BNN - Thursday, May 23, 2024 - 11:00 a.m. (ET) - Segment #1

>> Hi there. Welcome to morning markets here on bnn bloomberg. I'm paul bagnell. Thanks for joining us in just a couple of minutes, we'll take a detailed look at the results at toronto dominion bank and what the bank ceo as of this morning about the money laundering probe in the united states. We'll also speak with the canadian portfolio manager, mike archibald on why he likes to big names in canada's commodity sector chemical. Arc resources. And we'll talk to the chief executive officer of an executive search group. What makes a great leader and how leadership has driven success at nvidia. The stock that's moving the markets today. Markets are getting a left right now with the s&p 500 and the nasdaq composite briefly touching it fresh intraday all-time highs following those blockbuster numbers afterthe close of trading from nvidia. Speaking of nvidia, the ai bellwether once again blew away estimates as demand for artificial intelligence remain strong. We'll speak with the author of be the unicorn william vendor bloemen on how nvidia is emerging as a top leader in tech. And td bank has delivered a significant earnings beat across all operating divisions. Despite the money laundering was it continues to face in the united states. That's a probe into alleged money laundering activities. Let's get to some stories now that we're tracking for you in the bnn bloomberg newsroom. Westjet airlines plans to launch a new cheaper fare category for travellers willing to fly without a carry on bag. Chief executive officer alexis von hoensbroech says the new ultra-low fare category will be introduced in the next few weeks. Travellers will not have the option to put a bag in the overhead bins, though they will still be permitted to storm. Not cite purse or small personal item underneath the seat in front of them. Maple leaf foods says it's closing its poultry plant in brantford, ontario and consolidating production within its existing network earlier this year. The company said that 100 year-old facility would need significant ongoing investment to continue operating longer term. The police as the closure will happen in stages and affected employees will be given opportunities at other locations. Shares of live nation entertainment are under pressure. Bloomberg news is reporting the U.S. justice department and a group of states will sue the company for anti-trust violations related to the control of concert ticets. Sales by live nation's ticketmaster unit. The report says the lawsuits will seek remedies, including breaking up the company. There's another look at north american markets. You can see our tsx composite index is down by about a quarter of a percentage point. The s&p 500 in the united states is essentially break-even really the focus of investors today is on the nasdaq composite being driven higher by the nvidia results, which have had a knock-on effect throughout the tech and ai sectors. (Funky hip hop music) welcome back, toronto dominion bank topped earnings expectations early this morning, driven by strong performance in its capital markets division. Provisions for credit losses did come in higher than expected at just over 1 billion dollars. For more, let's head to christine dobby, she's canadian finance reporter at bloomberg news. Interrupt christine. Thanks a great deal for joining us on this. This was a widely anticipated set of results, I guess for other reasons what the was going to say about that big problem is facing in the united states. Why don't we start there? What did td bank's able to money laundering probe in the u.s.. >> Good morning, paul. And yes, absolutely, that was really the issue that's overshadowing their results this morning. And despite having media, despite beating and pretty much every category this morning, their their shares are still down a bit this morning. What they said the anti money-laundering probes was essentially a repeat of of a, a number of statements they've made in the past few weeks. Ceo barrett is ronnie on call with analysts this morning did say that it was unacceptable. What happened there and that they're hoping that they can resolve the the probe that they're facing, which is with the department of the U.S. department of justice as well as 3 different regulatory agencies in the u.s.. He's hoping that they can resolve those probes as soon as

possible. But we really got no further detail on what that specific timeline might be as well as the size and the scope of any penalties that td might face. And I think investors knew that we weren't going to get that clarity, but there's still a bit of disappointment that we okay. What about the results of there was a that he beat earnings per share expectations by wide margin. What what drove it there? >> There is a lot of analysts called it sort of broad base one particular bright spot for td u.s., its capital markets business where net income more than doubled compared to a year ago. And if you'll recall, td closed its acquisition of the U.S. investment bank. Cowen year ago the same quarter. So they they did see some momentum on you, pretty much across the board in their capital markets. Business. They wealth management business was also did also did well, as did the canadian retail business. >> And they the td came ahead of analysts estimates in terms of its ability to manage expenses. >> They haven't put it working on a restructuring program, too. Cut costs and really help try and counter some of the spending they've had to to to improve their controls around anti-money laundering. Christine dobby, thanks a great deal for the insight. Canadian finance reporter at bloomberg news. She's, we're watching for. >> Tracking those results all morning long. Let's continue the conversation on td bank results with carl de souza. He's a senior vice president and canadian. >> Banking sector leader at morningstar dbrs karl, thanks a lot for joining us. What stood out in these numbers off for for you. >> For really stated the analyst expectations you know, reflect is trying to cross operating as was expected. However, there are provisions for credit losses or pc else. >> Continue ramp up in the order and the percent or about that was driven by either the seals on performing loans that reflect an existing credit conditions, volume growth and higher for longer interest rate environment, is expected to further impact credit quality going forward. Did, despite the ramp he seals, it was more than offset by a modest adjusted growth quarter. Reporter that was driven by capital markets, including higher underwriting and advisory additionally just expenses. And that excludes the impact from the provisions for investigations related to the bank's program. Those expenses excluding that were down modestly for reporter. While insurance service says expenses were also down quite a bit and 9% or a reporter. So ultimately for from a result perspective the beat expectations, we td that's not the focus right now. Ironically, it it's more on the rental program. >> Do you expect the uptick in provisions for credit losses to be reflected in the results of to to happen in the results of other canadian banks. This quarter. >> Yeah, it's a good question. I think in general with with cue to earnings, we're expecting to see is is a continued ramp-up in pcl. It's a higher for longer and strain environment as I mentioned. And and we, you know, there's uncertainty as to the timing and magnitude of interest rate cuts, which I think would provide a little bit of relief on the critical for months out. So and those differences in timing also vary between canada and the u.s., which many of our large banks operate in the u.s.. And we do expect to continue ramp up in in those prisons are p seals and into 2 across the banking sector. However, you know, we also peoples and that that 2 reasons could potentially peak in the 2nd half of fiscal 24 provided there are no negative macroeconomic shocks or geopolitical shocks that come up in that 2nd a minute as you are well aware that things have been ramping up their provisions for for performing loans to fiscal. 23 and and some of those provisions for performing loans and moving where the pair so but all else being equal, we do prefers to some a in the let's get to the money laundering story because it really is the >> Narrative that td bank has has had a huge impact on >> Relative share price performance of this stock versus the with the others in the group. We did not get really any new information toay from bank leadership. What do you expect to happen in the future as as a as these rulings from U.S. regulators come in. >> Yeah, >> You know, fortunately, didn't get any more colour cry from the bank or anything, though some unexpected is is discussions with the ringleaders in the U.S. department of justice are ongoing. So we probably won't hear much until, you know, the there, they can disclose more

on that front, although we do expect, you know, additional monitoring a non monetary policies, in addition to the provision they they took and and so I think when you look at these aml issues, 2 sides here. They did, they bring to spend approximately 500 million related to improvements in the risk and control infrastructure. And we're all in the program. Ramped up you know, these costs are expected to increase going forward is to continue the remediation efforts. And then on the other side. I where I'm looking at it is you know, the big schools strategy is obviously focused on the U.S. the can attend a saturated market. They're essentially number 2 in canada. So was that has been focused on the u.s.. We do see potential impacts on growth strategy, both organically and in organically as a result of these ongoing discussions u.s.. Regulators in the department of justice acquisition activity in the U.S. is expected for the foreseeable future. And then following the termination, the first rise in transaction bank announced plans to open 150 stores by 2027, however, to be on the earnings call that they know the, you know, remediation efforts are attracting, as you would expect a lot of the investment dollars. So the bank is unknown somewhat of a pullback in those store openings, indicating the literally pay store world with a focus on digital in the near to medium term. So you know, going back to the does a growth strategy. I think when they announced the first horizon acquisition, they anticipated a much bigger footprnt or or an expanded footprint in the U.S. and a much quicker, you know, expansion in the U.S. and growth in U.S. than organic growth opening branches. And now with the benches, it looks like in a at least for the near to medium term. On on that 150 band forecast by 2027. And then lastly, there's also been speculation began speculation that it could potentially face an asset cap on growth in the u.s., but that remains to be seen. Cole, thank you. A great deal for your insight. Carl de souza, senior vp and km banking sector lead at morningstar. Dbrs. >> Well, oil has had a choppy ride over the past several weeks. Our next guest says energy is one of the sectors to be overweight. In, however, will get some investment ideas from mike archibald right after this. He's vice president and portfolio manager at agf investments. Morning Markets is brought to you by Amur Capital. Discover Amur Capital a simpler approach to investing. Discover amur capital. Amur capital's track record of consistent performance has delivered industry leading returns since inception. Why play games with your financial future? Choose amur capital - a Simpler Approach to Investing. Harvest Healthcare leaders Enhanced Income etf. Maximize your monthly cash flow from Canada's leading healthcare etf. More income from Healthcare Leaders. Harvest ETFs, income happens here. If you are an entrepreneur, you know what it means to be always invested. Grabbing hold of an idea and seeing it through, meeting old challenges with fresh solutions and believing in the power of tomorrow. We know because we're the exchange for entrepreneurs and we're always investing in public markets, in business, in growth, in you. The world of investments is growing, offering more alternatives than ever. ( ) Choose an alternative that invests, in what's here to stay. ( ) Things you can see and touch. ( ) Things that are part of our everyday lives. ( ) Avenue Living brings a different approach. ( ) One that's steeped in history, experience, and trust. ( ) Choose a proven alternative. Talk to your advisor about Avenue Living today. ( ) - [Narrator] The Ninepoint Energy Fund managed by Eric Nuttall. Generating long-term alpha in the energy sector through conviction and access. Number one Energy Fund in the Morningstar energy equity fund category for 3, 5, 10, and 15-year performance. Available under ticker nnrg. Gold, Gold, Gold, Gold, Gold, Gold, Gold, Gold, Gold, Gold, Gold, Gold, Gold, Gold, Gold, Gold, Gold, Gold, Gold, Gold, I got to gold. (Upbeat music)

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