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[theme music] >> Hello, I'm Greg Bonnell. Welcome to MoneyTalk Live, brought to you by TD Direct Investing.
Every day, I'll be joined by guests from across TD, many of whom you'll only see here.
We're going to take you through what's moving the markets and answer your questions about investing.
Coming up on today's show, we are going to discuss what possible candles there could be out there for the markets for the rest of this year with TD Asset Management's Jing Roy. MoneyTalk's Anthony Okolie is going to bring us the results of the TD Direct Investing sentiment index for the month of April. In today's WebBroker education segment, Jason Hnatyk is going to shows how to use different graphs on web broker. 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 will start with the TSX Composite Index. Not an exciting day on the equity markets, not on the topline numbers. The PSX right now down a modest 20 points, about 1/10 of a percent. Among the most actively traded names include BlackBerry. I'm not seeing any information specific to BlackBerry today other than the fact that we are seeing the meme stock craze reignite south of the border. BlackBerry has been pulled into that momentum in the past and today, as some of the meme stock valley south of the border, there is a bid for BlackBerry.
At $4.86, the stock is up about 15%.
We aren't really seeing any fundamental news coming out of the company behind this move. We've also got Shopify, its latest earnings were a disappointment.
That is several days behind us but a bit of weakness in the name today. Add $70.38, Shopify's down another 2%. South of the border, we got producer prices today coming in a little hotter than expected but then the month before was revised down, a little bit cooler than the original reading. Bit of a mixed picture there. We have a conference with Jerome Powell today, he reiterated that they might need to keep rates higher for longer to tamp down inflation in the states. The headline inflation number will be coming out tomorrow. The S&P 500 is flat, a little Shively points. The tech heavy NASDAQ seems to be carrying a little bit better today.
It is up a little shy of 1/3 of a percent.
The meme stocks are moving again. Social media poster resurfaced after about three years of being absent, seems to be enough to get the whole craze moving. GameStop today jumping another 66%. And that's your market update.
Markets have had a solid run so far this year, so what possible catalysts are there to drive it even higher?
Joining us now discusses Jing Roy, VP, Dir. and Portfolio manager for asset allocation at TD Asset Management. Great to have you back on the program.
>> Thank you for having me.
>> We are not quite halfway through the year yet but we are moving into the nicer weather, people started thinking about the year we have had so far and what could happen going forward. One of the key things were watching?
>> 2024 is really a year of rate cuts and election. Let's take a look at rate cuts.
The expectation for rate cuts reached a fever pitch in January and since then, the rate cut expectation has been wrenched back because of the sticky surface inflation. In the developed market, the Swiss National Bank and Sweden's bank have begun their rate cut cycle. This year, investors are expecting the first rate cut the summer from the bank of England, ECB and Bank of Canada and that is going to be followed by the Fed in November.
Now, perhaps equally as important as the timing of the rate cut is the depth of the rate cut cycle. Currently, it is a bit shallower than usual, but seven cuts, 7/4 cuts in total to account for the higher neutral rate which has gone up to clear the market of higher investment demand versus the pool of saving we have. In terms of rate cut, it will have an impact on regional asset performance as well as currency and sector rotation. Moving onto election, we have the EU parliamentary election this June and a very important US presidential election in November and UK general election by next January. So the general sense of those election is that we probably have swung too far toward the economic integration.
We need to balance back into sovereignty in terms of Europe because they don't want to be held hostage by economic interdependency. For the US, it's more swung towards democracy in the sense that for the people left behind by globalization, their needs need to be met in a better way.
>> I find it interesting that you're talking about the fact that when I think about rate cuts and elections, in my mind, jumps to America, America, America. But there are things happening in the world and divergence when you talk about the central banks including ours, when they are exciting to cut, versus when the Fed is expecting to cut. A bit of an exceptional performance out of the US. We are fully expecting a divergence between the Fed and other central banks this year.
>> Let's take a look at regional past performance. We tend to look at that in local currency terms. When the regional central bank start to cut rates, it supportive of the domestic market. So the local currency return for the assets will actually improve. But at the same time, because you are cutting rates, that will put a downward pressure on the foreign currency, especially, we have to be especially mindful as a global investor in Canada because you don't want local currency return that is strong but the return be eaten away by the depreciation of the foreign currency. So in certain instances, it makes sense to hedge a currency bed. It doesn't mean that in the US because of the economic exceptionalism and there hawkish central bank, it doesn't mean that that the return won't be good.
There is a strong US dollar to supplement your asset return. In a rate cut scenario, we expect a higher fixed income price, bond price, equity prices and especially within equity companies who are more vulnerable with the balance sheet, higher leverage and with more pressing need to access the capital market will actually do better because of more liquidity injected into the system.
>> When he talks about the election, I'm going to focus on the US election, although you mentioned others happening in the world, we get a lot of questions from viewers and you get the sense that they are trying to figure out, what should I do ahead of the election but that is not very easy because we do not know the outcome of the election.
>> It's a tricky question. On the one hand, if you are an investor with a very long term investment horizon, you'd probably be better off sticking off with the adage that time in the market means time in the market, especially when it goes up about 80% of the time in concentrated bursts.
On the other hand, for investors with an information edge and sophisticated investment tools at their disposal, they should definitely take advantage of the event and position accordingly in a cautious way.
Let's look at the US election. On the poles, right now it's a tossup between a Biden or a Trump presidency but there are a few most likely outcomes. Where Biden take the presidency but the Congress remain split, and that scenario means things would remain fairly status quo, not many opportunities there.
But the other outcome is a Republican sweep. In that scenario, you have the impetus for pretty drastic change in policy direction. Let's take a look.
In that scenario, inflation will probably go up higher because the Trump administration would advocate for immigration curbs and a universal tarriff that would increase the cost of input for a lot of companies. Especially for China, the tariff might go up 60%.
The 2016 Taxco could be extended and that would be supportive of growth. And you are also seeing the price of money will remain higher because you have reshoring investment demand from reshoring pitched against the dwindling pool of savings because that pool usually comes in the form of current account surplus from exporters because a punitive tariff would cause that to go down. So in order to position for that, we are seeing volatility in the US dollar market would increase the outcome, it becomes very wide in a trumpet ministration. Terrorists and higher growth would be supportive of a US dollar.
On the other hand, if central bank and dependence is compromised or in a more extreme case, the US dollar could depreciate.
In an arena where macro investors tend to put leveraged bets, we are seeing positioning currently is fairly light. If you look at the volatility term structure, there is a little kink around the election but that speaks to the fact that there are still opportunities for us to position. If you look at the broader equity market, the conclusion is less clear-cut because the policies work on the microlevel and makes winners and losers.
For example, immigration curbs, companies that are labour-intensive will be heard.
On the other hand, for tariffs, manufacturing companies lower on the supply chain will actually benefit because they face import competition but those on the higher up on the supply chain will hurt because they rely on imports. It's not very clear for the winners and losers.
>> Great start to the show and the conversation. We will get back to your questions for Jing Roy and just moments time. And a reminder that you can get in touch with us any time.
Just email moneytalklive@td.com or fill out the viewer response box under the video player on WebBroker.
Right now, let's get you updated on the top stories in the world of business and take a look at how the markets are trading.
It appears high borrowing costs continue to weigh on the home renovation market. We are hearing that Home Depot missed sales expectations for the most recent quarter as consumers delayed pricey kitchen and bathroom runners. Home Depot has been increasing its focus on professional contractors amid softening demand from do-it-yourself customers. Shares of Alibaba were under pressure the last time I checked in on them.
The Chinese e-commerce giant is reporting an 86% drop in profit for its most recent quarter despite beating revenue expectations. The stock is now down a little more than 7%. Alibaba underwent a massive corporate restructuring last year, and is also dealing with a more cautious consumer environment in China. Shares of Hudbay Minerals are getting a boost following the company's latest earnings report. Up almost 10%. In a note to clients, TD Cowen notes copper production was below forecast for the quarter but Hudbay's gold production was well ahead of expectations in both Peru and Manitoba.
Quick check in on the markets, we will start with the TSX Composite Index.
Not a terribly exciting day, at least on the headline.
You down 53 points on the TSX, about one quarter of a percent. South of the border, we got producer prices today, you're getting the headline CPI number tomorrow out of the states. Pretty key data points.
You are up 2.5 points and just five takes into the green.
We are back with Jing Roy from TD Asset Management, take your questions about asset allocation. First one here. Someone having memories of last fall. Is there a chance that treasury yields hit 5% again and if so, what impact could that have?
>> That's possible. We just had an experience with that and it really depends on inflation that we are seeing especially in the service sector. I would be too worried about hitting 5% because the fundamental factors of inflation, if they are still in place, then the disinflation process will still happen but at a slower pace. So the opportunities when the rate hits 5% are as follows. First of all, give bond investors another chance to lock in higher interest rate in the next 3 to 5 years and this is one opportunity that's harder to come by. For the first time in two decades, we actually have real fixed income generating real income for investors and secondly, of course, when the rate is higher, it will put a cap on the valuation multiples for equity returns. But if you are an investor in the US market, the strength of the US dollar probably will shelter you from some of the market volatility and equity risk.
>> We have heard from the Fed numerous times, we heard from Terry Powell again today, he was saying it's a bit of a mixed picture, but he reiterated the fact that we are probably going to be higher for longer than we thought entering this year.
As we wait, the equity markets seem to be fine with waiting.
>> That's because what is powering the equity market is actually earnings growth.
Equity market tends to do fairly well in a moderately inflationary environment because companies are able to push through price increases and expand their margins.
That means the entire demand picture in the economy is pretty vibrant so as a result of that, moderate inflation is good for equity return.
>> Let's get to another question now from the audience. Someone wants to know what opportunities and risks the equity market present as Canadian living standards decrease and the wealth gap widens?
>> That's a tough policy question. We have heard a lot about how our living standards have deteriorated because of the productivity loss. We cannot talk about Canadian productivity without talking about Canadian housing because more capital is a more recent thing. The left in its own devices, capital flows into sectors with higher return. In Canada, the churning of residential property provides higher returns than more productive use of capital. The government is doing more from the policy front to moderate the return from residential investment but more has to be done to channel capital into productive uses like investment into assets, hard assets, not residential investment, and intellectual property. And that really requires a coherent industrial trade immigration fiscal policy to provide a good ecosystem.
And on top of that, you also need a dynamic, vibrant equity market in Canada to attract domestic and foreign capital.
And then channel the capital to the right place at the right time. So if the government is, policymakers are successful in raising the productivity and growth in Canada, our economy will be more resilient to inflationary shocks and the living standards obviously will improve and from the equity investment perspective, if we invest in companies with good returns on capital investment, their profitability growth will actually improve and as an equity investor, we stand to benefit.
>> If we did not get a coherent policy to get money moving towards collective assets, because as he said, we need a robust equity market. If we are not investing there, maybe companies that could've been the next great Canadian company don't even get born.
>> Is really mind-boggling.
We have the brightest minds in AI at the University of Toronto but we don't have a vibrant AI industry. The worst case that could happen to Canada is to be relegated to a country, a hot money play for the commodity cycle and housing. That would be detrimental to the future of the economy.
>> Interesting stuff. Another question now about gold. A viewer noted that gold has had a significant run higher. So what is actually been driving at higher and where might be next year?
>> I think Powell's dovish if it jolted gold out of its slumber. Since then, there are other things that add to the upside momentum of gold. First of all, it is the investment climate in China. The Chinese equity market return is fairly dismal so capital naturally flows into the commodity market.
And we see a lot of speculative positioning out of China for gold and other commodities.
And secondly, the dedollarization and decoupling is playing to this diversification of central bank foreign reserves, foreign currency reserves.
Central banks are buying gold as a hedge.
So in terms of gold trajectory in the next year, I think if there is a Trump win and central bank independence is compromised, gold would be a good hedge.
>> Central bank buying is fascinating to me. They're going to buy and beholders.
They have a longer-term plan here.
>> Unless they run into a sovereign debt crisis which happened in the 1990s.
>> Fascinating stuff.
Has a one we will get back your questions for Jing Roy on asset allocation in just a moment's time.
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.
Charts are one tool that investors can use to analyse a potential opportunity and when he is not a walk through how to use them on a broker is Jason Hnatyk, Senior client education instructor with TD Direct Investing. Jason, what sort of trends in the charts help investors identify?
>> Great to be here.
Charts can be an essential tool to help us identify the trends. They are great for helping us look back into the past to hopefully learn from that and maybe predict where the stock is going to be going in the future. Maybe you are looking for buying and selling signals or some sort of continuation or reversal pattern.
Charts can be a very useful tool there.
Let's jump in and take a look at what what broker has to offer. I'm looking at the SPY. On the summary page, there is a simple, basic chart below the quote. We have a line chart here to help us do some trend identification but if we are really looking to get into the weeds and do some analysis, let's use the charts tab which a second from the left, right below the quote here at the top of the page. So jumping into this, let's walk through the different tools that are available. First off, we are looking at a chart right now that showing us a longer term chart so we can see the trend over a longer period of time.
Maybe you are looking for shorter term, you have the opportunity to change the time. We have the opportunity to change the candle frequency that we got on the chart.
Maybe you are looking intraday. The shortest is one minute, that is available for you and the platform also.
Now we are looking at candles on the chart, it's the most commonly used charting style. If something else floats your boat, you got the ability to make that choice for yourself. You've got different bar chart opportunities as well as line charts but let's stick with candles for our purposes.
We've got that laid out, the basic controls to move and change. Let's start adding additional indicators to help us make some decisions. First of all, we have our upper and lower indicator drop downs available for us here. Eisler show you how to work those quickly.
These are indicators placed on the price chart. I'm going to scroll down and choose simple moving average. You will notice in the top left it added simple moving average with a 15., The last 15 candles.
We can change that. It's posted right on the chart. Next looking at lower indicators, this is our opportunity to put indicators down below the price chart.
Just taking a few the pop up here, we can track the yield on the stock, we can look at more technical leave focused indicators such as Mac D or something that we don't want to forget, the volume of the stock, that can all be added to our lower indicators. If you're looking to edit any of these studies, we can click on the study name, make some adjustments, even get a little information about what that study is trying to tell you.
Moving away from the indicators themselves, a couple of other bells and whistles and charts I want to show you, the next is going to be the events drop-down menu at the top of the screen.
Here you can put earnings and dividend notifications on the chart.
For SPY, we want to be kept informed digitally when it is paying its dividend.
We now have the D's popping up on the chart. We have one in the middle of March.
We always know and that's coming.
>> There's a lot of indicators.
Maybe we don't know which one does start off with. When we go on what broker to start learning about these things?
>> We are not all naturally going to be charting wizards on the platform so we got lots of tools that can help bring you up that learning curve and help you refine your approach on the platform. Let me jump on the platform and show you a couple of ways to learn more about charting and technical analysis. The first thing I want to show you is the technical tab at the top of the screen.
We go ahead and choose that tab. There are a number of things here. We can spend lots of time talking about it. I want to show you the educational resources first of all.
That's the graduation Over here in the top right-hand side of the screen.
By choosing that, on the left-hand side, there is going to be an opportunity to learn more about different studies and indicators.
I go into indicators, it's got different moving averages and how that might be important to your own trading. You can click on one of those and then learn more about how that might be an important tool in your trading toolbelt.
Beyond that, if you're more of a visual learner, we can do that is here, the aptly named learn tab. You can go up there and I like to show us the video lessons here on the left-hand side. I've already filtered for technical analysis. We've got 25 separate lessons here but if someone is looking and says, where do I start? What will show everybody is do we scroll down and move over to the second page, there is a foundations of technical analysis five-part series. I recommend everybody go and take a look. You will learn more about different studies and how you can use them as well as how to best interpret the charts. Lots to learn there for everybody.
>> Thanks for that.
>> My pleasure.
>> Jason Natyk, Senior client education instructor with TD Direct Investing. For more educational resources, check out the learning centre on what broker or navigate to this QR code. Or even take a snap of the QR code.
Then you can navigate to TD Direct Investing's Instagram page and you will find more informational videos.
Before we get back to your questions on asset management for Jing Roy, a reminder of how you can get in touch with us. Do you have a question about investing or what's driving the markets?
Our guests are eager to hear what's on your mind, so send us your questions.
There are two ways you can get in touch with us.
You can send us an email anytime at moneytalklive@td.com or you can use the question box right below the screen here on WebBroker. Just write in your question and hit send.
We'll see if one of our guests can get you the answer right here at MoneyTalk Live.
Okay, we are back with Jing Roy, we are taking your questions about asset allocation. This one just came in.
Some pundits are saying the return of meme stocks means financial conditions are not tight enough.
Your thoughts on that?
>> There is certainly truth to that statement. As you know, there's a lot of dry powder parked in the money market funds to take advantage of the high short-term interest rate that can be deployed into capital return opportunities.
The question is probably more relevant, is it high enough to reach the 2% inflation target. Then it's less of an indicator of that. We should look at the wage growth.
Piercing the labour market coming into better balance and the wage growth coming down to a level that is more in line with 2% inflation target level so this is not a key indication that there is going to be another rate hike because that gain from the stock needs to be put into the economy and be spent again to put renewed pressure on inflation to force the Fed to be even more hawkish. So yes, it is an indication that there is liquidity sloshing in the system but it doesn't necessarily impede the rate cut narrative.
>> Interesting stat. Thanks for sending the question in, very timely considering what's happening in the markets today.
Another question for you. Does your guest see any opportunities outside Canada and the US when it comes to the equity markets?
>> Yes, that's particularly interesting, especially the reshoring really gaining momentum. Mexico could be a beneficiary of that. Some countries in Southeast Asia will be a beneficiary including India as well because people, companies are diversifying their supply chain.
When you look at these, how do you play that? Because the supply chain is being rewired so you want to look at companies that can facilitate bad transitions so let's look at the goods flow. So transportation companies and also traders, trading companies can facilitate change of the goods flow that financial institutions can actually facilitate the changing capital flow because to be industrialized to provide the supply base in those countries. Finally, I think as the country started to industrialize, you look at capital investment and how that will be good for industrial companies. Down the road, as people get richer in those countries, they will look for higher consumer consumption.
>> You talk about reshoring and friend shoring. It strikes me that these are longer-term trends in place as well. I just feel like there are some spots in the equity market where clearly it ignited in an instant and perhaps that fire peters out before you hundred chance to take a look.
>> It is a longer-term trend. In the short term, you start to see what's happening in Mexico in terms of foreign direct investment. In Europe, they are reshoring the defence supply chain and you can already see the defence stocks which had a nice boost from the increased defence spending and especially with the NATO overhang with the trump administration so that is already being played out in different sectors in different ways.
>> Another question from the audience, looking outside the borders of North America. Someone wants to get your views on Japan.
>> We are pretty constructive on Japanese equities. It's very interesting. The country finally escaped the deflationary doom slope. The first rate hike of the Bank of Japan indicates that the economy is entering a more virtuous cycle and that has a couple of implications. Equity returns are higher in a moderately inflationary environment. We are expecting higher earnings growth from these companies. At the top line, you probably want to look at inflation hike revenue growth but the margin can expand especially when the Japanese yen is at this level, very weak at the moment, so for exporters, after translation, they are having… Second I think there's a very comprehensive policy around the Japanese equity. So the policy includes the better sort of capital and you want to be encouraging divestment in related companies to improve your capital allocation and also the Tokyo Stock exchange became big. These work together to propagate the change in the mentality behind how companies should run. Overall, Japan has very good potential, especially with a very educated workforce so we stay bullish.
>> When you use the word potential, it suggests there is more room to run. I think when the Japanese story started coming to the floor several months ago, there were some people sending in questions worrying that they had missed it. Early endings?
>> I think the most important question for the next leg is can the consumer start to be more optimistic about spending? Because you really need consumption to kick this inflation green shoot into full drive.
Right now we are seeing a lot of foreign consumption into Japan, a lot of forest, a lot of… Foreign direct investment into Japan for the rewiring of the supply chain. So this can be a very good help, but we really need the local consumption to pick up to get that confirmation of escape velocity from deflation.
>> That's an interesting story unfolding in Japan.
Of your says, I keep hearing about the slowing economy in China, should I be worried about how that could impact the market?
>> The slowing economy did a lot of favours for inflation dynamics because the goods inflation partially is because the deflationary force we see in China out of their factories. So it's been very helpful. So the next question is, the Chinese government obviously are very concerned about hitting the 5% growth target and there will be a slew of policies coming down the pike to make sure the confidence level around that 5% growth rate is more secure. So what it means for the global equity market is that potentially, they will inject liquidity into the financial system which is very good for us because that tends to lift risk sentiment. On the contrary, China is facing a bit of a structurally internally.
>> That takes us back to the top of the show. We were talking about not knowing the outcome of the election. But that affects a lot of asset classes and geographies, including China.
>> There's not a lot of appetite for the government to come back on the fiscal stimulus so either abiding or trump when will see inflation staying higher than historically.
>> We will get back your questions for Jing Roy on asset allocation in just moments time. As always, make sure you do your own research before making any investment decisions. and a reminder that you get in touch with us in 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.
Every month, TD Direct Investing releases a sentiment Index to help track how Canadian investors are feeling about the market. Here were the results for April's MoneyTalk's Anthony Okolie.
>> The TD Direct Investing Index of the month of April has been released, and self-directed investor sentiment turned bearish for the first time in six months.
Here are the details. Let's start with the overall TD Direct Investing Index, which measures sentiment in a range from -100 for very bearish to +104 very bullish.
After a solid start in 2024, April showers reigned down on investors parade, testing the resilience. DII investor sentiment landed at -8 for April, a big loss of 26 points compared to March, breaking the streak of five straight months of bullish sentiment. Stocks ended their worst month of the year has stubbornly and sticky inflation data Daoust market hopes for interest rate cuts by summer.
When we compare sentiment April of last year, there was little change when sentiment stood at -11.
When you look at components that make up the DII, all the proxies were down across the board in April.
Significantly, however, flight safety or risk appetite for investors, as you can see, was -6, six points lower than last month, meaning more investors pulled back into safer, less risky investments.
A more positive value means risk on or less actual flight to safety.
We also saw a drop in the chasing transmitter, -4 points to zero, indicating more investors were buying on a falling market.
A few key points that stood out. Energy saw the most trading activity in April followed by basic materials, the next most popular sector.
Secondly, investors felt more negative about the markets last month but Baby Boomers, born between 1946 to 1964, were the most pessimistic.
As I mentioned, energy came out on top is most heavily traded sector with a sentiment score of +6, up two points month over month.
The surge in oil prices this year, driven in part by escalating tensions in the Middle East, has also helped prop up energy stocks.
Among the heavily bought stocks and energy were Crescent Point Energy, Baytex energy and Enbridge, which boasts a strong record of dividend payments and an attractive yield.
Meanwhile, sentiment for boomers slumped 11 points month over month to -8 in April, reversing the previous month again and that's all sentiment rebound back into bullish territory.
Heavily sold stocks by boomers included tech giants Nvidia, Tesla and Shopify.
And that's where TD Direct Investing Index highlights for April 2024.
>> Thanks a lot, Anthony. That was MoneyTalk's Anthony Okolie.
Now, for an update on the markets.
We are having a look at TD's Advanced Dashboard, a platform designed for active traders available through TD Direct Investing.
This is the heat map function, gives you a view of the market movers. Let's start with the TSX 60, we are going to screen through price and volume.
You can see Enbridge taking up a lot of real estate on the screen, mean significant volume behind the name but pulling back a little shy of a full percent.
Shopify, another down day. They're earning several days ago to disappoint the market.
There has been a pullback in that stock in terms of what we are seeing today, down a little more than 2%. First Quantum getting a big, up about 6%. The price of copper moving higher and there is perhaps a bit of a bid in that direction. South of the border, we have brought in producer prices this morning.
As we await headline CPI tomorrow morning, he bought a Tesla getting a bid, up about 3%. Other parts of the market showing a bit of strength including the financials, including Bank of America up a little more than 1% right now.
We're back now with Jing Roy from TD Asset Management, taking another question from one of our viewers. Someone wants to know if there is any chance of stagflation on the horizon?
>> It depends on the definition of stagflation.
If your yardstick is what happened in the 70s and 80s when growth was negative while inflation was double-digit, then I would say the odds of that is really low.
If your definition is what we experienced in Europe where the growth is kind of a bit negative but inflation pressure was actually declining. So if you view the stagflation in that lens, I think Canada has a higher odds of experiencing that kind of stagflation versus the US. So in a kind of 7080 scenario, as said it's very punitive for asset prices. In a scenario stagflation where a moderate slowdown in growth, I think it's very important to focus on companies that are high quality measured by high pricing power, strong competitive advantage and potential to improve margins.
>> That was stagflation. It's interesting because hi get the sense that when people are asking the question, their thinking about the 70s and 80s.
I admit, I was a kid.
It seems to be there's two types of stagnation to worry about.
>> Yeah, the mortgage rate back then was 18%. It was very damaging for all the asset prices. As Canadian, you probably remember the housing burst during that period, it was very painful.
>> Adults complaining about the mortgage rates and me saying I sort of get it but I sort of don't. I was pretty young. I wasn't ready for that kind of discussion yet. We have run out of time for questions from the audience.
I wanted to ask you, when we started the discussion about catalyst for this year, US elections and interest-rate policy, we are going to get headline CPI. Jerome Powell has repeatedly said inflation is not coming down as quickly as we would like. What are you watching for tomorrow?
>> Tomorrow is very important because you want to make sure the service inflation is actually picking up the slack from the goods inflation. Especially with the PMI starting to look up, that means industrial production is starting to recover from a lower base. We really need the service inflation to pick up the slack.
In terms of service inflation, we are looking at, especially for the rent because we are seeing small rent declining from a variety of real-time data indicators but it's not showing up in the CPI measure just yet, so the progress really needs to start to pick up. In terms of CPI, everything comes in threes. For the Fed, you really need, it seems like we need three consecutive kind of in-line or more favourable inflation print for the Fed to regain the confidence towards the 2% inflation trajectory so we want to look at inflation hopefully below 3% but the consensus tomorrow is about four. Let's just beat the consensus on the downside.
>> It will be an interesting morning with a lot of implications. Great to have you back. I look forward to next time.
>> Thank you very much.
>> Our thanks to Jing Roy, VP, Dir. and Portfolio manager for asset allocation at TD Asset Management.
As always, make sure you do your own research before making any investment decisions.
stay tuned for tomorrow show, Alex Gorewicz is going to join us, VP and Dir.
for active fixed income portfolio management at TD Asset Management. She's went to be our guest he wants to take your questions about fixed income and give us her thoughts about this US inflation report which we will have in hand by that time tomorrow.
And a reminder you get a head start with your questions for Alex. Just email moneytalklive@td.com.
That's all the time we have the show today. Thanks for watching. We will see you tomorrow.
[theme music]
Every day, I'll be joined by guests from across TD, many of whom you'll only see here.
We're going to take you through what's moving the markets and answer your questions about investing.
Coming up on today's show, we are going to discuss what possible candles there could be out there for the markets for the rest of this year with TD Asset Management's Jing Roy. MoneyTalk's Anthony Okolie is going to bring us the results of the TD Direct Investing sentiment index for the month of April. In today's WebBroker education segment, Jason Hnatyk is going to shows how to use different graphs on web broker. 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 will start with the TSX Composite Index. Not an exciting day on the equity markets, not on the topline numbers. The PSX right now down a modest 20 points, about 1/10 of a percent. Among the most actively traded names include BlackBerry. I'm not seeing any information specific to BlackBerry today other than the fact that we are seeing the meme stock craze reignite south of the border. BlackBerry has been pulled into that momentum in the past and today, as some of the meme stock valley south of the border, there is a bid for BlackBerry.
At $4.86, the stock is up about 15%.
We aren't really seeing any fundamental news coming out of the company behind this move. We've also got Shopify, its latest earnings were a disappointment.
That is several days behind us but a bit of weakness in the name today. Add $70.38, Shopify's down another 2%. South of the border, we got producer prices today coming in a little hotter than expected but then the month before was revised down, a little bit cooler than the original reading. Bit of a mixed picture there. We have a conference with Jerome Powell today, he reiterated that they might need to keep rates higher for longer to tamp down inflation in the states. The headline inflation number will be coming out tomorrow. The S&P 500 is flat, a little Shively points. The tech heavy NASDAQ seems to be carrying a little bit better today.
It is up a little shy of 1/3 of a percent.
The meme stocks are moving again. Social media poster resurfaced after about three years of being absent, seems to be enough to get the whole craze moving. GameStop today jumping another 66%. And that's your market update.
Markets have had a solid run so far this year, so what possible catalysts are there to drive it even higher?
Joining us now discusses Jing Roy, VP, Dir. and Portfolio manager for asset allocation at TD Asset Management. Great to have you back on the program.
>> Thank you for having me.
>> We are not quite halfway through the year yet but we are moving into the nicer weather, people started thinking about the year we have had so far and what could happen going forward. One of the key things were watching?
>> 2024 is really a year of rate cuts and election. Let's take a look at rate cuts.
The expectation for rate cuts reached a fever pitch in January and since then, the rate cut expectation has been wrenched back because of the sticky surface inflation. In the developed market, the Swiss National Bank and Sweden's bank have begun their rate cut cycle. This year, investors are expecting the first rate cut the summer from the bank of England, ECB and Bank of Canada and that is going to be followed by the Fed in November.
Now, perhaps equally as important as the timing of the rate cut is the depth of the rate cut cycle. Currently, it is a bit shallower than usual, but seven cuts, 7/4 cuts in total to account for the higher neutral rate which has gone up to clear the market of higher investment demand versus the pool of saving we have. In terms of rate cut, it will have an impact on regional asset performance as well as currency and sector rotation. Moving onto election, we have the EU parliamentary election this June and a very important US presidential election in November and UK general election by next January. So the general sense of those election is that we probably have swung too far toward the economic integration.
We need to balance back into sovereignty in terms of Europe because they don't want to be held hostage by economic interdependency. For the US, it's more swung towards democracy in the sense that for the people left behind by globalization, their needs need to be met in a better way.
>> I find it interesting that you're talking about the fact that when I think about rate cuts and elections, in my mind, jumps to America, America, America. But there are things happening in the world and divergence when you talk about the central banks including ours, when they are exciting to cut, versus when the Fed is expecting to cut. A bit of an exceptional performance out of the US. We are fully expecting a divergence between the Fed and other central banks this year.
>> Let's take a look at regional past performance. We tend to look at that in local currency terms. When the regional central bank start to cut rates, it supportive of the domestic market. So the local currency return for the assets will actually improve. But at the same time, because you are cutting rates, that will put a downward pressure on the foreign currency, especially, we have to be especially mindful as a global investor in Canada because you don't want local currency return that is strong but the return be eaten away by the depreciation of the foreign currency. So in certain instances, it makes sense to hedge a currency bed. It doesn't mean that in the US because of the economic exceptionalism and there hawkish central bank, it doesn't mean that that the return won't be good.
There is a strong US dollar to supplement your asset return. In a rate cut scenario, we expect a higher fixed income price, bond price, equity prices and especially within equity companies who are more vulnerable with the balance sheet, higher leverage and with more pressing need to access the capital market will actually do better because of more liquidity injected into the system.
>> When he talks about the election, I'm going to focus on the US election, although you mentioned others happening in the world, we get a lot of questions from viewers and you get the sense that they are trying to figure out, what should I do ahead of the election but that is not very easy because we do not know the outcome of the election.
>> It's a tricky question. On the one hand, if you are an investor with a very long term investment horizon, you'd probably be better off sticking off with the adage that time in the market means time in the market, especially when it goes up about 80% of the time in concentrated bursts.
On the other hand, for investors with an information edge and sophisticated investment tools at their disposal, they should definitely take advantage of the event and position accordingly in a cautious way.
Let's look at the US election. On the poles, right now it's a tossup between a Biden or a Trump presidency but there are a few most likely outcomes. Where Biden take the presidency but the Congress remain split, and that scenario means things would remain fairly status quo, not many opportunities there.
But the other outcome is a Republican sweep. In that scenario, you have the impetus for pretty drastic change in policy direction. Let's take a look.
In that scenario, inflation will probably go up higher because the Trump administration would advocate for immigration curbs and a universal tarriff that would increase the cost of input for a lot of companies. Especially for China, the tariff might go up 60%.
The 2016 Taxco could be extended and that would be supportive of growth. And you are also seeing the price of money will remain higher because you have reshoring investment demand from reshoring pitched against the dwindling pool of savings because that pool usually comes in the form of current account surplus from exporters because a punitive tariff would cause that to go down. So in order to position for that, we are seeing volatility in the US dollar market would increase the outcome, it becomes very wide in a trumpet ministration. Terrorists and higher growth would be supportive of a US dollar.
On the other hand, if central bank and dependence is compromised or in a more extreme case, the US dollar could depreciate.
In an arena where macro investors tend to put leveraged bets, we are seeing positioning currently is fairly light. If you look at the volatility term structure, there is a little kink around the election but that speaks to the fact that there are still opportunities for us to position. If you look at the broader equity market, the conclusion is less clear-cut because the policies work on the microlevel and makes winners and losers.
For example, immigration curbs, companies that are labour-intensive will be heard.
On the other hand, for tariffs, manufacturing companies lower on the supply chain will actually benefit because they face import competition but those on the higher up on the supply chain will hurt because they rely on imports. It's not very clear for the winners and losers.
>> Great start to the show and the conversation. We will get back to your questions for Jing Roy and just moments time. And a reminder that you can get in touch with us any time.
Just email moneytalklive@td.com or fill out the viewer response box under the video player on WebBroker.
Right now, let's get you updated on the top stories in the world of business and take a look at how the markets are trading.
It appears high borrowing costs continue to weigh on the home renovation market. We are hearing that Home Depot missed sales expectations for the most recent quarter as consumers delayed pricey kitchen and bathroom runners. Home Depot has been increasing its focus on professional contractors amid softening demand from do-it-yourself customers. Shares of Alibaba were under pressure the last time I checked in on them.
The Chinese e-commerce giant is reporting an 86% drop in profit for its most recent quarter despite beating revenue expectations. The stock is now down a little more than 7%. Alibaba underwent a massive corporate restructuring last year, and is also dealing with a more cautious consumer environment in China. Shares of Hudbay Minerals are getting a boost following the company's latest earnings report. Up almost 10%. In a note to clients, TD Cowen notes copper production was below forecast for the quarter but Hudbay's gold production was well ahead of expectations in both Peru and Manitoba.
Quick check in on the markets, we will start with the TSX Composite Index.
Not a terribly exciting day, at least on the headline.
You down 53 points on the TSX, about one quarter of a percent. South of the border, we got producer prices today, you're getting the headline CPI number tomorrow out of the states. Pretty key data points.
You are up 2.5 points and just five takes into the green.
We are back with Jing Roy from TD Asset Management, take your questions about asset allocation. First one here. Someone having memories of last fall. Is there a chance that treasury yields hit 5% again and if so, what impact could that have?
>> That's possible. We just had an experience with that and it really depends on inflation that we are seeing especially in the service sector. I would be too worried about hitting 5% because the fundamental factors of inflation, if they are still in place, then the disinflation process will still happen but at a slower pace. So the opportunities when the rate hits 5% are as follows. First of all, give bond investors another chance to lock in higher interest rate in the next 3 to 5 years and this is one opportunity that's harder to come by. For the first time in two decades, we actually have real fixed income generating real income for investors and secondly, of course, when the rate is higher, it will put a cap on the valuation multiples for equity returns. But if you are an investor in the US market, the strength of the US dollar probably will shelter you from some of the market volatility and equity risk.
>> We have heard from the Fed numerous times, we heard from Terry Powell again today, he was saying it's a bit of a mixed picture, but he reiterated the fact that we are probably going to be higher for longer than we thought entering this year.
As we wait, the equity markets seem to be fine with waiting.
>> That's because what is powering the equity market is actually earnings growth.
Equity market tends to do fairly well in a moderately inflationary environment because companies are able to push through price increases and expand their margins.
That means the entire demand picture in the economy is pretty vibrant so as a result of that, moderate inflation is good for equity return.
>> Let's get to another question now from the audience. Someone wants to know what opportunities and risks the equity market present as Canadian living standards decrease and the wealth gap widens?
>> That's a tough policy question. We have heard a lot about how our living standards have deteriorated because of the productivity loss. We cannot talk about Canadian productivity without talking about Canadian housing because more capital is a more recent thing. The left in its own devices, capital flows into sectors with higher return. In Canada, the churning of residential property provides higher returns than more productive use of capital. The government is doing more from the policy front to moderate the return from residential investment but more has to be done to channel capital into productive uses like investment into assets, hard assets, not residential investment, and intellectual property. And that really requires a coherent industrial trade immigration fiscal policy to provide a good ecosystem.
And on top of that, you also need a dynamic, vibrant equity market in Canada to attract domestic and foreign capital.
And then channel the capital to the right place at the right time. So if the government is, policymakers are successful in raising the productivity and growth in Canada, our economy will be more resilient to inflationary shocks and the living standards obviously will improve and from the equity investment perspective, if we invest in companies with good returns on capital investment, their profitability growth will actually improve and as an equity investor, we stand to benefit.
>> If we did not get a coherent policy to get money moving towards collective assets, because as he said, we need a robust equity market. If we are not investing there, maybe companies that could've been the next great Canadian company don't even get born.
>> Is really mind-boggling.
We have the brightest minds in AI at the University of Toronto but we don't have a vibrant AI industry. The worst case that could happen to Canada is to be relegated to a country, a hot money play for the commodity cycle and housing. That would be detrimental to the future of the economy.
>> Interesting stuff. Another question now about gold. A viewer noted that gold has had a significant run higher. So what is actually been driving at higher and where might be next year?
>> I think Powell's dovish if it jolted gold out of its slumber. Since then, there are other things that add to the upside momentum of gold. First of all, it is the investment climate in China. The Chinese equity market return is fairly dismal so capital naturally flows into the commodity market.
And we see a lot of speculative positioning out of China for gold and other commodities.
And secondly, the dedollarization and decoupling is playing to this diversification of central bank foreign reserves, foreign currency reserves.
Central banks are buying gold as a hedge.
So in terms of gold trajectory in the next year, I think if there is a Trump win and central bank independence is compromised, gold would be a good hedge.
>> Central bank buying is fascinating to me. They're going to buy and beholders.
They have a longer-term plan here.
>> Unless they run into a sovereign debt crisis which happened in the 1990s.
>> Fascinating stuff.
Has a one we will get back your questions for Jing Roy on asset allocation in just a moment's time.
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.
Charts are one tool that investors can use to analyse a potential opportunity and when he is not a walk through how to use them on a broker is Jason Hnatyk, Senior client education instructor with TD Direct Investing. Jason, what sort of trends in the charts help investors identify?
>> Great to be here.
Charts can be an essential tool to help us identify the trends. They are great for helping us look back into the past to hopefully learn from that and maybe predict where the stock is going to be going in the future. Maybe you are looking for buying and selling signals or some sort of continuation or reversal pattern.
Charts can be a very useful tool there.
Let's jump in and take a look at what what broker has to offer. I'm looking at the SPY. On the summary page, there is a simple, basic chart below the quote. We have a line chart here to help us do some trend identification but if we are really looking to get into the weeds and do some analysis, let's use the charts tab which a second from the left, right below the quote here at the top of the page. So jumping into this, let's walk through the different tools that are available. First off, we are looking at a chart right now that showing us a longer term chart so we can see the trend over a longer period of time.
Maybe you are looking for shorter term, you have the opportunity to change the time. We have the opportunity to change the candle frequency that we got on the chart.
Maybe you are looking intraday. The shortest is one minute, that is available for you and the platform also.
Now we are looking at candles on the chart, it's the most commonly used charting style. If something else floats your boat, you got the ability to make that choice for yourself. You've got different bar chart opportunities as well as line charts but let's stick with candles for our purposes.
We've got that laid out, the basic controls to move and change. Let's start adding additional indicators to help us make some decisions. First of all, we have our upper and lower indicator drop downs available for us here. Eisler show you how to work those quickly.
These are indicators placed on the price chart. I'm going to scroll down and choose simple moving average. You will notice in the top left it added simple moving average with a 15., The last 15 candles.
We can change that. It's posted right on the chart. Next looking at lower indicators, this is our opportunity to put indicators down below the price chart.
Just taking a few the pop up here, we can track the yield on the stock, we can look at more technical leave focused indicators such as Mac D or something that we don't want to forget, the volume of the stock, that can all be added to our lower indicators. If you're looking to edit any of these studies, we can click on the study name, make some adjustments, even get a little information about what that study is trying to tell you.
Moving away from the indicators themselves, a couple of other bells and whistles and charts I want to show you, the next is going to be the events drop-down menu at the top of the screen.
Here you can put earnings and dividend notifications on the chart.
For SPY, we want to be kept informed digitally when it is paying its dividend.
We now have the D's popping up on the chart. We have one in the middle of March.
We always know and that's coming.
>> There's a lot of indicators.
Maybe we don't know which one does start off with. When we go on what broker to start learning about these things?
>> We are not all naturally going to be charting wizards on the platform so we got lots of tools that can help bring you up that learning curve and help you refine your approach on the platform. Let me jump on the platform and show you a couple of ways to learn more about charting and technical analysis. The first thing I want to show you is the technical tab at the top of the screen.
We go ahead and choose that tab. There are a number of things here. We can spend lots of time talking about it. I want to show you the educational resources first of all.
That's the graduation Over here in the top right-hand side of the screen.
By choosing that, on the left-hand side, there is going to be an opportunity to learn more about different studies and indicators.
I go into indicators, it's got different moving averages and how that might be important to your own trading. You can click on one of those and then learn more about how that might be an important tool in your trading toolbelt.
Beyond that, if you're more of a visual learner, we can do that is here, the aptly named learn tab. You can go up there and I like to show us the video lessons here on the left-hand side. I've already filtered for technical analysis. We've got 25 separate lessons here but if someone is looking and says, where do I start? What will show everybody is do we scroll down and move over to the second page, there is a foundations of technical analysis five-part series. I recommend everybody go and take a look. You will learn more about different studies and how you can use them as well as how to best interpret the charts. Lots to learn there for everybody.
>> Thanks for that.
>> My pleasure.
>> Jason Natyk, Senior client education instructor with TD Direct Investing. For more educational resources, check out the learning centre on what broker or navigate to this QR code. Or even take a snap of the QR code.
Then you can navigate to TD Direct Investing's Instagram page and you will find more informational videos.
Before we get back to your questions on asset management for Jing Roy, a reminder of how you can get in touch with us. Do you have a question about investing or what's driving the markets?
Our guests are eager to hear what's on your mind, so send us your questions.
There are two ways you can get in touch with us.
You can send us an email anytime at moneytalklive@td.com or you can use the question box right below the screen here on WebBroker. Just write in your question and hit send.
We'll see if one of our guests can get you the answer right here at MoneyTalk Live.
Okay, we are back with Jing Roy, we are taking your questions about asset allocation. This one just came in.
Some pundits are saying the return of meme stocks means financial conditions are not tight enough.
Your thoughts on that?
>> There is certainly truth to that statement. As you know, there's a lot of dry powder parked in the money market funds to take advantage of the high short-term interest rate that can be deployed into capital return opportunities.
The question is probably more relevant, is it high enough to reach the 2% inflation target. Then it's less of an indicator of that. We should look at the wage growth.
Piercing the labour market coming into better balance and the wage growth coming down to a level that is more in line with 2% inflation target level so this is not a key indication that there is going to be another rate hike because that gain from the stock needs to be put into the economy and be spent again to put renewed pressure on inflation to force the Fed to be even more hawkish. So yes, it is an indication that there is liquidity sloshing in the system but it doesn't necessarily impede the rate cut narrative.
>> Interesting stat. Thanks for sending the question in, very timely considering what's happening in the markets today.
Another question for you. Does your guest see any opportunities outside Canada and the US when it comes to the equity markets?
>> Yes, that's particularly interesting, especially the reshoring really gaining momentum. Mexico could be a beneficiary of that. Some countries in Southeast Asia will be a beneficiary including India as well because people, companies are diversifying their supply chain.
When you look at these, how do you play that? Because the supply chain is being rewired so you want to look at companies that can facilitate bad transitions so let's look at the goods flow. So transportation companies and also traders, trading companies can facilitate change of the goods flow that financial institutions can actually facilitate the changing capital flow because to be industrialized to provide the supply base in those countries. Finally, I think as the country started to industrialize, you look at capital investment and how that will be good for industrial companies. Down the road, as people get richer in those countries, they will look for higher consumer consumption.
>> You talk about reshoring and friend shoring. It strikes me that these are longer-term trends in place as well. I just feel like there are some spots in the equity market where clearly it ignited in an instant and perhaps that fire peters out before you hundred chance to take a look.
>> It is a longer-term trend. In the short term, you start to see what's happening in Mexico in terms of foreign direct investment. In Europe, they are reshoring the defence supply chain and you can already see the defence stocks which had a nice boost from the increased defence spending and especially with the NATO overhang with the trump administration so that is already being played out in different sectors in different ways.
>> Another question from the audience, looking outside the borders of North America. Someone wants to get your views on Japan.
>> We are pretty constructive on Japanese equities. It's very interesting. The country finally escaped the deflationary doom slope. The first rate hike of the Bank of Japan indicates that the economy is entering a more virtuous cycle and that has a couple of implications. Equity returns are higher in a moderately inflationary environment. We are expecting higher earnings growth from these companies. At the top line, you probably want to look at inflation hike revenue growth but the margin can expand especially when the Japanese yen is at this level, very weak at the moment, so for exporters, after translation, they are having… Second I think there's a very comprehensive policy around the Japanese equity. So the policy includes the better sort of capital and you want to be encouraging divestment in related companies to improve your capital allocation and also the Tokyo Stock exchange became big. These work together to propagate the change in the mentality behind how companies should run. Overall, Japan has very good potential, especially with a very educated workforce so we stay bullish.
>> When you use the word potential, it suggests there is more room to run. I think when the Japanese story started coming to the floor several months ago, there were some people sending in questions worrying that they had missed it. Early endings?
>> I think the most important question for the next leg is can the consumer start to be more optimistic about spending? Because you really need consumption to kick this inflation green shoot into full drive.
Right now we are seeing a lot of foreign consumption into Japan, a lot of forest, a lot of… Foreign direct investment into Japan for the rewiring of the supply chain. So this can be a very good help, but we really need the local consumption to pick up to get that confirmation of escape velocity from deflation.
>> That's an interesting story unfolding in Japan.
Of your says, I keep hearing about the slowing economy in China, should I be worried about how that could impact the market?
>> The slowing economy did a lot of favours for inflation dynamics because the goods inflation partially is because the deflationary force we see in China out of their factories. So it's been very helpful. So the next question is, the Chinese government obviously are very concerned about hitting the 5% growth target and there will be a slew of policies coming down the pike to make sure the confidence level around that 5% growth rate is more secure. So what it means for the global equity market is that potentially, they will inject liquidity into the financial system which is very good for us because that tends to lift risk sentiment. On the contrary, China is facing a bit of a structurally internally.
>> That takes us back to the top of the show. We were talking about not knowing the outcome of the election. But that affects a lot of asset classes and geographies, including China.
>> There's not a lot of appetite for the government to come back on the fiscal stimulus so either abiding or trump when will see inflation staying higher than historically.
>> We will get back your questions for Jing Roy on asset allocation in just moments time. As always, make sure you do your own research before making any investment decisions. and a reminder that you get in touch with us in 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.
Every month, TD Direct Investing releases a sentiment Index to help track how Canadian investors are feeling about the market. Here were the results for April's MoneyTalk's Anthony Okolie.
>> The TD Direct Investing Index of the month of April has been released, and self-directed investor sentiment turned bearish for the first time in six months.
Here are the details. Let's start with the overall TD Direct Investing Index, which measures sentiment in a range from -100 for very bearish to +104 very bullish.
After a solid start in 2024, April showers reigned down on investors parade, testing the resilience. DII investor sentiment landed at -8 for April, a big loss of 26 points compared to March, breaking the streak of five straight months of bullish sentiment. Stocks ended their worst month of the year has stubbornly and sticky inflation data Daoust market hopes for interest rate cuts by summer.
When we compare sentiment April of last year, there was little change when sentiment stood at -11.
When you look at components that make up the DII, all the proxies were down across the board in April.
Significantly, however, flight safety or risk appetite for investors, as you can see, was -6, six points lower than last month, meaning more investors pulled back into safer, less risky investments.
A more positive value means risk on or less actual flight to safety.
We also saw a drop in the chasing transmitter, -4 points to zero, indicating more investors were buying on a falling market.
A few key points that stood out. Energy saw the most trading activity in April followed by basic materials, the next most popular sector.
Secondly, investors felt more negative about the markets last month but Baby Boomers, born between 1946 to 1964, were the most pessimistic.
As I mentioned, energy came out on top is most heavily traded sector with a sentiment score of +6, up two points month over month.
The surge in oil prices this year, driven in part by escalating tensions in the Middle East, has also helped prop up energy stocks.
Among the heavily bought stocks and energy were Crescent Point Energy, Baytex energy and Enbridge, which boasts a strong record of dividend payments and an attractive yield.
Meanwhile, sentiment for boomers slumped 11 points month over month to -8 in April, reversing the previous month again and that's all sentiment rebound back into bullish territory.
Heavily sold stocks by boomers included tech giants Nvidia, Tesla and Shopify.
And that's where TD Direct Investing Index highlights for April 2024.
>> Thanks a lot, Anthony. That was MoneyTalk's Anthony Okolie.
Now, for an update on the markets.
We are having a look at TD's Advanced Dashboard, a platform designed for active traders available through TD Direct Investing.
This is the heat map function, gives you a view of the market movers. Let's start with the TSX 60, we are going to screen through price and volume.
You can see Enbridge taking up a lot of real estate on the screen, mean significant volume behind the name but pulling back a little shy of a full percent.
Shopify, another down day. They're earning several days ago to disappoint the market.
There has been a pullback in that stock in terms of what we are seeing today, down a little more than 2%. First Quantum getting a big, up about 6%. The price of copper moving higher and there is perhaps a bit of a bid in that direction. South of the border, we have brought in producer prices this morning.
As we await headline CPI tomorrow morning, he bought a Tesla getting a bid, up about 3%. Other parts of the market showing a bit of strength including the financials, including Bank of America up a little more than 1% right now.
We're back now with Jing Roy from TD Asset Management, taking another question from one of our viewers. Someone wants to know if there is any chance of stagflation on the horizon?
>> It depends on the definition of stagflation.
If your yardstick is what happened in the 70s and 80s when growth was negative while inflation was double-digit, then I would say the odds of that is really low.
If your definition is what we experienced in Europe where the growth is kind of a bit negative but inflation pressure was actually declining. So if you view the stagflation in that lens, I think Canada has a higher odds of experiencing that kind of stagflation versus the US. So in a kind of 7080 scenario, as said it's very punitive for asset prices. In a scenario stagflation where a moderate slowdown in growth, I think it's very important to focus on companies that are high quality measured by high pricing power, strong competitive advantage and potential to improve margins.
>> That was stagflation. It's interesting because hi get the sense that when people are asking the question, their thinking about the 70s and 80s.
I admit, I was a kid.
It seems to be there's two types of stagnation to worry about.
>> Yeah, the mortgage rate back then was 18%. It was very damaging for all the asset prices. As Canadian, you probably remember the housing burst during that period, it was very painful.
>> Adults complaining about the mortgage rates and me saying I sort of get it but I sort of don't. I was pretty young. I wasn't ready for that kind of discussion yet. We have run out of time for questions from the audience.
I wanted to ask you, when we started the discussion about catalyst for this year, US elections and interest-rate policy, we are going to get headline CPI. Jerome Powell has repeatedly said inflation is not coming down as quickly as we would like. What are you watching for tomorrow?
>> Tomorrow is very important because you want to make sure the service inflation is actually picking up the slack from the goods inflation. Especially with the PMI starting to look up, that means industrial production is starting to recover from a lower base. We really need the service inflation to pick up the slack.
In terms of service inflation, we are looking at, especially for the rent because we are seeing small rent declining from a variety of real-time data indicators but it's not showing up in the CPI measure just yet, so the progress really needs to start to pick up. In terms of CPI, everything comes in threes. For the Fed, you really need, it seems like we need three consecutive kind of in-line or more favourable inflation print for the Fed to regain the confidence towards the 2% inflation trajectory so we want to look at inflation hopefully below 3% but the consensus tomorrow is about four. Let's just beat the consensus on the downside.
>> It will be an interesting morning with a lot of implications. Great to have you back. I look forward to next time.
>> Thank you very much.
>> Our thanks to Jing Roy, VP, Dir. and Portfolio manager for asset allocation at TD Asset Management.
As always, make sure you do your own research before making any investment decisions.
stay tuned for tomorrow show, Alex Gorewicz is going to join us, VP and Dir.
for active fixed income portfolio management at TD Asset Management. She's went to be our guest he wants to take your questions about fixed income and give us her thoughts about this US inflation report which we will have in hand by that time tomorrow.
And a reminder you get a head start with your questions for Alex. Just email moneytalklive@td.com.
That's all the time we have the show today. Thanks for watching. We will see you tomorrow.
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