Justin Flowerday

[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 what's moving the markets and answer your questions about investing. Coming up on today show, we will discuss whether fears of an earnings recession are well-founded with Justin Flowerday, Head of Public Equities at TD Asset Management. So here's how you can get in touch with us with questions for Justin, just email moneytalklive@td.com or fellow that viewer response box right under your video player right here on WebBroker. Before we get to our guest of the day, let's get you an update on the market. We have green on the screen for a second day. If you are a long, it is a welcome sight. 19,373 with the TSX right now up just a little shy of 500 points, 2.6%, pretty much everything is going in the same direction across the sectors today. For the TSX. You are seeing a boost in the price of crude of course a lot of chatter out there about OPEC and its allies and what they're willing to do to improve production cuts. Moral be known across from that meeting. Tomorrow. He of West Texas American benchmark of more than 3% today. At home, Shopify getting a handsome bid. A little more than 13%. Energy continues to fuel some momentum from the rising price of crude, you have MEG Energy up a little shy of 10%, 17 bucks and 60. South of the border, check in the S&P 500. Another read today of course jobs Friday will be the important data point of the week. It job openings actually plunged in the United States of the most recent read perhaps sometime that the labour market is still worried about in terms of inflation pressures might be starting to ease. The S&P 500 up to no quarters of a percent. The tech heavy NASDAQ, even stronger here, moving in we have money moving into some of those tech names. Bank of America, let's check in on Wall Street. To see how it's bearing in this environment. Doing well as well, 32, 43, a gain of more than 4% and that's your market update. As we approach corporate earnings season once again, plenty of fears in the market about the potential for a so-called "earnings recession" of course that as the economy slows. Joining us for now more is Justin Flowerday, Head of Public Equities at TD Asset Management. Good data on the program Justin. It seems strange to start the show on another update but there are concerns on the market about what things will look like. >> Yeah there are. I think it's really important take a step back and think about where we came from. We came from a really good place and earnings have been really resilient. They've been resilient on the back of higher energy prices which is provided huge amounts of cash flow and earnings for the energy sector. That's provided support for the broader market earnings. We have seen companies do a pretty good job managing costs and that's been supportive. And then the really great companies out there have been able to pass on higher input costs in the form of higher prices to the customers. So that is provided a nice, steady, earnings flow. Going forward, it's gonna be tougher. We have seen the early signs of some cracks in the market. You've seen PMI's rollover. Across the world and we have a data point recently were PMI's are weaker in the US. We started to hear some announcement from companies talking about things getting a little more difficult. > A little more difficult… Let's dig into that as we go through this earnings season. Companies will earn their way to putting on what they show us. But our all the storm clouds gathering on the horizon in terms of economic slowdown and recession and inflation just going to weigh in on the longer term? >> Yeah I mean you had that some a rally and that some are rally took away some of the edge for companies who were thinking "this is getting bad, we need to do something." It allowed them to take some time and say "you know what? Maybe things aren't as bad." It turns out obviously that rally disappeared and we had a big selloff. I think, going into the end of the year, you got all the incentives for companies and management teams to go out there and talk about "look, we are seeing a challenging environment area 2023 as we are providing guidance is not going to look like 2022. We can start to begin to see the market take down expectations to a more reasonable level." >> Now I understand that your team do some interesting work on relationships between stocks and inflation because of course, that is been the key concern all year. Inflation and what the central banks or can I do to try to slay it. >> Sure, yet we did a little study recently because you hear a lot about inflation being really bad for asset returns and really bad for the economy which is I mean we just want to put some facts around it. It turns out, inflation, if it's high and sustainably high, it is not good for stocks and bond returns. You will see some negative rates return if we are in a six, seven, eight, nine, 10% inflation environment for a long period of time. Deflation obviously not good. The sweet spot was 1 to 2 1/2% inflation. That's when equities do the best and that's kind of where we have been living for the last decade or so. And this last one which is moderately higher inflation, 2 1/2 to 4% inflation, it was interesting because you saw stock returns that were around 10% or a little under 10% in that environment. And bond returns of over 7%. So moderately higher inflation which is where we think we are going to live for the next five years as the Fed starts to crack the labour market and take some pressure off the economy. We think we will be in that 2 1/2 to 4% range. It's not a bad world for stocks and bonds. >> Not a bad world for stocks and bonds. That's we like to hear longer term as well. All is volatility that we've seen even, you have a Summer rally, September was miserable, thank God September is over from an investor's point. The weather is getting colder. Then you get a rally. When you step back and try to take a breather from the day-to-day, how should we be thinking about the market? >> Yeah. A few different things. Talking about earnings, you have to always think about what is valuation looking like if you ever make a buying decision. To buy the broader market or individual stocks of the what is the valuation set up? When you think about that, we started the year at over 20 times earnings for the broader market in the US. Maybe 22 Times Earnings in January. We have come down now to 16 1/2 times earnings. And so, that's a more reasonable entry point and probably more in line with historical averages. So you're not gonna see necessarily valuation headwind from here. Probably not a tailwind either. The other way to look at it is stocks versus other asset classes. One of the tools that we use to gauge how attractive that is is the equity risk which is essentially saying "you can invest in a guaranteed rate return, T-bill or invest in equities which have, obviously an uncertain rate return." How much can you get compensated above T-bills beyond equities? Over time, you get a sense of what a fair equity risk premium is. Right now our equity risk premium is about 2.75%. Kind of in line with long-term averages. Again, not really that much of a headwind and I don't think that much of a tailwind either. >> Now of course we talk about the storm clouds on the horizon, this idea that as the central banks try to bring inflation under control, they are going to tip us into a recession. First they said it was be a soft landing hard landing… Can we skip a recession question mark group people are pretty negative. If we did end up in a recession what are the chances and how are we supposed to handle that as investors? >> Yeah so if we end up in a recession, I think we have to understand that for companies that we invest in, there earnings are not gonna grow. There earnings will probably be down on a year-over-year basis. And so we need to have a reset of expectations and essentially the Fed told us that they want to send us into a mild recession. They're trying to make a nice balance there. Of avoiding a deep recession. Obviously. And if we get earnings estimates coming down, coming down from, let's say 220 522 a and $50 for the S&P 500, that's okay. We don't want to see is we don't want to see the types of things that we saw and 2007, 2008 or 2001 were you saw earnings really come down a lot. We think there is support to come down with their support for them not to get complete destroyed. So, for us it's a lot about earnings. The other thing we have to realize I think, is a lot of the pain has been felt for the year. NASDAQ 30% off from year to year, the S&P 500 is low 20s% off from the beginning of the year. So the market has anticipated some of what we are witnessing in terms of earnings declines asked year. >> In terms of how to handle that environment, it sounds like we need to be nimble. If you start saying "I think this is going to happen… Just ignore everything from this. On " you probably won't be in a good place. > Absolutely and I will say that there is going to be some companies will not survive and are can do as well because they have been receiving capital essentially for free for the last five or 10 years. Liquidity is going to dry up. So for us, where we are doing is we're spending a lot of time looking at quality. Of value in the companies and the companies that will gain share for the next one, two, three years during the difficult environment in companies that are going to have price empowerment. But it's going to be really important to avoid those companies that are going to… Where the funding will dry up and some of those companies will not survive. That can lead to a destruction and wealth of the you work in one avoid. > Great start the program. Lots of insights to come. We will get to your questions for the market with Justin Flowerday, Head of Public Equities at TD Asset Management are just moments time. A reminder of course you can get in touch with us anytime. Just email moneytalklive@td.com or Philip that your response box right here on that under the video player here on WebBroker. Right now let's get you updated in some top stories in business and take a look at how the markets are trading. LightSpeed is capping a Google executive as its new chief or Arctic technology officer. The provider of point-of-sale technology restaurants and retailers as Ryan Tabone a has a track record of overseeing large-scale technology challenges. Ryan was most recently VP and Gen. manager of Google pay and Google Finance. HSBC is looking at possible sale of its making business in Canada. In a statement to several media outlets, HSBC said it is reviewing its strategic options for its Holy owned subsidiary in Canada. The company cautioned that its review of the business is in the early stages and no decision has been made. According to H SBC's most recent results, the Canadian division is profitable and added to overall earnings. Shares of Ford are in the spotlight today, the Detroit automaker says third-quarter sales were up some 60% compared to the same period last year. The gain came despite a softer than expected sales number for September as supply chain issues continue to hamper Ford. Now let's take a look of the benchmark index in Canada. Pretty much across the sectors every thing is working in your favour if you are along the market. It just depends on what positions you have. But right now, all sectors are in positive territory. South of the border, let's check on the S&P 500. That brought a read of the market. Same story. A push in some consumer good names. We are back now with Justin Flowerday, Head of Public Equities at TD Asset Management taking your questions about the market. Can you explain what happened in the UK and why? > That's a good word. It was a bit of a difficult opening for Liz. It was a difficult move to prove herself in the world. When you think about it there's a lot of reasons why the market reacted the way did. You have essentially spending 7 1/2% of GDP on fiscal programs when inflation is a 10%. So the markets, they're telling you that it's almost like a bond vigilante back in the 1990s. We are not to put up with it. And it revolted. You know, I think from here, we have the central bank coming in last week and they calmed things and said "we are gonna step in and we're gonna do a little bit of stabilization of the market." But I think it is a bit of a warning signal to other countries who are thinking about aggressive fiscal plans and some of the reactions that they might get. So, yeah. Tough week for the pound… UK assets but they have rebounded and I think they are up there for now. >> The fact that the Bank of England did step in and ultimately say "we have to make sure that the bond market is functioning"… That that give investors I do want to call it false hope that you saw people sort of grab on saying the pivot was back and they will step in when they have to enslave us again. >> Absolutely. And that is probably one of the big reasons for the bid in risk assets that we've seen in the last couple of days. It will be interesting to see how many other central banks around the world to follow through with that type of activity. We heard from the Bank of Australia this morning and they came out with an announcement of a rate increase that was 25 base points less than the market was expecting. Again, that was support for maybe the Fed pivot, the global central bank pivot is here. I think we are going to get these moments were the market has been selling off and we take the pressure off. And we see a rally… The difficulty is that some of these rallies, depending on how long they are, once again, they cause a little bit more pain for the fed because people get confident again. People think "oh yeah, we are through the worst." And it makes the Fed's job that much more difficult. They told us that they want to bring down inflation. They keep talking about 2%. At least they need to get it to three or four. That probably means in the US, the unemployment rate moving from 3 1/2% up to the mid-fives so they have a path that there to go down and I don't think we should expect them to pivot before they see visible evidence that they're making big progress. >> Let's get to another question of the platform. This one about the strength that we could be seeing this year with the US dollar. How much higher could the US dollar go? >> Yeah, so the short answer, we will probably be somewhat capped on the US dollar from here. The type of pain that we saw with some of the risk assets and liquidity issues you saw in pockets of the market, I think highlighted the stress when the US dollar gets too strong. So it's come off since then a little bit. But, when you think about the US dollar and the purpose it is serving the central bank, the Federal Reserve and the US, the US economy, they want inflation to come off. A stronger US dollar means you are not importing inflation anymore. You are buying goods from other areas of the world at a cheaper price. Meaning you are importing… It also means that the companies generating earnings overseas when they're converting it back are generating less earnings in US dollar terms. That also takes, removes, some of the lofty earnings that some of these companies were earning. It brings things down to earth a little bit. And so, I think the FedIs thinking in the short term that they are okay with a stronger US dollar because it serves their purpose. What they don't want is they don't want a US dollar that starts to destabilize the global economy where there is contagion into different pockets which, sometimes, can cause things to break. Bigger issues, that. >> That seems to be very tough line for the Fed to have to balance. The central banks can say "you know, we have our country, Canada, small open economy, the Bank of England can worry about what's happening in England and the Fed can worry about what is happening in the United States. " To its advantage, with a stronger US dollar in the near term. What it can do globally, it has to be a central bank to both its own country and the rest of the world sometimes. >> Yeah it's a really tricky balance right now, this is part of the balance they're trying to achieve and you start to hear that famous quote back in the early 70s, the US treasury secretary mentioned the US dollars our currency but it's your problem. That is ringing really true right now. Which is anything is interconnected. It can be a powerful thing for the US but then, it can really cause problems for different areas of the world when so many economies are reliant on the US. That's probably why you've seen countries in the round the world trying to minimize or reduce their exposure to the US dollar in recent years. I will use as an example, countries really reliant on the US dollar, some of the pain they can come of that. >> Let's get to another question right now, this one about what we are seeing in the energy trade. Your take on the oil and gas space amid all these volatility in the price of crude? >> Yeah. It's been volatile and I would expect to continue to be volatile. What you think about where we were three months ago, the tightness in the physical market, we have seen that dissipate. And so, we have seen spot prices come down we have seen the future curve flatten. We've seen a lot of things improve in terms of the physical market. From here, it's really about, I think, how things play a globally around the world and you could paint a scenario for oil prices to go down to 60. And stay there for a little while. That's of things improve with Russia and Ukraine. The US economy doesn't of going into a recession. So demand doesn't remain as resilient. We could see an environment where it's at 60. You can also see an environment where oil goes well above 100. That happens if things continue to get worse with the Russia, Ukraine crisis. That happens if Russia starts using oil as a weapon. Similar to how they are using gas as a weapon. That happens of China starts to open up again. And we get that extra incremental demand from China in terms of barrels of oil. So, right now, it's a really difficult one. I would just expect oil to remain really volatile from here. >> Then of course you have OPEC leaning in. Yesterday, the headline was "OPEC cut up to a million barrels of production a day". Then I saw a headline flash on the business network that we watch out there were getting ready to do the show saying maybe it will be 2 million. By tonight in tomorrow's meeting… What kind of influences OPEC have? >> They do still have sway and they want well supported above a certain price. The problem becomes… They need to watch what they wish for. Because eventually, what's gonna happen is we are going to come out of this downturn and we will come through this economic contraction that we are probably in the beginning stages of in the global economies will start to grow again. While OPEC has the ability to cut barrels of oil that they are going to provide the world, they don't have the capacity to increase the supply of barrels that they used to. And so, if they were to cut 1 million… They could probably bring back 1 million. But they're going to have a difficult time increasing supply beyond that. So then we all know what happens if we are and really high oil price environment and what that does to the overall economies in demand in the world. So it's a delicate balance again and for now, they are sending the signal that "we are comfortable holding in oil above $75 and that's what they seem to be doing". >> So a case can be made for 60 under certain conditions in a case can be made for over 100 under certain conditions. We bring it back to equities namely a lot of the big energy companies in this country, all we heard earlier is how they are awash in cash. Are the company staying and saying there so making money? >> Absolutely. They have been so diligent with their expenses. So diligent with improving the operational efficiency of their production. They are still making money at $60. The other thing that's happened is all of this excess free cash flow that has been generated over the last 12 months with oil prices and how high they are has gone a long way to improve the balance sheet and buy back shares. So they go into, let's say, a lower oil price environment, much healthier businesses and let's say if they had gone into the last time oil price started to go down. But at $60, the Canadian oil producers are still making good money and generating plenty of free cash flow. >> As always at home make sure you do your own research before you make any investment decisions. We will get back to your questions for Justin Flowerday on the market to just a moment's time. A reminder of course it you can get in touch with us in 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. Let's check in on the markets. We have a second day of green on the screen. It's pretty firmly to the upside. 19,368 for the TSX Composite Index again just a little shy of 500 points. 2 1/2%. Taking a look across the sectors, all in positive territory. The biggest gainers percentagewise is technology. Mining stocks, financials, energy. They are among the top leaders to the upside when it comes to putting on percentage gains. Big rally our hands. South of the border, the S&P 500 much of the same story. Affirm rally thereto for the second day for that broader read the American market. 3780, triple digit gain of 102 points for a jump of 2 3/4 of a percent. Again you have technology stocks being strong not to mention energy. With the price of crude on the move as well. We are back now with Justin Flowerday, taking your questions about the markets, let's get to one that is a little closer to home. What is your view on the housing market right now? >> Yeah… So it's been a tough time for people who just bought a house. Clearly. And I know a few people. They are kind of new homeowners within the last year and it's been difficult. For most people who own homes, they've seen some of the gains we made over the last two or three years come off. We are still not back down to where we began let's say that being a pandemic. But, when I think of the housing market going forward, it's his tug-of-war. Taking place between, we have higher costs of funding which make servicing a mortgage a little more challenging. That's going to limit the amount of mortgage that someone can take out. So it's gonna limit the amount, the number of homebuyers I can afford houses in the million plus range. So that's on the negative. On the positive, the immigration profile for Canada is tremendous. We have the best population growth out of the G 10 countries. I think the number that just came in in terms of the second quarter population growth in immigration was 285,000 new individuals coming to live to Canada. It was a mix of Ukraine refugees and students. That was the highest number that I've seen in a long long time. Nothing of ever seen a number that high. It probably points to new individuals moving to Canada. In excess of 500,000 this year. On a 40 million person base, that's over 1% and population growth. So that's hugely supportive and so it keeps the demand for new housing obviously quite robust. And it's about finding that balance between having a lot of demand for people wanting houses and supplies really not that great but funding costs are going to CAP with what people can afford. Maybe down 5%, maybe down 20% of the peak. I don't think Morgan to be down another 20% from here. >> For the losses we've seen so far, of course their paper losses. If you have not sold your home, and you've been in your home for a while as you pointed out, at some point, when I was not watching they told me my house was worth this much. I'm still not living at the moment. What of the wealth effect? A lot is said about the strength of the consumer. They feel pretty good when every time they look at headline and say "hey my home prices up again, let's go buy something." >> Absolutely the effect is real and there have been a ton of studies highlighting how impactful it can be. I think on the margin, there is going to be a negative wealth effect is going to trickle into people's psyches. It probably is already starting to have an impact on consumer behaviour and consumption. That's on the margin. I don't believe that we are going to see massive demand destruction. If we end up remaining down 25, 20 to 25% from the peak, I think that wealth effect, as long as people stay employed, as long as we see healthy job profiles, then that should remain limited. If unemployment cracks and people stop receiving incomes, then it becomes a lot more challenging obviously. You get into that, you know, cycle of negative spending and the house price comes down more and negative spending… I don't think we're there yet and that's not my base case scenario but it's absolutely a risk. >> Stay in the real estate space, broadening out housing, we have of you are asking about REITs do they look attractive right now. >> It really does. It does depend on which when you're talking about. So many different varieties of REITs and sectors of REITs. Broadly speaking it's become a little more challenging for the sector. A lot of it has to do with funding. When you think about REITs, just a reminder that they have to pay out 90% of their net income as distributions to shareholders to maintain their tax status. So they are relying on funding, both debt funding and equity funding. The cost of debt funding has gone up and equity has dried up. So REITs in terms of the growth profile that they may have thought they were headed for for the last three years, has probably contracted a little bit. There still are some pockets of attractive REITs and apartment REITs in residential REITs speaking to the population growth in some of the trends we just talked about. They continue to look very well supported long-term from a fundamental basis. The price obviously can be volatile but ultimately it's a healthy profile. There is still e-commerce that is not going away so a lot of these logistics and warehouses are going to continue to be supported by a trend of buildout in e-commerce that slows down 100% but it's not going away. And you have to think about valuation. When you think about valuations also, your REITs is… Equity and fixed income. When you're looking at equity, earnings or indecent but they are not growing. When you think of at the fixed income component, you are kind of competing with the government bond >> Those yields that used to look so nice for me… >> They are now a bunch higher. So the dividend yields spread between the REITs and the government bond. Shrinking. Probably to where it was over the last 10 years. So valuation is nest not necessarily a supportive when you get to these interest-rate levels. But fundamentally, long-term, holdings, there are some pockets where you should do just fine. >> Interesting breakdown in the REITs sector here. We will change course here and talk about nuclear. Lots of headlines in the sector recently. Any updates? What's happening in nuclear? It seems many politicians are feeling differently about it these days… >> That's right. There's been a change in sentiment. You are seeing countries that were shutting down their nuclear plants kind of reopening. It is just such an important component of baseload and that's a really important thing for utilities. You think about utilities… When you're looking at power generation and throated day when they need to deliver power to consumers, they rely on renewable energy, they rely on natural gas, coal is becoming a smaller footprint in utilities. As it comes down and they think about that baseload, nuclear is really important because the sunshine is during the day and the wind blow sometimes but it doesn't always blow. We need the baseload and nuclear is a critical part of that baseload. I think as we continue to transition to more and more renewables, I think nuclear maintains its, kind of, position is an important part of baseload. And then, if you think about what happened after 2011, Fukushima… This was when people started talking about shutting down the plants over a period of time. You were hearing less and less and that as people understand that that was a very unique situation that took place which was tragic but any new nuclear plant built today is going to be built on… In a different area geographically and probably will not of the same risks. So the tides are turning a little bit for nuclear. And then, that's on the demand side. On the supply side, because Fukushima was such a big disaster and caused nuclear plants around the world to shut for a little while, the investment into mines was basically, you know, fell off a cliff and you didn't get new investment into uranium mines that you would've liked to see. And so supply is constrained. So in terms of nuclear as it relates to the price of uranium, it's probably a little more supported as demand increases in supply can't react as quickly because of the underinvestment. >> All right. We will get back to your questions in just a moment's time for Justin Flowerday on the markets. As always make sure you do your own research before making any investment decisions. A reminder that you can get in touch with us at 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. After a disappointing month of August, US vehicle sales rebounded to a five-month high last month despite concerns about rising interest rates, inflation and of course recession fears. Anthony Okolie joins us now with more. Anthony. >> Thanks so much Greg. Yes US vehicle sales up nearly 3% in September, month over month adjusting the consumer demand for new cars seems to be holding steady in the US at least for now. Now again, this despite concerns of rising interest rates and record high prices. While auto sales did do well for the month they were slightly down for the quarter but GM was actually a bright spot. I brought along a chart. GM sold half a million trucks and cars and in the third quarter. That's a 24% year-over-year increase. Of course, we part of the supply chain which is really hamper the auto industry. But it GM said that the availability of semiconductors have improved and certainly that was reflected in a nice rebound in its auto sales. The other automakers here they offered mixed signals with vehicle sales. Notably, GM did outpace Toyota and Ford. In the EV market, Tesla reported 343,000 vehicles. Up but fell short of analyst estimates. Interesting to note, Tesla did outsell Honda during the quarter, put interest concerns about the EV staying power. Again, electric vehicles have moved from being a niche novelty to a primary mode of transportation for a growing number of people. Traditional automakers like GMF continue to make that shift to EV's from gas and diesel cars to catch up. GM actually sold nearly 15,000 units of its Chevrolet volt and is the EV vehicle total sales for EV's ever highest price. Ford nearly tripled their EV sales in September as well. But again, Tesla is the towering force in the industry. They have sold far more EV's than all other car companies except for rivals in China. According to TD economics, EV's continue to uptick in Canada and in global market shares. It's been slower in Canada versus markets like China and Europe. Greg? >> Of course when it came to supply chains the automakers got hit pretty hard. We could not get semiconductors and other parts. As we start to see some easing, the supply chains are starting to work again and start to move the things we need. What is TD economics think about the space going forward? The rest of this year for 2023? >> The supply chain is easing. We are starting to see recovery and inventories. But sales are still below 15 to 16 million unit range that we saw back about a year and 1/2 ago. Now, TD economics says that this is a sign that rising interest rates, high inflation is certainly eating into demand. So looking ahead to this year, they expect just under 14 million units sold. Looking ahead to 2023 they expect a modest gain of 15 units in total. >> Our car currently is nine years old. To my way of thinking there is nothing wrong with it. For my wife it's time for a new one. So I might be one of those numbers in 2023. >> We will see. >> We will see indeed. MoneyTalk's Anthony Okolie thanks. Quite a market rally we have after a miserable September. So far into October, the second day of training, 19,388, more than 500 points now on the TSX. Again of 2.7%. All sectors in positive territory. The hard-to-find a small number of stocks I saw earlier. Nothing too notable in negative territory. Let's check in on Air Canada. See how it's faring in this environment. 17 bucks and $0.77 up 5 1/2%. Of course we've seen the price of oil, carrying some of the energy names hire as well with Cenovus Energy up 3 3/4 of a percent. South of the border, the S&P 500, let's check in. 108 points on the board. Good for a gain of just a little shy of 3% again. Broad-based strength in the market today. The tech heavy NASDAQ, faring a little bit better than earlier. Narrowing that gap a little bit still winning percentage wise. The NASDAQ up a little more than 3% and Ford, Anthony was just telling us about all the numbers coming in from the automakers. It seems that the street was pleased with what he got from Ford. For bucks and $0.24, that stock is up 6.75%. Let's get back to questions now for Justin Flowerday, our guestroom TD Asset Management. All right. Everything just seems to be flowing in and out of each other today. The semiconductors… We were just talking about how troublesome that is for the automakers. What you make of it? >> So, semis has been hit. They've been hit hard. You know, when you think about the sector, it was one of the main COVID where there was a huge demand for semis and supply issues were there. So they obviously had massive pricing power. As things got better, there is probably some double ordering probably some supply the came on that was in excess of demand. So you've seen the sector rollover faster than it was kind of a leading sector as we are kind of, things started to weaken. Structurally, semiconductors are massive massive parts of the future. So demand, the secular demand for semis is going to continue. It's not gonna go away. It's obviously can maintain cyclical characteristics. It's got a lot of operating leverage as a sector. So, you know, I'm not totally convinced the pain is done but structurally, if you are thinking of owning a sector for the next 5 to 10 years, it's going to have phenomenal growth. The growth is not done yet. You know, one of the things or I guess, signs, of how strategically important semis over the world, just think about some of the announcements that you've heard around the world recently. In the last year or so from Italy and Germany… And Japan and the US. They are all saying "we are going to pay anywhere between 20 to 40% of a new facility, semiconductor manufacturing facility," they are partnering with the larger semiconductor companies in the world to try and bring some of that production home. These are long-term projects. They are not going to necessarily change supply for the next five years. But, it highlights how critically important semis are and how big of a growth they are going to be for the economy for the next 5 to 10 years they will remain as well. >> We want to get your final thoughts for the audience during these tumultuous times. If you're along the market in your happier yesterday than today, I don't feel like there's any guarantee in this market in the short term. > No. The only thing guaranteed is volatility. Volatility is not going away. Were gonna remain in a highly volatile environment. If you have sold, do not sell. There are so many studies in so much literature that shows the harm you can do by selling after six, seven, eight, nine months of a downturn. It's gonna remain volatile and it might not feel great on some days but for the long-term preservation of your wealth and the growth of that wealth, my advice would be to close your eyes and wait for better times because looking at three years, I think the returns are gonna look quite attractive. >> Return investors indeed. Just great to have you here as always. >> Thanks for having me. >> Justin Flowerday, Portfolio Manager at TD Asset Management. On Wednesday, David Mau, Portfolio Manager at TD Asset Management will be our guest taking your questions about global and industrial stocks. A reminder to get a head start an email your questions at moneytalklive@td.com. That's all our chauffeur today. Take care. [music]