Juliana Faircloth

[music] Hello I'm Greg Bonnell and 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 we'll take you through it's moving the markets and answer your questions about investing. Coming about today show: we will discuss how the trend of onshoring might impact the industrial stocks and whether he could give rise to more inflation with Juliana Faircloth from TD Asset Management. And in today's WebBroker education segment, Jason Hnatyk will take us through how to find out about global exchange on the platform. So here's how you can get in touch with us with your questions: just email us at moneytalklive@td.com or fillet that viewer response box right under the video player here on WebBroker. Forget all that, let's get you an update on markets. A limit of a choppy trade and an indecisive one based on Bay Street and Wall Street. We will start here at home. After pretty punishing last week, it's a lacklustre way to start the week. Yet the TSX down a pretty modest when he 6 Points, West, TX intermediate, benchmark crude bouncing around, starting the slide right now into the tune of about 1%. We will see how that plays out for some of the energy names. Let's check in on Air Canada, earlier it was making waves. Of course with the announcement that it was coming, that they will drop COVID border restrictions as of Saturday. that may cause less friction for people and get them back into the sky. Centerra Gold down a little more than 5%. South of the border, chicken and the S&P 500, a choppy trade in positive territory earlier. I actually saw some money moving with some of the tech names today. Lifting the NASDAQ. But it is still staying in positive territory with roughly 31 points, about 1/4 of a percent. One of those big tech names: Apple. A little bit of momentum here for the upside, nothing too extraordinary, little shy of 152 bucks a share. And that's a market update. Global supply chains have come under enormous strain during the pandemic. Spurring a push towards bringing production back to North America. But what impact will onshoring have on industrial stocks and the cost of goods for consumers? Joining us now is a Juliana Faircloth, Industrials Analyst with TD Asset Management. Welcome. >> Thank you so much for having me. >> Let's talk about what onshoring is. It's hard to see the headlines about how supply chains became globally during the pandemic. What does it mean for an economy? >> When we talk about onshoring or "reassuring" near shoring" a bunch of charms to capture the same phenomenon which is reestablishing supply chains domestically or geographically closer to the end customer. So mostly in North America. We can think about it is the opposite of globalization where many companies outsource production to low cost jurisdictions, China, Vietnam… Those are common destinations. The reversal of that is what we think of as onshoring. >> We've heard the term thrown around during the pandemic. These key components of so many things we need. Made overseas. Is there actual momentum towards onshoring? We've seen that this is a real thing developing the market right now? >> There are a few drivers at play, going into this onshoring theme. That makes it quite topical. The first line of course was the pandemic, as you mentioned. Whether it was automaker is unable to find supplies… Or infant formula shortages that we had through the spring, all the noise about congestion at ports, all of that was an indication of strain in the global supply chain and some challenges there. Onshoring, I think, would be one way to manage through some of that and build a bit more resilience and to supply chains. The second driver is really geopolitical. As we know, there is rising tensions in Europe, there is rising tensions between China and the US and companies are now realizing that overreliance on certain jurisdictions can perhaps be detrimental to their business. And the third reason that I think is important for investors to consider this theme is that companies are telling us that they are thinking about it. The number of times that management teams have used the phrase "supply chain, onshoring, re-shoring" over their quarterly conference calls has really skyrocket. So it is top of mind for management teams and should be considered by investors as well. >> Now this obviously would be a big shift of what we are used to in terms of supply chains. Clearly it will mean change. Change can mean good, it can mean bad. So let's break down the benefits of the drawbacks. Onshoring really takes hold. What are some of the benefits for North America? North America's ecosystem? >> There are three benefits I would point to with onshoring. The first one is of course supply chain resilience. If you're supply chain is more domestically or regionally located, perhaps you are more insulated from external shocks like changes in international trade policy, geopolitical flareups, you are somewhat sheltered from some of those challenges. The second benefit, and I think why there is often political support for onshoring is there is a potential benefit to local economies. There's a bit of a multiplier effect with onshoring. It helps to create jobs. It improves the tax phase. Innovation as well as research and development more localized and centralized. The last benefit would be lower transportation costs. This was very topical a few months ago when ocean freight rates had really spiked dramatically. They have normalized somewhat since then but less of a transportation arbitrage with the onshoring theme. But to the extent that companies are more concerned about emissions to their local supply chain, travelling over distance certainly helps from that perspective as well. >> Their ESG goals laid out at the corporate level, those would be the benefits of onshoring. Any drawbacks? >> Of course. There are natural drawbacks as well. If I am to point to would be perhaps a lack of labour availability. That could make it difficult to implement onshore strategies. We know the US labour market is very tight. So finding skilled workers to work manufacturing jobs could be a bit of a challenge. Secondly, it's an expensive undertaking. Onshoring will require capital investment probably a higher operating cost Moving from a different cost of jurisdiction. A driving inflation also over the medium and long term. If supply chains become more regionalized onshore and production costs are higher, some of that gets passed on to the consumer through higher prices. So certainly it doesn't go in the favour of policymakers trying to battle inflation today. > I have often thought about how it's probably, if we didn't of the global supply chain of the past several decades, you probably would not have three or four televisions in your house. If you produce them in America, they could be more expensive than the company if it's passed through to the user, us. >> Exactly. >> What way do you play that is an investor in terms of different industries? People who are beyond shoring, finding industrials today, the largest beneficiary I guess? >> Certainly the industrial space would be a beneficiary of this type of trend. If we really boil it down to what is going to be the impact of onshoring, it's going to mean higher capital expenditures, higher investment in industrial production and industrial infrastructure and that is supportive for industrial companies organic sales growth. So there are a few pockets worth highlighting within industrials that could stand to benefit from this trend. The first would be machinery. As manufacturing facilities are built and constructed, companies with exposure to construction spending should benefit. A company like Caterpillar for example. Then, moving on to multi-industrials, this is a broad group of companies and they spanned many different end markets. Many of which stand to benefit from an onshoring trend. So if, I think, for example of electrical equipment companies, a company like Eaton in the US is well-positioned. They provide electrical equipment for manufacturing facilities. A company like Honeywell has industrial software business. That stands to benefit and then there is automation players like Schneider… In Europe that are exposed to the theme of industrial automation. They sell automation software. They sell robots to factories so particularly if wages remain elevated that could mean an area that stands to benefit. And the last area which is less direct but probably stands to benefit as well would be the rails, the North American rails. If a greater amount of industrial production is brought back to North America, that is positive for rail volumes as they transport raw materials, they transport finished goods so generally a tailwind there for the rails. I would say… This would be a slow-moving train. >> I want to ask you about duration. We have to be patient as we work our way to the trend. > Exactly. Companies today are not upending their whole supply chain and reconfiguring it in the next six months. That's not really what is expected to happen. But the incremental investment incapacity or as companies decide to, perhaps, bring more resilience into their supply chain, we may see some of those funds flow onshore which will be a nice tailwind for the industrial space over the medium term. >> Fascinating stuff and a great start to the show, we will get your questions what industrial stocks with Juliana Faircloth in just a moment's time. A reminder of course is you can get in touch with us any time by emailing MoneyTalkLive@td.com or using the viewer response block and in WebBroker. Right now look at the markets. Apple is moving some production of its recently released iPhone 14 to India. The move marks a small shift away from production in China which has been hampered of course by COVID lockdowns during the pandemic. All iPhones have been manufactured in India since 2017, it was largely the older models. Apart from production, and he is also a lucrative market for smart phone sales. The OECD says global economic growth is facing an extended slowdown in the wake of Russia's invasion of Ukraine. The organization is taking down its forecast for global growth next year to 2.2% from its earlier forecast of 2.8% and when it comes to Europe, the OECD's forecast of nearly flat growth suggest the euro zone could fall into recession part of 2023. Macy's is joining a chorus of US retailers with plans to hire workers for the holiday season. Despite the tough operating environment, the department store chain says it will bring on some 41,000 workers for the season. That follows similar announcements of hiring intentions from rivals such as Target and Walmart. Retailers have been grappling with shifting consumer habits and households focusing more on essentials such as food and fuel and less on close and other discretionary ideas. And now let's take a look at the main benchmark index in Canada's trading. We will call that 30 points… A little less than 1/5 of a percent. In the S&P 500, let's check on Wall Street, that brought a read of the market. A little bit of money perhaps sending some opportunity, some tech stocks but not enough to lift the broader market. 3673, the S&P 500 will shy of 20 points. A little more than half percent. We are back there with Juliana Faircloth taking your questions about industrial stocks. Let's do a deeper dive. What is your guest outlook for the Canadian rail companies question mark >> Sure. The whereThe rails are fairly well positioned. ^... ¸They are being supported by a fairly strong backdrop so potash, cold, those volumes are coming in quite strongly for the Canadian rails. We are starting to see auto volumes pick up an auto supply chains slowly start to unwind themselves from the tangle they have been in. And importantly, Canadian grain will be a very big drive over the next couple of quarters. We are lapping a very difficult grain harvest from 2021. So grain volumes are expected to be up about 40% year-over-year which will be quite a tailwind for the Canadian rails. From a pricing perspective, they have been able to drive significant pricing increases, yields have been up in the double digits for both Canadian National Rail and Canadian Pacific. Which has helped offset wage inflation, fuel cost inflation… All of the challenges that many companies are working through. I will say, there is risk associated with the rails, of course as well. First being macro. While the rails are generally a little bit more resilient, than other parts of industrials during a slowdown, they are certainly not immune to slowing macroenvironment. And then from a valuation perspective, the rails are both trading well towards the high end of their historical multiple range. I believe CN are trades at about 19 or 20 times earnings, CD trades at 20 times earnings. So some risk there from that downside perspective. >> Interested that you were saying that there will be strong demand for rails to move the things we need including grain and other materials. Potash is in there as well. So it seems like in the near term, we know there is product to move and they have the pricing power to pass on inflationary costs. But it is interesting. I've often thought of it to his you've talked about, sort of a bit of a bellwether for the recession. In the end, if the economy is doing well, you're removing goods… If the economy is not doing well you start to get concerned. >> Exactly. Volumes will be impacted if there is a slowdown particularly on the consumer side which makes up a little under half of volumes for both Canadian national and Canadian Pacific. But sort of, to offset that, assuming perhaps remain in a positive commodity environment, that should continue to be a bit of an offset for the Canadian rails specifically. >> Okay a good follow up with this question about the rails: south of the border… How did the US rails firm's stack up against the Canadian firms? >> Sure the US rails had a strike recently they got down to the wire but a successful agreement was negotiated so wages will be increasing 24% for rail workers in the US. That will have an impact on operative cost and profitability. Similar to the Canadian rails, the pricing environment has been very strong for the US rails. So that should help offset a lot of that wage inflation. More of the difficulty I would say, for the US rails has been on labour availability. That has been a struggle for the last several quarters. It's been difficult to find and retain skilled and qualified workers within the real space. So there has been quite a focus on recruitment and retention. Some policies that are starting to make inroads for the US rails. But that would be, I think, the big challenge going forward for the US rails. >> It does leave you scratching your head as we enter next year in all manner of business whether industrial or financial data that we just can't find the workers. Where did everyone go during the pandemic? We have some economists sitting in that chair that don't quite have an answer. Maybe an aging population? Apart from the rails are there other parts of the industrial space saying the need workers and can't find them? A lot of these jobs require high levels of training. >> Certainly. I think another area that has been facing this problem is the waste industry. They have had a bit of a challenge finding and retaining labour throughout this crisis. This all goes to_the bargaining power that employees have in the US and to some extent in Canada as well right now. It underscores perhaps inflationary pressure throughout the economy with so many jobs open. A lot of companies looking for skilled workers that they can't seem to find. It is really an employees market out there. >> All right. Let's take another question of the platform. This one about all of the geopolitical tensions that we are experiencing right now. With growing geopolitical tensions, what is your view on the defence sector? >> Sure. The defence sector is interesting and deftly topical. It's one of few areas of the market that's really outperformed this year. If you take a company like North… For example, that stocks up about 20% while the S&P 500 is down about 22, 23%. So significant performance. As you mentioned, the geopolitical backdrop is quite supportive for defence companies. With rising threats from Russia, rising threats from China, there is significant bipartisan support in the US for defence budget growth. So the US defence budget should continue to grow in the mid single digits which is at a higher end of the normal range for the next few years. And internationally, there is a big push by NATO allies that have not been spending the 2% of GDP on their defence budget as promised. So closing that gap from companies like France that have been spending less than 2% of GDP on defence will drive something like $70 billion in incremental defence spend over the next several years. So the outlook is fairly positive for defence. >> I think about geopolitical tensions. They can ebb and flow but it sounds like by what you're laying out, this can be long-term with these decisions. I can assume that these companies getting into these contracts is not like "if things clear up like in Russia we will go ahead". They seem to lock in for a longer-term opportunity. >> Yes the projects on the defence side tend to be very long. Long-term in nature. They can span decades. The defence companies, at least in the US, actually work extremely closely with the government. So there is a lot of support from the initial stages to see that through to the very end which again, could be decades. >> All right as always at home make sure you do your own research before making any investment decisions. We will get back with your questions for Juliana Faircloth on industrial stocks in just a moment's time. A reminder of course you can get in touch with us at any time. Email moneytalklive@td. com. Now let's get to our educational segment of the day. International diversification is one strategy that investors can use to help navigate market volatility. In the WebBroker platform has tools that can help you keep track of what's happening outside of Canada. Joining us now with more is Jason Hnatyk, Client Education Instructor and TD Direct Investing. . >> Thanks for having me. Whether you have exposure in your portfolio or want to take the temperature of global markets, may be looking to check the direction of which way the wind is blowing before the markets open up in North America, WebBroker has some useful tools for you. I'll show you how. The first thing we will need to do is go to the research tab. If we are looking for those international tendencies, we can scroll down on the left-hand side, we notice there is a series of different indices there available. How are you performing today versus the previous day… Do we also see the range over the last 52 weeks? Similar to how you would be analysing a particular stock you own. The trade ranges for the last year as well… If you're looking to dig in and get a little more information, maybe see how the short, medium and long-term trends of the index are performing, we can gladden select index that we are curious about. Down at the bottom, will go ahead and choose the "charts" option. That brings us to your standard charting package with all your regular analysis on stocks and ETF's that you may own. We can change the time. As well as the frequency to look at whatever is most relevant for your own trading. But interesting enough, here we are looking at the graph… We do have the opportunity to compare how this particular index is doing versus some of its peers internationally. You can either type in the symbol in the comparison field or we have the opportunity to scroll all the way down. You can see many different sectors and markets. But we do also have the major foreign indices available for selection as well. So in gladden add these to our charts. So we have a number of different comparison lines very to once again, the world is your oyster. You make this how you want to make it. Now we get to track and compare different indices over time against each other. So quite a useful tool. >> Great to see the North American markets and what's happening overseas and using those tools. What other places on WebBroker can I get some additional insights on what's happening? >> You're right. It's one thing to have the information. But is there some other insight or analysis I can used my own benefit? I'm going to keep it simple. I use that keep it simple stupid method. I won't re-create the wheel. I'll bring it back to the research section. Really highlighting the wealth of information available on this page. We get access to many third-party trusted providers on this page. You can see they are updated throughout the day at very short increments. So lots of live information available to you on this particular page. We can do as well, if we wanted to kind of refine that search as well, but the top, we can also get into our news tab by clicking on "news". On this page what is useful as we get the opportunity to actually do some searches for particular companies or if we are looking for globally focused reports, you can take advantage of this at the top. If you're gonna be looking, maybe we want to search for one then see what might be going on across the pond. We can see just today there are many topics listed here all about different foreign-exchange related materials. So once again, if this is what's important to you, WebBroker is that a great way for you to access the information in a really simple and convenient way. >> Definitely no shortage of stories right now but the state of the US dollar. Jason always a pleasure things for joining us. >> Thank you so much. >> Jason Hnatyk, Client Education Instructor at TD Direct Investing. Make sure to check out WebBroker for more videos and master classes and some upcoming webinars. Now before we get back to questions of industrial stocks for Juliana Faircloth a reminder of height and get in touch with us. Do you have a question about investing, or what is driving the markets? Send it to us here at MONEYTALK LIVE. You can send your questions two ways: You can send us an email anytime at moneytalklive@td.com Or you can use the question box at the bottom of the screen right here on Web Broker. Just type it out and click send. We'll see if one of our guests can get you the answer right here at MONEYTALK LIVE. We are back now with Juliana Faircloth taking your questions about industrial stocks. Could we get Juliana's take on Air Canada? >> Sure. Certainly topical today following the announcement you mentioned earlier from the Canadian government dropping all travel restrictions. That kind of plays in to Air Canada. The first point being there is quite a long road to recovery still. We know leisure travel has rebounded pretty well business travel not so much. Air Canada ticket sales were 94% up… In the last quarter so the demand backdrop still looks quite strong. Secondly, some of the operational challenges that Air Canada has been facing well they certainly have not all been resolved, we have all heard horror stories of people travelling in the last few months. But those operational challenges are incrementally improving. Air Canada has done a lot of work to bring on more crewmembers, to work with the airports to kind of streamline some of those operations. So slowly improving. Not quite there yet. And then lastly, from a fuel perspective, jet fuel was quite a headwind in the last couple of quarters. It has normalized a little bit while still very elevated but that should be, you know, an incremental positive for Air Canada going forward. >> Back to the normal times… Before the pandemic, on the day-to-day. The airlines are moving, clutching at the price of fuel. So many other factors involved but that's a huge expense for them in terms of what it cost a few of those planes is that? >> It is. It is very much so. Large expense for Air Canada. There is sort of a side story of a long-term trend for Boeing and Airbus which have been working to manufacture significantly more efficient air crafts that many of the airlines will, over the next few decades, be working to get their hands on to approve their overall admission profile. And to reduce that jet fuel cost within their cost structure. >> Electric… Air Canada I heard something about that recently. The smaller ones right? Let's get to another question enough in the platform. Here's an interesting one. This company is definitely in the headlines in recent days and weeks. What is the outlook for FedEx after last week's announcement of got about, I guess a slowdown? >> FedEx had a cold mine event a couple weeks ago. The stocks have been down over 30% in the last month. So very topical. FedEx, a couple of weeks ago pre-released their earnings results. They missed earnings by about 30% and they cut their guidance by 50% for the upcoming quarter. The reason behind that is the slowdown in Asia, a slowdown in Europe. Perhaps that is kind of well understood by the market. We know Europe is slowing faster than the rest of the world from a macro perspective. I think it really surprised investors was the domestic business was a bit weaker than expected. Management's commentary was pretty cautious, perhaps even bearish on the outlook for demand and consumption. So, a difficult read through for the rest of the market and for the rest of industrials we haven't necessarily heard that type of commentary yet. To FedEx defence, they have announced a significant cost, optimization program to help manage through. Of slower volume growth. So we will have to stay tuned for the execution on that strategy and how well they can offset some of the slowing in the business with cost savings. >> I think I remember, I could be wrong. But a billion to that degree, the market needs to wait and see. It doesn't see it doesn't seem like a company that can escape a bad economy. If things are booming you want to ship stuff. If things are not booming… >> Absolutely and I think it was quite a bit of froth within the market for FedEx over the last couple of years because of the pandemic. Shipping rates for FedEx had really skyrocketed. So quite a bit of cushion there to a more normal, pre-pandemic type of level. So it will be a challenge for FedEx. >> It is definitely been a challenge for that stock lately. Down another 3%. Let's take another question off the platform. We talked a bit about electric planes but what about how electrification impact industrials? >> This is a similar theme to onshoring. Stability is at the front and centre of many corporation mines. We are looking to electrify everything. We are electrifying planes, we are electrifying vehicles. Infrastructure, hardening the grade. All of these trends are quite supportive for capital expenditures within the industrial sector. There is further support politically for that. The infrastructure investment and jobs ACT! has specific outlays dedicated to powering infrastructure, EV infrastructure, electrifying public transit and the inflation reduction act has outlays for different initiatives. All of that should be positive for cap X Budgets and capital spending within that electrification space. I would highlight Eaton and Schneider in Europe. They power factories, utility companies, they were directly to harden the grid. They support data centre growth, really a broad spectrum of electrification trends, EV's as well. So those are be kind of interesting ones to watch as it relates to the electrification theme. >> For a name like Eaton… You can try and pick the company that will win the electrification but the company that is selling all of them… >> It's exactly that. Eaton has a broad portfolio and a lot of articles. Residential, commercial and industrial real estate. Warehouses, data centre's. They have a whole segment for e- mobility and nitrification. It is a broad swath in whatever market you could think of. >> For an investor looking in this space, what risk would there be? Sometimes I think in times of economic distress, our best intentions of a we need to do with what's right for the planet is sometimes from the side burner. > Yeah. I think the big risk here is perhaps the hopes and dreams that everyone has related to electrification do not necessarily play out. Some of these somatic stocks within the industrial sector, Eaton, Schneider, have generated a significant premium valuation relative to their own history. So there is a lot of optimism baked into the stocks that the electrification trend will really translate into higher organic sales growth, higher earnings generation and higher free cash flow. So that would be kind of the risk on the radar that this is a well understood story by the market. >> All right. We will get back to your questions with Juliana Faircloth on industrial stocks in just a moment's time. As always, make sure you do your own research before making investment decisions and a reminder that you can get in touch with us any time. Do you have a question about investing, or what is driving the markets? Send it to us here at MONEYTALK LIVE. You can send your questions two ways: You can send us an email anytime at moneytalklive@td.com Or you can use the question box at the bottom of the screen right here on Web Broker. Just type it out and click send. We'll see if one of our guests can get you the answer right here at MONEYTALK LIVE. The British pound is singing against the US dollar after last week's mini budget which will see massive tax cuts. Our Anthony Okolie joins us now with the implications on the measures for the Bank of England. This is interesting right Anthony? >> That's right. We are seeing it play out in real time. TD Securities says the odds of an interim meeting policy decision by the Bank of England have risen sharply since Fridays mini budget by the new UK government. TD Securities says the mini budget which provides the single largest tax cut since 1972 has been poorly received by the household and markets alike. TD Securities says of the fact that currency has fallen so much suggests that investors believe that this is the wrong policy for the UK. They are trading UK assets more like emerging-market assets. It fell more than 3% against the US dollar and TD Securities hundred and 60 bps of hikes to November. … As a result of the latest moves, TD Securities has revised their terminal for the bass the bank's key rate to 4 1/4% in response. TD Securities points to several possible policy options, should the Bank of England want to intervene. The most basic and likely intervention is a verbal one. Similar to the statements of the bank of England issued after the 2016 Brexit referendum.… TD Securities expects the hike of by a 75 Basis Points in November. As well as another 25 Basis Points in March. They say there is no reason that the Bank of England cannot accelerate the schedule. Finally, a more extreme policy response in their view would be direct intervention. Given the Bank of England's tolerance, in 2016, this is arguably hiding a likely… For TD Securities. Greg. >> If the Bank of England did not intervene, this TD Securities have an idea when they might act? >> The next policy meeting is not till November. There is not much economic gain that can come up for October 10. So in their view, it makes sense for them to fact right right away. To handle all the current developments or to wait until November 3. Where they can let the markets and the economy settle. An address that situation fully then. >> Interesting times indeed thanks Anthony. >> My pleasure. >> MoneyTalk Live's Anthony Okolie. Let's check in the market now. Of course last week was a very tough week. Right now continuing to sort of slide. It 18, 367. A little more than half a percent so little deeper of a whole than we were at the top the show. Earlier, I noticed Denison Mines was hanging in but modestly in positive territory. Some positive news about developments and key projects. Let's check in on Shopify. One of our big tech names. That green arrow beside it but this has been sliding from some of the gains from earlier. Modest but even more modest now. You've Shopify up again a little shy of 1/3 of 1%. South of the border, check on the S&P 500. Out of the gate a bit of the positive territory. Then we sort of slid down. Three, 655, down 38 points down a full percent. Some steam coming out of that tech tree that we saw earlier in the day. The NASDAQ is hanging in. 21 points to the upside about 1/5 of a percent. The check on Amazon. Amazon getting hit big today. Sort of the same story Shopify. Still positive. Not all that much to write home about. Hundred $14.82 a share. A little shy of 1%. We are back now with Juliana Faircloth from TD Asset Management taking your questions about industrial stocks. Let's get to this one. We talked a bit about it will he brushed past earlier, do you like the waste management sector? > Sure. The waste management sector is one of the outliers that is performed this year. About 10% year to date with the TSX down. I think 13%. So quite a bit about performance. What is driving that is a general perceived resilience of the waste business model. Especially relative to the rest of industrials from a volume perspective. Trash and waste is generated regardless of the economic cycle. Any society really. From a pricing perspective, the waste companies have been able to drive significant price increases that have been able to pretty much entirely offset rising wages, rising fuel costs. They've been able to hold their margins relatively flatin quite a challenging. So far this year. So that view of "waste" as consistent as reliable has so far been playing out this year. >> Look at the risk be? Point well taken. The economy is good at making garbage. We are making garbage. Look in the future be of some of these names? >> Sure. We talked a bit about this earlier from a labour perspective. That's a big challenge for the ways companies. it is difficult to find and retain workers in this type of industry. There been a lot of initiatives put in place by the company's to tackle that issue and try and improve their own retention. And then secondly, it kinda comes down to valuation. Connections, trades, over 30 times earnings that is essentially doubled the multiple for the broader industrial space. So you are paying quite a price for that reliability and consistency. You know… That perhaps opens you up to some downside if execution falters during the quarter or if we go into a serious risk on environment. That could be a source of funds for some investors. >> Great points there on the waste management industry. This one is about infrastructure. Will hire infrastructure spending boost industrials? We hear so much about the election cycle. It's always about infrastructure. The government is promising "don't worry, we will updated." >> Sure and there is certainly a lot of infrastructure there put into the market of the last couple years. You have the infrastructure job Zacks, the inflation reduction ACT! … Other elements to it. The Chips Act. Burning semiconductor bringing semiconductor manufacturing back to the US. A lot of infrastructure spent around that. So again, it's a matter of driving higher capital expenditures for companies across the board. Which is ultimately, a net positive tailwind for organic sales growth for the industrial companies. To think about a few that probably stand to benefit would be, again, machineries. So a company like Caterpillar involved in construction. The infrastructure spending going into transportation and building roads and bridges… Augmenting all of those systems within the US, Caterpillar is very well positioned to take advantage of that trend. >> I think you can easily make the argument in North America that a lot of our infrastructure is in dire need of upgrading. Is the danger here that governments promise but don't and of delivering? On those infrastructure promises? For whatever reason : the economy turns : there could be a litany of things. >> Yeah, I think that's definitely a risk. These are all promises that have been made by politicians. In the macro environment is deteriorating day by day as it seems. So they become, it becomes more and more difficult for governments to stand behind some of those claims and promises that they perhaps once made. Rates are rising. It becomes more expensive to undertake these types of projects. For the private markets. So, that would definitely be a bit of a headwind over the short term. >> No more time for questions what Juliana, it was a pleasure to have you. Please join us again soon. >> Thank you so much. >> Our thanks to Juliana Faircloth, Industrials Analyst with TD Asset Management. Coming up Tuesday, Michael Craig takes questions from you Head of Asset Allocation at TD Asset Management. A reminder that you can get a head start by emailing moneytalklive@td.com. That's all the time we are for the show today. Thanks for watching and we will see you tomorrow. [music]