Michael Craig

[music] >> Hello I'm Greg Bonnell and 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'll take you through what's moving the markets and answer your questions about investing.

Today show we will discuss why the diverging views on where markets are headed could mean more volatility for investors with Michael Craig, head of TD Asset Management allocation. And in today's WebBroker education segment, TD Direct Investing's Jason Hnatyk take us through the asset allocation tools on the WebBroker platform.

And here's how you can get in touch with us.

Just email moneytalklive@td.com or fill out the viewer response box under the player on WebBroker.

Let's start here at home with an update on Bay Street, modest with 54 points, good for 1/4 of a percent gain.

I want to check on some of the big energy names. Well this morning, there was quite a healthy build and the expectations for a drawdown. Things about the weather, shipping, the markets seem to take it in stride.

Oil prices held firm despite the inventory. Some positive territory at 42, 27 about 1 1/2%.

Let's take a look at Barrick Gold and see how it's faring. A bit of a run to the upside lately, pretty modest.

We have some news to share a little bit later on Barrick.

With joint explorations on the other side of the planet. South of the border, the S&P 500, that broader read of the American market, of course tomorrow another read on US inflation, this has been the big concert of central banks and the big story for us as investors for quite some time now. So that will be an interesting moment ahead of that report.

Have about 23 points, a little more than half a percent. The tech heavy NASDAQ, up just shy of 1% and Tesla making some gains today since the last time checked at about 3 1/2% of the upside.

They plan to spend $770 million to expand their facilities in Austin Texas.

And that you market update.

The widely divergent views on where the markets are headed may spell more volatility ahead for investors this year. According to our featured guest today, Michael Craig, Head of Asset Allocation at TD Asset Management. Great to get your thoughts on the year.

I'm not even saying last year anymore because it's behind us. As we look forward to this year, we can forgive ourselves for saying it's in the all clear but we still have some choppy waters ahead?

>> Yeah. I mean the markets of arty discounted economic cloudiness here. Stocks are all about their highest bonds.

That is kind of preceding what will likely be the real economy this year.

Data is showing a continued slowdown in terms of activity. So that's fine. In terms of this year, I say there is a pretty, I mean, the question right now that is at the top of most people's minds is it's the bond market versus the central banks. The bond market is pricing and cuts in the second half of this year the central banks are still very much in hike mode.

They are looking to hike more. I think this is where kind of the battle will be. This will drive a lot of volatility because for either side to win on this there will be major implications for other asset classes.

> Does not spell volatility in the sense that every data point we get in the investor say "this will mean this, therefore that…" >> Hypersensitivity and data points which is actually kind of crazy because half the time they get revised anyway.

You know, it's really about the trend of economic data.

A lot of momentum so… A data point might miss modestly but the overall direction is low in the market is a big reaction.

Last week, you had a day luge of fairly negative data.

Job numbers were okay.

Both the bond and stock markets… That's kind of the poor economic data that shouldn't necessarily be for risk assets and I don't think the central banks are actually looking for the growth in their decisions on cutting. But you get these overshoots in the market and I think, on any given day, you know, people will try to explain things away of why it's happening. I think you have to step back and have that broader, longer term. A couple of quarter pictures and short-term rises to give a sense of what to do.

>> You're talking about the bond market not fully believing the central banks of the Fed in terms of what they are saying and how long they want to keep rates there. What about when you take a look for the S&P 500… I think there is a pretty wide divergence here between where the bulls and the bears think we will end up too.

>> Not to sound like a two-handed strategist but they both can be right.

What I mean by that is when you look at the actual S&P, you take out the kind of MegaCap top six names, below its highs. It's been a pretty material recovery with the smaller companies and where you continue to see a lot of pressure, not so much there but pressure where things have gone stratospheric and I are deflating. So you have your MegaCap tech on one side and you have part of the stock market that is doing quite well.

Energy did very well last year.

Healthcare did find last year.

So you know, it's more of a stockbrokers market.

It's a world where you have a lot of confidences and there will be certain asset classes that will be a prolonged bear market.

Somewhere it doesn't look so bad and you might do okay in the next couple of years because of how certain areas are actually quite attractive.

>> After the year that we had, the year behind us that we had, all the volatility that we saw, some portfolios… Is this sentiment… You don't have to look far.

If you want someone to reinforce your negative viewpoint, you don't have to look far.

Is that a little overdone at this stage?

>> Yeah but I think in a bull market, it's fine because it's a good short-term measure. When you are in a bear market recession, it tends to be bad and it's not really a contra indicator.

It's actually a light indicator. On a regular day if you are trading around, I'd be a little more wary about getting to contrary and right now because people are, you know, bitter and not happy.

You look at CEO surveys… Quite bearish right now.

Hiring is quite low. A lot of the soft data is telling you the people are quite negative.

The hard data is saying employment is still going strong for example. So again, there's a lot of crosscurrents right now. You have to step back and look at… We have these major economic forces at play.

High levels of debt, very much higher cost of borrowing.

Ultimately that is going to drive economic progress and I think those are both two things you have to watch for and be mindful of but that's going to be driving things for some time and that's where the risk is in our opinion.

>> So obviously, you sharpen your pencil and take a look at opportunities in the space. What about fixed income? That was a tough year as well because the central banks are so aggressive with the supersized rate hike.

That was not good for the bond portfolio.

Could we be in a situation this year where some opportunity for that?

> I think so. Last year was one of total misery in fixed income land.

You know, I think ultimately, the, in terms of inflation, there are some trends but nobody ever defines what transitory was.

A month, 1/4 or two years… What's interesting right now is when you look at the expectations for inflation, there are actually traders in the market the trade based on inflation that are actually looking for inflation, 2% by June.

That's very aggressive.

If that's remotely accurate than the bond market provides relatively interesting value. We have been in an area of financial reflection were bond yields have been well below inflation and touching it now where they are still below headline inflation but expectations inflation… Right now very much above.

Anyone who tells you this is what will happen this year, forget it. You have to be open to a pretty wide range of outcomes and think about almost in your head, what you want to do in terms of outcomes.

Our approach right now is we can step back a bit, hold duration and fixed income, earned yields higher than they have been for a long time and see how things play out a bit before we get committed to, you know, risk again.

If you will.

I think there are places where equities do okay. But I would have a higher conviction in fixed income markets right now.

Not so much the deli but certainly the long and were we think inflation will moderate this year.

>> Given the fact that we are not out of the woods yet, there is volatility… You talked about duration.

Is it your timeline for what you want to do here?

Probably not expecting great things in short order.

That there will be some… >> By definition, equities provide far better value than they did a year ago.

You should always be looking at equities as a source of long-term wealth creation.

Not a something to trade around.

I know people do trade and that's fine. It's a really hard way to make a living. I've done it before.

In a previous role.

But if you think about a five-year horizon, there are certain areas in the equity market that you look back in five years, 3 to 5 years and say that that worked out quite well.

So over the next 12 months, we might be flat.

Might not go anywhere. With a lot of volatility. But that is ultimately how I would think about right now.

Not nearly as vulnerable as they were 12 months ago. I think some of the growth in parts of the market, if you don't see earnings, for growth year in stocks that have no earnings, I think there's still a risk there.

But other markets were income is good money, it's not a bad time to start looking. You have to have a view for over three years.

>> Great insights. Great starts the program and we will get your questions about asset allocation with Michael Craig in just a moment time.

A reminder of course you can get in touch with us any time by emailing moneytalklive@td.com or Philip that viewer response box on WebBroker.

Let's get you updated and some of the top stories on the world of business and take a look at how the markets are trading.

TECK Ressources is warning investors that steelmaking coal sales came in below expectations in its most recent quarter.

The Vancouver-based company is pointing to last month's frigid weather in Western Canada saying that impacted rail shipments, Texas steelmaking coal sales came in at about 4.3 million tons missing the guidance of up to 5.

4 million tons. Barrick CEO Mark Bristow says Barrick is committed to broadening its partnership in the region.

Signing a joint venture deal to develop potential mines in Saudi Arabia. US airline stocks are in focus today.

That after a computer outage forced the FAA to issue a grounding order for aircraft across the states.

While the order was lifted shortly before 9 AM, Eastern time airlines are still working through the delays and cancellations.

And here's how the benchmark index in Canada is trading.

Just shy of 50 points,… The S&P 500 south of the border a little firmer than half a percent.

We are back now with Michael Craig taking your questions about asset allocation. Let's get to them.

What's the potential impact of China's reopening on markets?

>> It's Artie shown to be very bullish. On consequentially totally bullish.

If you look at the Hong Kong indices, the onshore Chinese markets, European equities for Chinese consumption all have moved.

So this is a real, quite an amazing about-face.

You are essentially trading mortality for economic growth.

Not to be too grim but that's what the Chinese have decided.

So certainly, on the ground, within the hospitals you are seeing an overwhelming caseload. But with opening up, you will see tremendous transactions, travel stocks to do well.

And this will probably be a theme for a few quarters as the economy starts to normalize and you see some fairly strong growth at least on people moving around. I don't know if you will see a huge amount of fixed capital investment per se. But certainly in terms of movement and air travel and shopping in the purchase of luxury goods.

Quite bullish in that area.

>> Thinking about Canada's exposure, the Canadian economy but also some Canadian names in terms of the Chinese market and how much they rely… Good things for parts of our market as well.

That appetite for natural resources. The appetite for luxury goods, Canada goose comes to mind.

>> Yeah on the luxury side it's bullish.

On the commodity side, we are going into some form of slowdown, recession.

Oil has traded quite poorly as of late.

Gas is completely rolled over from the spike.

I think the base metal market probably, which was actually quite poor last year, does all right.

Where is on the energy side, you know, all supply is tight and over term I think there is value there… If we are going into some sort some form of recession, particularly a more severe recession, those companies are going to get a hit. The fact is in a recession we move around with less energy consumption. That's poor for energy companies. You have to pick your spots.

Again, it's one of those years where China has already kind of gone through a recession.

Now they are coming out and we are kind of just entering some form of slowdown.

So again, a lot of cross currency.

We shouldn't just assume because base metals are up energy is doing well. It doesn't work like that.

You have to pick your theme here in your narrative in terms of where you want your investments.

This is going to be a very messy year.

Last year everything kind of did poorly generally speaking.

This year things will do okay but there will be areas quite soft as well.

> Let's take another question now.

This one about gold.

What's your take on it.

>> Gold is a dance partner that I wish I never went on the floor with. I feel like I always step on their feet to be totally frank.

Last year S&P down 20+ percent. Bonds down 20, 13.

Gold flat.

If you actually look at the charts it's like a sinewave. Massive rally big selloff and finishes flat.

A real terror. A few things about Gold: I always think it makes sense to have a small allocation portfolio and asset allocation.

Someone of an insurance policy against currency. The currency system we use today is only 50 years old.

… So it inherently is an instable system. It might never pay off but you don't buy insurance hoping that your basin plates.

You buy insurance in case something… So it is performative for a hedge. I think the goal is that with what happened in Ukraine, US financial sanctions against Russia, much of the world has not aligned US interest.

Watching this is incentivized to move away from dollars in trade.

So some of those countries don't exactly have the faith in their currencies that the US dollar would be.

There will be a demand for gold reserves to back currency and forms of trade that is non-dollar. I do think there is a story or for gold and again, it makes sense in terms of diversify or. As the world moves away from more multipolar… It does play a role in it as geopolitics become more and more fraught with volatility.

>> Interesting stuff. We have another question. We talked a bit about bonds off the top.

We've been hearing there could be opportunity so let's talk about the outlook but also some people saying "well last year we felt there would be opportunity and we didn't get it." What's different about this year?

>> Patients. It's just patience.

I remember a fixed income, the price will move around.

You know, bonds, if you actually look at the Canadian market, Canadians topped out and yield in June.

They had a big rally. Sold off. It was very volatile but they never made back that high in June.

Other parts of the curve did underperform.

Now, you look at… We are in the middle of the ninth inning in terms of hikes. We might get more from the Bank of Canada. The Fed is almost done.

If we have inflation, all bets are off but inflation trajectory is now down. I think there's a case to be made that we see 4% inflation again at some point in the next few years but I don't think we see inflation on the one hand go first.

It's not something to think about for this year.

But going into the states of the world, we go into a situation where inflation rolls over and we don't go into a recession, this the Goldilocks scenario, central banks cut, bonds work.

We go to a scenario where inflation stays, you know, slowly kind of ebbs back towards target but growth rolls over aggressively and we go into a hard recession, then blondes rally.

More on fixed income, you lose more in stocks. The only world where I think bonds really have a struggle is where we get that great acceleration of inflation and I struggled to see that because consumption is coming off now as interest rates really start to bite into people and how they consume.

We look at surveys of how Canadians are looking at their finances.

They are paying debt. Number two cutting back on purchases.

That is recessionary and deflationary. So in that environment, that thinking is not unique to Canada.

That is a very much bullish backdrop for fixed income in terms of the inflation and how things play out in the next 12 months.

>> Fascinating stuff is always at home make sure you do your own research before making investment decisions.

We will get back to your questions with Michael Craig and a reminder of course you can get in touch with us any time and emailing MoneyTalk Live NT.com.

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

we've been talking asset allocation.

Jason Hnatyk Client Education Instructor at TD Direct Investing joins us.

>> Now might be that time of year if we have some investing New Year's resolutions, it's kind of that time a year to reengage back with the portfolio to make sure we understand just how our portfolios are of performing and make sure we still have them mixed with the diversification we expect to have.

We know sticking your head in the sand is never the best approach. So I will walk us through three quick tools and WebBroker to help you. One how to monitor your account and also how to value your investments and opportunity for some ongoing loan learning. Let's get into WebBroker. Let's go into the accounts tab to monitor our portfolio. Under the account details section, we have "asset allocation" this breaks it down by many different sectors as well as geographical locations. So we can see if we are invested in what the percentage of the portfolio is for the specific areas.

Canadian equities, US equities, all sorts of international opportunities as well.

We can see a pie graph of our entire account.

Scroll down and we can expand and see the different Securities and how they line up for those particular asset classes. As well, this is just my demo account.

Other portfolios have a much more detailed look.

It will be a very useful tool.

Next, let's take a look at how to identify some opportunities may be.

If we are looking to diversify a particular sector or industry.

That can be accomplished by using a screeners tool.

Over the top of the page, let's go now and choose the "research" tab at the top.

Under "tools" we will choose "screeners". WebBroker has a very extensive list of tools. We have a stock screener to screen for specific technical events. Or mutual funds and ETF's.

Let's focus on stocks here.

I will clear all the predefined screens there. Let's go ahead and take a look at more criteria.

You can make this and cast a very broad network keep it very specific to your own criteria. Let's focus on allocation in specific sectors.

Up in the top left we have industry section. Let's choose that and it will bring us back to the opportunity to fine-tune this kind of search.

We have all the major sectors here.

You can pick and choose which ones might be appropriate for your own plan.

Based on that diversification that you are looking to achieve.

Let's focus on the financial sector here just for this need here. We can also narrow it down beyond just the financial sector by choosing and expanding here.

We can then maybe dive in if we are only looking for bank stocks so that can be one particular opportunity.

Then down below, this is where your results are to be displayed. We happen to have 599 selections but once again, you could narrow this down with other criteria such as stock price, dividend yields, earnings-per-share growth, whatever's going to be most effective for you.

Then you can go ahead and make your additional comparisons from here as well.

Alright. The last promise I made here as I want to give everybody an opportunity to have an ongoing learning opportunity right and WebBroker.

So near and dear to myself my teams, my teams kind of reason, education need for that matter. Let's go ahead and jump into the "learn" section atop the page.

Lots of different opportunities and ways to interact with us but today we will focus on the on-demand videos under our "browse lessons" section here.

Well over 300 videos, very targeted, very specific and short of the point.

Get you and get you out to learn about specific topics.

The way to make sense of this, we have a filter on the right-hand side. I will filter by the "managing a portfolio section" and this will bring us back to her asset Malik allocation theme of the day.

This is all about asset allocation and diversification.

So I hope it will reinforce some of the messages your guest is been speaking about. Some of the tools I've spoken about.

So an opportunity to learn and continue to develop and make sure you are always one with your portfolio no matter what time of year it is.

>> Great stuff as always.

Jason thanks for that.

>> My pleasure thank you very much.

>> Jason Hnatyk, Client Education Instructor at TD Direct Investing.

Make sure to check out the Learning Center on WebBroker for more interactive videos, live master classes and upcoming webinars.

Now before we get back to your questions about asset allocation with Michael Craig a reminder of height and get in touch with us.

Do you have a question about investing in 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 any time, moneytalklive@td.com.

Or you can use the question box right below the screen right here on WebBroker.

Just writing your question and hit send.

>> We are back that with Michael Craig taking your questions about asset allocation. Lots of them coming in.

Which sector do you see having the most volatility this year?

>> There would be two areas I be wary of. Profit list tech. Anytime a company is not making any money, funding for those types of businesses is dried up and those are really going to go to zero. So I be quite cautious about the go-go names that the year 21, just because they sold off a lot doesn't mean they can't go lower and if there is no path to profitability, I'd be avoiding those at all costs. The other area, this may be controversial, I do think that if we go into a more severe recession, I think energy companies are a bit vulnerable here. You've already seen a moving commodity. Something of the world. Having sign.

But if we go into a really, really, there is a mode of thought right now that in order to really get inflation under control, Congress uses letters to devote rather denote… V-shaped snapback, you shape is lower… Some use the L which means you have a precipitous fall in economic activity and you go sideways in terms of.

what you're doing is destroying demand and reset your demand globally and the argument would be that the glow cannot provide the supply of services and goods that it once would because of various breakdowns etc.

I'm just throwing it out there is a view.

I'm trying to think about states of the world and prepare for it. If we go into that "L" word and demand is impaired, energy is going to really suffer. So I would say that the wildcard, an area that a lot of people have done quite well in the last 12 is I would be wary about going into what it is likely very much a consensus of some type of recession. I strongly see energy stocks do well but also news of the day, potentially a very warm winter. LNG prices have come off materially so that big kind of run-up, much of it is been reversed.

>> You actually mention recession there.

People actually asking what happens to the market if we officially had a recession?

>> It's given me a different experience for different places. In the US, US households are not incredibly vulnerable like they were in the 2000's. And so, it's really about a flow. It will have a recession because people pull back. But you don't have a credit crunch if you will. Just because they are not as vulnerable as they were before.

In Canada, look, we are a highly leveraged economy that is taking a bit of higher rates. But for me, the issue is not so much now that we are here at a very high level. It's how much damage that does. I would expect to see Canada have a more, we'd if we do have a recession which I would say, base case, I would expect it to be more severe in Canada and the US and ultimately you will know when you see a jobs member rather than Canada having 100,000 jobs, you will see it shedding 100,000 jobs over of the few months. We are dealing with labour shortages because of all the retirement during COVID. It's a weird time.

I've places like the UK, it's more stagflation than anything right now.

Again, a functional policy.

You have >> It where you are putting your politics aside, essentially limited immigration, limited capital flow, limited trade thereby reducing your economic potential in their economy and other dealing with the stagflation environment because their economy is far less dynamic than it was pre-breaks it. In the UK, you see more of a recession and in Asia they are coming on through their winter in many ways.

Now with this reopening, I think Asia is a bit more insulated to this because they've already had a poor 12 months with more policy related to COVID.

>> Another viewer question now, an interesting one: how do you protect against bear traps in 2023?

>> So I still do this, and if you're an investor, if you're to be an investor, you have to read all the time.

You have to find great writers and areas that you're interested in.

In this case, if you're getting a cut in a bear trap, usually more of a value type of investor. Pick up books on secured analysis. That's a great way to educate yourself.

I would say, bear traps are usually done when people invest without a complete set of information on a particular… >> Especially if you mention… >> True story, I went to my undergrad in the late 90s.

I had classmates who used their student loans to buy Nortel.

It had sold down to $50 and what a deal.

We all know what happened.

And sometimes bear traps, people buying goods because they got cheaper.

The markets are pretty efficient and usually when something becomes cheap it's for a reason. You need to understand what those reasons are. Maybe they're well-founded.

The first thing is don't buy just because something got cheaper.

That's the first.

Second, leveraging the company that tells you how they are to financing. Third, are they making any money? Are they sustainable?

Those are the things to look for. Go and pick up… Books, value investing and how to avoid bear traps.

>> Some homework to do by Michael Craig. We'll get back to your questions 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 to get in touch with us anytime.

Do you have a question about investing, or what is driving the markets? Our guests are eager to answer your questions so send them to us here at MoneyTalk Live. You can send your questions two ways: you can send us an email any time at moneytalklive@td.com or you can use the question box at the bottom screen right here on WebBroker just type your question and hit "send". We will see if one of our guests can get you the answer right here at MoneyTalk Live.

Of course in the face of red-hot inflation, central banks including our own Bank of Canada aggressively hiking rates trying to tame red-hot cost of living.

They said they would keep rates lower for longer during the pandemic. TD Economics is a new report about this one-sided bias relying too much on past observations failing to adjust the risks within the housing market along with all that stimulus we saw.

Pretty fascinating stuff.

Our Anthony Okolie has dug into it. Anthony.

>> Thanks Greg.

TD Economics says that despite signs in mid-2021 that inflation was trending and holding well above the 2% target, the Bank of Canada failed to raise a policy rate from the effective lower bound rate or crisis rate.

Instead, extending the duration for longer rates.

According to TD Economics, that was because the Bank of Canada was overly biased to what was historical events rather than what is its current developments.

This mindset, according to TD Economics meant insufficient attention was paid to the risks around household balances.

Implications made during the pandemic were made about what's happening now. Here is what was set on that subject.

>> We are on the other side of this with interest rates and in the context of now having these financial risks in the housing market… This is why I think, Canada is more at risk of a slower economic cycle or a slower recovery on the back end of it.

Because we have to go through some sort of deleveraging cycle.

And that naturally means that you were stealing growth away from other parts of the economy where your money would've went towards. So spending in other areas of consumption.

>> As she mentions, the implications on future consumption by households is not surprising given the run-up in the accumulated debt by Canadians doing this low rate environment. Now, while the Bank of Canada's guidance gives the economy an initial boost, it also encourages Canadians to dive into home purchases and repercussion was historical levels of household debt.

As my chart shows, which is forecasted surpassing the pre-pandemic peak. Of course, the government pandemic support programs should have led to a shortening of this lower rate environment or duration period. Not extending it.

So going forward to the economic… The Bank of Canada should focus its lands on avoiding bias and anchors to pass dynamics in favour of current development.

Of course here, the whole interview can be heard at 7 PM Eastern standard Time. Greg?

> In the heat of the pandemic I remember covering it in my old position. A lot of government programs, fast and furious. Con to keep up with those in the Bank of Canada.

TD Economics says now that we have some hindsight, we are well out of the heat of the moment, what we learned about monetary facilities?

>> We are likely to… Some of these legacy programs can evolve over time to respond to future economic shots.

With respect monetary policy, TD Economics believes that monetary policy should be more in tune to pitfalls for policy rates left too low for too long especially given the significant rather highly leveraged Canadian households that we have today.

Greg.

>> MoneyTalk's Anthony Okolie and you can catch a full conversation on the Monday talk show on BNN Bloomberg.

Election of the markets right now with the TSX Composite Index. Up a modest 62 points. But it is been on the screen to the tune of almost 1/3 of a percent.

Let's take a look at a few names on the move today including Manulife. About 1/2%.

Not seeing many outsized moves with bigger names but is in positive territory. 25 bucks and $0.13 a share.

Some of the gold names taking a little pause today after some recent gains.

Right now about three and half bucks roughly. South of the border, the S&P 500 ahead of another inflation printable land tomorrow morning. It's up 26 points.

Good for a little more than half percent. NASDAQ, building on some of its recent gains as well. Outpacing the broader market.

Up more than 1%.

I noticed Amazon showing some strength about after pretty rough year last year. Today, it doesn't make up obviously most of the ground lost last year but up to the tune of a little more than 4%.

Back now with Michael Craig, Head of Asset Allocation at TD Asset Management taking your questions left it to them again.

Could you discuss the big geopolitical risk?

>> This is a more longer tail event.

The split between Americana and team China, if you will, that will continue.

Always risks of things flaring up.

Ukraine continues to be the quagmire for Russia and again, there is a risk that it spills over. Ultimately, I will go back to my earlier comment about, as soon as the US used the dollar as a weapon, I think that's gonna set the motion for a real change in how global trade is conducted in terms of using dollars is the primary currency.

You're gonna see a real push.

China is starting to do trade-in with oil from Saudi Arabia.

The alignment of countries and what that leads to will be interesting to see.

From the world were coming from which is generally speaking quite peaceful from 1991 to the 2020., There were some hotspots for sure but in terms of the history of conflicts, pretty quiet period.

In terms of lives lost to military conflict. This is a world where, as we trade less with our adversaries and learn less about different cultures, the risk of conflict increases whether it be cyber conflict or what have you or traded… This is where, I think, we have obsessed about what central banks have been doing the last 40 years. I think investors need to start spending a lot more energy on policy and what's happening. We have someone in Mexico right now probably a bigger deal because this is really about North American complex and how our economies are going and where the trade-offs are. So to me, there is no clear answer what this means.

Lots of great writers have written about it and what the implications are but it's something that they need to keep schooling themselves and keep learning.

Unless you've done as a discipline. But most people haven't. Thinking about what those applications mean for business because business kind of works on top of the economy whether in a democracy or a dictatorship… Companies in all those countries and they have certain sets of rules.

Some we don't like what that's the way it works. If your company working, a global minded company, the rules are quite different in the jurisdictions therein.

You need to be really thoughtful about where you're going to spend your energy.

Ali Baba is not active in North America.

Microsoft is not terribly active in China because that major ties of those governments.

You need to be mindful of what the risks are for companies that try to span multiple jurisdictions.

I just don't know if it's to be that realistic going forward.

> Interesting stuff.

This falls on some discussions you and I had on the bottleneck rather the bottom.

We had a few things last year.

Have we hit the bottom?

>> Again, it goes back to, I gotta think about stakes in the world.

I don't know.

For us, what I like to see is a firming of data.

Telling me the earnings or trough ring. I like to see equity revisions which is starting to turn over now starting to stabilize. Those are still pretty big headwinds. We recently have done some work looking at leading indicators.

As well as revisions. Across the board of quite negative. So… Is the bottom… I think, I don't think it's a tremendous upside in the overall markets right now but the distribution of downside is massive. Right?

So what I mean by that is if the S&P is trading at 4000 today, if you told me that this year we traded 3500, I would say that's possible, yes.

If you told me we traded to 2500 I would say that's possible to in a recession. It really depends on these events.

Highly levered economies.

Instead of people… Spending like drunken sailors and then we raise interest rates massively. We just don't really have any historical kind of Pres.

for what this is going to do.

So I think the solution to the downside is a real wildcard and ultimately, the charts that we see. We see some bottoming patterns which are bullish.

I would say technically speaking they could stabilize.

But I would say patience is a virtue this year.

Do we see the lows and stocks like we saw last year?

Maybe. But I would be more, for me it's probably more of a chop this year than anything else.

>> We got a question late into the show. How would you change your asset allocation for waiting?

>> We have a variety of different strategies to invest in North American growth value, international… Assets, infrastructure, real estate. Various types of strategies domestic global credit, government etc.

our approach right now, I'm just giving you kind of you summarize what I just said, it's a very uncertain path.

So what's the obvious, more obvious thing? Would you do in that environment? In this environment, we like fixed income.

4 1/2 5% just to sit back and watch the school bullies count each other.

That makes sense. Right now, cash, ironically, cash rates are actually quite high. So you actually paid to sit and wait.

I'm not saying… Long-term this is not a winning strategy.

But you are earning on a one-year basis and looking at where things are fully priced in, where is it still yet to come? I would say that on the value side of the US market, it looks pretty good.

Europe and Asia even though the growth prospects are an awesome, I've been hit pretty hard.

And some of those areas were adding.

I would say growth, today's good day will have these massive bear market rallies.

But I still think it's a challenge.

> Always fascinated to have you here. Looking forward to many more discussions.

Our thanks to Michael Craig, Head of Asset Allocation at TD Asset Management.

on Thursday, David Sekera, chief US market strategist with MorningStar research will be our guest taking your questions about US stocks.

That's all the time we have for today thanks for joining us and we'll see you tomorrow.

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