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[theme music] >> Hello, I'm Greg Bonnell. Welcome to MoneyTalk Live, brought to you by TD Direct Investing.
Every day, I'll be joined by guests from across TD, many of whom you'll only see here.
We're going to take you through what's moving the markets and answer your questions about investing.
Coming up on today's show, we will discuss the potential opportunity and markets beyond the US and Canada. TD asset management's Michael Brown joins us.
We are also going to take you to the results of the latest TD Direct Investing Index which measures investor sentiment.
And in today's a broker education segment, we will show you how you can use fractional shares here on the platform.
So here's how you can get in touch with us.
Just email moneytalklive@td.com or fill out the viewer response box under the video player on WebBroker.
Before we get to all that and our guest of the day, let's get you an update on the markets.
We've got some modest green on the screen on Bay and Wall Street's. We will start you at home with the TSX Composite Index.
We are up about 54 points, one quarter of a percent. We've got some more earnings starting to trickle in on the side of the border. Among some of the notable movers include Element Fleet Management. An earnings be for this name. The stock up about 4 1/2%. Noticing a bit of a pause in the gold trade. Gold itself has been hitting new highs recently.
Pulling back at about a percent today.
Gold-mining names pausing the rally.
They've been on recently. $25.87 per Barrick Gold, you're down a little more than 1.3%. South of the border, a big week for economic data. Yesterday, there was a pretty strong rally off the producer price index. The big report was US inflation today. It pretty much came in as expected, making her way back on 50%.
The S&P 500 up about one half a percent, building on yesterday's rally. The tech heavy NASDAQ, when I check in on the space. Noticing pressure on Google. It's holding the NASDAQ back a little bit. We are up 27 points, we will call that just shy of 1/5 of a percent. One name that is moving south of the border is Kellanova.
We will tell you more about it later in the show. The Mars family wants to get a hold of their salty snacks and they will pay a lot for them. Kellanova is up more than 7.5%.
And that's your market update.
The running US equities has been grabbing all the headlines, but there is also potential opportunity in the international markets.
Joining is that it discusses Michael Brown, VP, Dir. and co-lead of fundamental equity research at TD asset management.
Welcome to the program. It's not your first time in the studio. We have chatted here before. But now we are chatting in front of the audience. Great to have you here.
>> Thank you for having me.
>> Since this is your first time on the show, let's talk about your role at TD Asset Management and your coverage area.
>> I am co-lead of research and specializing in international equities.
>> International equities, this is a space you don't think about a lot but perhaps we should be thinking about.
>> It's essentially everything outside of North America: Europe, Japan, Australia, emerging markets.
>> Canadian investors often get criticized somewhat for the fact that we are a little too home country but I think a lot of investors are home country centric.
Talking about international stuff, what's the case for international investing? What does the climate look like?
>> First and foremost, as we all know, the US market has been strong for years.
Looking outside of North America, particularly in terms of Japan and Europe, their positive terms there as well and positive valuations relative to the US and relative to history. We would measure that on an earnings risk premium which is basically a fancy method of equities versus bonds and we do feel that there are attractive valuations outside of the US, as well as looking at sector diversification. Obviously, we know that the US is dominated by the large information technology industry and then looking outside, there are areas in Europe and Japan that would offer additional diversification beyond what you get in North America.
>> You talk about valuations, I think this is pretty interesting considering the run we have seen heavily concentrated in tech in the US. If you look at a portfolio on a holistic basis, does that give some people concerned to say, the US is so levered to tech, surely there must be opportunities elsewhere?
>> I think that makes sense.
Diversification over the long cycle has proven to have benefits.
>> When we talk about international investing, let's start breaking down some of the buckets. We will start with concentration.
>> In terms of the US market where you see the Magnificent Seven, the colloquial term, dominating market performance. The top 10 holdings within international markets is less than 20%.
So it does offer opportunities where you could have a wide variety of names and significant positioning in those names that you would not see elsewhere.
Amongst those names leading outside, people have forgotten the auto industry in a lot of ways but there are auto names that are doing well, maintaining and then trading similar very discounted valuations with potential for a turn in the consumer.
There are other areas. Within Japan, benefiting from the tourist boom in Japan.
The week EN is good for tourists. There are a lot of businesses that benefit from that week the end and increase traffic into Japan.
>> Interesting stuff. You mentioned the valuation gap in terms of what we see in the North American markets, particularly what we see in the US. Let's dig into that. What should an investor keep in mind if this is a metric they are using to do the research?
>> You would have to look at comparable growth. Currently, there are names that offer strong growth outside of North America as well and those frequently were present opportunities.
>> That's on the valuation side. We all know about the outperformance of the US economy and stock market. We start comparing it to those international markets.
What are you looking out there that looks interesting and speaks to international opportunity?
>> We think about the strength in the US market, the one year returns on international markets are still doubled it does, it strong relative to history and it is looking attractive with potential.
>> Let's dig in.
We were talking about bigger ideas in different regions of the world. Let's dig into what's happening in Europe right now, economically and then in terms of corporate.
>> There are indications that the economy is slowing.
There has been some negative sentiment down to Germany. The key is focusing on good companies within Europe and good businesses where a lot of their markets, some are US, benefiting from the strong dollar in the US, as well as broader growth throughout, whether it be South Asia or other regions of the world.
Some of these European machinery names, the focus is on return on capital. They have been long term performers in terms of relative good solid businesses. So looking to those names. And other areas where we have been looking, as you know, rate cuts are on the table in the US. They are also on the table in Europe as well, so looking at some beneficiaries of those as well.
>> That's Europe.
Japan has been very interesting this year.
For the longest time, not a lot of people were talking about Japan. They have been over the past year. On top of the tourism, what's going on there in the markets?
>> Japan finally broke its 1989 hi. 30 years of recovery basically. Significant period of deflation, negative interest rates.
Back in 2012, Japan Shinzo Abe instituted a program called Abe-nomics, it weakens the end to benefit exporters. There was also, at that time, what was called Shinzo Abe's third arrow which was the corporate reform and actually improvements. With the last 30 Years in Japan, you have a lot of companies whose balance sheets are largely cash and what's happened recently over the last year or two, a lot of the economics suggested by him have been coming into play. The vesting of non-core business, etc. We have a grocery store that also in the golf course, the synergies are limited.
Japan's exchange development index of companies trading below book value as an incentive. The local term was the name and shame index but they took it as a measure of improving book value and balance sheet rationalization and capital allocation has been positive. As you know, there was a significant correction over the last couple of weeks in Japan.
>> That rate hike seems to have changed perhaps in the short term some people's ideas of Japan.
>> Correct. They did increase rates. They are officially out of the negative interest rate. Which they entered long before anybody else and they are the last ones to exit it and they raised their interest rates 2.25%, roughly.
[laughing] That's obviously a game changer in Japan.
They have been dealing with inflation, largely imported inflation, the cost of food has gone up, the cost of living has gone up. That would have been part of the case for the Japan prime minister choosing not to run again in September but at the same time, the exporters have been benefiting, there have been corporate reforms and also with the currency weakness, Canadian investors would have benefited where is the yen strengthened very rapidly with the rate hikes. Since that correction, we have seen somewhat of a recovery in the key is earnings growth measured in yen is approaching US levels and in US dollars, it has improved.
Obviously with the yen strengthening, it's a pretty positive case there.
>> These are some compelling arguments as to why Canadian investors should be looking outward. When they start looking outward, they start thinking about currency considerations.
What do you need to keep in mind is an international investor?
>> In terms of currency in the portfolio, there are portfolios out there that are 100% currency hedged.
Typically, investing in other currencies is part of the diversification. Along with US market strength, there has been strength in US dollar.
Predicting currency strength is a challenge as we all know but it does provide opportunities for diversification beyond Canadian dollar exposure, US dollar exposure, to have the yen or euros or Australian dollars as well.
>> Interesting stuff and a fascinating start the program. We are going to get your questions about international markets for Michael Brown in just a moment's time.
And a reminder that you can get in touch with us any time.
Just email moneytalklive@td.com or fill out the viewer response box under the video player on WebBroker.
Right now, let's get you updated on the top stories in the world of business and take a look at how the markets are trading.
It is being called one of the biggest acquisitions in the history of the snack food industry. Candy giant Mars is buying the Pringles maker Kellanova in a deal valued at nearly $36 billion. Kellanova is split off from WK Kellogg last fall and specializes in salty snacks.
Four $36 billion of those salty snacks, Kellanova is in the news is up almost 8% per share. Intel is selling its stake in British microchip firm ARM Holdings amid a broader restructuring and cost-cutting effort. The sale of almost 1.2 million shares of arm it comes as Intel plans to cut more than 15% of its workforce. Intel also suspended its dividend recently, it is trying to catch up to rivals such as Nvidia when it comes to that race to produce AI chips.
Closer to home, Metro out with its latest quarterly earnings. In a note to clients, TD Cowen says the Canadian grocer delivered a slight beat across most of its metrics. TD Cowen also sees a return to earnings growth by early next year as Metra nears the end of its transition to larger distribution sectors among other factors. Metro down slightly, $81.25 per share, down .18 per share.
On the TSX Composite Index, it's up about one quarter of a percent. South of the border, the big inflation report pre-much coming and as expected this morning. Did not rattle too many cages.
It added to yesterday's gains the tune of 24 points on the S&P 500, about half a percent.
We are back with Michael Brown, co-lead of fundamental equity research at TD asset management, taking your questions about global markets.
Here is a big one. What is your view of some of the big Chinese EV makers like BYD or NIO?
I don't know if they say NIO or Nio.
>> BYD is the name I am familiar with. I am not sure on the other one. BYD, leader in the Chinese market in terms of EVs.
There growth in market share has been large over the last couple of years, as is the growth of the stock.
Currently right now, there is a couple of positives for BYD and a couple of negatives.
The first being they are the dominant player within a growing segment of the Chinese market. Domestically, in terms of EV, it is highly sought after as a policy measure in China as well as basically incentivized customers to buy EVs. With that has also come increase competition in the Chinese market. When I was in Japan a couple of months ago, meeting with analysts covering the EV market, they talked about 103 Automakers in China.
>> Wow! Hundred and three.
>> Basically, Huawei, Xiaomi, the big names are also making autos and a lot of small independent ones as well.
Looking at that, although BYD is the biggest, it is increased competition in the domestic space. The second challenge for the Chinese automakers is tariffs are very popular outside of China.
I'm sure where Trump has talked… Both candidates in the US have talked about potential tariffs.
In Canada as well, they have talked about tariffs. They have implemented tariffs in the EU. That does also create challenge for growth in the Chinese EV market with exports.
We are watching it with a degree of caution.
>> To what degree? BYD dominates the Chinese market but if they can't start selling their cars overseas, is that going to be an impediment?
It's a big market in China.
>> I think they could be profitable within China but the real growth would come with exports.
They have had some success in exports and other regions of the world but it's a very competitive market and with tariffs, it makes the Chinese EVs less competitive globally.
>> Interesting stuff on that front.
Speaking of tariffs and and perhaps what would happen under a trumpet re-administration, if Mr. Trump is elected president and he follows through on his implementation of tariffs, which sectors could benefit and which could lose?
>> What he says the tariffs will be changes on a regular basis.
Definitely the EVs would be an area focus.
He really seems to target areas that he deems as National Defence in terms of the US as well as protecting industries oddly enough in swing states and electoral battle zones but I think the EVs would be the one that comes to mind. The other would be this global semiconductor trade where one would hope that would prevail but there have been concerned about restricting semiconductor producer sales.
>> That makes me think of the CHIPS Act, the Biden administration, but that was more about onshoring and nearshoring so they are not so reliance… >> It would likely accelerate some of the onshoring but leading names that are onshoring, Taiwan Semi and Samsung would be international names but definitely in terms of the nearshoring it would potentially benefit business in Mexico as well.
Because with the North American… Well it's not called that anymore.
>> USMCA. I want to call it NAFTA still.
>> Showing my age, but yes.
>> USMCA. We have a nice energy going here because the next question is about semis.
We have of you are asking, is now a good time to get into semiconductor stocks like Taiwan Semiconductor? You're on the program, we cannot give you buy, hold or sell recommendations but we can talk about the semis, the run they have been on and where we think they will go from here.
>> The business they built in Taiwan is incredible. The scale of their operation, the competitive advantage of that company, they are massive. On the other side, we also look at the significant run semiconductors have had, led by Nvidia but Taiwan Semi is not far behind. We saw a significant Sullivan growth in July, advancements led by semiconductors because they have been the predominant growth vehicle in the last couple of years but volatility has followed that. Both companies are long-term, incredible businesses.
Timing on that, managing through volatility is always a challenge.
>> I noticed in the summer in terms of the semiconductor trade, people were looking at names like micro soft and others to say how much they want to continue to spend in that space. The spent has been an enormous up to this point, just to get that hardware infrastructure in place. Is that becoming the question, how much more they willing to spend until they have all the chips they need?
>> I had not heard the term hyper scalars until about a year ago but it's definitely something people are watching closely for the semiconductor trade, how much they are spending on AI investments, all of which the semiconductor companies will continue to benefit from.
They are still cyclical.
>> Still cyclical. Fascinating stuff.
As always, make sure you do your own research before making any investment decisions.
we are going to get back to your questions for Michael Brown on global stocks in just a moment's time.
And a reminder that you can get in touch with us any time. Just email moneytalklive@td.com.
Now, let's get to our educational segment of the day.
You can now invest in fractional shares on my broker and TD Direct Investing has this explainer on how it all works.
>> To buy or sell partial shares, also known as fractional shares, in what broker, start by opening a trade ticket.
Then, select your account. You can trade partial shares in Canadian and US dollars using a cash account, margin account, TFSA, RRSP and, TFSA, RESPs, etc. Personal training is available on many stocks and ETFs listed on the Canadian and US exchanges.
You will find a complete list available for personal trading here. If partial shares are available for the stock or ETF you entered, the fractional icon will be green. You can only buy and sell partial shares as a market order, meaning your trade will execute at the best available price. If you switch to another order type, such as limit, stock market or supplement, the partial quantity will round to a whole share quantity. You can place a buy order in one of two ways.
Number one, enter the dollar amount you want to invest. The calculator will estimate how many shares you can buy, including fractions up to five decimal places.
Or number two, enter a whole or partial quantity and the calculator will estimate the dollar amount you would know.
Sell orders are always quantity base. The dollar amount will be estimated. You can enter quantity based orders at any time but the dollar-based order ticket is only available during market hours. For all partial orders, the good till date will be set to date. Click preview order to review the details of your trade ticket. When you trade less than a share, you will pay a flat fee of $1.99.
Otherwise, standard commissions apply.
Your order is placed as soon as you click agree and send and executed in real time during market hours. To check the status of your order, under the trading tab, select order status. Here you will find the details of your partial shares order.
That's how you trade partial shares on my broker.
For more information on partial shares, check out the homepage for educational resources on how trading partial shares can work for you.
Have more questions? Browse your on-demand videos, live webinars and interactive master classes in the learning centre.
>> Before you get back to your questions about global stocks for Michael Brown, a reminder of how you can get in touch with us.
Do you have a question about investing or what's driving the markets?
Our guests are eager to hear what's on your mind, so send us your questions.
Do you have a question about investing or what's driving the markets?
You can send us an email anytime at moneytalklive@td.com or you can use the question box right below the screen here on WebBroker. Just write in your question and hit send.
We'll see if one of our guests can get you the answer right here at MoneyTalk Live.
Okay, we are back with Michael Brown, coleader of fundamental equity research at TD asset management, taking your questions about international equities. This one just came in.
Clearly someone listening to our conversation about Japan off the top of the show. Would you guess put new money into Japan, hedged or unhedged?
>> That is a very interesting question. I think it would actually depend primarily on the clients or the investor's risk tolerance. In terms of hedged, I think with currencies, protecting currencies, obviously very challenging. Looking at where the current levels are around that 140 range where it has strengthened considerably from the 160 range, that is what most companies are using at their target so at the current time, the key is the market. Investing unhedged could potentially be a positive action from more logical levels in the currency. A longer term, in terms of the yen's strength, a lot depends-- yen strength or weakness depends on essentially the interest rate spread between Japan and the US. So potential for yen strength based on rate cuts in the US is also there but from the 140 level where it is now, it's a logical level with targets in the DOJ so I think it would really depend on the length of your investment horizon or your near-term risk tolerance.
>> Risk tolerance is important. When you start talking about taking a look at the Japanese market, if you break it down by sectors, are there parts of that economy that seem more interesting and would feed through to certain stocks?
>> We look at certain names that are beneficiaries of the large amounts of tourists going. Right now, tourism is at a pre-COVID level and there still potential for expansion from mainland China which is still below pre-COVID levels. There is growth there.
We do, some of the businesses we like would be beneficiaries of that trade. We do, there is a company called Pacific holdings, famous for the Don Quixote brand, they are also in Hawaii, but they offer discounts and tax incentives for tourists to shop there which is quite positive.
>> The other headline people may have seen related to Japan and the interest rate hike was this idea of the carry trade, the unwind of the carry trade. It gets a bit more esoteric but I'm always fascinated by that.
Borrow in yen, invest in anywhere else because you are borrowing so cheap. It's too much being made of that or is that something to keep an eye on?
>> In my honest opinion, a lot of the cell if we sell recently was a quick unwind of the carry trade for a lot of people and whether they are paying back bank loans, they went for liquidity, selling stocks is the most liquid vehicle.
In terms of the yen, carry trade, borrowing in Japan at .25% and investing elsewhere is still quite lucrative. There are businesses called trading houses that have been in business for over 100 years, essentially started as import export vehicles for Japan, Warren Buffet recently became one of the largest shareholders of all five of the trading houses. Their business is built around that basically borrowing in Japan and investing globally or in other areas. Currently obviously with the end, well, not obviously, with the yen weakness, they have been doing more investments closer to home, managing that currency risk exposure as well. Toad you would be one of the largest names there.
>> Fascinating step on that front.
Let's switch to another part of the world right now.
Someone wants to get your thoughts on Mexico.
>> Mexico, global growth has been positive for a number of years, benefiting from nearshoring and from the growth of the US economy as well as a major supplier to the US. In terms of recent volatility, we have seen is an election where the party that was expected to win one. However, what was not expected was the degree by which he wanted and that has created some risk in terms of a super majority essentially in Mexico and some worries about similar distraction from the economic growth.
Looking at Mexico in terms of opportunities, the long-term thesis is still intact in terms of growth relative to the US. You have an educated population, population growth. You have increasing business investment.
Going back to the Chinese EVs, BYD is planning to invest in Mexico. There have been more increased auto production there and that's all positive for economic growth there in the long run.
Currently, there is also volatility due to the political angst.
>> We always hear about political risk as investors, right?
>> When dealing with emerging markets, volatility is part of investing in emerging markets.
>> Fascinating stuff there on Mexico.
We are taking a trip around the world today. Do you see any opportunities in India?
>> India being one of the largest growing economies, they had an election which was also a bit of a surprise where also is expected Modi did win but not buy as much as was expected. The market did sell off briefly on that and has recovered but it really once again is an educated population with growth, business investment, entrepreneurial culture. There are lots of positive growth opportunities there. There are also positive growth opportunities with the South Asian population beyond putting money back into India via a stimulus plan as well, names that are quite attractive to gain exposure in terms of India would be the bank, the largest, one of the largest private banks in India which would give broad exposure to the Indian economy.
>> I wanted to ask you about this large growing economy with an educated population, without actually mean for different sectors. That's the banking sector. Any other interesting sectors in India?
>> Local manufacturing, some of the consumer-- many of these trade locally in India, looking for opportunities there, but definitely the growth, manufacturing companies, there are quite a few out there.
GDP growth and population growth, educated population provides tailwinds.
>> Interesting stuff there on India. This one is more broadly about emerging markets. Should investors be looking at emerging markets for diversification you might >> Recently, emerging markets, with a lot of the conversation has been monopolized by China and the concerns in China relative to the performance of China relative to the US. Broadly speaking, emerging markets, China represents 20%, India about 20%. Beyond that, there is also opportunities in terms of the Middle East with Saudi Arabia and the United Arab Emirates as well as in Eastern Europe with countries like Poland where there is positive economic growth as well as similarly with an educated population.
Ironically as a product of Brexit, more of the educated population will be staying in Eastern Europe as opposed to leaving which has provided a catalyst for economic growth in that area.
>> That's interesting. It's hard when investors are trying to wrap their minds around emerging markets? They might think about it as one bucket but within their, China has a different situation right now in terms of its economy, what India is going through, pulling.
>> Look at the largest EM names, Taiwan Semi, Samsung, global household names that many people would not think of as EM but they are classified as EM securities.
>> Fascinating stuff on emerging markets.
We will get back your questions for Michael Brown on global stocks in just a moment's time.
As always, make sure you do your own research before making any investment decisions.
and a reminder that you can get in touch with us at any time.
Do you have a question about investing or what's driving the markets?
Our guests are eager to hear what's on your mind, so send us your questions.
There are two ways you can get in touch with us.
You can send us an email anytime at moneytalklive@td.com or you can use the question box right below the screen here on WebBroker. Just write in your question and hit send.
We'll see if one of our guests can get you the answer right here at MoneyTalk Live.
The TD Direct Investing Index for the month of July has been released and self-directed investor sentiment turned bullish.
Here are the details.
Let's start with the overall TD Direct Investing Index, the DII, that measures sentiment in a range from -100 for very bearish to +100 for very bullish. DII sentiment landed at +8 for July, a 13 point gain over the previous month. The summertime rally kept its momentum going even his leadership flipped from the mega-cap tech Titans to lower-priced small-cap and value stocks that slipped under the radar in 2024. When we compare sentiment in July of last year, a modest gain when sentiment was at +1. Taking a look at components that make up the DII, we saw improvement in the flight to safety measure which rose 11.2+7, meaning more investors traded in higher risk items such as equities. A negative value means risk off or more flight into safer, less risky investments.
However, fewer self-directed investors but equities at the top of the market.
The proxy for chasing stocks at 52-week highs was only plus one in July, down seven points month over month. Investors rotated out of highflying technology Inc.
mitigation stocks into value oriented sectors such as financials and basic materials that offered more attractive valuation.
A few key points that stood out.
Financial services ranked as the most heavily traded sector in July. Secondly, traditionalists, those born between 1928 and 1945, were the most optimistic.
Financials, which previously sat near the bottom in June, bounced back to be the top traded sector in July with a sentiment score of +5. That is up six points month over month. Meanwhile, the technology sector slipped to the near bottom, slumping 16 points to -1 in July, as those large Tech stocks sold off during the month.
Among the heavily sold stocks and technology were Shopify and chip giants Nvidia and AMD as enthusiasm for AI related stocks waned.
Meanwhile, sentiment four traditionalists climbed 7 points month over month 2+2 in July. Not surprisingly, the eldest generation favoured dividend paying stocks such as BMO, TD and BCE, which were among the top bought stocks last month.
And that's your TD Direct Investing Index highlights for July 2024.
Okay.
We are having a look at TD's Advanced Dashboard, a platform designed for active traders available through TD Direct Investing.
We are looking at the heat map. We are screening the TSX 60 by price and volume.
Tourmaline is moving substantially compared to the others. Franco Nevada is showing some weakness today, down a little more than 8%. South of the border, headlined CPI, inflation, the big report that we have been focused on the last two years, came in as expected, cracking below three. Setting the Fed up for a cut in September. Markets seem to be at peace with it. Alphabet Google is an interesting story. There are reports out there, I'm not sure if they are confirmed or not, but antitrust action perhaps brewing in the United States. Though stocks are under pressure to the tune of 3%. Starbucks giving back some today. They had a big pop yesterday. They are getting a new CEO from Chipotle. Today a little bit of giveback on that front.
We are back now with Michael Brown from TD asset management, talking global stocks and markets. This question just came in.
Is the uncertainty in the Middle East and Ukrainian impacting international markets?
>> The short answer to that is yes. The awful situation in Ukraine, increasing tensions in the Middle East, is creating more volatility, in addition to geopolitical tension between the US and China. This is part of investing internationally.
We find the key focusing on where the businesses are, where there and markets are and how they are impacted.
Fortunately, Russia is no longer included in the EM index and is not currently investable. Thankfully, we were not invested prior to this.
But it is, in terms of EM, it is basically part of looking at decisions, looking into the Middle East, particularly looking at markets with Saudi Arabia or United Arab Emirates, a lot of it is a function of the oil price.
It's a significant portion of the economy.
What you will see is often more correlation with oil which will typically be stronger in geopolitically challenging times than others.
There is opportunities but the key is focusing on the individual companies and businesses as opposed to looking at distinct regions.
>> It so hard from day-to-day. Today, American benchmark crude is a little shy of $78 per barrel, it's gone. Earlier this week, it jumped 4%, then it went down 2%.
It's hard to judge a fluid situation.
>> Yeah. Focusing on your long-term her rising, knowing investments go through a cycle and not getting whipsawed by the geopolitical or macros.
>> The day-to-day can be quite a whipsawed, as we have seen in recent weeks.
We have talked a little bit about China.
Someone wants to get your thoughts on investing in China.
I guess there's been some obviously it was about maybe 1.5 years ago when they looked at those COVID restrictions and everyone thought it was game on and it did not really play out that way.
>> Yeah, the recovery in China has been disappointing.
There is, I mean… On the front page of every paper, they are talking about slowing in China. The market has been somewhat resilient in terms of that this year. Over the last couple of years, we basically rallied post-COVID and it's in anticipation of that rally that everyone hoped for, but in terms of the markets overall, investing in China, it's similar, looking at the long-term outlook, there are a lot of concerns in terms of the property market and the property market, I think that would be key for the investment, looking for some form of bottom or action on the property, ideally create a wealth effect predicting more upside in China. Beyond that, there are some world leading businesses in China specifically where you can look to those names as potential investments.
>> There is China. We have run out of time for questions but before we let you go, let's talk about global investing, we need to be mindful of as investors, particularly as Canadians. I think it's a fair criticism of myself and other Canadian investors that sometimes we are a little too home country focused. Where should we be looking and what should we be looking at?
>> Focus on your risk tolerance and time horizon.
It offers diversification of opportunities, global markets offer that, from a stock perspective and from businesses that are not available in North America as well as currencies which will move as well separately to the US dollar and Canadian.
>> Fascinating stuff. It's been a pleasure having you here. First time in the studio.
Hope we have many more times.
Our thanks to Michael Brown, VP, Dir. and co-lead of fundamental equity research at TD Asset Management.
As always, make sure you do your own research before making any investment decisions.
if we did not have time to get your question today, we are going to aim to get it into future shows.
Stay tuned for tomorrow show. Andres Rincon, managing Dir. and head of ETF sales and strategy with TD Securities will be our guest. He wants to take your questions about exchange traded funds. At a reminder that you can get a head start with those questions.
Just email MoneyTalkLive@TD.com.
That's all the time we have for the show today.
Thanks for watching.
We will see you tomorrow.
[theme music]
Every day, I'll be joined by guests from across TD, many of whom you'll only see here.
We're going to take you through what's moving the markets and answer your questions about investing.
Coming up on today's show, we will discuss the potential opportunity and markets beyond the US and Canada. TD asset management's Michael Brown joins us.
We are also going to take you to the results of the latest TD Direct Investing Index which measures investor sentiment.
And in today's a broker education segment, we will show you how you can use fractional shares here on the platform.
So here's how you can get in touch with us.
Just email moneytalklive@td.com or fill out the viewer response box under the video player on WebBroker.
Before we get to all that and our guest of the day, let's get you an update on the markets.
We've got some modest green on the screen on Bay and Wall Street's. We will start you at home with the TSX Composite Index.
We are up about 54 points, one quarter of a percent. We've got some more earnings starting to trickle in on the side of the border. Among some of the notable movers include Element Fleet Management. An earnings be for this name. The stock up about 4 1/2%. Noticing a bit of a pause in the gold trade. Gold itself has been hitting new highs recently.
Pulling back at about a percent today.
Gold-mining names pausing the rally.
They've been on recently. $25.87 per Barrick Gold, you're down a little more than 1.3%. South of the border, a big week for economic data. Yesterday, there was a pretty strong rally off the producer price index. The big report was US inflation today. It pretty much came in as expected, making her way back on 50%.
The S&P 500 up about one half a percent, building on yesterday's rally. The tech heavy NASDAQ, when I check in on the space. Noticing pressure on Google. It's holding the NASDAQ back a little bit. We are up 27 points, we will call that just shy of 1/5 of a percent. One name that is moving south of the border is Kellanova.
We will tell you more about it later in the show. The Mars family wants to get a hold of their salty snacks and they will pay a lot for them. Kellanova is up more than 7.5%.
And that's your market update.
The running US equities has been grabbing all the headlines, but there is also potential opportunity in the international markets.
Joining is that it discusses Michael Brown, VP, Dir. and co-lead of fundamental equity research at TD asset management.
Welcome to the program. It's not your first time in the studio. We have chatted here before. But now we are chatting in front of the audience. Great to have you here.
>> Thank you for having me.
>> Since this is your first time on the show, let's talk about your role at TD Asset Management and your coverage area.
>> I am co-lead of research and specializing in international equities.
>> International equities, this is a space you don't think about a lot but perhaps we should be thinking about.
>> It's essentially everything outside of North America: Europe, Japan, Australia, emerging markets.
>> Canadian investors often get criticized somewhat for the fact that we are a little too home country but I think a lot of investors are home country centric.
Talking about international stuff, what's the case for international investing? What does the climate look like?
>> First and foremost, as we all know, the US market has been strong for years.
Looking outside of North America, particularly in terms of Japan and Europe, their positive terms there as well and positive valuations relative to the US and relative to history. We would measure that on an earnings risk premium which is basically a fancy method of equities versus bonds and we do feel that there are attractive valuations outside of the US, as well as looking at sector diversification. Obviously, we know that the US is dominated by the large information technology industry and then looking outside, there are areas in Europe and Japan that would offer additional diversification beyond what you get in North America.
>> You talk about valuations, I think this is pretty interesting considering the run we have seen heavily concentrated in tech in the US. If you look at a portfolio on a holistic basis, does that give some people concerned to say, the US is so levered to tech, surely there must be opportunities elsewhere?
>> I think that makes sense.
Diversification over the long cycle has proven to have benefits.
>> When we talk about international investing, let's start breaking down some of the buckets. We will start with concentration.
>> In terms of the US market where you see the Magnificent Seven, the colloquial term, dominating market performance. The top 10 holdings within international markets is less than 20%.
So it does offer opportunities where you could have a wide variety of names and significant positioning in those names that you would not see elsewhere.
Amongst those names leading outside, people have forgotten the auto industry in a lot of ways but there are auto names that are doing well, maintaining and then trading similar very discounted valuations with potential for a turn in the consumer.
There are other areas. Within Japan, benefiting from the tourist boom in Japan.
The week EN is good for tourists. There are a lot of businesses that benefit from that week the end and increase traffic into Japan.
>> Interesting stuff. You mentioned the valuation gap in terms of what we see in the North American markets, particularly what we see in the US. Let's dig into that. What should an investor keep in mind if this is a metric they are using to do the research?
>> You would have to look at comparable growth. Currently, there are names that offer strong growth outside of North America as well and those frequently were present opportunities.
>> That's on the valuation side. We all know about the outperformance of the US economy and stock market. We start comparing it to those international markets.
What are you looking out there that looks interesting and speaks to international opportunity?
>> We think about the strength in the US market, the one year returns on international markets are still doubled it does, it strong relative to history and it is looking attractive with potential.
>> Let's dig in.
We were talking about bigger ideas in different regions of the world. Let's dig into what's happening in Europe right now, economically and then in terms of corporate.
>> There are indications that the economy is slowing.
There has been some negative sentiment down to Germany. The key is focusing on good companies within Europe and good businesses where a lot of their markets, some are US, benefiting from the strong dollar in the US, as well as broader growth throughout, whether it be South Asia or other regions of the world.
Some of these European machinery names, the focus is on return on capital. They have been long term performers in terms of relative good solid businesses. So looking to those names. And other areas where we have been looking, as you know, rate cuts are on the table in the US. They are also on the table in Europe as well, so looking at some beneficiaries of those as well.
>> That's Europe.
Japan has been very interesting this year.
For the longest time, not a lot of people were talking about Japan. They have been over the past year. On top of the tourism, what's going on there in the markets?
>> Japan finally broke its 1989 hi. 30 years of recovery basically. Significant period of deflation, negative interest rates.
Back in 2012, Japan Shinzo Abe instituted a program called Abe-nomics, it weakens the end to benefit exporters. There was also, at that time, what was called Shinzo Abe's third arrow which was the corporate reform and actually improvements. With the last 30 Years in Japan, you have a lot of companies whose balance sheets are largely cash and what's happened recently over the last year or two, a lot of the economics suggested by him have been coming into play. The vesting of non-core business, etc. We have a grocery store that also in the golf course, the synergies are limited.
Japan's exchange development index of companies trading below book value as an incentive. The local term was the name and shame index but they took it as a measure of improving book value and balance sheet rationalization and capital allocation has been positive. As you know, there was a significant correction over the last couple of weeks in Japan.
>> That rate hike seems to have changed perhaps in the short term some people's ideas of Japan.
>> Correct. They did increase rates. They are officially out of the negative interest rate. Which they entered long before anybody else and they are the last ones to exit it and they raised their interest rates 2.25%, roughly.
[laughing] That's obviously a game changer in Japan.
They have been dealing with inflation, largely imported inflation, the cost of food has gone up, the cost of living has gone up. That would have been part of the case for the Japan prime minister choosing not to run again in September but at the same time, the exporters have been benefiting, there have been corporate reforms and also with the currency weakness, Canadian investors would have benefited where is the yen strengthened very rapidly with the rate hikes. Since that correction, we have seen somewhat of a recovery in the key is earnings growth measured in yen is approaching US levels and in US dollars, it has improved.
Obviously with the yen strengthening, it's a pretty positive case there.
>> These are some compelling arguments as to why Canadian investors should be looking outward. When they start looking outward, they start thinking about currency considerations.
What do you need to keep in mind is an international investor?
>> In terms of currency in the portfolio, there are portfolios out there that are 100% currency hedged.
Typically, investing in other currencies is part of the diversification. Along with US market strength, there has been strength in US dollar.
Predicting currency strength is a challenge as we all know but it does provide opportunities for diversification beyond Canadian dollar exposure, US dollar exposure, to have the yen or euros or Australian dollars as well.
>> Interesting stuff and a fascinating start the program. We are going to get your questions about international markets for Michael Brown in just a moment's time.
And a reminder that you can get in touch with us any time.
Just email moneytalklive@td.com or fill out the viewer response box under the video player on WebBroker.
Right now, let's get you updated on the top stories in the world of business and take a look at how the markets are trading.
It is being called one of the biggest acquisitions in the history of the snack food industry. Candy giant Mars is buying the Pringles maker Kellanova in a deal valued at nearly $36 billion. Kellanova is split off from WK Kellogg last fall and specializes in salty snacks.
Four $36 billion of those salty snacks, Kellanova is in the news is up almost 8% per share. Intel is selling its stake in British microchip firm ARM Holdings amid a broader restructuring and cost-cutting effort. The sale of almost 1.2 million shares of arm it comes as Intel plans to cut more than 15% of its workforce. Intel also suspended its dividend recently, it is trying to catch up to rivals such as Nvidia when it comes to that race to produce AI chips.
Closer to home, Metro out with its latest quarterly earnings. In a note to clients, TD Cowen says the Canadian grocer delivered a slight beat across most of its metrics. TD Cowen also sees a return to earnings growth by early next year as Metra nears the end of its transition to larger distribution sectors among other factors. Metro down slightly, $81.25 per share, down .18 per share.
On the TSX Composite Index, it's up about one quarter of a percent. South of the border, the big inflation report pre-much coming and as expected this morning. Did not rattle too many cages.
It added to yesterday's gains the tune of 24 points on the S&P 500, about half a percent.
We are back with Michael Brown, co-lead of fundamental equity research at TD asset management, taking your questions about global markets.
Here is a big one. What is your view of some of the big Chinese EV makers like BYD or NIO?
I don't know if they say NIO or Nio.
>> BYD is the name I am familiar with. I am not sure on the other one. BYD, leader in the Chinese market in terms of EVs.
There growth in market share has been large over the last couple of years, as is the growth of the stock.
Currently right now, there is a couple of positives for BYD and a couple of negatives.
The first being they are the dominant player within a growing segment of the Chinese market. Domestically, in terms of EV, it is highly sought after as a policy measure in China as well as basically incentivized customers to buy EVs. With that has also come increase competition in the Chinese market. When I was in Japan a couple of months ago, meeting with analysts covering the EV market, they talked about 103 Automakers in China.
>> Wow! Hundred and three.
>> Basically, Huawei, Xiaomi, the big names are also making autos and a lot of small independent ones as well.
Looking at that, although BYD is the biggest, it is increased competition in the domestic space. The second challenge for the Chinese automakers is tariffs are very popular outside of China.
I'm sure where Trump has talked… Both candidates in the US have talked about potential tariffs.
In Canada as well, they have talked about tariffs. They have implemented tariffs in the EU. That does also create challenge for growth in the Chinese EV market with exports.
We are watching it with a degree of caution.
>> To what degree? BYD dominates the Chinese market but if they can't start selling their cars overseas, is that going to be an impediment?
It's a big market in China.
>> I think they could be profitable within China but the real growth would come with exports.
They have had some success in exports and other regions of the world but it's a very competitive market and with tariffs, it makes the Chinese EVs less competitive globally.
>> Interesting stuff on that front.
Speaking of tariffs and and perhaps what would happen under a trumpet re-administration, if Mr. Trump is elected president and he follows through on his implementation of tariffs, which sectors could benefit and which could lose?
>> What he says the tariffs will be changes on a regular basis.
Definitely the EVs would be an area focus.
He really seems to target areas that he deems as National Defence in terms of the US as well as protecting industries oddly enough in swing states and electoral battle zones but I think the EVs would be the one that comes to mind. The other would be this global semiconductor trade where one would hope that would prevail but there have been concerned about restricting semiconductor producer sales.
>> That makes me think of the CHIPS Act, the Biden administration, but that was more about onshoring and nearshoring so they are not so reliance… >> It would likely accelerate some of the onshoring but leading names that are onshoring, Taiwan Semi and Samsung would be international names but definitely in terms of the nearshoring it would potentially benefit business in Mexico as well.
Because with the North American… Well it's not called that anymore.
>> USMCA. I want to call it NAFTA still.
>> Showing my age, but yes.
>> USMCA. We have a nice energy going here because the next question is about semis.
We have of you are asking, is now a good time to get into semiconductor stocks like Taiwan Semiconductor? You're on the program, we cannot give you buy, hold or sell recommendations but we can talk about the semis, the run they have been on and where we think they will go from here.
>> The business they built in Taiwan is incredible. The scale of their operation, the competitive advantage of that company, they are massive. On the other side, we also look at the significant run semiconductors have had, led by Nvidia but Taiwan Semi is not far behind. We saw a significant Sullivan growth in July, advancements led by semiconductors because they have been the predominant growth vehicle in the last couple of years but volatility has followed that. Both companies are long-term, incredible businesses.
Timing on that, managing through volatility is always a challenge.
>> I noticed in the summer in terms of the semiconductor trade, people were looking at names like micro soft and others to say how much they want to continue to spend in that space. The spent has been an enormous up to this point, just to get that hardware infrastructure in place. Is that becoming the question, how much more they willing to spend until they have all the chips they need?
>> I had not heard the term hyper scalars until about a year ago but it's definitely something people are watching closely for the semiconductor trade, how much they are spending on AI investments, all of which the semiconductor companies will continue to benefit from.
They are still cyclical.
>> Still cyclical. Fascinating stuff.
As always, make sure you do your own research before making any investment decisions.
we are going to get back to your questions for Michael Brown on global stocks in just a moment's time.
And a reminder that you can get in touch with us any time. Just email moneytalklive@td.com.
Now, let's get to our educational segment of the day.
You can now invest in fractional shares on my broker and TD Direct Investing has this explainer on how it all works.
>> To buy or sell partial shares, also known as fractional shares, in what broker, start by opening a trade ticket.
Then, select your account. You can trade partial shares in Canadian and US dollars using a cash account, margin account, TFSA, RRSP and, TFSA, RESPs, etc. Personal training is available on many stocks and ETFs listed on the Canadian and US exchanges.
You will find a complete list available for personal trading here. If partial shares are available for the stock or ETF you entered, the fractional icon will be green. You can only buy and sell partial shares as a market order, meaning your trade will execute at the best available price. If you switch to another order type, such as limit, stock market or supplement, the partial quantity will round to a whole share quantity. You can place a buy order in one of two ways.
Number one, enter the dollar amount you want to invest. The calculator will estimate how many shares you can buy, including fractions up to five decimal places.
Or number two, enter a whole or partial quantity and the calculator will estimate the dollar amount you would know.
Sell orders are always quantity base. The dollar amount will be estimated. You can enter quantity based orders at any time but the dollar-based order ticket is only available during market hours. For all partial orders, the good till date will be set to date. Click preview order to review the details of your trade ticket. When you trade less than a share, you will pay a flat fee of $1.99.
Otherwise, standard commissions apply.
Your order is placed as soon as you click agree and send and executed in real time during market hours. To check the status of your order, under the trading tab, select order status. Here you will find the details of your partial shares order.
That's how you trade partial shares on my broker.
For more information on partial shares, check out the homepage for educational resources on how trading partial shares can work for you.
Have more questions? Browse your on-demand videos, live webinars and interactive master classes in the learning centre.
>> Before you get back to your questions about global stocks for Michael Brown, a reminder of how you can get in touch with us.
Do you have a question about investing or what's driving the markets?
Our guests are eager to hear what's on your mind, so send us your questions.
Do you have a question about investing or what's driving the markets?
You can send us an email anytime at moneytalklive@td.com or you can use the question box right below the screen here on WebBroker. Just write in your question and hit send.
We'll see if one of our guests can get you the answer right here at MoneyTalk Live.
Okay, we are back with Michael Brown, coleader of fundamental equity research at TD asset management, taking your questions about international equities. This one just came in.
Clearly someone listening to our conversation about Japan off the top of the show. Would you guess put new money into Japan, hedged or unhedged?
>> That is a very interesting question. I think it would actually depend primarily on the clients or the investor's risk tolerance. In terms of hedged, I think with currencies, protecting currencies, obviously very challenging. Looking at where the current levels are around that 140 range where it has strengthened considerably from the 160 range, that is what most companies are using at their target so at the current time, the key is the market. Investing unhedged could potentially be a positive action from more logical levels in the currency. A longer term, in terms of the yen's strength, a lot depends-- yen strength or weakness depends on essentially the interest rate spread between Japan and the US. So potential for yen strength based on rate cuts in the US is also there but from the 140 level where it is now, it's a logical level with targets in the DOJ so I think it would really depend on the length of your investment horizon or your near-term risk tolerance.
>> Risk tolerance is important. When you start talking about taking a look at the Japanese market, if you break it down by sectors, are there parts of that economy that seem more interesting and would feed through to certain stocks?
>> We look at certain names that are beneficiaries of the large amounts of tourists going. Right now, tourism is at a pre-COVID level and there still potential for expansion from mainland China which is still below pre-COVID levels. There is growth there.
We do, some of the businesses we like would be beneficiaries of that trade. We do, there is a company called Pacific holdings, famous for the Don Quixote brand, they are also in Hawaii, but they offer discounts and tax incentives for tourists to shop there which is quite positive.
>> The other headline people may have seen related to Japan and the interest rate hike was this idea of the carry trade, the unwind of the carry trade. It gets a bit more esoteric but I'm always fascinated by that.
Borrow in yen, invest in anywhere else because you are borrowing so cheap. It's too much being made of that or is that something to keep an eye on?
>> In my honest opinion, a lot of the cell if we sell recently was a quick unwind of the carry trade for a lot of people and whether they are paying back bank loans, they went for liquidity, selling stocks is the most liquid vehicle.
In terms of the yen, carry trade, borrowing in Japan at .25% and investing elsewhere is still quite lucrative. There are businesses called trading houses that have been in business for over 100 years, essentially started as import export vehicles for Japan, Warren Buffet recently became one of the largest shareholders of all five of the trading houses. Their business is built around that basically borrowing in Japan and investing globally or in other areas. Currently obviously with the end, well, not obviously, with the yen weakness, they have been doing more investments closer to home, managing that currency risk exposure as well. Toad you would be one of the largest names there.
>> Fascinating step on that front.
Let's switch to another part of the world right now.
Someone wants to get your thoughts on Mexico.
>> Mexico, global growth has been positive for a number of years, benefiting from nearshoring and from the growth of the US economy as well as a major supplier to the US. In terms of recent volatility, we have seen is an election where the party that was expected to win one. However, what was not expected was the degree by which he wanted and that has created some risk in terms of a super majority essentially in Mexico and some worries about similar distraction from the economic growth.
Looking at Mexico in terms of opportunities, the long-term thesis is still intact in terms of growth relative to the US. You have an educated population, population growth. You have increasing business investment.
Going back to the Chinese EVs, BYD is planning to invest in Mexico. There have been more increased auto production there and that's all positive for economic growth there in the long run.
Currently, there is also volatility due to the political angst.
>> We always hear about political risk as investors, right?
>> When dealing with emerging markets, volatility is part of investing in emerging markets.
>> Fascinating stuff there on Mexico.
We are taking a trip around the world today. Do you see any opportunities in India?
>> India being one of the largest growing economies, they had an election which was also a bit of a surprise where also is expected Modi did win but not buy as much as was expected. The market did sell off briefly on that and has recovered but it really once again is an educated population with growth, business investment, entrepreneurial culture. There are lots of positive growth opportunities there. There are also positive growth opportunities with the South Asian population beyond putting money back into India via a stimulus plan as well, names that are quite attractive to gain exposure in terms of India would be the bank, the largest, one of the largest private banks in India which would give broad exposure to the Indian economy.
>> I wanted to ask you about this large growing economy with an educated population, without actually mean for different sectors. That's the banking sector. Any other interesting sectors in India?
>> Local manufacturing, some of the consumer-- many of these trade locally in India, looking for opportunities there, but definitely the growth, manufacturing companies, there are quite a few out there.
GDP growth and population growth, educated population provides tailwinds.
>> Interesting stuff there on India. This one is more broadly about emerging markets. Should investors be looking at emerging markets for diversification you might >> Recently, emerging markets, with a lot of the conversation has been monopolized by China and the concerns in China relative to the performance of China relative to the US. Broadly speaking, emerging markets, China represents 20%, India about 20%. Beyond that, there is also opportunities in terms of the Middle East with Saudi Arabia and the United Arab Emirates as well as in Eastern Europe with countries like Poland where there is positive economic growth as well as similarly with an educated population.
Ironically as a product of Brexit, more of the educated population will be staying in Eastern Europe as opposed to leaving which has provided a catalyst for economic growth in that area.
>> That's interesting. It's hard when investors are trying to wrap their minds around emerging markets? They might think about it as one bucket but within their, China has a different situation right now in terms of its economy, what India is going through, pulling.
>> Look at the largest EM names, Taiwan Semi, Samsung, global household names that many people would not think of as EM but they are classified as EM securities.
>> Fascinating stuff on emerging markets.
We will get back your questions for Michael Brown on global stocks in just a moment's time.
As always, make sure you do your own research before making any investment decisions.
and a reminder that you can get in touch with us at any time.
Do you have a question about investing or what's driving the markets?
Our guests are eager to hear what's on your mind, so send us your questions.
There are two ways you can get in touch with us.
You can send us an email anytime at moneytalklive@td.com or you can use the question box right below the screen here on WebBroker. Just write in your question and hit send.
We'll see if one of our guests can get you the answer right here at MoneyTalk Live.
The TD Direct Investing Index for the month of July has been released and self-directed investor sentiment turned bullish.
Here are the details.
Let's start with the overall TD Direct Investing Index, the DII, that measures sentiment in a range from -100 for very bearish to +100 for very bullish. DII sentiment landed at +8 for July, a 13 point gain over the previous month. The summertime rally kept its momentum going even his leadership flipped from the mega-cap tech Titans to lower-priced small-cap and value stocks that slipped under the radar in 2024. When we compare sentiment in July of last year, a modest gain when sentiment was at +1. Taking a look at components that make up the DII, we saw improvement in the flight to safety measure which rose 11.2+7, meaning more investors traded in higher risk items such as equities. A negative value means risk off or more flight into safer, less risky investments.
However, fewer self-directed investors but equities at the top of the market.
The proxy for chasing stocks at 52-week highs was only plus one in July, down seven points month over month. Investors rotated out of highflying technology Inc.
mitigation stocks into value oriented sectors such as financials and basic materials that offered more attractive valuation.
A few key points that stood out.
Financial services ranked as the most heavily traded sector in July. Secondly, traditionalists, those born between 1928 and 1945, were the most optimistic.
Financials, which previously sat near the bottom in June, bounced back to be the top traded sector in July with a sentiment score of +5. That is up six points month over month. Meanwhile, the technology sector slipped to the near bottom, slumping 16 points to -1 in July, as those large Tech stocks sold off during the month.
Among the heavily sold stocks and technology were Shopify and chip giants Nvidia and AMD as enthusiasm for AI related stocks waned.
Meanwhile, sentiment four traditionalists climbed 7 points month over month 2+2 in July. Not surprisingly, the eldest generation favoured dividend paying stocks such as BMO, TD and BCE, which were among the top bought stocks last month.
And that's your TD Direct Investing Index highlights for July 2024.
Okay.
We are having a look at TD's Advanced Dashboard, a platform designed for active traders available through TD Direct Investing.
We are looking at the heat map. We are screening the TSX 60 by price and volume.
Tourmaline is moving substantially compared to the others. Franco Nevada is showing some weakness today, down a little more than 8%. South of the border, headlined CPI, inflation, the big report that we have been focused on the last two years, came in as expected, cracking below three. Setting the Fed up for a cut in September. Markets seem to be at peace with it. Alphabet Google is an interesting story. There are reports out there, I'm not sure if they are confirmed or not, but antitrust action perhaps brewing in the United States. Though stocks are under pressure to the tune of 3%. Starbucks giving back some today. They had a big pop yesterday. They are getting a new CEO from Chipotle. Today a little bit of giveback on that front.
We are back now with Michael Brown from TD asset management, talking global stocks and markets. This question just came in.
Is the uncertainty in the Middle East and Ukrainian impacting international markets?
>> The short answer to that is yes. The awful situation in Ukraine, increasing tensions in the Middle East, is creating more volatility, in addition to geopolitical tension between the US and China. This is part of investing internationally.
We find the key focusing on where the businesses are, where there and markets are and how they are impacted.
Fortunately, Russia is no longer included in the EM index and is not currently investable. Thankfully, we were not invested prior to this.
But it is, in terms of EM, it is basically part of looking at decisions, looking into the Middle East, particularly looking at markets with Saudi Arabia or United Arab Emirates, a lot of it is a function of the oil price.
It's a significant portion of the economy.
What you will see is often more correlation with oil which will typically be stronger in geopolitically challenging times than others.
There is opportunities but the key is focusing on the individual companies and businesses as opposed to looking at distinct regions.
>> It so hard from day-to-day. Today, American benchmark crude is a little shy of $78 per barrel, it's gone. Earlier this week, it jumped 4%, then it went down 2%.
It's hard to judge a fluid situation.
>> Yeah. Focusing on your long-term her rising, knowing investments go through a cycle and not getting whipsawed by the geopolitical or macros.
>> The day-to-day can be quite a whipsawed, as we have seen in recent weeks.
We have talked a little bit about China.
Someone wants to get your thoughts on investing in China.
I guess there's been some obviously it was about maybe 1.5 years ago when they looked at those COVID restrictions and everyone thought it was game on and it did not really play out that way.
>> Yeah, the recovery in China has been disappointing.
There is, I mean… On the front page of every paper, they are talking about slowing in China. The market has been somewhat resilient in terms of that this year. Over the last couple of years, we basically rallied post-COVID and it's in anticipation of that rally that everyone hoped for, but in terms of the markets overall, investing in China, it's similar, looking at the long-term outlook, there are a lot of concerns in terms of the property market and the property market, I think that would be key for the investment, looking for some form of bottom or action on the property, ideally create a wealth effect predicting more upside in China. Beyond that, there are some world leading businesses in China specifically where you can look to those names as potential investments.
>> There is China. We have run out of time for questions but before we let you go, let's talk about global investing, we need to be mindful of as investors, particularly as Canadians. I think it's a fair criticism of myself and other Canadian investors that sometimes we are a little too home country focused. Where should we be looking and what should we be looking at?
>> Focus on your risk tolerance and time horizon.
It offers diversification of opportunities, global markets offer that, from a stock perspective and from businesses that are not available in North America as well as currencies which will move as well separately to the US dollar and Canadian.
>> Fascinating stuff. It's been a pleasure having you here. First time in the studio.
Hope we have many more times.
Our thanks to Michael Brown, VP, Dir. and co-lead of fundamental equity research at TD Asset Management.
As always, make sure you do your own research before making any investment decisions.
if we did not have time to get your question today, we are going to aim to get it into future shows.
Stay tuned for tomorrow show. Andres Rincon, managing Dir. and head of ETF sales and strategy with TD Securities will be our guest. He wants to take your questions about exchange traded funds. At a reminder that you can get a head start with those questions.
Just email MoneyTalkLive@TD.com.
That's all the time we have for the show today.
Thanks for watching.
We will see you tomorrow.
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