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[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 show, we are going to discuss what's been driving the outperformance we've seen from the Canadian utilities sector and whether it's had to continue with TD Asset Management Marisa Jones.
MoneyTalk's Anthony Okolie is going to have a look at a new TD Economics report on how immigration is shaping Canada's economic future.
And in today's WebBroker education segment, Caitlin Cormier will show us how you can set up stock alerts using the platform.
Here's how you can get in touch with us.
Just email moneytalklive@td.com or fill out the viewer response box under the video player on WebBroker.
Before we get to our guest of the day, let's get you an update on the markets.
The Americans are back from the Memorial Day long weekend and they are trading. Volumes have picked up on the side of the border as well, although we are fairly deep in the red. The TSX Composite Index, we are down 167 points, almost a full percent.
We have quite a substantial pullback in the price of American benchmark crude today. Of course, OPEC and its partners will be meeting this weekend, seeing some volatility in the trade. That is playing through some of our biggest energy names.
I could've paid any of them to show you the effect of that lower price of American benchmark crude but Crescent Point at this hour at eight bucks and $0.79 per share, down about 3%. Now, gold is getting a modest bid today.
Most of the miners are doing much but Centerra gold is standing out from the rest. At seven bucks and $0.33, it's a 5%.
South of the border, there is political wrangling over the US debt ceiling deal. There is some movement in the tech stocks. The S&P 500, the broader read of the market,is it very modestly about six points, a little bit more than 1/10 of a percent.
The NASDAQ has been benefiting from all this talk around AI recently. It is doing better than the broader market, it's up 90 points are almost records of a percent.
I want to check on the share price of Nvidia.
The magic number is $404.86. If it stays above that line, it is in the trillion dollar market Group. It broke about that today.
At 412 it is where above it.
It's up about 6%. It's got a big bump recently.
There's been all the interest in artificial intelligence the chips Nvidia makes I power all of this AI technology and a really pretty robust revenue forecast to give us in recent days. We'll keep an eye on the one for you. That's your market update.
While the market leadership we have seen from the big tech firms out of the US has been hogging the spotlight, Canadian utilities have been quietly outperforming on the side of the border. Joining us now to discuss, Marisa Jones, utilities credit analyst at TD Asset Management. Good to be back on the program.
>> Thanks for having me here.
>> It was interesting when you brought this up and were having a chat yesterday. The utilities have outperformed the TSX Composite Index. What's happening?
>> There is a number of things. If you look at the first quarter, the utility sector here in Canada was a bit of a laggard in Q4 last year.
So coming into this quarter, there was a bit of a trade looking for safety, security, which, of course, utilities offer. Secondly, I would say that there are a number of utilities that outperformed in the quarter that had been the ones that had been lagging in Q4 due to specific situations.
>> So that is what was behind this. Investors are also concerned about what we have in front of us and ahead of us. How is it shaping of the rest of the year?
>> Sure thing. I think the utilities are well positioned to continue performing strongly.
So what we have, our outlook for inflation continues to be a headwind for most of the companies in Canada, and North America generally speaking. Both utilities offer a real return.
So what I mean by that is that inflation rates are passed through the cost of capital, the expenses for the utilities on to the… So it offers a bit of protection for the investor against any inflation headwinds, which we continue to expect. Furthermore, I think there's a lot of medium to longer-term tailwinds behind the sector, and we can touch on that if you want, namely policy support and regulation that is supportive of greening the grade, of increasing electricity demand and support of the system here in Canada.
>> Now, the Canadian federal budget, that seems like ancient history although it was only several weeks ago.
At the same time, we know that the managers and they are can have effects on various industries going forward. The media spotlight goes away from the federal budget but you are still seeing things in there that relate to the utility space.
What are they?
> It was very interesting because I saw the Canadian federal budget as a response to what we saw last summer in the US. That was the inflation reduction act.
So when the IRA in the US, there was a lot of… Of course, they tried to deal with inflation and with jobs, but there was a lot in that bill in the US supporting renewables and clean generation, and building on home territory, so bringing the supply chain back to the US. So Canada, to keep up with that, the Canadian federal budget also included different tax measures, tax credits for manufacturing of clean energy. So the whole supply chain for clean energy will be able to be, to receive tax credits going forward.
So that is supportive.
There is also different support mechanisms for investments in terms of building renewables, a lot of tech support there.
The whole energy supply.
It's more so with the power generation then I would say the regulated utility side, so not as much for distribution and transmission.
But of course, if you have a buildout in support of the power generation side, the regulated utilities that I largely cover… > You gotta get it out to the people.
> You gotta distribute it. So it's very supportive, I think.
>> I want to talk about inflation.
Last time you were on, you mentioned it briefly and he talked about the ability of utilities, and regulated utilities to pass through. Is there political risk and that in times when you know the government will say, well, we want to ease your pain from these higher costs and then people say, what about my energy bill?
>> Very good point.
That's something we've been watching very carefully.
So there is a balance between that capital investment needed for the utilities on many fronts, the inflation impact on the cost side and then the balance between affordability, so customers. So the regulated utilities have a responsibility to serve the territory that it's based down.
That's its obligation.
And for that, on the regulated side, they are expected to get a fair rate of return.
That's how the utilities space works here in Canada and globally.
So when you have inflation rising, there is that fear that, yes, they are allowed to capture that and pass it through to the end, but if they can't afford that, there's a lot of risk of political interference.
Largely, we seen in North America is that the government has said in different jurisdictions, we recognize this is an issue, so the government in different, we have seen it in some of the states that they have actually stepped in and started giving relief programs to customers that can't afford these rising costs on their bills.
I do watch to see if there is political interference.
Typically, there is none that will actually impact the regulated utilities.
But we did see 1 Instance in Nova Scotia in the fall, and this resulted in Psalm, you would see, and marrow, the stock price decline. The ratings agencies to punitive actions against Nova Scotia Power.
It was more that the dollar impact of the utility was not that significant in the end.
But the fact that the political interference was there was deemed a risk and a negative.
>> I imagine a lot of our viewers are going to be looking at the utility space today as we talk about it from an equity perspective.
You are a credit analyst.
Our equity investors sort of looking at the same things that a company? When you start doing the homework and looking in the balance sheets, are you looking at the same things?
>> Very much so.
I would say specifically now. You mentioned that the costs are rising, we are watching the impact of cash flows.
And for utilities spaces in particular, and to some big state that pipelines mainstream companies as well, the impact on the ability to pay a dividend could be affected if the credit ratings are at risk of being downgraded.
The ability to grow could be impacted as well.
I'm from a credit perspective cautious of the risk to the downside, but right now I think our interests are very much in line with how equity investors are looking at the companies.
>> Fascinating stuff and a great start to the program.
We are what you get your questions about utilities for Marisa Jones and just moments time.
A reminder, of course, you can contact 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.
Nvidia has made its way into the trillion dollar market cap club.
the chipmaker's shares have been rallying in recent days on a strong sales forecast. That strong sales forecast was on the back of AI demand, and it means that Nvidia chips, apparently, with $1 trillion plus market value includes only a few names such as Apple, Microsoft and Alphabet, and it's the first semiconductor stock to make it into the club.
At 410 bucks per share, Nvidia needs to hold about $404.86 and if they stay above that line, they close the day in the trillion Dollar club. Right now you're at 410, well in comfortable territory.
Shares of Tesla also in the spotlight today. Elon Musk is in China, of course as an important market for the electric vehicle maker, and has apparently held a meeting with the country's Foreign Minister. The trip of course comes on the heels of the recent G7 meeting in Japan, where the group of nations said it wants to de-risk its relationship with China.
Right now you've got Tesla up a little shy of 4%.
It appears Americans were eager to travel by air over their Memorial Day long weekend. The US transportation Security Administration says it's May 9 .79 million passengers from Friday through Monday. That number slightly surpasses the number of travellers from the 2019 holiday weekend.
Of course, that was pre-pandemic life. Airlines has said that they are seeing strong demand for the summer travel season ahead.
A quick check on the markets, Bay Street, we will start with the TSX Composite Index.
We've got a substantial pullback on the price of American benchmark crude today. It is pushing a lot of our big energy names lower. Data hundred and 81 points on the top line for the TSX Composite Index, almost a full percent. And south of the border, lots of things in the mix.
Yesterday seeing a big push for tech stocks. There is a tentative deal on the Debt ceiling. There's going to be some jockeying around that in the next couple of days as they pushed around Congress for votes.
so right now you're pretty much flat on the S&P 500, three points to the upside, sort of fading a little bit from earlier.
We are back now with Marisa Jones, take your questions about utilities.
Let's get to them.
Right off the hop here, what is your opinion on Algonquin Power?
>> Okay, and this is a name that had its ups and downs a lot in the last couple of quarters.
Going back to Q4, the company, it came to fruition at the company had a lot of floating-rate debt in its capital structure. It had historically been quite aggressive in making acquisitions and using its balance sheet to do so. So we saw on the equity side the dividend was cut heading into the year end.
so looking since that time, there has been a few positive steps. It came out that there, by year end, they had reduced the use of floating-rate debt. So their balance sheet was starting to be repaired. And then we were watching, cautious on the name, but watching what would happen with this deal to buy Kentucky power.
And then the whole market, I think both the debt market and the equity market, in my impression, were hoping that the deal would not come to fruition.
The idea was that it would have to use a lot of leverage, Algonquin Power, use leverage to make this acquisition and at this time and with interest rates where they are now, it was now looking good.
So the fact that Kentucky power deal was terminated and this was done on mutually agreed terms between the buyer and seller, I think it was viewed quite positively, both on the debt and the equity side. So that was step number one.
And then, quickly after that, when they reported, Algonquin Power reported its Q1 results, they also said that they are looking at a strategic review of its renewable power business.
So here I would say it's very interesting. They are going to have a quick turnaround I think by Q2, they said, which is early August, when they report.
They will give the results of what they plan to do with the renewables and this could mean spinning it off, it could mean selling down the sake of it, it could mean maintaining it. We don't know.
I think, from a positive perspective, if the renewables businesses were to be sold, it would help the balance sheet.
And plus, if you're holding the pure utility in the end, which from a debt perspective would be a lot more stable, that could be a positive, especially for the fixed income holders.
On the negative side, though, the renewables business does offer complementary power supply to its utilities and its agreed power supply.
There are pluses and minuses. I think when I am looking at the equity analyst's view, a lot of the analysts right now are just sitting on the side, the sidelines and waiting to see what happens.
>> What actually does happen.
>> Yeah. So I think a lot of investors and I would be in the group that are so cautious on the name, but there have been some interesting of elements.
>> The fact, and obviously there are conditions here unique to Algonquin Power, but the fact that that deal with Kentucky power in both sides agreed to walk away from it, is there anything to be gleaned from their about the broader industry about potential M&A activity this year? Is it sort of not the time for the markets play in that space?
>> That's a very good question.
That particular deal was unique in that it was announced back in 2021, at the end of the year.
And the market has changed completely since that time.
So actually financing it would've been a lot more punitive than originally contemplated. So that was, it's kind of unique to this deal.
But in terms of M&A in general, I think there are small opportunities emerging but there's not a lot of hugely transitional or big transactions that I expect to happen in that space. I mean here in Canada, you might be looking at some companies that have to be selling.
So this is segueing into a kind of TC Energy which, to clean up its balance sheet, specifically to appease the ratings agencies but would benefit both debt and equity holders, they are looking, and they have stated quite clearly, that they are looking to sell some assets.
So a minimum of $5 billion.
So there are some specific deal transactions that will occur.
But other than that, I think it's serviceable, small M&A market now.
>> Interesting set. Look at to another question. I think you briefly mention Emera off the top. You got someone thinking about Emera and they want to get your take on the name.
>> Sure. I guess, similarly, it had a rough Q4 . There was political interference in its Nova Scotia based utility that hitthe company pretty hard. There was rating agency downgrades in Nova Scotia Power and that resulted in negative outlooks at Emera.
And right now that reading is quite critical becauseit's sitting at the Tripoli Midas level. So again, equity and fixed income investors are watching quite closely. But what I would say has happened, and I give the management some credit here, is that they were saying, what happened politically in Nova Scotia was out of their control but there were also a lot of positive catalyst yet to come to help positive free cash flow starting in Q1, so in the beginning of this year.
And we start to see these transpire in line with what the management said.
So they have outlined, Emera has outlined it steps to reduce its leverage and some steps that they could take if needed, such as issuing preferred shares.
They don't really want to sell assets. I think they have some assets they could sell but it's not top of their list.
And going back a few months ago, I thought they might have to, but really, their Florida-based utility has started to recapture some of that cost that they hadn't captured, storm related costs last year, fuel costs last year, it started to get into the cash flow.
So we are seeing their kind of metrics improve and eyes see a good trajectory this year for Emera. So from my perspective as a credit rating analyst, they can keep theirratings will be positive for fixed income and equities.
>> Another one here, a little closer to the province of Ontario, closer to where we are.
Hydro One, with your view on this one?
>> Hydro One, it's a stable credit and stock as well.
There is a new CEO in place, but he came from within the company.
There is no change in strategy here. So it's a very homegrown, it's Ontario-based, transmission company was some distribution for electricity, and that strategy at least for five years I don't expect to change. So from that perspective, if you are looking for a safety trade, I think it's a very good name to go into.
On the flipside, it trades pretty expensively.
It's pretty rich. Set a premium to other utilities.
But I do think it's warranted and I think it can stay that way. There is, in my view, some upside.
so it's not just a boring, stable credit.
there is a push for transmission billed in the providence andthe system organizer here in the province are actually directing some additional transmission lines to be built. So I think that has yet to be captured into the company's valuations.
I see the upside.
>> Some interesting stuff there. What would be the biggest risk for a name like Hydro One?
>> Well, right now, it's more on the valuation side. If you think it's too rich and there could be a trade out of their if investors think it is indeed boring and don't see the upside that I see, that would be one risk.
There is a risk that we watch, I think it's very remote risk, but that they do look for growth outside the province.
That was nipped in the bud a few years ago with government interference at that point and I don't see the appetite there for Hydro One but it is something I do watch.
>> As always, make sure you do your own research before making any investment decisions.
we are going to get back to your question for Marisa Jones on utilities and just a moment's time. A reminder, of course, 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 want to stay up-to-date on the price action of a specific stock, WebBroker can help.
Joining us now with more is Caitlin Cormier, client education instructor with TD Direct Investing. Caitlin, great to see you as always. Let's talk about tracking stocks using the platform.
>> Absolutely! Thanks, Greg.
So one of the tools that we have within WebBroker's what's called alerts.
So exactly as you said, Greg, maybe you are looking at you want to know more about the price of a security but you want to be more proactive about it.
You don't want to kind of have to go on to the trading platform and be constantly monitoring your positions or your watchlist. Maybe you would like to be notified about changes for a particular security and take some of that onus off a view of keeping track.
So let's hop into the trading platform and see how you could do that. So I'm going to do, there's a couple different ways you could set these types of things up but what I'm going to start as and when you click on research and then I'm in a go under investments and click on stocks. Of course at this point, this is kind of our main stock page. Let's just go ahead and put our Old Faithful here… I clicked away. Just one second there.
Let's put our Old Faithful Apple in there. So as we can see, there is the normal information about quotes but you might notice appear towards the top right hand side, we have set alerts.
So this is available on any of our stock research pages and I'm just going to go ahead and click on it and it's going to pop up a separate box here this is where I actually set up these types of alerts.
As you mentioned, there's price alerts. So we could do a price drop, price rise, you could do 52-week high or low, you can also do changes from previous close. If you want to see if there is some real volatility in the stock, maybe after earnings announcements or something like that, you can also do ratio, price-to-earnings ratio drops and rises, trading volume, we want to know people are really actively trading the stock. Again, if it's rising faster than a particular index over a period of time, so for example if you want to know if it's rising faster than the S&P 500 over a week or a month, then you can also get a notification. So there's really kind of a whole bunch of different options as far as price and volume. I want to quickly note to you that especially for these options here, you can have push notifications come to your mobile app. I will caution that you do have to have the latest version of the TD app installed on your smart phone in order to get these notifications. So if you don't have that installed, make sure you are always keeping them today because otherwise is push notifications won't come through.
also, you can have email sent as well. If a kind look across the top here, you can get sent an email every day on any news that comes up about this company. You can get information about analyst changes. So they're kind of changing their tune as far as what they think about the company.
You can look at technical indicators if you are into technical analysis and get notifications of those, or any notifications of events.
So let's just say for example we want to know the next time Apple has a dividend announcement. Some just go duplicate dividend announcement, make sure the my email address is correct. I'm going to go over and click save and that's as easy as I actually add an alert for a particular security.
>> Okay prayer and am going to tell you a story but it has a point.
On the train ride on the way this morning, I'm going through my inbox and I'm unsubscribing to a bunch of things at the time I thought, yes, let me know when you're having a sale.
Yes, let me know when you're having an event.
And then it was too much. All to say, if I can't learn from my mistakes, is it possible that I could set too many alerts and need to rein them in?
How would I do that?
>> I think that's probably something we can all feel as for your email inbox getting too many notifications.
Absolutely, we can go ahead and rein those in. If you are unhappy with your alerts, you are getting too many notifications, you absently can go ahead and alter them once you have them set.
Let's go ahead and haul back in and see how we can do that. So we're gonna click on research and go under tools.
and again, I said there's a few different ways even set alerts. This is another way to set B can also manage your alerts within here.
So here if I want to set I would singly type in a symbol.
this is also where you can edit these alerts.
I see currently on this particular account, I have two different companies that I've notification setand again, I have dividend announcement, I have a price drop as well as a prize hits a new 52-week high or low.
And it's so simple for me to delete. I go ahead and typically click on the checkmark for whatever I want to delete and click delete selected.
And delete alert.
And it's the same with editing.
See I have price drops below 145, that might be ambitious given that the last trading prices 177, I go in here and say let's maybe be a bit more realistic and change it to 150.
And then if it changes there, I will get notified.
Again, it's as simple to go ahead and update that.
So really simple and easy I think in order to get some management there.
Just as easy as it was, you could probably do that on the train and to work as well.
>> Excellent. That's what I need to hear. Thanks.
>> Thanks.
>> Caitlin Cormier, client education instructor at TD Direct Investing.
And make sure to check out the learning centre in WebBroker for more educational videos, live, interactive master classes and upcoming webinars.
Now before you get back your questions about utilities for Marisa Jones, a reminder of how you can get in touch with us.
Do you have a question about investing or what's driving the markets?
Our guests are eager to hear what's on your mind, so send us your questions. There are two ways you can get in touch with us. You can send us an email anytime at moneytalklive@td.com or you can use the question box right below the screen here on WebBroker. Just write in your question and hit send.
We'll see if one of our guests can get you the answer right here at MoneyTalk Live.
We are back now with Marisa Jones, taking your questions about utilities. A lot of them coming in in the past couple of minutes. Let's start to get to them.
What is your view on Brookfield renewable partners?
>> That's a name that I think tends to trade fairly extensively, both for fixed income as well as equity.
And I think, on the fixed income side, I think it similar for equities as well, investors may typically look at trading between Brookfield family, so Brookfield infra structure partners, Brookfield renewables.
Brookfield renewables is a name I cover and I think that has a lot of opportunity. Whenever I have heard the company present, they are talking about the opportunities of the energy transition. So everything is open to them because they are very, they are nimble and the advantage to that company has in particular is at scale number one, its first preferred manage it in terms of renewables and in the fact that it has a huge amount of capital behind it within the whole Brookfield group.
So those are very supportive factors, I think, for Brookfield renewable.
What I think, what I'm looking at the name from a fixed income perspective, is that already price in?
And the fact is trying to achieve 12 to 15% real return, so after inflation.
And that may offer a good inflation hedge for investors. But the risk to that, from my perspective, is that those are very lofty goals for returns. How will they achieve this?
What they are doing now I think is a good strategy and that the economy, there's a lot of companies with this net zero emissions target by 2050 and Brookfield renewables is trying to support this effort. So what they're doing is they are partnering with very large, significant firms, often tech companies, that are looking to source their power from green sources. So this is beneficial to Brookfield.
What I see as a little bit of a change in their risk profile though from my perspective, which I'm a little cautious on, is that it means they are actually doing more construction, more greenfield development, rather than their most recent strategy, which was more acquiring renewables businesses… >> That already did all the building.
>> And they could just make it more efficient and improve it and scale it up.
So maybe there's a bit of a shift in the risk profile.
Right now, it's not too much of a concern.
but if you are looking at the bonds or the stock, I would question, is it priced to perfection at this point?
>> Interesting stuff.
Another viewer question here.
Your thoughts on Nexterra?
>> I cover Nexterra from a fixed income perspective. I really like the name.they are a Florida based utility, huge utility and similar to Brookfield in that it was a very early developer of renewables businesses.
It still has a little bit of fossil fuels in its power makes but beyond the power generation component, it has a very large and significant, regulated business.
So it has those two offsets.
it has, in the past, growth through acquiring companies that need to either rescale up as well as improve on the ESG front, replacing fossil fuels or coal generation in Floridawith renewables.
So I think it's on a very good job that way.
It is price, again, at a premium but I think that premium is warranted and its home base of Florida has a very supportive regulatory jurisdiction and a very favourable population growth.
So just based on population and corporative element alone, there's a huge amount of growth for Nexterra.
I think it's very stable.
>> There is always risks though. So what might be a risk for Nexterra? You mentioned its price pretty well.
>> So is there too much of a premium? There is that risk, of course.
Where I could see some risk and it's something I watched going back hereto, it seems to have dissipated but it has acquired an integrated well but there was potential for them to go out and make a large acquisition. It has a lot of value in its stock. It could use its stock to help acquire company and do a very large acquisition.
That is not off of… Out of the spectrum of possibilities for Nexterra.
There could be a risk for fixed income if they used leverage to do that as well those next steps in terms of integrating. That is something I want for them. I don't see it as a near-term risk but I would be watching that.
>> And the one that's just common in the past couple of moments. Thoughts on Fortis?
>> Fortisis a stable credit as well. There is a lot going on.
It has Alberta and BC base Canadian regulated utilities. It has a nice transmission business in the US. There is some assets in Arizona that is having to go through the energy transition, get off cool. So there some moving parts to it.
But for the most part, I was a very stable right now. I don't see any catalysts in terms of spread or equity movement for Fortis. I think a lot of investors will buy it for its stability and its dividend stability as well.
And I think that's going to remain in place. Answer any catalysts right now for the upside or downside.
>> I feel like the last time I saw a headline around Fortis around M&A action was a while back.
>> I do not see M&A for them really. They are very busy right now in terms of a lot of regulation issues going on. Not necessarily of concern, but just stuff they have to deal with specifically in its transmission in the US. So I think it has its hands full.
>> We look about your questions for Marisa Jones on utilities in just a moment's time. As always, make sure you do your own research before you make 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.
Immigration is essential to maintaining growth in Canada's labour force, from helping employers drive enterprise growth to filling vacant positions. Our Anthony Okolie joins us now to discuss a new TD Economics report on how Canadians born to newcomers are shaping Canada's future.
>> Thanks very much.
According to TD Economics, Canada is winning the race for talent on a global stage. Immigration is a key source of Canada's population growth. It helps to boost the labour force even as our population ages.
Beyond their immediate contribution, immigrants add to the Canadian economy through their children.
Within the next 13 years, according to TD Economics, nearly half of all Canadian children will be second-generation. With unemployment at historical lows, the Canadian labour market is full of opportunity, especially for highly skilled workers.
Now, the report goes on to say that second-generation Canadians are more likely to graduate University, and you can see in the first chart that I brought along, though share of second-generation Canadians that finish college rose faster versus third or more generation Canadians from 20% in 2006 to 29% in 2021.
In addition to that, second-generation Canadians were more likely to hold university degrees and pursue higher education in science, engineering and math programs as well as pursue positions in STM related rules.
Now, these academic games helped to bolster Canada's talent pipeline.
some cohorts face barriers and career progression. She economics indicates a highly skilled second-generation Canadian to identify as visible minority groups tend to be underrepresented in management roles as they progress through their career.
Additionally, while second-generation Canadians generally earn comparable wages to third-generation Canadians, a wage gap does exist between some groups.
Now, according to a deep dive analysis of the 2016 Census from Statistics Canada, it points to one of the largest wage gaps being between or among French speaking men with second-generation Canadians earning roughly 8% less than third or more generations Canadians.
By contrast, English-speaking second-generation earn up to 4% more than Canadian children of non-immigrants.
So while the contribution of second-generation Canadians is one of the biggest benefits that immigration brings to Canada, TD Economics highlights the importance of putting measures in place to make sure that no one gets left behind.
>> We know that bringing in highly skilled newcomers grows our economy. At the same time, that story would be true of any G7 nation.
So how do we rank in terms of bringing in those highly skilled people?
>> Canada takes the top spot among G7 countries in terms of its immigration share.
Canadian immigrants also top the charts in terms of educational attainment. That's bachelors and above, as well as skill levelin terms of managers and technicians. Canada also brings find a less desirable category.
specifically, Canada ranks second among G7 in terms of share of immigrants that feel overqualified for their job. That's because Canada does a poor job of maximizing their potential with first-generation likely to work low wage jobs versus second and third generation Canadians.
> Interesting stuff. Definitely suffer policymakers to consider.
Thanks.
>> My pleasure.
>> MoneyTalk's Anthony Okolie.
A quick check in on the markets now. The TSX Composite Index is feeling the weight of American benchmark reviewed pulling back significantly today. We are down 187 points, almost a full percent. A lot of the big energy names under pressure with the sliding price of crude, including Cenovus Energy.
Right now down almost 3%, at 2213 per share.
Canadian Western Bank has been gaining recently, they are up 2.8%. South of the border, you do have a tentative debt ceiling deal that's going to go through the houses of Congress and get batted around by politicians.
You are up a very modest two points, it's pretty much just flat for that broader read of the American market.
The tech heavy NASDAQ has been doing a bit better.
Let's see how it's faring.
It's up about half a percent. Of course, there's been a real push around of artificial intelligence.
Nvidia has been the stock this and capturing that attention in recent days. What we got going on here?
$403.21.
The magic number for Nvidia to be in the trillion dollar market Is 404 bucks and $0.86. It's dropped a little bit below that. He broke into it for the first time today. So it a few hours until the close, we will see how that works out for Nvidia.
We are back now with Marisa Jones from TD Asset Management, taking your questions about utilities.
This is interesting for people looking at the green transition. What's the outlook for nuclear?
>> We have done a lot of work into nuclear and its role in the energy transition and Canada's goal and the world school to have net zero emissions by 2050. And it is our view that nuclear is a very important component of the power mix.
May not be a growing component of the total mix but really demand for energy is going to continue to grow.
The population of the world, the population Canada as we just heard will continue to grow.
So we need to meet the needs of increased power and demand, electricity demand, and the way to do that in a green way is to use nuclear. In Canada, 15% of our overall electricity needs are met through nuclear.
Mainly here in Ontario, about 60% of our mix is actually nuclear.
Number one, we see it is very important. There is a lot of policy and government support now for nuclear. We did see that again in the most recent federal budget.
There was support for nuclear there.
We are seeing it globally as well, different jurisdictions obviously have different views on nuclear but we are seeing it as well in the US.
We are seeing, I guess taking a step back, there is a lot of misconceptions surrounding nuclear. Last year 2022, my colleagues at TDM, including our head of ESG, wrote our white paper report on nuclear and its role in energy transition. We are supportive of nuclear and we have participated in some of the bond offerings by nuclear power generation, so Ontario Power generation and Bruce Power would be the main two.
>> What does the infrastructure look like? I saw a headline several months ago about Pickering being over 50 years old, 1971 I think was the day. The only reason I remember is because that's the year I was born. I don't know how to feel about that. Is that old or not?
>> It's very interesting because in Canada, again in Ontario, 60% of our generation has come from nuclear for a long time now, and it's been proven reliable, it's proven safe. So the fact that we have Pickering as the oldest of the facilities right now, OPG, Ontario Power generation, it runs Pickering and Darlington and then Bruce Power is on an OPG site but is co-owned by TC Energy and private groups.
So those three sites here in Ontario are undergoing, two of them are undergoing refurbishment. Darlington has been active in a refurbishment program and its extending its life in a safe way.
Bruce started to undergo a refurbishment. Pickering here is interesting because it was had to shut down, I can run with the timeline, but it should have been shot already.
but again, we have this increasing demand for power, increasing demand for green electricity and Pickering supports, I forget the number, something like 14% of the baseload here in Ontario, it's a baseload, it's not intermittent like the wind, it is baseload capacity so right now it is critical.
OPG has been asked by the Ontario government to assess the viability of an extension program for that, and I think I saw on the news just today that there's a few days for the government, it's very soon that the government has to decide, I think, on the extension program or not. So there's that.
And then other infrastructure, there is some need of elements going on. Here in Ontario and more globally for SMR, so those are small modular reactors.
This is technology that may be about 1/3 of the size of the larger scale, older reactors that we are more familiar with.
And the idea of these new reactors are, again, they have to be safe and they will be billed safely.
But they are going to be able to be built more quickly and at a lower cost. Therefore, you could put them in more locations.
This is viewed, and we view this as a very positive development but we are still years away from that. OPG is one of the first in terms of SMRs and is expecting his pilot reactor to be built by around 2026.
So we are still a number of years away.
>> Always fascinating when you're here. I always learned so much. I look forward to the next time.
>> Thank you.
>> Our thanks to Marisa Jones for joining us today. You want to stay tuned. On Wednesday, Chris Whelan, senior Canada rate strategist with TD Securities will be our guest taking your questions about the economy and interest rates.
As a reminder, you can get a head start.
Just email MoneyTalk Live@td.com with your questions.
That's all the time we have for the show today. Thanks for watching. We will see you tomorrow.
[music]
Every day, I'll be joined by guests from across TD, many of whom you'll only see here.
We're going to take you through what's moving the markets and answer your questions about investing.
Coming up on today show, we are going to discuss what's been driving the outperformance we've seen from the Canadian utilities sector and whether it's had to continue with TD Asset Management Marisa Jones.
MoneyTalk's Anthony Okolie is going to have a look at a new TD Economics report on how immigration is shaping Canada's economic future.
And in today's WebBroker education segment, Caitlin Cormier will show us how you can set up stock alerts using the platform.
Here's how you can get in touch with us.
Just email moneytalklive@td.com or fill out the viewer response box under the video player on WebBroker.
Before we get to our guest of the day, let's get you an update on the markets.
The Americans are back from the Memorial Day long weekend and they are trading. Volumes have picked up on the side of the border as well, although we are fairly deep in the red. The TSX Composite Index, we are down 167 points, almost a full percent.
We have quite a substantial pullback in the price of American benchmark crude today. Of course, OPEC and its partners will be meeting this weekend, seeing some volatility in the trade. That is playing through some of our biggest energy names.
I could've paid any of them to show you the effect of that lower price of American benchmark crude but Crescent Point at this hour at eight bucks and $0.79 per share, down about 3%. Now, gold is getting a modest bid today.
Most of the miners are doing much but Centerra gold is standing out from the rest. At seven bucks and $0.33, it's a 5%.
South of the border, there is political wrangling over the US debt ceiling deal. There is some movement in the tech stocks. The S&P 500, the broader read of the market,is it very modestly about six points, a little bit more than 1/10 of a percent.
The NASDAQ has been benefiting from all this talk around AI recently. It is doing better than the broader market, it's up 90 points are almost records of a percent.
I want to check on the share price of Nvidia.
The magic number is $404.86. If it stays above that line, it is in the trillion dollar market Group. It broke about that today.
At 412 it is where above it.
It's up about 6%. It's got a big bump recently.
There's been all the interest in artificial intelligence the chips Nvidia makes I power all of this AI technology and a really pretty robust revenue forecast to give us in recent days. We'll keep an eye on the one for you. That's your market update.
While the market leadership we have seen from the big tech firms out of the US has been hogging the spotlight, Canadian utilities have been quietly outperforming on the side of the border. Joining us now to discuss, Marisa Jones, utilities credit analyst at TD Asset Management. Good to be back on the program.
>> Thanks for having me here.
>> It was interesting when you brought this up and were having a chat yesterday. The utilities have outperformed the TSX Composite Index. What's happening?
>> There is a number of things. If you look at the first quarter, the utility sector here in Canada was a bit of a laggard in Q4 last year.
So coming into this quarter, there was a bit of a trade looking for safety, security, which, of course, utilities offer. Secondly, I would say that there are a number of utilities that outperformed in the quarter that had been the ones that had been lagging in Q4 due to specific situations.
>> So that is what was behind this. Investors are also concerned about what we have in front of us and ahead of us. How is it shaping of the rest of the year?
>> Sure thing. I think the utilities are well positioned to continue performing strongly.
So what we have, our outlook for inflation continues to be a headwind for most of the companies in Canada, and North America generally speaking. Both utilities offer a real return.
So what I mean by that is that inflation rates are passed through the cost of capital, the expenses for the utilities on to the… So it offers a bit of protection for the investor against any inflation headwinds, which we continue to expect. Furthermore, I think there's a lot of medium to longer-term tailwinds behind the sector, and we can touch on that if you want, namely policy support and regulation that is supportive of greening the grade, of increasing electricity demand and support of the system here in Canada.
>> Now, the Canadian federal budget, that seems like ancient history although it was only several weeks ago.
At the same time, we know that the managers and they are can have effects on various industries going forward. The media spotlight goes away from the federal budget but you are still seeing things in there that relate to the utility space.
What are they?
> It was very interesting because I saw the Canadian federal budget as a response to what we saw last summer in the US. That was the inflation reduction act.
So when the IRA in the US, there was a lot of… Of course, they tried to deal with inflation and with jobs, but there was a lot in that bill in the US supporting renewables and clean generation, and building on home territory, so bringing the supply chain back to the US. So Canada, to keep up with that, the Canadian federal budget also included different tax measures, tax credits for manufacturing of clean energy. So the whole supply chain for clean energy will be able to be, to receive tax credits going forward.
So that is supportive.
There is also different support mechanisms for investments in terms of building renewables, a lot of tech support there.
The whole energy supply.
It's more so with the power generation then I would say the regulated utility side, so not as much for distribution and transmission.
But of course, if you have a buildout in support of the power generation side, the regulated utilities that I largely cover… > You gotta get it out to the people.
> You gotta distribute it. So it's very supportive, I think.
>> I want to talk about inflation.
Last time you were on, you mentioned it briefly and he talked about the ability of utilities, and regulated utilities to pass through. Is there political risk and that in times when you know the government will say, well, we want to ease your pain from these higher costs and then people say, what about my energy bill?
>> Very good point.
That's something we've been watching very carefully.
So there is a balance between that capital investment needed for the utilities on many fronts, the inflation impact on the cost side and then the balance between affordability, so customers. So the regulated utilities have a responsibility to serve the territory that it's based down.
That's its obligation.
And for that, on the regulated side, they are expected to get a fair rate of return.
That's how the utilities space works here in Canada and globally.
So when you have inflation rising, there is that fear that, yes, they are allowed to capture that and pass it through to the end, but if they can't afford that, there's a lot of risk of political interference.
Largely, we seen in North America is that the government has said in different jurisdictions, we recognize this is an issue, so the government in different, we have seen it in some of the states that they have actually stepped in and started giving relief programs to customers that can't afford these rising costs on their bills.
I do watch to see if there is political interference.
Typically, there is none that will actually impact the regulated utilities.
But we did see 1 Instance in Nova Scotia in the fall, and this resulted in Psalm, you would see, and marrow, the stock price decline. The ratings agencies to punitive actions against Nova Scotia Power.
It was more that the dollar impact of the utility was not that significant in the end.
But the fact that the political interference was there was deemed a risk and a negative.
>> I imagine a lot of our viewers are going to be looking at the utility space today as we talk about it from an equity perspective.
You are a credit analyst.
Our equity investors sort of looking at the same things that a company? When you start doing the homework and looking in the balance sheets, are you looking at the same things?
>> Very much so.
I would say specifically now. You mentioned that the costs are rising, we are watching the impact of cash flows.
And for utilities spaces in particular, and to some big state that pipelines mainstream companies as well, the impact on the ability to pay a dividend could be affected if the credit ratings are at risk of being downgraded.
The ability to grow could be impacted as well.
I'm from a credit perspective cautious of the risk to the downside, but right now I think our interests are very much in line with how equity investors are looking at the companies.
>> Fascinating stuff and a great start to the program.
We are what you get your questions about utilities for Marisa Jones and just moments time.
A reminder, of course, you can contact 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.
Nvidia has made its way into the trillion dollar market cap club.
the chipmaker's shares have been rallying in recent days on a strong sales forecast. That strong sales forecast was on the back of AI demand, and it means that Nvidia chips, apparently, with $1 trillion plus market value includes only a few names such as Apple, Microsoft and Alphabet, and it's the first semiconductor stock to make it into the club.
At 410 bucks per share, Nvidia needs to hold about $404.86 and if they stay above that line, they close the day in the trillion Dollar club. Right now you're at 410, well in comfortable territory.
Shares of Tesla also in the spotlight today. Elon Musk is in China, of course as an important market for the electric vehicle maker, and has apparently held a meeting with the country's Foreign Minister. The trip of course comes on the heels of the recent G7 meeting in Japan, where the group of nations said it wants to de-risk its relationship with China.
Right now you've got Tesla up a little shy of 4%.
It appears Americans were eager to travel by air over their Memorial Day long weekend. The US transportation Security Administration says it's May 9 .79 million passengers from Friday through Monday. That number slightly surpasses the number of travellers from the 2019 holiday weekend.
Of course, that was pre-pandemic life. Airlines has said that they are seeing strong demand for the summer travel season ahead.
A quick check on the markets, Bay Street, we will start with the TSX Composite Index.
We've got a substantial pullback on the price of American benchmark crude today. It is pushing a lot of our big energy names lower. Data hundred and 81 points on the top line for the TSX Composite Index, almost a full percent. And south of the border, lots of things in the mix.
Yesterday seeing a big push for tech stocks. There is a tentative deal on the Debt ceiling. There's going to be some jockeying around that in the next couple of days as they pushed around Congress for votes.
so right now you're pretty much flat on the S&P 500, three points to the upside, sort of fading a little bit from earlier.
We are back now with Marisa Jones, take your questions about utilities.
Let's get to them.
Right off the hop here, what is your opinion on Algonquin Power?
>> Okay, and this is a name that had its ups and downs a lot in the last couple of quarters.
Going back to Q4, the company, it came to fruition at the company had a lot of floating-rate debt in its capital structure. It had historically been quite aggressive in making acquisitions and using its balance sheet to do so. So we saw on the equity side the dividend was cut heading into the year end.
so looking since that time, there has been a few positive steps. It came out that there, by year end, they had reduced the use of floating-rate debt. So their balance sheet was starting to be repaired. And then we were watching, cautious on the name, but watching what would happen with this deal to buy Kentucky power.
And then the whole market, I think both the debt market and the equity market, in my impression, were hoping that the deal would not come to fruition.
The idea was that it would have to use a lot of leverage, Algonquin Power, use leverage to make this acquisition and at this time and with interest rates where they are now, it was now looking good.
So the fact that Kentucky power deal was terminated and this was done on mutually agreed terms between the buyer and seller, I think it was viewed quite positively, both on the debt and the equity side. So that was step number one.
And then, quickly after that, when they reported, Algonquin Power reported its Q1 results, they also said that they are looking at a strategic review of its renewable power business.
So here I would say it's very interesting. They are going to have a quick turnaround I think by Q2, they said, which is early August, when they report.
They will give the results of what they plan to do with the renewables and this could mean spinning it off, it could mean selling down the sake of it, it could mean maintaining it. We don't know.
I think, from a positive perspective, if the renewables businesses were to be sold, it would help the balance sheet.
And plus, if you're holding the pure utility in the end, which from a debt perspective would be a lot more stable, that could be a positive, especially for the fixed income holders.
On the negative side, though, the renewables business does offer complementary power supply to its utilities and its agreed power supply.
There are pluses and minuses. I think when I am looking at the equity analyst's view, a lot of the analysts right now are just sitting on the side, the sidelines and waiting to see what happens.
>> What actually does happen.
>> Yeah. So I think a lot of investors and I would be in the group that are so cautious on the name, but there have been some interesting of elements.
>> The fact, and obviously there are conditions here unique to Algonquin Power, but the fact that that deal with Kentucky power in both sides agreed to walk away from it, is there anything to be gleaned from their about the broader industry about potential M&A activity this year? Is it sort of not the time for the markets play in that space?
>> That's a very good question.
That particular deal was unique in that it was announced back in 2021, at the end of the year.
And the market has changed completely since that time.
So actually financing it would've been a lot more punitive than originally contemplated. So that was, it's kind of unique to this deal.
But in terms of M&A in general, I think there are small opportunities emerging but there's not a lot of hugely transitional or big transactions that I expect to happen in that space. I mean here in Canada, you might be looking at some companies that have to be selling.
So this is segueing into a kind of TC Energy which, to clean up its balance sheet, specifically to appease the ratings agencies but would benefit both debt and equity holders, they are looking, and they have stated quite clearly, that they are looking to sell some assets.
So a minimum of $5 billion.
So there are some specific deal transactions that will occur.
But other than that, I think it's serviceable, small M&A market now.
>> Interesting set. Look at to another question. I think you briefly mention Emera off the top. You got someone thinking about Emera and they want to get your take on the name.
>> Sure. I guess, similarly, it had a rough Q4 . There was political interference in its Nova Scotia based utility that hitthe company pretty hard. There was rating agency downgrades in Nova Scotia Power and that resulted in negative outlooks at Emera.
And right now that reading is quite critical becauseit's sitting at the Tripoli Midas level. So again, equity and fixed income investors are watching quite closely. But what I would say has happened, and I give the management some credit here, is that they were saying, what happened politically in Nova Scotia was out of their control but there were also a lot of positive catalyst yet to come to help positive free cash flow starting in Q1, so in the beginning of this year.
And we start to see these transpire in line with what the management said.
So they have outlined, Emera has outlined it steps to reduce its leverage and some steps that they could take if needed, such as issuing preferred shares.
They don't really want to sell assets. I think they have some assets they could sell but it's not top of their list.
And going back a few months ago, I thought they might have to, but really, their Florida-based utility has started to recapture some of that cost that they hadn't captured, storm related costs last year, fuel costs last year, it started to get into the cash flow.
So we are seeing their kind of metrics improve and eyes see a good trajectory this year for Emera. So from my perspective as a credit rating analyst, they can keep theirratings will be positive for fixed income and equities.
>> Another one here, a little closer to the province of Ontario, closer to where we are.
Hydro One, with your view on this one?
>> Hydro One, it's a stable credit and stock as well.
There is a new CEO in place, but he came from within the company.
There is no change in strategy here. So it's a very homegrown, it's Ontario-based, transmission company was some distribution for electricity, and that strategy at least for five years I don't expect to change. So from that perspective, if you are looking for a safety trade, I think it's a very good name to go into.
On the flipside, it trades pretty expensively.
It's pretty rich. Set a premium to other utilities.
But I do think it's warranted and I think it can stay that way. There is, in my view, some upside.
so it's not just a boring, stable credit.
there is a push for transmission billed in the providence andthe system organizer here in the province are actually directing some additional transmission lines to be built. So I think that has yet to be captured into the company's valuations.
I see the upside.
>> Some interesting stuff there. What would be the biggest risk for a name like Hydro One?
>> Well, right now, it's more on the valuation side. If you think it's too rich and there could be a trade out of their if investors think it is indeed boring and don't see the upside that I see, that would be one risk.
There is a risk that we watch, I think it's very remote risk, but that they do look for growth outside the province.
That was nipped in the bud a few years ago with government interference at that point and I don't see the appetite there for Hydro One but it is something I do watch.
>> As always, make sure you do your own research before making any investment decisions.
we are going to get back to your question for Marisa Jones on utilities and just a moment's time. A reminder, of course, 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 want to stay up-to-date on the price action of a specific stock, WebBroker can help.
Joining us now with more is Caitlin Cormier, client education instructor with TD Direct Investing. Caitlin, great to see you as always. Let's talk about tracking stocks using the platform.
>> Absolutely! Thanks, Greg.
So one of the tools that we have within WebBroker's what's called alerts.
So exactly as you said, Greg, maybe you are looking at you want to know more about the price of a security but you want to be more proactive about it.
You don't want to kind of have to go on to the trading platform and be constantly monitoring your positions or your watchlist. Maybe you would like to be notified about changes for a particular security and take some of that onus off a view of keeping track.
So let's hop into the trading platform and see how you could do that. So I'm going to do, there's a couple different ways you could set these types of things up but what I'm going to start as and when you click on research and then I'm in a go under investments and click on stocks. Of course at this point, this is kind of our main stock page. Let's just go ahead and put our Old Faithful here… I clicked away. Just one second there.
Let's put our Old Faithful Apple in there. So as we can see, there is the normal information about quotes but you might notice appear towards the top right hand side, we have set alerts.
So this is available on any of our stock research pages and I'm just going to go ahead and click on it and it's going to pop up a separate box here this is where I actually set up these types of alerts.
As you mentioned, there's price alerts. So we could do a price drop, price rise, you could do 52-week high or low, you can also do changes from previous close. If you want to see if there is some real volatility in the stock, maybe after earnings announcements or something like that, you can also do ratio, price-to-earnings ratio drops and rises, trading volume, we want to know people are really actively trading the stock. Again, if it's rising faster than a particular index over a period of time, so for example if you want to know if it's rising faster than the S&P 500 over a week or a month, then you can also get a notification. So there's really kind of a whole bunch of different options as far as price and volume. I want to quickly note to you that especially for these options here, you can have push notifications come to your mobile app. I will caution that you do have to have the latest version of the TD app installed on your smart phone in order to get these notifications. So if you don't have that installed, make sure you are always keeping them today because otherwise is push notifications won't come through.
also, you can have email sent as well. If a kind look across the top here, you can get sent an email every day on any news that comes up about this company. You can get information about analyst changes. So they're kind of changing their tune as far as what they think about the company.
You can look at technical indicators if you are into technical analysis and get notifications of those, or any notifications of events.
So let's just say for example we want to know the next time Apple has a dividend announcement. Some just go duplicate dividend announcement, make sure the my email address is correct. I'm going to go over and click save and that's as easy as I actually add an alert for a particular security.
>> Okay prayer and am going to tell you a story but it has a point.
On the train ride on the way this morning, I'm going through my inbox and I'm unsubscribing to a bunch of things at the time I thought, yes, let me know when you're having a sale.
Yes, let me know when you're having an event.
And then it was too much. All to say, if I can't learn from my mistakes, is it possible that I could set too many alerts and need to rein them in?
How would I do that?
>> I think that's probably something we can all feel as for your email inbox getting too many notifications.
Absolutely, we can go ahead and rein those in. If you are unhappy with your alerts, you are getting too many notifications, you absently can go ahead and alter them once you have them set.
Let's go ahead and haul back in and see how we can do that. So we're gonna click on research and go under tools.
and again, I said there's a few different ways even set alerts. This is another way to set B can also manage your alerts within here.
So here if I want to set I would singly type in a symbol.
this is also where you can edit these alerts.
I see currently on this particular account, I have two different companies that I've notification setand again, I have dividend announcement, I have a price drop as well as a prize hits a new 52-week high or low.
And it's so simple for me to delete. I go ahead and typically click on the checkmark for whatever I want to delete and click delete selected.
And delete alert.
And it's the same with editing.
See I have price drops below 145, that might be ambitious given that the last trading prices 177, I go in here and say let's maybe be a bit more realistic and change it to 150.
And then if it changes there, I will get notified.
Again, it's as simple to go ahead and update that.
So really simple and easy I think in order to get some management there.
Just as easy as it was, you could probably do that on the train and to work as well.
>> Excellent. That's what I need to hear. Thanks.
>> Thanks.
>> Caitlin Cormier, client education instructor at TD Direct Investing.
And make sure to check out the learning centre in WebBroker for more educational videos, live, interactive master classes and upcoming webinars.
Now before you get back your questions about utilities for Marisa Jones, a reminder of how you can get in touch with us.
Do you have a question about investing or what's driving the markets?
Our guests are eager to hear what's on your mind, so send us your questions. There are two ways you can get in touch with us. You can send us an email anytime at moneytalklive@td.com or you can use the question box right below the screen here on WebBroker. Just write in your question and hit send.
We'll see if one of our guests can get you the answer right here at MoneyTalk Live.
We are back now with Marisa Jones, taking your questions about utilities. A lot of them coming in in the past couple of minutes. Let's start to get to them.
What is your view on Brookfield renewable partners?
>> That's a name that I think tends to trade fairly extensively, both for fixed income as well as equity.
And I think, on the fixed income side, I think it similar for equities as well, investors may typically look at trading between Brookfield family, so Brookfield infra structure partners, Brookfield renewables.
Brookfield renewables is a name I cover and I think that has a lot of opportunity. Whenever I have heard the company present, they are talking about the opportunities of the energy transition. So everything is open to them because they are very, they are nimble and the advantage to that company has in particular is at scale number one, its first preferred manage it in terms of renewables and in the fact that it has a huge amount of capital behind it within the whole Brookfield group.
So those are very supportive factors, I think, for Brookfield renewable.
What I think, what I'm looking at the name from a fixed income perspective, is that already price in?
And the fact is trying to achieve 12 to 15% real return, so after inflation.
And that may offer a good inflation hedge for investors. But the risk to that, from my perspective, is that those are very lofty goals for returns. How will they achieve this?
What they are doing now I think is a good strategy and that the economy, there's a lot of companies with this net zero emissions target by 2050 and Brookfield renewables is trying to support this effort. So what they're doing is they are partnering with very large, significant firms, often tech companies, that are looking to source their power from green sources. So this is beneficial to Brookfield.
What I see as a little bit of a change in their risk profile though from my perspective, which I'm a little cautious on, is that it means they are actually doing more construction, more greenfield development, rather than their most recent strategy, which was more acquiring renewables businesses… >> That already did all the building.
>> And they could just make it more efficient and improve it and scale it up.
So maybe there's a bit of a shift in the risk profile.
Right now, it's not too much of a concern.
but if you are looking at the bonds or the stock, I would question, is it priced to perfection at this point?
>> Interesting stuff.
Another viewer question here.
Your thoughts on Nexterra?
>> I cover Nexterra from a fixed income perspective. I really like the name.they are a Florida based utility, huge utility and similar to Brookfield in that it was a very early developer of renewables businesses.
It still has a little bit of fossil fuels in its power makes but beyond the power generation component, it has a very large and significant, regulated business.
So it has those two offsets.
it has, in the past, growth through acquiring companies that need to either rescale up as well as improve on the ESG front, replacing fossil fuels or coal generation in Floridawith renewables.
So I think it's on a very good job that way.
It is price, again, at a premium but I think that premium is warranted and its home base of Florida has a very supportive regulatory jurisdiction and a very favourable population growth.
So just based on population and corporative element alone, there's a huge amount of growth for Nexterra.
I think it's very stable.
>> There is always risks though. So what might be a risk for Nexterra? You mentioned its price pretty well.
>> So is there too much of a premium? There is that risk, of course.
Where I could see some risk and it's something I watched going back hereto, it seems to have dissipated but it has acquired an integrated well but there was potential for them to go out and make a large acquisition. It has a lot of value in its stock. It could use its stock to help acquire company and do a very large acquisition.
That is not off of… Out of the spectrum of possibilities for Nexterra.
There could be a risk for fixed income if they used leverage to do that as well those next steps in terms of integrating. That is something I want for them. I don't see it as a near-term risk but I would be watching that.
>> And the one that's just common in the past couple of moments. Thoughts on Fortis?
>> Fortisis a stable credit as well. There is a lot going on.
It has Alberta and BC base Canadian regulated utilities. It has a nice transmission business in the US. There is some assets in Arizona that is having to go through the energy transition, get off cool. So there some moving parts to it.
But for the most part, I was a very stable right now. I don't see any catalysts in terms of spread or equity movement for Fortis. I think a lot of investors will buy it for its stability and its dividend stability as well.
And I think that's going to remain in place. Answer any catalysts right now for the upside or downside.
>> I feel like the last time I saw a headline around Fortis around M&A action was a while back.
>> I do not see M&A for them really. They are very busy right now in terms of a lot of regulation issues going on. Not necessarily of concern, but just stuff they have to deal with specifically in its transmission in the US. So I think it has its hands full.
>> We look about your questions for Marisa Jones on utilities in just a moment's time. As always, make sure you do your own research before you make any investment decisions.
And a reminder that you can get in touch with us at any time.
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Immigration is essential to maintaining growth in Canada's labour force, from helping employers drive enterprise growth to filling vacant positions. Our Anthony Okolie joins us now to discuss a new TD Economics report on how Canadians born to newcomers are shaping Canada's future.
>> Thanks very much.
According to TD Economics, Canada is winning the race for talent on a global stage. Immigration is a key source of Canada's population growth. It helps to boost the labour force even as our population ages.
Beyond their immediate contribution, immigrants add to the Canadian economy through their children.
Within the next 13 years, according to TD Economics, nearly half of all Canadian children will be second-generation. With unemployment at historical lows, the Canadian labour market is full of opportunity, especially for highly skilled workers.
Now, the report goes on to say that second-generation Canadians are more likely to graduate University, and you can see in the first chart that I brought along, though share of second-generation Canadians that finish college rose faster versus third or more generation Canadians from 20% in 2006 to 29% in 2021.
In addition to that, second-generation Canadians were more likely to hold university degrees and pursue higher education in science, engineering and math programs as well as pursue positions in STM related rules.
Now, these academic games helped to bolster Canada's talent pipeline.
some cohorts face barriers and career progression. She economics indicates a highly skilled second-generation Canadian to identify as visible minority groups tend to be underrepresented in management roles as they progress through their career.
Additionally, while second-generation Canadians generally earn comparable wages to third-generation Canadians, a wage gap does exist between some groups.
Now, according to a deep dive analysis of the 2016 Census from Statistics Canada, it points to one of the largest wage gaps being between or among French speaking men with second-generation Canadians earning roughly 8% less than third or more generations Canadians.
By contrast, English-speaking second-generation earn up to 4% more than Canadian children of non-immigrants.
So while the contribution of second-generation Canadians is one of the biggest benefits that immigration brings to Canada, TD Economics highlights the importance of putting measures in place to make sure that no one gets left behind.
>> We know that bringing in highly skilled newcomers grows our economy. At the same time, that story would be true of any G7 nation.
So how do we rank in terms of bringing in those highly skilled people?
>> Canada takes the top spot among G7 countries in terms of its immigration share.
Canadian immigrants also top the charts in terms of educational attainment. That's bachelors and above, as well as skill levelin terms of managers and technicians. Canada also brings find a less desirable category.
specifically, Canada ranks second among G7 in terms of share of immigrants that feel overqualified for their job. That's because Canada does a poor job of maximizing their potential with first-generation likely to work low wage jobs versus second and third generation Canadians.
> Interesting stuff. Definitely suffer policymakers to consider.
Thanks.
>> My pleasure.
>> MoneyTalk's Anthony Okolie.
A quick check in on the markets now. The TSX Composite Index is feeling the weight of American benchmark reviewed pulling back significantly today. We are down 187 points, almost a full percent. A lot of the big energy names under pressure with the sliding price of crude, including Cenovus Energy.
Right now down almost 3%, at 2213 per share.
Canadian Western Bank has been gaining recently, they are up 2.8%. South of the border, you do have a tentative debt ceiling deal that's going to go through the houses of Congress and get batted around by politicians.
You are up a very modest two points, it's pretty much just flat for that broader read of the American market.
The tech heavy NASDAQ has been doing a bit better.
Let's see how it's faring.
It's up about half a percent. Of course, there's been a real push around of artificial intelligence.
Nvidia has been the stock this and capturing that attention in recent days. What we got going on here?
$403.21.
The magic number for Nvidia to be in the trillion dollar market Is 404 bucks and $0.86. It's dropped a little bit below that. He broke into it for the first time today. So it a few hours until the close, we will see how that works out for Nvidia.
We are back now with Marisa Jones from TD Asset Management, taking your questions about utilities.
This is interesting for people looking at the green transition. What's the outlook for nuclear?
>> We have done a lot of work into nuclear and its role in the energy transition and Canada's goal and the world school to have net zero emissions by 2050. And it is our view that nuclear is a very important component of the power mix.
May not be a growing component of the total mix but really demand for energy is going to continue to grow.
The population of the world, the population Canada as we just heard will continue to grow.
So we need to meet the needs of increased power and demand, electricity demand, and the way to do that in a green way is to use nuclear. In Canada, 15% of our overall electricity needs are met through nuclear.
Mainly here in Ontario, about 60% of our mix is actually nuclear.
Number one, we see it is very important. There is a lot of policy and government support now for nuclear. We did see that again in the most recent federal budget.
There was support for nuclear there.
We are seeing it globally as well, different jurisdictions obviously have different views on nuclear but we are seeing it as well in the US.
We are seeing, I guess taking a step back, there is a lot of misconceptions surrounding nuclear. Last year 2022, my colleagues at TDM, including our head of ESG, wrote our white paper report on nuclear and its role in energy transition. We are supportive of nuclear and we have participated in some of the bond offerings by nuclear power generation, so Ontario Power generation and Bruce Power would be the main two.
>> What does the infrastructure look like? I saw a headline several months ago about Pickering being over 50 years old, 1971 I think was the day. The only reason I remember is because that's the year I was born. I don't know how to feel about that. Is that old or not?
>> It's very interesting because in Canada, again in Ontario, 60% of our generation has come from nuclear for a long time now, and it's been proven reliable, it's proven safe. So the fact that we have Pickering as the oldest of the facilities right now, OPG, Ontario Power generation, it runs Pickering and Darlington and then Bruce Power is on an OPG site but is co-owned by TC Energy and private groups.
So those three sites here in Ontario are undergoing, two of them are undergoing refurbishment. Darlington has been active in a refurbishment program and its extending its life in a safe way.
Bruce started to undergo a refurbishment. Pickering here is interesting because it was had to shut down, I can run with the timeline, but it should have been shot already.
but again, we have this increasing demand for power, increasing demand for green electricity and Pickering supports, I forget the number, something like 14% of the baseload here in Ontario, it's a baseload, it's not intermittent like the wind, it is baseload capacity so right now it is critical.
OPG has been asked by the Ontario government to assess the viability of an extension program for that, and I think I saw on the news just today that there's a few days for the government, it's very soon that the government has to decide, I think, on the extension program or not. So there's that.
And then other infrastructure, there is some need of elements going on. Here in Ontario and more globally for SMR, so those are small modular reactors.
This is technology that may be about 1/3 of the size of the larger scale, older reactors that we are more familiar with.
And the idea of these new reactors are, again, they have to be safe and they will be billed safely.
But they are going to be able to be built more quickly and at a lower cost. Therefore, you could put them in more locations.
This is viewed, and we view this as a very positive development but we are still years away from that. OPG is one of the first in terms of SMRs and is expecting his pilot reactor to be built by around 2026.
So we are still a number of years away.
>> Always fascinating when you're here. I always learned so much. I look forward to the next time.
>> Thank you.
>> Our thanks to Marisa Jones for joining us today. You want to stay tuned. On Wednesday, Chris Whelan, senior Canada rate strategist with TD Securities will be our guest taking your questions about the economy and interest rates.
As a reminder, you can get a head start.
Just email MoneyTalk Live@td.com with your questions.
That's all the time we have for the show today. Thanks for watching. We will see you tomorrow.
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