Marisa Jones – 7/21/2022

[music] >> Hello, I'm Greg Bonnell, and welcome to MoneyTalk Live which is brought to you by TD Direct Investing. It's a new program broadcast daily on WebBroker. Every day I'll be joined by guests from across TD, many of whom you'll only see here. We'll take you through what's moving the markets and answer your questions about investing. Coming up on today's show, we'll discuss whether the utilities sector is ready for the shift to electrification with TD Asset Management's Marisa Jones. And in today's WebBroker education segment, we'll have a look at how you can research ESG investments on the platform. And here's how you can get in touch with us, just email moneytalklive@td.com, or fill out the viewer response box right under the video player on WebBroker. before we get our guest of the day, let's get you an update on the market action. It's an indecisive and mixed trade. We will start you at home with the TSX Composite Index. That's as flat as you can get. 19,020 right now. I push and pull out there. Noticing some strength in industrial, some technology names, but with the price of crude oil pulling back, rather dramatically today, a drop for the American benchmark WTI. We are seeing the energy companies holding us back from a better showing. Suncor among them. Let's check in on some of the big names in the energy space. Down to the tune of almost 3%, 39, 92 per share. Mullen Group, which is in transportation out with its earnings report stronger-than-expected earnings for the name, and you see those stocks, that stock right now is almost up 10% right now, 12 bucks and $0.88. South of the border, we will look at the S&P 500, brought a read of the American market, some investors sifting through interesting data point. jobless claims continue to rise in the United States. Meanwhile, factory activity is softening a bit as well. Perhaps these supersized rate hikes we've been getting late from central banks including the US Federal Reserve, which is on deck for next week, are starting to make themselves felt through the economy. We've got the S&P 500 up about 1/5 of a percent, it's been bouncing around. The tech heavy NASDAQ, what's happening there? We got the NASDAQ right now up about half a percent. Carnival Cruise Lines under pressure this hour. interesting, after the close of trade yesterday, they announced a billion-dollar stock offering. This is the reaction so far, at $9.81 per sharefor Carnival. That your market update. If the world is serious about meeting net zero climate targets by 2050, than elective vacation will be key. So what opportunities does that present for investors interested in the utilities space? Joining us now to discuss is Marisa Jones, utilities credit analyst with TD Asset Management. Marisa, great to have you with us and a really fascinating topic to, if we talk about elective vacation and the future of everything, what does that actually mean for the utility space? >> Great, thank you for having here today. Yes, it's a very exciting time, I think, to be following the electric utilities. When I started my career back 20 years ago or so in fixed income, utilities were largely a boring sector. That's great for fixed income as a credit analyst, it's great to have a sector that's very reliable and transparentand can predict what their revenues will be. But since that time, there have been a lot of changes. I'd still say one of the qualities of the electric sector is that it is still very stable and reliable, but I think, especially now facing this energy transition globally and in North America, the electric… Regulated electric utilities have a lot of growth ahead of them. So I'd like to focus both on the growth ahead of it as an opportunity for investors as well as the specific role that utilities power as well as transmission distribution play in the energy transition. So when the gross side alone, aside from the fact that we expect huge population growth globally, I think what you are seeing particularly in North America is that growth for the utilities will be outsized, meaning out sizing economic growth alone or population growth. And by that, what I'm looking at is you have factors such as technology growth, so here I'm looking at data centre use for power, and also the specific role utilities have in the transition in that they have to be able to adapt to climate change, become more resilient, hard in the grid, they call it. Plus, they also have to… There are two rules for power in particular. This is the generation side utilities, to green the grade, so yes you want to have companies and households reducing their missions. But you can only do that if you have the electricity that's flowing into their houses and hopefully into electric vehicles going forward. That power has to be green as well. So I see a lot of upside in terms of growth and with that comes a lot of spending. So for example… >> I was going to say, is the great… Is our power generation as it currently is up to the job? Because when people talk about, say, electric vehicles, they say, if you want to meet these targets, you have to electrify things, the vehicle fleet. But if everyone suddenly overnight had an electric car plugged into their house, it raises the question, are we up to that challenge at the moment? >> Good question. It's interesting because we are moving more quickly towards EVs then I think was expected even five years ago. And I think this is a positive trend going forward, but yes, are we prepared? I think what is in the favour of utilities and for us as a society is that we have time. So, for example, other jurisdictions, you're looking at Europe and China, are well ahead of us in terms of, as meaning North America, the US and Canada, in terms ofadopting electric vehicles. So first of all, we can learn from mistakes made another country. That's number one. Number two is that we do have time. For example, the cost curves of EVs have come down and there are estimates that show that the cost of an electric vehicle will be on par or reach parity with combustion engines as early as 2025, in most regions. So with that you're seeing it. But still, adoption is still going to take time because we have to produce these electric vehicles. And then the other factor is, even if the actual sales continues to increase at the pace it is, we have time before, you know, cars last and average combustion energy vehicle might last 10 years. So you're not going to see those phase out so quickly. We have time. But we are already investing in it. So in Ontario, we are seeing partnerships, and these go back a number of years where Hydro One and OPG Ontario Power… [video buffering] > That's key. If you have an electric vehicle and you hit the road, it's summertime and you take a road trip, you gotta make sure you get some juice into it. >> And it reduces range anxiety. So that's something that will make demand continue to increase. My point is that we are already investing but it's not just by the utilities themselves. There is support, so that program I just mentioned has some federal government support in it. So we are seeing that because there is a lot of… The policy initiatives are pushing us this way as well. So there is an alignment between what the utilities want… We are moving towards that trend and policies pushing it that way too. So I think that we, there is a good balance there. There still might be hiccups, but I'm seeing that we are going to reach these milestones. [video buffering] Because everything is aligned that way. >> The push for electrification is about trying to meet those commitments we made for the environment and the emissions targets. A second ago, you mentioned about hardening at the grade because as we move in this direction to try to lessen the effects of climate change, we are seeing some pretty intense weather. That sounds like a pretty intense proposition, to harden the grade. >> Yeah, so that specific terminology refers to things that are in zones where there might be flooding or hurricanes in the US. It you are burying the cables and that's very expensive. Or they might be putting in transmission towers that are more resilient, so they are not going to be… Ice storm should not be taking them down as easily. There's a lot of money going into this. So again, for the regulated utilities and for the unregulated power segment, there has been this need, and its been seen for a while, because the climate change has been impacting all the physical aspects of the grade for a while now,so this investment has been picking up and, indeed, 2021 was a peak year for Export utilities in the US and it's not affected to come down. So that spending will continue and so that's why I'm seeing you're going to see outside growth in utilities, outsize. So you have a stable, regulated sector for the most part. Yet, there is growth behind it. That's why think it's interesting, both from my perspective, a debt perspective, as well as equity investors, because you can see that it is a reliable cash flow supported by growth. >> I was thinking when you are saying about hardening degraded to, seems like there would be some issues try to pay for this all. From the investment point of view, this could be a very active space. >> And regulated utilities, the one interesting or exciting thing for my perspective is as a bond analyst, when they issue, they have a Program, it's largely de-risked, and by that I mean unlike other corporations that are not regulated cap-ex are largely. . . it's a fairly stable industry. But about 50 or 60% of the funding will be in the form of debt issuance. So when I am looking at the corporate bond market, we want liquidity. So one of the aspects it affects pricing about this if there's not a lot of liquidity within a curve of an issuer, it might trade either more expensive than it should otherwise or just not trade at all. So I want that liquidity. So you're having, you know, there's a balance between having too much issuance, which might spread wider, make the bonds cheaper, or not having enough the crudity. So I see, if you have predictability issuance of needs, it helps work with liquidityand it helps our job is fixed income investors. >> Fascinating stuff and a great start to the program. We are going to get your questions about utilities for Marisa Jones from TD Asset Management in just a moment. A reminder they can get has with us anytime. Just email moneytalklive@td.com or fill out that viewer response box under the video player here on WebBroker. Now let's get you update on some of the stories in the world of business had a look at how the markets are trading. The European Central Bank lifted its key policy rate today, the first hike for the ECB in more than 10 years as it it attempts to tame soaring inflation. The half-point hike was larger than expected and ends the bank's negative interest rate regime. TD Economics says despite the economic risks facing the euro area, it expects rate hikes to continue through the rest of the year. The ECB says it's now taking a meeting-by-meeting approach to interest rate decisions. Shares of Tesla are in the spotlight today. That after the electric-vehicle maker posted better-than-expected profits for its most recent quarter despite a sales slowdown. Higher selling prices for Tesla vehicles helped the bottom line, with CEO Elon Musk pointing to "production shocks and crazy inflation" for pushing prices higher. American Airlines is posting its first profit without the aid of U.S. Government support since the start of the pandemic. A surge in travel demand heading into the summer boosted revenue to more than $13 billion dollars in the quarter. That said, American Airlines is warning of higher costs for this current quarter beyond just fuel. While travel demand has come roaring back, airports and airlines have struggled to meet that demand. American Airlines says it continues to scale back its schedule and limit capacity in the face of those challenges. Quick check in on the market. We will start here at home on Bay Street with the TSX Composite Index. At the start of the show, it was flat. Right now, he got a very modest 18 points to the upside or 1/10 of a percent, 19,039. South of the border for the S&P 500, it's been a bit of a choppy and I decisive day but we have some upside action as well. 3967, we are above sense of a percent. We are back now with Marisa Jones, utilities credit analyst with TD Asset Management. We areTaking your questions on utilities. Here's the first one coming in. What is the impact of inflation and rising rates on utilities? >> Good question. Very topical, of course. When I think of inflation and rising rates on my sector, on utilities, I take a step backand just remind the investor that the sector is a defensive one in that it's an essential service, so most of the companies I look at our basic monopolies in their service areas, service territory. So they are providing natural gas or electricity to consumers and businesses. So there might be some bowling risk, but for the most part it's very stable. And then secondly, I would say that because a regulated system allows for costs to be passed through to the end consumer, so the regulatory team includes things like fuel costs, operating costs which is where you will see the inflation, as well as debt issuance costs, so rising rates, that eventually gets borne by the ratepayer. That said, you know, it's not perfect in terms of the mechanisms to pass these costs through rates to the consumer, and there's a certain amount of the consumer can bear, ultimately. So those are risks that we are watching. But ultimately, I would say that it is a modest impact to the utilities sector. There was areport I read not long ago by S&P and they wereestimating that for its review will, meaning that for itsreview of the… two debt ratios these companies , funds from operations, yes, that's a very critical cash flow metrics that is looked at when the credit of these values is evaluated. It only affects this ratio by a small number of basis points. When I look at is overall in my sector, it's generally a highly rated sector. So from a debt perspective, it tends to be a rated in Canada, triple B high rated in the US. So negative impact, you could see some downgrades because of this for companies that are operating right on the margin, but they still remain investment grade. So a marginal negative impact overall and I do think that it is one of the most offensive sectors, especially from a fixed income perspective in terms of the essential nature of it, in terms of passing through these cost through to the consumers. So I'm not very concerned. >> Very interesting points on that one. We've got a viewer question that is name specific. What's your outlook for Hydro One? >> Hydro One is a pure rated Ontario corporation or utility. largely transmission, which are the big towers for long distance hauling for electricity and distribution, and LDCs, local histories and companies. I think right now with the whole backdrop of huge amounts of gas in the sector is very supportive for Hydro One. There's a lot of growth. I think if you look back a couple of years ago and Hydro One was trying to make a foray into the US which did not occur, there was concerns that, well, will it have growth ahead of it? At this point in time, I think there is ample opportunity within the province, which keeps it quite… From my perspective, a safer utility than some that have to make acquisitions to grow or might look elsewhere in terms of power. So it's fully regulated, which is very supportive. Looking out forward a couple of years, will it have to look for other opportunities outside of the province? That remains to be seen. It's possible, but not in my near-term forecast. After that be the risk going forward for this one? Thinking they might need to look abroad again to get growth that they are not getting domestically to appease shareholders? >> I think that would be one of the risks, it's a medium to longer-term risk, it's not near-term. They will be having a new changeover in CEO. The current CEO is leaving. He announced his departure for family reasons, for personal reasons. I don't see that as a risk because the board is fully on board with this strategy going forward in terms of remaining in the province and supporting the growth and need for energy transition in the province. So I don't see that as a risk. >> Interesting. He got another question coming in. Name specific. Can we get your view on Fortis? This is the one based out of St. John's, Newfoundland, right? >> Yes, it is. So Fortis, from a debt perspective, it's interesting because there are various aspects that I look at but looking at the holding company, which is Fortis Inc., they were one of the Canadian companiesthat did make a foray into the US around 2015, 2016, they acquired ITC, which is a transmission utility in the US, what I like about that and with the business model looks like currentlyis it's nearly fully regulated. So despite looking abroad for growth, which they had to do a few years ago, they remained about 99% regulated. And with that, they brought diversification in terms of regulatory jurisdiction, so what they bought in the US is regulated federally and that's a very strong regulator and supportive. They still have their Canadian businesses. Some of the downside I see to Fortis might be in the Canadian subsidiaries that there are lower ROEs. So for example, Alberta allows fora lower return, for example, than in the US and even other provinces. So it's not a major concern from my perspective, but it is something that they might not have the gross, in Canada, as US peers would have. >> That's interesting. So the domestic situation for utility like Fortis doesn't look as good as the American. I can remember those expansions in America several years back and that's the more lucrative market to be in? >> Yeah, and there are a lot of structural differences, I would say, in the US than in Canada. One has been this ROE, the return that they are allowed to earn through their rates. In the US, it's typically been higher. But there are reasons for that. In the US, a lot of the regulated utilities are integrated. So they will have a power component, which tends to be a little riskier and a little more volatile. So they been a lot higher ROE's. So that's why Canadians looked there. They looked abroad for that. I don't hold… A stable asset base. You just don't get the returns that you get in the US. > Very interesting stuff. As always at home, make sure to do your own research before you make any investment decision. We are going to get back your questions for Marisa Jones from TD Asset Management on utilities in just a moment. A reminder, course, you can get in touch with us here at any time. Just email moneytalklive@td.com. Now let's get to today's educational segment. Environmental, social and governance investing has been one of the big trends in the markets over the past couple of years, and if you're interested in the space, WebBroker has tools which can help you. Joining us now is Caitlin Cormier, client education instructor at TD Direct Investing. Caitlin, always a pleasure to have you with us. Let's first break down what we are talking about when we talk about ESG investing in how we can get through it on WebBroker. >> Absolutely. So I will start at the beginning. So what is ESG investing? As you said, it's environmental, social and corporate governance type of investing. it basically means that you're looking for qualities in a company that go beyondkind of the financial statements and the balance sheet of the company. So we are looking for things kind of specifically climate change impact, energy efficiency, air and water pollution, human rights, health and safety, anticorruption, board independence, to name a few. Lots of different things to kind of consider. At the end of the day, the ideas that the focus on the specific areas allows the company… This will all impact to the long-term value of this corporation and kind of being able to continue into the future and be profitable in the future as an investment. >> All right, Caitlin, there's a lot of things in their that comprise the ESG investing universe. How does WebBroker help me screen through all this? >> Right. So then, when we are taking all of these things into consideration, that would be a lot of work independently to be able to find out what companies kind of are focusing on these areas, so luckily WebBroker can help us filter through some things. So we have our screener tool. Select top-rated. We are going to go under the research tab within WebBroker, so the second tab here, all the way under tools, we are going to click on screeners, and that's when you take us to the home page of our screening tool. and within this tool, we have different themes. So we can choose a specific theme that we want to focus onand lucky for us today, ESG is one of those themes. So what we are going to do is we are going to school down here and click on the ESG stocks, and that's going to take us to the results of what we have comprised for the ESG screen. Now, the results are actually acomprised of 50 ETFs, so that constituents of several ETFs. Those are the specific results that we are seeing. Those are the companies that are showing up as results. what we can do from there, instead of just looking at these results, we can actually add some additional criteria into sort of filter through these companies to see companies that match certain criteria that we are looking for over and above that ESGkind of mandate. So I know recently we had some viewers writing in, talking about being able to screen for things like P/E ratio and debt to equity, so let's take an opportunity to add those in today. So I'm dead click on the debt to equity ratio. So looking forward specifically low debt or corporation is what this particular viewer was requesting, so let's go in and put maximum debt to equity ratio of about 1.5. So that's going to tell us again how leverage the company is and we are just choosing that lower debt at this point in time as criteria, and then we can also add that P/E ratio, so we are going to scroll down to valuation and click on P/E ratio. And again, we are going to do here, we are trying to find out if the stock is fairly valued, we are looking in this case for a lower P/E ratio, so going to put 15 and we are going to click on that and as we scroll down, what happens is we are seeing only the resultsof this particular theme that matched that additional criteria that we had added. So here we can seewhat the number one company listed under that criteria is for the screen. It showing us the P/E ratio as well as the debt-to-equity ratio. Got some other information about price-performance and that sort of thing. We see it's a common share and over here, we can select a kind of buy or sell or get over. . . An overview on that company. And then if we actually click on the name of the company, it will pop up and give us additional information about the company, their website, tell us which space they are in and give us a little bit more information about the reason why this company is listed number one in our results. So lots of information to dive into. We kind of got that wide scope of ESG and then we can really get down to some of the nitty-gritty as far as financials as well and ratios and companies that might be best for us. >> Great stuff as always, Caitlin. Thanks for that. >> No problem, thank you. That's 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, including what you should know about how options are taxed. before you get back to your questions for Marisa Jones until it is, reminder the get in touch with us at any time. do you have a question about investing or what is driving the markets? Argus are eager to hear what's on your mind. Send us your questions. Email us anytime at moneytalklive@td.com or use the question box right below the screen here on WebBroker. Just writing your question and hit send. We will see it if one of our guests can get you your answerright here at MoneyTalk Live. We are back with TD Asset Management's Marisa Jones. We are taking your questions about utilities. Here's an interesting one that's been cropping up lately. How big of a role will nuclear play in this green transition? Is the jury in or out on this? >> Yes, and you're right, it's a very topical question right now. Nuclear has been, in my mind, has a perception that's unwarranted away. It's much more negative than I believe it should be. And as we are pushing forward to a net zero: many businesses or countries by 2050, in my view, you have to have all hands on deck. So every source of low mission or omission list type of power is necessary. So it's interesting because here in Ontario, in Toronto, a lot of people don't give it much thought that about 16% of our power comes from nuclear. Ontario Power generation owns and operates the majority of it, as does Bruce power, which is on the Bruce Peninsula. It's a private company, but is partially owned by TC energy. So I saying, you know, it's been safe and a baseload source of power here in Ontario for a long time. That said, the vast majority of nuclear source power is in the US, France or Europe and in China. With, you know, following 2011 Fukushima, there's been some divestment but also a sort of tilt away from nuclear overall. I think that with the need now, especially with needing to source secure local power as well as a baseload, which what I mean by that is if you have, if you are building all kinds of renewable power, so wind or solar, the downside of that is that it's intermittent. With nuclear, it has, some of the benefits are it's a very reliable, high reliability factor. 90%, they're about. So it is there when you need it. It's low omissions and it is, in terms of the actual physical space it needs, it's quite small compared to when you put up a windfarm or a solar power farm, for the amount of energy that's produced, you need a lot of land. So I think there's a lot of positive benefits or attributes to nuclear. So I think you will see it, it will have an important role in the transition to lower omissions. That said, I think that it is still a very high cost source power to build. What is operating, it's low cost, but to build. So will we see a lot of new nuclear power? In my view, it's kind of unlikely unless you get a lot of policy support. >> I was going to say, the public perception risk, not only the public perception, Fukushima was devastating in 2011, change some policy perspectives as well. Germany and some other company said, we don't want to be in the space anymore. It is that part of the hurdle to, to change perception? >> Yes. Unfortunately, it's been kind of consistent. One thing I do like to remind investors and people I speak with is that nuclear is one of the… Probably one of the only industries or few industries that we would look at that is fully regulated, talking about from the whole supply chain from the mine to the usage to the actual waste product. So it's very highly regulated and monitoredlocally and globally. From that perspective, I think it's a very secure type of power generation. I think a lot of people overlook that or downplay that. That's part of the perception. And then I think there is also… There's also a rule, a thought that… Maybe it's a communications issue about the waste product. Yes, you have this long-term nuclear waste and it's an issue about how it's stored and secured. In terms of actual, again, physical space, the waste produced is very small and it takes a long time to produce any size, large scale amount of this waste. So it is an issue that I'm not trying to downplay. It's just something that the industry as a whole has been able to do safely and securely for a long period of time. But I think it's an important role and I think that for nuclear, and I think that there's been interesting developments, you mention Germany, but just about two weeks ago, it was finalized that the EU taxonomy has allowed, the green taxonomy has allowed nuclear as well as some natural gas with some conditions to be included as green investments, with the idea that that will drive capital flow into this kind of investment. So there might be some growth spurred by that as capital flows into nuclear. >> You mentioned natural gas and that's a nice segue into the next viewer question. In energy space, people will consider these utilities, the pipeline. Another question from the viewers. What's your take on TC energy or Enbridge? >> Yes, I don't formally cover the pipeline but I'm quite familiar with them. I think, from a long-term's perspective and the value perspective,pipe in the ground is quite valuable because as he becomes more difficult, greenfield expansion, so new pipelines, it's very, very difficult. We seen many examples of pipelines being cancelled in the last 10, 15 years, so pipe it's already in the ground, so for TC energy, they have a lot of… It's probably more weighted towards natural gas. So in that sense, you might see more opportunities there because natural gas has been an increasing source and energy transition that we've been talking about. So we've seen natural gas in many cases the demand growing. That said, Enbridge, which does have a little more weighted towards crude oil, it does have natural gas as well, of course, in the state. I think, again, you have to go back to the point that fossil fuels as a source of power generation is not going to disappear. As much as it might be nice to think it would in terms of reducing emissions overall, it just won't. We need that, as you are introducing more solar and intermittent sources of power, we need this baseline study fallback in terms of power supply. >> Very interesting stuff. We will get back to your question for Marisa Jones from TD Asset Management just a moment. As always, please make sure you do your own research before making any investment decisions. A reminder, course, 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 and out right here on WebBroker, just writing your question and hit send. we will see if one of our guests can get you your answer right here at MoneyTalk Live. here's Anthony Okolie. > TD Securities significantly reduce their earnings-per-share on Canadian life insurers. this comes as life insurance companies are set to report their second-quarter results starting on July 28. Now, the sharp decline in earnings-per-share mostly reflects expectations for much lower wealth management earnings. And they point to the double effect of lower financial markets plus higher rates, which supports their estimates of between 11 to 16% year to date declines in wealth asset management across the group. Now with markets down nearly as much is the first quarter in 2020, still the unofficial start of the pandemic, TDSI also lowered their full-year estimates by 6 to 8% by 2022 and 8 to 10% for 2023. Now, the reduction on full-year estimates also reflects other factors that they point to, including currency, new business gains and investment performance. Finally, to reflect the reduction in the earnings estimates, TD Securities also cut the target prices across the board. >> When it comes to the subsectors on the TSX, the lifecos find themselves in the financials bucket with the banks. So what is the report saying about lifecos in light of perhaps banking? >> So in light of these significant reductions to earnings-per-share and target prices, TDSI is leaning towards financials, the banks over insurers at this time. They think that higher interest rates should drive the bank's net interest margins over the near term. However, it's going to have very little impact on quarterly earnings for life insurers. >> MoneyTalk Anthony Okolie. Let's take a look at the markets. a little bit halfway through the lunchtime trading session. 19,023, the TSX was having hard times, is slowly moving into the up side by just about three points. We are seeing some technology names and industrial names moving higher,but the energy stocks are a bit under pressure today with the price of crude pulling back again. It's very tall betrayed and grew. Some of the miners taking points off the table. Let's check in on first quantum. Down 2.7%, $19.70 per share. Shopify, one of the tech names I had my eye on her earlier with points on the table, $51.88 per share on Shopify, it's up about 4 1/2% today. Let's check at the S&P 500, the broader read of the American market. It's building on his earlier gains after bit of a choppy start to the session at 3984, a jump of about half a percent. America is now adjusting to some early evidence or at least an indication that the supersized rate hikes we've been getting in all this aggressive talk from central banks including the US Federal Reserve might be finding its way into the economy. Jobless claims continue to rise. We are seeing some softening's of key gauges of manufacturing activity. Let's check out the tech heavy NASDAQ and see if the same story is playing out on the other side of the border. Of almost a full percent on the NASDAQ 100. Look at Exxon, I said the energy names are weighing on trade the side of the border, so it is on Wall Street. At $87.26 per share for Exxon, it's down a little more than 2%. We are back now with Marisa Jones from TD Asset Management. We are taking your questions on utilities. This is a name specific one. How does Emera look in this environment? > Looking at Emera, it similar to my earlier comments about Fortis. It's one of the companies that look for growth south of the border a number of years ago. It is slightly different from Fortis in that it bought a very, I say, financially strong utility in Florida. With that, they've got a lot of growth. So Emera is interesting in that a lot of its growth going forward will be in the US as opposed to its Canadian operations. And again, talking about a higher return of equity, that bodes well for Emera. On the downside, it's slightly less regulated than Fortis. it's about 95% regulated, so still highly regulated and quite stable in terms of revenue. Ibut a little bit more volatility. On the home front, so in terms of… The next, you know, there's pretty aggressive plans by the province of Nova Scotia to get off coal. So in order to get to this point, I think it has to be a bit more aggressive in terms of sourcing renewable power and other sources. So it's a more interesting to look at Emera, but not a huge concern, it has a stable and growing asset in the US. >> You mentioned it doing the same as Fortis a few years back, they don't seem to be telling that story as of late. Have conditions change? Do we expect any more acquisitions or consolidations within the spaceor are we had a stable point in North American utility? >> Yeah, a very good question. So when this big growth spurt happened, it was because the Canadian market is quite mature and regionally dominated. So there's not as much growth or acquisitions available here other than organic growth that I talked about, and that story has changed positively. But when some of these companies went to the US, the US was more fragmented in the market, there were more opportunities. But as there were more acquisitions in the US, within the country, valuations became quite expensive. So acquisitions became less attractive, especially for the Canadian utilities. So that kind of naturally slow down this acquisition bend. And then, I'd say on top of that, you layer a bit of a political disinclination towards looking to the US ormore broadly it might come down to perceptions about, well, let's focus on your home market, let's focus on getting Canadian rates down or lower. Document to play as well. So since that time, I think it's been pretty stable. And as I mentioned, the growth expectations within… Canada has also improved. So I think you might see smaller talk in acquisitions, but you're not gonna see these transformational acquisitions anytime soon. >> Interesting stuff. Here's an interesting one as well. we danced around a bit knock on quite into it. What opportunities could you see out there in Greenbaum? These are been around for a while. What's the state of them right now? >> This is something I find pretty exciting. Green bonds are what we call use proceeds bonds. So when a company issues a bond, sometimes they will be for general corporate purposes. They just need funding for something. Something like a green bond, the use proceeds has to be pretty clear and has to go to specific projects or types of projects that are climate friendly, environmentally friendly, anything. And it's not just for utilities. Green bonds have been issued by various sectors in many different ways. In fact, they started around 2007, 2008 by like the World Bank, for example. So it started kind of as a niche but it's been growing and why find quite exciting for utilities is because there is so much cap ex and because so much issuance to be done. they're going to be projects with specific goals. I think it's a small market but it's maturing. So as you see more growth, I think last year, globally, issuance was only about 600 million, so still small relative to the bond market. But we are seeing more and more, even in Canada. So even just last week, I believe, or the week before, it was Ontario Power generation issued a green bond and it was the second one in Canada that was the use of proceeds specifically for nuclear. So that's an interesting development and I think it allows investors to have an insight into how companies, because I'm quite interested in how companies are transitioning and they are ESG footprint as well, so it helps us to see how they are spending their money and how… What kind of progress they are making to meet their climate goals. So Green bonds are exciting and there are continuing to Veltman's. For example, sustainability linked bonds where it's not a use of proceeds but instead accompany, and again, doesn't have to be utilities, but you are seeing a lot of the power segment because they have a lot of emissions reductions to be done, the company will set out a framework for reducing its… It might be social goals, it might be green goals, and then a bond will be issued with key performance indicator targets and the interest rate might go up or down to benefit or penalize a company if these targets are met or not met. So there is interesting developments and I think it's still pretty nascent. Again, maybe from my perspective, that's why it's exciting because we are actually having a say in how frameworks are being developed. Green bonds, for example, you can go on a company's website, so any company that is issued green bonds, you can go, like OPG for example, you can go on their website and they will have their framework and they will have a list of projects or types of projects they will invest in. And any investor can simply go and look and see, is this something I'm interested in supporting or not? So I think it's quite exciting. > As you mentioned it's a fairly nascent space though with opportunity ready to get bigger. It is that one of the risks for it as well? >> I don't think so and as you mentioned there is a lot of interest in these bonds because it's brought new investors to companies. that's one of the benefits of the companies to issue these is capital that might not really have cared much about that company. If the investor want to invest in something where they can see the actual green benefits, they might be attracted to green bonds. So it's help the companies. so they are interested in issuing this. Investors similarly can say, well, this is why we bought this project and it's helping our, as a… As investors, our ESG goals. And the third aspect, I would say, is that as the market has developed, there was some scepticism, course, early on about are they actually being used for these proceeds? There have been frameworks developed, goals and procedures, party checks, and there's been a lot more verification. So I would say that is the market has matured and is developing, it's becoming much more transparent and easier to follow. >> Fascinating discussion. Really enjoyed it, Marisa. > Thank you. >> Our thanks to Marisa Jones, utilities credit analyst with TD Asset Management for joining us today. Make sure to stay tuned. On Monday, Colin Lynch from TD Asset Management will be our guest on the program. Really talking about global real estate. You don't have to wait on Monday at noon Eastern time to get your questions in, you can get a head start. Email moneytalklive@td. com. That's all the time we have on our chauffeur today. Take care and see you next time. [music]