any downward momentum would be capped just on the flight to quality as people by some short-term treasuries.
>> Here's a question that just came in. What is your view on the commodity space right now?
>> We are extremely bullish commodities.
Once again, this is a midterm trend.
For all the reasons we highlighted, re-militarization, re-shoring of supply chains, building of critical infrastructure at home. These are all supportive of commodities. There's also the fact that Biden needs to rebuild the SPR. This should give commodities and a strong bid and it will.
But this is a midterm trend.
I think in the short term, some pain could continue.
We are going into a recession in the West.
And yet, this puts a little bit of a damper on demand and because of that you've seen some big players shift from cyclical like commodities and into defensive's.
For retail investors, it's very tough to time the market.
So… If anyone that was interested in the commodity trade and they were looking to start there, you just gotta say, what levels are you comfortable with?
Is between 60 and 70?
If so, okay.
If you don't take that exposure via equities, at least you're getting paid a dividend to hold it.
You can wear the pain in the short term.
Knowing that that long-term trend is there, commodities are going significantly higher.
>> The gold trade has been interesting in the last several weeks, and that's a question we get a lot on the show too.
We get a lot of questions about oil and gold.
Where can you possibly go from here?
>> I'm no gold bug. The last time we had spoken, I mentioned that gold trades are a reflection of real rates.
If you got inflation higher, rates going lower, then yeah, gold will do well.
We already seen central banks load up on their gold reserves. I think that that's stopping. If we do find that the fed steps in and buys bonds and eject a whole lot of liquidity into the market, people are going to be forced to load up on inflation hedges like gold..
It's very tough for investors because gold is an asset that pays you nothing. So how do you buy gold one you could be in money markets and get a juicy yield?
Because really you've got a look at gold as a cash product over a commodity, in my opinion.
>> Interesting read there.
We had someone ask you about your thoughts on oil. We touch on it a little bit. Maybe give us some of the context.
You're talking about the Western world falling into recession. It was a pretty intense trade in oil last week.
It firmed up a bit and started rising again but it's been really changeable. What's going on?
>> It's tough. You got this question of people worried about how the… Is going to play a. At the same time, you of supply issues.
Those aren't going away.
Last time we were on the show, OPEC had just in a major cut of over a million barrels. I think there's continued commitment to limiting that supply and keeping prices elevated.
I think that we've still got Biden dipping into that SPR just on the rebuild.
It's a huge bid to oil prices.
I think we are setting ourselves up for a very tough period because when the SPR is rebuild and provides that support, it could be at the point where the Fed is doing a pivotand, at the same time, they are forced to buy bonds on the short end to try and steepen the curve and inject some financial health into the system.
So you have all of these inflationary pressures. I think they painted themselves into a very tough spot right now.
>> As always, make sure you do your own research before making any investment decisions.
we are going to back your questions for James Dixon on market trends in just a moment's time. Armida, of course, you can contact us at any time.
Just email moneytalklive@td.com.
Now let's get our educational segment of the day.
Technical analysis is one potential strategy that investors can use on WebBroker.
Joining us now with more is Nugwa Haruna, Senior client education instructor at TD Direct Investing. Nugwa, always great to see you.
let's talk about technical analysis. If investors are curious, what does WebBroker have for them?
> Right.
It's always a pleasure being here, Greg.
As you mentioned, we talked about trends and so technical analysis is a way that investors can actually utilize the price chart to find trends in the market.
For instance, an investor might be able to identify an uptrend that could, for a long investor, indicate a potential position for them to enter the markets.
They might be able to identify downtrends, which could be an indication for a long investor to exit the market or there might be what we call sideways trends where investors, there's not exactly an uptrend or downtrend but some investors still trade using subordinate resistance. So investors can find all of this information in WebBroker.
Let's go into WebBroker and take a look at where investors can find information on technical analysis.
Once in WebBroker, you're able to click on the tablets is research and under markets, we are going to go technicals.
So the technical staff is dedicated to technical analysis and when you are on this homepage, you are able to see some information.
So information such as your most recently viewed securities, you are able to see their five-day price chart, how that security is performing. You can see things like the most viewed bullish events.
So the securities that have certain indicators pointing at the securities potentially going up. You can see the most popular as well as most of bearish event. So these are just some of the things you can see. So sticking to the most bullish column here, if you are curious to see you Cenovus Energy, they have a bullish indication here and you want to see a little bit more, you can actually click on this chart. So let's do that. Once you do that, you will be brought to a more extensive page. He gives you some additional information into the specific indicator that is pointing at a bullish event for the security.
If you want to see some more, you can close this out and then once here, you're able to see other indicators that may also be pointing a bullish events.
If you want to identify a bullish event it will be were presented by a green dot but a bearish event will be a Red Square, and when you scroll down, you will see additional information such as support and resistance, how many events are bullish and how many are bearish.
I will have it one more thing. For investors who are not too sure about what all of these indicators are present, you're able to learn a little more just using this graduation had here. It goes into some more detail about each of these indicators to give you more of an understanding what they are presenting.
>> When we talk about technical analysis, we are also talking about price action. Is there way to be notified of a specific security you have your ion has a change in its trend?
>> Yes.
Right now, with in WebBroker, there is the general alert Centre where you can actually set up different alerts. But if you want to get technical with your alerts, you can do that using the technicals tab. So I'm just going to pull up the specific security in WebBroker. I will use the last one I viewed here which is Shopify and so once I pull it up, if you recall the first time we pulled up the technicals tab, we went under the research tab. But this time when you have a specific security on screen, you can actually go directly to the technicals tab that security.
So I'm going to click on technicals here.
Anna brings me back to a similar chart here, showing me the different events for the security, but I can set an alert now using the bell at the top right-hand corner here. So when I click on set alert, I'm presented with the option to either set technical event opportunities, so I can use oscillators. If I click the drop-down, maybe I want to get a notification if, let's say the price chart crosses over the top band of a Bollinger band, or I can select select all, and I can just call this, I will just call this oscillators.
And then once you do that, you're able to set that alert.
You can look at all your alerts under the alert Centre for technicals and that is represented by the three lines at the top left-hand corner.
When I click on that, I'm able to go to my alert Centre, see the different alerts I set up. Now, one more thing you can do is also create a watchlist specific to technical events.
And you will also find that under the three lines here.
If I click on it, I can create a watchlist and if I have specific securities there, I can look at what their support and resistance are as well as some technical insights, you know, how many indicators are pointing at bullish or bearish event. There is something for you if you really want to dive into technical analysis.
The tool that you are able to utilize to make your life easier will be the technicals tab.
> Nugwa Haruna, Senior client education instructor with 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.
Now before you get back to your questions about market trends for James Dixon, a reminder of how you 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.
We are back with James Dixon.
We are taking your questions about market trends, plenty coming in so let's get to some of the ones fresh in the inbox. If there is a debt ceiling default, will that her demand for US debt and will undermine the dollars global standing? Here's the big fight that we've got in Washington.
>> Right, so I think the debt ceiling is an incredibly hot topic right now. It's funny.
We talk about… That was initially thought to be August and it's now move forward to June.
Tax receipts haven't quite been there.
It's really interesting.
There is always noise around the debt ceiling, but at the end of the day, can you really afford to default?
And the answer is no. In the short term, there are accounting tricks you can use so that you don't default on your debt and I think in the long run, Republicans don't want to be the ones that allow the US to default.
I mean, that creates… Huge concerns around the trust.
We talked about loss of faith in the Fed.
And the US government. And default in your debt certainly will cause a loss of faith.
So I think it's highly unlikely that they will default.
I also think that as with any allocation, you want to ask yourself, where you put your money?
It can't be under your mattress. There's only so much you can put in cash.
>> The mattress isn't paying interest.
>> Exactly. You gotta ask yourself, where do you allocate that capital?
So if I was looking at allocating it to bonds, I mean, I still think rates look very attractive, especially US rates.
I think that if I'm right about the Fed stepping in, I think focus should be on the front end, and I'm talking about durations of up to 2 years. That would seem like the right place to get involved. I also's struggle to see long-duration assets and performing if inflation is sticky because there's only so much you can do in terms of rate policy. You probably want to stay away from the far end of the curve. In terms of demand for debt, if anything, we still favour an overweight, rates holding.
we talked about this during the la show.
And every year that follows, compared with stocks and bonds have sold off in lockstep, bonds outperform stocks.
We do like an overweight and we don't think there will be any lack of demand.
And we do think the Fed will step in and soak up that additional issuance.
If anything, if the Fed doesn't step in and buy those bonds on the short end, we've got a problem in the corporate space. Credit has already been struggling.
Credit spreads will blow out to the head of those corporate to raise funds?
It can be crippling.
>> Definitely high stakes around all that.
Here's a question a little closer to home.
A viewer wants to know what your outlook is for Canadian energy stocks.
>> So I think you, as I said earlier, we are bullish for oil in the midterm.
That rising tide will lift all the energy stocks.
Once again, this is a midterm trade.
I think in the short term, investors have to brace for a little bit of pain heading into a recession, knowing that structurally, the trade seems to be the right trade.
Loading up and layering in seems to be the right thing to do. Knowing that in the long run it seems like the right trade. In terms of Canadian stocks versus US stocks, we still favour US energy over Canadian energy just because there is less structural headwinds. We have struggled with pipelines for years, since before I arrived in Canada.
We don't have the same sort of structural problems in the US.
On that perspective, we favoured the US over Canada, but bullish on all energy stocks.
>> Longer term, what could be the challenge?
There is the discussion around the elect vacation of things, what people have said will be good for certain commodities, and they wonder about energy longer-term being a sunset industry.
>> Right.
To build that infrastructure, you need oil, you need steel.
You need copper more than anything.
If you want to really electrify all of your cars, if you want to go to completely green energy, this is what you need.
There is a huge copper shortage. To build that infrastructure, you need oil.
So if you're looking at a 10, 20 or trade, there is still a lot of scope for oil.
>> Interesting stuff. Another question here. This was a topic that's never far from Canadians minds. Your guests take on the risks in real estate?
There so many pockets to talk about, residential, commercial… > It's important to draw a clear line between the two.
We are really worried about commercial real estate.
I discussed on the last show. We are really worried about the cracks that are going to affect the banking sector because there are going to be big write-downs of those assets.
Residential, we are bullish.
>>last time we had the discussion about the US regional banks and how correlated they are to commercial.
>> All banks have exposure to commercial real estate through loans. Canadian banks also have exposure to commercial real estate via loans. If you start to have strong write down the list assets, the outlook is not great.
For residential real estate, we are actually quite bullish, as I mentioned, and it's funny because the first question I will get asked is interest rates are rising. A won't you see house prices collapse? People are going to default on their mortgages.
I think what we've seen is all the banks have done is they've extended the mortgage periods to keep pricing consistent, to keep those payments consisted, to avoid default.
I don't know if that just means by the time that they eventually renew their mortgages, maybe rates are lower, because I do think there will be a pivot from the Bank of Canada.
But I do think the reason I most bullish is we've still got the same old supply problem, especially in Canada.
We still got a large amount of immigration into Canada.
This is why I am so bullish about our economy.
we do not have enough supply. And because rates are higher, people aren't moving, so that limits apply further. Because rates are higher, there is less new big housing development being built, which is further squeezing supply.
So anyone looking to buy a house, there's just no inventory out there and this is the challenge. This should keep prices supported.
>> How about a recession? We always hear that one thing… It's been an interesting decade in housing.
how would the unemployment rate changing affect that?
>> Typically a strong recession kills things like inflation because consumption is gone.
but you gotta ask yourself, what is the real impact on the jobs market?
Will there be some job losses? Sure. We have already started to see some movement in the street.
I think the job market will be generally supported.
We have a shortage of skilled labour.
This is why think countries that have strong immigration policies like Canada will do really well in the long run. We need young, intelligent workers. As long as we have that, we can grow.
I think there's a shortage across the developed world of young, skilled people and because of that, I think that labour markets will hold up and that will prevent a deep recession or a hard landing. I think it's a soft landing.
Less consumption and… To put that in context, because I think this is important, if you talk about a hard landing, this is large layoffs across the board.
A soft landing would be, all right, you get paid 30% less than you got paid last year.
And then no recession, everything takes a long.
I think it's either hard or soft landing.
We continue to lean toward self.
>> We will get back to your questions for James Dixon on market trends in just a moment's time. As always, make sure you do your own research before making any investment decisions. and a reminder that you can get in touch with us at any time.
Do you have a question about investing or what's driving the markets?
Our guests are eager to hear what's on your mind, so send us your questions.
There are two ways you can get in touch with us.
You can send us an email anytime at moneytalklive@td.com or you can use the question box right below the screen here on WebBroker.
Just write in your question and hit send.
We'll see if one of our guests can get you the answer right here at MoneyTalk Live.
The uranium industry continues to build momentum as acceptance of nuclear energy increases.
Our Anthony Okolie is joining us now at the latest TD Securities report on why they remain optimistic about the sector. Anthony.
>> Thanks very much, Greg. TD Securities Outlook for uranium prices and the nuclear sector in general is the best that it's been in 15 years.
Driving that view is that governments around the globe and across political spectrums are acknowledging the central role that nuclear power will play in a low carbon, stable, electrical grid.
TD Securities says that many governments are reviewing and updating their nuclear power policies to support the nuclear power sector. TD Securities is forecasting some prices, uranium prices.
For 2023, they are forecasting a price above just over $53 US per pound. Through 2024, little higher, at $58 US per pound.
The longer term sits at higher than 60 per pound.
TD Securities notes the total term contracting volumes surged by 33 million in April and it currently sits at around 88 million here today.
This is the most contracted volume to the end of April that TD Securities has recorded dating back to 2010.
2011, for example, 88 million pounds of uranium was contracted to the end of April.
Now TD Securities does note that the uranium price has been relatively quiet of late. Only about 16 million pounds have been transacted here today. That's well below the five-year average of around 28 million to the end of April.
But TD Securities says that the spot price has recently been moving upwards.
They've seen some upward pressure in the last week.
Now TD Securities says that buying interest has returned to the market last week from a number of market players that includes traders, producers and utilities with an expected increased in the uranium contracting, TD says there could be renewed upward pressure on uranium term prices going forward.
>> Optimistic take there.
Any risks outlined in the report?
>> I think the key risk continues to be geopolitical risk.
That is something that will continue to be a key risk for the market. In the past, we've seen the uranium price react strongly to the Russia Ukraine crisis.
TD Securities noted in a previous report that the risking and repositioning their nuclear supply chains away from Russia in what is already a tight market.
Great. That interesting report there. Thanks, Anthony.
>> My pleasure.
>> MoneyTalk's Anthony Okolie.
Let's check in on the markets.
The TSX Composite Index is up 63 points or about 1/3 of a percent. Shopify made a big move last week on the back of not only its latest earnings release but talking about cutting the workforce, getting back to the core mission of the company.
At 86 bucks and change, they are of 4% today on the name.
In Cenovus Energy, we are seeing a move into American crude after a rocky ride last week.
At 2178, Cenovus is up a little bit more than 2%.
Of the border, we have a Fed that has told us it is data dependent going forward.
We are going to get another read on US inflation this week on Wednesday.
A fairly significant one.
Ahead of all that, you're talking about a flat rate on the bottom.
Right now it's down about two points or five takes. The tech heavy NASDAQ, Lisieux it sizes up. It's about the same.
For Tyson Foods, using a substantial pullback in the name to the tune of almost 16% right now.
We are back now James Dixon from TD Securities talking about market trends.
Someone has an eye on Europe, thinking of adding to their position in Europe and/or emerging markets for the long term.
Is this a good time or would you hedge to CAD? We can give specific advice but there are some interesting themes here.
What do you think about a hedging strategy in terms of international investing?
>> We have this dichotomy between East and West where the West is struggling to grow and the east is growing quite nicely. We've seen strong growth out of China and India will continue to watch them. Europe is interesting because your benefits directly from a reemergence Tory reopening of China because you have strong travel into Europe and the Chinese are strong consumers of luxury goods and that's what Europe produces.
We just talked about, we just had a statement on uranium.
We also believe that on this big building of critical infrastructure, things like energy, Europe is going to be very committed to this because they have structural problems. They have energy problems right now.
They have been fortunate that we had this warm winter and they seem to have gotten out of it fairly unscathed but right now you have big support programs for consumers to bring prices down.
There will be problems in the long run unless they build green infrastructure.
We talked a few minutes ago and you just had that statement on uranium and I thought that was all good for growth in Europe, building infrastructure, building… Whether it's energy infrastructure or re-shoring of supply chains, these are all good for growth and I think that that's positive for Europe. And I think that Europe probably sees a stronger benefit than Canada does, at least in the short term, just on the back of Chinese consumption of luxury goods and travel.
>> Fascinating stuff as always, James.
It was a pleasure having you here. I look forward to next time.
>> Thanks. Thanks for having me. It's always lovely to be here. I appreciate it.
>> We will talk soon. Our thanks to James Dixon, director family office solutions that TD Securities.
Stay tuned for tomorrow's show, Damian Fernandes, portly manager at TD Asset Management will be our guest taking your questions about global stocks. You can get a head start on your questions. Just email moneytalklive@td.com. that's all the time we have for the show today. Thanks for watching and will see you tomorrow.
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