Market Insights

[music] >> Hello, I'm Greg Bonnell. Welcome to MoneyTalk Live, brought to you by TD Direct Investing.

coming up on today's show, we are going to hear from TD Securities Daniel Ghali on why investors may be under position for a possible move in gold when we see rate cuts from the Fed.

When we see them. TD Asset Management Juliana Faircloth is going to take us through potential catalyst for industrial stocks this year.

And TD Securities Robert Both will give us his view one we may get rate cuts from the Bank of Canada after this week's cooler than expected inflation report.

Before we get to all that and our guest of the day, let's get you an update on the markets.

Last trading day of the shortened week on both sides of the border. We were off Monday and so were the Americans. On the TSX, we are putting 71 points to the upside, up about 1/3 of a percent.

Among the most actively traded names at this hour include Baytex energy. Pullback in the price of crude, it continues to be a choppy trade and is reflected in the energy names. Baytex is down about 2%.

Hudbay earnings at with its latest earnings. The street is reacting favourably. At $7.66 per share, Hudbay is at more than 6%.

The S&P 500 is continuing to make new records after cracking about 5100 for the first time. Still in the green, a little more than 1/10 of a percent.

Tech heavy NASDAQ is a little way down at this hour. Nothing dramatic but down about 30 points were 1/5 of a percent. I want to check in on Block, Jack Dorsey payment outfits apprising the street with better-than-expected results. As $79 and change, that stock is popping up to the tune of all 17%. And that's your market update.

The S&P 500 hitting new highs this week.

There was one main event and it came on Wednesday after the closing bills, Nvidia.

MoneyTalk's Anthony Okolie joins us now.

Entering the shortened trading week, there was a lot of caution in the markets, what is Nvidia going to give us?

>> I think markets were looking for what is that next driver of sentiment because we were coming off of a choppy week when the Fed got news of much higher, harder than expected inflation so a lot of markets scaled back their bets on when rate cuts would come.

But markets are back to all-time highs.

The S&P 500 broke above the 5100 level.

Has pulled back a bit. It is driven by the earnings from Nvidia which was blockbuster earnings.

I will give you some numbers. Nvidia is sales tripled to an absurd $24 billion, there profits rose almost 800% to over $12 billion and the stock opened today at just over $800, surpassing the 2 trillion valuation for the first time ever. It might have pulled back a bit.

But markets are headed for the best weekly stretch since May 2023.

Nvidia wasn't the biggest winner on Thursday. We had other names, supermicro computers, this company provides high-end service to data centres. It was of 30% on the day. AMD, considered Nvidia's main rival, was up 11%.

Other gainers as well and the tax base, synopsis, Marvell Technology's.

All the engines are chugging and Nvidia is pulling the rest of the market with it.

>> It's fascinating when a stock enters the place as Nvidia has in the past couple of quarters where it becomes a bellwether for an industry.

If you believe in artificial intelligence, and that's what powered in large part the rally last year which caught some people by surprise on the equity side, can it continue this way? Nvidia hands out the report and all the other boats rose on the tide.

As much as we are fed and rates and inflation watches, the Fed minutes landed on Wednesday to but it was more like, that's nice but what is Nvidia going to report after the bell?

>> I think the Fed minutes got lost. It confirmed that officials are still wary of cutting interest rates to early. In the minutes, they suggested the Fed is looking to take a cautious, patient approach to cutting rates. Member stated that it is unlikely to cut target rates until they gain greater confidence that inflation is on a sustainable path to the 2% target.

We have seen some upside surprises in not just inflation data but jobs data.

That may underscore the fact that the Fed needs to take a prudent approach. TD Economics also believe so.

In their view, rate cuts are set for the second half of 2024.

>> Fascinating stuff. We will see what next week brings. Thanks for that.

>> My pleasure.

>> MoneyTalk's Anthony Okolie.

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.

We have shares of Live Nation Entertainment in the spotlight today.

Strong demand for concerts during the holiday. And they saw a revenue rise 36% in the fourth 4:45 $0.84 billion. That said, Live Nation posted a larger than expected loss on the bottom line as it is dealing with higher costs.

Put it all together, at $96 and change, they are up a little shy of 3%. Also want to check in on shares of Intuitive Machines. They are on the rise today.

22% of the upside. What's going on? You may not be familiar with the name. The company successfully landed an unmanned spacecraft on the moon. It there lunar lander touchdown late yesterday afternoon Eastern time. I watched the live stream on the train on my way home.

There were a tense few minutes before they establish commune occasions and said it was a success. This marks the first touchdown on the lunar surface for the states in more than 50 years. Interesting stuff! If you like the space stuff, which I do. Let's talk about budget airline Lynx Air, it is ceasing operations come Monday after filing for creditor protection.

The upstart airline says it was facing several financial pressures that it could not overcome, including inflation, exchange rates and fuel costs. The airline is advising passengers with existing bookings to contact their credit card providers for refunds.

A quick check in on markets, Lord start here at home with the TSX Composite Index.

Green on the screen. Oil is under pressure. Some other parts of the market are doing some lifting for us. It 87 points to the upside, a little shy of four temps of a percent. South of the border, the S&P 500 is also up slightly.

While the Fed has preached patience when it comes to rate cuts, Daniel Ghali, senior commodity strategist with TD Security says that investors may be historically on a position for the moves gold might make when those cuts to arrive.

He joined me earlier to discuss.

>> The start of the timing of a rate cutting cycle is less relevant for gold in the total number of cuts on the horizon that we can expect. What's interesting in the gold market is that today, investors are historically under position for a Fed cutting cycle. And why wouldn't they be?

If you think about the last few years, macro traders in particular in gold have been repeatedly wrongfooted. The types of indicators they look like, real rates or the broad US dollar, have led them astray time and again.

What's interesting is that despite the fact that after the series of growth data in particular in the US, they have built up a sizable net short position.

Gold prices are still near all-time highs, so what gives? The answer to that is actually from physical markets.

If you look at the relationship between gold and real rates over a really long term horizon, that relationship is fairly stable but there are moments in time where large changes in real rates don't have much of an impact on gold.

That's happening today in the last time this happened was in the early 2000's which is an era where physical markets were larger or larger forces than financial markets for gold. That's really the reason why gold prices haven't sold off even though macro traders are shorting it.

>> Though macro traders shorting, under position in terms of what could happen with the Fed when we do get to the point that we do see some rate cuts from the Fed, I think TD Securities, the thinking still is we will probably get some cuts by the summer. Robert Both was on earlier this week. What could that do the price of gold and the trade? Will everybody start rushing in?

>> Historically, you see a very large amount of capital that starts move into gold and the reasoning behind that is simple.

The cost of carrying gold at this moment in time is quite elevated.

That raises the cost of funding your long gold position. The US dollar interest rate is quite high which keeps people from buying gold. As that rate comes down, it makes it easier for folks to start buying gold.

What we would expect and we do think the Fed is going to cut rates for the first time as early as May.

>> As early as May?

>> Yes. Our forecasts are actually for a deeper Fed cutting cycle and the market is currently pricing in because we still expect a meaningful slowdown in growth even though we are no longer anticipating a recession in 2024 in the US, we are expecting growth to slow more material value than the market thanks which should be accompanied by more meaningful Fed cuts on the horizon.

>> Right now on my screen I have an ounce of gold at $2031.

If this thesis starts to play out and the Fed starts cutting rates and they go deeper than the market is anticipating, do we have substantial upside for gold?

>> We think so. We think gold prices can trade on an average quarterly basis as high as 2250 by the second quarter of this year. Really, that's on the back of the strong physical market activity that we have seen, but also this rush of capital from the investor side which has really been the missing piece for gold to sustain new all-time highs for the time being.

>> Is the biggest threat to that thesis simply that inflation in the states, seems like we are getting our headline and core inflation down in Canada, the (from the US was a little sticky.

Is that the biggest threat to the thesis for gold right now, that inflation doesn't behave?

>> From the macro side absolutely.

What is interesting is that macro traders are now net short on gold. They have taken positions consistent with that view. The other side of the equation, physical markets, is really what's interesting here.

The exceptionally strong demand that we have seen this year out of China isn't just associated with the lunar new year celebrations. That tends to be the seasonal peak in Chinese buying activity but we are seeing that buying continue to persist beyond the horizon.

We also know that in India there has been a substantial amount of purchases of precious metals more broadly, and it's the same case in many parts of the world including the Middle East, Turkey as well.

These flows are no larger than the downside pressure that we might see from macro traders from the stickier inflation than expected.

>> We are going to talk about silver now.

Fairly or not it is sometimes referred to as the poor man's gold. You notice some interesting things in this market to.

>> Absolutely. So far this year, silver has dramatically underperformed gold. That is consistent with the macro story we have been discussing.

When you start to look on the horizon, there are a few very large assumptions that are being taken for granted in the market that we think could be challenged.

The first is that one of the large assumptions and silver markets is that you will always have silver that is available.

This is a metal that is very intensively used in industrial capacity. Solar is increasing the largest structural driver of demand growth for silver and we expect that to continue on the horizon.

Most market forecasters are at they are expect a structural deficit on the horizon.

I think that begs the question, is there a moment in time where with the very large silver inventories that have accumulated over the last decades will wind down?

By the strong industrial demand in particular with the solar complex.

If that does happen, how will we incentivize investors to sell their physical silver holdings in order to satisfy physical market demand?

>> I was thinking to how you incentivize buyers to take more silver out of the ground. It's an interesting time in the fact that we are going through a lot of metals that we will need for different transitions, we will talk about that later.

But are we minding enough of it? If we think about the structural deficit of silver, it has industrial purposes and we need more.

Are the miners going to put the money in to take it out of the ground?

>> Silver is traditionally mined as a byproduct of other metals. It is a byproduct of zinc mines, lead mines, gold mines and so forth.

So there is a very well discussed seeing the structural underinvestment in mining activity.

That's been the case for the past 12 years and that is now having an impact on silver. The difference in silver markets, this theme has appreciated another base metal markets, like copper for instance, but the difference in silver markets is that there is that assumption that there will always be silver available given that… >> Don't worry about it, it's always coming out of the ground when we pull out other things.

>> Nobody is throwing away their silver.

Every ounce of silver that has been mine for a long time still exists somewhere in some form.

The question is how much of it is freely available for purchase? When we crunched the numbers, we find a significant portion of it is not available for purchase or not at current prices.

>> That was Daniel Ghali, senior commodity strategist with TD Securities.

Now, let's get our educational segment of the day.

Stocks can sometimes make some pretty big moves after an earnings release.

If you'd like to try to manage some of that volatility, WebBroker has tools which can help. Joining us now with more is Hiren Amin, senior client education instructor with TD Direct Investing.

Great to see you. We know people trade outside of regular trading hours. Walk us through it all.

>> Great to be back.

As you put it, we are in the midst of earnings season and that usually brings market volatility. But investors may not have the stomach to really endure that so how can they sort of get more stability?

One way we will talk about first is about limit orders. Now, market volatility is akin to turbulence.

When you're flying, nobody likes the feeling of turbulence for a sustained amount of time.

Usually you are going to see a little dating sign that goes on to fasten your seatbelts. A limit order is very similar to that.

It will be fasten your seatbelt because allows you to have price control. Market volatility brings about sporadic prices and what we term choppy market conditions.

Let's look at how to do those limit orders. We are going to open a buy and sell ticket. We will explain some parameters that will help us get the price stability that we are looking for. So when you come in here, throw in any symbol. We are going to use the SPY as our example.

Once you have their and that in, in the price type, what you're going to choose is limit. One thing you want to keep in mind in terms of what can you set as your price over here, it is going to be based on what you see on the bid and ask.

The rules are simply when you put a limit order on the by end of the bid, you have to send it in either at or below the asking price that you are seeing. It's not actually the last traded price, it has to be based on the current asked.

At or below that. It can be as low as you want.

This is the most I am willing to pay is what you are saying.

In the case of SPY, I might say to myself, 450, I don't want to spend any more than 450. The market is nowhere near that so that for the second piece comes in. How long do you want this order to remain in effect?

This is where you are going to think, was a realistic chance is going to get down to 450? I need to give myself enough time.

I can choose a good till cancelled order.

This means that it lasts for 180 days for US securities, 180 calendar days, and if you are using as a Canadian security, the good till cancelled duration is for 90 days.

This is a bit about how to use a limit order. On the sell side of things, if you want to sell and we switch this, the rule is simply you have to place your price at or above your bid price at the moment.

Let's assume we own the stock. We say assume it runs up to 550, this is the basement price that I want to get for owning the stock and so that's a bit about being able to control the choppiness you are experiencing in the market.

>> So we understand why you would want to use a limit order, control the choppiness.

Earnings season is full of choppiness. The thing is, some of that dramatic movement comes before the market opens or after the market closes, depending on when a company reports. How do you use these reports during extended hours?

>> Absolutely. Fair enough! If you want to follow some of those big moves, you want to use a market extended order.

Let's talk about some rules that are in place to extended market trading.

First and foremost, there is a premarket and post-market session that happens in the US markets only.

Very important, first of all. You will not be able to access this on the Canadian side. If you are trading US securities, you can access that. It only supplies to those securities that are listed on the major exchanges.

Most big notable socks you will most likely be able to trade. It will exclude anything like OTC, penny stocks and any asset classes they don't trade in in extended hours.

There are a couple of things to keep in mind. When you are looking at the price type, we just to clean the limit order, this is the only type of order that gets accepted during those extended trading sessions.

Make sure you set up the limit order.

The next piece of important information is the good till order. There is one more here that you are going to find when you choose a limit order and that is it day plus EXT markets.

That's day plus extended markets. Legacy extended coverage. The premarket starts here at TD Direct Investing which is 8 AM Eastern time which runs until about 920.

There is a 10 minute buffer zone that allows the exchanges to get their books in order to have the open at 930 and then post market starts at 4 PM and runs until 7 PM. When you choose this order, let's say we put it right now in the system, it will give us coverage for the regular session from now until four and will also give us from coverage from 6:56 PM. These orders will only be day orders and post-market session orders. They do not carry over to the next day so you would have to reenter them if you do not get filled. That's another thing about the limit order that we wanted to mention. If markets are moving fast, you might have to chase the price. That brings into question some of the risks that you want to be aware of.

What we say is the difference between the bid and ask. You want to be mindful of that.

Then there is something known as price slippage and that simply means that if you were to try to get a price and you might be filled at a price that you were not expecting if you're going to go much higher than what the bid or ask a showing.

All you have to do is plug the same, confirm the next screen over and your order will be queued up for the rest of the session there.

>> Great stuff as always. Thanks for that.

>> My pleasure.

>> Our thanks to Hiren Amin, Senior client education instructor with 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.

Let's do a quick check in on the markets.

Last trading day of the shortened trading week.

We have the TSX in positive territory to take us into the weekend. You are up 83 point, little more than 1/3 of a percent.

The S&P 500 cracking above 5100 for the first time ever. It's a bit off that mark now but still in positive territory.

Nvidia the big story of the week, the big catalyst on that front.

The S&P 500 right now up a very modest eight points, little more than 1/10 of a percent. The tech heavy NASDAQ, big pop after Nvidia lifted a lot of those tech names. NASDAQ is currently down 1.26 points or one take.

The global shipping industry was hit by a freight recession in 2023 as their customers work down there bloated inventories and as a result, they shipped fewer goods. We are into a new year now and Juliana Faircloth, VP for portfolio research at TD Asset Management, she is keeping an eye on a potential catalyst for the industry, a trend toward restocking.

Here is our conversation.

>> I think it's an interesting topic and these types of inflection points can often present opportunities for investors. It's an interesting topic to think about it particularly in the context of the US economy has been growing well over the last three years but under the surface, as you mentioned, we have been in a freight recession and we have seen some waves of destocking and changes under the hood that have had a lot of implications for different industries like retail, like freight. I brought a couple of charts to illustrate what has been going on. The first one I believe is US personal consumption and yours. You can see there that greenline reflects consumption of goods. There was a huge surge through 2020 and 2021. We were all at home, we were ordering computers, we were ordering athleisure, all that kind of stuff, if you look into late 21, 2022 and 23, that's where a lot of the destocking took place.

We heard about that for retailers like Target and Walmart destocking, needing to unwind their inventories.

We saw that across the more industrial facing economy. A second chart that looks very similar shows US manufacturing new orders.

Again, that spake over 2020 and into 2021 and then into contraction through 2022 and 2023.

Exciting moment right at the end of that chart.

>> That little tick up there.

>> That tick up above the 50 level which represents a potential restocking thesis that might market inflection point that investors should be paying attention to.

>> If your restocking are doing so is good, raw materials, whatever your business is.

Let's talk about what it means for the global shipping industry. If you break it down by sector, we talked a lot about rails but there are a lot of ways I could get to us.

>> I think was in freight the two interesting examples to think about would be rails and trucking. To start with rails, it was a tough year through 2023 for the rails. Almost all of the class one rails reported and earnings declined.

And that was as they moved fewer and fewer volumes across their large asset base and we know that can have a really big impact on profitability.

Looking ahead, the outlook looks more interesting.

In Q4 of 2023, which the rails reported earnings just a couple of weeks ago, all of the large North American class one rails reported growth, that's the first time that's happened in a while. So the outlook is pretty interesting for a re-acceleration of earnings growth through 2024, driven by volumes and that positive operating leverage story as the economy restocks.

>> What about the trucks?

>> Another industry very impacted.

We saw a large, high profile bankruptcy last year, a company called yellow in the US went bankrupt through this quite tough operating and volume environment for the trucking industry.

So again the hope for 2024 is looking forward that we have some volume benefit from restocking. You may have some capacity rationalization in the industry was a large player no longer present in the industry so it creates an interesting set up for earnings acceleration through 2024. I think that stands out potentially in the context of the broader industrial landscape. You've got rails and trucks set to possibly see their earnings accelerate through 2024 and if I contrast that with a couple of other pockets of industrial and markets, say airlines or construction, there we are starting to see earnings roll over and slow down as the peak of their demand has started to normalize from a very high level.

>> Those things that we buy and expect to show up on our doorstep magically, obviously frightened trucking is a big part of it but there is no training or transport truck pulling up in front of my house. When it comes to me, it's typically a UPS or FedEx.

>> Those name brands that we know that typically bring packages to our house, it's been an interesting. From a stock perspective for FedEx and UPS. Both have been challenged by the operating environment that we talked about in my that destocking theme but the stocks performances have really diverged.

FedEx has materially outperformed UPS over the last year and I think what's driving that is a focus on we know the volumes are pretty weak for these companies but let's narrow in on the cost side and see what these companies are doing from a cost perspective.

So FedEx stock has really benefited from a huge cost cutting and restructuring plan that they announced over a year ago where is UPS has been muddling through the operating environment in a different way.

Looking to 2024, I think it will be important for both of these companies to demonstrate that they can bring on volumes and handle some of this restocking tailwind without taking on too much additional cost.

>> Let's talk about some of the risks.

The thesis we have here is that we went through a freight recession. The company's work through bloated inventories resulting from a shifting our habits coming out of the pandemic are also behind us.

Restocking could mean good things. What could be the risks to this thesis?

>> This inflection is an exciting potential opportunity for investors but of course there are risks. One big risk that I would highlight is global supply chains are so quite fragile.

To the extent that we rely on ocean shipping to bring freight to North America that can move across rails and come on a UPS truck to the front of your house, that is a potential risk. We are seeing geopolitical conflict in the Red Sea, droughts in the Panama Canal. This is having a huge impact on ocean shipping.

We have seen ocean freight rates spike over 100% since October when the Red Sea crisis started. So that could be a difficult environment in terms of cost and also in terms of the time it takes for products and goods to move from point A to point B. The other interesting sort of implication to highlight I would say from this theme is that if we have searching ocean freight rates and higher transportation costs and a lot of demand for some of these transportation needs, that sounds a little bit inflationary.

>> It takes me back to 21, 20 Tio when people were saying, don't worry, transitory.

>> That sounds a bit inflationary and it's something we will have to watch closely because we know central bankers are keenly focused on keeping a lid on inflation.

>> That was Juliana Faircloth, VP for portfolio research at TD Asset Management.

Now, for an update on the markets.

We are having a look at TD Advanced Dashboard, platform designed for active traders available through TD Direct Investing. This is the heat map function which gives us a view of the market movers. Let's start with the TSX 60, screening by price and volume. I want to start with financials. Not that they are taking of most real estate but we have a steady block of green across the biggest banks in the country, Manulife and Sun Life as well, the two biggest life codes.

Suncor is moving on volume, 1% on the upside, and a pullback for First Quantum which is down to the tune of 2%.

South of the border, I want to check in on the S&P 100. The S&P 500 got above 5100 for the first time ever this week.

We went into the week on a cautious no.

The market was awaiting Nvidia. After the closing bells on Wednesday not only did they deliver on the board behind them, they delivered a forecast that was favourable for the streets. Nvidia soared and pulled up a lot of boats with it.

Nvidia up modestly today, 1%. It's rival, AMD, down a little bit.

There's a bit of a move in some of the banks, including Bank of America, Wells Fargo, Morgan Stanley.

Right now the S&P 500 is still hanging in positive territory but falling back a bit from that 5100 level.

You can find more information on TD Advanced Dashboard by visiting TD.com/advanceddashboard.

Let's talk about Canadian consumer prices.

They eased more than affected in January.

Motorists paying less at the pumps. Now we have headline inflation below 3%. Does that bring us any closer to the Bank of Canada cutting rates? Robert Both, Senior macro strategist Ed TD Securities joined us earlier in the week.

>> We had been looking for inflation till fall from 3.4% to 3.2%. The market was looking for an even smaller drop to 3.3, so at 2.9, this is a pretty material surprise. Generally, you don't see inflation moved by the 10th, two temps beyond what markets are expecting so the biggest take away for this was the magnitude of the spreads.

As you say, inflation is back inside that one to 3% target range.

That is the sweet spot that the Bank of Canada is looking for but they are really looking forward to percent.

We are not quite there yet.

There were a few larger moves that helped drive that deceleration.

Airfares can be quite volatile but those fell by nearly 25% month over month.

We also saw a pretty large drag from things like travel services or hotels, things like clothing and household appliances, furniture, those discretionary spending items.

So this does speak to the pressure that Canadian households are feeling that squeeze budgets. That is translating to reduce inflation pressures.

But there were some positives as well for those that might not spend as much on discretionary items. Prices still rising but by 0.1% month over month, that is a much smaller increase in we saw last year.

Food inflation actually fell like quite a lot. It's now at 3.9% instead of five.

We are moving in the right direction but we are not quite there yet.

>> Let's talk about looking under the hood.

We broke down some segments there in the report. Some people say it's all good and well that headline inflation was below 3%, but what about the core measures that the BOC watches? Some of those appear to be moving in the right direction as well.

>> The Bank of Canada does have tools to look past some of the volatility and headline inflation but those core measures moved lower as well.

The two that the BOC looks most closely act, those are running around 3.3%. That's down from about 3.6% last month. Still above that target range. The BOC has also been pretty focused on where the three-month rates of core inflation are going, are those moving higher and pushing inflation higher or are they starting to signal more momentum to the downside?

Those three-month rates of core inflation did fall to about 3.2%. That gives us a little more confidence that that is starting to break lower.

>> A big part of the reason is that we are paying less of the pumps compared to the same time last year in January.

At the same time, we know that when it comes to gasoline engine crude and geopolitical stress, this could be a volatile category.

>> Oil prices can be quite volatile.

They are not just affected by the demand-side but supply-side factors as well. You political events can have a material impact on global crude supplies.

Going out beyond the next couple of months, we do expect oil prices to or US oil prices to stay at the $82-$84 range over the second half of 2024. That's a little bit higher than what they are right now but we are not necessarily looking for those geopolitical risks to have a meaningful impact on crude oil prices.

Those are simply risks to our base case.

The Bank of Canada has another rate announcement I believe on March 6. Another inflation report to put on their desks. We have heard from Tiff Macklem repeatedly that we need to give it some time.

We are talking about how long we need to stay at these levels.

What can we expect from them?

>> Headline inflation is back into that one to 3% range but the bank wants to see it at 2%, so this does move the goal posts a little bit closer.

This is the first time we have seen inflation and that one to 3% range since last June but as we saw last June, that tended to be a short-lived dip under that 3%. Now, we are going to need to see more evidence to reinforce that this isn't another one of those short-lived dips but a sustained return to the target range.

The bank is going to want to see it more evidence of deceleration in those core inflation measures. At 3.3%, it's much lower than they were last month but those need to continue decelerating going forward. Likewise, we want to see the three-month rate of core inflation much closer to the midpoint of the target range.

We are not there yet, we are at 3.2%. In a couple of more months of similar data, we will be getting closer.

But we do think there is going to require more evidence before the Bank of Canada is in a position to cut rates. We continue to look for that first rate cut in July. From the Bank of Canada's perspective, this is welcome news but their job isn't finished yet.

>> For July, that pushes it out into the summer. We entered this year with some people thinking spring. If you are saying July, we are firmly in the summer.

After they finally decide that they are confidently getting closer to a sustainable 2% and they are in a position to cut rates, how many rate cuts can we accept on the heels of that?

>> We look for something in between I think the Bank of Canada is going to proceed cautiously on till the first rate cut, that is to say they are going to want to see that evidence that we are clearly on that track towards 2%. They are not going to the clear mission accomplished at the first sign that the target is getting closer. We think the Bank of Canada is going to approach the decision to cut rates cautiously, but once they are ready to ease off the brakes a little bit and move policy closer to Target, we do expect them to cut by 25 basis points at every meeting over the back half of this year.

Those are smaller moves then we saw all the way up.

>> We did not go on those baby steps on the way up.

>> There were no baby steps.

By moving a 25 basis point increments all the way down, it's a sign that the bank is being more cautious. They don't want to just bring policy from tight to neutral levels in one fell swoop.

They want to move a little more gradually.

So we think they get to 4% by the end of this year, and then we will probably see the pace of rate cuts slow down over 2025 as well.

Instead of cutting by 25 basis points at every meeting, we think they will do one rate cut per quarter.

>> That was Robert Both, Senior macro strategist at TD Securities.

As always, make sure you do your own research before making any investment decisions.

stay tuned for Monday show.

Caitlin Cormier, client education instructor with TD Direct Investing will be our guest. She wants to take your questions about how to get more out of WebBroker and Advanced Dashboard.

We know you have questions. You can get them in early for Caitlin.

Just email moneytalklive@td.com.

That's all the time after the show today.

On behalf of me and Anthony in front of the camera and everyone behind the scenes, thanks for watching and we will see you after the weekend.

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