BNN - Thursday, May 23, 2024 - 09:00 a.m. (ET) - Segment #6

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. So, it's a financial approach that just flows together. Kinda like this: Investments in the front... Insurance in the back. We do both. [phone ringing] ( ) ( ) ( ) The infiniti qx60 exemplifies modern luxury. With powerful suv performance, three rows of comfort, and a sleek-yet-daring design. ( ) Lease a 2024 qx60 from 0.99% apr for up to 24 months. Visit INFINITI.ca. ( ) Take advantage of historically high yields while reducing risk. Td Asset Management offers a large suite of active and passive fixed income investment solutions that can provide income and stability to your portfolio. Td Asset Management. Hi I'm Taylor Thoen. Coming up on btv. There's been over 11,000,000oz of additional resources found since 2020 by people working in the Tombstone Gold Belt in the Yukon. To date, we've only found that two deposits. But there's nine known gold bearing intrusions on our rc gold project. More potential outside of the discoveries that we've made already. Watch us online or here on bnn Bloomberg. We often talk about looking for value in the stock market. But looking beyond the stock market, there's another value story to tell you about. According to data compiled by bloomberg credit is trading at the biggest value gap with equities in more than 2 decades. For more on what that means for income seeking investors, let's bring in ed clissold chief us strategist at ned davis research group. It's great to see normally we keep our conversation centered around the stock market. But what are you seeing in the credit market right now? Well, we've re entered a regime that we have been in since before the financial crisis. >> Where bond yields have got to a high enough level that that for income seeking investors really offer an alternative. Whereas last decade really, we called it tina, you know, there is an alternative to equities now or a year of terror. There are reasonable alternative to equities, particularly from the bond market showed by several measures you not to look at. So earnings yield for the so yeah, inverse, if you're a share versus bond yields, you know, bonds, ponce, look fine. And then also, if you look at percentage of providing dividend yields greater than the 10 year treasury yield, that's at its lowest level since since 2007. So you know, if, if you really need that in common, a consistent you know, make sense. What the on stocks and why you think when you've got such a an obvious example of credit. >> Or fixed income opportunity that you've got the stock market at an all-time high. >> Yes, it should be clear. This we don't like for a balanced portfolio. We actually are overweight stocks, but it was a few reasons for that one is that the economy is doing fine. Earnings growth is fine. Quarter quarter acceleration in s&p 500 earnings and heidi rate percent of companies beating expectations. We also, if you, if you look at what that the road evaluation picture, what we've done is you really, really ensured gary the normal range from what it was before the financial crisis. So if you use a look at last 15 years ago, while stocks are expensive. But if you look at it. So last 40 50 years, which may be a better time you know, and what it means is it's really more about balance. And this 100 thing to consider here and that is because of tax rules and also the flexibility. Buybacks and become a lot more attractive in so actually buybacks and exceeded dividends for the s&p 500 for all but 6 in the past decade plus. You need to look at buybacks and dividends together to get the idea of what companies are doing to return capital to shareholders. And if there's a case for bonds and a case for stocks to is the case for a so-called 60 40 split. Come back on the table. People have been throwing in the towel on that. Yeah, I think that does need to be considered and I

throwing cash is as well known in a in a world where leasing the U.S. you're getting, you know, 5 and a half 6% on cash will make sense to have something that in a registry of support every ministry asset, your portfolio. So so no, 60 40 is not dead. In fact, I make the argument that over the next 10 years to become more and more important to have a range of assets. Your portfolio, okay. And on the technicals cause you cover a range of metrics in the market. What he's saying for the the outlook from here. A lot of people very curious about whether or not this bull market continue to run conversation this week. This it actually the gains we've seen in this stock market. >> Bull or at least the length of the bull market is nothing close to what we've seen historically. So could continue to run. But like when you look at the trends, technically what he's seeing right now. >> Degree was that you know, in terms of duration of a bull market there, we're not even close where where they usually and but >> What we saw in april quick, decent pullback in the market got oversold percent, just talks about 10 day moving average, just very short term. Doctors most oversold level since march of last year, right after a silicon valley bank closure. So we got oversold. But the long-term technicals didn't break down a technical perspective that like to see percent stocks their 200 day moving average. It's a longer-term timeframe, never got below 63%. And now we're back up to almost 75%, for stocks in the U.S. are about the long-term moving averages. That's a pretty bullish setup that suggests the bull market has a while to go. And then getting to the tech sector specifically, just because it's the only thing people seem to be talking about today with nvidia. >> A company that also unveiled a stock split planned increase to its dividend. If the technology companies are leaning into shareholder-friendly moves, coupled with the the growth that they're known for what message does that send? Yeah, that's a reason why we like the sector retelling communication services as well over the long run. I it's really remarkable. They cannot put these massive investments in ai that. >> Really fear if you're the companies could could handle because takes too much cash with one hand. And then with the other hand, they can returning capital to shareholders. So as agent underscores, are great businesses. This is not dot com late in 90's type of situations which companies are burning through cash. So it's a reason to like them over the long run doesn't mean you're not going have pullbacks along the way. But these are these are really solid. Is a good to get your perspective as always. Thanks so much for the time at joining us chief us strategist at ned davis research on that tax team. >> We had a lot to calls on market call yesterday for kim bolton on tech. As for the picks that he put in front of us. Cisco, western digital and digital realty trust were the names that he likes right now. You can get more on the details from our website. Bnnbloomberg.ca. And if you're curious about the outlook for the energy sector. Eric nuttall will be joining us on market call today. She can get your questions ready, noon eastern time. 9:00am pacific coming up. We've been talking a lot about td bank this morning. It's pure though, we royal bank is seeing another notable move higher, a new high for the stock. Andy bell breakdown that story next. (Upbeat instumental music)Canadians are facing a newnormal with interest rat and investment options. The Capital Direct OneIncome Trust is in a growing asset class thatprovides stability and is income-generating forportfolios. Here from Capital Direct areEire Gorman and Aaron Narayan, great to see you again. Thank you for havingus back, Mark. Eire,how are interest rates impacting the Capital DirectOne Income Trust? It's really important tounderstand the timeline of the loans that make upthe income trust. These are fixed-term vehiclesthat don't have the volatilityof a variable product. That means we're less-vulnerable to interest rate changes for18-24 months. Aaron, what arethe pros and cons for the trust if interestrates go down? First off, we love stability. Looking forward, we believe interest rates willact in our favour. If rates go down then (Unclear)or now Cora drops which means the cost of capitalis actually cheaper. And what if interest ratesstay around these levels? Aaron: If interest ratescontinue to stay the same we continue to kick out similarreturns as we have been for our investors which makethem extremely happy. So the trust holdsresidential mortgages. Based on what you're seeinghow would you say Canadian homeowners are coping in thisnew interest rate environment? This is a good news story. Canadians arefinding ways to cope.

Our mortgage investments andflexible lines of credit have allowed homeowners toconsolidate at a lower rate and continue todo the things they love while owning their own homes. As we said here, homeownershipis so important to Canadians and we've seen the choices thatthey have made to remain in this privileged category. And it's also important to notethat throughout this new normal we've kept our loaned valueat a very comfortable 52%. If advisors or investorsare interested how do they reach you? Yes, Portfolio Managers andFinancial Advisors can find us atincometrustone.com. And for direct investorsyou can call us anytime at 1-800-625-7747. All right, we've been talking a lot about the banking sector, including td this morning. But royal bank on an intraday basis got up to a 52 week high. Let's bring in andy bell's been covering the royal story and indian just looking back at history. I think the all-time high came back in 2022 were not too far off royal bank up pretty much close to its best levels of all time that's right, jon. Yeah, my calculation is that we haven't seen the price for royal bank like this since february of 2022. >> And of course, that's in contrast to td bank, which has been struggling. I know you've been all over that story. Look at that score card tells a it's a tale. Td bank relatively investor darling and siding over the past year and more money laundering, investigation concerns and royal bank simply heading higher. Of course, day investors. I've said this before institutional investors not known for their imagination. So they often tend to just graduate gravitate companies companies are the biggest market cap in a way you can't blame them. They do want to caution smaller companies that are less like you know, it's interesting with royal as well they >> But 2 trillion dollars in assets. Now they're just a an absolute behemoth and try and you have to wonder if we're going to increasingly see a story around the standout bank stock how often are investors coming on and talking about jp morgan, they love jp morgan that up. In the thing with with royal, which is very interesting, is all things considered. They did seem to have a relatively smooth process towards acquiring h a street bc's business year in canada. And it feels like some of the analysts who cover the bank keep pointing to that deal is one of the reasons to like the stock. >> That's right. Yeah. Jeffries said jon aiken, the jefferies to upgrade royal bank to a buy this month. And he said one of the one of the factors propelling the company ford is this acquisition of hsbc. It's actually interesting. He said the customer in canada, it's especially profitable for the banks. And of course, we have heard them called I royal bank now has the opportunity to cross-sell. >> And additional with the hsbc take up additional 70,000 retail customers. And 12,000 12,000 commercial clients. So that's one factor. You make lots of money from your customers in canada. And also jon, this as you said, it appears that they aren't having teething troubles right now are integration troubles, indigestion as bring hsbc canada into the organization. You know, before I let you go, we could arguably cover td and royal bank every day here on bnn only because if you look at the way the tsx. >> Those 2 stocks make up, I think more than 10% of the index. But royal is the the most heavily weighted. That's right. Bank is just over 6% of the tsx composite. And then td is number the as you say, more than 4%, then comes that cnq canadian natural with just under 4% in 2 of our thai of cibc is an interesting piece out saying that what, depending how you slice s something like 20% of the float of update. Tsx stocks by market capitalization are now managed, possibly know one of staring. Well, it's kind of like elon musk country and these funds just follow the market up and down. But of course, become self-fulfilling as people put money into possum stock. Possum stock funds are passing they have to buy the heavily wage and stocks and that tens, of course, to push up royal bank even further. So there's certain circularity, they're kind of speaks to like the themes you have to watch with the etf revolution. It seems to be one of the considerations are right.

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