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[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 show, we will discuss whether this reason publicly seen in the markets is a pause in the rally or something that deserves a little more attention. TD Asset Management's Michael Craig joins us.
In today's WebBroker education segment, we will discuss whether you can find out where your trade has been completed here on the platform. Here's how you get in touch with us. Just email moneytalklive@td.com or fill out the viewer response box under the video player on WebBroker.
Before we get to all that and our guest of the day, let's get you an update on the markets.
TSX Composite Index down a very modest 22 points, about 1/10 of a percent. Got the price of gold pulling back rather dramatically today as tensions ease in the Middle East. Some of the most actively traded names include some of those gold mining names, including Barrick right now, at $22.65, they are down 3.7%. Notice some green when it came to Air Canada.
The US carriers last week said that they expected a big summer travel season. That lifted Air Canada last week.
They are to the upside today, $19.79.
The S&P 500 is getting rid of that losing streak.
21 points to the upside, a little child half of a percent.
The tech heavy NASDAQ, I think four of the Magnificent Seven are reporting this week.
Some of them have not been so magnificent this year.
The NASDAQ is up 50 points, one third of a percent.
Nvidia, after selling off to the tune of 10% on Friday alone, it's bouncing a little, not making of that lost ground. It is up a little shy of 3%. And that is your market update.
Markets have been tested recently by a pullback in some of the big US tech names.
Are there signs out there of a bigger pullback on the horizon or is this just a pause in the rally we have been seeing?
Joining us at or discuss, Michael Craig, Managing Director and head of asset allocation at TD Asset Management. Great to have you back.
What's been going on in the markets?
>> There is a bit of exhaustion, a really aggressive really to start the year. I think one key that, there are some seasonals at play.
US tax filing is in full swing. Last year was a great year for returns.
People need to sell before April 15 two be able to use that money to pay off their tax bill so there's a bit of a seasonality effect on top of some overdone or overextended boost. A little bit of profit taking, 5% pullback, I don't think there's anything too serious here other than just the market recharging, if you will.
>> One of the narratives on the street is after the bouncy week that we had, the rough week that we had led by the tech stocks south of the border, that we are going to start getting some tech earnings this week and at some point there is optimism in the fundamentals of the companies. What's your sense of the earnings season right now?
>> I think the broadening and the market is-- you don't buy tech for a quarterly release.
It has been repriced.
AI is not going away.
We have been focusing on industrials and energy this year which have been nice places to work and they've done well and you haven't seen that selloff like you have seen in the major tech indices were as there it is I think an excessive amount of investor attention.
>> South of the border, the economy has been pretty well.
>> Keep on trucking for the time being.
Manufacturing PMI indices have started to inflect and work their way higher so there is a bit of a bid on the manufacturing side globally.
Services actually is rolling over.
So again, very bizarre world post-COVID. A lot of kind of industry cycles.
Manufacturing has been in the basement for months now so I think that's what we are interested in in terms of that story involving and finding somebody there versus the services side which had a great run but is starting to soften.
>> At the macro level, there's the Fed.
It seems like it's been this story developing in increments. At the end of the year, there's going to be four, five, six cuts from the Fed, maybe two or three, and now maybe none. This is a strangely evolving story. The US 10 year bond yield is at 4.6%.
Where are we sitting out in terms of higher for longer?
>> Investor expectations of Fed policy has been incredibly inaccurate, really since this hiking cycle started. I only say that because whatever the narrative is today, it is unlikely that we are really talking about it in four months time. We are trying to fit a narrative to the market.
Our own view is that the disinflationary process continues.
It's not a straight line. Goods inflation has probably bottomed but it has come off along way.
If we get on recessionary cuts, that would be very supportive for risk.
But the thought that we are going to have this re-acceleration of inflation I really struggle with particularly on the wages side. I think people keep trying to fit the narrative and also I think this too is important, there is the Fed and there is the Bank of Canada.
I think it's likely we see some kind of divergence. Our economy is much more sensitive to interest rates than down so.
Maybe the Fed only cuts once this year.
But I would expect the Bank of Canada to do quite a few more in the coming months.
>> There was a panel discussion last week, Tiff Macklem and Jerome Powell on the same panel.
When you talk about divergence, the headlines coming out of it, Jerome Powell was saying, we are not seeing the progress on inflation we were hoping for. How about you, Mr. Macklem? Things are looking good in terms of where we are headed.
How much can the Bank of Canada diverge from the Fed?
>> We will follow up our own inflation path. Canada has weakened materially.
Remember, we have massive immigration.
80+ percent of jobs growth in the government sector on the back of a million plus new people arriving here, that's a pretty dire job market in Canada right now. If the bank cuts and we see the currency really start to weekend, that'll be a limiting factor. But outside of and I think the BOC will be fine if the currency appreciates, they just don't want to see rapid depreciation.
Outside of that, I think we see a reasonable cutting cycling Canada in the next 18 months.
>> What about geopolitical risk? This has been in the headlines, people trying to gauge the sentiment, the level of tension.
Right now, it seems that tensions are ratcheting down but it's a fluid situation.
>> So with that, it really requires a different type of thought process that market participants have not had to worry about in 30+ years.
With the Middle East, I think it's been very much a show of force more than anything more serious. In terms of where we go from here, I would expect to see cooler heads prevail but for the last five years, 10 years, the direction of travel has been far more severe and we can't rule out conflict emerging between Israel and Iran.
No one wants that.
Certainly not the Americans who would be pulled into it.
In many ways, it's really geopolitical theatre at its best.
On the Ukrainian Russian side, Europe is rearming. The irony of that conflict is pulling the European Union closer because now they have a common enemy.
The irony is the drifting of Europe over the years in terms of formulating coherent policy, this is probably supercharging that in a positive way.
It is unfortunate it took award to people to go that way. But I think this is long-term supportive for Europe being more focused on energy security, industrial policy as well as coordination amongst the economies. I think long-term this is probably the catalyst for Europe to compete but had a horrible cost.
>> You put that all together, and it is a lot, what does it mean for asset allocation? What should investors be thinking about?
>> Our focus has been on the west and Japan.
We like North America.
We are on the margin less bearish Europe.
And intrigued by what's happening in Japan. Japan's going through one of those things you see once in a career in an economy, they are emerging from, they are starting to see signs of inflation, not rapid inflation but inflation which is starting to break that disinflationary, deflationary mindset which was so damaging. And you are seeing great improvements in corporate governance and an almost collapse. They will be facing labour shortages but that will increase productivity and investment. It's an intriguing, with the American slowly trying to detach from China, Japan is well positioned to pick up on that.
Increasing our allocations to Japan, a place that we haven't spent a lot of time on in some time.
>> Always great insights with Michael Craig. A great start to the show too.
We'll get your questions about asset management for Michael and just moments 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.
Shares of Tesla in the spotlight today. It appears the EV makers cutting prices in China facing increased competition from domestic EV makers in the world's second-largest economy. This news comes ahead of Tesla's latest earnings report.
It is accepted tomorrow. Right now at $144 and change, Tesla's down about 3.5%.
US telecom giant Verizon handing in an earnings beat for its most recent quarter.
Revenue from the wireless business increased some 3%. More customers are signing up for premium plans. Verizon is also managing to lower the number of cancellations that it has seen from wireless customers.
Been working the number down over the past couple of quarters. Right now, the stock was modestly higher this morning but now at 3899, it's on about 3.7%.
Closer to home, we have the miners among the leading Lakers on the TSX composite index today is the price of gold is retreating.
You're down 65 bucks per ounce, about 2.7% on the session right now.
Concerns over a wider conflict in the Middle East have eased in recent days.
Looking across the space, I'm just using these as an example, Kinross Gold, Lundin, several gold miners are under pressure in Toronto.
Materials is one of the big three sectors in terms of the topline number on the TSX Composite Index.
We are up a fraction of one point, basically flat right now on the TSX Composite Index.
South of the border, the S&P 500, trying to break that losing streak that it was in last week.
Right now it is hanging in there. 23 points to the upside, about half a percent.
Okay, we're back with Michael Craig, head of asset allocation at TD Asset Management taking your questions about asset allocation. Let's go to the first one here.
Colin, thanks for sending in the question.
He wants to know what opportunities and risks that could the equity market present as Canadian living standards decrease and the wealth GAP widens?
>> There is a lot to impact there.
The facts are Canadian productivity is liking her trading partners and household and corporate debt as a percentage of GDP is materially higher than our trading partners.
So in Canada, it's a fairly bond bullish story relative to peers, unlikely that the Canadian-- also within Canada, when you're looking at the TSX, if you want to avoid that, you have to look to sectors that are geared to the global economy, that gets you into energy, agricultural, mining, etc.
probably want to stay away from companies geared towards domestic consumption.
That would be the near term risks. Get the thing for Canadian investors to be mindful of is typically a negative for the currency so from a Canadian investor standpoint, having exposure into Canada equity doesn't make sense because you do have the tailwind of the currency supporting your investment returns. If you were talking about at the top of the show the possible divergence of the Bank of Canada and said that only to a certain point if there are ill effects on our currency because at some point the BOC will have to worry about supporting inflation. We buy a lot of stuff from the states.
>> It's all about that path. I don't think that they are too worried that currency depreciates. That's not in their mandate.
But it's that sharp 5% drop that would be a problem.
Central banks always worry about the rate of change rather than the level of change as a general rule of thumb and that said, I don't think Canada is going to be the only been cutting. I think the ECB will be in play as well.
If it's a broader US all her strength story, not so horrible but if the Canadian dollar materially underperforms, that's a bigger challenge.
>> You talked about parts of the Canadian market that are not directly related to our domestic economy. One criticism I have always heard is that the Canadian investors to focus on Canada. From an asset allocation perspective, does not hold any weight? Is it a truism?
>> A few things. You take the global benchmark of equity. Canada makes up less than 3% of that.
You need to realize your liabilities are in Canadian dollars.
Some people are worried, you can go through long periods of time where Canada underperforms neck and her returns.
Our own thoughts since broadly speaking Canadians have too much Canadian equity we have not been you know by equity to be investing in productivity gains.
It's why you buy stocks. And we haven't been great in creating productivity.
I think it's important for investors to consider that when looking at their overall asset allocation.
>> Great question there, Colin. Thanks for setting that one into us. Another one from the audience. The viewer wants to know how much climate change is being priced into the market?
>> Not much, I don't think. It's hard.
It's almost nothing until it's something.
So until you see real, tangible impacts on a particular company, you don't really see it.
Companies have shifted supply chains in recent years has one way to deal with it.
There is a lot of modelling being put on.
I'm not confident that, I think it's one of those things where that risk is so binary where it's kind of all or nothing that you don't really see it, in terms of risks being priced, I don't think that will be a problem.
>> It's interesting, he talked about the supply chain, made me think of rivers, so I had low water levels, makes me think of reshoring.
>> We recently had a bridge collapsed in Baltimore and within days supply chains were reestablished.
That wasn't necessarily a climate change accident but it's a good proxy.
Companies are well aware for utilities and their supply chains. You are seeing a high quality supply chains being able to react quickly while others not so much. The other thing to you is ironically this does provide some opportunity because in other places where you had a inhospitable climate, as it warms, you have more ability to develop production versus areas that are more arid.
It's I would say the ranking of risks right now would be more near the bottom of the top as to what investors are stressing about.
>> Someone wants to know, that's all and we just did.
My brain is off course on Monday.
A question from Jeff here, a regular contributor to the show.
As investors, should we be doing anything in anticipation of the US election?
>> That is a hard one.
There is a long-term trajectory which, whether it's Republican or Democrat, I don't think it really changes.
Continual detachment from China continues no matter what.
For certain. Onshoring, reshoring with the US economy continues.
Biden didn't change a lot of policy put in place by the previous administration and I don't expect to see rapid shifts there.
Things I would be a bit more concerned about is if Trump wins, tariffs is a big issue.
You hope that Canada gets exempt but it's not like there's a great relationship between Trump and the current government in Canada so that's a risk.
I think sectors that have been receiving subsidies to the Democrats, particularly on the green energy side, are very much at risk under Trump. Sectors that have been held back in terms of oil production, I think oil will be a risk in terms of price under Trump because he will likely want to increase production. So some short-term place. Another thing I'd be a little concerned about is if Trump starts to impress the unfunded fiscal largeness, that could be a risk for the bond market.
I think there's a few things under Trump or you have to be mindful.
With Biden winning, it's likely he does not take both Senate and Congress or house, so he will be restrained a little bit in terms of his policies but some near term risks with Trump as regards bonds, renewables and tariffs.
What's the position? It's tough.
>> You simply don't know the outcome.
>> Under all scenarios, you're not bullish on China. You're probably okay with Japan.
Bullish for aerospace and defence stocks.
Tariffs and bond market are wildcards under Trump.
>> Interesting stuff.
As always, make sure you do your own research before making any investment decisions.
we will get back to your questions for Michael Craig on asset allocation and just moments time. And a reminder that you can get in touch with us any time. Just email moneytalklive@td.com.
Let's get our educational segment of the day. We are having a look at what happens after you actually place of trade on the platform.
Bryan Rogers, Senior client education instructor with TD Direct Investing has more.
>> I know we talk on the show all the time about limit orders and market orders and stop orders, those order types.
Something that's new if you're entering a limit order and it has gone through you, you might be wondering, where can I see it next? If you did get a fill, you may just be going to your position screen and seeing that there it is. It was partially filled, how do I get the rest of the details?
I want to show you order status. It's a small thing but something I think can be pretty valuable when you are placing your first few trades or you're wondering where does it go after you place that.
If we jump into web broker, I will show you that there is a location you can go to and is called order status.
We see from here under the research tab, we want to jump into trading and vendor trade you're going to see order status.
Once you click on order status, I don't have any orders in here.
This is a test or demo account. If you are in your own encounter I was in my own account, I could see for a certain timeframe a number of days that it will show all, what I mean by all this could be partially filled orders, working or open orders, you'd be seeing you are filled orders were cancelled orders, anything you could possibly see, you can filter it as well.
You can add filters and clear filters at whatever time. This is under historical but then under active, if there is anything that's open right now, you open a limit order right now and you want to see what it looks like, what's going on, it might be filled right away or just be sitting there waiting for the price to come up or come down, whatever the case may be. But you go right to this order status and see the information there.
One of the quick thing to remind you of is anything we show on web broker, this is a good tip we go into once in a while, any page that you're on, if you click this help tab right here, this?, He will give you some more information on this. If you're wondering what does this all mean in terms of some of the terms I just talked about, the order date, the order status, whether it's open trigger, open pending trigger, if you want to know what more, click on the? And you can find out what any of that terminology means.
You get a little bit more information there.
>> A lot of resources there. What about orders that stretch across either several hours or days? Can you get notified when it gets filled?
>> Yes, good point, because you may have an order that's good to cancel, on US stocks, that's 180 days.
So you want to be aggressive with your limits, you can fix it and forget it and leave it there, we talked about that, you can leave them in for an extensive period of time. But let's say you're in the platform or even more so on right away, there is a thing called order notifications. Let's jump into web broker and take a look at that.
You should have it set up as a default. If for some instance you are not seeing the motivation Cajuns come up right away, this is how you add that on.
We've shown this before but just as a refresh, if you click on the name at the top right, there's a menu that comes up and there is a number under customized site, there is a number of different things you can do here.
You can customize the site in terms of timeout and other stuff.
The one I wanted to highlight is trade notifications right there. If you don't have this activated, go in and activate it.
Go in and see whether it says show or don't show trade notifications.
If you want to see every time he gets filled, you can have it,. Whether the order is partially filled or rejected, that the good ones and 02.
If for some reason that you made a mistake or the order was reviewed for a certain reason, that will have on more information. It could get rejected and you may want to know that right away.
Once again, same thing, I'm going to go to the help tab,? On the top right and just to give you a visual and show you what it would look like, because I don't have an example available, but just to show you guys, we can look at this as well, you can set the timing, three seconds, five seconds, 10 seconds, etc.
And then they will show up at the bottom of the screen, bottom writer top rate, wherever he wanted to come up most easily, and then there's a little tab coming out this is bought 100 shares were sold 100 shares or it might come up and be read as rejected. Any of these you can get information about, you can use that feature.
>> Great stuff as always. Thanks that.
>> Thanks, Greg.
>> Bryan Rogers, Senior client education instructor at TD Direct Investing. For more information, you can go to the education Centre on web broker or you can use this in QR code to reach the YouTube page. Before you back your questions about asset allocation with Michael Craig, 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.
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.
Okay, we're back with Michael Craig, taking your questions about asset allocation. This one was sent into us in French so we thank you for that question.
The viewer is asking, why are gold stocks so disconnected from the price of gold? I have a feeling they were looking at the ascent of gold, perhaps the miners have been participating.
>> This is an interesting question. A few things. First, gold has broken every traditional model used to value gold for many years. We have been using the dollar as a proxy for where gold should be.
Some unnatural drivers of gold prices here. A central bank buying particularly.
After the Russian invasion of Ukraine, the US want to seize Russian assets and I think a lot of banks that are or countries that work in the great, started moving some of the reserves into gold.
There is a lot of buying by retail investors in China.
The metals had a phenomenal run here. On the stock side, you would expect to see some of that differential compressed but it's not straightforward anymore in terms of buying a commodity and expecting the commodity to respond to that price. Gold mining is notoriously difficult.
There is some expropriation risk with Barrick.
Job little risk. The challenge of mining, the inability to create new mines, in 2024 and the thing about the climate change question, today, it's a lot harder to create a gold mine or any type of mind that it was 20 years ago.
So I think a lot of those risks are just priced very high right now so the mining stocks have moved higher but I think part of the challenge is it's just more challenging.
You see gold higher, money seems to be a lot higher.
The sector is fairly unloved.
It shrunken a lot of people just have been burned so many times, you have true believers, but generally people haven't come back because they have been burned so many times.
>> Nice break down there what's happening in the world space.
" One of the question here about opportunities outside of Canada and the US and equity.
Outside of Canada and the US, are there opportunities in equities?
>> I'm not gonna get into specific stocks.
Pharma in Europe, we had Japan story, those have been our top places that we're looking at right now in terms of opportunities.
I started trading currency 10 years ago. I don't do it anymore.
At the end, you get 60 for a Canadian dollar. Now it's about double.
The market is trading at a material discount.
It would be an area for long-term allocation in terms of the cheapness of the currency and was happening there a place to look for in terms of gold exposure.
>> If someone is looking at Japan, which they be aware of in terms of the thesis as to why it's interesting and what could undo that? What could go wrong?
>> Certainly a slip back into inflation would be a disaster for certain.
I would say the second would be any type of sabre rattling between China and Taiwan would have implications for Japan so on the due political side, it's not like the US and Canada were you have two broad oceans with no close adversaries. Japan has neighbours that are not aligned. That is one issue I would point out.
>> Considering what Japan has been through over the past several decades, with their aging population, demographics, is there anything that Canada, the United States could take away as a cautionary tale to say, remember in the 80s, I was only a kid, we stay here about Japan in terms of it being a mighty economic foe to the west.
>> When we consume debt at an unhealthy pace for too long, to unwind that tends to take years if not decades.
Americans after they busted financially in 2008, they were the gold standard. The other countries have language. UK, Europe, in terms of their balance sheet recessions. We escaped it in Canada and did not see much vocal back. We continue to leave her up.
Sometimes I worry that we are risking becoming Japan in the late 80s in terms of debt. And that will lead to very tepid growth in years to come.
That is a cautionary tale.
It's an important in terms of market history it's an important place to study because it tends to be a mistake that other countries continue to make years after.
>> Another question from the audience, this one about artificial intelligence.
Has the hype around AI and semiconductor stocks come to an end?
We talked about that on Friday when Nvidia was down 10%.
>> This is classic market behaviour around new innovation where we over high-pitched short-term. You have a day like Friday with Nvidia down 10%, you think it's over.
These stocks have had a huge move. They probably overshot a bit.
But you can't take that and say, AI is over.
There was no shortage of folks lamenting that the Internet was useless in 2001 the stock market rollover. That obviously was wrong.
Sometimes you need to detach the two.
There's the market and the hype and then there's the real technology. There will be some backsliding.
There will be applications, use cases reported is used and the output is garbage, but there will be cases where companies use their own proprietary data where they solve problems at a speed that is unimaginable. Critical not to dismiss AI right away. It is critical when things start bracing 50 times sales, that's a very expensive multiple. What you need to see?
Is there any additional good news that could push it higher? That's more of a valuation story of not dismissing AI.
>> We will get back to questions for Michael Craig on asset allocation in just a moment's time.
As always, make sure you do your own research before making any investment decisions.
and reminder 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.
Let's remarket check. We went to take a look at TD's Advanced Dashboard, platform designed for active traders available through TD Direct Investing. This is the heat map function, gives us a view of the market movers.
We will look at the TSX 60, screening by Price and volume. Price of gold pulling back substantially today with rationing down of tensions in the Middle East and as goes the price of gold goes the fortune of some of these names at least today. Bear down 4%, Kinross down almost 5% at this hour.
Energy stocks are holding them. Seeing modest gains from Suncor or Cenovus, up about 1% each and across-the-board there's a little more green than there is red.
Interesting day. South of the border, we will see how the state plays out into the closing bills this afternoon.
The S&P 500 trying to break its losing streak. We look at the 100 to give us a clearer view.
Less cluttered view.
Tesla cutting prices in China again, do animals were percent. They are reporting tomorrow so it will be interesting to hear what they have to say about the situation.
After Nvidia selling off on Friday to the tune of about 10%, making some modest gains, a little shy of three right now.
We are back with Michael Craig from TD Asset Management, more questions coming in the past couple of moments. Telecom stocks used to be a solid conservative investment. Has that changed?
>> Conservative investment but you still need to reinvest and I think right now with competition, investment, they are really struggling and the dividends, the earnings are not covering dividends so I don't know if I would say conservative.
Low growth, perhaps, things that we see as conservative typically evolve over time.
Sometimes you look at a conservative investment because they have a mature lifecycle but mature companies, usually the next stop is they are not mature companies, they are in financial strain.
So you want to make sure you still see that reinvestment.
I think in many ways that they are struggling, there is competitive pricing pressures.
My son dropped his phone as well a few weeks ago, when to get a new phone, and my contract was lower.
My point is that the kind of pricing environment they are finding themselves in right now. It's a struggle.
When you think about conservatism, you can't think about a simple investment, you gotta think about what strategy do you think about that and that's why diversification is so important.
>> They were those track pants, slips out of his pocket on a bus.
In the end, he needed a new phone but you want to make him feel a bit bad. So there are consequences.
As much pain as you can.
We are here to teach lessons at least to her children. One more question we're going to squeeze in now.
If you want to know if there are any concerns or in the growing portion of the market's made up by passive investing, for example ETS?
>> First off, not all ETFs are passive, there are active and passive ones.
Although of course, the dominant growth in ETFs has been passive.
First off, a more philosophical note, with an finance investing, a lot of good ideas come along and the risk is always that too many people use a good idea and it doesn't work.
Passive investing went from zero and 1992:45% today. I don't know what the right amount is but there gets to be a point where if the market becomes so dominant with passive investing, returns are a function of flows.
A passive provider gets a dollar, they invest that day, or whenever redemption request a solid day. An active investor always has a decision whether they want to sell off for hold or buy.
Passive investing is a great, low cost way to get market exposure but there's a limit where we are all doing the same thing and that creates fragility and markets and you don't want that.
You want markets to reflect real fundamentals.
You have markets dominated by flow, it's really a function of that flow and actually tied to employment.
We are looking at a huge shift in the market not just because earnings are coming down but change in the flow.
Being mindful about that growth because they can lead to fragility.
I think we are in decade with far higher inflation growth risk and as a result more failures. This is an environment where more active approach is probably more effective than passive.
>> A lot going on in the world, would we need to think about? Living through times like these, what should we be thinking as investors?
>> Step back.
Much more fiscal deficits. And I think you're going to have more periods of volatility and growth. More than ever, this requires a multi-approach to portfolio management, I think more so than we saw in the 20 teens.
>> Always great having you. Look forward to the next one.
>> My pleasure.
>> Michael Craig, Managing Director and head of asset allocation at TD Asset Management.
As always, make sure you do your own research before making any investment decisions.
if we don't have time to get your questions today, we will aim to get it into future shows.
Stay tuned for tomorrow show. Bryan Armer, Dir. of passive strategies research, North America, Morningstar Research will be our guest, he wanted to your questions about exchange traded funds.
And a reminder that you can get a head start.
Just email MoneyTalkLive@TD.com.
That's all the time we have for the show today. Thanks for watching. We will see you tomorrow.
[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 show, we will discuss whether this reason publicly seen in the markets is a pause in the rally or something that deserves a little more attention. TD Asset Management's Michael Craig joins us.
In today's WebBroker education segment, we will discuss whether you can find out where your trade has been completed here on the platform. Here's how you get in touch with us. Just email moneytalklive@td.com or fill out the viewer response box under the video player on WebBroker.
Before we get to all that and our guest of the day, let's get you an update on the markets.
TSX Composite Index down a very modest 22 points, about 1/10 of a percent. Got the price of gold pulling back rather dramatically today as tensions ease in the Middle East. Some of the most actively traded names include some of those gold mining names, including Barrick right now, at $22.65, they are down 3.7%. Notice some green when it came to Air Canada.
The US carriers last week said that they expected a big summer travel season. That lifted Air Canada last week.
They are to the upside today, $19.79.
The S&P 500 is getting rid of that losing streak.
21 points to the upside, a little child half of a percent.
The tech heavy NASDAQ, I think four of the Magnificent Seven are reporting this week.
Some of them have not been so magnificent this year.
The NASDAQ is up 50 points, one third of a percent.
Nvidia, after selling off to the tune of 10% on Friday alone, it's bouncing a little, not making of that lost ground. It is up a little shy of 3%. And that is your market update.
Markets have been tested recently by a pullback in some of the big US tech names.
Are there signs out there of a bigger pullback on the horizon or is this just a pause in the rally we have been seeing?
Joining us at or discuss, Michael Craig, Managing Director and head of asset allocation at TD Asset Management. Great to have you back.
What's been going on in the markets?
>> There is a bit of exhaustion, a really aggressive really to start the year. I think one key that, there are some seasonals at play.
US tax filing is in full swing. Last year was a great year for returns.
People need to sell before April 15 two be able to use that money to pay off their tax bill so there's a bit of a seasonality effect on top of some overdone or overextended boost. A little bit of profit taking, 5% pullback, I don't think there's anything too serious here other than just the market recharging, if you will.
>> One of the narratives on the street is after the bouncy week that we had, the rough week that we had led by the tech stocks south of the border, that we are going to start getting some tech earnings this week and at some point there is optimism in the fundamentals of the companies. What's your sense of the earnings season right now?
>> I think the broadening and the market is-- you don't buy tech for a quarterly release.
It has been repriced.
AI is not going away.
We have been focusing on industrials and energy this year which have been nice places to work and they've done well and you haven't seen that selloff like you have seen in the major tech indices were as there it is I think an excessive amount of investor attention.
>> South of the border, the economy has been pretty well.
>> Keep on trucking for the time being.
Manufacturing PMI indices have started to inflect and work their way higher so there is a bit of a bid on the manufacturing side globally.
Services actually is rolling over.
So again, very bizarre world post-COVID. A lot of kind of industry cycles.
Manufacturing has been in the basement for months now so I think that's what we are interested in in terms of that story involving and finding somebody there versus the services side which had a great run but is starting to soften.
>> At the macro level, there's the Fed.
It seems like it's been this story developing in increments. At the end of the year, there's going to be four, five, six cuts from the Fed, maybe two or three, and now maybe none. This is a strangely evolving story. The US 10 year bond yield is at 4.6%.
Where are we sitting out in terms of higher for longer?
>> Investor expectations of Fed policy has been incredibly inaccurate, really since this hiking cycle started. I only say that because whatever the narrative is today, it is unlikely that we are really talking about it in four months time. We are trying to fit a narrative to the market.
Our own view is that the disinflationary process continues.
It's not a straight line. Goods inflation has probably bottomed but it has come off along way.
If we get on recessionary cuts, that would be very supportive for risk.
But the thought that we are going to have this re-acceleration of inflation I really struggle with particularly on the wages side. I think people keep trying to fit the narrative and also I think this too is important, there is the Fed and there is the Bank of Canada.
I think it's likely we see some kind of divergence. Our economy is much more sensitive to interest rates than down so.
Maybe the Fed only cuts once this year.
But I would expect the Bank of Canada to do quite a few more in the coming months.
>> There was a panel discussion last week, Tiff Macklem and Jerome Powell on the same panel.
When you talk about divergence, the headlines coming out of it, Jerome Powell was saying, we are not seeing the progress on inflation we were hoping for. How about you, Mr. Macklem? Things are looking good in terms of where we are headed.
How much can the Bank of Canada diverge from the Fed?
>> We will follow up our own inflation path. Canada has weakened materially.
Remember, we have massive immigration.
80+ percent of jobs growth in the government sector on the back of a million plus new people arriving here, that's a pretty dire job market in Canada right now. If the bank cuts and we see the currency really start to weekend, that'll be a limiting factor. But outside of and I think the BOC will be fine if the currency appreciates, they just don't want to see rapid depreciation.
Outside of that, I think we see a reasonable cutting cycling Canada in the next 18 months.
>> What about geopolitical risk? This has been in the headlines, people trying to gauge the sentiment, the level of tension.
Right now, it seems that tensions are ratcheting down but it's a fluid situation.
>> So with that, it really requires a different type of thought process that market participants have not had to worry about in 30+ years.
With the Middle East, I think it's been very much a show of force more than anything more serious. In terms of where we go from here, I would expect to see cooler heads prevail but for the last five years, 10 years, the direction of travel has been far more severe and we can't rule out conflict emerging between Israel and Iran.
No one wants that.
Certainly not the Americans who would be pulled into it.
In many ways, it's really geopolitical theatre at its best.
On the Ukrainian Russian side, Europe is rearming. The irony of that conflict is pulling the European Union closer because now they have a common enemy.
The irony is the drifting of Europe over the years in terms of formulating coherent policy, this is probably supercharging that in a positive way.
It is unfortunate it took award to people to go that way. But I think this is long-term supportive for Europe being more focused on energy security, industrial policy as well as coordination amongst the economies. I think long-term this is probably the catalyst for Europe to compete but had a horrible cost.
>> You put that all together, and it is a lot, what does it mean for asset allocation? What should investors be thinking about?
>> Our focus has been on the west and Japan.
We like North America.
We are on the margin less bearish Europe.
And intrigued by what's happening in Japan. Japan's going through one of those things you see once in a career in an economy, they are emerging from, they are starting to see signs of inflation, not rapid inflation but inflation which is starting to break that disinflationary, deflationary mindset which was so damaging. And you are seeing great improvements in corporate governance and an almost collapse. They will be facing labour shortages but that will increase productivity and investment. It's an intriguing, with the American slowly trying to detach from China, Japan is well positioned to pick up on that.
Increasing our allocations to Japan, a place that we haven't spent a lot of time on in some time.
>> Always great insights with Michael Craig. A great start to the show too.
We'll get your questions about asset management for Michael and just moments 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.
Shares of Tesla in the spotlight today. It appears the EV makers cutting prices in China facing increased competition from domestic EV makers in the world's second-largest economy. This news comes ahead of Tesla's latest earnings report.
It is accepted tomorrow. Right now at $144 and change, Tesla's down about 3.5%.
US telecom giant Verizon handing in an earnings beat for its most recent quarter.
Revenue from the wireless business increased some 3%. More customers are signing up for premium plans. Verizon is also managing to lower the number of cancellations that it has seen from wireless customers.
Been working the number down over the past couple of quarters. Right now, the stock was modestly higher this morning but now at 3899, it's on about 3.7%.
Closer to home, we have the miners among the leading Lakers on the TSX composite index today is the price of gold is retreating.
You're down 65 bucks per ounce, about 2.7% on the session right now.
Concerns over a wider conflict in the Middle East have eased in recent days.
Looking across the space, I'm just using these as an example, Kinross Gold, Lundin, several gold miners are under pressure in Toronto.
Materials is one of the big three sectors in terms of the topline number on the TSX Composite Index.
We are up a fraction of one point, basically flat right now on the TSX Composite Index.
South of the border, the S&P 500, trying to break that losing streak that it was in last week.
Right now it is hanging in there. 23 points to the upside, about half a percent.
Okay, we're back with Michael Craig, head of asset allocation at TD Asset Management taking your questions about asset allocation. Let's go to the first one here.
Colin, thanks for sending in the question.
He wants to know what opportunities and risks that could the equity market present as Canadian living standards decrease and the wealth GAP widens?
>> There is a lot to impact there.
The facts are Canadian productivity is liking her trading partners and household and corporate debt as a percentage of GDP is materially higher than our trading partners.
So in Canada, it's a fairly bond bullish story relative to peers, unlikely that the Canadian-- also within Canada, when you're looking at the TSX, if you want to avoid that, you have to look to sectors that are geared to the global economy, that gets you into energy, agricultural, mining, etc.
probably want to stay away from companies geared towards domestic consumption.
That would be the near term risks. Get the thing for Canadian investors to be mindful of is typically a negative for the currency so from a Canadian investor standpoint, having exposure into Canada equity doesn't make sense because you do have the tailwind of the currency supporting your investment returns. If you were talking about at the top of the show the possible divergence of the Bank of Canada and said that only to a certain point if there are ill effects on our currency because at some point the BOC will have to worry about supporting inflation. We buy a lot of stuff from the states.
>> It's all about that path. I don't think that they are too worried that currency depreciates. That's not in their mandate.
But it's that sharp 5% drop that would be a problem.
Central banks always worry about the rate of change rather than the level of change as a general rule of thumb and that said, I don't think Canada is going to be the only been cutting. I think the ECB will be in play as well.
If it's a broader US all her strength story, not so horrible but if the Canadian dollar materially underperforms, that's a bigger challenge.
>> You talked about parts of the Canadian market that are not directly related to our domestic economy. One criticism I have always heard is that the Canadian investors to focus on Canada. From an asset allocation perspective, does not hold any weight? Is it a truism?
>> A few things. You take the global benchmark of equity. Canada makes up less than 3% of that.
You need to realize your liabilities are in Canadian dollars.
Some people are worried, you can go through long periods of time where Canada underperforms neck and her returns.
Our own thoughts since broadly speaking Canadians have too much Canadian equity we have not been you know by equity to be investing in productivity gains.
It's why you buy stocks. And we haven't been great in creating productivity.
I think it's important for investors to consider that when looking at their overall asset allocation.
>> Great question there, Colin. Thanks for setting that one into us. Another one from the audience. The viewer wants to know how much climate change is being priced into the market?
>> Not much, I don't think. It's hard.
It's almost nothing until it's something.
So until you see real, tangible impacts on a particular company, you don't really see it.
Companies have shifted supply chains in recent years has one way to deal with it.
There is a lot of modelling being put on.
I'm not confident that, I think it's one of those things where that risk is so binary where it's kind of all or nothing that you don't really see it, in terms of risks being priced, I don't think that will be a problem.
>> It's interesting, he talked about the supply chain, made me think of rivers, so I had low water levels, makes me think of reshoring.
>> We recently had a bridge collapsed in Baltimore and within days supply chains were reestablished.
That wasn't necessarily a climate change accident but it's a good proxy.
Companies are well aware for utilities and their supply chains. You are seeing a high quality supply chains being able to react quickly while others not so much. The other thing to you is ironically this does provide some opportunity because in other places where you had a inhospitable climate, as it warms, you have more ability to develop production versus areas that are more arid.
It's I would say the ranking of risks right now would be more near the bottom of the top as to what investors are stressing about.
>> Someone wants to know, that's all and we just did.
My brain is off course on Monday.
A question from Jeff here, a regular contributor to the show.
As investors, should we be doing anything in anticipation of the US election?
>> That is a hard one.
There is a long-term trajectory which, whether it's Republican or Democrat, I don't think it really changes.
Continual detachment from China continues no matter what.
For certain. Onshoring, reshoring with the US economy continues.
Biden didn't change a lot of policy put in place by the previous administration and I don't expect to see rapid shifts there.
Things I would be a bit more concerned about is if Trump wins, tariffs is a big issue.
You hope that Canada gets exempt but it's not like there's a great relationship between Trump and the current government in Canada so that's a risk.
I think sectors that have been receiving subsidies to the Democrats, particularly on the green energy side, are very much at risk under Trump. Sectors that have been held back in terms of oil production, I think oil will be a risk in terms of price under Trump because he will likely want to increase production. So some short-term place. Another thing I'd be a little concerned about is if Trump starts to impress the unfunded fiscal largeness, that could be a risk for the bond market.
I think there's a few things under Trump or you have to be mindful.
With Biden winning, it's likely he does not take both Senate and Congress or house, so he will be restrained a little bit in terms of his policies but some near term risks with Trump as regards bonds, renewables and tariffs.
What's the position? It's tough.
>> You simply don't know the outcome.
>> Under all scenarios, you're not bullish on China. You're probably okay with Japan.
Bullish for aerospace and defence stocks.
Tariffs and bond market are wildcards under Trump.
>> Interesting stuff.
As always, make sure you do your own research before making any investment decisions.
we will get back to your questions for Michael Craig on asset allocation and just moments time. And a reminder that you can get in touch with us any time. Just email moneytalklive@td.com.
Let's get our educational segment of the day. We are having a look at what happens after you actually place of trade on the platform.
Bryan Rogers, Senior client education instructor with TD Direct Investing has more.
>> I know we talk on the show all the time about limit orders and market orders and stop orders, those order types.
Something that's new if you're entering a limit order and it has gone through you, you might be wondering, where can I see it next? If you did get a fill, you may just be going to your position screen and seeing that there it is. It was partially filled, how do I get the rest of the details?
I want to show you order status. It's a small thing but something I think can be pretty valuable when you are placing your first few trades or you're wondering where does it go after you place that.
If we jump into web broker, I will show you that there is a location you can go to and is called order status.
We see from here under the research tab, we want to jump into trading and vendor trade you're going to see order status.
Once you click on order status, I don't have any orders in here.
This is a test or demo account. If you are in your own encounter I was in my own account, I could see for a certain timeframe a number of days that it will show all, what I mean by all this could be partially filled orders, working or open orders, you'd be seeing you are filled orders were cancelled orders, anything you could possibly see, you can filter it as well.
You can add filters and clear filters at whatever time. This is under historical but then under active, if there is anything that's open right now, you open a limit order right now and you want to see what it looks like, what's going on, it might be filled right away or just be sitting there waiting for the price to come up or come down, whatever the case may be. But you go right to this order status and see the information there.
One of the quick thing to remind you of is anything we show on web broker, this is a good tip we go into once in a while, any page that you're on, if you click this help tab right here, this?, He will give you some more information on this. If you're wondering what does this all mean in terms of some of the terms I just talked about, the order date, the order status, whether it's open trigger, open pending trigger, if you want to know what more, click on the? And you can find out what any of that terminology means.
You get a little bit more information there.
>> A lot of resources there. What about orders that stretch across either several hours or days? Can you get notified when it gets filled?
>> Yes, good point, because you may have an order that's good to cancel, on US stocks, that's 180 days.
So you want to be aggressive with your limits, you can fix it and forget it and leave it there, we talked about that, you can leave them in for an extensive period of time. But let's say you're in the platform or even more so on right away, there is a thing called order notifications. Let's jump into web broker and take a look at that.
You should have it set up as a default. If for some instance you are not seeing the motivation Cajuns come up right away, this is how you add that on.
We've shown this before but just as a refresh, if you click on the name at the top right, there's a menu that comes up and there is a number under customized site, there is a number of different things you can do here.
You can customize the site in terms of timeout and other stuff.
The one I wanted to highlight is trade notifications right there. If you don't have this activated, go in and activate it.
Go in and see whether it says show or don't show trade notifications.
If you want to see every time he gets filled, you can have it,. Whether the order is partially filled or rejected, that the good ones and 02.
If for some reason that you made a mistake or the order was reviewed for a certain reason, that will have on more information. It could get rejected and you may want to know that right away.
Once again, same thing, I'm going to go to the help tab,? On the top right and just to give you a visual and show you what it would look like, because I don't have an example available, but just to show you guys, we can look at this as well, you can set the timing, three seconds, five seconds, 10 seconds, etc.
And then they will show up at the bottom of the screen, bottom writer top rate, wherever he wanted to come up most easily, and then there's a little tab coming out this is bought 100 shares were sold 100 shares or it might come up and be read as rejected. Any of these you can get information about, you can use that feature.
>> Great stuff as always. Thanks that.
>> Thanks, Greg.
>> Bryan Rogers, Senior client education instructor at TD Direct Investing. For more information, you can go to the education Centre on web broker or you can use this in QR code to reach the YouTube page. Before you back your questions about asset allocation with Michael Craig, 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.
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.
Okay, we're back with Michael Craig, taking your questions about asset allocation. This one was sent into us in French so we thank you for that question.
The viewer is asking, why are gold stocks so disconnected from the price of gold? I have a feeling they were looking at the ascent of gold, perhaps the miners have been participating.
>> This is an interesting question. A few things. First, gold has broken every traditional model used to value gold for many years. We have been using the dollar as a proxy for where gold should be.
Some unnatural drivers of gold prices here. A central bank buying particularly.
After the Russian invasion of Ukraine, the US want to seize Russian assets and I think a lot of banks that are or countries that work in the great, started moving some of the reserves into gold.
There is a lot of buying by retail investors in China.
The metals had a phenomenal run here. On the stock side, you would expect to see some of that differential compressed but it's not straightforward anymore in terms of buying a commodity and expecting the commodity to respond to that price. Gold mining is notoriously difficult.
There is some expropriation risk with Barrick.
Job little risk. The challenge of mining, the inability to create new mines, in 2024 and the thing about the climate change question, today, it's a lot harder to create a gold mine or any type of mind that it was 20 years ago.
So I think a lot of those risks are just priced very high right now so the mining stocks have moved higher but I think part of the challenge is it's just more challenging.
You see gold higher, money seems to be a lot higher.
The sector is fairly unloved.
It shrunken a lot of people just have been burned so many times, you have true believers, but generally people haven't come back because they have been burned so many times.
>> Nice break down there what's happening in the world space.
" One of the question here about opportunities outside of Canada and the US and equity.
Outside of Canada and the US, are there opportunities in equities?
>> I'm not gonna get into specific stocks.
Pharma in Europe, we had Japan story, those have been our top places that we're looking at right now in terms of opportunities.
I started trading currency 10 years ago. I don't do it anymore.
At the end, you get 60 for a Canadian dollar. Now it's about double.
The market is trading at a material discount.
It would be an area for long-term allocation in terms of the cheapness of the currency and was happening there a place to look for in terms of gold exposure.
>> If someone is looking at Japan, which they be aware of in terms of the thesis as to why it's interesting and what could undo that? What could go wrong?
>> Certainly a slip back into inflation would be a disaster for certain.
I would say the second would be any type of sabre rattling between China and Taiwan would have implications for Japan so on the due political side, it's not like the US and Canada were you have two broad oceans with no close adversaries. Japan has neighbours that are not aligned. That is one issue I would point out.
>> Considering what Japan has been through over the past several decades, with their aging population, demographics, is there anything that Canada, the United States could take away as a cautionary tale to say, remember in the 80s, I was only a kid, we stay here about Japan in terms of it being a mighty economic foe to the west.
>> When we consume debt at an unhealthy pace for too long, to unwind that tends to take years if not decades.
Americans after they busted financially in 2008, they were the gold standard. The other countries have language. UK, Europe, in terms of their balance sheet recessions. We escaped it in Canada and did not see much vocal back. We continue to leave her up.
Sometimes I worry that we are risking becoming Japan in the late 80s in terms of debt. And that will lead to very tepid growth in years to come.
That is a cautionary tale.
It's an important in terms of market history it's an important place to study because it tends to be a mistake that other countries continue to make years after.
>> Another question from the audience, this one about artificial intelligence.
Has the hype around AI and semiconductor stocks come to an end?
We talked about that on Friday when Nvidia was down 10%.
>> This is classic market behaviour around new innovation where we over high-pitched short-term. You have a day like Friday with Nvidia down 10%, you think it's over.
These stocks have had a huge move. They probably overshot a bit.
But you can't take that and say, AI is over.
There was no shortage of folks lamenting that the Internet was useless in 2001 the stock market rollover. That obviously was wrong.
Sometimes you need to detach the two.
There's the market and the hype and then there's the real technology. There will be some backsliding.
There will be applications, use cases reported is used and the output is garbage, but there will be cases where companies use their own proprietary data where they solve problems at a speed that is unimaginable. Critical not to dismiss AI right away. It is critical when things start bracing 50 times sales, that's a very expensive multiple. What you need to see?
Is there any additional good news that could push it higher? That's more of a valuation story of not dismissing AI.
>> We will get back to questions for Michael Craig on asset allocation in just a moment's time.
As always, make sure you do your own research before making any investment decisions.
and reminder 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.
Let's remarket check. We went to take a look at TD's Advanced Dashboard, platform designed for active traders available through TD Direct Investing. This is the heat map function, gives us a view of the market movers.
We will look at the TSX 60, screening by Price and volume. Price of gold pulling back substantially today with rationing down of tensions in the Middle East and as goes the price of gold goes the fortune of some of these names at least today. Bear down 4%, Kinross down almost 5% at this hour.
Energy stocks are holding them. Seeing modest gains from Suncor or Cenovus, up about 1% each and across-the-board there's a little more green than there is red.
Interesting day. South of the border, we will see how the state plays out into the closing bills this afternoon.
The S&P 500 trying to break its losing streak. We look at the 100 to give us a clearer view.
Less cluttered view.
Tesla cutting prices in China again, do animals were percent. They are reporting tomorrow so it will be interesting to hear what they have to say about the situation.
After Nvidia selling off on Friday to the tune of about 10%, making some modest gains, a little shy of three right now.
We are back with Michael Craig from TD Asset Management, more questions coming in the past couple of moments. Telecom stocks used to be a solid conservative investment. Has that changed?
>> Conservative investment but you still need to reinvest and I think right now with competition, investment, they are really struggling and the dividends, the earnings are not covering dividends so I don't know if I would say conservative.
Low growth, perhaps, things that we see as conservative typically evolve over time.
Sometimes you look at a conservative investment because they have a mature lifecycle but mature companies, usually the next stop is they are not mature companies, they are in financial strain.
So you want to make sure you still see that reinvestment.
I think in many ways that they are struggling, there is competitive pricing pressures.
My son dropped his phone as well a few weeks ago, when to get a new phone, and my contract was lower.
My point is that the kind of pricing environment they are finding themselves in right now. It's a struggle.
When you think about conservatism, you can't think about a simple investment, you gotta think about what strategy do you think about that and that's why diversification is so important.
>> They were those track pants, slips out of his pocket on a bus.
In the end, he needed a new phone but you want to make him feel a bit bad. So there are consequences.
As much pain as you can.
We are here to teach lessons at least to her children. One more question we're going to squeeze in now.
If you want to know if there are any concerns or in the growing portion of the market's made up by passive investing, for example ETS?
>> First off, not all ETFs are passive, there are active and passive ones.
Although of course, the dominant growth in ETFs has been passive.
First off, a more philosophical note, with an finance investing, a lot of good ideas come along and the risk is always that too many people use a good idea and it doesn't work.
Passive investing went from zero and 1992:45% today. I don't know what the right amount is but there gets to be a point where if the market becomes so dominant with passive investing, returns are a function of flows.
A passive provider gets a dollar, they invest that day, or whenever redemption request a solid day. An active investor always has a decision whether they want to sell off for hold or buy.
Passive investing is a great, low cost way to get market exposure but there's a limit where we are all doing the same thing and that creates fragility and markets and you don't want that.
You want markets to reflect real fundamentals.
You have markets dominated by flow, it's really a function of that flow and actually tied to employment.
We are looking at a huge shift in the market not just because earnings are coming down but change in the flow.
Being mindful about that growth because they can lead to fragility.
I think we are in decade with far higher inflation growth risk and as a result more failures. This is an environment where more active approach is probably more effective than passive.
>> A lot going on in the world, would we need to think about? Living through times like these, what should we be thinking as investors?
>> Step back.
Much more fiscal deficits. And I think you're going to have more periods of volatility and growth. More than ever, this requires a multi-approach to portfolio management, I think more so than we saw in the 20 teens.
>> Always great having you. Look forward to the next one.
>> My pleasure.
>> Michael Craig, Managing Director and head of asset allocation at TD Asset Management.
As always, make sure you do your own research before making any investment decisions.
if we don't have time to get your questions today, we will aim to get it into future shows.
Stay tuned for tomorrow show. Bryan Armer, Dir. of passive strategies research, North America, Morningstar Research will be our guest, he wanted to your questions about exchange traded funds.
And a reminder that you can get a head start.
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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