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[music] speaking of the R word, were to take a look at the latest earnings, with just a flower day ahead of public equities at TD asset management. All these concerns about rising rates and slowing growth has taken its toll on real estate. Later in the program we will get some perspective from Colin Lynch, head of global real estate in TD asset management. Plus in education, Jason will talk to us about client education and conditional orders. Before all that let's get drifted in the markets. This of course being the last trading day of the month. And we have some green on the screen. We will start with the TSX compensate. A pretty healthy gain of 206 points on the board right now. Good for a whole full percent to the upside. We are seeing a pretty hefty increase in the price of American benchmark crude. Not only energy stocks that do the heavy lifting, people do see and seem to be in a bit of a buying mood. Take a look at Sleep Country. Some of their competitors and suppliersshowing a bit of weakness but Sleep Country has a gain of more than 4%. Again of over 15% year-over-year. Moving in the other direction, is Aecon Group. … South of the border let's take a look at the S&P 500. It's looking like it's the best month for stocks since 2020. Indeed, we have had a very rough start to the first half of the year but a bit of a bounce back for this month. The S&P 500, building on that, 4107 points, almost up a full percentage. It was a big week for tech earnings. Some heavyweights after the closing bells yesterday. Lifting some of the spirits out there for investors. Let's take the NASDAQ opposite, almost of up a full percent. Some names like Amazon and Apple giving investors some positive news after the closing bells. One and that didn't give positive news though, was Intel. Let's check those shares right now. Down almost 8 1/2%. He cleared his appointment for them in their most recent quarter. And that's your market update. [music] So much talk about the American economy and the American central bank policy. Earlier this morning we have Canadian GDP numbers for the month of May. Now, the economy managed to avoid a contraction but we are not exactly talking about growth either. Joining us now we have Anthony Okolie a. > Yes the numbers as you said, not quite a contraction but gaining quite slowly in terms of economic growth. It was better-than-expected. When you dig into some of the numbers, output expanded… We saw service in producing sector that arose. Arts and entertainment, people getting back, playing sports again. So it's slowly getting back to pre-pandemic levels there. On the decline though, we did see the goods producing side weakening. Particularly things like construction and manufacturing. Now, we did get a flash estimate from stats Canada it is just .1% growth. So again, not a contraction in terms of economic growth. Very slow. >> Talking about a stalling and for the month of May. That is a very modest gain of one… GDP activity for the month of June. What is the thought about what this does to the bank of Canada? As investors, everyone tries to read the tea leaves of what investors and banks might do next. Will this change in his mind but anything? >> TD says no. Just because the economy is slowing it's not in it deter the bank of Canada from continuing with its aggressive market policy. Markets right now are pricing at the 75 basis point rate hike come September. So again, even though we are six and weakness in the economy, it's unlikely to deter Bank of Canada from its policy. >> We saw that this week the American economy, not only do we hear from… Jay Powell, a double whammy in addition we have the decision, hike on Wednesday. that didn't seem to change a lot of minds about the fact that the Fed is going to keep raising hikes. But maybe some hope that they are getting near the end. A little optimism on that front? >> I think there is some optimism that perhaps there are some indications that the economy is slowing and that perhaps the said, after the rate hike cycle, they might take a pause and slow down and see where the economy is. Particularly then, we will have to wait and see. When you dig into the numbers, consumers are being hit by higher inflation and consumer sentiment, for example, is hovering near a low in July, again high inflation. So I think some of those are the factors that the Fed will have to weigh as they look ahead from their long-term policy. >> The Fed likes to have its own measure of how the economy is thinking. Personal consumption expenditures? This is what the Fed likes to keep an eye on. Let's take a look at the headline this morning. That has had its highest level since January 1982. So perhaps still some inflation to obtain in the system. Fascinating stuff as always Anthony. Thank you. >> Pleasure. >> Anthony Okolie adjoining is later the program as well. Let's talk about what investors are trying to make of the Fed moves this week. And whether Jerome Powell ease on the rate hikes heading into the fall. What is the bond market been telling us on that front? This in perspective, we spoke with Alexandra Gorewicz. >> I think that's where the market started running with this idea that, maybe it's a little more balanced. Maybe some may even interpret it as dubbish. The ultimate conclusion is maybe the Fed will not raise rates as far as they are communicating. From the flipside, he did reinforce a number of times the best blueprint they have about where monetary will policy will go this year and into next year, was to set out their June meeting where they gave us their updated economic projections, complete with… So basically what he said is that we are kind of sticking to that. We still think is appropriate and since that economic projection update, inflation, if anything, has surprised to the upside. Although growth has come and weaker. Again this emphasis on growth is where the market ran with it. What he's really saying is our mandate is inflation. And that's still problematic. So 75 basis points rate hike for September is on the table. Going to just over 3% on the policy rate could be 3 1/4, 3 1/2% by the end of this year and that's what they effectively showed back in June. That's still on the table and then hiking even further into 2023 as things currently stand also on the table. So market heard, probably not what you wanted to hear rather than what we were saying or he was saying. >> It's like you are preparing an essay. Of course if Jerome Powell is asked routinely, are you trying to engineer a recession? Is the slow down all about tipping the economy recession? Of course they say they don't want it and they can't rule it out. And then today, you get GDP. I'm looking to make you quibble about whether we use the word recession because this factor or that factor. But the fact is, for the first half of this year, the US economy has not been growing. The inflation is uncomfortably high. >> Yes heading into Q3. Each one of them has a different source of weakness. In Q1 it was an external source. That's why but he said "let's make a big deal about this because the domestic economy is so strong." This time around if you delve into the details, it was an inventory drag. Companies build up their inventories a lot in the second half of last year and then in the first quarter of this year. So that has now actually been a drag. Although there was some weakness in residential investment as well which is, again, domestic. A domestic factor. Maybe to margins, things are not just external lead in terms of weaker economic growth and then the other thing we have noticed is that if you look at personal consumption, although still positive and contributing positively to GP, every civil quarter over the last two quarters, it has steadily gone down. Could it be flat in Q3? Or could it even be negative? That would be a real surprise. To the extent that every additional quarter showing GDP weakness is coming from domestic factors, that makes it much harder for the Fed to say "well, we can debate the technicalities of what a recession is. " However, on the inflation side, to address that part of your question, still very high. There are signs that it is rolling over. Particularly when we look at core inflation, although we know that the official mandate of the Fed has to take into account headline which means things like energy and food prices. They are incorporated in the inflation numbers that they have to try to bring down. But the problem with high inflation at the moment as far as the Fed is concerned is that the labour market is too tight. And this, Powell said repeatedly yesterday, he would like to see some softening of the labour market which they think would put less pressure on the price side of the equation. >> So given what we heard from the Fed yesterday, Jerome Powell, preceding the American economy, what is the bond market tell us in terms of how we are moving in? >> Investors… >> They hear what they want to hear? They are supposed to be smart about it. >> Technically the curve is inverted all the not every single point is inverted. The three month tenure which is the New York Fed's favourite recession indicator from the bond market. It is still slightly positive. If we look at the entirety of the yield curve… We would like to think we are very smart and thing this would happen. But when we think about the fact that stocks rallied yesterday. Implied volatility in equities… In fixed income, they all fell. Those are usually positive developments. Credit spreads tightened, positive developments. So most investors are saying "well, the reaction is you know, on… Because the Fed won't over tighten and won't be necessarily the cause of that recession. In fact, it could also be interpreted that a lot of investors are saying "well maybe the pivot from the Fed will come a lot sooner than what they are suggesting at the moment. And that's what happens when you say "we are not giving guidance anymore, now we are going to be truly data dependent. We are going to make decisions meeting by meeting." So then, investors will take the data and run with it. Right now the investors are saying that growth is more of a factor. So interest rates fell, credit spreads tightened, risk rallied in general yesterday. The will was kind of interesting but not a lot of people talked about it is that inflation breakeven. So basically, the market inflation expectations, that actually went higher. So it could be that some niche investors are saying "well, hang on, even if inflation is showing signs of rolling over, where is it going to? Is it rolling over fast enough? What is that mean for the Fed if we get into a recession? Inflation is still far away from their target. And inflation expectations should move higher." >> Now let's get you updated on the top stories in the world of business and market action. [music] >> Soaring energy prices are fuelling record revenues for the world's largest oil companies. Exxon mobile and Chevron are the latest with results, both reaping the benefits of not only surging oil prices but also much higher refining margins. Shareholders are also reaping the benefits, Chevron is increased for a share buyback and Exxon holding its buyback guidance earlier this year. Canadian oil and gas companies have made similar moves to return capital Lussier to shareholders. They find themselves awash in cash. Amazon and Apple have had a week of big tech earnings with better-than-expected results. They returned to in person shopping and that raised concerns about the staying power of e-commerce. That said, Amazon beat expectations and expects further growth in this quarter. Over Apple, concerns about supply chain and consumers being squeezed by inflation were swept aside when it comes to iPhone demand. Apple says demand for its phones a strong and the parts needed to build those phones are starting to flow again. A higher commodity and energy prices did take a toll on magmas bottom-line in its recent quarter. The Canadian auto parts maker reported a 41% decrease in adjusted earnings per share. And magna is warning investors to persist at the back half of this year. Magna has about half a dozen plants in Russia which were idled in the spring in reaction to the Russian invasion of Ukraine. The company says it took a dollar 24 per share non-cash impairment charges related to its Russian operations for the quarter. Let's check on how the main benchmark index is trading here in Canada. We have a nice bit of green on the screen on Bay Street and Wall Street on those last trading days of the month. 19,670, the TSX up a full percentage at this hour. Let's check in on the S&P 500. If we can hold onto this were looking at the best month for stocks 2020. And that's after a rough first half to the year. The S&P 500 up pretty firmly as well. Of course it is been a big week for earnings with some of the largest names in business delivering their latest numbers. We spoke earlier with Justin flower day, head of public equities at TD asset management about the themes he's been watching for. >> A few themes that we had in mind…consumers and businesses trying to understand buying preferences… This kind of speaks to how fragile the overall demand for the economy is. We're getting some good reads on that. Margins are a big focus. Incremental margins which describe the profitability of the incremental dollar of sales for companies. It tells us quite a bit about how companies are managing the cost environment. It tells us quite a bit about how competitive different industries and sectors are. And then the last thing I'd say is we are paying close attention to what management teams are saying with the future. You know, this is a really important one. Because management teams currently have all the excuses the world to start to provide a little bit of a more realistic picture of the future in their guide. A stronger US dollar. They've got currency volatility, they have higher oil prices, they have higher inflation, hired two streets. So we are really hoping, and we are starting to see, some incrementally more negative things coming out of management teams. >> When it comes to that, perhaps more realistic view of the future, and what lies ahead for us, that's where the big question is right? With soaring inflation and very aggressive central banks, and we falter recession? Don't we? What are earnings telling us? What is corporate America telling us about what's to come? >> I say so far we've had, I think, about 1/4 of the S&P 500. Speaking of the US report so far. They are beating not as much as they typically beat. So I think it's about two thirds of the companies that reported are beating. They're handling the cost pressures decently. You know, it's not a disaster. But we have started to hear some changing tones from management teams. They're starting to talk about some of the challenges they are seeing in terms of inventory builds, in terms of overall demand. I would say that this is a very, very positive thing. Any bottom cycle or process has to have a reset of expectations. And it's kind of medicine that the market has to take in the companies have to take. We are making some progress on that front. >> The hard part obviously is trying to figure out when we've had all her medicine. And when we have bottomed out. I mean it's very hard and near impossible to time the markets. What things should we be looking for as investors going forward? Maybe the worst of this is behind us. >> Yeah. I think it relates to expectations for earnings and revenue. I think if you look at 2023, going into the quarter, you are seeing estimates for the S&P 500 around $245-$250. That needs to come down. And I think what you are starting to see, more recently in the last couple of days, is those numbers are starting to trickle downwards. You need, I think, management teams to start being more realistic about their cost structure. And protecting margins. You're starting to hear little bit more about rational investment that they're making in terms of people. In terms of projects. So all that's really good stuff and again, it's medicine that the companies and markets have to take. >> Of course part of the discussion around all this is we've seen peak inflation on what? So many unknowns in this market. If we knew this, perhaps we could have a strategy to do this. At the core of it, haven't we seen peak prices in which we will we be watching for there to try to make a determination? >> I'd say we've probably seen peak inflation where were at. And I'd say going forward, there is probably a couple of different phases… Kind of this easy disinflation aerie phase. The prices are good and the commodity start to roll over. And that is a lot of work for headline CBI and that would be a positive. The next phase is a little bit of a tougher one. It relates to some of the stickier prices and services which relates to stickier wages. And I think that's one where it's gonna take a little bit longer. I think we have a Phillips curve right now that's a little different than it was in the past. A little more asymmetric than in the past. So yes, some challenges ahead but I think that were going to make progress in the next six months from going from that 9% headline number. Maybe down to something in the 4 to 5 range and that move down to that Goldilocks 2 to 3 will be a bit more challenging. >> Until we get there, obviously the central banks including ours, of course the US Federal Reserve on deck as well, have been pretty aggressive in doing these jumbo sized, supersized, whatever you want to call them, rate hikes that nobody was anticipating just a year ago. How reactive are they to this, sort of, first indication? Maybe companies say they pulled on their earnings as they see some of the softening of some of the data. Do they have to go forward at this point? >> I would say the Fed has gone through a couple of different phases were first of all, they lost credibility. Because they missed some of the signs of inflation starting to become a problem. They have regained with the market. I just don't think it's in a take one negative or weakening inflation data point to change and, essentially because a fed pivot. Like it's in a take two, three, four, five of those data points for Powell to come out and say "yeah we think we have the inflation problem under control and where to start to think about pivoting. I don't think that's next month or the month after. I think that's probably six months away. >> Now a pivot of course could be okay. We've done the work we need to do and raise the cost, flow through the economy and give some time to see the effects. Some segments of the market seem to be thinking about the pivot even going further at some point. By the time you get into next year, 2023, even though we've been living with the supersize hikes, were to be seen cutting. Is that far off? If someone wants to see that and it's part of their investment thesis, is that too optimistic? >> I don't think that's too optimistic. In fact, I think that's probably a base case for me right now. The Fed's gonna do the work. They're gonna try to increase unemployment. They're gonna try to bring down overall demand. I think once they get there, they're gonna start thinking more about the balance that they have to strike in terms of their dual mandate. And their dual mandate is around managing inflation. But then also managing for maximum long-term employment. It's always a balance. Right now inflations right in front of them and staring them in the face. They're dealing with that. Once they start to see that ease, I think we'll start to see… Once the economy frankly starts to weaken which it will, I think we will start to seal a bit more talk about turning it away. >> That was just in Florida ahead of public equities at TD asset management. Now let's get to today's educational segment. [music] >> If you're setting up your accounts for trading on web broker you might want to consider something called conditional orders. What are they? How do they work on the platform? For that we turn things over to client education instructor at TD Bank. Jason give us a run of what we are talking about here. Welcome Jason Hnatyk. >> Thanks for having me. There are three specific types of condition orders. Today we will focus on one called OCO. We love our acronyms in the investing world. That means one cancels the other. OCO.we often talk about removing emotion from the trades that that's difficult. We are moving money. This can be important in high times of market volatility. You can take a more rules-based approach instead of just reacting. This for the old CO order comes into play. You'll see a quote upper broad-based index ETF on the screen. Let's take a look at the chart to digitize the strategy in just a moment. With this particular order, you are entering two different orders. But as the name implies, after one of the orders fills, the others cancel. Okay? The most common use of this order is, as we like to call it, it's used as a profit loss taker where you set orders in place to exit your trade. If the investment goes up, your capturing your gains.… Alright let's go that visual so we can see the strategy and action here. That a jump over the chart. Now we will see the chart of the index ETF on the screen. All right. I'm in a draw a quick price line on the chart. We will use that as a theoretical by price that we may have entered on this particular position. Now, with an OCO, once again, were seen to orders. Both the potential exit points. We have a limit order that's above the market… Let's just drop a quick line for that. Let's get this working and get the line in the chart. So this can be our potential first-order of our OCO. Again the second portion of the OCO is a stock order which is placed below the market. This is an order that would be used as the potential loss point where you may be hit that risk tolerance, that Max lost that you're hoping to achieve it it's not something we are looking to achieve. Were not looking to lose money but were not have winners on each and every trade. So the OCO order can be very useful. It can help you feel protected even if you're not using your computer or TDF. It's something you can put in place for the future. You can almost kind of set it and forget it that's nice about the strategy. >> Alright so we've done our theoretical homework using the S&P 500 as an example. What is it actually mean when you're on the pro web broker platform now to enter the one cancels other order or OCO? > The order has to be processed. That's the easy part but as discussed earlier, these really should align with your individual trading plan and your own individual risk tolerances. So, going back to the platform here, to find conditional orders, you can either… Now that we are into this page, this should be a lot of folks treading on the platform and are very familiar with. We can choose the strategies tab. Once again, there are many other conditional orders to choose from. I would like to draw attention to the graphics that we have displayed here. The display in that graphic really illustrates quite well when each of these conditional orders is hoping to achieve. Let's get ourselves into the one cancels other order entry screen here. On this particular order, it's really the same as entering your one order except as the name of the trade applies, there are two separate legs to the individual trade. So I'll walk you through a quick demonstration of the order entry process. We will need to enter our symbol. We will keep it the same as what we were using previously. Will notice that we have the quote. It can will appear in the right hand side of your ticket. Just as a reminder. If you're taking some time to deliberate over your limit or your stock prices, we know that web brokers real-time the things are happening quickly in the market, you want to make sure you refresh it to get a real-time view of exactly was happening up to the moment. So filling up the ticket, once again, that really is the easy straightforward part. Will enter the quantity. Will go with a lot here of 100 shares. The first order, we are going to be entering our profit-taking side. An arbitrary number. We see the ETF is trading at almost $410. So it's maybe set our profit Target to an additional five dollars on top. So will set a limit price at $415 for this example. Then were to be setting our get to a point meeting where we can take orders out in the future to help make sure we can kind of, once again, take that set it and forget it approach. Keep in mind for Canadian trade, this cancel. Will be 90 days and for US investments, it'll take as far as 180 days. Now that we've enter a first order, let's gladden quickly Karasek in order to that area to protect her downside of the trade. One detail, you need to choose "sell" for this particular strategy. Next, it's gonna be identical from the first time but instead of entering her limit were to be choosing our stop point. So, putting in the same symbol as our first order, continuing to choose "sell". Once again, the quantity will be a repeat of the first process and then we will have the opportunity to choose between our different stop orders. We will go ahead and enter a stop market order. Meeting at this point we will be able to choose a price at which point, if the stock pulls back and hits our point at which we look to exit the trade and limit our losses, it will then activate and trade our shares out of the market. So let's choose an approximately five dollars down as we did before. Let's just choose a trigger point of $405. Key detail on the order entry processes you need to ensure that the good till dates are matching from the first condition as well as on the second condition. So it's good to match the top. From here, investors will then choose the preview order screen and then send your order in. Now you've got an opportunity to once again implement that trading plan to ensure that you have the opportunity to take your profits, if the investment goes in your favour. But also ensure that you have an order there to limit your losses if it does go against you. >> Interesting stuff. Jason we really appreciate that. >> My pleasure. >> All right thanks. And make sure to check out the learning instructor for more educational videos, live master classes and upcoming webinars. Let's take a look at what's happening on the markets right now. This is the last trading day of the month. If we can hold onto these levels, were looking at the best trading month we've had since 2020. 19,670 of the TSX compass and index of 213 point, more than a full present. Seeing the price of crude oil, American benchmark crude sharply higher today. This is fairly broad-based. Earning season as well. Let's check out one of the interplay G Pl. right now on Bay Street. Canadian natural resources and 70 bucks and $0.61. Up a little more than 3%. Magna coming up again seeing some pressure. Although the stock is taking it fairly in stride. A bit of a downside and 8114 and the share. Down are pretty modest three quarters of a percent. Let's check in the S&P 500. Of course it's in a big week for earnings, a big week for Fed news and a big week for economic news of the world's largest economy. But investors seem to be feeling like buying some stocks on the back of the Fed. That's on Wednesday when the rally really began. It's been holding for the past couple days. Right now 4106. The S&P 500 up almost a full percent. The tech heavy NASDAQ, a heavy week for tech earnings. Some of the big ones last night, pleasing the market. The NASDAQ comps it right now up almost a full percent. Let's check on Amazon. All those concerns as we got back out into the wild world that we would not shop online anymore. Amazon has blocked those concerns. The stock is quite handsome right now to the tune of 11%. Of course a very rough run of the first half of the year for names like Amazon, Apple and others. Rising rates soaring inflation as well have been the top of the hour. One segment of the economy has been affected perhaps more than most. Real estate. Earlier we spoke with Colin Lynch and he said the biggest impact has been on the cost of construction. >> Certainly those factors are relative and real estate. Let's start with inflation. When you're building a new building, there are construction costs and those are labour costs. There also material costs. Think about steel and cement… All of those are inputs into the cost of building a new building. So ultimately, the costs of construction rise. Now you can look at the other side. Completion of the building. Ultimately, in a high inflationary environment, at least in theory, the value of those buildings should increase. Partially because the cost of constructing a new building also increases. The other driver is around income. So when you look at the value of anything, if the income increases over time, in theory, the value should increase over time as well. In real estate, generates income, rents. So in the highly inflationary environment, if rents are increasing due to inflation, in theory, the income should be increasing as well. And the capital value should be increasing as well. Now there is a caveat. Just like in every other business you have revenue and expenses. Rents are the revenue, without the expenses, the cost of maintaining and cleaning the building etc. Capital repairs, and all of those. Those can increase as well. Now in theory, the income should increase in the capital value should increase. That's all on inflation. >> That's interesting right? Inflation has a so worried about so many things. As investors. But it doesn't have to be a complete negative or real estate. It can be a positive. >> Precisely. The key there is what is the state of the economy? If the economy is growing and we have high inflation, that's generally okay for real estate. Because ultimately those rents will go faster than the expenses. If the economy is shrinking, and we have high inflation, that's when you get into some trouble. Because ultimately, what drives rents is the growth of the economy. So if your expenses are rising due to inflation, your rents are going up as fast as your expenses, then you have some issues. That's inflation. Then we have central banks. What is a rate hike mean? Ultimately it means at the cost of doing business in general. For real estate, it's the cost of borrowing money. Either to operate the building or to construct the building. Were new buildings. That just increases the expense line. Whether you're building or operating. Depending on whether you have leverage or not. And so that does increase the risk profile for real estate and it becomes really important to understand "is leverage being used? Is debt being taken out to either build or operate the building? If so, what what is that form of leverage?" So, not necessarily negative but certainly more challenging as interest rates rise. >> Now a year ago, maybe 18 months ago, the conventional wisdom would've been "yes at some point the central banks will begin raising rates. At some point in the year 2023 which we have not even gotten close to entering yet, was thrown off to being very slow." We've seen the magnitude in the short period of time. We've pulled forward a lot of that. Are there certain rules and real estate projects of this kind of environment with costs that steeply higher in such a short period of time in jeopardy of not getting done? >> Yes so certainly there are products in jeopardy of not getting done. Have we seen the outcome yet? No. Because we are still relatively early into the cycle. By that I don't mean the absolute number of hikes is early I just mean from a time horizon. From where we were where we weren't even thinking about raising rates to today. That's been a very short period of time relative to cycles. It takes time for the implications of rates to make their way through the system. And in the case of developers of real estate, it takes time for numbers to begin readjusting. So today we are seeing a lot of pause. We are seeing a lot of things that were going to be brought to the markets. If you think about condominium constructions and the like that were to be brought to market but now folks are saying "maybe not now, maybe later, we'll see how things progress." That hasn't produced a lot of outright cancellations but my hunch is there will be some cancellations as the metal of change for a few folks in market. >> Now, if we were doing this show in front of a live audience and taking questions of people watching us, you have to know, if you're discussing real estate in this environment, someone's going to bring up the word "crash". What are the dangers that we can see a property market crash? We being a little too concern on front? What are the fundamentals question mark >> I'd say we have seen crashes. Clearly in the past. There were different reasons that drove some of those crashes. Today I would say the risk of a crash is relatively low. The risk of a decline is relatively substantial. And so what gives me the difference between "decline" and a "crash"? In Canada we have a few things going for us. Robust demographic growth. Immigration and Canada is a very attractive place to be. When you consider demographic growth, the chance that you can continue to see good economic growth, it increases. It is not certain but it's more likely. Ultimately, giving real estate serves the economy and more broadly, serve society. It serves economy by being a place for people to work and distribute goods through and to sell goods. But it also serves society by being a place for people to live. So if there are more people coming to the country, and more people… That means more people taking on jobs and doing etc. That means in the longer term that provides a good foundation for real estate. In the shorter term, also provides a good foundation because the government, federally, has been driving immigration Target tire. And so that helps. Clearly, you have some headwinds. Like higher cost and concerns about economic growth in the near term. Certainly, out west, we have energy prices that are broadly increased. That is provided some optimism. You balance that all out. You say "certainly risk of a decline in the short term, but an outright crash, hard to say." You can look around the world and sort of draw not exactly the same conclusions but similar conclusions. In the US, they went through GFCI, global financial crisis, in 2008. Ditto for the UK. The amount of… A substantially lower than it was in 2008. In a moment like now when those costs are rising, that's a good thing. So you could go market by market and you can say "yes there are risks for sure but outright crash can't see it yet." > That was Colin Lynch head of global real estate investment the TD asset management. More on the topic of real estate concerns about rising rates, economic uncertainty has led TD securities to take a second look at their price Target's at their mortgage companies. Anthony Okolie returns to us with one's topic. Anthony. >> The lenders as opposed to a lender's. As peoples report nonqualifying income where is a lenders don't consider the big charter banks look for qualifying credit and income. Now, TDS I points to a couple of factors for cutting their Target prices with more conservative multiples. One of course, housing activity has pulled back because of significant rise in interest rates. Further downside it appears likely according to to the economics. Then the job market is still strong. But 2023 forecast suggests an weakening resulting in higher loss provisions for some of these companies. Of course, the Bank of Canada see some vulnerabilities in the housing market. Finally, increasing economic uncertainty and the possibility of recession are some of the factors that they point to. As a result, TD security's estimates have come down from mortgage companies and are generally below consensus. Greg. >> It's so interesting when you think about the rising rate environment that we have been in. Discussing earlier in the week, the prevailing wisdom only a year ago or so was not to worry that when the rate hikes come, not until 2023, they will be slow and gradual. We've seen these jumbo size rate hikes. When you talk with central bank policies taking the time to work through an economy, it didn't take that much time for the real estate economy to work. We've been warned that there are more rate hikes to come from the Fed. >> Yes. What goes up must come down. That's overseeing the Canadian housing prices. When you look at some of the housing crisis since February, the peak home sales, they've been down 27%. Average home price… With interest rates going up, that's gonna put more pressure on cost and homeowners in Canada. >> When it comes to my house, when I get home every night, I get off the train and I walked up the driveway. I just want there to be a meal waiting for me inside and the comfy couch to sit on. I try not to think too much of a headline. Thank you so much Anthony. Have a great long weekend. We are almost there in terms of our work. We will see you next week. >> You bet. >> Thanks to money talks Anthony Okolie a. Of course, Monday is a holiday. But on Tuesday, were to be joined by Haining Zha portfolio manager TD asset management. A reminder that you can always give us your questions@moneytalklive@td.com. That's all the time we have the show today. Thanks for watching us and we will see you next week. [music]
