Print Transcript
[music] >> Hello, I'm Greg Bonnell. Welcome to MoneyTalk Live, brought to you by TD Direct Investing.
Coming up on today's show,MoneyTalk's Anthony Okolie is going to take us through what we heard from fed chair Jerome Powell today at Jackson Hole and what it means for rates.
TD Asset Management's Michael O'Brien gives us his view on the oil and gas sector. And we are going to hear from Michael Craig, head of asset allocation at TD Asset Management.
We are going to hear him talk about why the markets, where they could be heading as bond yields have grind it higher this summer. In today's WebBroker education segment, Nugwa Haruna is going to show you how to use the portfolio manager tool on Advanced Dashboard. Here's how you get in touch with us.
Just email moneytalklive@td.com or fill out the viewer response box under the video player on WebBroker.
Before I get to all that, let's get you an update on the markets.
We will start here at home with the TSX Composite Index.
Right now we are down modestly about 14 points are just seven tics.
A bit of a choppy ride since we heard from Jerome Powell this morning. He said a lot of things that we've already heard him sayas investors try to figure out what it's all going to mean. Let's take a look at this name though. BlackBerry apparently, the share spiked earlier today. Right now they are up about 9%. I think we may have resumed trading.
Bloomberg is reporting that Veritas is considering a bid for the company.
These are unconfirmed reports, but it definitely had an influence on the price of BlackBerry so we will keep a careful eye on that one for you.
Want to see what else is happening in the markets, with the dynamics and what's happening in the wake of Jackson Hole and Jerome Powell. 6 1/2 bucks roughly for Kinross Gold per share, down about 2.4%.
Did notice though however that Athabasca Oil had a bit of a bid to the upside.
West Texas intermediate is up today.
South of the border, the S&P 500 was trying to decide what to make of what we heard from Jerome Powell. It was up, it was down, it was pretty much just flat right now. The tech heavy NASDAQ, which has benefited in recent days from stronger earnings, managing to keep in positive territory. A very modest nine points, just seven tics. Nordstrom under significant pressure today. It's been a week big week for US retail earnings and it's been a mixed bag but if you don't please the street, these retailers get hit pretty hard. You've got Nordstrom down right now little more than 11%.
And that's your market update.
Jerome Powell has delivered that highly anticipated speech at Jackson Hole.
MoneyTalk's Anthony Okolie joining us now with the details of what we heard in some reaction. What did we get?
>> Yeah, so we got kind of a hawkish tone from Jerome Powell.
there were some key uncertainty is slight.
One is that the policystance is not restrictive enough, they signal more hikes. And second, it has been restrictive for long enough, which could augur for more patients. Coming into this, we heard a more hawkish tone up from Jerome Powell and his Jackson Hole speech. While he acknowledged that progress has been made on inflation, the chairman reiterated his views that high interest rates which are likely to remain elevated for an extended period are necessary in order to bring inflation back to central banks preferred 2% target.
some of the other things he mentioned, incoming data will have an impact.
TD Securitiesnoted that they have been more data dependent. He emphasized that today.
It he said that bringing down inflation has a long way to go despite recent welcome improvements. He also warned that additional rate hikes could be a possibility if growth remains strong. On the path of interest rates, he talked about markets have recently been pricing in a small chance of another hike at the September meeting with a 50% chance at the November session.
Powell did not provide a clear indication which way he sees the decision going.
But he also gave no sign that he's even considering a rate cut at this point.
When we look at market reaction, of course, we have seen markets continue to push the five-year real rates higher, which continues to weigh on market activity.
The five-year yield is at its highest in quite a while.
Of course, higher real rates are good news for savers because the picture gets more complicated as it ripples through the markets and the economy. It kind of reflects that borrowing is getting more expensive which tends to slow growth and high real yields tend to drive investors to cash like products like money market funds and out of riskier assets, from equities, gold and whatnot. I have an economic impact as well as that movement goes on long enough. Finally, Powell also dismissed the idea of inflation target change.
Now we have heard from some legislatorsthat the Fed should change or raise rather it's 2% inflation target, a move that would give it more policy flexibility and might deter further rate hikes. But Powell rejected that idea flat out, as he is done in the past. Those are some key highlights of what we heard from Powell today.
>> It feels like a stay the course. Last year at this time, Jerome Powell came out with some stern words, saying, I don't know if you guys are listening to me but we have a way to go.
He brooded over the past year, indeed they did hike. The question seems to be, it may be are we done yet?
I think TD Economics's take on it was they could be done by they brought their hand just hovering over the hike but in case they need to use it.
>> That's right.
TD Securities, they came out with a report just prior to the Jackson Hole meeting and they said that in their view, the bulk of the data supports the idea that the Fed might be done lifting rates.
If you look at core inflation, it set to steadily fall in line in the near term.
Inflation excitation and wage growth are gradually normalizing. They also point to the imbalance between labour market supply and demand. That has been slowly healing.
And now, this effect, while the Fed will not fully close the door to additional rate hikes, TD Securities has come out after the speech saying that they don't expect any further rate hikes and for the Fed to start cutting rates in March of next year.
>> Is a lot going on and we have to keep on watching the data.
I know you will come back later and tell us what is ahead in the next week. Thanks, Anthony.
>> My pleasure.
>> MoneyTalk's Anthony Okolie.
Earlier this week, we heard from Michael Craig, head of asset allocation at TD Asset Management about these bond rates and what it could mean going forward.
>> There has been some negative news this month. There was a downgrading of the US treasury.
That wasn't great for sentiment. They are issuing more bonds and what was expected.
it's August. A lot of people on vacation.
The speculative communityhas taken a fairly large short position in the treasury which has pushed it higher.
We won't really have a great idea where were going until about the third week of September until people are back at their desks.
I think buy programs are being triggered and I think I will be interested to see where we are in about a month's time when everyone is back at their desks and working.
As you mentioned in the summer doldrums, you see the bond yields up, grinding higher, gets tongues wagging becausepeople have programming time on different business networks, with four on this, will why not a six on a 10 year? Is it possible to bond yields could moves significant lay higher from here absent a massive triggering event?
>> Yes. I would look at it two ways. There is the move higher and then there is the durability, can it stay at that level for a period of time?
Six seems a bit aggressive.
But can 10 year rates move to 5%? I mean, it's possible.
But how long can they stand there?
How long can the world function, can companies and households finance of those higher rates as people reset their mortgages or look at their variable lines of credit or companies refinanced debt, moving from coupons of 3 to 7 or eight.
How does that affect demand? As the cost of money goes higher, we will consume less.
it's deflationary. Anything can happen in the near term.
There is limited liquidity right now.
I struggled to see rates staying at a high level for a long period of time without material economic damage being inflicted on the global economy.
So long story short, for income investors who are looking not so much the next quarter but for longer periods of time, these are fairly attractive income yields that you get higher from fixed income right now.
> On the equity side, even though August has been choppy after July was pretty strong in the equity market, they are still holding and considering how much rates have grind it higher.
There has been a pullback but nothing too dramatic. What's the dynamic there?
>> Well, your today returns are still very, very good.
Europe has pretty much been flat's the spring. When you look at the TSX versus the S&P, they are very different markets.
The S&P is up give or take 15% on the air and the TSX is up maybe with dividends maybe three, three and a bit.
That is really an example of how this has been driven by just a handful of stocks.
A lot of good news is priced in. Can I go hard to mark absently. Nvidia has earnings tomorrow.
AI is all the rage. There is also capital investment going there.
But when you look at, when people start quoting price to sales, your return is not sales, it's earnings, you start to use, people start to use different metrics to kind of describe value, you should have a bit of pause and think about how much of that has already been priced in. I would see on equities, again, it's been a tough month for equities, going into seasonally a very challenging.
In August and September, they are typically quite tougher equities, again, when we get back to work next month and we look at earnings yields, the price we pay for stock versus it's earnings versus what you get for cash versus fixed income, right now, it's very, very tight, the tightest it's been in 20 years, making both cash and fixed-income more attractive on an earnings perspective than stocks.
>> That was Michael Craig, head of asset allocation at TD Asset Management.
Michael and I had the discussion earlier in the week before Nvidia came out with his latest quarterly earnings.
It was all about the artificial intelligence.
Even though Nvidia did deliver on the promises of earlier this year, torta failed to lift the broader markets.
Interesting days ahead in terms of the AI excitement and what it could mean.
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.
The chairman of India's JSW Steel says the company wants to buy a significant stake in the steelmaking coal operations of Teck Resources.
In a televised interview, Sajjan Jindal said JSW is looking to buy up to 40% of those assets and would make a bid within the coming months. The shares of Teck Resources did jump higher earlier this month on reports that JSW was looking at the Vancouver-based minors cool operation.
Right now model of price action but perhaps lose confirmation of the rumour from earlier this month.
It's been a pretty busy week for US retail earnings, the latest Nordstrom.
The street does not seem please. Right now, the stock is down about 11%. The department store chain delivered stronger than expected sales and profit for its most recent quarter, but it is standing by its forecast of a 46% decline in sales this year. Retail earnings were a mixed bag this week.
Some companies are navigating inflation and shifting consumer habits. MasterCard is the latest global payment networks and partnerships with Binance. The crypto firm says MasterCard will stop offering Binance branded cards in the Middle East and Latin America. It follows a similar move from credit card giant VISA earlier this month.
Let's check in on the markets. We will start here at home on Bay Street with the TSX Composite Index. Choppy trade post Jackson Hole. They are still in Jackson Hole but the main event was Jerome Powell.
He spoke shortly after 10 AM Eastern time this morning. The TSX is about nine points, pretty modest, just five takes up.
South of the border, the S&P 500 trying to decide if it wants to be positive or negative. Right now it started to find a little bit of momentum to the upside. Very modest, six-point, a little more than 1/10 of a percent.
We see in the price of oil moving higher recently but will that translate into more opportunity for Canadian energy stocks?
Earlier I spoke with Michael O'Brien, portfolio manager with TD Asset Management to get his view.
>> Well, I think the supply demand fundamentals are finally starting to line up the way we had hoped at the beginning of the year. But you're right, it was a tough slog the first six or seven months.
What we had expected coming into the year was the supply not so much the demand, we were not as concerned about that, but we felt that there was going to be some significant tightness and supply. Kept waiting to see those inventory drawdown.
They are finally starting to materialize.
I think that's what has put a more fundamental base underneath the oil price.
The reality is oil, the price of oil moves around a lot more than the supply demand fundamentals do so macro headlines are gonna knock it up and down. But I think the fundamental underpinning here looks better than it has in quite some time.
>> Before we move on, let's talk about China. It has been great there. How much do you need to keep that in mind for energy investors?
>> China obviously is the 800 pound gorilla in the commodities market. What's interesting though is relative to things like copper, they are very much geared to their industrial production, the manufacturing side of the economy, I think the story for oil in China has been more about the Chinese ending the lockdowns, letting people move around. At the end of the day, oil is about, is a transportation fuel. It's about moving people and things around.
So the demand so far this year out of China has actually been quite solid, contrary to what you might've expected.
>> Okay, contrary indeed to what I did expect. Glad I got that in.
Let's talk about the energy related stocks. We have seen this move higher in the price of crude. It's been a fairly substantial one of the past couple of months. Is it really being priced into the energy stocks? What's going on there?
>> It's starting up. They have had a betterthird quarter, so far it's been a little bit more encouraging. Energy stocks are starting to participate in what has been a pretty good year for markets.
In our view, there is still more to come here.
And I think what's really intriguing about this space is there still aren't really high expectations on the part of investors but if you give a lot of these Canadian producers $80 plus or minus, they are going to generate a lot of free cash flow.
One of the things we've been focused on for some time, which I think is something we don't want to take our eye off the ball, a lot of these Canadian producers, they spent the last couple of years doing what they should have done, which was repair their balance sheets, their balance sheets and order, get their debt levels down, but we are really getting to an interesting point where a lot of the major producers are very close to hitting those debt level targets.
You take Canadian Natural Resources, Cenovus, some of the big hitters, somewhere late this year, early next year, they are going to reach those targets which means all the free cash flow is coming back to us as investors.
So I think that the opportunity is what could be a difficult time for markets overall, you're going to be seeing a subgroup of companies here that are going to be sending a lot of cash back to shareholders.
>> Those are some of the big names. The pipeline stocks, they don't seem to be sort of catching a bid like some of these energy names are during this rally in crude. What's going on there?
>> Yeah, that's partly self-inflicted and partly another I would say broader issue that's affecting a lot of other stocks too. So to get the macro out of the way, one of the things that has weighed on the pipeline stocks, like TC Energy, like Enbridge, is the same thing that has weighed on a lot of the traditional dividend paying, high yielding stocks in the TSX Composite Index, your BCE's, your Telus, Fordis. These types of names. And what that is simply, they have to compete for investor dollars with cash, which EI season for the last 10, 15 years, there was not muchcompetition at all.
But as we see rates begin to rise and investors have other options, those dividend yields have to rise to to keep that attraction.
So that's a more general comment.
>> Can I show a picture that will speak to what we have seen in rates in the bond market and central banks of what it actually mean?
There's the Canadian tenure right there rivers and by the white line and there some of the transportation stocks moving in the other direction.
>> That's what one would expect to see. As the price goes down, the dividend yield goes up to keep pace with those bond yields.
So like I say, it's not just the pipeline companies that have been affected but that's clearly been one of the factors.
The second part that's more specific to these companies is, I think for a number of years, we as investors encouraged pipeline companies to increase their payout ratios. Give us more cash, give give it back. Investors are fickle, their mood changes. What we have seen over the past couple of years as after the pipeline companies listen to us and did increase their payout ratios, now the focus seems to pivoted more towards getting your leverage down,reducing your debt.
When you have those high dividend payout ratios, it kind of ties the hands of management. It's difficult to do both things at the same time. And so TC Energy, which is probably the most topical name in that space right now, not only do they have a bit of an elevated payout ratio, but they also have the misfortune of having some significant cost overruns on some major projects. This has been a long running theme in the Canadian energy space.
So they have had some cost overruns that have put some pressure on their balance sheets.
In response, they are attempting to sell non-core assets or minority interest in some of their core assets.
To date, they have been making progress but I would say the devaluations they are getting on some of these asset sales haven't been as robust as investors have helped so that's putting a lot of pressure on some of those stocks.
>> Let's broad that out. If we are talking about stocks that are particularly sensitive to rising bond yields, you mention some of this.
>> you are gonna recognize this chart because it looks pretty much the same.
So what's interesting, communication services, in other words, your big wireless and telecom providers, BCE, Telus, Rogers, similar to what I described withTC Energy, and they have some of their own sector specific issues. Directly in communication services with Rogers acquiring Shaw, with freedom mobile going to Québec, obviously there is a lot of anxiety among investors about how the competitive environment is going to shape up for these communication services companies especially with back-to-school.
That's why there has been pressure on those stocks. But if you then sort of look at the utility space, far less hair on those names and yet it's the same chart.
So that's what brings us back to when interest rates go up and it pressures a higher yield in dividend stocks that investors traditionally turn to for yield.
>> That was Michael O'Brien, portfolio manager with TD Asset Management.
Technology fails me now, so we're going to old school and read off a piece of paper like us the 1950s.
Now let's get to today's educational segment.
In today's segment, we are going to take a look at TD's Advanced Dashboard, this is a platform designed for active traders available through TD Direct Investing. New Bern is going to join us, Senior client education instructor at TD Direct Investing. You're going to take us through how you can test out trading ideas on Advanced Dashboard without putting your portfolio at risk. How do you do that?
>>Hi, Greg.
It's always a pleasure to be here.
Advanced Dashboard, as you mentioned, is a platform available to TD Direct Investing clients, usually those who consider themselves active traders. There are number of tools that investors may find their in one of these include support flow manager tool. As you mentioned, investors might be considering an investment but don't have conviction yet about when to buy it or how many to buy, they can create a portfolio manager and track the performance of this portfolio over time.
So let's hop into the platform and take a look.
I'm just going to show you how you can get to Advanced Dashboard. This is WebBroker.
To get to Advanced Dashboard, you will click on here and you would pull up the web version. I've already done that so we are in Advanced Dashboard. One of the nice things about it is you can customize it and so I have created a layout that just has the portfolio manager here.
So you're going to be taking a look and you might think, this is my portfolio, these are my holdings, but once again, I have populated with information based on securities I may want to hold. In any time you are looking to add securities to your portfolio manager, you simply go to the top tier where it says enter symbol. I'm going to select the last symbol I searched up and I'm going to pull that up. And notice the moment I pull it up, a little box pops up.
This is where I'm able to put the quantity. Keep in mind, when you are dealing with ETFs, you can fit a portfolio for them as well, it has to be quantities of 100.
So I'm going to Sam buying 100 of the security. And based on the price of that security and how many you are looking to buy, it gives you the amount you will be spending to purchase the specific security. Now one of the things you can do as well is it instead of going by the default price you see here, you actually are able to select a date. He would say, wait, what if I purchased at the security, let's say you purchased it last week Monday. What price what I have paid?
when I select that, you're going to notice, Greg, that the price has changed.
That's one of the things you can do, sorry, this is multiples of 100.
Just going to put one there. And I'm going to save.
So once I do this, Greg, now you're going to notice that now I have my ETF on this list. A few things I want to colour. You can see the average costs are paid for each of the securities, the quantities I'm holding, and you also see things like the book cost, how much this costs to add to my portfolio, with the market value is in some additional things like daily profit and loss.
Right now, it's unfortunate, you will notice that most of my position, I am in the red but that's what's happening with the markets today.
if you notice any securities didn't belong, you can remove them.
I have a US ETF you that maybe I don't want to my list.
I simply go to the next year and I am able to delete that from my list.
If I have a few more securities I want to edit, I always do that by using the little pin button there. If you want to create a new portfolio, you can do that by simply using the new portfolio tab and you can create a brand-new list.
A few things you can do, you can keep coming back here review the portfolio, see how well you're doing.
When I look at the top, I see that half the securities in my portfolio are up today and have are down.
That's giving me a quick pulse of the market. I will also see the total value of my portfolio, what the cost was to me and if I am up or down.
I'm actually down about $8000.
So that's all the more reason why, as an investor trying to track the markets, I might be looking to pause in the interim before make a decision.
>> A very interesting tool.
I'm gonna try my hand at that when I get a bit of time. Maybe later today. Thanks, Nugwa.
>> Are welcome. Have a great day.
>> You too. Nugwa Haruna, Senior client education instructor at TD Direct Investing. And make sure to check out the learning centre in WebBroker for more educational videos, live, interactive master classes and upcoming webinars.
markets have been increasingly pricing in a soft landing scenario for the economy, but that still means there's going to be a landing of some sort. According to Emin Baghramyan, lead of quantitativeportfolio management at TD Asset Management, investors may be too optimistic about the prospects for growth.
He joined me earlier to discuss.
>> We at TD Asset Management quantitative team take a bit more of a measured perspective on global economic growth.
While it is true that the economic conditions, they proved to be more resilient than many believe, especially considering the amount of monetary tightening we have seen over the past few years, however, we are seeing that there are a few emerging signs that people need to consider when they are making judgements about global economic growth going forward.
The first sign is that while indeed the interest rate sensitivity of the economy has been greatly reduced and that is because over the past decade, people, companies, state and local governments, took advantage of very low interest rates and we have seen over the past decade and kind of locked it into this long-term interest, long, long term interest rates.
However, there's not really much in evidence that there is no sensitivity at all and I think that the brunt of the negative impacts of the market tightening is yet to come.
So there is some kind of time lag that the legs have a bit increased but the negative impacts of the monetary tightening, we think, is going to come.
And we look at the sources of economic growth.
Recently, we can clearly see that manufacturing is in recession.
If you look at all the manufacturing PMI's from the US to Canada to Japan to China to Europe, they are in deeply contractionary territory.
And the main source of economic growth has been consumer spending on services.
We think that the service sector has been benefiting still from the legged impacts of this reopening that we saw post-pandemic because when we think about this, governments have greatly underwritten consumer incomes during the pandemic.
The unemployment rate did not shoot up.
People's incomes are supplemented greatly by zero interest rates that banks provided around the world, plus an enormous amount of physical spending and payroll protection loans and things like that. So incomes were steady and people had nowhere to spend their money and the brunt of the spending went into goods and renovations and that kind of created this boom in good spending. However, over the past year or so, where people now have a chance to direct their marginal dollars into things that have been missed out and things they couldn't spend on due to social distancing such as travel, entertainment, restaurants, dining out and things like that, consumer spending has been really strong in that area. However, if we look at the forward-looking indicators, for example, restaurant and hotel bookings, that are already showing signs that we are in the final innings for that source of economic growth as well.
So we believe that the services sector will also slow down.
And it's not only that.
If we continue looking at the leading indicators such as credit growth, for example, if we take the Senior loan Ofc.
survey, which measures the bank's willingness to lend to consumers, to corporations, we are seeing that there is deeply contraction where the lending standards are being tightened sharply and that usually foreshadows a slowdown in credit growth and we all know that if there is not enough credit in advanced economies, usually economic growth feels the brunt.
>> So we've got a few indicators there that are pretty interesting in terms of perhaps finally seeing those legs take part in the economy. When you take a look at the market performance, up until this month, it's been pretty strong. But you say there are some risks around the so-called Magnificent Seven. Take me through the Magnificent Seven.
>> Yes, indeed.
If we look at the performance of a very broad basket such as the S&P 500, it looks like it's collaborating for a positive message that the general sentiment among market participants is that economic growth is okay.
However, if we look below the surface, we can see that the majority of those gains did not come from, it wasn't a widely participated rally. We have to first remember that these double-digit gains in the S&P 500 in almost 35% rally so far that we are seeing in the NASDAQ is coming on the back of very similarly deep correction that we saw over the past year.
The S&P declined 25% last year and the NASDAQ was down 30% last year as well. If you look at what is actually increased, it's the so-called tech companies. In the chart that we currently see, there are a few companies, Magnificent Seven, are responsible for the majority of the gains that we saw in the benchmark. For example, if we take a very broad average, the S&P 500 equal weighted as we look at the performance of that, we can see that it's basically flat so far and is running at -10% year to date, 10% annualized returns over the last 10 years, which tells us that the average or median stock is not really participated so far in this rally.
And that's on a very good signfor the coming health of economic growth going forward.
So what that did though, it made the benchmarks quite vulnerable to the developments of the so-called Magnificent Seven. What if something happens? What if the investors are overly optimistic that we usually have seen throughout the history many times that investors get very optimistic when some things get really positive such as currently AI is this driving force where people feel extremely positive on these companies outlooks.
However, if it doesn't pan out as rosy as many expected we see this de-concentration of the benchmarks that can basically cause big risks for people who tend to invest in the broad benchmarks such as the S&P 500.
That is why we at TD Asset Management quantitative team think that it is a very good time actually to look awayfrom traditional cap-weighted benchmarks and look for alternative strategies.
>> What would some of those alternative strategies be in an environment like this?
>> In this environment, it would be strategies that favour low volatility strategies attend to invest in companies that tend to be more defensive and less benchmark oriented and a little bit more diversified in individual name, sectors or regionally. Another interesting strategy is investing in dividend paying stocks and multifactor strategies.
>> That was Emin Baghramyan, lead of quantitative portfolio management and TD Asset Management.
Now for an update on the markets.
We are looking at Advanced Dashboard's heat map function here, it gives you a view of the market movers. We will take a look at the TSX by price and by volume.
Earlier in the session, this wasn't the case. But we are seeing some momentum now in the energy names. A fairly substantial amount of real estate being taken up by some green on the screen, a name like Suncor right now is up by 1.6%. Below that, TC Energy, I was want to call it trans Canada, but TC Energy has been up for a while now about 1 1/2.
You see another energy names rallying along with it.
We had bank earnings season kickoff here in Canada. The reaction is a bit muted right now in the financial space. As we take a look at the miners, it's a bit of a mixed basket here. You've got First Quantum up 1% but you got Kinross Gold next-door down to the tune of about 2%.
You normally have to screen by the TSX 60.
We can take a look at other screens as well, including the S&P 100. I want to focus in on Nvidia.
This is interesting, right? There is a lot of promise around AIA and the demand it would have for their GPU's.
Their graphics processing units. Indeed, the demand they talked about played out for the quarter.
It was stronger than anticipated. The stock though giving a bit back. It has been trading at all-time highs figure down about 3.7% right now. And Tesla, right next door, some momentum, up to the tune of about 2%.
It came under pressure in recent weeks on price cuts in China but got some favourable sentiment towards the name on the street in recent sessions.
You can find out more information about TD's Advanced Dashboard by visiting TD.com/Advanced Dashboard.
All right, we are almost ready to say goodbye to this week.
A few more hours left in the trade, but then next week, we are in the thick of summer. Anthony Okolie is joining us now.
People think of the summer doldrums but at the same time, after what we heard from Jackson Hole today and that there is more data to common, we'll have to keep an eye on next week.
>> Yes,there will be data that the Fed and the Bank of Canada will be watching closely ahead of the key meetings in September.
The market will focus on a couple of key reports next week.
On September 1, we get the US jobs report for August.
This is a key report.
TD Securities expects US payrolls likely posted another sub- 200,000 gain this month.
Job growth in July that we got last month was less than expected, pointing to a slower pace in the US economy, though perhaps not a long anticipated recession that some market watchers were expecting.
TD Securities is expecting about 180,000 new jobs, that slightly more than market consensus expectations around hundred 68,000. When it comes to the employment rate, still fairly low, 3 1/2%, that's pretty much in line with consensus estimates. Again, the Fed will be watching this closely to see if past interest rate hikes are working their way through the economy and flowing that red-hot labour market.
Some other things, reports will be getting, core Personal Consumption Expenditure Price Index, or PCE in the US for July, we are also going to get the August manufacturing print.
With regard to the PCE,, core PCE inflation is being called to strengthen the 3% month over month after drop the prior month while the manufacturing index, they are expecting an increase to 47 1/2 after a small gain in July.
Of course, here in Canada, on September 1, we get Canadian real second-quarter GDP for June. Second quarter GDP growth is expected to come in at a slower pace of 4.2% amid more evidence that the Bank of Canada rate hikes continue to work its way to slow demand.
TD Securities is also looking for GDP to contract in June by .1%.
So some key reports due out next week that the central banks will be watching closely and so will we.
>> The PCE is the preferred measure of the Fed.
He said expectation is going to take a bit higher.
We could have some market moving events after those reports. I know you will be all over it next week.
But we will take a break before he gets all that.
On Monday show, you want tuning, Bart Melek, global head of commodities strategy at TD Securities will be our guest, he wants to take your questions about commodities.
You can get a head start on those questions at any time.
You just gotta email us@moneytalklive@td.com.
On behalf of Anthony and me here at the desk and everyone behind the scenes that bring to the show every day, thanks for watching a week.
Have a great weekend, and we will see you on Monday.
[music]
Coming up on today's show,MoneyTalk's Anthony Okolie is going to take us through what we heard from fed chair Jerome Powell today at Jackson Hole and what it means for rates.
TD Asset Management's Michael O'Brien gives us his view on the oil and gas sector. And we are going to hear from Michael Craig, head of asset allocation at TD Asset Management.
We are going to hear him talk about why the markets, where they could be heading as bond yields have grind it higher this summer. In today's WebBroker education segment, Nugwa Haruna is going to show you how to use the portfolio manager tool on Advanced Dashboard. Here's how you get in touch with us.
Just email moneytalklive@td.com or fill out the viewer response box under the video player on WebBroker.
Before I get to all that, let's get you an update on the markets.
We will start here at home with the TSX Composite Index.
Right now we are down modestly about 14 points are just seven tics.
A bit of a choppy ride since we heard from Jerome Powell this morning. He said a lot of things that we've already heard him sayas investors try to figure out what it's all going to mean. Let's take a look at this name though. BlackBerry apparently, the share spiked earlier today. Right now they are up about 9%. I think we may have resumed trading.
Bloomberg is reporting that Veritas is considering a bid for the company.
These are unconfirmed reports, but it definitely had an influence on the price of BlackBerry so we will keep a careful eye on that one for you.
Want to see what else is happening in the markets, with the dynamics and what's happening in the wake of Jackson Hole and Jerome Powell. 6 1/2 bucks roughly for Kinross Gold per share, down about 2.4%.
Did notice though however that Athabasca Oil had a bit of a bid to the upside.
West Texas intermediate is up today.
South of the border, the S&P 500 was trying to decide what to make of what we heard from Jerome Powell. It was up, it was down, it was pretty much just flat right now. The tech heavy NASDAQ, which has benefited in recent days from stronger earnings, managing to keep in positive territory. A very modest nine points, just seven tics. Nordstrom under significant pressure today. It's been a week big week for US retail earnings and it's been a mixed bag but if you don't please the street, these retailers get hit pretty hard. You've got Nordstrom down right now little more than 11%.
And that's your market update.
Jerome Powell has delivered that highly anticipated speech at Jackson Hole.
MoneyTalk's Anthony Okolie joining us now with the details of what we heard in some reaction. What did we get?
>> Yeah, so we got kind of a hawkish tone from Jerome Powell.
there were some key uncertainty is slight.
One is that the policystance is not restrictive enough, they signal more hikes. And second, it has been restrictive for long enough, which could augur for more patients. Coming into this, we heard a more hawkish tone up from Jerome Powell and his Jackson Hole speech. While he acknowledged that progress has been made on inflation, the chairman reiterated his views that high interest rates which are likely to remain elevated for an extended period are necessary in order to bring inflation back to central banks preferred 2% target.
some of the other things he mentioned, incoming data will have an impact.
TD Securitiesnoted that they have been more data dependent. He emphasized that today.
It he said that bringing down inflation has a long way to go despite recent welcome improvements. He also warned that additional rate hikes could be a possibility if growth remains strong. On the path of interest rates, he talked about markets have recently been pricing in a small chance of another hike at the September meeting with a 50% chance at the November session.
Powell did not provide a clear indication which way he sees the decision going.
But he also gave no sign that he's even considering a rate cut at this point.
When we look at market reaction, of course, we have seen markets continue to push the five-year real rates higher, which continues to weigh on market activity.
The five-year yield is at its highest in quite a while.
Of course, higher real rates are good news for savers because the picture gets more complicated as it ripples through the markets and the economy. It kind of reflects that borrowing is getting more expensive which tends to slow growth and high real yields tend to drive investors to cash like products like money market funds and out of riskier assets, from equities, gold and whatnot. I have an economic impact as well as that movement goes on long enough. Finally, Powell also dismissed the idea of inflation target change.
Now we have heard from some legislatorsthat the Fed should change or raise rather it's 2% inflation target, a move that would give it more policy flexibility and might deter further rate hikes. But Powell rejected that idea flat out, as he is done in the past. Those are some key highlights of what we heard from Powell today.
>> It feels like a stay the course. Last year at this time, Jerome Powell came out with some stern words, saying, I don't know if you guys are listening to me but we have a way to go.
He brooded over the past year, indeed they did hike. The question seems to be, it may be are we done yet?
I think TD Economics's take on it was they could be done by they brought their hand just hovering over the hike but in case they need to use it.
>> That's right.
TD Securities, they came out with a report just prior to the Jackson Hole meeting and they said that in their view, the bulk of the data supports the idea that the Fed might be done lifting rates.
If you look at core inflation, it set to steadily fall in line in the near term.
Inflation excitation and wage growth are gradually normalizing. They also point to the imbalance between labour market supply and demand. That has been slowly healing.
And now, this effect, while the Fed will not fully close the door to additional rate hikes, TD Securities has come out after the speech saying that they don't expect any further rate hikes and for the Fed to start cutting rates in March of next year.
>> Is a lot going on and we have to keep on watching the data.
I know you will come back later and tell us what is ahead in the next week. Thanks, Anthony.
>> My pleasure.
>> MoneyTalk's Anthony Okolie.
Earlier this week, we heard from Michael Craig, head of asset allocation at TD Asset Management about these bond rates and what it could mean going forward.
>> There has been some negative news this month. There was a downgrading of the US treasury.
That wasn't great for sentiment. They are issuing more bonds and what was expected.
it's August. A lot of people on vacation.
The speculative communityhas taken a fairly large short position in the treasury which has pushed it higher.
We won't really have a great idea where were going until about the third week of September until people are back at their desks.
I think buy programs are being triggered and I think I will be interested to see where we are in about a month's time when everyone is back at their desks and working.
As you mentioned in the summer doldrums, you see the bond yields up, grinding higher, gets tongues wagging becausepeople have programming time on different business networks, with four on this, will why not a six on a 10 year? Is it possible to bond yields could moves significant lay higher from here absent a massive triggering event?
>> Yes. I would look at it two ways. There is the move higher and then there is the durability, can it stay at that level for a period of time?
Six seems a bit aggressive.
But can 10 year rates move to 5%? I mean, it's possible.
But how long can they stand there?
How long can the world function, can companies and households finance of those higher rates as people reset their mortgages or look at their variable lines of credit or companies refinanced debt, moving from coupons of 3 to 7 or eight.
How does that affect demand? As the cost of money goes higher, we will consume less.
it's deflationary. Anything can happen in the near term.
There is limited liquidity right now.
I struggled to see rates staying at a high level for a long period of time without material economic damage being inflicted on the global economy.
So long story short, for income investors who are looking not so much the next quarter but for longer periods of time, these are fairly attractive income yields that you get higher from fixed income right now.
> On the equity side, even though August has been choppy after July was pretty strong in the equity market, they are still holding and considering how much rates have grind it higher.
There has been a pullback but nothing too dramatic. What's the dynamic there?
>> Well, your today returns are still very, very good.
Europe has pretty much been flat's the spring. When you look at the TSX versus the S&P, they are very different markets.
The S&P is up give or take 15% on the air and the TSX is up maybe with dividends maybe three, three and a bit.
That is really an example of how this has been driven by just a handful of stocks.
A lot of good news is priced in. Can I go hard to mark absently. Nvidia has earnings tomorrow.
AI is all the rage. There is also capital investment going there.
But when you look at, when people start quoting price to sales, your return is not sales, it's earnings, you start to use, people start to use different metrics to kind of describe value, you should have a bit of pause and think about how much of that has already been priced in. I would see on equities, again, it's been a tough month for equities, going into seasonally a very challenging.
In August and September, they are typically quite tougher equities, again, when we get back to work next month and we look at earnings yields, the price we pay for stock versus it's earnings versus what you get for cash versus fixed income, right now, it's very, very tight, the tightest it's been in 20 years, making both cash and fixed-income more attractive on an earnings perspective than stocks.
>> That was Michael Craig, head of asset allocation at TD Asset Management.
Michael and I had the discussion earlier in the week before Nvidia came out with his latest quarterly earnings.
It was all about the artificial intelligence.
Even though Nvidia did deliver on the promises of earlier this year, torta failed to lift the broader markets.
Interesting days ahead in terms of the AI excitement and what it could mean.
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.
The chairman of India's JSW Steel says the company wants to buy a significant stake in the steelmaking coal operations of Teck Resources.
In a televised interview, Sajjan Jindal said JSW is looking to buy up to 40% of those assets and would make a bid within the coming months. The shares of Teck Resources did jump higher earlier this month on reports that JSW was looking at the Vancouver-based minors cool operation.
Right now model of price action but perhaps lose confirmation of the rumour from earlier this month.
It's been a pretty busy week for US retail earnings, the latest Nordstrom.
The street does not seem please. Right now, the stock is down about 11%. The department store chain delivered stronger than expected sales and profit for its most recent quarter, but it is standing by its forecast of a 46% decline in sales this year. Retail earnings were a mixed bag this week.
Some companies are navigating inflation and shifting consumer habits. MasterCard is the latest global payment networks and partnerships with Binance. The crypto firm says MasterCard will stop offering Binance branded cards in the Middle East and Latin America. It follows a similar move from credit card giant VISA earlier this month.
Let's check in on the markets. We will start here at home on Bay Street with the TSX Composite Index. Choppy trade post Jackson Hole. They are still in Jackson Hole but the main event was Jerome Powell.
He spoke shortly after 10 AM Eastern time this morning. The TSX is about nine points, pretty modest, just five takes up.
South of the border, the S&P 500 trying to decide if it wants to be positive or negative. Right now it started to find a little bit of momentum to the upside. Very modest, six-point, a little more than 1/10 of a percent.
We see in the price of oil moving higher recently but will that translate into more opportunity for Canadian energy stocks?
Earlier I spoke with Michael O'Brien, portfolio manager with TD Asset Management to get his view.
>> Well, I think the supply demand fundamentals are finally starting to line up the way we had hoped at the beginning of the year. But you're right, it was a tough slog the first six or seven months.
What we had expected coming into the year was the supply not so much the demand, we were not as concerned about that, but we felt that there was going to be some significant tightness and supply. Kept waiting to see those inventory drawdown.
They are finally starting to materialize.
I think that's what has put a more fundamental base underneath the oil price.
The reality is oil, the price of oil moves around a lot more than the supply demand fundamentals do so macro headlines are gonna knock it up and down. But I think the fundamental underpinning here looks better than it has in quite some time.
>> Before we move on, let's talk about China. It has been great there. How much do you need to keep that in mind for energy investors?
>> China obviously is the 800 pound gorilla in the commodities market. What's interesting though is relative to things like copper, they are very much geared to their industrial production, the manufacturing side of the economy, I think the story for oil in China has been more about the Chinese ending the lockdowns, letting people move around. At the end of the day, oil is about, is a transportation fuel. It's about moving people and things around.
So the demand so far this year out of China has actually been quite solid, contrary to what you might've expected.
>> Okay, contrary indeed to what I did expect. Glad I got that in.
Let's talk about the energy related stocks. We have seen this move higher in the price of crude. It's been a fairly substantial one of the past couple of months. Is it really being priced into the energy stocks? What's going on there?
>> It's starting up. They have had a betterthird quarter, so far it's been a little bit more encouraging. Energy stocks are starting to participate in what has been a pretty good year for markets.
In our view, there is still more to come here.
And I think what's really intriguing about this space is there still aren't really high expectations on the part of investors but if you give a lot of these Canadian producers $80 plus or minus, they are going to generate a lot of free cash flow.
One of the things we've been focused on for some time, which I think is something we don't want to take our eye off the ball, a lot of these Canadian producers, they spent the last couple of years doing what they should have done, which was repair their balance sheets, their balance sheets and order, get their debt levels down, but we are really getting to an interesting point where a lot of the major producers are very close to hitting those debt level targets.
You take Canadian Natural Resources, Cenovus, some of the big hitters, somewhere late this year, early next year, they are going to reach those targets which means all the free cash flow is coming back to us as investors.
So I think that the opportunity is what could be a difficult time for markets overall, you're going to be seeing a subgroup of companies here that are going to be sending a lot of cash back to shareholders.
>> Those are some of the big names. The pipeline stocks, they don't seem to be sort of catching a bid like some of these energy names are during this rally in crude. What's going on there?
>> Yeah, that's partly self-inflicted and partly another I would say broader issue that's affecting a lot of other stocks too. So to get the macro out of the way, one of the things that has weighed on the pipeline stocks, like TC Energy, like Enbridge, is the same thing that has weighed on a lot of the traditional dividend paying, high yielding stocks in the TSX Composite Index, your BCE's, your Telus, Fordis. These types of names. And what that is simply, they have to compete for investor dollars with cash, which EI season for the last 10, 15 years, there was not muchcompetition at all.
But as we see rates begin to rise and investors have other options, those dividend yields have to rise to to keep that attraction.
So that's a more general comment.
>> Can I show a picture that will speak to what we have seen in rates in the bond market and central banks of what it actually mean?
There's the Canadian tenure right there rivers and by the white line and there some of the transportation stocks moving in the other direction.
>> That's what one would expect to see. As the price goes down, the dividend yield goes up to keep pace with those bond yields.
So like I say, it's not just the pipeline companies that have been affected but that's clearly been one of the factors.
The second part that's more specific to these companies is, I think for a number of years, we as investors encouraged pipeline companies to increase their payout ratios. Give us more cash, give give it back. Investors are fickle, their mood changes. What we have seen over the past couple of years as after the pipeline companies listen to us and did increase their payout ratios, now the focus seems to pivoted more towards getting your leverage down,reducing your debt.
When you have those high dividend payout ratios, it kind of ties the hands of management. It's difficult to do both things at the same time. And so TC Energy, which is probably the most topical name in that space right now, not only do they have a bit of an elevated payout ratio, but they also have the misfortune of having some significant cost overruns on some major projects. This has been a long running theme in the Canadian energy space.
So they have had some cost overruns that have put some pressure on their balance sheets.
In response, they are attempting to sell non-core assets or minority interest in some of their core assets.
To date, they have been making progress but I would say the devaluations they are getting on some of these asset sales haven't been as robust as investors have helped so that's putting a lot of pressure on some of those stocks.
>> Let's broad that out. If we are talking about stocks that are particularly sensitive to rising bond yields, you mention some of this.
>> you are gonna recognize this chart because it looks pretty much the same.
So what's interesting, communication services, in other words, your big wireless and telecom providers, BCE, Telus, Rogers, similar to what I described withTC Energy, and they have some of their own sector specific issues. Directly in communication services with Rogers acquiring Shaw, with freedom mobile going to Québec, obviously there is a lot of anxiety among investors about how the competitive environment is going to shape up for these communication services companies especially with back-to-school.
That's why there has been pressure on those stocks. But if you then sort of look at the utility space, far less hair on those names and yet it's the same chart.
So that's what brings us back to when interest rates go up and it pressures a higher yield in dividend stocks that investors traditionally turn to for yield.
>> That was Michael O'Brien, portfolio manager with TD Asset Management.
Technology fails me now, so we're going to old school and read off a piece of paper like us the 1950s.
Now let's get to today's educational segment.
In today's segment, we are going to take a look at TD's Advanced Dashboard, this is a platform designed for active traders available through TD Direct Investing. New Bern is going to join us, Senior client education instructor at TD Direct Investing. You're going to take us through how you can test out trading ideas on Advanced Dashboard without putting your portfolio at risk. How do you do that?
>>Hi, Greg.
It's always a pleasure to be here.
Advanced Dashboard, as you mentioned, is a platform available to TD Direct Investing clients, usually those who consider themselves active traders. There are number of tools that investors may find their in one of these include support flow manager tool. As you mentioned, investors might be considering an investment but don't have conviction yet about when to buy it or how many to buy, they can create a portfolio manager and track the performance of this portfolio over time.
So let's hop into the platform and take a look.
I'm just going to show you how you can get to Advanced Dashboard. This is WebBroker.
To get to Advanced Dashboard, you will click on here and you would pull up the web version. I've already done that so we are in Advanced Dashboard. One of the nice things about it is you can customize it and so I have created a layout that just has the portfolio manager here.
So you're going to be taking a look and you might think, this is my portfolio, these are my holdings, but once again, I have populated with information based on securities I may want to hold. In any time you are looking to add securities to your portfolio manager, you simply go to the top tier where it says enter symbol. I'm going to select the last symbol I searched up and I'm going to pull that up. And notice the moment I pull it up, a little box pops up.
This is where I'm able to put the quantity. Keep in mind, when you are dealing with ETFs, you can fit a portfolio for them as well, it has to be quantities of 100.
So I'm going to Sam buying 100 of the security. And based on the price of that security and how many you are looking to buy, it gives you the amount you will be spending to purchase the specific security. Now one of the things you can do as well is it instead of going by the default price you see here, you actually are able to select a date. He would say, wait, what if I purchased at the security, let's say you purchased it last week Monday. What price what I have paid?
when I select that, you're going to notice, Greg, that the price has changed.
That's one of the things you can do, sorry, this is multiples of 100.
Just going to put one there. And I'm going to save.
So once I do this, Greg, now you're going to notice that now I have my ETF on this list. A few things I want to colour. You can see the average costs are paid for each of the securities, the quantities I'm holding, and you also see things like the book cost, how much this costs to add to my portfolio, with the market value is in some additional things like daily profit and loss.
Right now, it's unfortunate, you will notice that most of my position, I am in the red but that's what's happening with the markets today.
if you notice any securities didn't belong, you can remove them.
I have a US ETF you that maybe I don't want to my list.
I simply go to the next year and I am able to delete that from my list.
If I have a few more securities I want to edit, I always do that by using the little pin button there. If you want to create a new portfolio, you can do that by simply using the new portfolio tab and you can create a brand-new list.
A few things you can do, you can keep coming back here review the portfolio, see how well you're doing.
When I look at the top, I see that half the securities in my portfolio are up today and have are down.
That's giving me a quick pulse of the market. I will also see the total value of my portfolio, what the cost was to me and if I am up or down.
I'm actually down about $8000.
So that's all the more reason why, as an investor trying to track the markets, I might be looking to pause in the interim before make a decision.
>> A very interesting tool.
I'm gonna try my hand at that when I get a bit of time. Maybe later today. Thanks, Nugwa.
>> Are welcome. Have a great day.
>> You too. Nugwa Haruna, Senior client education instructor at TD Direct Investing. And make sure to check out the learning centre in WebBroker for more educational videos, live, interactive master classes and upcoming webinars.
markets have been increasingly pricing in a soft landing scenario for the economy, but that still means there's going to be a landing of some sort. According to Emin Baghramyan, lead of quantitativeportfolio management at TD Asset Management, investors may be too optimistic about the prospects for growth.
He joined me earlier to discuss.
>> We at TD Asset Management quantitative team take a bit more of a measured perspective on global economic growth.
While it is true that the economic conditions, they proved to be more resilient than many believe, especially considering the amount of monetary tightening we have seen over the past few years, however, we are seeing that there are a few emerging signs that people need to consider when they are making judgements about global economic growth going forward.
The first sign is that while indeed the interest rate sensitivity of the economy has been greatly reduced and that is because over the past decade, people, companies, state and local governments, took advantage of very low interest rates and we have seen over the past decade and kind of locked it into this long-term interest, long, long term interest rates.
However, there's not really much in evidence that there is no sensitivity at all and I think that the brunt of the negative impacts of the market tightening is yet to come.
So there is some kind of time lag that the legs have a bit increased but the negative impacts of the monetary tightening, we think, is going to come.
And we look at the sources of economic growth.
Recently, we can clearly see that manufacturing is in recession.
If you look at all the manufacturing PMI's from the US to Canada to Japan to China to Europe, they are in deeply contractionary territory.
And the main source of economic growth has been consumer spending on services.
We think that the service sector has been benefiting still from the legged impacts of this reopening that we saw post-pandemic because when we think about this, governments have greatly underwritten consumer incomes during the pandemic.
The unemployment rate did not shoot up.
People's incomes are supplemented greatly by zero interest rates that banks provided around the world, plus an enormous amount of physical spending and payroll protection loans and things like that. So incomes were steady and people had nowhere to spend their money and the brunt of the spending went into goods and renovations and that kind of created this boom in good spending. However, over the past year or so, where people now have a chance to direct their marginal dollars into things that have been missed out and things they couldn't spend on due to social distancing such as travel, entertainment, restaurants, dining out and things like that, consumer spending has been really strong in that area. However, if we look at the forward-looking indicators, for example, restaurant and hotel bookings, that are already showing signs that we are in the final innings for that source of economic growth as well.
So we believe that the services sector will also slow down.
And it's not only that.
If we continue looking at the leading indicators such as credit growth, for example, if we take the Senior loan Ofc.
survey, which measures the bank's willingness to lend to consumers, to corporations, we are seeing that there is deeply contraction where the lending standards are being tightened sharply and that usually foreshadows a slowdown in credit growth and we all know that if there is not enough credit in advanced economies, usually economic growth feels the brunt.
>> So we've got a few indicators there that are pretty interesting in terms of perhaps finally seeing those legs take part in the economy. When you take a look at the market performance, up until this month, it's been pretty strong. But you say there are some risks around the so-called Magnificent Seven. Take me through the Magnificent Seven.
>> Yes, indeed.
If we look at the performance of a very broad basket such as the S&P 500, it looks like it's collaborating for a positive message that the general sentiment among market participants is that economic growth is okay.
However, if we look below the surface, we can see that the majority of those gains did not come from, it wasn't a widely participated rally. We have to first remember that these double-digit gains in the S&P 500 in almost 35% rally so far that we are seeing in the NASDAQ is coming on the back of very similarly deep correction that we saw over the past year.
The S&P declined 25% last year and the NASDAQ was down 30% last year as well. If you look at what is actually increased, it's the so-called tech companies. In the chart that we currently see, there are a few companies, Magnificent Seven, are responsible for the majority of the gains that we saw in the benchmark. For example, if we take a very broad average, the S&P 500 equal weighted as we look at the performance of that, we can see that it's basically flat so far and is running at -10% year to date, 10% annualized returns over the last 10 years, which tells us that the average or median stock is not really participated so far in this rally.
And that's on a very good signfor the coming health of economic growth going forward.
So what that did though, it made the benchmarks quite vulnerable to the developments of the so-called Magnificent Seven. What if something happens? What if the investors are overly optimistic that we usually have seen throughout the history many times that investors get very optimistic when some things get really positive such as currently AI is this driving force where people feel extremely positive on these companies outlooks.
However, if it doesn't pan out as rosy as many expected we see this de-concentration of the benchmarks that can basically cause big risks for people who tend to invest in the broad benchmarks such as the S&P 500.
That is why we at TD Asset Management quantitative team think that it is a very good time actually to look awayfrom traditional cap-weighted benchmarks and look for alternative strategies.
>> What would some of those alternative strategies be in an environment like this?
>> In this environment, it would be strategies that favour low volatility strategies attend to invest in companies that tend to be more defensive and less benchmark oriented and a little bit more diversified in individual name, sectors or regionally. Another interesting strategy is investing in dividend paying stocks and multifactor strategies.
>> That was Emin Baghramyan, lead of quantitative portfolio management and TD Asset Management.
Now for an update on the markets.
We are looking at Advanced Dashboard's heat map function here, it gives you a view of the market movers. We will take a look at the TSX by price and by volume.
Earlier in the session, this wasn't the case. But we are seeing some momentum now in the energy names. A fairly substantial amount of real estate being taken up by some green on the screen, a name like Suncor right now is up by 1.6%. Below that, TC Energy, I was want to call it trans Canada, but TC Energy has been up for a while now about 1 1/2.
You see another energy names rallying along with it.
We had bank earnings season kickoff here in Canada. The reaction is a bit muted right now in the financial space. As we take a look at the miners, it's a bit of a mixed basket here. You've got First Quantum up 1% but you got Kinross Gold next-door down to the tune of about 2%.
You normally have to screen by the TSX 60.
We can take a look at other screens as well, including the S&P 100. I want to focus in on Nvidia.
This is interesting, right? There is a lot of promise around AIA and the demand it would have for their GPU's.
Their graphics processing units. Indeed, the demand they talked about played out for the quarter.
It was stronger than anticipated. The stock though giving a bit back. It has been trading at all-time highs figure down about 3.7% right now. And Tesla, right next door, some momentum, up to the tune of about 2%.
It came under pressure in recent weeks on price cuts in China but got some favourable sentiment towards the name on the street in recent sessions.
You can find out more information about TD's Advanced Dashboard by visiting TD.com/Advanced Dashboard.
All right, we are almost ready to say goodbye to this week.
A few more hours left in the trade, but then next week, we are in the thick of summer. Anthony Okolie is joining us now.
People think of the summer doldrums but at the same time, after what we heard from Jackson Hole today and that there is more data to common, we'll have to keep an eye on next week.
>> Yes,there will be data that the Fed and the Bank of Canada will be watching closely ahead of the key meetings in September.
The market will focus on a couple of key reports next week.
On September 1, we get the US jobs report for August.
This is a key report.
TD Securities expects US payrolls likely posted another sub- 200,000 gain this month.
Job growth in July that we got last month was less than expected, pointing to a slower pace in the US economy, though perhaps not a long anticipated recession that some market watchers were expecting.
TD Securities is expecting about 180,000 new jobs, that slightly more than market consensus expectations around hundred 68,000. When it comes to the employment rate, still fairly low, 3 1/2%, that's pretty much in line with consensus estimates. Again, the Fed will be watching this closely to see if past interest rate hikes are working their way through the economy and flowing that red-hot labour market.
Some other things, reports will be getting, core Personal Consumption Expenditure Price Index, or PCE in the US for July, we are also going to get the August manufacturing print.
With regard to the PCE,, core PCE inflation is being called to strengthen the 3% month over month after drop the prior month while the manufacturing index, they are expecting an increase to 47 1/2 after a small gain in July.
Of course, here in Canada, on September 1, we get Canadian real second-quarter GDP for June. Second quarter GDP growth is expected to come in at a slower pace of 4.2% amid more evidence that the Bank of Canada rate hikes continue to work its way to slow demand.
TD Securities is also looking for GDP to contract in June by .1%.
So some key reports due out next week that the central banks will be watching closely and so will we.
>> The PCE is the preferred measure of the Fed.
He said expectation is going to take a bit higher.
We could have some market moving events after those reports. I know you will be all over it next week.
But we will take a break before he gets all that.
On Monday show, you want tuning, Bart Melek, global head of commodities strategy at TD Securities will be our guest, he wants to take your questions about commodities.
You can get a head start on those questions at any time.
You just gotta email us@moneytalklive@td.com.
On behalf of Anthony and me here at the desk and everyone behind the scenes that bring to the show every day, thanks for watching a week.
Have a great weekend, and we will see you on Monday.
[music]