BNN - Monday, May 27, 2024 - 09:00 a.m. (ET) - Segment #7

anticipated earlier in the year. And so are you. >> Creating economic models based on the idea that we won't say see interest rate cuts this year or you are anticipating that eventually the bank of canada, regardless of your own opinion, is going to make a pivot. What's your call on rate strategy for the rest of this year? >> You know, are a cause for a bank because we view governor macklem was a daughter, her, we saw that in the early days of the pandemic, when dragged his feet and reacted too slowly to inflation was more focused maximum employment. We saw that when was a little bit prematurely back in january of last year, we saw some of his, his arguments earlier this year before looks like was performing a little nicer. I think the june july call is, is a sense of oneness. If we take the governor at his word. He said he wanted months plural of additional evidence when he said that may second and he's only have one more inflation print and there will be nothing before next. Decision on in terms of inflation, many of his also quite cautiously. And I think some of just holding off until at least july on yet another round of inflation expectations measures. Be able produce another whole set of forecasts going into the july meeting firmer foundations on which to deliver potential cut, a tiny. And so this is more. What does that make a reaction function guiding our our rate cuts. 50 75 points by the end of the year as opposed to what I think the bank of canada should be doing going forward. All right, well, before I let you go, you know, before you joined us, we do this segment on where people might go for their summer vacations. And right now we've seen the canadian dollar all it's been holding around $0.73. But over the course of the year. >> It's lost some ground compared to the U.S. currency. And obviously this is constant conversation around what the fed does reach. The bank of canada does if the bank of canada is a little slower in the push lower rates. What do you think that means for the loonie? You know, this is that's the case. And canadian dollar strength as a little bit against U.S. economy, because we're cutting and wide enugh. The native policy rate differential that presently have relative to the federal reserve, which is right now. >> 50 points below, which is another argument for being very cautious when you're already below the fed and you have a weak currency and high oil prices and all these other forms of resilience in ongoing fiscal stimulus. More coming in the fiscal update in winter budget into our election next year. Just don't see the big rush of the bank of canada to feel like it has to the fed in this environment. Alright derek, thanks very much. The breakdown, derek holt of scotiabank. And we'll see what the gdp numbers tell us later this week. And of course, we'll have that bank of canada decision heading into next week. >> Later in the program for investors who've been watching the interest rate story. Increasingly, we're in world where the fixed income market is starting to pay a little bit more than what you might have traditionally look for in the equity world through dividends. But we've got some standout dividend plays as part of today's edition of the list will bring you that coming up. Closed captioning of this bnn Bloomberg program is brought to you by Avenue Living Asset Management. Investing in the Everyday. ( )( ) ( ) ( ) ( ) We all need fibre for our digestive health, but most Canadians only get about 50% of the fibre they need. Good thing Metamucil Gummies are an easy way to get plantbased fibre. Three gummies have the same amount of fibre as 2 cups of broccoli. Metamucil Gummies. The easy way to get your daily fibre. Investing for monthly income made easy with hyld. A high income alternative to the s&p 500 and hdiv, outperforming the tsx 60 with a higher yield. Hyld and hdiv, more income every month. From Hamilton ETFs. New Herbal Essences is packedwith naturally derivedplant based ingredientsyo and none of the stuffit won't. Our sulfate free collections,smell incredible and leave your hairtouchably soft and smooth. New Herbal Essences. At the cse, we're always invested in public markets, in business, in growth, in you. Champion Iron offers a rare solution to decarbonize the steel industry. Which represents up to 10% of global emissions. The company recently doubled production capacity at its mine in eastern Canada. It is now investing to produce one of the

world's purest iron ore. Enabling green steelmaking without the use of coal. Controlling a large portfolio of high purity iron ore resources. Champion is considering strategic partnerships to further develop the region. Champion Iron. G7 finance ministers and central bankers wrapped weekend meeting in italy with some strong words for china. Their official statement taking issue with the country's policies accusing china of hurting the economies of its trade partners. Member nations also warned will consider taking steps to ensure a level playing field for global trade. Shareholders of indigo are set to vote this morning on whether the retailer should accept a sweetened offer to take the bookstore chain private. The $2.50 per share bid comes from 2 firms controlled by jerry shorts, husband of indigo ceo heather eastman. The offer already has the support of a special committee of independent directors. And a sign of trouble for the U.S. movie business really box office numbers showing it will be the weakest memorial day weekend in nearly 30 years. The latest mad max film underperformed expectations, barely matching the new garfield animated movie. Other new releases have also to point disappointed. This pond says hollywood enters the crucial summer movie season. In the markets today. Big quiet. We do not have regular trading in the united states because it is indeed that merial day weekend stateside. The tsx though, is moving ahead. The positive performance, today's being led by a number of groups. Materials that topped the list, followed by consumer discretionary and communication services. All and we've got 8 of the 11 subgroups in the green at this hour take a look at what's happening with the price of oil, which has been trending higher over the course of the morning. Currently up about $0.69. 78 41 is the wti quote in new york. Gold, as we mentioned earlier, has also been positive today. And that's been rubbing off on our material sector. Toronto stock trading currently. We're looking at advance of almost $25 an ounce 23 at 81. 80 is the current quote there. And on the currency front, a day of strength for the loonie against the greenback at 73 33 us. And earlier we had a conversation martin pelletier, senior portfolio manager, trivest wealth at wellington-altus private counsel for his take on what's been happening in the equity world, including the recent run-up in canadian stocks. I think get dragged out with the U.S. market, U.S. markets. >> Leading most global markets and bringing up the call level of confidence in the economies like in and canada and domestic markets. And I think what is benefitting from that general trends happening south of the border. And you know, you said with the tempered response to and these like for like today where is quite us. Markets are closed. >> Yeah, and I guess at the end of the day, it's a good chance to slice and dice and remind our audience that is as a as as weightings go sometimes so go the markets and you know, the U.S. for better or for worse has that huge component that is tied to our market has some outperform some individual tech stocks that had huge rallies, but it's less influence on the overall market because we've got sectors like materials and energy that carry a bigger waiting. What do you think is the waiting that's going to carry investors the for this over the course of this year. >> Well, I'm still very optimistic about. >> The energy sector, the commodity the resurgence of inflation having a little bit of that in your profile is I think that's going to be beneficial to the tsx. >> I am worried about the canadian certainly in comparison to what's in the u.s.. Isn't the same level of strength, especially among the average household that is financially weaker and more susceptible to higher interest rates. And so that shooting pack some of the more broader the market, even though the canadian banks reporting more recently. And so I guess that opens the door to a conversation around the canadian banks they have plenty of exposure to the canadian consumer. We're going to get a flood of canadian bank earnings this week. We're going to be watching for. >> Well, looking for some excitement. Something think to get a I from what mean to you reported a they did beat. >> On revenue and adjusted earnings, any money anti-money laundering uncertainties, no running we think that see

flat, the low single digit year-over-year catch earnings and growth, but stable margins. And all of what described to you is, is not very much excited we could see some small dividend increases, maybe 2% by scotia royal bank, 4% by national, a cbc not a lot of excitement segment, but you know, sometimes boring is scene and that's what we have and dividend yields are you know, drive the drug today we'll talk a little bit more about dividend yields later in the program, but >> You know, there are there any banks that carry the kind of characteristics that he would lean into more than you know, there's there's a lot of overlap. I think with the financial services sector. But are there any banks like more than others? That's a good question because it has been a stock picker's market in the sector. Looking over the last 1, 3, 5, years. >> Looking at says the october lows. You've had give away its and so you know, there a point to 0.7%, whereas you have cnbc national royal bank for anywhere from 30 to 40%. And so you know, there's been sort of an equalization on more. A long line of recent results. We any of the individual names of reproduce them such that were through structured notes instead for a number of different reasons, especially around risk. But you know, there's there's definitely you can see the guy that ever since in the in the dividend yield. And so you got scotiabank at the highest at 6 and a half percent and national bank los at 3.7% dino getting a little bit of a higher yield it's probably me work be worth looking at like scotiabank and cibc td of the higher yield guys to them. So you're getting paid the level of of, of risk associated there it there, there certainly is it something south of the border that, you know, we're keeping an eye on, but on the you know, you are being rewarded or being paid a quarterly for the risk. >> Martin held days re there on the canadian banks want to stay on that theme. We also got perspective on the banking group earlier from laura lau from brompton group. >> And he had td report. So I think that's, you know, a good indication what to expect. And I think we're at this point where a lot of the bad news since be baked to the canadian banking sector. Everybody's waiting for, you know, loan you saw losses were increased by td. And I think a lot of the loan losses, if you don't increased loan losses now, when you get to do because if you don't, everybody's going to wonder when they can increase. So you might as well just do it, get it over with. And then I think, you know, there's also what's the outlook for loan growth, especially with these high mortgage rates. >> Yeah, I'm glad you brought up td which you know, some of the maybe we're less focused on because there are also navigating that into money laundering probe. They did set aside more money for bad loans. And if those bad loans don't materialize, a guess you get that money back. But the the idea of the loan growth, I mean, what does a higher interest rate environment where consumers are increasingly being more cautious with their cash. What does that mean in terms of the kind of expectations and investors should have full for what a bank can. >> So what we're seeing is, you know, the U.S. consumers much more resilient to can a consumer, but with this earning season, we've seen cracks. What I mean by that is, you know, mcdonald's is it's too expensive to go donald's now for the average consumer, home depot. And we also saw blows do yourself it with a beta, this less of that walmart and target again, it was seen cracks are and then it's of us can in concert was even under more stress because we actually we have a greater impact as we don't have. 30 year mortgages like they have uso. I think that what we see is certainly less mortgage loan growth. And we might we expect more credit card loan growth this well. >> Can the bank's offset some of that lingering uncertainty with other parts of their empires. Capital markets performance, that kind of stuff. >> We're seeing some capital markets activity pick up, especially in the mining space. We had quite a few deals last week, so that helps offset that. And then I think that to try to offset parts on the expense side well. So we've had to mount a layoff. So you know, we're likely going to have a bit more. How do you feel about investing in bank stocks generally right now? I think that, you know, by the downsides already been baked in, you know, it's a story that everybody knows and they're trading closer to the bottom in the range. So I think that it now is not a bad entry point for banks. And we

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