Justin Flowerday

[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 with the continued labour strength we are seeing on both sides of the border means for interest rates and the markets with Justin Flowerday, head of public equities at TD Asset Management. MoneyTalk's Anthony Okolie is going to have a look at Saudi Arabia surprised oil production cut and what it means the energy market. And on today's a broker education segment, Nugwa Haruna is going to show us how you can find information about high-yield bonds using the platform. So here's how you can get in touch with us. Just email moneytalklive@td.com or fill out the viewer response box under the video player on WebBroker. Forget our guest today, let's get you an update on the markets. First trading day of the week. We are going to start your home with the TSX Composite Index. Modestly in negative territory, we will call it a 27 point deficit, a little more than 1/10 of a percent. Even though Saudi Arabia did deliver that surprising cut coming out of the OPEC+ meetings, it's not doing all that much for the energy sector today. We have seen some farming in the price of American benchmark crude but if you look at a name like Crescent Point Energy, he could have been forgiven if you thought you would've seen a little bit more on this front. It is positive territory though, one and 1/2% to the upside or $0.14 per share. Canadian Natural Resources, we were watching them earlier as a study of the mixed reaction that we are seeing here in the energy space. You got CN Q down modestly about 1/3 of a percent. Now, south of the border, he brought the S&P 500 flirting with bull market territory. There is a name in particular, Apple. We will show you in a second. They're putting some points in the table today. You've got the S&P 500 up modestly, benefits of a percent. We'll check in on the tech heavy NASDAQ and see what it's up to you today. A little stronger. It is about half a percent to the upside. Apple a new record territory. The developer conference kicking off today. All the rumours about what big product they might have in right now you've got Apple up about 1.8%. I believe the development conference gets underway later today. That's your market update. Recent strong economic data and signs of sticky inflation and have investors wondering if we are at the end of these rate hikes seeing or if central banks havemore work ahead of them. Joining us now to discuss is Justin Flowerday, head of public equities at TD Asset Management. >> Great to be here. >> What are we seeing in terms of the data and what are we thinking about rates? >> So we got some interesting data from the US on Friday with the jobs report. And it was probably stronger than people anticipated, but there are a couple of caveats. The headline number, they created 240,000 new jobs in the US, that was higher than anybody had estimated. So another really nice strong jobs number. On the other hand, they had an unemployment rate which actually when up to 3.7% as the result of a different survey that the Fed runs. The one that folks were really looking at though was average hourly earnings. That's an indication of wage inflation. That came in the up about 4.2% which is a bit of a slowdown in the rate of wage gains there. But for all intents and purposes, the US labour market remains very, very strong. We received the jolt report which was out earlier in the week last week. A number of job openings at per employed individual looking to get hired is 1.8. That was upfrom the last month. So overall, very strong job environment in the US. And it begs the question, what does the Fed do in June when they meet? Do they raise, did they hold back? And I think, the way I'm approaching it right now, we are likely to see a skip to the July meeting and I would expect that in July,they would raise rates once again. >> So not even strong enough to call it a pause, a skip holding over until July. A lot has been said about it in terms of one-off data. The central banks are looking for a trendline. As the trend working in the direction that they want to see you or is there some concern that we are stalling out? >> So there's a couple different things happening. You've got a really, really strong labour market and wage gains which haven't shown the type of downward trend that the Fed would like to see. On the other hand, you are seeing continued slowdown in the ISM and in terms of the manufacturing economy in the US, we saw ISM services this morning which came out and there was also a little bit of weakness there. So there are a couple of different things. What they need to do though it is cracked the labour market. And they want to see and they expect to see the unemployment rate continues trend higher. It's just been stickier than they would've believed. They still provide their outlook for economic forecasts when they meet and they still expect the unemployment rate to end the year probably in the 4 1/2 range which would be significantly higher from the start of the year by about a percent. And that would, in all likelihood, result in a type of slowdown in the economy that would help them believe that inflation will not be sticky in the 4+ percent range. >> Is this the story the market is telling us? Looking at the headlines out there, we got the S&P 500, the broader read of the American market, a fresh nine month high, people using terms like bull market or dancing on the edge of a bull market. And yet we have these unresolved issues with inflation, a strong labour market, interest rate policy. How do we score that out? >> It's a tough one. If you would've pressed pause last October when you had the SP down in the mid-20%, that would've been a nice thing for the Fed because it tightens financial conditions which is ultimately what they need to achieve in order to slow down the economy. But you get the cycles within cycles and you saw a rally from that low and part of it was if you think about in the fall, people had started to anticipate the recession. They had started to price in the recession. They traded the recession. The recession was still 12, 18 months in the future. People have a tendency to want to fast-forward to the end of the movie because they know what's happening. In this case, it's too early, and so we have had the cycle within a cycle. This is going to continue. I would say the most recent data for me probably leads to a belief that the recession has been pushed out to 2024. It would be very, very unique to see a the type of jobs number you saw on Friday and then in the next six months, the economy roll over. >> Does not mean any potential rate cuts and that story has been pushed out until next year as well? Because the market has been changing its pricing. >> Right. So if you look back even three months ago, you would have seen an expectation for rate cuts in the summer. Right? And we would not have been talking about a potential rate hike in June or July. And so that has started to move back. There is a bit of a discrepancy in terms of the expectations for Fed rates that are priced into the market and what I believe. I don't think you're going to see a rate cut this year. I think that has been pushed into 2024. Ultimately, we are going to remain data dependent and we still have some inflation data to come out for the next meeting. We have some other economic data that the Fed is watching very closely. Atlanta said wage trackers coming out later this week. We will get a lot of data points that will help us develop a better picture of where we are heading. >> If we bring it back home, of course, our central bank has a decision this week before the Fed. We have seen some strong data and we have also seen inflation with stickiness to it. We have been on a full on pause. There's a discussion now that perhaps they will have to come out of pause and raise again. >> Yeah. And I think we have seen stronger-than-expected overall employment growth. We have seen a stronger economy then we would have anticipated. A lot of this has to do with just the overall aggregate demand in the Canadian economy that continues to grow on the back of our immigration. And the fact that our base of consumers grows quarter after quarter by a significant amount. And so that's been a really nice tailwind for the Canadian economy. Canada obviously was leading the way in terms of holding their rate hikes and some would've thought they would be cutting later in the year. I think for now we are probably in a similar boat where we think they are going to hold steady where they are. I don't believe that they are going to be hiking on later this week. Although they have enough data to support, if they want to. One of the things that the central banks both in Canada and the US don't want to do is they don't want to shock the market. They want to telegraph where they are going. And I think both central banks have done that fairly well. I would say that we will probably see a pause from both Canada and the US, which is based on the things that we've heard coming out of the central bank in recent weeks. >> Interesting times indeed and a great start to the show. We are going to get your questions about the markets for Justin Flowerday in just a moment's time. A reminder that you can get in touch with us at 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. Investors keeping an eye on Apple today, though shares hitting fresh all-time highs. The tech giant, of course, is holding its annual developers conference and it is expected to announce new products and some updates to existing offerings. There are unconfirmed reports out there that some of it seems to be based on perhaps some cryptic musings from Apple themselves at a mixed reality headset for the augmented virtual reality market play could be announced this afternoon. I think the event starts at 1 PM our time, Eastern time, 10 AM Pacific. We will see what Apple has for the market. 184 bucks, the stock is almost 2%. We also have shares of Palo Alto Networks and the swelling today. The cybersecurity company is being added to the S&P 500, replacing Dish Network. Last month, Palo Alto raised its sales and profit forecasts saying it seeing resilient demand out there for it cybersecurity offerings. The stock is going to be added to the S&P 500 effective June 20. You can see a rise of a little more than 5%. You often see that when you get included in an index. Index funds will have to add the name. Some sort of movement is there in the stock today. Closer to home, NFI Group says it has a five-year contract to supply up to 621 electric buses for the Toronto Transit Commission. The deal is actually 486 heavy duty buses, with an option for an additional 435 of the same vehicle. Now the TTC has said it wants to convert its entire fleet to zero emission vehicles by 2040. A quick check in on the main benchmark indices. We will start here at home on Bay Street with the TSX Composite Index. We are down a modest 14 points, less than 1/10 of a percent. South of the border, let's check in on the S&P 500. People are throwing around terms like dancing on the edge of another bull market. You do have Apple making gains today and that is helping move the S&P 500 higher but it's modest, you're up about a 50% at this hour. We are back with Justin Flowerday, head of public equities at TD Asset Management, take your questions about the market. Plenty coming in here let's get to the first one. Can we get your guests view on all this AI hype which is pushing tech stocks higher? Is it overblown? >> I certainly don't believe AI is overblown. We actually just did a deep dive within the investment group in a IN looking at the evolution of the technology and looking at the impact on company margin profiles, profitability, and the conclusion that we have come to is that it's not overhyped or overblown. This is the real deal. I don't think that's probably in a surprise to you. But when it comes to the near-term impact on the market and what you've seen from the big six or seven technology companies, we've had some pricing in a future revenue growth that goes well beyond the next couple of quarters. We are now thinking that this is, the market is now pricing in some very, very significant revenue growth from a IN order to get the valuations. It has resulted in a narrowness of breadth in the market which we haven't seen too many times before. And when you think about the top seven technology stocks that have driven this rally, they are up on average 50% year to date. Outside of that, the S&P 500 is flat. So again, just a massive, massive disparity. And the last time we would've seen this narrowness of breadth would've been back in the tech bubble. I think this is real, this is going to benefit companies like Nvidia and Microsoft and Alphabet in terms of data set growth. What will be really interesting is to see how some of the other companies in the regular economy employee a lot of the AI technology. >> The chipmakers make sense, building the tools behind AI, but how will it transfer mother industries? >> That's right. And look, I think ultimately what this has the potential to do is to increase the level of productivity and provide support for margins over the next 5 to 10 years for a bunch of companies. We have seen productivity growth that has been a little bit lacklustre in the last decade for the overall North American economy and I do think that this has a potential to provide a level of support to get the productivity growth backup which is, as you know, the real driver for real GDP growth of the economy. And I think is going to be across all kinds of industries that are going to see it the benefit. Consumer facing industries is what's being talked about quite a bit. The financial sector I can see some serious benefits. The industrial complex can employ a lot of the AI technologies in terms of automation of their plants. So lots and lots of benefits that I think will not just be felt this year but will be felt over the next 10 to 15 years and help support that margin profiles across various industries. >> Were talking earlier about a nine-month high for the S&P 500. You talk about how narrow the concentration is being in terms of certain tech names driving that and the fact that a lot of what you say is future revenue, future sales, seems to have been priced in. Does that make it a bit of a risky market? It sounds like then AI needs to deliver on his promise in the next little while. > Yeah. This most recent leg of the uptake started with Nvidia and their most recent quarter where they just announced blowout, blow out sales of semiconductor chips that are used to train AI machines and also run AI queries. And the numbers there were staggering. The question now becomes, as we head into the second quarter of the season, which will start in July, what are we going to see from everybody else? Are we going to see from some of the other big technology companies that have been dragged along upwards for this ride, are we gonna see the kinds of revenue growth and datacentre usage for Amazon and Alphabet? Are we going to see an uptick in some of the software that Microsoft is offering folks that is enabling the kind of use of AI? And is it enough to justify the types of gains to be had already? >> Let's get another question now. This one is about the Canadian banks. The viewer says Canadian banks have done very well for a long time. You see them continuing on their upward trajectory? To be fair, the banking sector this year has been under a bit of pressure given the uncertain economic backdrop. I caught you right there mid drink. >> It's just water, I promise. The Canadian banks just reported their second quarter fiscal earnings and that ended last week. And what we saw was probably a little bit more negative results than we had seen in the last little while. We went through some strong quarters of net interest margin expansion, loan growth, credit obviously wasn't an issue for some time. We have seen a bit of a turn in terms of a couple of things. Number one is net interest margins. They were a big driver of the growth asinterest rates were rising. That really was a tailwind for profits for banks. That slow down and in many cases rolled over a little bit. That was a headwind this quarter. They also saw changes in expenses. They were growing expenses and double-digit rates and that's fine when you have a revenue tailwind that's coming from really strong loan growth and net interest margin expansion and no credit issues but you get an environment where names start to roll over, loan growth, not as many folks out there looking for homes with loans with higher interest rate so that's gone down, credit remains fairly strong but in general, there's probably a little bit of a near-term headwind in terms of profit growth and sustaining the kind of profit growth of the Canadian banks have been generating. The other one thing I would mention that gives me a lot of comfort is that the limited downside is the capital is so healthy and stronger than they've ever been in that supportive for buybacks, it supportive for dividend growth and I think, we talked about earlier, population growth for the country just again provides that natural base of growth for new folks coming into this country looking for loans to buy new houses and new cars and that is obviously very supportive for the business of Canadian banks. > Okay, let's get another question here about the state of the economy. What might happen to markets if we did enter a recession? >> So what typically happens to markets when and if we do enter a recession is… Markets don't typically price it in right away. We get close to the point where you start to see a bunch of the leading indicators start to move down aggressively in the market moves with that. In hindsight, we can see the start date of the recession. if the market were to go into recession, it would have some difficult days and depending on the depth of the recession and then any of the other follow the takes place, the market can obviously get hit quite a bit and we've seen that in 2008, we saw that in 2000. And look, I think at this moment, our base case is the economy does go into recession and if and when it does, the market is going to feel that. The negative sentiment that kids build just from people psyche when they hear recession translates into people reallocating funds into other areas, safe havens. So I wouldn't be surprised to see a 10, 15% correction from here if we were to get a recession. That said, I do think that the recession has been pushed out until 2024. There is a lot of momentum in the short term in this economy that's going to be difficult to snuff out and see a recession in kind of the third quarter of this year, as was anticipated about a year ago. >> Things are always changing and we have to keep on top of them. As always, make sure you do your own research before making any investment decisions. we are going to get back to your questions for Justin Flowerday on the markets just a moment's time. Our minor course that you can get in touch with us at any time. Just email moneytalklive@td.com. Now, let's get our educational segment of the day. If you're interested in doing research on the high-yield bond space, WebBroker has tools which can help. Nugwa Haruna, Senior client education instructor with TD Direct Investing joins us now with more. Nugwa, let's talk about investors who purchase fixed income products in WebBroker, such as bonds and GICs. Maybe they are not terribly familiar with high-yield bonds. Walk us through it, what are we talking about here? >> Hi, Greg. It's interesting that you and Justin are talking about potential hikes in interest rates. We didn't think we would be here at this point in time and that is the reason why fixed income products have become more popular in the past year because of these higher rates that we are experiencing. So when it comes to regular bonds, an investor would purchase a bond which is issued by a corporation or government that promises to pay back your full principal at the end of the term until bonds will return the face value which is typically 100 and along the way, those corporations or governments will pay a coupon rate or interest. On the other hand, when you think about high-yield bonds, it's the same idea but the difference is the credit quality of these bonds. So top into WebBroker and Joe investors where they can find this information. So once in WebBroker, you would click on research. Under investments, he would go fixed income. And so the idea of what we talk about with credit quality, if you think about this, Greg, a regular investor who is a low credit rating may end up getting a loan at a higher interest rate and thus the same idea with these high-yield bonds. So these are bonds that typically have a lower credit rating and for this reason, to be attractive to investors, they will discount their purchasing price, which tends to lead to a higher interest that will be paid out to the investor. Investors who want to find high-yield bonds in WebBroker, you can go to the top here where it says high-yield, right click and open that as a separate tab, you can open it as a pop-up if you would like and I'm just going to zoom in a little more. This is where investors can see a listing of high-yield bonds within WebBroker. For example, you'd be able to see one of these bonds selling at 70. And the face value of bonds is 100. So this means that if an investor purchases this bone, they are getting a steep discount. When this bond matures in 2030, the investor will receive 100 for every 70 that they paid and if they hold this bond to maturity, they will receive over 12% for the lifetime that they are holding this bond for. That is to give you that idea of why investors may consider using high-yield bonds compared to regular bonds. > Okay, so a pretty good grounding now about high-yield bonds, some of the benefits and risks. What if an investor wanted to place a trade for high-yield bond? How would they do that in WebBroker? >> Right. So if an investor wanted to buy these high-yield bonds, they do need to call the trading desk in order to purchase these. So there is an alternative investors can use a let's go into WebBroker and I will show investors that option. So an investor may be able to use things like funds, so maybe an exchange traded fund or mutual fund. So you would go under research. Under investments, under ETFs, we will click on their, and once here, you can go under the tab that says categories, and then we can scroll down and find a fund with the fund manager takes the time together different kinds of high-yield bonds, put them into a fund and then an investor has access to them. I will mention though because these are high-yield, they come with higher risk were an investor may be facing a potential higher risk of default, so the company may not be able to return the original principal back. An investor wants to be aware they may not receive all the interest payments along the way as well so these are some of the additional risks that investors should consider if they do decide they want to go along with buying high-yield bond. >> Great stuff as always, Nugwa. Thanks for that. >> Always a pleasure. >> Nugwa Haruna, Senior client education instructor at TD Direct Investing. And make sure to check out the learning centre in WebBroker for more educational videos, live, interactive master classes and upcoming webinars. Now, before we get back to your questions about the markets for Justin Flowerday, 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 screenhere 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 Justin Flowerday and we are taking your questions about the markets. There are plenty coming and still is continue to go through them. A viewer wants to know if interest rates are going up again, what does that mean for dividends? >> Well, I guess it depends on a couple of different things. For companies that pay dividends, interest rates can impacts themby providing competition, obviously if you are a high-yield company and the risk-free rate of interest goes up and you are yielding 5% in the risk-free rate is 5% and you can get back, obviously there's a bit of competition potentially. But more than that, I would say that there are certain companies that have a high debt profile which, higher interest rates can obviously increase the cost of servicing that debt so if you are looking at high yielding companies that have a high debt profile, that can be challenging. But other than that, I would say it's really about the business model for these companies and their ability to grow revenue and grow it through free cash flow in a stable way throughout a cycle. And for us, if we can find a company that has that profile and being able to, who has competitive advantages and modes around their businesses and are able to grow revenues, whether they are yielding four or 5%, it's really about that future free cash flow. So it can be a challenging environment for company uses that are considered to be high yielding stocks as money flows away towards fixed income securities. but we are very happy to look through that if we believe in the business model of the company. > It sounds like one of those do your homework kind of occasions. We have another question here. This one about Canadian energy stocks. Outlook there? Interesting command of the weekend, Saudi Arabia seems to be taking one for the OPEC team. >> Yes, they are. And I think it's funny. Looking at that headline, it was a bit of confusing news release coming out of the weekend and I think what Saudi has indicated that they want is they want oil at 80 bucks or above for crude. And the second thing they want is they don't want short spot prices lower than forward prices. They are very happy with back gradation and this should help theget back gradation on the back end of the curve and getting back to $80 and above. What that means for the energy complex if we can get the price of crude oil back into high 70s, low 80s, that's a very healthy environment for these companies and right now, for the last couple of quarters, they are still generating really nice free cash flow. wwhat they are using that free cash flow for is to service their debt, paid on their debt, so we have seen continue debt levels for these companies move lower and lower and lower. And then most of them are allocating at least half of the free cash flow that they generate towards buybacks and dividends. And so I think that continues and really a higher price of oil is just going to result in more and more free cash flow in the short term which means lower debt profiles, which means or will lead to higher buybacks, which should support the price of the stocks. That I was going to say, given that, as we are having this conversation a question just came in. Someone wants to know, given all these factors, why is the Canadian oil sector leggings so much? >> A few things. There are other things right now there are a little bit more attractive in the market that people are chasing and people are looking for immediate gratification. If you got stocks that have good fundamentals and price growth, that can be an attractive story. Part of what investors have been thinking is they are looking at the economy, they are looking at the fact that we may go into a recession at some point in the next 12 to 18 months which likely leads to some pockets of weakness in the price of oil. And in that environment, they are not thinking about this quarter and next quarter, their thinking that 12 months out, we might end up with 70, $65 oil. And look, all I would say is that this is a range where these companies can still generate attractive free cash flow and I think the valuation has been de-risked for a lot of these companies. They will remain volatile. If you are investing in the sector, you need to be ready for lots and lots of volatility. But I think there is a lot of risk that has been taken out simply because energy companies have lagged. >> Another question here, this one about return to travel for so many of us after the pandemic, the outlook for global travel companies? >> Right, so there's been a fairly significant uptake, as you know, from travel on both a ledger basis and a business basis. And it really was led by leisure in terms of both air travel andstaying in hotels. And so you saw a lot of momentum behind these stocks that are involved in these business seas and these areas of the economy for a while. Some have dissipated recently as people have thought, well, the leisure play is already played out. Businesses, we got that initial boom but there is the work from home thing that's going to stay and play for a long, long time. I don't think we are done. I think we have momentum in leisure that will continue as people, again, I don't think the mentality is gone. Anything that goes away. And then in businesses, I think people just… Understood the power of connecting face to face with their colleagues and their clients and month after month after month, the more we do that and the more we realize the benefits of just being in person, I think that wave continues as well. Obviously, a recession would not be positive for the sector. It's an economically cyclical and sensitive sector of the economy. But I think there are still legs beyond what we have seen late last year and early this year in terms of leisure and business travel continuing. >> We are going to get back to your questions for Justin Flowerday on the markets in just a moment's time. As always, make sure you do your own research before making any investment decisions. and a reminder that you can get in touch with us at any time. Do you have a question about investing or what's driving the markets? Our guests are eager to hear what's on your mind, so send us your questions. There are two ways you can get in touch with us. You can send us an email anytime at moneytalklive@td.com or you can use the question box right below the screen here on WebBroker. Just write in your question and hit send. We'll see if one of our guests can get you the answer right here at MoneyTalk Live. Saudi Arabia surprised the markets after agreeing to an additional voluntary cut of 1 million barrels per day in July, but will this latest cut support sluggish oil prices we been seeing? Our Anthony Okolie is digging into a new TD Economics report on the latest report that we got over this weekend. >> That cut of 1 million barrels per day by Saudi Arabia brings the total production cuts to 9 million barrels per day over the period and that's thelowest level since early 2021. Of course, we saw oil prices have a modest bounds early on Monday. This latest move is an extension of the April promise of monthly output cuts totaling 500,000 barrels… In addition to the cuts on the weekends OPEC and its partners reached a deal extending it cuts for another year. Those cuts which were initiated back in April were set to expire at the end of this year. The alliance also announced plans to curb combined oil output to 40 1/2 million barrels per day between January to December 2024. That's a cut of 1.4 million barrels per day. Now the key implications, the decision marks OPEC's third attempt at tightening oil supplies since October 2022. But prior cuts didn't support prices in global recession fears. There was a WBT I rally up to $80 US per barrel before settling down to the high 60s per barrel in the month of May. TD Economics says the latest announcement shows that Saudi Arabia's intention to act unilaterally to support weaker oil prices. And while near-term cyclical dynamics will dictate price movements, TD Economics believes that recent actions by OPEC in its partners will serve to put a floor under crude prices. They also believe that the combined oil cuts are meaningful but are uncertain of the global oil demand picture. OPEC+ has implanted sizable performance cuts that account for about 5% of projected global demand in 2023. And they believe that this will tip the balance is further into debt is a territory in the second half of this year. TD Economics also goes on to say that the latest OPEC+ decision highlights the growing influence the cartel has gained in terms of being a producer and schoolsto support oil prices going forward. > TD Economics basically saying here that they think this is material and Saudis are showing their willingness to support prices. In their view, what does it mean for the price of oil later this year? >> TD Economics is this new should be bullish for oils looking ahead and rebalances their call for $90 per barrel, W BTI oil, by the end of this year which, prior to this deal, faced downside risks. Now looking ahead to 2024, TD Economics says that the planned production cuts which now extend well into 2024, combined with any form of strong global demand will support prices that materially high levels into next year. >> Interesting stuff. Thanks. >> My pleasure. > MoneyTalk's Anthony Okolie. Now let's get you updated on the markets. We'll take a look at TD's Advanced Dashboard platform designed for active traders available through TD Direct Investing. We are looking at the heat map function here. It gives you a nice representation of not only with moving percentagewise. We are looking at the TSX 60. The Saudi's were showing the willingness to go it alone to try to support crude prices. A bit of a mixed reaction from some of the big energy names. While Cenovus is up 1 1/3%, name like Suncoris just sort of flat and Enbridge is up pretty modestly. Before I leave energy space, I do want to point out, if you are not talking about oil, if you are talking about uranium, Cameco is continuing its rally in recent days. There have been some positive development in terms of nuclear south of the border, in the United States. If we take a look at some of the materials names, we are noticing weakness in Teck Resources and First Quantum. Glencore might take another run. We had Greg Barnes on the program a week and 1/2 ago and he said they thought maybe they would've shown something by now in terms of going back after tax. So maybe a bit of a pause on that story as we try to figure out what's next for the name, what Glencore may do next. Shopify is popping up for me right now because of the beginning of the session, Shopify wasn't that green on the screen but right now it seems to be building some momentum along with some of the tech name south of the the border. You got Shopify up a little more than 3 1/2%. You can find more information on TD advanced dashboard by visiting TD.com/Advanced Dashboard. We are back now with Justin Flowerday, head of public equities at TD Asset Management. I just got this question. Coming out of the slowdown recession, which sectors would be a good place to be? What usually benefits coming out? >> So coming out meaning we have had a recession, we lived through it, we survive, we are here. A few different areas of the economy have typically shown sensitivity to that positive inflection in the early economic growth of the cycle. One is you were talking about the metals, the base metals. Demand for metals generally increases and particularly if it's related to strengthen some of the developing economies, such as China. Commodities in general, oil should do well in that environment. Then, you get into financials, that's another economically early cycle sector which benefits early on because you get through some of the provisions for credit losses and credit issues that had potentially become an issue. And you see a positive swing and earnings momentum. And then I'd start thinking about the industrials. I'm not talking about long cycle industrials, I'm talking about the really short cycle industrials, which are very geared towards economic activity but the sales cycle from the time where customer is engaged and looking at a product to the point that they receive the products and buy it is shorter. And so those are some of the areas in the economy that typically would benefit from the early stages of an economic recovery. > We are running out of time for questions. Before let you go, we started off the top of the program talking about what central banks might do next because we are almost at the halfway point of the year. I guess you are entering this year thinking that at some point, there is going to be a pause, which we may be living through right now with the North American central banks, and then some cuts, but everything seems to keep shifting on us. What's really going on? What's really going on out there? That's one for the end. >> I think it's really a matter of the global economybeing really colocated and at work obligated today than it ever has been because the US is a smaller relative portion of the global and we all focused very heavily on the US but given the rise of China and the power it has in terms of the global economy, given the integrated supply chains across the world, there is a lot more factors which can go into building momentum or taking away from momentum in any given corner for the economy. And so the important thing is you need to stay, in trying to forecast the future of the economy need to stay discipline and just focus on the data. You need to understand, when you see an employment report, there are two different components. There is the household survey and then there's the establishment survey. One reports jobs, one reports the unemployment rate. Understand what the data is telling you. Then, you need to put it all together to try to come up with a forecast. But I would say it's more challenging today than it ever has been. >> Always a pleasure having you, Justin. Looking forward to that extent. >> Thanks, great to be here. >> Our thanks to Justin Flowerday, had a public equities at TD Asset Management. As always, make sure you do your own research before making any investment decisions. you want to stay tuned. On tomorrow show, Julien Nono-Womdim, semiconductor analyst at TD Asset Management is going to be our guest taking your questions about semiconductor stocks. They were definitely in the headlines recently. to get those questions into us, you can wait until the show starts or email them to moneytalklive@td.com. That's all we have for the show today. Thanks for watching. We will see you tomorrow. [music]