Sam Damiani

[theme music] >> Hello, I'm Greg Bonnell. Welcome to MoneyTalk Live, brought to you by TD Direct Investing.

Every day, I'll be joined by guests from across TD, many of whom you'll only see here.

We're going to take you through what's moving the markets and answer your questions about investing.

Coming up on today's show, we are going to discuss whether rate cuts may provide a tailwind for the REIT sector. TD Cowen Sam Damiani joins us. MoneyTalk's Anthony Okolie is going to have a look at the latest US retail sales report telling us about the world's largest economy and perhaps about rate cuts from the Fed.

In today's education segment, Hiren Amin is going to tell us how to find low volatility ETFs on the platform.

Here's how you can touch with us.

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

Before we get our Guest of the day, let's get you an update on the markets. We will start here at home with the TSX Composite Index. Got some modest green on the screen. A little shy 100 points or half a percent. Among the notable movers include some big energy names. You do have the price of West Texas intermediate, the American benchmark crude, above $81 per barrel, making some gains today.

We will use Baytex as the example. $4.59 per share, a little more than 3%. Shopify has been giving back in recent sessions and again today. At $88.24, pulling back a little bit more than 3%. South of the border, we got the latest read on the US consumer. Anthony will break it down later. Came in a little softer than expected. What does it mean for rate cuts going forward?

Not an outsized reaction in the market.

Europe a modest eight points for the S&P 500, although we are in record territory with green on the screen, of a little more than 1/10 of a percent. The tech heavy NASDAQ seems to be struggling a little bit to keep up with the broader market.

It is down, it's modest, about 1/10 of a percent.

Homebuilders south of the border had a strong quarter but new orders seem to be a bit of a concern, the forecast they have on that front. Lennar right now is down a little more than 5%. And that is your market update.

The Bank of Canada delivered the first rate cut, several more potentially on the horizon, but that said, it doesn't seem to be doing much to help the real estate investment trusts. Joining us that with more is Sam Damiani, director for equity research at TD Cowen. Of course, for full disclosure on the companies covered by TD Cowen, please see the link to the website at the end of this program. Great to have you back.

>> Pleasure to be back. Thank you.

>> It felt like for some of these rate sensitive sectors, including the REITs, that one thing we were waiting for was a rate cut from our central bank.

Well, they got the rate cut. It doesn't seem to be much of a reaction. What's going on?

>> We were waiting a long time for this day.

It finally came. Since I was last on the program back in February, I think the REIT indexes down 78%, so I wish you hadn't called me back so soon. Hopefully next time I'm back, REITs are up. But it's clear, the reach market is really reliant not just on that first cut but on visibility of multiple cuts. The REITs rallied I think 2% the day of the cut.

It's giving back double since then. It's all about visibility and trajectory and pace of those rate cuts. But I think also, we look at the BOC, they cut, the ECB, they cut, but we are still waiting for the Fed and there is only so wide of a divergence that Canada and the US can go, so I think the market really needs to see the first Fed cut, that will be catalyst as well and then visibility on multiple cuts. We need that yield curve to come down but more importantly get out of conversion and get those money market GIC rates which were 5% plus, get those down to 3% and then individual investors would need to go back into higher-yielding equities like REITs in search of something that offers 5% plus, maybe even 6% plus.

But we are still waiting.

>> I find it interesting that you brought in the Fed to because I did notice other asset classes that you would've expected to benefit from that first Bank of Canada rate cut did benefit on that day and the following days, no if you like, as I look with them, they are moving with US bond yields and not so much Canadian bond yields even though they are Canadian assets.

>> They are Canadian assets and the vast majority of what our coverage universe owns is north of the border here.

The transaction market is pretty quiet still. We need visibility on transactions, we need to assets to trade, portfolios to trade, and they are, the pricing of those assets and portfolios is benchmarked off the longer end of the yield curve. The longer end of the Canadian yield curve is to a degree tethered to the US yield curve.

>> Apart from the yield sensitivity and with the central banks may or may not get up to for the rest of the year, obviously, when he break down the REITs, we can go through the major categories, each of them has their own potential but also their own headwinds. Let's start with the big one that always dominates in this new reality that we are living right now in terms of people not coming to work five days a week, the office.

>> Office is challenging. It's been challenging now for many years. Honestly, sentiment could be bottoming. I feel like sentiment could be turning a little bit more positive, at least temporarily.

Talking to management at both Allied Properties and dream office recently it just feels like there is an acceleration of leasing interest whereas people had been taking a long time to make decisions but it feels like right now the momentum has picked up at a level we haven't seen perhaps for a couple of years. So I don't know if that's a permanent turn upward or ahead fake but it feels like between that and the valuations of the publicly traded office REITs, of which there is just a small number, it's a very small percentage of the overall Canadian REIT sector, but those REITs are by far the cheapest among the multiples and discounts. So for someone who's got a little higher risk tolerance, it certainly looks like an opportunity could play out there.

>> One of the problems here to, we talked about visibility overall when it comes to interest rate policy, visibility on where we are headed as a workforce. I feel, anecdotally, the train is busier than it has been a long time. Sometimes I don't get a seat, makes me grumpy, but at the same time, you are seeing life returned to the core.

Are we unsure about what that means longer term?

>> I think so.

We are settling in some degree. We are not going to be out of the office five days a week, we are not can be in the office five days a week, but we are gonna be in the office some percentage of the week. It varies by function and Company, whatever.

It feels like we are settling in towards a semi new normal which we are much closer to today than we were six months ago and the way that we look at it is physical census data for downtown Toronto and those numbers continue to take higher every week. At a slower pace. Again, it feels like we're getting closer to the normal.

Mayor Chow reportedly asking the banks to bring more employees back to the office.

We are seeing even the government trying to bring more people back to the office.

There is obviously a desire by decision-makers and leaders to make this happen.

We have to fix the commute in downtown Toronto. We are getting off topic here.

There are issues.

But I think we are reaching in equilibrium and hopefully over time some of those commuting issues get resolved and you start to see more people happy and willing to come downtown.

>> I'm all for it. That's the office space. What about retail?

>> Retail is doing great. I said this on our last appearance here, but the occupancies, the leasing spreads, the rents they are getting on renewal and replacement leasing, though spreads her back to historic highs. What that's indicating is the retailers have rediscovered the need for the physical store. Obviously, the pandemic had a surge in online shopping and then people, with the vaccine and everything reopen, went back to shopping, back to dining, etc.

And then the other major factor over the last couple of years has been population growth. We look at our population, it's up 8% since the beginning of the pandemic and equally importantly the number of employed people as of 6% since the beginning of the pandemic.

There are a lot more people shopping now than there were before the pandemic.

And there hasn't been much retail space built. So when you look at the retail space per capita, it's actually been declining considerably. And so there is a shortage of retail space and what we are seeing evidence of, the way I read it, is some retailers are scrambling and so they are putting out announcements like I want to have 300 locations in Canada, fast food chain, there is no way they are going to get 300 locations in Canada in three years, but they want to put that out there and put landlords on notice that, hey, if you got space, call me up, I want the available space.

>> Some interesting retail. Apartments, naturally, we know we have a shortage of housing.

>> Same thing.

There has been construction and housing, both for sale and for rent, but it has not kept up. Occupancies with our coverage universe are at historic highs. The leasing spreads as well, historic highs.

The issue is the turnover has really come down. So with the shortage of a scarce commodity, people are sitting in an apartment for maybe 1300 bucks a month and the market might be double that so they are just not willing to move. So the turnover rates which might have been 25% annually five years ago, they are down to like 10, 11%.

So you are capturing a much higher spread but you are having a far fewer percentage of your propeller. It's a very tight market. The issue there is affordability.

We are at a ceiling in some markets, not all, but some. It's a strong leasing market as well.

>> I want to end off with industrials, warehouses.

Obviously they were shining stars during the pandemic with e-commerce. What is going on with them now?

>> The momentum has slowed.

The vacancy rates are still low. They have come up, the market rent growth has slowed.

By some measures, it's even come off a little bit but from the landlord's perspective, if you got an available space in your leasing it directly as a landlord, that market really hasn't come off. It's really just the sublet spaces that have brought the averages down in terms of market rent surveys.

Momentum has slowed but we are looking at a sector that in our view does have a long way of rent growth and capacity growth because these buildings take so much land to build. So there really is a barrier to entry.

As interest rate settle down, as the economy sorta finds a groove, find a base here, we think users are going to pick up leasing activity and these vacancy rate should come back down in 2025 and that coincides with a reduction in supply as well because not a lot of people have started new construction over the last year with the volatility in interest rates, so next year we think is going to be a real resurgence of momentum in the industrial property sector, and that is our top sector right now.

>> Fascinating stuff. For full disclosure on the companies covered by TD Cowen, a division of TD Securities, please see the link to the TD Securities website at the end of this video.

We are going to get your questions at real estate investment trusts for Sam Damiani in just a moment's time.

And a reminder that you can get in touch with us any time.

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

Right now, let's get you updated on the top stories in the world of business and take a look at how the markets are trading.

Boeing safety and quality control issues are in focus at a U.S. Senate panel hearing today. In prepared remarks, CEO David Calhoun plans to tell the committee the playmakers culture is far from perfect, but he's going to add that the company is taking action and making progress. This testimony comes amid a whistleblower alleging Boeing lost track of damaged and substandard parts, and that those parts were likely installed on planes.

Electric vehicle maker Fisker has filed for bankruptcy protection. The company is looking to restructure its debt and sell assets amid a downturn in demand for EVs which is industrywide. A ramping up of production of its Ocean SUV proved to be a pretty expensive endeavour, with the vehicle plagued by software and hardware issues.

Berkshire Hathaway, do we talk about them yesterday? Back in the headlines today, they increase their stake in Occidental Petroleum to nearly 29%, making Warren Buffet's conglomerate the company's largest institutional investor.

Filing show Brookshire acquired 7.3 million shares over nine straight trading sessions.

Quick check on the market, on the TSX Composite Index, up half a percent. So the price will move higher, looking at some of our big oil and gas names. South of the border, retail sales coming in a touch softer than inspected. What does it mean for rates, what is the readthrough?

The S&P 500 is putting on a modest 10 points today, good for 1/5 of a percent to the upside.

We are back with Sam Damiani, take your questions about real estate investment trust. First one here. Could you please comment on the Nexus Industrial REIT?

>> Absolutely. Nexus is, it stands out is the purest play on Canadian industrial property with about 90% of its assets in industrial property, all in Canada.

That is, I guess, an attractive attribute given the privatization of Summit REIT a couple of years ago.

So it standalone. It has underperformed over the past few months. We have seen the REIT unfortunately continue to acquire assets last year was brought up as leverage and the results have not been overly consistent the last couple of quarters. From our perspective, we are focused on the dispositions that they hope to achieve later this year to bring the balance sheet leverage back down and visibility on a resumption of growth. We see that when a little bit challenged right now but there are ways they can work out of it. Right now, it seems like a bit of a challenged situation.

>> Those challenging parts of the situation, if they execute on those things were looking toward, does that perhaps turn the story around?

>> Sure.

>> In the industrial space, we talked a bit off the top as well, is more than just, when you think industrial, you think about warehouses and e-commerce. There's other things you can put in those properties.

>> There are a ton of things, such as recreational activity. Speaking of Nexus, I was in Vancouver recently.

They are developing an old warehouse into pickle wall, tennis, squash, everything else. It's a beautiful facility that's going to open up the summer. That's just an example.

Obviously manufacturing, reshoring of manufacturing, distribution, all that stuff.

Their sense of demand, tailwinds for industrial space. Again, just need the interest rate, economic environment to settle down so users have confidence and with their cost of capital is, with their near-term, medium term operational outlook is and then we will get back to, wheezing, normal growth in that space.

>> When you're talking about that, my sons are older now, I remember one place that was just trampolines everywhere, kids everywhere jumping on trampolines. I was like, this seems like very controlled chaos, but definitely a fun use of the space. Those years behind me.

Put me on edge. Another question from the audience. Zone wants to get your outlook on Canadian Apartment Properties REIT?

>> CAP REIT, that's the largest Apartment REIT in Canada.

It's strong. By virtue of its size and geography across the country, very stable operating results, good balance sheet, good long-term track record. They are going through some portfolio repositioning, capital recycling initiatives at the moment so that does give a little bit of uncertainty but creates an opportunity for a high rates portfolio.

We foresee stable and above average growth for the next couple of years.

>> Thinking in terms of retail, I know a lot of the big retail REITs have talked about wanting to be in this market and this market, not so much a secondary market. It is at the same?

>> What they are trying to do a strike deals with governments or government agencies to sell properties back to an entity like that where the asset can be put away permanently into the hands of someone that can really focus on affordability. Obviously, CAP REIT, it's a company, there is a cost of capital, but if it's in a government agency, that building can be retained as affordable and may be made into an increasing proportion of affordable units. They are looking at that. There has been some success in BC and Ottawa with these types of transactions. If that really sort of grows exponentially, it creates a fantastic opportunity for REITs to accelerate high-grade capital recycling.

>> Interesting stuff to watch on that name. Next question from the audience.

Geopolitics. There are a lot of geopolitical issues in the world today.

Are there any situations or changes that would affect Canada's REIT sector?

>> I think Canada stands as an island of safety in the world, in my humble opinion.

The external factors that are outside of the control of the REIT space are the interest rate, the economy, the types of things that could impact interest rates and inflation because the worst possible combination for a REIT, for real estate, is something called stagflation where you have high rates and no growth.

So that would be the worst. I would say that there is some level of concern about that price into the REIT market today just because of the excessively discounted valuations that we are sitting at, basically rarely seen outside the beginning of COVID, outside the GFC. When I look back at 30 years of REIT history in Canada, this feels like the late 1990s. A little off the top your question here, great, but the late 90s, if you recall, it was all about Nortel and everything tech was wonderful and nothing could go wrong, and some stables sort of boring industries like real estate were just completely ignored by the market. Those types of situations are usually great opportunities to invest in these types of industries, like real estate. I feel that we are like that, we are at that stage right now where just look at the market, everyone was right to avoid real estate over the last two years. There are so many other ways you can make money in the market.

But things always revert in the real estate sector is relatively healthy, so it's not going to be forgotten forever and all of a sudden interest rates are hopefully going to be a favour and not a challenge over the next year as opposed to a challenge over the last two and half years.

Geopolitical, unfortunately, it's easier perhaps to focus on Canada.

We don't have as much of those things to worry about. But just that macro backdrop is key for sure and hopefully it's more of a tailwind that had when long term.

>> Interesting stuff.

TD Cowen covers Nexus Industrial REIT and Canadian Apartment REIT. And for more information, a link to companies covered by TD Cowen, a division of TD Securities, can be found at the end of the video.

As always, make sure you do your own research before making any investment decisions.

we will get back to your questions for Sam Damiani on real estate investment trusts in just a moment's time.

And a reminder that you can get in touch with us any time. Just email moneytalklive@td.com.

Alright, let's get to the educational segment of the show. Low volatility exchange traded funds are one type of product that investors may consider during times of market turbulence. Joining us now is more is Hiren Amin, Senior client education instructor with TD Direct Investing. Herein, great to see you. When we start for the viewers who might not be aware of these funds, how do low volatility ETFs work?

>> Absolutely, Greg. Great to be back again.

Talking about low volatility ETFs, they are ETFs that aim to provide market like returns but with less volatility than the overall market. So in other words, it's basically trying to give you a smoother ride is the primary objective and they do this by investing in stocks that are, by nature, less volatile, as the name suggests. You're going to find that they are featured sectors that are going to comprise a lot of these ETFs and they are going to be things like healthcare, consumer staples, utilities. Think of those defensive or countercyclical sectors. When it comes to low volatility stocks, historically, they have generated better risk-adjusted returns over time then the market since you capture less on the downside which can then of course lead to overall better long-term, strong performance there. While low volatility stone completely eliminate risk or even prevent losses in the event of a market downturn, they are defensively position to better protect against those or whether those market drawdowns better.

With every sort of give me, there is a gotcha. The gotcha in this case is that low volatility funds do often underperform or like the broader market, especially when the markets are doing well and are undergoing strong growth cycles. That just a quick rundown on low volatility funds.

>> Now we have a better understanding.

Let's talk about investors using the platform to screen for a list of low volatility ETFs.

>> Absolutely. Let's jump into web broker over here. We are going to start with our trusty screeners tool. We are going to pull that up by clicking the research tab.

I'm going to go under tools and pull up screeners.

We are looking specifically at ETFs. I'm going to check the ETF section.

I've already got the screeners set up and start each year but I will walk you through some of the criteria. I'm going to load up the low volatility screener and we are going to see which ones we want to add. When you come to all of these different criteria, what you want to first and foremost ad is localized to which markets you want to find those ETFs in.

We chose domestic markets. More important, the fun category.

These funds are going to be equity-based once we have chosen broadly both Canadian markets and the global equity markets.

In the drop-down, that's what we have chosen. Here's a feature of the ETFs and that is really the low volatility part.

One of the ways low volatility is measured is standard deviation and so standard deviation, when you select this criteria, we wanted to be on the lower end of the spectrum so that's why we have chosen this.

And then the next criteria we have included here is called the beta. The beta tells us how well an ETF essentially moves with the overall broader market and low volatility funds, as we know, they tend to like the broader market and performance and also on the downside, when we chose the beta, we chose the lower range, average to lower range. The last point I want to add in there which is the sharp ratio which is a risk-adjusted return measure, it tells you what type of returns you are getting. We want to see a higher ratio for better adjusted returns. I'm gonna pull up the matches.

A whole bunch,. We are going to go to our risk section.

I'm going to sort by beta over here. Once we do it, what I want to see is the lowest beta stocks and then moving up and you will see some of these low volatility baked right into the name.

You can see that there is a BMO one, low volatility. We will run a quick comparison.

So three that I want to show and what we are going to do is click on compare for a second.

When we do the compare, let's show the performance chart to speak that point that we were talking about low returns. We will compare to a broad market index, we will take the S&P 500 as an example and load that up.

What you are looking at Greg as we will cue up the one year chart and one thing you will notice, this green line here is the S&P 500. You can see over the last year it had a pretty significant rise, almost reaching the mid-twenties there.

But the low volatility funds have been slightly liking. So positive returns but this is very talked about they do leg in strong bullish markets.

Where they really shine, if we go to three year or longer duration, this is where they shine. You can see the S&P has had this period, and we saw low volatility is a farewell overall.

That's a little bit about researching those funds and maybe worth consideration for investors as part of their portfolio.

>> Great stuff as always. Thanks for that.

>> My pleasure.

>> Hiren Amin, Senior client education instructor at TD Direct Investing. And a reminder that June is Options Education Month at TD Direct Investing.

[music] For more information on Options Education Month, you can use this QR code to navigate to the Options Education Month webpage.

Okay, we are back with Sam Damiani from TD Cowen, taking your questions about real estate investment trusts. This one just came in. Can your guest discuss the barriers to real estate development and how to increase the efficiency?

It's time for Sam Damiani to make some policy.

>> Okay. Honestly, right now, I would say it's as difficult as ever to develop.

You had zoning restrictions and time constraints, historically, land availability, trades, during COVID, there were periods where you could not access glass to put the windows on a tower, for example.

But now, with industries where they are, it is almost impossible to get labour. It is very, very difficult. So with the push on the need for housing, it was encouraging to see the government sort of rally the troops, if you will, from all parts of the country, all levels of government and industry to try to figure out ways to really accelerate this aspirational goal of building I think 4 million homes by 2031 I think.

I would call that aspirational. I'm not sure how certain that is.

We will have to see if we can come up with some economical and ways that the market would be, would like to build things more efficiently, prefab, assembled off-site and then put in place. You will have to see how it all plays out but right now it is as difficult as ever to develop the property.

>> Different challenges there for all levels of government and the private sector to to try to wrap their heads around. Another audience question creates someone wants to get your thoughts on H&R REIT? Are the distributions safe?

>> H&R REIT to cut their distribution earlier in the pandemic, we have a payout ratio's, a pretty clean metric of 60% which is one of the lower payout ratios in our coverage universe. We do not see the need for a distribution cut. They've got good, stable cash flows.

The majority of the assets are apartments or industrial property, so it's stable.

They do have some office but most of it is long term lease. I think the question really is is how successful his age and are going to be on selling the remaining non-core assets that they have?

The biggest of which are couple of big office towers in the US.

Selling those will be a good catalyst for the REIT and provide some certainty for investors.

But I think the market today is probably pricing and the level of risk that that won't be successful. As it stands today, we are not concerned about distribution at H and R.

>> You mentioned they are there portfolio of US office properties. This was an area of concern for the broader market last year as to how that was holding up. I hope you like to read about it much anymore, the state of US office.

>> It's not as bad as it was. Again, the same thing we are seeing his runner with the return to office, physically people coming downtown picking up, it's picked up even more in many markets in the US. We are seeing a far greater returns office happening in the US. The commune is probably not as bad a lot of cities.

I think there is capital forming now that's actually buying office properties.

Again, looking for deals, cheap things, areas of distress. That is a process in the cycle that really signifies a return.

We haven't seen that yet in Canada but that's a positive sign that there is capital willing to chase that asset class for the first time in quite a few years.

>> Interesting set. Another question now, this one about healthcare space.

What is the future for my healthcare REITs?

>> Well, generally the healthcare REIT sector, basically we are talking about is senior housing, retirement and long-term care. The great thing there is is a demographic story that we have talked about for the last 15, 20 years. Right now, the number of 80-year-old is growing by 4% per year. Forget about immigration, it doesn't matter.

We've got guaranteed, very visible growth, 4% a year on people turning 80. At the same time, the development, as we talked about before, the development of new senior homes, retirement homes, excessively difficult and there has been virtually no new starts in recent years.

So those deliveries of past active projects or just really coming to a halt so we are looking at a major supply vacuum. In a variety of asset classes in real estate, but including senior housing.

You have demand continuing to grow at that 4% pace with supplied basically edging down to zero and some trade areas even negative because older properties, some get demolished.

The outlook there is quite strong and when we forecast at the next couple of years, it's the senior housing space that's growing by far the fastest, real recovery from COVID, it's a very steep recovery.

>> Is that the kind of industry to you where you could see some consolidation or is it sort of evenly mapped out right now between the players in the space?

>> Well, there's only a couple sort of senior housing names in Canada, Chartwell and Sienna. Consolidation is always a factor in the REIT space. Tricon got taken private earlier this year.

The circumstances are right for more of that. In the senior housing space, I think there's a runway of growth there that you need to go private because I think there's an opportunity to trade at a reasonable valuation, etc. It's one sector that is trading close to that right now for good reason.

There has been talk about US players coming in and may be willing to get a bigger share of the Canadian market.

>> Interesting stuff and things to think about on that space.

TD Cowen covers H&R, Chartwell, Sienna.

And for more information, a link to companies covered by TD Cowen, a division of TD Securities, can be found at the end of the video. We will get back your questions for Sam Damiani in just a moment time. As always, make sure you do your own research before making any investment decisions. And a reminder that you can contact us at any time.

Do you have a question about investing or what's driving the markets?

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We got a fresh read today on the health of the US consumer. Retail sales coming in a touch lighter than effective. People are dealing with high inflation and elevated borrowing cost.

Our Anthony Okolie has been digging into what it might actually mean for interest rates.

>> US retail sales were we can make, they came in at a gain of .1% month over month, that is well below the expectations of 0.3% increase by Wall Street. It is slightly better than what we saw in April where retail sales were down 0.2%. That was revised from a flat reading. Now, some of the biggest decliners, we saw weakness in gas stations. That was primarily due to a pullback in gas prices and may. Also retailers, furniture stores for example, as you can see here, were down as well, shop selling building materials and garden equipment where we can the month of May.

On the plus side, the auto sector was strong as well and that was really due to car dealerships and was also reflected in the automotive parts and accessories for us. Excluding these sectors, retail sales control group, the control group is what is used to estimate the personal consumption index or the PCE expenditure index, the PCE Index, which is closely followed by the Fed to get a sense of whether inflation is cooling. So the retail sales control group was up .4% month over month versus 1/2% decline in April and they are the biggest gains were sporting goods stores. What does this all mean?

We know that US consumer's account for two thirds of economic activity in the US and evidence is growing that spending is weakening, that consumers are under pressure from rising prices over the last two years. In fact, retailers such as Walmart and Kohl's and Target have been indicating that the consumers are starting to feel the pinch and are pulling back on their spending in the past couple of months and there is also other evidence that the labour market is starting to cool as well.

Markets right now are betting that this latest evidence that the economy is cooling could prompt the Fed to start cutting rates.

>> Over the Fed to enters these today meetings, I always expect someone carrying a bunch of reports under their arms, retail sales would be one of them. There was some reaction to that.

>> There was some reaction. Markets right now are pricing in, betting on to rate cuts this year. TD Economics says, look at, this is not going to change the minds of the Fed or the calculus.

They believe that even though we have seen inflation improving over the past couple of months, that has been partially offset by the strengthen payout numbers and wage growth as well. They believe that, look, the Fed needs to see some signs that inflation is cooling before they have enough confidence to start cutting interest rates and they believe that a rate cut is unlikely before December.

>> Interesting stuff. Thanks for that.

>> My pleasure.

>> MoneyTalk's Anthony Okolie.

Now, for an update on the markets.

We are having a look at TD's Advanced Dashboard, a platform designed for active traders available through TD Direct Investing.

This is the heat map function, it gives us a view of the market movers. So the TSX 60 by Price and volume. You know, when it comes to the top line, the TSX Composite Index number, we got some green on the screen. Pretty clear who is doing the lifting today, it would be in the energy space. American benchmark route is making some gains. You got CNQ up almost 3%, Cenovus, CVE, up a little more than 2%, and the rest of the group, Enbridge is down slightly. A bit of green on the screen in the financials.

Fairly substantial. Shopify, another week session, down a little more than 3%. South of the border, Anthony was telling us about the further signs that consumers were feeling the pinch with higher borrowing costs.

Bit of a mixed picture. The S&P 500 is up modestly. Nvidia starting to show us something. They are up about 2 1/2. Their competitor in the chip making space, AMD, down a little more than 2 1/2. Across the rest of the board, a little mix of green and a little mix of red.

We are back now is Sam Damiani from TD Cowen, talking REITs. We are taking another question. Someone wants to know if REITs like RioCan are good for investors looking for income?

That's income distribute, right?

>> That's right.

It's really the retail REITs including RioCan that stand out with an average distribution yield today of 6.7%, which is obviously well above where GIC rates are today or were a few months ago and certainly if rates go down, that's well above even more so. So we sing with the retail leasing backdrop still strong, despite what we are hearing about the consumer being challenged, that population growth and employment is leading retailers wanting to expand in a capital constrained market, so the leasing market is strong for RioCan and virtually all other retail REITs.

Low payout ratios. RioCan poised to grow its earnings, we don't think this year but in subsequent years, we see recurring growth at a RioCan.

Very stable results.

So we think the retail REIT space is potentially one of the more interesting to individual investors that we want to get back into the REIT space because of that high yields and obviously the low valuations as well, so RioCan, just like H&R, we don't think the distribution is at risk, we think that over time there is potential for it to grow.

>> There you go, another place to do some homework on for the audience. We will squeeze in one more question. What is the Outlook moving forward for Allied Properties REIT?

>> Allied, yeah.

We started with office and may be ending with office. It's a small piece of the pie.

It's an interesting went today because the yield today is over 11%. Usually, when a stock is yielding like that, the market is expend dating a dividend distribution cut.

Management has been quite vocal including going on BNN just a few weeks ago to say that the distribution is not going to be cut.

The market has got to decide what they want to believe but if management is going to prove them right, in the course of time, we could look back and say why didn't I buy allied with the 11% plus yield? Allied, but of a controversial name in the sense that they just got a rating downgrade I think from Moody's last week to on investment grade, they have one other rating agency.

The focus is more on the balance sheet today that I think it was a few months ago and how they refinance their upcoming ventures. I don't think the debt market really moved on that rating downgrade last week. It's kind of Christ and, if you will.

And so a controversial name but it certainly is a deep value opportunity and like I said, if the sentiment is positive, at least temporarily, it could represent an opportunity. You're buying allied around 300 per square foot, cap rate over 8%, we haven't seen asset like there is trade anywhere near those metrics almost ever, 20+ years.

There is price discovery that is going to come eventually and personally I would be surprised if allied gets valuations anywhere closer to where it's trading today.

>> Final thought before he let go. We started off talking about, in the end, we cannot escape the macro rate environment.

If we want to see the REITs start to perform, other things need to happen.

>> I heard her call you talking about a cut not happening until later this year.

That's just telling investors to be more patient in terms of dusting off their files. We just need that.

In the meantime, if you are patient and you want to get in ahead of the rush, if there is a rush, and we think there would be a rush under a scenario of declining rates, continuing declining rates, now is a good time to start thinking about it.

>> Look forward to the next time.

>> Thank you.

>> For more information, a link to companies covered by TD Cowen, a division of TD Securities, can be found at the end of the video.

Our thanks to Sam Damiani for joining us today, director for equity research at TD Cowen.

As always, make sure you do your own research before making any investment decisions.

if we didn't have time to get your question today, we will aim to get into future shows.

Stay tuned for tomorrow show, Rachana Bhat is going to join us, VP for active fixed income portfolio management with TD Asset Management.

We are going to do your questions about corporate bonds. A reminder to get those questions in ahead of time. Just email moneytalklive@td.com.

That's all the time we have for the show today. Thanks for watching and we will see you tomorrow.

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