Oscar Muñoz

[music] >>Hello I'm Greg Bonnell and welcome to MoneyTalk Live, brought to you by TD Direct Investing. Coming up on three show will discuss whether 50 basis points of cuts or so on the table that after today's inflation report. Will also talk with the big takeaways from last night's presidential debate with Oscar Munoz from TD Securities. MoneyTalk Live's Anthony Okolie well weigh in on the price of oil during the last two trading sessions and in today's education segment, Ryan Massad will help us use the advanced dashboard. TSX Composite Index a little shy of 1/5 of a percent on 38 points. Some interesting moves beneath the surface. Dollarama, we will speak more of this later in the show. Clearing the street and it liked what it saw with the stock up more than 5%. CN Rail, talking about the work stoppage that will hit the bottom line in terms of their guidance for the year, perhaps weighing a little bit on the name about 2%. Now, south of the border is it because it is September and it's traditionally not kind to equities? Was it the inflation report today? We got a bit of selling pressure. 55 points to the downside for that broader read of the US market, the S&P 500. That's a full percent. The NASDAQ tracking a little bit better but still to the downside and only to the tune of 1/3 of a percent. Noticing some weakness in US financials today including Bank of America. They have their own unique story that we will hear more later in the show. It involves Warren Buffett. Bank of 32 down about 2 1/2%. And that's your market update. US inflation continues to cool hitting the lowest annual level since 2021. But what are the details beneath the headline number tell us about the size of potential rate cuts from the US Federal Reserve? Joining us to discuss his Oscar Munoz. The chief US macro strategist with TD Securities. Great to have you. >> Thank you for the invitation Greg. Ask let's start with that inflation report this morning. What is your read on it? >> The market and the Fed care are really about the court and really the year and your change, not right now but the month and month increase in that, actually came in a bit stronger-than-expected right? So the number wasn't really what the Fed would like to see. But in the grand scheme of things, I don't think it's gonna be a dealbreaker. I do think that shelter prices, particularly OA are is a bit concerning. But we will have to wait and see what September and October data bring. Overall, we are still of the view that inflation is likely to continue to normalize in the near horizon. So even, despite the strength we saw today, we don't think that 0. 3% month on month increase will translate into the court PCE which is what the Fed actually target's. We are forecasting a 2% month-to-month increase for that. So still in the vicinity of what the Fed would like to see. >> Alright as the Fed heads into that meeting next week in the market expecting some sort of rate move from them, what you think they will make of inflation? What will they do with all this? >> I think in today's day it probably sets the discussion between 25 BIP 750 bibs. They will probably start with a 25 bit rate cut. I know the market was debating if that was good to be the case or not but I do think that we are focusing too much in September. I think it's very important as well is the guidance next week. They will tell us pretty much what they are going to do between now and the end of the year and also expectations for 2025. And even if they don't really implement or start using… With a 25 rate cuts, I think the 50 beep option will remain on the table. The Fed will stay data dependent. Even in labour market conditions continue to garner the most attention and we just jobs report away from the Fed deciding to actually go with that 50 BIP cut. Maybe not in September but he could happen in November or December. >> There is some thinking out there also that of next week they decided they decided to go for 50 basis points, 1/2 of a full percent as the opening acts, they can actually get the markets quite nervous. What are you seeing that we are not seeing? Are people overplaying that fear? >> I think so Greg. I think we are of the view, the market in general is of the view that the only way the Fed can use rapidly is because the economy is getting into a recession or that conditions are deteriorating rapidly. I don't think that's the case. I think you have to look at it from where we are in terms of monetary policy versus where you need to be. And I think that the Fed cannot manage the message that they could start on the faster side from great rate cuts. Perhaps once this year and then guide that they that those decisions can become more gradual depending on the labour market. I don't think the market is going to take it that bad. similarly in the headlines supporting a rate cut just so the market actually rallying on that. I think we are overplaying that story. >> I want to get your take on the US labour market. Still slowing but adding jobs. What are some of the market be seen to that? Is that overdone? >> I think the market has to look ahead and the recent toughness that we are seeing in the data entering the recession…in that view I think the Fed will not overdo policy cuts in the near term because I think, the Fed in general things that the economy is probably going to normalize here. And probably achieve a soft landing between now and 2025. >> Okay so let's talk about, we have a full card this fall. Inflation coming back towards a little stickiness and watching the labour market. Also watching a presidential election that is just around the corner. We had the debate last night between Harris and Trump. Big takeaways for you? >> I think it's clear that Kamala Harris did better in the debate. The markets also support that view. I think she did a better job in terms of connecting with undecided voters. We will see at the end how that translates into actual polling. I think the first poles will be policies and that will confirm if she actually managed to gain a meaningful advantage but I still think that the story doesn't change much. We will still be a close race that will be decided in a handful of states and still erase they will be too close to call. We will have to wait until November for that. For the most part. >> Let's dig into that. The importance of the swing states right now. I think the people who live in those states that are, I think it's seven, basically we know which way you're going to go and there are so Seven that we need to watch. >> That's right. Wisconsin, Michigan, Ohio, Nevada, those of the key states and Pennsylvania I think will be a very important one as well. I think that that's where the money is going to be spent. Thoughts where the candidates are going to continue touring. And visiting. I think it's a bit funny that they only focus on those states because pretty much they know how it will go on the rest of the country but that's how it works in terms of the electoral voting in the US. >> Perhaps informed a little by the debate last night or part of the story is we didn't get a lot of information about policy from either candidate. What it could mean if either or takes the White House for the economy and for the markets. What should we be thinking in terms of investors about that? >> It for now I think there were policies… We do think the differences are big and Trump's Trump brings more in the markets particularly for 2025. His policy ideas, in terms of trade and immigration, I think I could have a meaningful impact for 2025 if he goes through with those initials particularly on inflation and growth. It could be a stagflation area scenario for next year. You have, if he goes through with the tariffs policy in particular, that could increase inflation meaningfully in the short term and also a negative picture growth. Similarly with immigration policies. So there is a lot around what Trump might do. We think Harris is mostly status quo. Our view has been for now the markets are probably paying more attention to Fed policy in the near term. Thus we get more clarity in terms of what the Fed might do between now and then at the end of the year to 2025. The market will start focusing more on the actual election results. So as we get closer to November, we start getting more a sense of the polling and I think the market will start to price in the most. >> The markets paying attention to Fed policy, how much of the presidential candidates paying attention to Fed policy? I believe your shop is talked about Fed independence recently and some of your notes? >> Yes. I think for now, no matter what the Fed does really, in terms of next week, if they do 50 in September or if they decide to do 50 in November, I think it's gonna be as political no matter what. The Democrats or the GOP is going to hit back on Powell, somebody is not to be happy that's for sure, if they do 25 and they start doing 50 after the election, the Democrats are going to say that Powell has been political. If they start with 50, you're probably going to start seeing some tweets from Trump on that. So no matter what the Fed does is probably going to be not taking well by a part of DC for sure. >> A lot of moving parts. Appreciate you joining us Oscar and breaking all down for us. >> Thank you. >> Our thanks to Oscar Munoz, TD market strategist with TD Securities. Upcoming is David Sekera chief US market strategist with MorningStar research and also Jennifer Nowski on whether dividend stocks are trying to improve. An MoneyTalk's Anthony Okolie will have a look at what's been weighing on the price of oil these last few trading sessions. But first let's get you updated on some of the top stories in the world of business and take a look at how the markets are trading. >>starting with Dollarama in the spotlight today you can see up to the tune of 5%. Beating expectations on the top and bottom lines in its most recent quarter. It's those bargain-hunting shoppers driving for traffic and sales higher. Dollarama did serve more customers in the quarter, the average spend was down some 2%. Again, speaking to people feeling a real pensioner pocketbooks in this economic environment. Canadian National Railway is lowering its earnings forecast for this year. Citing the recent labour action a chart of operations at both CN and its rival, Canadian Pacific Kansas City. In making the announcements, CN also said its operations and recover from that shut down. CNN CN rather NCP locked out some 9000 Workers in August after contract talks broke down. Open to interpretation. Brookshire Hathaway has sold another sizable amount of its Bank of America shares, leaving it's taken the Wall Street Bank 11%. Warren Buffett's conglomerate has now sold more than $7 billion worth of the Bank's shares. Berkshire Hathaway purchased $5 billion in the Bank of America's preferred stock and warrants in the years following the financial crisis and clearly starting to sell some of that position. Bank of America down to a 2% with a lot of other Wall Street banks under a bit of pressure. One of the rivals, J.P. Morgan yesterday saying the street is a little too optimistic about where they think the Bank can deliver and they sort of rivaled the street a little bit. Quick check on the market starting here at the TSX Composite Index… Right now, we are modestly to the upside. 22 points are about 1/10 of a percent. >> AI in and of itself still is a long pathway of growth ahead of it but according to our valuations, yes we think the outperformance of AI stocks over the broad market is probably behind us. In fact in our third quarter outlook, we noted that as compared to our valuations, a lot of those AI stocks, most closely tied to the fundamentals were at that point, getting to be fully if not overvalued and in that outlook we reviewed why they the market returns really to broaden out specific into value stocks and small-cap stocks. Je should(…) > Some of the big tech names… Am I seeing a rotation on my hands? What is your take on it? >> I think to really start here in July, the value category and the small caps, both were very undervalued both in absolute basis when we looked at it as compared to our long-term intrinsic valuations on those stocks. But also on a relative value basis. If you look at composites of evaluations going all the way back to 2010, both value and small caps really were not above the lowest relative values they had as compared to, you know, the broad market. So from here, even though they've outperformed both in July and August, we still think they have a long runway. We think they have a performance ahead of them. Of course the real recession risk here is probably putting pressure on those small-cap earnings in the short term or, you know, if we saw AI having another big leg up in growth, then we can see people move back into those large-cap growth stocks. But irrespective of those happening, we do think that both value stocks and small-cap stocks look pretty attractive here. Now we did see in August a bit of turmoil and a pretty brisk selloff in the markets. Then we came back and had a rough start in September. September doesn't have a great reputation anyway for stocks and definitely showing us what that's all about. Last week, some people might be thinking are we getting into another environment like 2022? That was a rough one for stocks. Write Wise's environment not like that when? >> We actually put out an article of the be getting of August we had that brief market selloff that about how now is different than 2022. So in our 2022 Outlook at that point in time, we actually advocated for investors to underway equities. So from a fundamental point of view, stocks were overvalued at that point in time. But they were also four headwinds we identified that the mark would have to contend with in 2022. The first being rising inflation, the second is an increase of the expected and long-term interest rates. Tightening monetary policy and the slowing rate of economic growth. Fast forward to today, we think the market is pretty close to fair value as compared to our valuations. At three of those four headwinds are actually no tailwinds. So we look for inflation to continue moderating over the course of the remainder of this year and going into next year. We expect that we expect a multiyear path of decreasing long-term interest rates and of course we expect the Fed will start easing monetary policy next week when they meet. Really the only headwind right now is that slowing rate of economic growth. We are in the soft landing camp. We are not looking for a recession in our base case. So I think right now those tailwinds are to be enough to be able to offset the only headwind which is that slowing rate of economic growth. >> You said you are not in the camp of a hard landing, soft landing… Not looking toward a recession. Part of the market volatility in August and recently too, has been you get a piece of economic data, the market was waiting so long for the data soften so the Fed could cut. You know? The economy gets softer now the markets worried that it's going to get too soft. Then you start throwing around 50 basis points at a Fed meeting. Maybe even from lift off. What's your take on that? >> Our base case from our economics as we are forecasting a cut of 25 basis points of that meeting and then cut 25 again to each of the next two meetings over the course of 2025. We expect them to continue cutting to the point that we will get to a 3 to 3 1/4% range by the end of next year. Now, what I think about, you know, the feds mentality, they were definitely too late to start the increase of the Fed's fund rate when inflation was going up. They thought inflation was transitory and it wasn't. They really got focused on fighting inflation ever since. So I know the market is right now, pricing at a much higher probability that they may cut by 50 basis points. In my opinion, I think that would be a negative. So yes, inflation is on a downward trend but it is still above the 2% target so I think the Fed is still needs to focus to some degree on inflation. If they were cutting by 50 basis points, that would tell me that the Fed is actually much more concerned about the economy slipping into a recession in the near term than they are worried about inflation remaining on that downward path. In my opinion I think if they cut by 50 basis points, market can actually selloff on that news and maybe even have a pretty good selloff in that case. Just like at the beginning of August when we had the jobs report that came out and everyone is fearing recession and heightening in that same thing beginning of September here with the markets selling off on some relatively dour economic news as well. >> Let's put that all together and take a look at some of the sectors in your Outlook and your Outlook for those. What are some of the ones you're more constructive on? >> Right now communication still looks pretty undervalued to us compared to our valuations. Of course he got a look at Alphabet and Mehta, the two largest MegaCap stocks and the indications sector. Alphabet, for example, still just hitting on all cylinders. That's a stock that we think looks relatively attractive here. But also the traditional Communications providers also look undervalued us. For example, the US wireless carriers, we perceive that industry really starting to morph into more of an… Meaning they will compete less on price over time, that's going to allow margins to rise and a number of those stocks, we think are undervalued and in the meantime pay relatively high dividend yields. So really the risk in that sector is gonna be if we see a slowdown in growth in alphabets business or if price competition both in the wireless as well as some of the traditional media areas, the other two sectors that highlight or to be energy in real estate. Energy, I still find particularly interesting. I think energy provides that good natural hedge in your portfolio in case inflation were to come back or if we see heightened geopolitical risk. What I like about energy to, in our models we use it to your forward strip price for oil but then we bring it down over time. And our forecast for WTI or West Texas intermediate is $55 a barrel in the long term. Yet, even using kind of that long-term bearish view we are still finding a lot of those oil companies are attractively priced. Of course the risk you're in the short term, If economic growth comes in a recession that could lower prices in the short term. Real estate was up 7 1/2% in July and up another 5.4% in August. It's actually now getting to be fairly valued in our view. It had been one of the most hated asset classes on Wall Street personally would still steer clear of office space but we see a lot of undervalued opportunities in real estate specifically real estate with defensive types of characteristics such as healthcare, medical offices, or personal storage space. >> I find I get the benefit of knowing some your thoughts ahead of time. I find this intriguing. The areas you are not as constructive on, declining interest-rate environment, people talk about utilities. Why are you not constructive on utilities? >> Utilities were hit especially hard in 2023 when interest rates, you know, were rising. Again people might use utilities as a fixed income substitute. But a drop so far, so fast last year that actually utilities in our team called this out that utility sector was as undervalued last October as they've ever seen it over the course of the past decade as compared to our valuations. Now, the story this year on utilities is been all about AI, utilities really being that second derivative trade on artificial intelligence. The reading on AI computers require multiple times more electricity than traditional computers and everyone is now increasing that long-term forecast for electric demand. We agree, we've already modelled that an utilities are now up over 22% year to date. Sector is now starting to trade up premium. I think now is really a good time not only to think about profit-taking or if you want to keep exposure, looking to swap out of those that run up too far, too fast and to those of lagged and still had pretty decent dividend yields. >> Quickly I'll ask you about the last two spaces they are not constructive on. Consumer defensive intact. We need to go back to the top of the deck. >> Consumer defence, that sector is at a very strong year thus far. Up almost I think 17%. But I would note in the consumer defensive there are several large MegaCap stocks that we think are significantly overvalued. So that is skewing the entire consumer defence sector on a valuation basis to high to the upside. But from a stock pick or point of view, we see a lot of names and their like the food names that we think are undervalued. So good time that, if you are an investor in that space, maybe instead of investing in ETF's, look at some of these undervalued stocks individually. And of course… Was tech was undervalued at the beginning of 2023. It was up 59% last year and up another 17% thus far this year. At this point we do think the sector is overvalued. Especially a lot of these AI names. The concern here is that AI looks like it's already kind of run its race. The fundamentals are still growing a lot. But that growth, what we are seeing in the past quarter or so, is really no longer outpacing expectations. When I'm thinking about earnings this quarter and guidance into the end of the year, you know, just meeting guidance for the third quarter might not necessarily be enough to keep those stocks up and of course the risk is that if they are not providing ever higher guidance going forward, I think that with current valuations where they are, if there is some downside, potentially in those stocks, for later this year, specifically mid-October. >> That was David Sekera, chief US market strategist with MorningStar research. Taking a look at TD's advanced dashboard design for active traders available through TD Direct Investing. Ryan Massad, from TD will help us find out how to make a trade on the TD dashboard. >> Thank you Greg. I wish it was a simple answer but the nice thing about the advanced dashboard is it gives you many choices on how you'd like to make a trade. We will jump into the platform right now. And show you how to make a trade or the number of ways that you can make a trade. The simplest way here is off of your watchlist. Off of your watchlist to the left here, we've got these three little dots. If you've got something like TD Bank stock on a watchlist, you click on the three dots. You've got a numberit opens up this nice floating order entry box that you can start entering in the details. The beauty here is you've got your bid and your ask price actually streaming within that item here. It's really easy to go ahead and then adjust these values and then send that order. That's one of the ways to do that. Another way to do that is to actually create a component that is an order entry ticket and link it to other components. I've got it link using these channel configurations. Whenever I click on anything on this watchlist, it's going to populate already in the order of tickets. If you want if you want the order ticket to always be present on screen, that's a great way to go ahead and do that. Another detail here to this and what makes it really easy, if I were to open up an order ticket, right off the order ticket I can actually add these contingent orders. These conditional orders or, something called a profit loss exit. So let's say I'm looking to buy Apple in this case. But I already know what's going to happen after. Harry have an idea of what I want to happen after. I will click on this "attach profit loss" exit and I can already choose at what price I would like to sell this. If I buy Apple, I can go ahead and choose that price here. And already on one ticket, with that one click of the mouse I can actually have that ready. I can even have a stop loss. Just in case it goes a little bit lower than what I had planned. I can go ahead and add a stop loss triggering Christ to that. So the idea here is that it's quite customizable, right from the start and it's really easy to add that detail to all of this Greg. >> A lot of options there Ryan for investors using the platform. What if they find sort of a set up that they like? Can they set that up? Some of those orders that you mentioned? >> They definitely can I recommend that they do. You want to be as efficient as possible when you are dealing with this platform here. You want to spend less time setting things up and more time placing trades. Let's go in and I'll show you how to do that quite simply. On the trade ticket itself, right here, on the trade ticket, on the top right, you've got this little gear. If we click on this gear, we will see the defaults that are available here. On the defaults, I can choose, what is the default duration of my order? Is it day order, good till cancelled? Extended market order? Or what I like it to say by default? What I want to buy on the ask? Sell on the bid? What what I like? What would my quantity or increment pricing increment or even the type of order that I'd like to appear? I can also have that profit loss exit item that I switched on. Well, I can have an always on. All I have to do is switch on these items here and that thing will open up automatically every time that I open this up here. So I've got a lot of choices here when it comes to the defaults, Greg. Again, I recommend you all go into this and make it as efficient as possible to be able to place your trades because that's what's gonna make you an efficient trade going forward with advanced dashboard. >> Lots of great options. Ryan great stuff as always. Thanks for that. >> My pleasure. >> Ryan Massad, a senior education instructor at TD Direct Investing. For more educational resources you can check the learning centre on WebBroker or use this QR code to navigate to TD directing investing's YouTube page where there are more informative videos. Oil prices dropped below $70 per barrel for the American benchmark. For the first time since December 2021. I think that was, that might've been the British benchmark. Anyway, oil is been interesting. The man here with all the details as Anthony Okolie, joins us now from TD Securities. What is on the near term? > Exactly. Brent well actually it fell as much is nearly 4% on Tuesday. WTI down as much is 4% to its lowest and today price since May 2023 on Tuesday as well. What we've seen is some downbeat economic data out of the United States and China. That's about oil demand of the top to consumers in the world. It's also added to fears of a potential surplus in oil next year. Oil also weighing on prices reports that Libyan oil will soon return to the market as well. That continues to put pressure on the oil market. Crude oil prices come despite OPEC+ alliance move to postpone their original plan to add about 180,000 barrels per day next month. TD says they expect OPEC+ to continue proactive moves to manage the supply of oil. They would not be simple why they would not be surprised if the output delays, should global demand continues to weaken further. Additionally, td notes that US refinery had a year today low with margins on average falling below the five-year average and there are about 57% below a year ago levels and TD attributes this strong refine to strong refinery utilization and low average demand for the week margins they are seeing in the US. Now again despite the delay in OPEC+, October output hike, it hasn't been enough to reverse a slide in oil according to reports of TD Securities and they see no signs of a turnaround and demand to put a halt to the downward trend in the energy markets. Greg? >> The thing I find fascinating about the oil trade from an investment point of view is a lot of ways to look at it. If you take a look at energy plays it may make a part of some people's portfolios. They haven't done well considering how volatile things up in. If you worried about inflation, West Texas intermediate was well above 80 bucks a barrel this time last year. Now you have the 67. Definitely not an inflationary pressure. >> Exactly we got the numbers today and they came in at the lowest level since early 2021. We did see that pullback in energy costs the you talked about. Which helps bring down inflation figures. Gasoline was off 0.6% in August. Down more than 10% from a year ago and of course that's going to plane to the Fed's decision next week. >> A lot of moving parts. I love how they fit together as well. Thanks Anthony. >> My pleasure. >> MoneyTalk's Anthony Okolie. With interest rates trending lower, some investors may be turning their attention to other parts of the market beyond tech including Canadian dividend payers, Jennifer Nowski, VP director and Portfolio Manager at TD Asset Management join me to discuss. >>… A more supportive backdrop for some of the dividend paying equities in the sense of improved fundamentals. But also potentially better slope. Look at the fundamental side lower interest rates result in lower interest expenses for the company. It also means investors start applying a lower discount rate to the stock so it leads to potentially improved valuations. Looking at the funds inside Canadians of seen GIC rates, for example, that they have not seen in many years. Those are very attractive. Now that they may be coming down, investors who were income oriented might start taking alone another look again at some of the higher dividend yielding equities. If you look at sectors like utilities, reads, communication services, financials, pipelines, you can find dividend yields in the range of say 3 to 5% plus depending on the name. So, as a result of these lower bond yields, we have seen a pickup in the share prices for some of these sectors. Over the course of the Summer. >> There have definitely been interesting moves over the Summer. Some big names on the Canadian market include the Canadian banks. We just went through another Bank earnings season. What's the Takeaway? >> The banks I'll just reported over the past week or so. Generally the results were for steady operational results. As well as some early signs that maybe the banks are nearing the end of the provision for credit losses normalizing. So starting with the positive side, it was a good quarter operation pretax, pre-provision growth was positive. And the banks kept a better control over their expense base which had been kind of a challenge a year ago. So operating leverage was positive. As well the core Canadian banking division performed well also. With loan growth kind of up in low and mid single digits and names were stable. Lastly, the banks remained well-capitalized. Their common equity tier 1 ratios are around 13%. So they don't need to raise as much capital. The banks have turned off the discounts they used to offer on their dividend reinvestment plans. As well as some of the banks are buying back shares. Another thing investors up and watching is this normalization of the provision for credit losses. It was at low levels a year or two ago and it was normalizing as expected. The challenge with this is that it does way on total EPS growth. Now, this quarter, there was variations across the Bank group in terms of PCL's. However there were early signs that it's starting to kind of flatten out a bit sequentially. So that's something that investors will continue to watch. What will drive PCL's going forward, the rate environment is certainly one. In the Bank of Canada lowering rates again yesterday, that takes away some of the pressure from consumers and the other key is unemployment remaining somewhat stable. >> That's a very key part of the Canadian market obviously the financials, the banks. Obviously, the energy trade is important. Let's talk about the actual price of oil. If someone has been tracking it through the Summer, it's been pretty choppy. >> Yes it's pulled back a bit recently. Really, that's driven by two things. One is perhaps demand coming it a bit lighter but the other remains is continue to focus on supply and what OPEC+ is doing. So starting first on the demand side of the equation, this is a year shaping up to be a more normal year in terms of demand. There's been a lot of disruptions in the past few years due to the pandemic and the impact that that had on print transportation. This year, oil demand growth is resuming its more normal correlation with global GDP growth. As well, the main source of demand growth is the non-… Countries. Particularly Asia, China and India. That's where maybe we are seeing things come up short of expectations with Chinese demands struggling in light of kind of slower economic growth there. Turning to the supply side, the focus really is on OPEC+. There is some supply growth outside of OPEC. But within OPEC, they had a fair amount of spare capacity and the question for the market is what the will do with this. Earlier in the spring we've indicated they indicated rather that they were looking to bring some of the spare capacity back onto the market. However they gave themselves a lot of outs in terms of the depends of the market needs. Given that demand appears to be coming in weaker, there are more questions about what they're going to do. Some early reports today maybe that they might adjust these plans but it's something to continue to watch because OPEC+ remains critical for supporting balanced oil market. >> Powerful global forces. We talked with the oil trade, we take it back home to some of the oil companies. Results from them over the Summer as well. What are they look like? > So the trend with the Canadian oil players continues to be a financial discipline. They spent the past few years really controlling their Expenses, lowering their debt levels significantly. As well as being more disciplined about returning that cash to shareholders. So even if, say, oil or… In the low 70s, these Canadian oils stocks will have a free cash flow yield around the high single digits which is still very attractive. And now that they hit these debt target's, they are returning the majority of God and in some cases all that to shareholders. In the form of dividends and buybacks. Now the other thing to kind of highlight with them especially kind of coming out of the quarter as we look forward, is the continued focus on lowering operating costs. So OPEC came in fairly well this quarter and benefited a bit from volume growth as well as lower energy and natural gas costs. However going forward, there still a continued focus on driving these operating costs per barrel lower. Part of it will come from a bit of volume growth but also real operational improvements in terms of how they are managing their maintenance and turnarounds. The productivity of their feet, lowering energy consumption and things like that. So I think it's just a good sense of these companies continue to maintain their focus on financial discipline. >> Of course the product moves and pipelines are interesting. People think of utilities in the energy basket. They are considered stable businesses. What's the trend here? >> The earnings continue to remain stable as these businesses are highly contracted or regulated. The interesting thing to look out for going forward is there opportunities to capitalize on US power demand growth. Now, US power demand is been roughly flat the past decade. It's now expected to be starting to grow due to the increase in demand from electrification, AI and data centre's as well as near shoring. Now for Canadian domicile pipelines and utilities, some of them actually have fairly sizable US operations. So they are exposed to this trend. On the utility side, they benefit from growing demand in their territories as well as transmission and generation opportunities. And on the gas side, you know, the power demand is going to be needing to be met through all sorts of sources. I included gas and renewables in these companies that renewable generation divisions. They also will be able to supply those potentially new gas plans with new gas lines. Of course, for the gas pipelines player, the other big growth area is L and G. That's what kind of changing in the near term is the driver of their growth. Now, the caveats all this is that it is still early days. It'll still take time to play out. Some of these companies are quite large. So although directionally positive, it is more of a marginal positive but something we are watching for the sector. >> >> That was Jennifer Nowski, VP director Portfolio Manager with TD asset management. Now for an update on the markets with the advanced dashboard and the heat map function. A nice view of the market movers. Screening by price with the TS 60. Some modest upside on the TSX Composite Index of about a 50% South. What are we looking at below the surface, some mild weakness in the energy basket. Interesting. BCE and Telus and Rogers which have been getting modest bids day-to-day and falling interest rate environment giving a low but back today. We see Cameco nicely to the upside, Dollarama based off its earnings and Shopify. We are actually seeing some of the tech stocks rallied today on both sides of the border. Let's go south of the border and take a look at the S&P 100. The NASDAQ actually positive right now. The S&P 100 modestly negative, there's that name again, taking up all that real estate on the screen. That would be in video trading at a more robust volume than its peers on the screen up to the tune of about 4%. Interesting that you can see weakness in the financial names including Bank of America, Wells Fargo, Citigroup and a few others in that basket. As always, be sure to do your own research before making any investment decisions and stay tuned for tomorrow's show, Brad Simpson, Chief Wealth Strategist at TD Wealth will be here take your questions about market strategy. A reminder that you can get a head start with your questions by emailing moneytalklive@td.com. That's all the time we have for the show today. Thanks for watching and we will see you tomorrow. [music]