Michael O’Brien

[music] >> Hello, I'm Greg Bonnell. Welcome to MoneyTalk Live, brought to you by TD Direct Investing. Every day, I will be joined by guest from across TD, many of whom you'll only see here. We are going to take you there with moving the markets and it's your questions about investing. Coming up on today show, we'll discuss whether the move higher we've seen in markets has some room to run further or is just a false dawn for investors. TD Asset Management's Michael O'Brien joins us. In today's Baroque education segment, Jason Hnatyk's going to dig us through how you can stay on top of corporate earnings using the platform. Here's how you get in touch with us. Email moneytalklive@td.com or you can fill it that your response box right under the video player and Whataburger. Before we get to our guest today, let's get you an update on the market action. We got some green on the screen on both sides of the border. We will start here at homeat the TSX Composite Index. It hundred and 26 points, about half a percent. We are seeing a risk on sentiment out there and it's playing well into the tech names on both sides of the border here at home. He got Shopify making substantial gains today, up about 6% to 54 bucks and change. a bit of downward pressure on the price of gold. Let's check in on some of the mining names, including Barrick. It is down at this hour to the tune of about $0.58 per share, a little more than 2 1/2%. South of the border, you got the S&P 500 putting points on the table. Wholesale number some of the states today further suggesting that perhaps inflation is starting to ease off just a little bit. Those wholesale prices numbers coming in a little softer than expected. Not a thought. That's pretty much what we are looking for right now in terms of inflation prints, and easing and perhaps rolling over of price pressures. Got the S&P 500 up 1/2% right now, up 60 points. Let's check out the tech heavy NASDAQ. It's making some pretty big gains in recent session. Most notably last week, it's up another 2 1/2% today. Amazon, some of these big mega-cap tech names that really got hit hard in the latest earnings reports out just a couple weeks ago gaining back some of that ground. Obviously, it's been a bit of a rough ride for Amazon Thursday year but right now at 100 bucks and change, that stock is up a little bit more than 2%. That is your market update. Seeing some positive momentum in the markets, building on some of the momentum we've recently had. But after a tough year, many investors may be wondering whether stocks have more room to run. Joining us for more as Michael O'Brien, portly manager at TD Asset Management. Great to have you back on the program. It let's talk about the green on the screen that we've been enjoying for the last couple days for people following the market. What we make of it? >> It's a nice change, isn't it? >> It's a very nice change. >> Yeah, last week's moved higher and spilled into this week. A very, very powerful move. I think a lot of people were shaking their heads, saying, you know, okay, let's understand. I guess what I would say is the magnitude of the move caught a lot of people by surprise. I think that's probably most to do with investors have been very negative, sentiment was very poor heading into it so it's one of those things where markets were prone to move very violently on just a sniff of good news. What we got was more than a sniff, though. The CPI report out of the US which triggered the rally, that was a very encouraging prints. Obviously, the fact that both the headline in the core numbers came in a little below what people thought was positive, but what I think was really encouraging is when you look across all the different metrics they were looking at, you saw the signs of a little bit of deflation creeping across, you know, a very broad swath of measures. So you start prices, healthcare expenses, a lot of things that we've been looking at. That was a legitimately positive saying. I think what it does is it just reinforces how critical of the inflation story is to the direction of market. >>we are having some audio problems apparently. We want to have this conversation in full. We'll see if we can't sort it out. We will through the spotlight on me for a few moments. Get your questions and for Michael O'Brien. You can contact us anytime, just email moneytalklive@td.com or fill out the viewer response box right under the video player here on WebBroker. Let's get you updated right now and some of the top stories in the world of business and a quick check in on how the markets are trading. Canadian home sales have posted their first month over month gain since the month of February, nudging up 1.2% last month. That's according to the latest numbers from the Canadian Real Estate Association. While 6/10 markets did see a pickup in activity, sales are still 36% below the same period last year. And the average sale price, we are talking about sales volumes, the average sale price was down almost 10% year-over-year. Shares of Walmart and the spotlight today, that as the retail giant raises its full-year sales and profit forecast after beating estimates in its latest quarter. While inflation is putting a strain on household budgets, Walmart did see strong demand for its grocery offerings. The retailers also announcing a new $20 billion share buyback plan. Home Depot also beating the streets expectations in his latest quarter. But the home-improvement retailer is leaving its full-year forecast unchanged in the face of a slowing housing market. There were also signs that the do-it-yourself customers were slowing their renovation activities in the quarter. You can see right now, Home Depot up to the tune of a little bit more than 2%, 313 bucks and change per share. We will check in on the benchmark indices, starting here at home at the TSX Composite Index. Got some green on the screen today, building on some of the gains of last week. We are up 110 points, a little more than half a percent. Not too bad on that front. South of the border, wholesale data and sales showing perhaps signs that inflation is easing just a little bit in the United States and perhaps that could change the path of the US Federal Reserve. right now, we are up 1 1/3%, 53 points for the S&P 500. So we have seen some of that positive momentum in the markets in recent sessions. Of course, after pretty tough year for many investors,Many of us may be wondering whether stocks have more room to run from here. Joining us now for more than that, Michael O'Brien, portfolio manager at TD Asset Management. Michael, let's dig in. Obviously, green on the screen, we like to see it. It's been a tough year for the market. What should we make of the rally? >> I think it's very evident that investors are cuing off the inflation trends. As you were mentioning just a second ago,when we get some of these indications that inflation is peeking or rolling over, it gives people encouragement that the Federal Reserve in the states in the Bank of Canada here might be close to being finished their work. The magnitude of rate hikes both north and south of the border really caught investors by surprise. It's been one of the things that's really weighed on valuations here today it has been this constant resetting of investor expectations. Oh, they're going to have to go higher, they're going to have to stay there longer. So last week'sinflation print in the US, and hopefully we get something solar tomorrow here in Canada, that's one of the first signs we've had that inflation really might be peeking here. We might start to get a bit of deflation or a little bit of an easing in those pressures and that will hopefully allow the central banks to sort of proceed to the sidelines like you were saying. I think a lot of investors are very worried about the cumulative effect of all those rate hikes we've seen here today. What's that going to do to growth next year? Was this going to do to earnings next year? So the faster we see inflation starting to break, the sooner, hopefully, the central banks can retreat to the sidelines and that just reduces the risk of a really bad, really negative growth here next year. So to the extent that these signs of inflation might be peeking, take some of the pressure off central bankers. Hopefully, what that means is there's a little less risk of a deep recession next year and more hope that we get a soft landing. So that's, I think, with moving the rally or that's what spark the rally. I think it's got a bit of staying power. I think the next big challenge for the markets really is probably a Q1 event to when we get into the next round of corporate earnings in late January, early February. I think that'll be the next big test for the markets. But, you know, hopefully we enjoy some of those seasonal tailwinds here and hopefully this has a bit of legs to it. >> As part of that first-quarter test going into the new year going to be after the US Federal Reserve, the Bank of Canada, the central banks feel, okay, the job is done pretty close to the end, get to the end. But of course, the whole point of raising rates, it was the tough medicine, right, try to tame inflation, cool the labour market, slow the economy. Does that start to play its way through corporate earnings? >> You are exactly right. That's the whole point. Until the economy slows, until the overheating that we saw both north and south of the border begins to ease up and what that translates to is until we start to see labour markets loosen up a bit, the Fed's job won't be done. The Bank of Canada's job will be done. So that's what I think we are going to be watching for as we get into late January, early February, like I said, when Q4 earnings are reported, these companies are going to have to give us their best guess as to what 2023 hold. Clearly, if the cumulative impact of all these rate hikes means a tougher growth year next year, it's going to be harder company to avoid that discussion so that's why I say that that's going to be a real test because I don't think we can realistically expect inflation to stay down if we have full employment, if the economy is growing gangbusters, the two don't go together. We need to have both. We are sort of seeing may be inflation is easing, but to your point, the reason it's easing is because presumably we are going to see some less demand, some loosening up in the labour to market, and that's the next shoe to drop, effectively. >> Last time I heard from Fed chair Powell, he seemed to be laying the groundwork to say, we might end up at an end point, that terminal rate where we are going to stop, it may be a little bit higher. So the market has been focused on slowing the pace. The 75, the 50s, eventually maybe get down to 25. That seems so quaint, doesn't it? But then we had a few other Fed speakers in recent days saving it to try to drive that point home, saying, don't get hung up on the size of the next increase, whether it's big or not, it's about getting to that end game. Is that the new Nuance now, where do we end up? >> Yeah, exactly. Central bankers are trying to message… I think what they are trying to do is say to investors, don't get so fixated on the cadence, in other words, whether 25, 50, 75, focus more on the destination, which is, is it the terminal rate of 4%, 4 1/2%, 5%? They don't want investors to get ahead of themselves and misread a slowdown in the pace of rates as a lack of determination to get what they need to be. And at the end of the day, they need to be in a position that will slow the economy. That is what they are attempting to do and that is what they will do. So they are trying to warn investors and I think it would be well to listen to them. Don't fight the Fed. it hasn't gone out of style, that old moniker. I think we should take them at their word. There will be some slowdown next year. It's a question of how deft a touch of the central bankers have and how quickly inflation does wing. >> They warned us about pain, there will be paid to come. But the labour market is still strong, the economy is hanging in. We've seen the pain in our portfolios, but in the real world, your job, your finances and other areas. Once the recession comes, you'd expect that pain to be a little more widespread. Do the banks have to live through a period of pain? Traditionally, the central bank would then say, well, the economy is slowing down, let's lower borrowing costs. This feels like a different kind of situation. >> You hit an important point, Greg,which is I think investors earlier in the year. . . tthe moment any sort of weakness appeared in the economy, the central banks are going to ride in and save us and alleviate us with bank rate cuts. Once they get to this terminal rate sometime in early 2023, that's likely to be there for a while and the reason it's going to be there for a while is they need to be good ensure that inflation not just goes down but stays down. So this is the tricky part. I think we forgot a little bit about this. I think we all knew that there were elements of this inflationary verse that we've had that were transitory. That was a very overused word last year, transitory inflation. But there were elements that clearly were distorted by supply chain disruptions. Used car prices went through the roof because he couldn't get them. Clearly, those are going to normalize so what I think what we might be in for here in the next couple of months is the easy disinflation stage, which is when some of these temporary or transitory drivers of inflation start to finally rolloff, and that's going to feel good as investors. That's why I say maybe this rally has some legs here. But I think, at some point, as we get into 2023, the low hanging fruit will have been grabbed and we are going to get into a stickier situation where, okay, inflation has come off. It's no longer six, seven, 8%, maybe three, four, 5%. But the next one or 2% lower to get to the next target is going to be really tough. That's where the grind said 10 and that's why think we should expect, wherever the central bankers land here, whether it's four, 4 1/2, five, we are going to be there for a while. And so that's going to be the grinding phase in 2023 where just gradually take some of the oomph out of the economy and so the faster that those more lasting elements of inflation, like I say, the labour market is such an important focus, the trajectory of wage gains as we get into 2023, that's really going to determine when the central bankers feel it safe to finally take their… To finally go to the sidelines and stay there and think about rate cuts. If we see inflation remaining sticky and that 3 to 4%, which is uncomfortably above below their targets, this going to work. Desiccated 2023, some of those lasting elements, particularly the labour market and wages, how do they respond to the constraints or the restraint that's already been put in place by these rate hikes we've seen this year? >> Great insights is always in a great start to the show. We are going to get your questions about Canadian stocks for Michael O'Brien in just a moment time. But first, let's check in on the markets. We will start here on Bay Street with the TSX holding onto its gains for the lunchtime session, up 120 points, little more than half a percent. That broader read of the American market, the S&P 500, let's check in there. As Michael was saying, some signs of inflation easing. The S&P 500 right now is up 1 1/3%. We are back with Michael O'Brien. That was quick. Take your questions about Canadian stocks, let's get to them. Can we get a preview for bank earnings season? In Canada, of course, they rounded out. >> Yeah, so the banks are always the last report but arguably the most important for the entire TSX. So we are all going to be watching the very carefully. My expectation is I think are going to see a very solid set of results. When I think through the key drivers of bank profitability, clearly the thing is going to get the most focus is going to be what are the banks doing in terms of provisioning for loan losses? How are their loan books holding up? Because obviously, that's going to be a big concern with people worried about where growth is headed. So that's the first thing people look for. My guess there is what we will see is the banks will try to set aside provisions or reserves for loans that might potentially go bad. In other words, they might say it's not looking the same it was six months ago, some loans we thought were good, it might be a little shakier if the economy does look up. So I think they will build reserves for the performing loans. For the nonperforming loans, the ones where they are not getting paid, I think there will be a small uptick. That's what people will really be focused on from a more negative perspective. The more positive side of this, I think we are going to see the lending margins and the interest margins at the bank, we saw a really nice expansion across the board last quarter. We will likely see more of the same this quarter. That core business of banks making moneyby lending it out to you and collectinginterest versus what they have to pay depositors, I think you're gonna see a lot of strength there. Coming out of this quarter, the debate over whether loan losses are headed will be resolved but the report card for those three months will be they delivered another solid set of results, they are well-capitalized and provision. I think it's going to be a workmanlike order for the bank. > Heading into next year, if we do get the recession, is it going to be mild? If we have to have a recession, we would hope would be a mild and short one. Would that be an overhang for the bank and stocks for a while? You put those two things together, financials, recession, people don't like the sound of those two things. >> Absolutely. The banks are levered plays on the economy. That's what they are. And so whenever you see a slowdown in growth, clearly things like the growth in loans will slow but it really comes back to the credit cycle. What kind of a credit cycle are we going to see? How big are the loan losses going to be? My thinking there is that will be a headwind until that debate is resolved. However, when you think about the outlook for it, I think the banks and Canadians in general are coming into this in a pretty good spot. Employment is still pretty robust, some excess savings were accumulated over the pandemic, you've got the commodity-based part of the economy, particularly in the southwestern provinces, is very strong. So I think there will be a credit cycle, but I think what will become increasingly clear to investors as we work to reach quarter is the bank's loan books will hold up quite well. They've got plenty of capital, so I think people are going to get more and more comfortable as we go through itthat these are only going to be flesh wounds. There won't be any carnage. >> Let's get to the next question off the platform now. One of our viewers want to get your take on oil. It's been a bit choppy late and throughout the year. >> Yeah, oils a bit of a range. We had that big blow off peak earlier in the year with the Russia Ukraine situation. Right now is kind of been bouncing around between 80 and hundred dollars and holding closer to the bottom and of that range today. We've got to competing forces they are:was pushing it prices down is about where demand is going. Canada and the US aren't the only countries where growth is slowing. We are looking at what could be a potentially global recession in 2023. Groups obviously under a lot of stress. So there are a lot of concerns at a high level about what will this mean for oil demand. When you actually look back historically, oil demand hasn't been as sensitive to economic growth as one would think so I think that's going to be a bit sticky, but that's really what's been pressing on oil. On the other hand, I think there are a number of positive catalysts that are very close at hand, a bit under the oil prices in the stocks as well. One example of that would be the US has been releasing a million barrels a day from its strategic reserve since the spring. Conveniently now that midterm elections are over, that's about to pass. So there's $1 million of supply that's taken back within the next few weeks. Secondly, in Europe, on December 5, this eu, European union embargo of Russian oil imports is supposed to go into effect, which could potentially have a lot of disruptive impact on Russian oil flows. And then finally, we've just been getting some teasers out of China post their most recent Congress where Pres. Xi was reaffirmed as the leader there, they are taking early steps to ease up on their zero COVID policy. Now when you think about it, China has been the number one growth driver for oil demand for the better part of a couple of decades. 2022 with their zero COVID policy firmly in place, major cities like Shanghai being locked down for weeks at a time, oil demand in China was uncharacteristically weak. So if you see any sort of easing in zero COVID, you're going to start to see the Chinese demand start to come back and tighten up the market quite significantly. He fought the demand on one hand that's pressing, we've got a lot of supply catalysts on the other that are looming. My best guess is that the balance of risks is higher on oil prices but that's an open debate until some of these things player. >> Is my job to ask the following question. We've got a viewer with the great following question: is it too late to get into the energy companies with oil? >> Too late? I would say no. I think it's too late to expect those spectacular gains that you saw in the spring of 2020. Oil prices were negative and a lot of oil stocks were priced as if they might go out of business which, if oil prices are negative, it's a distinct possibility. So there's been an extraordinary recovery both in the oil market and the oil equities over the last two years. So if you're buying today, don't be expecting three or four baggers across the board. That said, my view is that oil prices in this $80-$100 range are sustainable. I think that's what we are going to see for the next number of years, and if that's the case and you look at where stocks are priced today, valuations are very reasonable and you can be assured that you're going to getting an enormous amount of cash returned to investors because this discipline of let's not reinvest all our money, let's send it back to shareholders in terms of buybacks and dividends, that's very much in play. I still see opportunities in the energy space. >> As always, at home, make sure you do your own research before you make any investment decision. We will get back to your questions for Michael O'Brien on Canadian stocks in just a moment time. You can get in touch with us anytime. Email moneytalklive@td.com. Now, let's get our educational segment of the day. We are almost through earnings season but there are still some big names yet report, so if you want to stay on top of those releases, WebBroker has tools that can help. Joining us now is Jason Hnatyk, client education instructor at TD Direct Investing. Jason, wait to see you. How do you stay on top of these corporate earnings? >> A pleasure to be here. keeping aware of what's going on in the market is always important and it canbe a challenge and we want to stay on top of important releases like earnings announcements. So will go into WebBroker now to show us to useful tools that we can use our advantage to say in front of these items. Right now I'm just on the WebBroker homepage. If you ever navigate away from this, you can access it again by clicking on the TD Shield in the top left-hand corner. I will direct everybody's attention to the lower right-hand portion of the screen. This is the your event section. Specifically for the stocks that are in your portfolio. It scanning for earnings, dividends and ratings changes from analysts across a weekly time period. You always have the opportunity to see what's going to impact your account. Mind you, this is my demo account. I don't have any holdings in it, but in your own portfolio, you will definitely see those results displayed. Now, if we are looking to get a sense of what's going on in the rest of the market, we can find those events by choosing the research tab at the top of the page and under markets, we can go ahead and choose the events selection down towards the bottom. This is an opportunity for us to choose a specific date so we can look into the past, we can look into the future, to make sure we are well informed and we can choose across the different countries here from a Canadian and a US perspective. So this will give us a list and we have a broad sense, a broad list of topics that we are scanning for. We have a earnings, so been talking about, dividends let's as well as some other useful information. Let's go ahead and choose the earnings announcements section. Here on this particular page, we can see what. These earnings are covering, we can see the estimate from the company and we get the opportunity to compare how those estimates are relating to previous years. If we want to dive in and look at a particular companies earnings information, what we will do is click on the taker of the company in question and from the pop up, we will choose the overview selection at the bottom. From here, to keep drilling out on earnings, we will choose the earnings tab right below the company's quote and on this particular page, we get a chance to see reports from analysts, we get a chance to see past dated earnings information as well as projections into the future so you can see not only what the company is projecting but what analysts across the market are projecting into the future so you can stay well informed and hopefully use that information to help you with your trading. >> Obviously, when investors take a look through their screens and try to do the research on companies, one thing they like to see is year-over-year earnings growth. How would we get that information WebBroker? >> That's certainly a helpful tool. We want to make sure the company is demonstrating some past success so hopefully we can project into the future and WebBroker's got a great tool to help narrow down some choices for you. That can be found under the research tool at the top of the page. From there, under the tools column, we have screeners. Screeners are great because they allow us the opportunity to either cast a very broad net to find a large number of companies to begin doing research on, or you can have very specific criteria to help identify very unique trades that might be displayed. We can always screen for stocks, specific technical events as well as mutual funds and ETFs. we choose screening from the middle of the monitor here, I'm gonna go ahead and clear the predefined screen that's already here and to choose the specific criteria, I will go to more criteria. I'm going to go ahead and select the earnings-per-share growth over a five-year period for this particular example. on the screen, we get the opportunity to narrow it down in this particular section quite a bit. We will focus on the Canadian markets here, so we can start to narrow down our results, and down below, we will notice there is a slide bar. This is our opportunity to kind of see the minimum amount of growth. We can go ahead and take the slider and break that up to 5%, so we are looking for 5% growth over that five-year period, we have already narrowed our results down to 274. With just one criteria, you've already started to find some opportunities and you can always go in to add an extra field such as dividend yields or average volume or share prices, really define that stock that's going to be the right investment choice for you. A lot of tools that are ready, willing and able. >> Great stuff as always. Thanks for that. > Jason Hnatyk, client education instructor at TD Direct Investing. Make sure to check out the learning centre in WebBroker for more educational videos, live interactive master classes and some upcoming webinars. Before I get back to your questions about Canadian stock for Michael O'Brien, a reminder of how you can get in touch with us. Give a question about investing or what's driving the markets? Argus are eager to hear what's on your mind, sosend us 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 under the screen here in WebBroker. Just write in your question and hit send. You will see upon our guest can get your answer right here at MoneyTalk Live. We are back now with Michael O'Brien and we are taking your questions about Canadian stocks, so let's get back to them. AmazonIn the news lately, reports there cutting 10,000 jobs. What would that mean for a name like Shopify? >> So I think of the big guys like Amazon, an 800 pound gorilla, are beginning to look hard at their expenses, I think it's reflective that that whole e-commercetechnology ecosystem is under a lot of pressure right now. Shopify has similar cost-cutting programs, they announce some layoffs a few months ago.Times are tough for these companies. I don't think Amazon laying off 11,000 people or whatever number is going to be as a direct readthrough to Shopify's business per se. I don't think it changes the competitive dynamics, I think it just highlights their headwinds right now. We talked a lot today about how growth is likely to slow in 2023, and so if you think of a company like Shopify, their bread and butter is small businesses, small independent business people selling discretionary items. Typically, those the types of things that get a rough ride if they actually have been in a recession. I think Shopify's got some challenges ahead of it the way that Amazon does and they are all they are all bracing for tougher times and tightening their belts. >>wholesale sales on report today are suggesting inflation is rolling over on the back of CPR last week. Does that make it harder for an investor may be to do their homework? Because the price moves can be pretty dramatic day-to-day across a lot of these names. >> Yes, and particularly in a Mike Shopify, you see some very violent reactions Poche the upside and the downside. Had a very nice right here in the last couple of weeks, and I think really what it speaks to is what your time horizon? What are you playing for? Because I've highlighted that next year could be a difficult environment for a lot of Shopify's customer base, though small, independent businesses selling discretionary goods. But it's equally valid to take a longer-term approach and say, you know, this is a very fast-growing company with a very bright future and we are not so focused on what happens in the next six months. We are thinking more what happens over the next decade. That's a perfectly legitimate point of view and I think that's what sort of pulls the stock back-and-forth from, you get a little despondent, the stock sells off big time, you get a little bit of encouragement from a macro data point, the CPI report last week, and it brings the bowls back out of hibernation and I think it just sort of shows you that Shopify, it's best days are likely out there in the future. So should we get so bent out of shape about what's going to happen the next six months or should we focus on the long term? Each individual investor has to answer the question. >> I like that phrase, bent out of shape. I get bent out of shape and I should know better. Let's get another question. All this US dollar strength he been saying, of your wants to know is the US buck running out of steam? > It certainly rolled over here which from a macro, high-level perspective, it's another encouraging data point for equities. Typically, the relationship has been when you see US dollar strength of the magnitude we saw your today, that tends to pressure a lot of economies. The emerging market economies traditionally felt it very acutely but opposed to other countries, pressure them. For example, the Gov. of the Bank of Canada made a reference earlier this year, the fact that Canadian dollar hasn't strengthened along with oil prices and has been weak relative to the US dollar was actually making his draw harder because usually a stronger currency helps knock down inflationary impulses a little bit. So is putting a lot of pressure on economies. But it was also putting a lot of pressure on commodities and traditionally, there's been a very tight relationship where a strong US dollar is usually associated with commodity prices being pressured and vice versa. So the fact that the US dollar seems to be easing a little bit here takes the pressure off of some of these commodities. Is it here to stay? Is this a new trend? I would say the US dollar appreciated quite dramatically over the course of the summer so some sort of a pause is valid but I don't think it changes the fact that the US central bank is taking a pretty tough stand. And I would say if you're trying to figure out which central bank is going to relent on raising rates first, there are probably some weaker hands out there than the Federal Reserve. So I think the US dollar is going to remain relatively strong. I think this is a welcome respite from what had been a straight up march, but I don't think we are going to see pronounced US dollar weakness in the near future. >> We are going to get back your questions for Michael O'Brien on Canadian stocks in just a moment's time. As always, make sure you do your own research before you make any investment decisions. And a reminder, you get in touch with us at any time. 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 a question box right below the screen here on WebBroker. Just writing your question and hit send. We'll see if one of our guest can get you your answer right here at MoneyTalk Live. The number of homes trading hands in this country rose the for the first time this year in October but still far below pre-pandemic levels. This after interest rates taking a toll on housing prices. Anthony Okolie. >> Across Canada, the number of houses and condos being sold edged up last month but prices are still falling and wesaw Canadian homes edging up 1.3%, that's the first monthly gain since February and the data basically shows that there are signs that buyers are coming off the sidelines according to figures by the Canadian Real Estate Association. However, the slight bump in sales has been accompanied by a drop in home prices and the MLS home price index actually chosen -1.2% month over month. When you look at the national average, it was down nearly 10% year-over-year. What we are seeing is rising home prices, excuse me at rising rates are forcing prospective homebuyers to look and lower price brackets for homes and that's likely to bring down home prices across Canada. When you look at single-family home prices across the country took a hit, falling more than 4% month over month. They are also down year-over-year for the first time since late 2019. Now when you look at apartment prices, they also fell last month but not nearly as much and the year-over-year apartment prices are still growing faster than detached homes. They are up more than nearly 6% year-over-year. When you look across the country, home sales did rise in 8/10 provinces, the steepest gains made in PI, it's up 6%. Not surprising given that the Prairie provinces are supported by the best affordability conditions across the country. Other gains were seen in BC, Manitoba and Alberta. Meanwhile, when you look at new listings, they increase just over 2% in October but are still below their long-term average. Again, that highlights too many people in a lot of houses. >> Ones always so curious about where home prices might be headed. TD Economics probably has a forecast of some shape. What is the look like? >> TD Economics expects a much steeper home price drop in 2023. When the dust settles, there are forecasting that Canadian average home prices will be pulling back about half of the gains made during the pandemic. They do note a key risk in the forecast, specifically if homeowners add up listing their homes because of higher mortgage rates due to higher interest rates, higher monthly payments rather due to higher interest rates. It could pressure prices even greater than they expected or forecasted next year. >> Thanks for that. >> My pleasure. >> Money talks Anthony Okolie. We will check in on the markets now, starting your home with the TSX Composite Index. Another Dave gains on our hands on both sides of the border at 20,045. You got a triple digit gain, a little more than half a percent. Risk sentiment has returned. Tech stocks are getting a bit on both sides of the border. I showed you Shopify earlier, also you lightspeed commerce now. At 2344 comments up to the tune of almost 3 1/2%. Aritzia, we will check in on this name, it's been in favour throughout the pandemic, it's at 50 to 51, down a little more than 2%. South of the border, yet another sign, wholesale prices coming a little softer than expected, perhaps another sign as we were discussing with Michael O'Brien that inflation is perhaps peeking and starting to roll over and what does it mean for the Fed. The other central banks are trying to get to the job to the finish line. 4009, the S&P 500 of 52 points, 1 1/3%. Let's check in on the NASDAQ. It's up to an order percent. Mega-cap Tech names, we checked in on Amazon, we will check in on Apple now. It's up to and 1/2% today, on a bit of a run in recent sessions. We are back now with Michael O'Brien from TD Asset Management, let's get back to your questions.this one is about the next bull market when it arrives. What stocks or sectors would lead the next bull market? >> I like this question, we get to look at better times. I think when you are trying to anticipate what leadership is going to look like, I think one easy approach… when you are looking at stocks or sectors, ask yourself, where is there pent-up demand? Conversely,where his there may be in some excess or overconsumption? Along that line, some obvious examples coming out of what was a very strange pandemic., You look at something like automobiles where in 2020, 2021, a lot of people want to buy a new car, they actually have the money to do it but they couldn't physically get a car because of supply chain snafus. If you look at that part of the market, ifyou get a little bit of relief on interest rates at some point, autos are big-ticket purchases, you gotta finance them, at some point, there's probably a lot of pent-up demand in the next cycle for something like automobiles. That would be a good example of early cycle leadership. if we think back to what we did and could buy during the pandemic, every type of consumer electronics product conceivable was upgraded or purchased. we updated our home offices, we had to replace our laptops, or PCs, get the latest and greatest new iPhone. I think there was probably overconsumption in that area. That's not what I would expect to be leadership in terms of their sharp earnings rebounds. A broader view that I would have, and this goes back to some old wisdom is that typically what led in the previous of cycle doesn't tend to lead in the next of cycle. It tends to be a transition of leadership which is all part of this process and going through bear market. And so I tend to agree with that point of view. I think the last decade was very much around deflationary impulses and low interest rates, easy money. I think the expansion that we get coming out of this scenario is going to be a lot different. I think interest rates will be a bit higher than they were in the last decade, there will be more inflationary pressures, commodity prices will probably be a bit higher. I don't know exactly where leadership is going to live, but I do feel quite strongly that the playbook of the last decade were technology stocks and high-value, low profitability stocks, performed very well. I think it's going to be a different look over the next 5 to 10 years. That's how I'm thinking about. >> As always, pleasure to have you here and to hear your insight. Thanks so much. >> Thanks for having me back. >> Michael O'Brien, portfolio manager at TD Asset Management. When tomorrow show, Robert Both, macro strategist at TD Securities will be our guests and will get his reaction to the Canadian inflation report when the markets open tomorrow. We will then take your questions about the economy overall. A reminder, of course, you can get a head start with your questions. Just email moneytalklive@td.com. That's all the time we have for the show today. Thanks for watching. We will see you tomorrow. [music]