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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, we will discuss three seems that investors may want to be keeping an eye on in the markets with TD Securities James Dixon.
Money talks Anthony Okolie will take us with the results of the latest Bank of Canada Business Outlook Survey.
And in today's WebBroker education segment, Jason Hnatyk will take us are the different graphing tools available on the platform.
So here's how you can get in touch with us.
Just email moneytalklive@td.com or you can follow that viewer response box right under the video player here on WebBroker.
Before we get our guest of the day, let's get you an update on the markets. We are starting a new month and a new quarter. Right now you got the TSX up a pretty solid 144 points, three quarters of a point.
Obviously a lot of energy names are doing the heavy lifting here.
We had some developments over the weekend, the surprise production cut from OPEC and its partners.
I could've chosen any energy name out of the big basket in this country. At 2549, you got Cenovus up now a little more than 8%. Rogers closing the takeover of Shaw and right now though shares are slightly under pressure, 6159, it's been quite the saga, pardon me, and now we are seeing the closing deal day it down 1.7%. South of the border, let's check in on the S&P 500.
It's a bit flat right now, down have a point, because of the surprised production cut from OPEC while it is fuelling some energy names it is fuelling concerns about inflationary pressures as well, trying to figure out what's the longer-term game here.
We will get those details in a moment.
Check out the tech heavy NASDAQ, scouts holding up against the broader market. See a bit of risk coming off the table here as clearly evidenced in the NASDAQ, down hundred and 16 point, almost a full percent at this hour.
But as we said, the energy names getting a bid not only on Bay Street but south of the border. Got Exxon at 115 bucks and change per share, up five and half percent.
And that is your market update.
As investors navigate higher volatility, our guest today says there are three main themes they may want to keep in mind when considering where markets could go from here. Joining us now for more is James Dixon, Dir.
family office solutions at TD Securities. James, great to have you on the show for the first time.
>> Thanks so much for having me, Greg.
>> Let's tell the audience a little bit about who you are and what you do here at TD. He worked for the family security office.
Tell us about that.
>> What we try to do is deliver the full suite of Capital Market solutions to family offices and ultrahigh net worth individuals.
We do that by connecting with our partners, private banking, PIA, our TD family office and of course just directly through external family office.
So we really aim to just bring an institutional quality coverage to the space, something that we feel the space has been lacking for a while.
>> That puts you in a very interesting position in terms of watching everything in the world that's happening and trying to distill it. You've got three big themes here. I want to start with what central banks have been doing and try to tamp down inflation by hiking rates.
It's been such an interesting wrinkle over the weekend that as we talk about inflationary pressures, we get OPEC and its partners with a surprised production cut.
I mean, how does this all play out?
>> It's been a very, very interesting story. We have seen so much tightening over the last year, far more than we thought initially. We saw all banks continuously revising their target tire as central banks across the globe ramped up to fight inflation.
Now we are in this position where economies are breaking and because rates have just been too high. The question is really, does inflation continue to trade lower like leucine or is it sticky?
On my desk, we have held the narrative of sticky inflation seemed persisting. Over the short term, we do think the trend is lower, even with this OPEC cut, and it's a big cut, over a million barrels.
We think overall, though, inflation levels out around three or 4%. There are few narratives driving that.
The oil supply is clearly a big issue and the uppercut has made that worse. We also think that the continuous reassuring of supply chains on the back of COVID… We think that this re-militarization efforts around the globe on the back of the war in Ukraine is a really big deal and they should keep demand for commodities high all the back of that inflation.
And I think that overall, central banks might even be okay with that because if you have a balloon balance sheet, the easiest way to get rid of your debt is to inflate everybody.
>> Okay, interesting point there. Interesting developments to keep track of. For the longest time always talked about was inflation and central-bank action and then in recent weeks something stole the spotlight: the banking crisis, the failure of some US banks, the whole Credit Suisse situation.
What you may be thinking about in terms of that?
>> It's interesting. Initially, I thought about rehashing what actually causes banking crisis but what I think is more pertinent is what's next?
You know, there are was some chatter about a run on a one bonds after the rundown on Credit Suisse.
I think the bigger issue now is a theme that's gaining momentum and that is commercial real estate.
These regional banks have circa 70% of commercial real estate loans.
This is a big deal. Commercial real estate has been struggling because of work from home policies.
A change in the way consumers spend, a lot of it is online now so revenues are down, financing costs are up. And at the same time, we have a lot of maturation.
To put things into perspective, just this year, there's $450 billion of loans maturing.
The pain doesn't end there. In the years to come, it's around 550 a year. By 2027, that's around two and half trillion in debt that maturing and this is a big deal because commercial real estate works a little bit different to residential real estate.
These loans are not amortized.
These are usually balloon payments at the end of whether it's five or 10 years.
And when it comes to refinancing these loans, I don't how you do it because the bid overspread for these buildings is huge. The bank say they are worth one amount because revenues are down and the owners said there was something completely different.
So I think this is the underlying issue now that we are all trying to chop through.
Are we facing a balance sheet crisis or is loose policy going to alleviate the problem we have?
And we drive on? So new markets seemed to be thinking it loose policy will be okay.
>> That's to interesting themes and we promise three.
The big one, as we plow through all of this, try tobring inflation down, live with higher borrowing costs, deal with the problems with regional banks in the US. What are the signs of the telling us about recession?
>> It's interesting.
Everyone has been pointing to 530s… Suggest inflation is around, recession is about six weeks away.
I think we are in a very difficult position.
you've got tighter lending standards which slows growth. You've got weaker consumer balance sheets, so I think the signs are there.
I think it's going to be a recession.
The question is how hard is it going to be?
Is it a soft or a hard landing? My gut says it's probably a softer landing and just because we believe that China reopening is a big story and we've seen some strong growth and we think that they keep commodities big and coats you will grow. Is it enough to get the world out of recession? We don't think so.
>> How keen with the central bank speed to race back to the rescue?
There's been an argument made that as they wrestled out inflation they will tolerate perhaps a bit more pain in the economy than they would during other cycles.
>> So we believe there is not enough priced in terms of cuts.
We saw huge hikes over the last year.
It started at 25 and then went to 50 and then 75.
We have just continued to see pain in the economy.
All those hikes have even fed through into the data yet. We believe that when the Fed starts to cut, it will be aggressive. They will have to unwind as quickly as they hiked.
>> So with all of this in mind, and it is a law, a nice break down on with the state of the world is and what it means for investors, what should investors do about positioning themselves in an environment like this?
>> I have to be careful in how I answer this one, Greg.
What we have seen is we list all the data since the 1930s. What we have seen is one bonds and stocks selloff in lockstep, typically in the year that follows, bonds outperform stocks.
Will that happen again? We are not sure.
If there is a recession, bonds tend to outperform stocks just in a flight to safety.
If there is a recession, things like consumer staples, healthcare, utilities, those are the stocks that outperform.
For commodities, well, I think you gotta ask yourself if you believe in the Renee it militarization as we do and the rebuilding of infrastructure, then commodity should outperform.
>> Interesting stuff in a great start to the program.
we are going to get your questions about the markets for James Dixon in a moment. A reminder that you get in touch with us at any time.
Just email moneytalklive@td.com or float that your response box under the video player on Webbroker.
Right now, let's get you updated on the top stories in the world of business and take a look at how the markets are trading.
shares of Teck Resources in the spotlight today, that on news that the company rejected an unsolicited takeover offer from a Glencore PLC. tag right now is up almost 14%.
We got a merger of two of the largest sports entertainment companies in the world.
World wrestling entertainment combining with Endeavour Group's UFC, creating a new publicly listed company valued at some $21 million.
The new company is going to be listed under the ticker TKO. You can see world wrestling now it down on the back of the knees.
It appears cutting prices helped boost demand for Tesla's vehicles. The EV maker says it delivered almost 423,000 vehicles in the first quarter, which it calls a record. While slashing list prices boosted demand, some investors are concerned about the effect on Haslam's margins.
You can see the shares, despite the record quarter in terms of deliveries, down almost 6% at this hour.
A quick check in on the markets.
We will start on Bay Street with the TSX Composite Index. Right now with the help of energy largely, it 739, hundred and 40 points we will call that, a little shy of three quarters of a percent.
South of the border, it's a bit more of a mixed picture. Yes, we are seeing some energy names get a bit along with ours here in Canada but you are seeing some money move out of tech stocks today.
You pretty much just got a flat read on the S&P 500.
We are back now James Dixon, taking your questions about the market. Got lots coming in so let's get to them. The first one off the bat: if I haven't invested in bonds yet, have I missed out or is there still more room to run?
>> I think that, once again, the Fed has to match their cutting cycle with the hiking cycle so if you look at the cuts that are priced right now which is around 85 beeps, we don't think that's nearly enough.
I think it's the Fed does start stepping up and cutting, there's a lot of room for bonds.
they have sold pretty aggressively. We have seen a comeback on the ones that are underpriced but I think there still a lot of room here and if the recession gets legs, that will lend support.
>> the bonds, that 30 or 40, was supposed to give you protection at times of equity volatility and it just didn't work last year for very specific reasons.
But we are starting to think maybe that that changes this year?
>> Right, that certainly seems to be the theme. There have been a lot ofarguments that the 6040 is back.
We do think that those traditional correlations return.
It's been a very tough year for investors.
I don't know what else to say.
It's been a very tough environment.
I think that fundamentals will always trump at the end so I think a balanced portfolio is certainly the right way to play things.
>> If I talk to some of the fixed income people at TD Asset Management, they will talk about the fact that even if you are thesis is, what you laid out there, at some point the Fed pivots and you start to see a move higher in bond prices, even while you are waiting for that scenario to unfold, you are going to get… A coupon that's much higher than you are accustomed to before the start of the year.
>> 100%.
I was looking at a very interesting chart today in the amounts of fixed income securities that's yielding north of 4% is unreal.
It wouldn't make sense not to own that is part of your portfolio especially if you expect… >> Here's an interesting one because you talked a bit about this.
I think the last time we heard from Fed chair Powell he talked about the fact that we've got a taken mind what's happening with the banking crisis, it seemed like the Fed wasn't going to hike rates so aggressively but he sort of ruled out cuts this year. Do you think interest rate cuts her off the table?
Jerome Powell tried to tell us they were but I don't and the market believed him.
>> In the markets we are seeing cuts priced.
We agree with that narrative. We think that as this banking crisis unfold, it's going to get nasty.
We think as the previous hike speed into the data, is going to get nasty.
Earnings post share are off.
We think growth is going to be a real problem and Powell is going to have to react.
You really got a situation where you have to say, okay, what's the worse of the two evils?
Deal with higher inflation or phase to a bigger banking crisis? We have already seen the cracks form there and I think the solution is really obvious.
>> In the early innings of the pandemic, given the challenge of setting that society and millions of people losing their jobs overnight, the interest rate cuts were aggressive and basically brought us back down to zero.
In the cycle forward of cuts, do we see anything that dramatic or will it be a bit more temperate?
>> I think the pace will be aggressive because the pace of hikes were aggressive.
But are we going back down to 0% rates? The answer is no.
And once again I think you have to take a step back and look at where inflation is.
If inflation settles around three or 4%, then quite honestly your nominal rates have to be similar because real rates can't be aggressively negative.
They thought of you may be -1 or 0% so I think a lot of how far the Fed is going to go hinges on what your view is of inflation.
If you think inflation is going back down to some 2%, then sure, the Fed can go more.
But as outlined a little bit earlier, that is certainly not our view on my team and on the back of that, I think that handcuffs the Fed and how far they can go.
>> Here's another question that might not correlate with the view of our team. If rates are going to stay higher for longer, some people have concerns that central banks, as central banks laid out, they want to get there and stay there. You don't truly believe that theory.
But if that happened, what Canadian sectors might benefit?
>> Well, most obviously is banks. Banks do well when rates are high.
I think, as an equity investor, if you're not really sure where to go, there is the trifecta of protection.
So if you're worried about recession, things like healthcare and utilities, consumer staples do well.
If you're worried about rate hikes, things like banks do well.
And if you are worried about inflation, things like commodities do well.
So really that's your protection trade in the equity space.
That's The way we look at it.
The biggest performers when rates are high are banks and that's because they are lending at higher rates.
>>obviously the situation in Canada is a bit different than the states.
We are already on a conditional pause.
and the final copulation, it's about household debt.
With the run-up in housing prices, there is mortgage debt.
if things turn what's interesting about our economy is that if you look at theBalance driving our growth, its commodities, banking and households.
so you can't collapse one of those pillars.
You have an indebted population.
I also think it would be highly politically unpopular if you start to collapse house prices when a lot of people are using their home as their retirement estate.
> As always, make sure you do your own research before making any investment decisions.
we will go back to your question for James Dixon on the markets in a moment.
And a reminder that you can get in touch with us any time. Just email moneytalklive@td.com.
now, let's get to our educational segment of the day.
If you are trying to analyse company stock, WebBroker has tools that can help. Joining us now for more Jason Hnatyk, Senior client education instructor with TD Direct Investing. Walk through how to use charts in WebBroker.
>> Thanks for having me again, Greg.
whether or not we are looking to analyse the trend or do a comparison against one of the companies peers in its industry, or looking or looking for some buying or selling signals, a chart can be useful for regular investor. Let's jump into WebBroker and I will show us on the chart how we can customize this to our own needs and tastes.
first of all, let's start with the drop-down menu at the top of the chart.
We can see that there is a chart style function and this will allow us to choose between different parting styles.
I've got candlesticks on the chart because this is when I prefer to use but if you are more into a bar chart, those things are here or if you are a line chart enthusiast, that can be chosen from here as well.
The next thing is looking, you have the opportunity to analyse stocks over varying lengths of time. I am now looking at a 20 year price chart on Toronto Dominion Bank so we can see looking back two decades worth to see how the company is doing and get a sense of how things are going and hopefully draw some conclusions about where it's going into the future.
But if 20 years of time is a little bit too much, you have the opportunity to shorten that time.
And now we can really dive in and start to see much more recent price data. If we are looking to find some support resistance levels or to identify the near term trend because we are planning to hold it for a period of weeks or months, this could be another function that might be helpful. Additionally, if you are looking to find more information about companies upcoming event, the events dropped in on the top of the pages where you will have the opportunity to add that datato the chart.
Let's go ahead and add earnings and events.
Earnings and dividends, rather. You will see the E and D letters popping up. You are never out of step. You always know when things are coming up and will be able to take that into your decision-making process bear the lasting we will quickly shows a comparison option.
We have the opportunity to compare against an index or you can compare it against one of its direct competitors. Souls go ahead and add in a couple of the other Canadian banks to our chart so we can see how things… How that would look for our purposes here.
Now we can see just analysing either over the time. We have or drawing lines to project the future, we got the ability to see how things are expected to go.
The last thing we will do for this particular show and tell session is let's go ahead and add a few studies to the chart that might be useful for people to see at home. The first would be I will just go ahead and add a moving average into our chart.
A simple moving average, just translating the average of the daily closes across the time. We've added on.
We've added just a 15 day moving average to help us identify kind of short-term, medium-term, long-term trend.
You got the opportunity to have one average on your chart but you can additionally go on and add more averages by putting that into the edit box available here. You can choose different lines, different lengths of times, given the opportunity to look for trends across different periods of time so we can see if the stock is advancing or decline based on the movement.
>> Jason, I always appreciate having a variety of resources to draw on but if someone is just wetting their toes in this area when it comes to indicators, they don't even know where to start, is there a tool in WebBroker that can help them get along on that journey?
>> Yeah, Greg. We want to certainly know what the indicators are trying to tell us before he make decisions based on that information and we are in luck.
There's plenty of information within the platform to help us guide us down that learning journey. Let's jump in and I will show you how. The first place you will go to is directly from this page you will notice there is a technicals tab.
On this particular page if we go into here, what's really interesting about this resource is that this is a tool that actually scans the market for technical advance. We don't need to be a wizard with charts. The platform is going to be finding of those eventsand then we can go ahead and choose to see if they are appropriate for us.
We will notice that it's finding all of these events on this chart here.
But if you want to learn about a specific indicator, where you can go is in this graduation That's in the top of the page.
If we go ahead and choose that, along the left-hand side of the screen here we can see that there is different types of indicators that we can learn about.
I'm gonna go ahead and click on classic patterns and maybe just choose one at random here.
We got a diamond bottom here.
So if you're curious about what this specific technical pattern means, there's lots of information here to read about.
And get a sense of what it's gonna look like, you can even get some in-depth trading considerations.
If you're more of a visual learner, I've got you covered there as well. We can go back to the top of the page and click on the learn tab.
From here, we will choose our video lessons. I've already got it filtered for technical analysis and the filters are accessible on the right-hand side.
In this area, we've got 21 separate areas all about technical analysis, all of the different patterns, charting and techniques that you can use hopefully to your best advantage to find those entry and exit signals to make yourself at a profitable trade.
>> Great stuff as always. Thanks for that.
>> My pleasure.
>> Jason Hnatyk, Senior client education instructor at TD Direct Investing.
And make sure to check out the learning centre in WebBroker for more educational videos, live, interactive master classes and upcoming webinars.
Now before you get back to your questions about the markets for James Dixon, a reminder of how you can get in touch with us.
Do you have a question about investing or what's driving the markets?
Our guests are eager to hear what's on your mind, so send us your questions.
There are two ways you can get in touch with us.
You can send us an email anytime at moneytalklive@td.com or you can use the question box right below the screen here on WebBroker. Just write in your question and hit send.
We'll see if one of our guests can get you the answer right here at MoneyTalk Live.
We are back with James Dixon, taking your questions about the markets. This one is came in in the past minutes. Your thoughts on oil?
>> Thank you, Greg.
Leaning into the narrative we outlined a bit earlier, we do think that this rebuilding of infrastructure globally is a big deal. It's highly supportive of commodities, oil, metals.
We think it's a similar story for re-militarization.
we are seeing some cuts. This cut by OPEC is a really big deal.
And China coming online. It's just very interesting to see that oil isn't even higher.
I think the US drawing on the SPR is still putting downward pressure on prices.
I think when they start rebuilding those reserves, I think that gives an additional bid.
You know, it's been tough.
We like soil and we've liked on the way down. We still like it.
I think that the question is always how you put the exposure on.
I think that if you've got that exposure on through physicals, it can be expensive when it's going the wrong way.
I think that exposure is on through equities.
You kind of pay to play because you receive your dividends and then you kind of wait it out.
I think the only thing that puts downside pressure on commodities isthe recession that's coming.
I think you gotta ask yourself, how deep is going to be? We believe it's a soft landing so not enough to derail the commodities outlook.
>> Longer-term, some of the discussion around oil has been the fact that we see this electrification of everything in the future and that oil won't be as necessary or as in demand.
Some people think people are perhaps getting ahead of themselves on that, that the world is not ready to make that shift just yet.
We just don't have the technology in place.
How does that scenario play out?
>> I think the first thing is that even if you are starting to go towards nuclear power, you need to rebuild the infrastructure and that's the only way that Europe's going to be able to get the green energy is nuclear. I think the other thing that viewer should realize is that when the world moved away from coal, the consumption of coal didn't decrease.
It just remained flat. In fact, now with energy shortages, we've seen resurgence is in the use of coal.
I think that if that theme does persist, it's many years away.
It's a way too early to make a call on that now.
I think that… To get to, once again, to get to the green energy narrative, this is years away and a lot of infrastructure needs to get built.
And I think the one thing that, I don't want to carry on too much, but I think the one thing that no one seems to be talking about in mainstream media is the race to build a military base on the moon which is quite interesting.
Dr.… Had a great piece on that.
this is a big deal.
>> You might burn a littlefuel trying to get to the moon and back.
>> This is a big deal because it's about control of the satellite network and the satellites determine our military protection.
This is a big deal for our rockets and things like missiles.
It's a really interesting interview. Anyone who'd like to watch that, she is on a great podcast.
It's called macro voices.
>> Interesting stuff.
We have a question now about technology is stocks.
Will tech stocks make a comeback to earlier highs?
>> It's interesting. You've seen tech do really well this year.
>> I think they had a great first quarter and by the NASDAQ standards, they had a great quarter.
>> I think the market is looking past recession fears.
I think the market is looking to Fed cuts and that's what's being priced now.
I think for tech to really make it back to the old highs, you need to see an aggressive pivot by the Fed.
So the way to look at tech stocks orany stocks, their long-term assets because they pay dividends.
So if you do like… for Teck to make Isaac in theFed has to pivot aggressively. Is that Q2 words that Q4?
Capital is finite and investors need to be careful where they allocate in the short term.
>> When we talk about the Fed pivoting and if they do pivot aggressively it's usually because, as we laid out some of the risks out there, something has gone wrong, maybe the economy is in recession. Can the tech names sort of plow through that, the actual economic conditions in which they are operating?
>> I think once again it comes down to those names are very, very sensitive to rate policy.
So it's going to be very tough for those names to make returns if there is no consumption and if rates are high.
So in a recessionary environment, defensives tend to perform better. We highlighted some of them earlier.
Healthcare, consumer staples, utilities. Don't get me wrong.
In the long term, do I like tech? Hundred percent. I think innovation is ultimately what leads global dominance.
I think the Fed needs to pivot and when that happens, that's the right time to get in.
>> A question now about the Canadian economy. The viewer wants to know will onshoring help or hurt the Canadian economy?
>> I think you need to ask the question, what's driving onshoring? Is it productivity or is itgeopolitics?
We touched on earlier. It geopolitics right now.
It's things like COVID, it's things like protectionism.
Because you got a large disenfranchised population.
So if you look at it from that perspective, then it's very negative for the economy.
Re-shoring is highly inflationary, so it squeezes the guy on the bottom.
I think you always have to consider once again the labour shortages I touched on earlier.
We don't have the population and even if we did, do Canadians want to do those jobs?
>> We are going to get back your questions for James Dixon on the markets in just a moment 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 Bank of Canada is I was at the latest survey of business sentiment, showing the economy is softening with future inflation excitations coming down.
Anthony Okolie has been breaking the report for us.
What the telling us?
>> Thank you very much.
Keep in mind, this Business Outlook Survey was conducted before the emergence of the global banking crisis last month about the business Outlook indicator fell in the first quarter to -1.1 from roughly 0, is addressing that business confidence is weaker than usual. Now, the decline reflects expectations of slower price growth and easing capacity pressures due to better supply conditions.
and as the next chart shows, cost pressures remain a top concern for many firms in Canada,followed closely by labour shortages and economic uncertainty.
Now, the costs and economic uncertainty concerns were slightly higher versus last quarter, but labour shortage fears are down significantly year-over-year.
Meanwhile, business sentiment was roughly unchanged from the last quarter as the next chart shows. That is down from the second quarter of last year.
And this is likely driven by expectations of lower sales growth among businesses. The decline in expectations or sales growth was the fifth consecutive quarter of lower growth expectations.
Still, overall firms expect sales will continue to grow.
Finally, while labour market pressures have eased, a tight labour market.
As this final chart shows, many firms expect their wage increases to remain high although there are signs of wage growth easing. On balance, firms view current labour shortages as less intense versus a year ago when they were extremely high.
Great?
>> Anthony, given the fact that this is the tone of the Bank of Canada is hearing from businesses from their survey, the economy is hanging in despite all of these aggressive rate hikes we've seen, any implications were read through zest with the Bank of Canada might do next when it comes to rates?
>> In terms of the labour market, like the US, the Canadian labour market has been clearly strong and TD Economics expects job gains to slow dramatically in the coming months as employers must reconcile with incredibly weak productivity and contracting profits.
Now, the survey seems to suggest that businesses expect lower price growth and there are signs of easing wage pressures as labour shortages ease. It given the surge in GDP growth and immigration…the BSE will likely remain on pause.
>> MoneyTalk Anthony Okolie. Let's do a check in on the markets right now. First trading day of the week of the month and of a new quarter. At 20,248, we are of 150 points, rounding up, of three quarters of a percent on the TSX Composite Index. It's energy doing the heavy lifting after the surprise production cut from OPEC and its partners.
You can pick any big energy name out of the hat, they are all up pretty solidly.
4420 unsung Orchard, Europe 5 1/3%.
Teck Resources rejected an unsolicited takeover bid from Glencore, God tech shares on the move, 5655, a jump of almost 15%. South of the border, the picture is more mixed.
we have US energy names rallying with the price of crude but you got tech names falling back today.
Got a bit of a push and pull on the market, the broader read, the S&P 500 right now is up two points. There's the tech heavy NASDAQ, down about 90 points or three quarters of a percent.
Let's check out Tesla. We know they did some pretty aggressive price cuts for some of their vehicles to stoke demand and try to retain or capture some market share about that does raise concerns, even though it seemed to work for the first quarter in terms of boosting some of their shipments, does rates and terms among investors about margins. That is playing out in the name right now it hundred 95 bucks and change, your dental 6% on Tesla.
We are back now James Dixon from TD Securities taking your questions about the markets. Viewers want to know where your outlook is for the Canadian dollar, the loonie?
>> Well, I think that you have to ask against what? If it's against the dollar, we think the Canadian dollar trends lower.
We like oil, so we think that could do okay.
That's one of a couple of things we've talked about.
We also think that it's more of a red story than anything else.
>> I remember when Stephen… Was the governor of the Bank of Canada. He always used to say look at oil. A network simply doesn't work.
>> So yeah, I mean that, overall, the rate story is the biggest story and we do think that it's going to be a big unwind by the Fed and it should put some downside pressure on the Canadian dollar.
In the very short term, we don't think there is an aggressive collapse. Just if this recession theme does play out, then momentum will be curbed. There will be demand for dollars on the back of the flight to quality. It's probably a tighter range in the short term, but into next year, we think it's significantly lower and that's just on the back of a right move.
>> Okay, precious metals. Desktop a few times in the show. With your expectation for the performance of precious metals? Gold has been interesting in the middle of all this volatility.
>> Gold has done well on the back or recession fears.
If you really want to look at how precious metals perform, they trade in line with real rates. So if you believe inflation will remain high, and rates will come lower, then precious metals will outperform.
if you believe in the opposite, they will underperform.
we think that inflation is structurally hired so it's good for precious metals. We think the commodity theme is alive and well. We have seen strong buying of gold from central banks, and I think the people are just trying to use that as a diverse fire on the US dollar.
>> We have time to squeeze in one more viewer question.
we talked a bit about this off the top, the financial sectorand some of the road bums we've had recently in the United States.
What is your expectation for financial sector performance?
>> It's a tough one because we don't know how deep the rabbit hole goes for commercial real estate.
If we start to see a large consolidation of banks, aggressive Fed cuts, it could be okay.
I think if the Fed maintains this path, at least in the short term, we've got a bigger problem because then balance sheets are in trouble and even the consolidation could be very, very tricky because who wants to purchase those assets?
I mean, that really is the question.
There will be a huge debate about valuation.
It's going to be a tough period, it's going to be a very trying period, and I think we just have to wait and see what happens in terms of policy to really make that decision.
>> We've got a lot of things hanging in the balance. We live in interesting times. Can I continue to be interesting. Great having you here. Great for show. I hope we see you back on a regular basis.
>> Thank you so much. Really appreciate it.
>> Are things to James Dixon, director of family office solutions at TD Securities. Stay tuned. On smaller show, Michael O'Brien, portfolio manager at TD Asset Management will be our guest taking your questions about Canadian stocks. A reminder that you get a head start with this question. You don't have to wait until we start at noon Eastern time, we are happy to take your questions during the show as well. Email moneytalklive@td.com. I had this. That's all the time we have for the show today. Thanks for watching. We'll 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, we will discuss three seems that investors may want to be keeping an eye on in the markets with TD Securities James Dixon.
Money talks Anthony Okolie will take us with the results of the latest Bank of Canada Business Outlook Survey.
And in today's WebBroker education segment, Jason Hnatyk will take us are the different graphing tools available on the platform.
So here's how you can get in touch with us.
Just email moneytalklive@td.com or you can follow that viewer response box right under the video player here on WebBroker.
Before we get our guest of the day, let's get you an update on the markets. We are starting a new month and a new quarter. Right now you got the TSX up a pretty solid 144 points, three quarters of a point.
Obviously a lot of energy names are doing the heavy lifting here.
We had some developments over the weekend, the surprise production cut from OPEC and its partners.
I could've chosen any energy name out of the big basket in this country. At 2549, you got Cenovus up now a little more than 8%. Rogers closing the takeover of Shaw and right now though shares are slightly under pressure, 6159, it's been quite the saga, pardon me, and now we are seeing the closing deal day it down 1.7%. South of the border, let's check in on the S&P 500.
It's a bit flat right now, down have a point, because of the surprised production cut from OPEC while it is fuelling some energy names it is fuelling concerns about inflationary pressures as well, trying to figure out what's the longer-term game here.
We will get those details in a moment.
Check out the tech heavy NASDAQ, scouts holding up against the broader market. See a bit of risk coming off the table here as clearly evidenced in the NASDAQ, down hundred and 16 point, almost a full percent at this hour.
But as we said, the energy names getting a bid not only on Bay Street but south of the border. Got Exxon at 115 bucks and change per share, up five and half percent.
And that is your market update.
As investors navigate higher volatility, our guest today says there are three main themes they may want to keep in mind when considering where markets could go from here. Joining us now for more is James Dixon, Dir.
family office solutions at TD Securities. James, great to have you on the show for the first time.
>> Thanks so much for having me, Greg.
>> Let's tell the audience a little bit about who you are and what you do here at TD. He worked for the family security office.
Tell us about that.
>> What we try to do is deliver the full suite of Capital Market solutions to family offices and ultrahigh net worth individuals.
We do that by connecting with our partners, private banking, PIA, our TD family office and of course just directly through external family office.
So we really aim to just bring an institutional quality coverage to the space, something that we feel the space has been lacking for a while.
>> That puts you in a very interesting position in terms of watching everything in the world that's happening and trying to distill it. You've got three big themes here. I want to start with what central banks have been doing and try to tamp down inflation by hiking rates.
It's been such an interesting wrinkle over the weekend that as we talk about inflationary pressures, we get OPEC and its partners with a surprised production cut.
I mean, how does this all play out?
>> It's been a very, very interesting story. We have seen so much tightening over the last year, far more than we thought initially. We saw all banks continuously revising their target tire as central banks across the globe ramped up to fight inflation.
Now we are in this position where economies are breaking and because rates have just been too high. The question is really, does inflation continue to trade lower like leucine or is it sticky?
On my desk, we have held the narrative of sticky inflation seemed persisting. Over the short term, we do think the trend is lower, even with this OPEC cut, and it's a big cut, over a million barrels.
We think overall, though, inflation levels out around three or 4%. There are few narratives driving that.
The oil supply is clearly a big issue and the uppercut has made that worse. We also think that the continuous reassuring of supply chains on the back of COVID… We think that this re-militarization efforts around the globe on the back of the war in Ukraine is a really big deal and they should keep demand for commodities high all the back of that inflation.
And I think that overall, central banks might even be okay with that because if you have a balloon balance sheet, the easiest way to get rid of your debt is to inflate everybody.
>> Okay, interesting point there. Interesting developments to keep track of. For the longest time always talked about was inflation and central-bank action and then in recent weeks something stole the spotlight: the banking crisis, the failure of some US banks, the whole Credit Suisse situation.
What you may be thinking about in terms of that?
>> It's interesting. Initially, I thought about rehashing what actually causes banking crisis but what I think is more pertinent is what's next?
You know, there are was some chatter about a run on a one bonds after the rundown on Credit Suisse.
I think the bigger issue now is a theme that's gaining momentum and that is commercial real estate.
These regional banks have circa 70% of commercial real estate loans.
This is a big deal. Commercial real estate has been struggling because of work from home policies.
A change in the way consumers spend, a lot of it is online now so revenues are down, financing costs are up. And at the same time, we have a lot of maturation.
To put things into perspective, just this year, there's $450 billion of loans maturing.
The pain doesn't end there. In the years to come, it's around 550 a year. By 2027, that's around two and half trillion in debt that maturing and this is a big deal because commercial real estate works a little bit different to residential real estate.
These loans are not amortized.
These are usually balloon payments at the end of whether it's five or 10 years.
And when it comes to refinancing these loans, I don't how you do it because the bid overspread for these buildings is huge. The bank say they are worth one amount because revenues are down and the owners said there was something completely different.
So I think this is the underlying issue now that we are all trying to chop through.
Are we facing a balance sheet crisis or is loose policy going to alleviate the problem we have?
And we drive on? So new markets seemed to be thinking it loose policy will be okay.
>> That's to interesting themes and we promise three.
The big one, as we plow through all of this, try tobring inflation down, live with higher borrowing costs, deal with the problems with regional banks in the US. What are the signs of the telling us about recession?
>> It's interesting.
Everyone has been pointing to 530s… Suggest inflation is around, recession is about six weeks away.
I think we are in a very difficult position.
you've got tighter lending standards which slows growth. You've got weaker consumer balance sheets, so I think the signs are there.
I think it's going to be a recession.
The question is how hard is it going to be?
Is it a soft or a hard landing? My gut says it's probably a softer landing and just because we believe that China reopening is a big story and we've seen some strong growth and we think that they keep commodities big and coats you will grow. Is it enough to get the world out of recession? We don't think so.
>> How keen with the central bank speed to race back to the rescue?
There's been an argument made that as they wrestled out inflation they will tolerate perhaps a bit more pain in the economy than they would during other cycles.
>> So we believe there is not enough priced in terms of cuts.
We saw huge hikes over the last year.
It started at 25 and then went to 50 and then 75.
We have just continued to see pain in the economy.
All those hikes have even fed through into the data yet. We believe that when the Fed starts to cut, it will be aggressive. They will have to unwind as quickly as they hiked.
>> So with all of this in mind, and it is a law, a nice break down on with the state of the world is and what it means for investors, what should investors do about positioning themselves in an environment like this?
>> I have to be careful in how I answer this one, Greg.
What we have seen is we list all the data since the 1930s. What we have seen is one bonds and stocks selloff in lockstep, typically in the year that follows, bonds outperform stocks.
Will that happen again? We are not sure.
If there is a recession, bonds tend to outperform stocks just in a flight to safety.
If there is a recession, things like consumer staples, healthcare, utilities, those are the stocks that outperform.
For commodities, well, I think you gotta ask yourself if you believe in the Renee it militarization as we do and the rebuilding of infrastructure, then commodity should outperform.
>> Interesting stuff in a great start to the program.
we are going to get your questions about the markets for James Dixon in a moment. A reminder that you get in touch with us at any time.
Just email moneytalklive@td.com or float that your response box under the video player on Webbroker.
Right now, let's get you updated on the top stories in the world of business and take a look at how the markets are trading.
shares of Teck Resources in the spotlight today, that on news that the company rejected an unsolicited takeover offer from a Glencore PLC. tag right now is up almost 14%.
We got a merger of two of the largest sports entertainment companies in the world.
World wrestling entertainment combining with Endeavour Group's UFC, creating a new publicly listed company valued at some $21 million.
The new company is going to be listed under the ticker TKO. You can see world wrestling now it down on the back of the knees.
It appears cutting prices helped boost demand for Tesla's vehicles. The EV maker says it delivered almost 423,000 vehicles in the first quarter, which it calls a record. While slashing list prices boosted demand, some investors are concerned about the effect on Haslam's margins.
You can see the shares, despite the record quarter in terms of deliveries, down almost 6% at this hour.
A quick check in on the markets.
We will start on Bay Street with the TSX Composite Index. Right now with the help of energy largely, it 739, hundred and 40 points we will call that, a little shy of three quarters of a percent.
South of the border, it's a bit more of a mixed picture. Yes, we are seeing some energy names get a bit along with ours here in Canada but you are seeing some money move out of tech stocks today.
You pretty much just got a flat read on the S&P 500.
We are back now James Dixon, taking your questions about the market. Got lots coming in so let's get to them. The first one off the bat: if I haven't invested in bonds yet, have I missed out or is there still more room to run?
>> I think that, once again, the Fed has to match their cutting cycle with the hiking cycle so if you look at the cuts that are priced right now which is around 85 beeps, we don't think that's nearly enough.
I think it's the Fed does start stepping up and cutting, there's a lot of room for bonds.
they have sold pretty aggressively. We have seen a comeback on the ones that are underpriced but I think there still a lot of room here and if the recession gets legs, that will lend support.
>> the bonds, that 30 or 40, was supposed to give you protection at times of equity volatility and it just didn't work last year for very specific reasons.
But we are starting to think maybe that that changes this year?
>> Right, that certainly seems to be the theme. There have been a lot ofarguments that the 6040 is back.
We do think that those traditional correlations return.
It's been a very tough year for investors.
I don't know what else to say.
It's been a very tough environment.
I think that fundamentals will always trump at the end so I think a balanced portfolio is certainly the right way to play things.
>> If I talk to some of the fixed income people at TD Asset Management, they will talk about the fact that even if you are thesis is, what you laid out there, at some point the Fed pivots and you start to see a move higher in bond prices, even while you are waiting for that scenario to unfold, you are going to get… A coupon that's much higher than you are accustomed to before the start of the year.
>> 100%.
I was looking at a very interesting chart today in the amounts of fixed income securities that's yielding north of 4% is unreal.
It wouldn't make sense not to own that is part of your portfolio especially if you expect… >> Here's an interesting one because you talked a bit about this.
I think the last time we heard from Fed chair Powell he talked about the fact that we've got a taken mind what's happening with the banking crisis, it seemed like the Fed wasn't going to hike rates so aggressively but he sort of ruled out cuts this year. Do you think interest rate cuts her off the table?
Jerome Powell tried to tell us they were but I don't and the market believed him.
>> In the markets we are seeing cuts priced.
We agree with that narrative. We think that as this banking crisis unfold, it's going to get nasty.
We think as the previous hike speed into the data, is going to get nasty.
Earnings post share are off.
We think growth is going to be a real problem and Powell is going to have to react.
You really got a situation where you have to say, okay, what's the worse of the two evils?
Deal with higher inflation or phase to a bigger banking crisis? We have already seen the cracks form there and I think the solution is really obvious.
>> In the early innings of the pandemic, given the challenge of setting that society and millions of people losing their jobs overnight, the interest rate cuts were aggressive and basically brought us back down to zero.
In the cycle forward of cuts, do we see anything that dramatic or will it be a bit more temperate?
>> I think the pace will be aggressive because the pace of hikes were aggressive.
But are we going back down to 0% rates? The answer is no.
And once again I think you have to take a step back and look at where inflation is.
If inflation settles around three or 4%, then quite honestly your nominal rates have to be similar because real rates can't be aggressively negative.
They thought of you may be -1 or 0% so I think a lot of how far the Fed is going to go hinges on what your view is of inflation.
If you think inflation is going back down to some 2%, then sure, the Fed can go more.
But as outlined a little bit earlier, that is certainly not our view on my team and on the back of that, I think that handcuffs the Fed and how far they can go.
>> Here's another question that might not correlate with the view of our team. If rates are going to stay higher for longer, some people have concerns that central banks, as central banks laid out, they want to get there and stay there. You don't truly believe that theory.
But if that happened, what Canadian sectors might benefit?
>> Well, most obviously is banks. Banks do well when rates are high.
I think, as an equity investor, if you're not really sure where to go, there is the trifecta of protection.
So if you're worried about recession, things like healthcare and utilities, consumer staples do well.
If you're worried about rate hikes, things like banks do well.
And if you are worried about inflation, things like commodities do well.
So really that's your protection trade in the equity space.
That's The way we look at it.
The biggest performers when rates are high are banks and that's because they are lending at higher rates.
>>obviously the situation in Canada is a bit different than the states.
We are already on a conditional pause.
and the final copulation, it's about household debt.
With the run-up in housing prices, there is mortgage debt.
if things turn what's interesting about our economy is that if you look at theBalance driving our growth, its commodities, banking and households.
so you can't collapse one of those pillars.
You have an indebted population.
I also think it would be highly politically unpopular if you start to collapse house prices when a lot of people are using their home as their retirement estate.
> As always, make sure you do your own research before making any investment decisions.
we will go back to your question for James Dixon on the markets in a moment.
And a reminder that you can get in touch with us any time. Just email moneytalklive@td.com.
now, let's get to our educational segment of the day.
If you are trying to analyse company stock, WebBroker has tools that can help. Joining us now for more Jason Hnatyk, Senior client education instructor with TD Direct Investing. Walk through how to use charts in WebBroker.
>> Thanks for having me again, Greg.
whether or not we are looking to analyse the trend or do a comparison against one of the companies peers in its industry, or looking or looking for some buying or selling signals, a chart can be useful for regular investor. Let's jump into WebBroker and I will show us on the chart how we can customize this to our own needs and tastes.
first of all, let's start with the drop-down menu at the top of the chart.
We can see that there is a chart style function and this will allow us to choose between different parting styles.
I've got candlesticks on the chart because this is when I prefer to use but if you are more into a bar chart, those things are here or if you are a line chart enthusiast, that can be chosen from here as well.
The next thing is looking, you have the opportunity to analyse stocks over varying lengths of time. I am now looking at a 20 year price chart on Toronto Dominion Bank so we can see looking back two decades worth to see how the company is doing and get a sense of how things are going and hopefully draw some conclusions about where it's going into the future.
But if 20 years of time is a little bit too much, you have the opportunity to shorten that time.
And now we can really dive in and start to see much more recent price data. If we are looking to find some support resistance levels or to identify the near term trend because we are planning to hold it for a period of weeks or months, this could be another function that might be helpful. Additionally, if you are looking to find more information about companies upcoming event, the events dropped in on the top of the pages where you will have the opportunity to add that datato the chart.
Let's go ahead and add earnings and events.
Earnings and dividends, rather. You will see the E and D letters popping up. You are never out of step. You always know when things are coming up and will be able to take that into your decision-making process bear the lasting we will quickly shows a comparison option.
We have the opportunity to compare against an index or you can compare it against one of its direct competitors. Souls go ahead and add in a couple of the other Canadian banks to our chart so we can see how things… How that would look for our purposes here.
Now we can see just analysing either over the time. We have or drawing lines to project the future, we got the ability to see how things are expected to go.
The last thing we will do for this particular show and tell session is let's go ahead and add a few studies to the chart that might be useful for people to see at home. The first would be I will just go ahead and add a moving average into our chart.
A simple moving average, just translating the average of the daily closes across the time. We've added on.
We've added just a 15 day moving average to help us identify kind of short-term, medium-term, long-term trend.
You got the opportunity to have one average on your chart but you can additionally go on and add more averages by putting that into the edit box available here. You can choose different lines, different lengths of times, given the opportunity to look for trends across different periods of time so we can see if the stock is advancing or decline based on the movement.
>> Jason, I always appreciate having a variety of resources to draw on but if someone is just wetting their toes in this area when it comes to indicators, they don't even know where to start, is there a tool in WebBroker that can help them get along on that journey?
>> Yeah, Greg. We want to certainly know what the indicators are trying to tell us before he make decisions based on that information and we are in luck.
There's plenty of information within the platform to help us guide us down that learning journey. Let's jump in and I will show you how. The first place you will go to is directly from this page you will notice there is a technicals tab.
On this particular page if we go into here, what's really interesting about this resource is that this is a tool that actually scans the market for technical advance. We don't need to be a wizard with charts. The platform is going to be finding of those eventsand then we can go ahead and choose to see if they are appropriate for us.
We will notice that it's finding all of these events on this chart here.
But if you want to learn about a specific indicator, where you can go is in this graduation That's in the top of the page.
If we go ahead and choose that, along the left-hand side of the screen here we can see that there is different types of indicators that we can learn about.
I'm gonna go ahead and click on classic patterns and maybe just choose one at random here.
We got a diamond bottom here.
So if you're curious about what this specific technical pattern means, there's lots of information here to read about.
And get a sense of what it's gonna look like, you can even get some in-depth trading considerations.
If you're more of a visual learner, I've got you covered there as well. We can go back to the top of the page and click on the learn tab.
From here, we will choose our video lessons. I've already got it filtered for technical analysis and the filters are accessible on the right-hand side.
In this area, we've got 21 separate areas all about technical analysis, all of the different patterns, charting and techniques that you can use hopefully to your best advantage to find those entry and exit signals to make yourself at a profitable trade.
>> Great stuff as always. Thanks for that.
>> My pleasure.
>> Jason Hnatyk, Senior client education instructor at TD Direct Investing.
And make sure to check out the learning centre in WebBroker for more educational videos, live, interactive master classes and upcoming webinars.
Now before you get back to your questions about the markets for James Dixon, a reminder of how you can get in touch with us.
Do you have a question about investing or what's driving the markets?
Our guests are eager to hear what's on your mind, so send us your questions.
There are two ways you can get in touch with us.
You can send us an email anytime at moneytalklive@td.com or you can use the question box right below the screen here on WebBroker. Just write in your question and hit send.
We'll see if one of our guests can get you the answer right here at MoneyTalk Live.
We are back with James Dixon, taking your questions about the markets. This one is came in in the past minutes. Your thoughts on oil?
>> Thank you, Greg.
Leaning into the narrative we outlined a bit earlier, we do think that this rebuilding of infrastructure globally is a big deal. It's highly supportive of commodities, oil, metals.
We think it's a similar story for re-militarization.
we are seeing some cuts. This cut by OPEC is a really big deal.
And China coming online. It's just very interesting to see that oil isn't even higher.
I think the US drawing on the SPR is still putting downward pressure on prices.
I think when they start rebuilding those reserves, I think that gives an additional bid.
You know, it's been tough.
We like soil and we've liked on the way down. We still like it.
I think that the question is always how you put the exposure on.
I think that if you've got that exposure on through physicals, it can be expensive when it's going the wrong way.
I think that exposure is on through equities.
You kind of pay to play because you receive your dividends and then you kind of wait it out.
I think the only thing that puts downside pressure on commodities isthe recession that's coming.
I think you gotta ask yourself, how deep is going to be? We believe it's a soft landing so not enough to derail the commodities outlook.
>> Longer-term, some of the discussion around oil has been the fact that we see this electrification of everything in the future and that oil won't be as necessary or as in demand.
Some people think people are perhaps getting ahead of themselves on that, that the world is not ready to make that shift just yet.
We just don't have the technology in place.
How does that scenario play out?
>> I think the first thing is that even if you are starting to go towards nuclear power, you need to rebuild the infrastructure and that's the only way that Europe's going to be able to get the green energy is nuclear. I think the other thing that viewer should realize is that when the world moved away from coal, the consumption of coal didn't decrease.
It just remained flat. In fact, now with energy shortages, we've seen resurgence is in the use of coal.
I think that if that theme does persist, it's many years away.
It's a way too early to make a call on that now.
I think that… To get to, once again, to get to the green energy narrative, this is years away and a lot of infrastructure needs to get built.
And I think the one thing that, I don't want to carry on too much, but I think the one thing that no one seems to be talking about in mainstream media is the race to build a military base on the moon which is quite interesting.
Dr.… Had a great piece on that.
this is a big deal.
>> You might burn a littlefuel trying to get to the moon and back.
>> This is a big deal because it's about control of the satellite network and the satellites determine our military protection.
This is a big deal for our rockets and things like missiles.
It's a really interesting interview. Anyone who'd like to watch that, she is on a great podcast.
It's called macro voices.
>> Interesting stuff.
We have a question now about technology is stocks.
Will tech stocks make a comeback to earlier highs?
>> It's interesting. You've seen tech do really well this year.
>> I think they had a great first quarter and by the NASDAQ standards, they had a great quarter.
>> I think the market is looking past recession fears.
I think the market is looking to Fed cuts and that's what's being priced now.
I think for tech to really make it back to the old highs, you need to see an aggressive pivot by the Fed.
So the way to look at tech stocks orany stocks, their long-term assets because they pay dividends.
So if you do like… for Teck to make Isaac in theFed has to pivot aggressively. Is that Q2 words that Q4?
Capital is finite and investors need to be careful where they allocate in the short term.
>> When we talk about the Fed pivoting and if they do pivot aggressively it's usually because, as we laid out some of the risks out there, something has gone wrong, maybe the economy is in recession. Can the tech names sort of plow through that, the actual economic conditions in which they are operating?
>> I think once again it comes down to those names are very, very sensitive to rate policy.
So it's going to be very tough for those names to make returns if there is no consumption and if rates are high.
So in a recessionary environment, defensives tend to perform better. We highlighted some of them earlier.
Healthcare, consumer staples, utilities. Don't get me wrong.
In the long term, do I like tech? Hundred percent. I think innovation is ultimately what leads global dominance.
I think the Fed needs to pivot and when that happens, that's the right time to get in.
>> A question now about the Canadian economy. The viewer wants to know will onshoring help or hurt the Canadian economy?
>> I think you need to ask the question, what's driving onshoring? Is it productivity or is itgeopolitics?
We touched on earlier. It geopolitics right now.
It's things like COVID, it's things like protectionism.
Because you got a large disenfranchised population.
So if you look at it from that perspective, then it's very negative for the economy.
Re-shoring is highly inflationary, so it squeezes the guy on the bottom.
I think you always have to consider once again the labour shortages I touched on earlier.
We don't have the population and even if we did, do Canadians want to do those jobs?
>> We are going to get back your questions for James Dixon on the markets in just a moment 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 Bank of Canada is I was at the latest survey of business sentiment, showing the economy is softening with future inflation excitations coming down.
Anthony Okolie has been breaking the report for us.
What the telling us?
>> Thank you very much.
Keep in mind, this Business Outlook Survey was conducted before the emergence of the global banking crisis last month about the business Outlook indicator fell in the first quarter to -1.1 from roughly 0, is addressing that business confidence is weaker than usual. Now, the decline reflects expectations of slower price growth and easing capacity pressures due to better supply conditions.
and as the next chart shows, cost pressures remain a top concern for many firms in Canada,followed closely by labour shortages and economic uncertainty.
Now, the costs and economic uncertainty concerns were slightly higher versus last quarter, but labour shortage fears are down significantly year-over-year.
Meanwhile, business sentiment was roughly unchanged from the last quarter as the next chart shows. That is down from the second quarter of last year.
And this is likely driven by expectations of lower sales growth among businesses. The decline in expectations or sales growth was the fifth consecutive quarter of lower growth expectations.
Still, overall firms expect sales will continue to grow.
Finally, while labour market pressures have eased, a tight labour market.
As this final chart shows, many firms expect their wage increases to remain high although there are signs of wage growth easing. On balance, firms view current labour shortages as less intense versus a year ago when they were extremely high.
Great?
>> Anthony, given the fact that this is the tone of the Bank of Canada is hearing from businesses from their survey, the economy is hanging in despite all of these aggressive rate hikes we've seen, any implications were read through zest with the Bank of Canada might do next when it comes to rates?
>> In terms of the labour market, like the US, the Canadian labour market has been clearly strong and TD Economics expects job gains to slow dramatically in the coming months as employers must reconcile with incredibly weak productivity and contracting profits.
Now, the survey seems to suggest that businesses expect lower price growth and there are signs of easing wage pressures as labour shortages ease. It given the surge in GDP growth and immigration…the BSE will likely remain on pause.
>> MoneyTalk Anthony Okolie. Let's do a check in on the markets right now. First trading day of the week of the month and of a new quarter. At 20,248, we are of 150 points, rounding up, of three quarters of a percent on the TSX Composite Index. It's energy doing the heavy lifting after the surprise production cut from OPEC and its partners.
You can pick any big energy name out of the hat, they are all up pretty solidly.
4420 unsung Orchard, Europe 5 1/3%.
Teck Resources rejected an unsolicited takeover bid from Glencore, God tech shares on the move, 5655, a jump of almost 15%. South of the border, the picture is more mixed.
we have US energy names rallying with the price of crude but you got tech names falling back today.
Got a bit of a push and pull on the market, the broader read, the S&P 500 right now is up two points. There's the tech heavy NASDAQ, down about 90 points or three quarters of a percent.
Let's check out Tesla. We know they did some pretty aggressive price cuts for some of their vehicles to stoke demand and try to retain or capture some market share about that does raise concerns, even though it seemed to work for the first quarter in terms of boosting some of their shipments, does rates and terms among investors about margins. That is playing out in the name right now it hundred 95 bucks and change, your dental 6% on Tesla.
We are back now James Dixon from TD Securities taking your questions about the markets. Viewers want to know where your outlook is for the Canadian dollar, the loonie?
>> Well, I think that you have to ask against what? If it's against the dollar, we think the Canadian dollar trends lower.
We like oil, so we think that could do okay.
That's one of a couple of things we've talked about.
We also think that it's more of a red story than anything else.
>> I remember when Stephen… Was the governor of the Bank of Canada. He always used to say look at oil. A network simply doesn't work.
>> So yeah, I mean that, overall, the rate story is the biggest story and we do think that it's going to be a big unwind by the Fed and it should put some downside pressure on the Canadian dollar.
In the very short term, we don't think there is an aggressive collapse. Just if this recession theme does play out, then momentum will be curbed. There will be demand for dollars on the back of the flight to quality. It's probably a tighter range in the short term, but into next year, we think it's significantly lower and that's just on the back of a right move.
>> Okay, precious metals. Desktop a few times in the show. With your expectation for the performance of precious metals? Gold has been interesting in the middle of all this volatility.
>> Gold has done well on the back or recession fears.
If you really want to look at how precious metals perform, they trade in line with real rates. So if you believe inflation will remain high, and rates will come lower, then precious metals will outperform.
if you believe in the opposite, they will underperform.
we think that inflation is structurally hired so it's good for precious metals. We think the commodity theme is alive and well. We have seen strong buying of gold from central banks, and I think the people are just trying to use that as a diverse fire on the US dollar.
>> We have time to squeeze in one more viewer question.
we talked a bit about this off the top, the financial sectorand some of the road bums we've had recently in the United States.
What is your expectation for financial sector performance?
>> It's a tough one because we don't know how deep the rabbit hole goes for commercial real estate.
If we start to see a large consolidation of banks, aggressive Fed cuts, it could be okay.
I think if the Fed maintains this path, at least in the short term, we've got a bigger problem because then balance sheets are in trouble and even the consolidation could be very, very tricky because who wants to purchase those assets?
I mean, that really is the question.
There will be a huge debate about valuation.
It's going to be a tough period, it's going to be a very trying period, and I think we just have to wait and see what happens in terms of policy to really make that decision.
>> We've got a lot of things hanging in the balance. We live in interesting times. Can I continue to be interesting. Great having you here. Great for show. I hope we see you back on a regular basis.
>> Thank you so much. Really appreciate it.
>> Are things to James Dixon, director of family office solutions at TD Securities. Stay tuned. On smaller show, Michael O'Brien, portfolio manager at TD Asset Management will be our guest taking your questions about Canadian stocks. A reminder that you get a head start with this question. You don't have to wait until we start at noon Eastern time, we are happy to take your questions during the show as well. Email moneytalklive@td.com. I had this. That's all the time we have for the show today. Thanks for watching. We'll see you tomorrow.
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