Juliana Faircloth

[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. The labour market is pretty strong. It is having a ripple effect across the markets including here at home on Bay Street. The TSX Composite Index is modestly in negative territory, down about 11 points, just five tics right now. We are seeing some movement in some energy names. Crescent Point Energy among them announcing a special dividend. That stock is up to and 1/3%, a bit of a push and pull. We are in the thick of bank earnings season. A lot of big names moving the topline number around. Let's take a look at B2Gold. Some of the miners are under pressure today, understandably, given the rise in bond yields and the US back today. A little bit of pressure on gold and gold miners. B2 down about 2%. Let's check in on the S&P 500, the broader read of the American market. The US labour market is still pretty strong. That raises a lot of questions about what the US Federal Reserve is going to do about that in terms of further interest rate hikes and how far they need to go. They are looking at that 10 year bond yield up above 4%. It was holding but for the last time I looked. It changed the game a little. Got the S&P 500 down to fits of a percent. How about the tech heavy NASDAQ? How's it going against the broader market? A little weaker, down 73 points, little more than half a percent. Macy's, noticed it was up earlier in the session, to the tune of almost 9%. Pretty strong holiday quarter, stronger than the street was exacting. That's market update. There has been no shortage of headlines in the rail sector recently but is there opportunity for investors in the space longer-term? Joining us now with more, Juliana Faircloth, industrial analyst at TD Asset Management. Great to have you back. >> Thanks for having me. >> If you scan the media headlines, the rails have been in the headlines for many reasons. What we need to be thinking about that space as investors, in the here and now and going forward? >> Sure, so I think going with why he is the rail a place in investors would go to in the first place? There are a lot of reasons to like North American rails. Not necessarily always the case. If we go back 50 years ago, it was a very regulated industry. Very competitive. There were dozens and dozens of small rail networks operating across North America. In 1980, the industry was deregulated which sparked a huge consolidation wave. A lot of price competition. Not necessarily a great time to be an investor in rails back then either. That started to stabilize in the early 2000s and the industry became quite investable through the implementation of something called precision scheduled railroading which is pioneered by someone called Hunter Harrison. all that really means is a simplified operating model for the rails. Leaving trains on a fixed schedule rather than at sort of random times on different days of the week. That has left a pretty attractive industry. So there are high barriers to entry. There is no new cross continent rail networks being constructed. Pretty limited competition. There is now just six class I Rails Left Today in North America. Generally, the industry grows kind of alongside economic growth, would GDP. There is potentially some longer-term opportunity to regain some share that was lost a trucking overload that decades of consolidation.. >> In the shortage near term, if we are talking about, you know, because I have watched the rails over the years. They are really tied to the economy and how things are going. We can't decide as investors or as pundits whether there is going to be a recession, you are rarity in one, will be soft or hard, what kind of landing are we going to get? Is that something you need to be aware of in the near term if you are thinking about the rails? >> Yes. As it's quite an economically is sensitive sector, volumes are tied to GDP growth and general economic growth. So the path for the broader economy is certainly important over the near term for the rails and so something that investors should be watching closely. Dad you talked about consolidation over the years in the railway sector. Of course, we have a deal that's been around for quite some time. What's the latest on what's happening with CP? >> Absolutely. Yes, the CP acquisition of Kansas City Southern has been topical for a couple of years now. We are in the very late stages of that development. The surface transportation Board, which is the regulator for North American rails, is in the very final stages. We should be expecting a decision imminently. It could be within the next couple of days. So that is kind of the situation for Canadian Pacific. And again, that's quite a transformational deal for the industry via and for Canadian Pacific specifically. It will create the only single rail network that joined Canada, the US and Mexico so there are all sorts of opportunities that we can think of that that would stimulate for Canadian Pacific. >> When you take a look at the map of it, does it live much opportunity in the space for mergers and acquisitions? >> I think it's pretty unlikely to see any large-scale M&A within the rails. This will bring the class one real count down to just 6 Rails Operating in North America, in a lot of instances, depending on the region and the area of the network. One rail is really only competing with one other rail so from a competitive perspective you are likely to see anything of that size again. >> Okay, apart from corporate M&A activity, we have seen derailments as well, most recently the one in Ohio the got a lot of attention because of the massive burn that was involved. What do investors need to think about when they see headlines like that? Because they are not positive headlines for the space. >> Definitely not. It's a very unfortunate situation. Just for a bit of context. So a Norfolk Southern train derailed early in February in Ohio, as you mention. It happened to be carrying hazardous chemicals that were then burned and has had a tragic impact on the environment and on the community there. In terms of what caused that, the investigation is still underway, trying to determine whether that was a mechanical error, operational, was that human error? That is yet to be seen. For investors, I think was important to consider is there will likely be a regulatory impact from this type of event. I believe last night there was a piece of legislation kind of put in front of the house related to real safety that will call for additional safety measures, a higher degree of fines going forward for any large rail wrongdoings. So it's definitely a cost to think about going forward for all of the rails and then safety has always been a big priority for the rails and it should be a priority for investors. It's something we have engaged with management teams on in our discussions and as part of our investment process so that should be a consideration for all investors. >> We've covered a lot of ground and there is even more ground to cover around the headlines recently. We saw headlines in recent days in Union Pacific and investor activist pushing for change there getting some change at the very top. > You are right. No shortage of headlines within the rails. So on Sunday, an activist investor in Union Pacific sent out a presentation and a letter calling for a change of management. Later that day, Union Pacific sent out their own press release, saying, we've been working on succession planning and hope to have a new CEO in place by the end of 2023. A bit of background, what drove that, Union Pacific in the context of the US publicly listed rails has a advantage network. It's a longer length of haul which means there is less competition from trucking and the business makes is pretty nicely diversified between intermodal which is consumer facing volumes, industrial volumes and commodities. So a nice balance there. I would say in light of that advantaged network, the management team has not executed up to the company's full potential, so that's what kind of opens the door for these types of activist investors. It's a great reminder that of course when we look at any company, understanding the management team, their track record, their skill and level of execution is always important. The rails is a particular industry where we have seen management changeovers drive very significant improvements and operating results and very divergent stock outcomes. So very curious to see who ends up in the seed at Union Pacific. >> Lots of fascinating stuff and a great start to the show. We are going to get your questions about industrial stocks for Juliana Faircloth in just a moment time, including her outlook for Boeing, FedEx and the defence sector. 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 some of the top stories in the world of business and take a look at how markets are trading. Canadian Natural Resources is raising its dividend for the 23rd consecutive year. quarterly payout to investors is going up 6% to $0. 90 per share. Sankey was also renewing a share buyback program starting in March. The news follows quarterly results were mostly in line with expectation. You've got shares of salesforce in the spotlight today that as investors react to a stronger-than-expected revenue forecast from the cloud software company, and plans to double the share buyback plan to $20 billion. Salesforce has been the target of several activist investment firms pushing for change, including Elliott Management. You can see the 11% rise in the shares today. Tesla shares under pressure, at least last time I checked. They are down to the tune of about 7% right now. Investors were looking for details on any new Tesla products. They were left wanting, particularly a timeline for lower-priced Tesla vehicles. The electric vehicle maker did provide updated plans to cut assembly costs in half and invest in a new plant in Mexico. A quick check in on the market. We will start here at home on Bay Street with the TSX Composite Index down roughly about eight points right now, just for ticks, just on the other side of the breakeven line. We are seeing money move towards the energy names. We are in the thick of bank earnings season as well so that is pushing the topline up around a little. So the border, as we said, the US jobs market continues to be resilient. Investors have to ask themselves what that means for monetary policy and rate . 4. Right now, got the S&P 500 down eight points, pretty modest, about a fit of a percent. We are back now Juliana Faircloth, you're taking your questions about industrial stocks, so let's get to them. The first one of the show. What is your guests view on the EV trend? Are there more catalysts ahead? >> I would say definitely. I mean, it just from a government perspective, there has been a ton of support in the US and Europe for all sorts of projects through the inflation reduction act, the CHIPS Act, the infrastructure, investment and jobs act all in the US and in Europe, there are a number of other initiatives that are supportive of broad trends toward electrification. A lot of that is getting directed to electric vehicles, electric vehicle battery manufacturing facilities in trying to build out the infrastructure to electrify the global car fleet. So it's definitely a trend that is not slowing down and there is, you know, a number of different places within the value chain there that could be in for staying kind of pockets for investors to explore. >> Government policy, a certain amount of money is earmarked for electrification. That's the political will, right? But political will can change dependent on who is in power on the four year cycle. What about the will of corporate North America or corporate Europe? Do they seem fully on board with this as well, that we don't just have to worry about the sand shifting underneath us as investors if there is any president or prime minister? >> I would say the sense that most companies, at least within the industrial landscape, comments on through earnings calls and conferences and other presentations as very supportive of moving towards a lower carbon future. Whatever that means for their own business and if there's changes within their business model with the way that they operate, there's quite a bit of support. I would say that it's stronger in Europe than it is in North America but it's definitely growing in North America as well. >> I was investors look at this trend and they think about the actual people producing the vehicles and they think about the supply chain into the vehicles, where should investors be looking? >> There is no shortage of opportunities. There is electric vehicles themselves, there is battery equipment, there is the commodities that are needed to create and sustain batteries, there's all sorts of electrical equipment that needs to be built in to improve grids. You can go through utilities. There's really no shortage, so it's a great opportunity to investigate further. >> Let's take another question now, this one about the airlines. With the code restrictions rolled back, what is the outlook for airlines this year? >> So, I think the story with the airlines for now has been China's reopening. obviously, China is a very big travel market. We have already seen departures in China pick up quite considerably. It's been led so far by domestic travel as similar to what we saw in North America. But we will surely see international travel pick back up as well. For example, a company like Air Canada has had about 7% of their business tied to China pre-pandemic, so not an insignificant amount of business that is kind of coming back online. The balance to that, I would say, we are seeing some macro softening in North America and in Europe, travellers who maybe spent the last year and 1/2, two years travelling everywhere they want to go post-pandemic, may be experiencing a bit of fatigue with airline tickets being quite expensive and the outlook is a bit more uncertain from an economic perspective. >> Is there a handoff there? Because I think in the earlier stages in COVID research and through being rolled back, people felt more control travelling, they went out and they travelled as much as they could. They revenge travelled. I want to get out and see the world. But the business travel had picked up to the same degree. Is there some optimism in the industry that is businesses call more people back to the offices and get back to what used to be normal before all this, maybe people will start filling out those that business class tickets as well? >> I would say there's definitely optimism from the industry around the return of business travel. It sounds, when you listen to company conference calls, that there has been a bit of a plateau in the return of business travel and there is the thesis out there that with zoom and the ability to use Microsoft teams and have virtual meetings a lot more successfully and comfortably then people were used to pre-pandemic that it may not return entirely. So there's probably still some return to go, but we will have to see whether it can fully recover. >> The publisher we were talking about headlines around the railway industry. I don't think I've read any recently but over the holiday break, we got some headlines around the airline industry. Long lines of luggage out the door, long lines of people waiting to get on a plane. I don't want to say these are growing pains because they are mature industries were coming out of pandemic, it seemed that there was still a certain amount of issues to work through to make sure we get back to that hopefully seamless experience. I walked into the airport, and my ticket, I want a plane to somewhere. >> It's been tough for the airlines and it's been tough for the airports and infrastructure around that. It's been tough for consumers who have had a disappointing and difficult time travelling over the last several months. There has been a lot of work put into the entire ecosystem from a staffing perspective, bringing new people up to speed. So it's improving slowly but it is a difficult and very logistics intensive production to really pull off of managing an airport. There are certain regulations around how long staff can be working. If it's delayed by an hour, you may have entire cruise not eligible to work anymore, God finds but he knew. It's complicated so Stephanie Lee improving with more staffing and more funds directed at that. So hopefully we will have a better summer travel season this year. >> I flew to Britain in December just past and my plane got delayed by an hour. When I realized what everyone else was going through,I realize I was being a bit dramatic. It was only in R. Gladue political risk out there is this a good time to look at the defence sector? >> So the defence sector has been interesting and topical. We are lapping the one year market of the invasion of Ukraine which sparked a lot more interest in the defence sector I would say. the stocks performed very well last year. In general, there continues to be a lot of budget support for defence spending in the US and then with several NATO countries committing to increasing their budgets towards the 2% target that had been agreed upon but not necessarily met by other countries. The medium-term outlook is still quite positive in terms of the direction for budget growth. The threat environment remains pretty elevated with Russia and China, that's all quite supportive for the outlook for the defence stocks. >> We can't give recommendations on the show about certain stocks, but what are some of the bigger players in this basis alone was interested in this theme, to start doing their homework on. >>. So the US defence industry is the biggest kind of open defence market globally, and that leaves you with a number of players in the US, Lockheed Martin, Northrop Grumman are well-known players in that space. As I mentioned, there's a lot of budget growth happening in Europe where defence budgets relative to GDP had been perhaps a little bit lower than the US, so a company like DA systems, there is a number in the UK and then you got specific French or Italian defence companies to investigate there. >> Great stuff as always. At home, do your own research before you make any investment decision. We are going to get back to your questions for Juliana Faircloth on industrial stocks in just a moment's time. Earl minor, course, you get in touch with us at any time. Just email moneytalklive@td.com. Let's get to the educational segment of the day. If you are looking to keep track of a stock or sectors performance, WebBroker has tools which can help. Joining us now with more, Caitlin Cormier, client education instructor with TD Direct Investing. Caitlin, always great to see you. Let's talk about how we can find specific sectors using WebBroker. >> Absolutely. Hey, great. Always nice to see you too. So we are going to look at today as we are going to go into a specific sector within WebBroker. We are going to take a look around and continue with today's theme of industrial stocks and we will kind of look around and see where we can find different securities and how we get them added to a watchlist so we want to do that further research, decide whether might be a good purchase for us and we can do that. So let's go ahead and hop into WebBroker. We are going to click on the research button and we are going to gounder markets and click on sectors and industries. So this will take us to the homepage for all the different sectors and industries available with the market. You can see we have defaulted to the Canadian market here, so we have a little Canadian flag. If you chose to go back and forth, you can simply click between the different countries if you want to see what that looks like. We will stick to Canada for today. So as I scroll through, I can see the different Canadian sectors, the top industries, the bottom industries as well as sector performance on the left here. As I said, I'm just going to go ahead and click on industrials for today. And then we are getting into an industry analyser. I'm going to deep dive a little bit further onto the specific industry. So we can see herewhat our other sectors are. The actual report for industrials, he can actually jump in and see the insider report and see some additional information on that sector, stuff about sentiments. Over here, we have a bit of a graph here talking about price to book and that as well is P/E ratio. Down here, we can see the movers, so people who are kind of moving the most within these sectors, so today's change. You can see top and bottom companies. Over on the left again, we are seeing all the different industries within the sector. So if you want to kind of dive into one specific industry, you can do that. For today and for the purposes of building a watchlist, I'm just gonna go ahead and go right over here into the… This area right here we can see different company strategies. So this is giving me a list of a few different securities that we have here and so this is where we can kind of look at actually finding securities to put on a watchlist. Yeah. So what I'm going to do here is I'm just going to go price discount to book value. What I'm going to do is go ahead and click on the security. Again, I'm going to pick random companies here, not any specific ones but just the ones that are showing here. So what I see is a little bit of information about the stock and what I'm going to do is click add to watchlist here. And click right through, let's choose watchlist number 10. So just make sure you do that to make sure he gets added again and then I add a couple here, add to watchlist, again, we are going to choose list number 10 and let's just choose one more here. And add to watchlist. So that's as easy as it is to kind of go in there, look at the sector, kind of find some specific sectors and go into a specific area to find more information and kind of build a watchlist from there. >> Alright so walking in the morning, we put a few names into a watchlist in the next day, I'd like, I made a watchlist, where can I find it? I've done my work and I don't want to go to waste. >> Yeah, of course. Definitely important to be able to keep track of those stocks that you put aside to make sure you can do that for the research. So when I'm logging in on my homepage, we are always going to see this top green bar on WebBroker. Over on the far right hand side, we are going to see the button with the star there that says watchlist. So that's as easy as it is to pull up. We are going to click on list 10 so I do have some other securities and I'm going to remove here that got added to this list. I'm going to click onthese three we have selected here. We can see performance on the securities. If I drop down I can see the chart there. I can see the quote information as well as any other fundamental information and just kind of quickly keep track of those stocks and have a quick jumping off point to go and see additional information on these combinations by clicking that overview here to get into a little bit more detail. So again, just kind of a way to take a big area within the market, find some specific securities you want to do some more research on and then from there, be able to keep them all in one spot can come back and do your additional research. > Great stuff, as always. Think that, Caitlin. >> Thanks, Greg. > Our thanks to Caitlin Cormier, 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 back to questions about industrial stocks for Juliana Faircloth, a reminder of how you can get in touch with us. Do you have a question about investing or what's driving the market? 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 the below the screen here on WebBroker. Just writing your question and hit send. We will see if one of our guest get you your answer right here at MoneyTalk Live. We are back now up with the Juliana Faircloth taking your questions about industrial stocks. does your guest see any material benefit to the rails considering the potential for onshoring? >>That's a great question and I think they're kind of two long-term bullish arguments foronshoring. There could be repatriation to America or even Mexico. The amount of goods flow throughout North America should continue to increase, which is positive to real volumes. The second sort of long-term outlook for the rails would be the opportunity to take market share from trucking. Of course, trucking is a bit more flexible. It can be faster in some instances. But it's typically at a higher cost and significantly less fuel-efficient. So as manufacturers start to think about and missions throughout their entire supply chain including their freight and transportation, the advantage there goes to rails in terms of fuel efficiency. >> If we think about the onshoring trend, it feels like an investor would have to have some sort of thesis as to what the next five, 10, 20 years look like in terms of geopolitics. The onshoring thing is bring up a whole, during COVID, we realized there was risk. We need more manufacturing back at home and others geopolitical risk. You sort of have an idea or thesis of where we are headed, to say, okay, this is a theme I believe in? >> I would say probably. the difficulties of cross-border interactions that popped up during the pandemic is one point towards onshoring. geopolitics is another one. I would say in discussions that investors may overhear or earnings calls from companies, there is not necessarily a push to shut down all operations in China and completely repurposed to Mexico towards the US, but it's really the incremental buildout and capacity that sounds to be happening on a much more local than a global basis. >> Fascinating stuff. Lots of questions coming in. Let's get more. What is your opinion, Juliana, on CN Rail? >> Sure. CN Rail we didn't cover in our earlier discussion. I would say CN Rail, along with CP, both have benefited over the last year from the dislocations that were created from the invasion in Ukraine. That was very supportive of the larger bulk commodity businesses that the Canadian rails have. The Canadian grain harvest this past year was also the fifth largest on record which really helps from a volume perspective for the rails, and then additionally for CN specifically, the new CEO, Tracy Robinson, has been there for about one year now and while the market was initially quite sceptical, I would say, of her taking on the CEO role, having been out of the rail industry for about eight years, she's done quite a good job. Volumes and velocity have picked back up. Pricing has been strong. They have been winning business and the operating ratio or the margin of the business has been performing quite well. So fundamentally, the performance has been pretty good at CN. Again, the near-term outlook is very dependent on the macro environment so we will have to see but in terms of execution, CN has been doing a nice job. >> In terms of the CN story as well, we talked about CP and Kansas City Southern on the top of the show, people who were never their early stages or months as of that dance was will it be CN, will it be CP? CP one the day. The CN past that story in terms of its business? >> I would say so. Whilethere was, to your point, a bit of a back-and-forth of who will Kansas City be going to,CNs investment story has very much moved beyond that. There's a new management team in place. There was a lot of work to be done in terms of operations. CNs execution had been faltering a little bit over the prior years. So the story now is really getting execution sustainably back to a better place and then with a focus on other potential areas of growth and ways to win new business. >> Okay, let's take another question now, this one about regulation. We talked about it a little bit off the top. We have of you are wondering how worried should we be with increased regulation and industrial spaces? > That's a great question. One thing I think always worth mentioning with industrials is it's very broad. So there will be industries like the rails that we talked about where regulation is probablyincrementally negative. It's historically been a very manageable situation and a level of manageable added costs for the rails. But the flipside of regulation is things like the inflation reduction act or any regulation around energy efficiency within buildings that is very supportive of electrical equipment companies, all sorts of multi-industrials, HVAC companies get a lot of support from that. So it very much depends on which and market you are looking at and what specific regulation you are dealing with. >> I think we talked a bit, the reason we had regulation at the top was the rails. We have viewer wondering about that, when you see derailments like that and worry about environmental impacts,what kind of environmental regulation might there be? >> I believe last night, the bipartisan Senators put forward the Railway safety act to be discussedwhich stipulates some additional safety measures, higher fines for rails when there is these types of hazardous wrongdoings. So the outlook is probably for some degree of higher operating costs for the rails going forward. It's likely to be well absorbed into their business. They've had a history of being able to do that. But that's the… We will have to see how that specific piece of legislation develops, that just kind of crossed the headlines last night. >> Very fresh that. We'll get back to your questions for Juliana Faircloth on industrial stocks in just a moment 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 at any time. Do you have a question about investing or what's driving the market? Our guests are eager to hear what's on your mind, so send us your questions. There are two ways that you can get in touch with us. You can email us anytime at moneytalklive@td.com or you can fill out the question box right below the screen here on WebBroker. Just writing your question and hit send. We'll see if one of our guest can get you the answer right here at MoneyTalk Live. US vehicle sales GOT off to a strong start this year after pretty rough go in 2022. The industry was hit by a lot of supply chain woes. Our Anthony Okolie has been digging into the latest TD Economics report to see if the strong start for the sales continues. >> Not quite. We did see February US vehicle sales fall 6.2% to about 15 million units seasonally adjusted. That's down from almost 16 million units sold back in January. Despite the drop, however, the number did it come in slightly higher than consensus forecasts. When we break it down by the type of vehicle, light trucks edged higher by nearly 10% year-over-year. Again, light trucks accounted for about 80% of February sales, just marginally above what it was one year ago. With dealership inventories continuing to balance back from last summer slows, we saw an improvement in the average daily selling rate which rose by 47,000 cars sold per day in February, that's up from about 43000 Daily Rate in February last year. When we look at the best-selling models in February in the US, the light trucks again took the top spots, the two top spots with Tesla model Y edging out RAM pickups for the… And the Ford F series was number one followed by the Chevrolet Silverado. The Toyota RAV4 along with the Tesla model three and GMC Sierra also made it into the top 10. Now, TD Economics notes that the February drop into sales is somewhat deceiving because the high number we saw in January was partially inflated by the pandemic. In adjusted terms, the February sales grew by nearly 9% and those partially driven by an uptick in retail incentives in order to try to burst sales. Incentives in February were up more than 8% versus one year ago. TD concludes that while strong headwinds remain for not just consumers but for vehicle sales in the form of higher financing costs and higher transaction prices, the persistent strength in the job market, the US labour market, coupled with two years of pent-up demand, is helping to keep a floor under the sales activity at least for now. > It sounds like we are in a situation right now where a consumer can walk onto a law and actually see some cars. There is some supply. But then you sit down and start doing the numbers and the financing costs are higher than they were a year ago. How does TD Economics see that dynamic playing out? >> That's one of the headwinds they are facing. Interest rates have risen since 2022. What they've seen is that households with the largest declines in liquid savings as well as lower credit scores, they've started to fall behind on their payments and this is led to an increase in delinquency rates especially in the auto segment. They do note that consumer delinquencies should be put into context because they are arising from an unusually low level and TD Economics also notes that there was a welcome improvement in US to Lincoln see rates in January which suggests that credit deterioration is leveling off, especially given the continued strength of the US labour market. > Interesting stuff. Thanks. >> My pleasure. > Moneytalk's Anthony Okolie. A quick check in on the markets. The TSX Composite Index on my screen is up modestly, 13 points to the upside, but of push and pull between the financial names, we are in the thick of bank earnings season and some energy names getting a bit today. Canada natural resources is up 1. 7% at this hour. Kinross Gold, perhaps not a surprise that some of the mining names, particularly those clues connected to gold, Kinross is down about a percent to the downside. South of the border, investors got another greed on the US labour market, this timejobless claims and the indication is that they US labour market is still pretty strong and resilient. It will have implications for what the Fed is going to do next. It's not so dramatic. We are only down about 3 1/2 points right now on the S&P 500. The tech heavy NASDAQ was bearing a little worse than the broader market earlier. Right now it's still down about half percent. But Salesforce, let's check in on this name. Investors liking what they got out of the quarterly report, more so with the forecast as we talked about the buyback, they are up at this hour about 11% we are back to Juliana Faircloth, take your questions about industrial stocks. Does your guest like the waste management sectorand how are they affected by the rising interest rates? This is interesting because people sometimes ask about waste management and recession but what about rising interest rates? >> So what the waste sector generally known for is that GDP like type of growth. That can be a resilient place to be in the face of the broader macro situation that we are seeing alongside rising interest rates which is a potential slowing path of economic growth. That means slowing for the waste businesses but probably a bit more resilience to other more cyclical higher data parts of the industrial landscape. Within the waste sector, there is a number of companies operating in a big part of many of their business models is M&A and acquisition. So there is potential for that leg of the growth story for some of these companies to be impacted by higher rates depending on the level of leverage on the balance sheet, depending on how they typically fund their mergers and acquisitions, whether it's through their own free cash flow generation or they've had a history of taking on some leverage in order to acquire competitors and consolidatetheir roots and their densities and drive some nice energies from those types of opportunities. >> I hadn't thought about how rising interest rates affect M&A. Interesting point. The flood we have Juliana here. Will Boeing be able to get past their recent missteps? Talk about headlines. >> Every once in a while there is news from Boeing. I believe last week there was another headline. They have had to temporarily halt deliveries of the 787. Mostly that is related to a documentation issue but the company will not be delivering planes until those documentation issues are resolved and they get another stamp of approval from the FAA. It's not impacted their guidance. They are expected to still deliver 70 or 80 787's for the year. Boeing has had a couple of positive developments to the story over the last several months. They had their first investor day and three years in the fall, where they outlined their path for growth, their path towards 10 billion in free cash flow by 2025 which is significant for accompanying that is very highly levered, like billing. So some positive development there but execution seems to be not stellar. The company also tends to be thrown around within geopolitical discussions between the US and China pretty frequently, so some risk still on the horizon, but improving the situation at Boeing for sure. >>alright, let's a question. We want to squeeze at least one more in. What is your view on FedEx. >> FedExthere outlook is pretty cautious. They highlighted industrial slowing in Europe, they highlighted some rightsizing within the e-commerce market after the significant boom that we all know very well from the pandemic. So a pretty cautious outlook. On the flipside of that, they also announced a $4 billion cost savings program that they are undertaking. Just a few weeks ago, they announced a 10% cut to their management and executive level employees, so very focused and on the cost to offset the slowing that they see coming to the market. It's interesting because we have seen a lot of cost-cutting in technology and a little bit more skewed within consumer and retail. Not so much in industrial. And really only in the situations like FedEx where companies have pretty high consumer related exposure. So something to watch for if we start to see a broader job slow down within the industrial whole area but FedEx seems to be a load of that journey. >> Great to have you back on the show. >> Thank you. >> Are things to Juliana Faircloth, industrial analyst at TD Asset Management. Stay tuned, we'll be back tomorrow with an update on the markets, highlights from our best interviews of the week. And on Monday, Derek Burleton, deputy chief economist at TD will be our guest taking your questions about the economy. A reminder that you can get a head start on those questions. You have to wait till we start the show every day at noon Eastern time. Just email moneytalklive@td. com. That's all the time we have for the show today. Thanks for watching. We'll see you tomorrow. [music]