Bank of Canada Cuts and the Case for Gold Miners

[00:00:01] This is The Canadian Investor, where you take control of your own portfolio and gain the confidence you need to succeed in the markets. Hosted by Braden Dennis and Simon Belanger

[00:00:14] Welcome back to The Canadian Investor Podcast. I'm back with Dan Kent here. We are back for our Thursday news and earnings episode. Got quite a bit to talk about. Earnings are really starting to pick up, although a lot of it is happening this week.

[00:00:29] And with you traveling and me traveling as well, so we'll probably be a week or two behind for big tech earnings. But I'm sure we'll get the chance to do a bit of a recap when earnings season is slowing down.

[00:00:42] Yeah, there's a few big Canadian companies reporting. Rate cut news. I mean, we got CN Rail, Rogers. So should be a pretty good episode. They're pretty popular companies.

[00:00:52] Yeah, exactly. They're pretty widely held. And I'm also gonna talk about Newmont, which is listed, I think in multiple places, Canada, US, I think Australia as well.

[00:01:03] The largest gold producer in the world. Haven't really talked about them in the past on the podcast. So kind of got inspired because they had like a 15% drop when they released earnings. So big drop. I'll go over that.

[00:01:15] But as you mentioned, we'll start off with the Bank of Canada cut. And you know, I'll admit I was wrong. So you were right on the 50 basis points. I cut I think we when was it we talked about it when the Fed did their announcement or it was like two, three weeks ago, right?

[00:01:33] Yeah, it was. Yeah. And then they like it was expected that they were going to go 25 basis points. But then that, you know, inflation print came out and I had a feeling like they were going to use anything they could to get rates down faster. And I mean, like you'll go over like it does. It's not necessarily like I would imagine that, you know, that inflation report, it could easily come in much higher next month just due to energy prices.

[00:01:56] But I know CIBC came out with a report. It was like the night before or even possibly the morning of that said that they could go by 75 basis points. Yeah, which I think would have been that would have been really, really aggressive. I think it would have had to been much worse than it is to go 75. But I mean, they kind of put it out there. And I feel like it could have made people panic a little bit.

[00:02:22] Yeah, I mean that I don't even know. I didn't look it up. But I can't imagine like when would the last time be that they cut rates 75 basis points?

[00:02:29] I don't know. I'd have to look but usually it's not when things are going well.

[00:02:34] Outside of like maybe like the COVID. I don't even know if they cut 75 during the COVID. Like they pretty much just wiped it wiped it down to next to nothing. But I mean, it's been 15 or 20 years since they cut by 50 basis points, I think, like outside of the COVID crash. So 75 would have been huge.

[00:02:51] Yeah, I don't have the data in front of me. But that sounds about right. And so some of the reason I thought they might go 25. And obviously, the inflation data kind of change. And of course, you know, you can also make the case I talk a lot about energy. But if you remove kind of, you know, housing costs, inflation is even lower. So, you know, you can make case both sides.

[00:03:12] The reason why I thought I saw core CPI didn't move in the latest print, and I think one of the metric was actually slightly up. There's still upside risk for inflation, especially if energy prices go up, like you mentioned, US headline data, specifically job growth, is coming in better than expected, meaning that the Fed may slow down its cutting cycle.

[00:03:33] And if the Fed is slowing down its cutting cycle, and the Bank of Canada isn't, then you increase the risk of well, obviously, you increase the gap between the two, and potentially weaken the Canadian dollar and could create and spur some inflation.

[00:03:49] And if for whatever reason, inflation would start picking up in the next six to 12 months, the Bank of Canada has been very clear and Tiff Macklin that they really want to rebuild their credibility with Canadians.

[00:04:01] And I don't think anything worse than inflation picking back up short term.

[00:04:07] So let's say six next six to 12 months, and then they have to start raising rates again.

[00:04:12] That would be the worst possible outcome, because then they obviously they lost a lot of credibility.

[00:04:18] When they were saying rates would stay near zero for a very long time.

[00:04:23] And then obviously, the inflation was transitory thing.

[00:04:27] And then if this were to happen there, let's just say the way they're trying to rebuild that credibility would take a big hit.

[00:04:35] Yeah, they did not look good.

[00:04:37] I remember they said they were telling businesses, encouraging businesses to borrow money, like people to spend.

[00:04:44] And then, you know, rates would be low for a long time.

[00:04:47] And then how I don't even know it was very shortly after that announcement when inflation started spiking.

[00:04:53] And it was pretty clear that that would not be the case.

[00:04:55] But I mean, for them to do it two times in the course of like three, four years wouldn't really wouldn't really look all that good.

[00:05:01] But I think the Canadian economy is relatively, you know, it's weak enough that it probably supports something like this.

[00:05:08] But again, like they say that they aren't like they don't have to remain closely in line with the US.

[00:05:15] But I do believe they do.

[00:05:16] Like I remember he once said, like, it doesn't matter.

[00:05:19] I don't think he said it doesn't matter what the Fed does, but he said they can deviate.

[00:05:23] But I think if they deviate, you know, too much.

[00:05:25] I mean, we're seeing it even now.

[00:05:27] The dollar is it's taken a beating over the last while.

[00:05:31] And yeah, like if the Fed doesn't cut, you know, aggressively and, you know, you get to the next meeting and inflation still low, the economy still weak.

[00:05:39] What do you do?

[00:05:40] Do you cut even more?

[00:05:41] It's yeah, it gets a bit tricky.

[00:05:44] Yeah, I think.

[00:05:45] Yeah.

[00:05:46] What he mentioned is obviously Canada is its own currency.

[00:05:49] It's a floating currency.

[00:05:50] So, you know, I think the Canadian dollar, like I'm paraphrasing, but that was several meetings back, you know, you know, will fluctuate and Canada sets its own policy.

[00:06:00] But they had mentioned that it is a consideration, but it's not the end all be all.

[00:06:06] Now, if we go to the announcement overall in the release that Bank of Canada mentioned that their projections for growth in Canada is straightening.

[00:06:13] In the release, they said that the economy continues to evolve in line with their forecast, that they expect to reduce the policy rate further.

[00:06:23] So essentially, if things continue going as they think it will go, they will probably reduce further.

[00:06:28] But without going into too much detail there, of course, they had the mention again, the questions coming from some of the journalists.

[00:06:36] Not all of the questions were bad, but definitely there was a couple, I think two or three.

[00:06:41] If I remember correctly, reporters asking the same question, what the Bank of Canada will do in the next meeting if they're thinking about that 50 basis point.

[00:06:50] And of course, Tiff gave his usual very predicted, very expected in answer that it will be data dependent response.

[00:07:00] And of course, every time he answers, it's pretty funny if anyone's looking at the video, just look at his reaction.

[00:07:06] He like literally seems annoyed with these questions when they come up.

[00:07:10] It's kind of it's kind of funny.

[00:07:12] Now, they mentioned that geopolitical risk as well as stronger than expected housing activity.

[00:07:18] Our risks are upside.

[00:07:20] Well, our risk to inflation increasing faster.

[00:07:23] So there are some upside risks there during the press conference.

[00:07:26] Carolyn Rogers answered a question about housing potentially picking up with lower rates and the new mortgage rules.

[00:07:33] As she said, in their view, it could literally go either way.

[00:07:37] So they could see a scenario where it doesn't do much and housing kind of still trends downwards.

[00:07:42] Or they could also see scenarios where housing starts picking up.

[00:07:47] So in the first scenario where, you know, Canadians would basically just be waiting for lower rates and housing demands would not start picking up.

[00:07:56] But again, there's a couple of different scenarios that they're thinking.

[00:07:59] They're not sure what these new mortgage rules will do is essentially what they said.

[00:08:04] There's also some downside risk to inflation if consumers do not pick up spending, which we've seen happening quite a bit.

[00:08:11] A lot of people are just, you know, being more careful with their money.

[00:08:15] So whether it's, you know, depending on what your financial situation is, could be, you know, cutting back on going to the restaurant, cutting back on some activities, some of the items.

[00:08:26] Maybe, you know, you were thinking of purchasing a car and you're like, well, you know what?

[00:08:31] My car is still probably good for another few years.

[00:08:33] So you're stretching it.

[00:08:34] So it is one thing that they are keeping an eye on.

[00:08:38] And of course, if that doesn't happen, if consumers are not picking up the spending, I guess if you read between the line, it would probably cut even more aggressively.

[00:08:48] Now, there was a good question from a reporter asking about bond yields rising in the U.S. and Canada, a bit like your reference before I started going through the announcement and what impacts it has on their decision making.

[00:09:02] So, you know, I think it was quite a good question.

[00:09:04] And Tiff answered that, yes, the Bank of Canada takes financial market conditions into consideration when making their decision.

[00:09:12] Now, again, like you mentioned, bond yields are still, you know, going up.

[00:09:17] They're actually the Canada five-year bond yield went up seven basis points since basically this morning.

[00:09:25] So we're recording this on Tuesday.

[00:09:26] So since the announcement last week, it's actually gone up five basis, seven basis points.

[00:09:32] So it just shows that, yes, the Bank of Canada cutting, I think we've said it time and time again, does not mean that fixed rates for mortgages, for example, will be going down.

[00:09:43] Clearly, we are seeing the opposite.

[00:09:45] We're seeing the rates actually trending up.

[00:09:48] And in the U.S., like we mentioned, it's actually in the past month, it's gone up a lot more than Canada.

[00:09:56] So in the last month, it's gone up 54 basis points for the U.S. 10 year.

[00:10:01] So that's a pretty massive increase.

[00:10:04] And clearly, yeah, it's a big move.

[00:10:06] I think a lot of this was a result of the job print, the latest job print being stronger than expected.

[00:10:12] A little bit surprising if that would be the only reason, just because we've seen these job prints being constantly revised downwards recently.

[00:10:21] It could be other things.

[00:10:22] It could be just a bond market, less demand, less appetite for longer dated bonds from the U.S. and Western nations.

[00:10:30] It could be inflation expectations picking up for longer term in the U.S. and Canada.

[00:10:36] We've talked it at length about government spending, which is inflationary being so high, especially when, you know, typically you see these high spending levels when there's a recession and it's not the case right now.

[00:10:49] So they're all things that they are keeping in mind.

[00:10:52] But it's interesting to see how the bond market is moving despite those rate cuts.

[00:10:57] Yeah, I mean, the one I do keep an eye on, you know, fixed rate mortgages just because I am up for renewal in the next year.

[00:11:03] They really haven't moved all that much.

[00:11:07] I mean, despite we were 50 basis points last time.

[00:11:10] So we're down 100 basis points and mortgage rates have maybe come down like maybe 30 or 40 basis points since, you know, I last kept tabs before they cut the 50 basis points originally.

[00:11:23] So, I mean, lower rates does not always guarantee lower, you know, lower borrowing for people, especially when it comes to mortgages.

[00:11:31] I mean, obviously, you know, variable rate mortgage holders are probably getting a ton of much needed relief.

[00:11:40] But yeah, yeah, definitely.

[00:11:42] And even, you know, revolving lines of credit, things like that, I mean, are ultimately going to go lower.

[00:11:46] But yeah, it's going to be interesting.

[00:11:48] I mean, the inflation, like you said, there's so much like global conflict, but oil is just taking a beating.

[00:11:56] Like I think we're, I think just yesterday it fell five or six percent.

[00:12:00] And I mean, if that spikes up, it impacted so much.

[00:12:05] What was it?

[00:12:06] It was 80 basis points, I think, in terms of overall inflation, like the impact on it.

[00:12:10] But I can't remember, but it was pretty, pretty big.

[00:12:14] So it's definitely putting some downward pressure on inflation.

[00:12:17] I think there's no doubt about that.

[00:12:18] Yeah.

[00:12:19] And I mean, that's something that can change on a dime, really.

[00:12:22] So, I mean, month to month inflation reports are going to be pretty, pretty important to keep an eye on.

[00:12:27] But yeah, it'll be interesting to see what the U.S. does.

[00:12:30] Yeah.

[00:12:31] And then, as you mentioned, right, you alluded to.

[00:12:33] So the Canadian dollar has just been taking a beating over the last month.

[00:12:38] It's down three percent, which is quite a bit when you're talking about currencies.

[00:12:43] You know, it's not surprising because it's been pretty widely, you know, expected, at least over the last two, three weeks, that the Bank of Canada would be cutting, you know, probably 50 basis points.

[00:12:54] That's where the odds were.

[00:12:56] Of course, during that same time period, the odds of a rapid of rapid cuts in the U.S. have slowed.

[00:13:02] The market is still pricing in cuts, but at a slower rate.

[00:13:07] And clearly, it's put some pressure on the Canadian dollar.

[00:13:10] I actually wonder how bad it would be if we didn't export as much oil and commodities as we do.

[00:13:17] Yeah.

[00:13:17] Because that definitely puts, you know, dampens the effects a little bit.

[00:13:22] You know, it slows the effect a little bit because there is some extra demand for the Canadian dollar when you're exporting that and for the potential buyers.

[00:13:30] But if you look now at the CME FedWatch tool, you see that the odds of aggressive cuts are definitely slowing down.

[00:13:40] So now the probabilities by the end of this year is that the U.S. will probably be sitting at either, you know, four and a half percent or 4.25 percent.

[00:13:52] So that's kind of the probability.

[00:13:54] It's about two thirds at 4.25 and then, you know, about a third at 4.5 percent.

[00:14:00] But it's evolved a lot.

[00:14:02] I think over the last probably month, these odds, like I said, the previous job print was one of the catalysts for that.

[00:14:11] But, I mean, it'll be interesting what happens because the wider the gap kind of, you know, increases between the rates in Canada and the U.S., the more pressure it's definitely going to be putting on the Canadian dollar.

[00:14:24] Yeah.

[00:14:25] Like we would have one more Bank of Canada meeting this year, I would imagine.

[00:14:29] Probably near the end of the year.

[00:14:29] Yeah, I think it's early December.

[00:14:31] Yeah.

[00:14:31] If I remember correctly.

[00:14:32] I mean, if this, if the FedWatch tool, you know, if they do come in at say 4.5 percent and Canada cuts another 50 basis points, you're talking 4.5 percent versus 3.25.

[00:14:45] Like that's a pretty, pretty wide gap.

[00:14:49] Yeah.

[00:14:49] It's going to be interesting.

[00:14:50] I mean, this stuff is very hard to predict.

[00:14:52] I don't really spend too much time focusing on it because, I mean, even the best economists in the world can't predict this.

[00:14:59] I mean, even, yeah, it's very hard to predict.

[00:15:02] So, I mean, it's, you just got to keep an eye on it, especially from, you know, that widening gap is going to put more pressure on the dollar.

[00:15:10] I'm going to Arizona tomorrow and it hurt.

[00:15:13] The currency, it hurts.

[00:15:15] It also is a good reminder.

[00:15:17] I mean, for me, I am definitely happy that I hold most of my cash in U.S. treasury bills.

[00:15:23] And, you know, it's going to make, you know, people know I own like a U-bill, which is one that's like a TFSA friendly U.S. treasury bill because it's listed in Canada.

[00:15:34] I'm definitely glad I own that because I'm getting a much better yield compared to what I would get with a C-bill, which is the Canadian equivalent.

[00:15:42] And I wouldn't be surprised if you start more and more seeing Canadian investors that want to get some yield but don't necessarily want to buy bonds because they understand that there might be some risk with long dated sovereign bonds.

[00:15:55] When you think about long term with the massive deficits that we're seeing, but they might be fine withholding the short term treasury bills and especially the U.S. ones if they're constantly, you know, maybe they kind of level out in the high threes, low fours in terms of, you know, the terminal rate for this cutting cycle in the U.S.

[00:16:15] Who knows?

[00:16:16] But at this point, I mean, you're probably at least looking at the CME FedWatch tool, which, you know, has been wrong quite a bit.

[00:16:22] So we will say that again, if you kind of follow what they're predicting, you're going to be getting three and a half percent or more until the end of next year.

[00:16:34] And that's where the probabilities lay right now.

[00:16:37] So it's not too bad, especially if the U.S. dollar keeps strengthening versus the Canadian dollar.

[00:16:42] Yeah, I mean, I've already gotten quite a few notifications on, you know, GIC rates, like savings accounts here in Canada that have fallen.

[00:16:49] I mean, a few of them have held up thus far, but I'm pretty sure they're going to start coming down.

[00:16:55] So you're definitely going to be able to earn more, you know, on your cash balances in the U.S.

[00:17:01] I mean, I think that's almost a guarantee unless they get, you know, a big scale of cuts.

[00:17:06] The only element there would be the currency.

[00:17:08] I mean, do you want to exchange currencies?

[00:17:11] I mean, I hold, you know, a lot of my portfolio is in U.S. dollars, but I don't have any cash in U.S. dollars.

[00:17:17] It's all in equities.

[00:17:18] But if I did have cash, I mean, those U.S. Treasury bill ETFs are, they're still pretty high yielding.

[00:17:25] Yeah, yeah, definitely.

[00:17:26] Obviously, yeah, the currency is always something to consider.

[00:17:30] But, you know, you never know where currency goes.

[00:17:33] It could go one way or the other.

[00:17:34] Although I've said it time and time again with the U.S. being the world reserve currency.

[00:17:38] See, I have more faith in the U.S. dollar than I do the Canadian dollar, but that's my own personal bias.

[00:17:47] Now, we'll move on.

[00:17:49] You know, we do have some earnings.

[00:17:50] So I'll let you start with Rogers Communication while, yeah, I tried to just catch my breath a little bit.

[00:17:56] Yeah.

[00:17:56] Yeah.

[00:17:57] So Rogers, they reported earnings.

[00:17:59] Revenue was pretty much flat year over year.

[00:18:02] Adjusted EBITDA grew by 6%.

[00:18:05] So wireless revenue grew by 2% year over year.

[00:18:10] But pretty much the story is much the same as the other major telecoms.

[00:18:14] They're seeing higher churn rates.

[00:18:15] The churn rate wasn't crazy high.

[00:18:17] I think it only increased by 4 or 5 basis points year over year.

[00:18:21] But the one important thing is ARPUs, which is average revenue per user, are declining.

[00:18:27] And when churn rises and ARPU declines, to me, it just means that the company is just facing pretty stiff competition in the space.

[00:18:35] I mean, especially as the economy gets weaker.

[00:18:37] I mean, Canadians, it's pretty easy to seek out savings these days when it comes to your phone bill.

[00:18:43] So, I mean, I think that's going to be...

[00:18:45] Especially if you own the phone.

[00:18:47] Oh, yeah.

[00:18:47] You have them.

[00:18:48] You can really negotiate hard.

[00:18:50] And you just basically tell them like, well, okay, I'll go to a competitor.

[00:18:53] And usually, you know, they'll try at first.

[00:18:56] And I've gone through this.

[00:18:57] They'll give you like an okay deal.

[00:19:00] They won't give you like a bad deal because they know now like there's a lot of competition.

[00:19:04] They'll give you an okay deal.

[00:19:05] And then if you're like, well, not good enough.

[00:19:07] I'm going to go check with some competitors.

[00:19:09] All of a sudden, they'll come up with a loyalty deal that's way better than that one.

[00:19:14] Yeah.

[00:19:15] I used to do that back in the day with satellite radio.

[00:19:18] Like with Sirius, you could pretty much name your price and they would give it to you.

[00:19:22] I mean, that's kind of what's happening in the space right now.

[00:19:26] I mean, when churn is rising and ARPUs are declining, I mean, it's clear that Canadians are flipping around.

[00:19:34] And the thing is, is like people are, you know, back when say during the pandemic or even pre-pandemic, when, you know, money was a little discretionary spend was a little more, was a little better.

[00:19:44] Like people were buying new phones every year.

[00:19:48] I mean, every year or two.

[00:19:50] And now that's just not the case.

[00:19:52] Like people are holding onto their devices, which ultimately gets them out of the contract.

[00:19:56] And then you're free to effectively do whatever you want.

[00:20:00] You can really negotiate hard on, hard on price.

[00:20:04] And this is just creating some difficulty with, you know, it's not just Rogers.

[00:20:09] It's I'm pretty sure every single telecom tell us Rogers, BCE is reporting declining ARPUs.

[00:20:16] And I mean, as a result, they're pretty much having to solely rely on new customer additions due to increase revenue.

[00:20:25] So their cable segments saw revenue decline by 1%.

[00:20:29] Media segments are revenue increased by 11%.

[00:20:31] Capital expenditures declined 4% year over year.

[00:20:34] And this will likely be much the same as the other telecoms.

[00:20:38] They're going to scale back expenditures, higher rate environment.

[00:20:40] And a lot of them, you know, finish, you know, the rollout of, you know, 5G heavy infrastructure spending, things like that.

[00:20:46] So, I mean, this is going to decline moving forward pretty much in an attempt to increase free cash flow generation.

[00:20:54] So the company's leverage ratio, which I didn't actually dig into what its leverage ratio is, but tell us and Bell both do debt compared to EBITDA.

[00:21:01] So, I mean, I would imagine Rogers is the same.

[00:21:04] It's at 4.6 X.

[00:21:05] This is the highest leverage ratio among major telecoms.

[00:21:09] And like Rogers has spent a lot of money over the last while and taken on a huge amount of debt.

[00:21:16] I mean, we look at the MLSE purchase and then we look at Shaw.

[00:21:20] So they've, you know, their debt levels are really elevated over the last while.

[00:21:25] The only difference between, you know, Rogers and the other two are that, you know, Rogers kind of ditched the whole dividend growth element over, I believe it was in 2019.

[00:21:36] They pretty much said they're not going to grow the dividend anymore.

[00:21:39] They're going to allocate the capital to, you know, attempts to grow otherwise, whether it be acquisitions, share buybacks, things like that.

[00:21:46] So they aren't really, you know, saddled with that high dividend payment.

[00:21:50] Again, the MLSE and the Shaw acquisition were primarily financed through debt.

[00:21:57] If you look at a debt chart from Rogers, it pretty much skyrockets during the pandemic.

[00:22:02] So just to give you some insight on this, Rogers has increased its debt levels since 2021.

[00:22:08] They've increased their debt levels by 107%.

[00:22:10] So in comparison, TELUS and Bell are around 40%.

[00:22:14] And again, they don't have that big dividend.

[00:22:18] Like you see TELUS and BCE, they're maxed.

[00:22:21] Like almost 100% of their free cash flow is going towards that dividend at this point.

[00:22:25] And Rogers, it sits at around, I believe it's 40% right now of free cash flow,

[00:22:30] which, you know, should put it in a little bit of a better position in terms of debt reduction.

[00:22:36] And again, you know, the quarter, it's much the same for every telecom.

[00:22:41] Like I said, slowing ARPUs.

[00:22:43] Revenue growth is primarily fueled by new customer additions.

[00:22:46] And as a result, I mean, they rely a ton, like massively on government regulations and immigration.

[00:22:54] And in terms of guidance, it projects revenue growth of 8% to 10%,

[00:22:57] adjusted EBITDA growth of 12% to 15%,

[00:23:00] and free cash flow to improve quite a bit.

[00:23:03] $2.4 billion last year, upwards to $3.1 billion this year.

[00:23:07] I believe the dividend only counts for around $1.1 billion.

[00:23:11] So they got a lot of excess cash flow generation, which should help the debt situation.

[00:23:17] If they choose to pay it, some of it off, I imagine they will.

[00:23:20] But, you know, recently it's just been increasing and increasing.

[00:23:24] And, you know, it's just been, it's been a pretty rough time for the,

[00:23:28] for the telecom companies over the last while.

[00:23:30] But yeah, I mean, we'll see how the Shaw acquisition works, MLSE, things like that.

[00:23:36] But from a cash flow perspective,

[00:23:38] they're definitely in one of the stronger positions out of the major three.

[00:23:41] Yeah. And I wonder, just to go back to your comment about population growth and immigration.

[00:23:46] So I wonder, you know, what impact it's going to have with the announcements of the federal government last week, right?

[00:23:54] So they're essentially saying now that they're forecasting population to decline 0.2% in the next two years

[00:24:00] before it starts increasing again.

[00:24:03] So we'll have to see.

[00:24:05] But that's definitely not great news for, you know, these telecoms that are, you know,

[00:24:11] I think a lot of the thesis behind them as an investment is like you were saying, population growth.

[00:24:17] I know engaging with some of the, you know, we've been critical of BCE, of course,

[00:24:22] just because how unsustainable the dividend is.

[00:24:25] But one of the things that Fintwit, these, you know, BCE bulls kept saying is just population growth.

[00:24:31] That was one of their big go-tos that, you know, oh, BCE is going to pick up.

[00:24:37] And obviously it applies to BCE Rogers, I guess to some extent Videotron as well tell us.

[00:24:42] Yeah.

[00:24:42] So you have slowing population growth or even declining.

[00:24:46] What's going, what are the sales going to be like in the next couple of years?

[00:24:51] And then especially you have a BCE that, you know, has a lot of debt to start refinancing.

[00:24:56] We just talked about the yields, you know, the five-year yields are not, you know, declining as,

[00:25:03] you know, people necessarily expected.

[00:25:05] They've kind of bought them at least so far.

[00:25:06] Maybe they will go lower in the future.

[00:25:08] But then you're looking at, you know, corporate bonds.

[00:25:12] If Bell has to issue new debt, it will likely come at a, you know, pretty, a higher yield than the existing debt.

[00:25:21] That's for sure.

[00:25:22] Because a lot of people were saying, yes, like, but, you know, interest rates are coming down.

[00:25:27] Well, yeah, it's all nice and dandy if they have variable debt.

[00:25:30] But if the, you know, the five-year is just stagnating, not coming down or even going up,

[00:25:36] it's not going to look good when they start refinancing.

[00:25:39] Yeah.

[00:25:39] And I mean, a lot of these companies don't carry very much floating rate debt.

[00:25:43] Like a ton of it will be fixed because it creates a disaster when, you know, a lot of it is floating

[00:25:49] rate.

[00:25:49] I mean, we saw similar type, you know, capital intensive, like Algonquin had way too much floating

[00:25:55] rate debt and just got absolutely hammered.

[00:25:57] Most of it will be fixed.

[00:25:59] And I believe Rogers did say in the report that I believe 4.6% is their average interest cost on debt

[00:26:07] and with an average maturity of around 10 years.

[00:26:10] So, I mean, at this point in time, I don't think a lot of the refinancing would come in at higher rates,

[00:26:15] but I bet you they do have, you know, quite a mixed variety of yields on that debt just because

[00:26:22] of how crazy interest rates have been as of late.

[00:26:24] But, um, yeah, I mean the Canadian telecoms, it's pretty tricky.

[00:26:29] Like you said, population growth, if that, and that obviously, you know, that heavily depends on

[00:26:34] government, obviously.

[00:26:36] I mean, they could scale that back or they can increase that however they want.

[00:26:39] So it puts a lot of risk in that regard.

[00:26:41] And like, I don't see a way for these companies to grow ARPUs.

[00:26:48] Like I just can't see a way for, you know, phone plans to increase moving forward.

[00:26:52] I think they're only going to decrease.

[00:26:54] I think even right now, our phone plans are some of the highest phone plans in developed

[00:26:59] nations, like how much we pay for devices.

[00:27:02] Really?

[00:27:02] Still?

[00:27:03] Yeah.

[00:27:03] Yeah.

[00:27:04] And it's, uh, yeah, I mean, I, the competition is only going to get bigger.

[00:27:08] I mean, I'm actually, I've said it a few times.

[00:27:10] I actually, I own TELUS and I'm kind of bullish on TELUS from a free cashflow growth perspective,

[00:27:15] just because I think it's, you know, it's going to generate more free cashflow moving forward.

[00:27:20] But these companies over the longterm, I think there's a lot of, a lot of headwinds right

[00:27:25] now.

[00:27:25] Yeah.

[00:27:26] I mean, it's, it's hard to disagree there.

[00:27:28] Yeah.

[00:27:28] It'll be interesting.

[00:27:29] I think, uh, I know we, we bash on BC quite a bit, but I think I will probably have one

[00:27:35] of my bold predictions for 2025 is they're going to cut the dividend now with this, uh,

[00:27:41] population growth announcement, I think, and, uh, rates at least on the fixed side or not,

[00:27:46] you know, the five-year bond is kind of stagnating.

[00:27:50] I feel like the, the odds of BC potentially cutting its dividend just increased a little

[00:27:54] bit.

[00:27:55] Yeah.

[00:27:55] It's definitely still, it's still a possibility.

[00:27:58] The one thing that you really got to watch for, and I guess they might, I don't know if

[00:28:03] they'll release it this quarter, but they're going to release eventually like TELUS and BC

[00:28:08] are going to release next year's guidance.

[00:28:09] And I think that's going to be a big indicator, uh, in terms of free cashflow generation,

[00:28:14] primarily, uh, where they go price wise and also, you know, in terms of dividend safety.

[00:28:20] Yeah, no, I think that's a good overview here of Rogers and obviously the telecom.

[00:28:26] So we'll move on to new Mount corporation.

[00:28:28] So like I mentioned, new Mount is a, uh, is not a company that we really discuss on the

[00:28:34] podcast.

[00:28:34] If you're not really aware of them, obviously it's a gold miner.

[00:28:37] Like I referenced earlier, it is the largest gold miner in the world has a market, uh,

[00:28:43] market cap of 55 billion us, uh, for context, Barrett gold has a market cap of about 48

[00:28:50] billion.

[00:28:51] So it's not, you know, Barrett gold is not that far behind in terms of size.

[00:28:55] One of the reasons I decided to look at new months earning is because like I mentioned,

[00:28:59] a stock dropped 15% that they came out with earnings last week.

[00:29:04] So on the revenue front, you know, probably not surprising, but revenues increase 85% versus

[00:29:11] last year and 4.6% compared to the previous quarter.

[00:29:14] Uh, that's a combination of course, uh, higher gold prices.

[00:29:18] So if you've been living under the rock, uh, gold has been performing very well, uh, so far

[00:29:23] this year, um, and a combination as well to with higher volume.

[00:29:27] So they're producing more.

[00:29:28] They produce 1.6 million ounces of gold during the quarter, and they are guiding for a massive

[00:29:34] 1.8 million ounces to be produced in Q4.

[00:29:39] 2024 is on track to shatter their production levels from last year.

[00:29:43] So year to date is they have 4.95 million gold ounces produced versus 5.55 million for

[00:29:51] all of last year.

[00:29:52] So if they hit the guidance, they will have produced 22% more gold this year.

[00:29:57] So that's, that's pretty impressive.

[00:29:59] The operating margins went down 234 basis point compared to the previous quarter.

[00:30:05] So if I had to say that's the reason that the stock was down, especially I listened to

[00:30:10] parts of the conference call, not the whole thing, but the amount of questions about costs

[00:30:15] that, that was the theme of the conference call.

[00:30:18] I'll just say that most of their questions was the cause.

[00:30:20] So the reason, you know, they said, yes, costs were higher than they had expected, uh, mainly

[00:30:26] because of a higher labor cause.

[00:30:28] They said that other costs actually were in line with their expectation.

[00:30:32] Uh, they do expect those costs, those labor costs to normalize next year.

[00:30:37] Their guidance for 2024 for their all in cost per gold ounce.

[00:30:41] So that's basically what it caused them to produce an ounce of gold is still 1475.

[00:30:47] Whereas it was around $1,600 for this quarter.

[00:30:51] So, you know, definitely higher, but they seem relatively confident to kind of get back to

[00:30:57] the, the more normalized costs.

[00:31:00] The cost was an increase of 8.4% versus the same quarter last year.

[00:31:04] However, the average gold price this quarter compared to last year's, uh, Q3 was a 2518.

[00:31:12] So $2,500 and eight, uh, well, yeah, 2518 per ounce during the quarter, which was 31% higher

[00:31:19] than last year.

[00:31:20] And it's currently sitting at $2,300 and 16 year to date.

[00:31:26] So clearly, you know, they're doing quite well on that.

[00:31:29] Um, you know, the big tailwind is the rising price of gold and yes, the costs were higher,

[00:31:35] but the price realize, uh, this year is far outpacing the higher costs.

[00:31:41] So definitely a good situation to be in.

[00:31:43] You'd want them to have more of a lid on the, the costs increasing, but I mean, I don't think

[00:31:50] it's all that bad personally.

[00:31:52] I don't know what you think about that.

[00:31:54] Well, really the, the one main gold operator, like minor that I do follow is Agnico and

[00:32:00] they're, they're right.

[00:32:01] Okay.

[00:32:01] They're right behind Barrick in terms of size.

[00:32:04] I think Agnico is like $46 billion versus 48.

[00:32:08] They were a merger of Kirkland, Kirkland Lake and Agnico a few years ago.

[00:32:12] I mean, they're all in sustaining costs are quite a bit lower than this.

[00:32:16] So, I mean, cause you said a decline 15% on the earnings.

[00:32:20] I mean, I would imagine it would be from these higher costs.

[00:32:24] I mean, that's pretty, I think Agnico runs like in the $1,250 to $1,300 range all in sustaining

[00:32:31] costs.

[00:32:31] So, I mean, it is quite a bit higher.

[00:32:33] I don't really follow Newmont very much, but I mean, it's gold producers are just, it's

[00:32:39] crazy right now.

[00:32:40] Like the cashflow generation and just the results over the last year.

[00:32:43] I mean, obviously like it's much like an oil producer.

[00:32:46] You know, if, if gold goes up, these producers are going to go up.

[00:32:50] If operations are, are maintained, you know, steady operations, obviously, but, um, yeah,

[00:32:54] they're typically more volatile than, you know, the underlying commodity, much like an oil

[00:32:59] producer and gold is just ripped over the course of the year.

[00:33:03] But yeah, I mean, the labor costs, I, I don't even know why that would be.

[00:33:08] I mean, I, the only reason is I follow Agnico again, and they aren't reporting any of this.

[00:33:12] So, I mean, the one thing about companies like Newmont and companies like Agnico, a lot

[00:33:18] of their focus is in developed areas.

[00:33:22] Like, so they don't have like that added risk of, you know, regulations, things like

[00:33:26] that from like, you know, foreign countries.

[00:33:28] I believe Newmont is primarily North America and Australia, which is much the same as Agnico

[00:33:33] so that, you know, it's a bit more stable in terms of operations, but it's also higher

[00:33:37] costs rather than, you know, foreign countries.

[00:33:41] So, I mean, I would imagine that would have some sort of impact.

[00:33:43] Like Newmont has, um, much higher volume.

[00:33:46] Oh, way higher.

[00:33:47] I would assume.

[00:33:48] Yeah.

[00:33:48] Yeah.

[00:33:49] That they make a lot.

[00:33:50] They, even if their margins are a bit lower, they're making up in the volume.

[00:33:55] I think Agnico is anywhere from three and a half to 4 million ounces.

[00:34:00] So, I mean, Newmont is, is quite higher.

[00:34:04] Yeah.

[00:34:04] It's like, yeah, like four.

[00:34:06] Yeah.

[00:34:07] A good 40% higher.

[00:34:08] Yeah.

[00:34:08] So, I mean, I guess at the end of the day, right?

[00:34:11] Like you're, you're going to benefit as long as the cause don't get out of control.

[00:34:15] I think it should be fine.

[00:34:16] Of course, if price of gold keeps going up.

[00:34:18] Now they reduced their debt, 233 million during the quarter, returned 786 million to shareholders

[00:34:25] via buybacks and dividends.

[00:34:26] Uh, they produced 760 million in free cash flow during the quarter, which was almost double

[00:34:32] that of last year.

[00:34:33] They are trying to sell about 2 billion worth of non-core assets, which, you know, seems

[00:34:39] like, you know, fine by me.

[00:34:41] I don't know the company overly well.

[00:34:42] So that would make sense if they don't think they're really, uh, that important to their

[00:34:46] business.

[00:34:47] Uh, their adjusted net income was up 227% compared to last year.

[00:34:53] And they're now trading at a Ford and, uh, P and Ford price to free cash flow of 12 and

[00:34:59] 16 respectively, which is, um, if you look at it on a historical basis is quite low.

[00:35:05] So like you were saying, I mean, you know, gold has been just on a tear this year.

[00:35:09] It is surprising that, and you know, I said this with Franco Nevada, which is a completely

[00:35:15] different business model than these miners, but they seem to, you know, definitely be trailing

[00:35:21] what we've seen in gold, which is a bit, uh, you know, it's just kind of interesting to

[00:35:26] see because they're definitely lagging.

[00:35:29] I don't know if it's the same for all the miners, but, uh, definitely in Uman, Franco

[00:35:32] Nevada now has, you know, ever since I talked about it, maybe I triggered something, but, uh,

[00:35:38] ever since I talked about it and I re added to my position, it's gone up.

[00:35:43] It's actually gone.

[00:35:44] Yeah.

[00:35:44] Gone up quite a bit.

[00:35:45] And that was one of my thesis for Franco Nevada was like, okay, like they're going to come

[00:35:51] out with our earnings and the market's going to realize, wow, like we've been too bearish

[00:35:55] on them.

[00:35:56] You know, we should have realized that yes, they're like crushing it by selling gold at

[00:36:00] higher prices.

[00:36:01] Of course they had the mining, one of their minds closed that they had streaming interests,

[00:36:05] uh, the, uh, pan, the Cobra Panama mine last year, but it's been a while that that happened

[00:36:12] and gold prices have just increased.

[00:36:14] And Franco Nevada is so well diversified that I just thought it was a good opportunity.

[00:36:18] And so far, I guess I am being proven right.

[00:36:21] Yeah.

[00:36:21] And that's one of the things when I mentioned like the, you know, stable regions in terms

[00:36:27] of mining, like how important that is.

[00:36:29] Like first quantum is the, the owner of that mine.

[00:36:32] And then obviously like Franco, you know, they effectively provide capital to these companies

[00:36:36] through streaming.

[00:36:38] So, I mean, it's a little less risk and you can look at it like first quantum as soon as

[00:36:42] that mine shut down.

[00:36:43] And they take a lot of, they take a lot of bets too, right?

[00:36:46] So they just put a bunch of bets, like hundreds of bets and some pan out, some don't.

[00:36:51] It just happened that that was one of their better bets that was doing, uh, that ended up

[00:36:55] being shut down.

[00:36:56] Yeah.

[00:36:56] And I mean, I believe there's still a chance for that to come back.

[00:37:01] So, I mean, it's almost trading back to levels before that mine got shut down.

[00:37:06] When you look at first quantum, the actual miner, they're down once that mine shut down,

[00:37:11] they were at $32 a share.

[00:37:12] And then when that mine shut down, they, they went down to 10.

[00:37:16] So, I mean, that just shows you like the volatility of, you know, a miner versus a streamer as well.

[00:37:21] And they're still only at, you know, $18 per share.

[00:37:24] So they're still down quite a bit, but yeah, it's, uh, I mostly, if I were to actually own

[00:37:31] a gold company, it would probably be a streamer over a miner.

[00:37:35] I mean, it's just for this prime reason, but, uh, yeah, I mean, I gold, I don't know how,

[00:37:42] like, I don't really know the gold market all that well.

[00:37:44] I have no idea on, in terms of, you know, the price, how long it's going to be sustained

[00:37:48] for.

[00:37:48] I would imagine a lot of that has to do with the forward valuations of these companies.

[00:37:52] That's just not something I've ever really dug into all that much, but they've still

[00:37:57] had very, I mean, the price of gold.

[00:37:58] I mean, if governments keep spending and central banks have to start printing money to monetize

[00:38:05] the debt because there's not enough demand for bonds, then gold, I mean, it's no guarantee

[00:38:10] and it go probably, it never goes up in a straight line.

[00:38:13] So I think that's important for people to remember, even though, uh, you know, long-term

[00:38:17] the outlook might be very bullish for gold.

[00:38:20] I could still experience some significant declines short-term, but long-term, I think,

[00:38:26] you know, whether it's gold and, you know, Bitcoin as well, I believe that Bitcoin is

[00:38:30] a good inflation hedge when you think long-term again, don't hat me saying like short-term

[00:38:36] it's super volatile.

[00:38:37] Yes.

[00:38:37] It could crash 50% tomorrow.

[00:38:38] Like I, I, I've been in Bitcoin long enough to know it can happen.

[00:38:42] I've lived it.

[00:38:43] So don't, I'm well aware of that, but longer term, these are the plays that a lot of, you

[00:38:49] know, a lot of smart investors are putting some money in.

[00:38:52] You don't have to go all in and either, you just have to allocate some percentage of your

[00:38:56] portfolio to kind of ensure themselves against, uh, uh, you know, government spending going

[00:39:02] out of control.

[00:39:03] And it's hard to say that it's not out of control to some extent right now.

[00:39:08] Yep.

[00:39:08] Absolutely.

[00:39:09] I, uh, well, well explained.

[00:39:11] I seen that they had a, this is a bit off topic, but they had the, the Bitcoin chart and

[00:39:16] they showed the years that the McRib came back and how well Bitcoin did after it.

[00:39:22] It was one of the funniest, funniest memes.

[00:39:24] And the McRib, I think they brought it back like what, two or three weeks ago and look at

[00:39:29] the price of Bitcoin since.

[00:39:30] Is that what people caught E. coli with?

[00:39:32] Yeah.

[00:39:33] No, apparently it was the onions.

[00:39:35] The onions.

[00:39:36] Okay.

[00:39:36] Yeah.

[00:39:37] Oh, I guess I would have been okay.

[00:39:38] I hate onions.

[00:39:39] So, uh, I would tell them no onions.

[00:39:42] I probably would have saved me if I went to McDonald's.

[00:39:44] Yeah.

[00:39:44] Yeah.

[00:39:45] But, uh, not financial advice, but if you look at a chart of Bitcoin and when the McRib

[00:39:50] returns, it's typically done quite well.

[00:39:53] Okay.

[00:39:54] Okay.

[00:39:55] Now people are no longer taking this podcast seriously, but that's okay.

[00:40:00] Yeah.

[00:40:01] So I think we've talked enough about Newmont.

[00:40:03] Anything else you want to add or, uh, we'll just go to, um, you know, one of the big two

[00:40:07] railways here in Canada.

[00:40:09] Yeah.

[00:40:09] We'll dig into CN rail.

[00:40:11] It was a pretty interesting quarter.

[00:40:13] I mean, as expected, pretty much declines across the board in terms of, you know, overall activity,

[00:40:18] uh, revenue is up 3% year over year.

[00:40:21] Earnings are up by 2%.

[00:40:22] However, pretty much all of this earnings growth is coming from share buybacks.

[00:40:27] So the work stoppages and the Jasper wildfires to an extent had an impact on the company's

[00:40:33] results, but they do say, you know, it's going to be washed out quite quickly.

[00:40:37] Obviously.

[00:40:37] I mean, the work stoppages are over for the most part and the wildfires have been taken

[00:40:42] care of, you know, thus far.

[00:40:43] So the company's operating ratio came in at 63.1%, which is up 1.1% year over year.

[00:40:52] And you never like the lower the operating ratio, the better.

[00:40:55] Last week, I kind of explained this with TFI international and operating ratio of 63.1%.

[00:41:01] Essentially means that CN rail has to spend $63 and 10 cents to generate a hundred dollars

[00:41:07] in revenue.

[00:41:08] This is pretty much in line with its peer CP rail.

[00:41:11] I do keep an eye on both of these.

[00:41:13] Just, I mean, just from an industry perspective and CPs came the exact same.

[00:41:18] It increased 110 or 120 basis points year over year.

[00:41:22] So pretty typical revenue, revenue ton miles, which is a pretty important KPI for the railways.

[00:41:28] It's a pretty simple calculation.

[00:41:30] It just compares the tonnage of their shipments to the miles transported that increased by 2%,

[00:41:35] but actual car loads declined by 2%.

[00:41:38] Car loads fell just due to overall lower demand, but long haul, long haul grain exports and petroleum

[00:41:46] exports, I believe ended up boosting RTMs a little bit.

[00:41:49] So digging into the company's individual segments, I noticed again, pretty much a decline across

[00:41:55] every one, except for a few outliers, including grain and a bit of recovery in its intermodal

[00:42:01] volumes.

[00:42:02] So petroleum revenue, fourth straight quarter of decline and its automobile revenue also struggled

[00:42:08] down by double digits on a year over year basis.

[00:42:11] The company mentioned that plant retooling had an impact on auto shipments, but it was

[00:42:15] also dealership inventories.

[00:42:17] I'd imagine dealership inventories is having a larger impact on this.

[00:42:21] Although because just because automobile sales have slowed pretty much North American wide just

[00:42:26] because of the slowdown in spend.

[00:42:28] But then I did look, I had to dig into CP rails earnings as well.

[00:42:33] And they actually had an increase in automotive shipment revenue, which is kind of interesting,

[00:42:37] but the company is reporting low to mid single digits improvements in practically every KPI it

[00:42:44] measures in terms of efficiency.

[00:42:46] So you're talking car speed, car length, fuel efficiency, things like that.

[00:42:50] So it reiterated its outlook on the year for low single digit earnings growth now expects

[00:42:56] revenue ton miles growth to come in at the lower end of the guidance.

[00:42:59] So they had, they had said RTMs would grow three to 5% at the start of the year.

[00:43:04] Now they're, they're kind of saying that it's going to come in at the lower end near that

[00:43:08] 3% mark.

[00:43:09] And I would imagine, you know, this is due to the wildfires and the work stoppages.

[00:43:13] They probably had, you know, just kind of unforeseen impacts on the company.

[00:43:17] So it's pretty likely that all of this earnings growth as well comes as a result of buybacks

[00:43:24] again.

[00:43:25] They've been buying back shares pretty aggressively.

[00:43:27] I mean, CN rail is always typically bought back quite a few shares, but even now they're,

[00:43:32] they're getting pretty aggressive and I would expect them to continue getting pretty aggressive

[00:43:37] over the next while, while it's share prices, you know, the share price, I believe for CN

[00:43:41] has been pretty much flat for two years now.

[00:43:44] I mean, that's really not all that surprising.

[00:43:46] I mean, these railways are heavily, heavily, you know, dependent on the economy, which is

[00:43:51] not, not doing all that well.

[00:43:53] And just overall, I mean, not really a surprising quarter from CN rail.

[00:43:58] They top expectations to small degrees, but they did better than, you know, many analysts

[00:44:02] had expected, but it was still a relatively weak quarter.

[00:44:06] CP reported a bit better quarter, but the bulk of that is just coming from tailwinds of the

[00:44:12] Kansas city acquisition.

[00:44:13] Yeah.

[00:44:14] Yeah.

[00:44:15] And I mean, I'm just showing here for joint TCI, the total share is outstanding for Canadian

[00:44:20] national rail.

[00:44:21] So you can really, they've basically reduced the share count by two and a half percent

[00:44:25] over the, since 2014.

[00:44:27] So over the last 10 years, every single year on average.

[00:44:31] So that's, yeah, returning quite a bit of money to shareholder.

[00:44:35] I do own shares.

[00:44:36] So I'm a shareholder.

[00:44:37] So I'm probably a little biased.

[00:44:38] I own it as well.

[00:44:39] So keep that in mind.

[00:44:39] Yeah.

[00:44:40] You own it as well.

[00:44:41] So, I mean, the railways at the end of the day, I think when they're stagnating a little

[00:44:46] bit, the economy is slowing down and it's probably not a bad time to, you know, to purchase

[00:44:53] some shares or add to a position.

[00:44:55] Of course, do your due diligence, but as the economy start picking up, they will benefit

[00:45:00] from this.

[00:45:01] And you have to keep in mind, these are not just Canadian play.

[00:45:04] They're North American plays.

[00:45:06] Clearly they, you know, they have probably a bigger impact to their revenue coming from

[00:45:11] Canada.

[00:45:11] But again, Canadian national rail goes all the way to the Gulf of Mexico and then goes

[00:45:17] east to west in Canada.

[00:45:19] And CP with the Kansas City Southern acquisition goes all the way to Mexico.

[00:45:24] So, I mean, they have massive networks and there's just not railways being built.

[00:45:31] If you have a better solution for transporting goods at that kind of price, you should try

[00:45:38] to do something about it because clearly there's they've not been really disrupted and, you

[00:45:45] know, pretty much in forever.

[00:45:46] So, I think those are the reasons.

[00:45:48] And I was going to add to the when you mentioned the operating ratio, I always like to tell people,

[00:45:54] look, it's kind of the opposite of the operating margin.

[00:45:57] So, I think we talk about the operating margins quite a bit, but that's something just to keep

[00:46:03] in mind when it comes to these railways.

[00:46:05] Yeah.

[00:46:06] I mean, they have like if you want to talk about almost a borderline impenetrable business

[00:46:11] model, I mean, the infrastructure required to just develop anything new is crazy.

[00:46:17] And I mean, I think it was, I think Warren Buffett once said that, you know, in his total

[00:46:22] portfolio, he expects, you know, every company inside of it over the next hundred years to

[00:46:26] become obsolete, but not as railways.

[00:46:29] Like they're just that dominant.

[00:46:32] And like, it's just, it's just still, you know, it's relatively old tech when you think

[00:46:37] about it, but I mean, it's just the best way to transport goods.

[00:46:40] And I mean, especially for like, how else are they going to do it?

[00:46:44] Really?

[00:46:45] Yeah, no, that's a good point.

[00:46:46] And one thing I forgot to mention when you were saying, I think you said oil volumes were

[00:46:51] down, right?

[00:46:52] Revenue.

[00:46:53] A bit?

[00:46:54] Revenue.

[00:46:54] So revenue at?

[00:46:55] Yeah, I think their revenue, it was a fourth straight decline quarter over sequentially

[00:47:01] in petroleum, petroleum and chemical revenue.

[00:47:04] Okay.

[00:47:05] Okay.

[00:47:05] So, I mean, I wonder if that has to do with the Trans Mountain expansion going online earlier

[00:47:11] this year.

[00:47:12] It's possible.

[00:47:12] Obviously the four quarter would have been before that, but that could have compounded

[00:47:16] the issue a little bit.

[00:47:18] Yeah, it's possible.

[00:47:19] And I mean, a lot of it is probably demand based as well, I would say.

[00:47:23] Yeah.

[00:47:23] Yeah.

[00:47:24] Like kind of a combination of the two.

[00:47:26] Yeah.

[00:47:26] That's going to be something, that's going to be an area of the business that's going

[00:47:28] to be pretty cyclical.

[00:47:30] Same with its intermodal, which is, you know, intermodal is effectively when it goes from

[00:47:34] a train to a truck and like transported.

[00:47:36] And I mean, that's going to be heavily, you know, consumer, consumer based as well.

[00:47:41] I mean, there's so many segments of the business, actually pretty much every single

[00:47:44] one of the business segments is cyclical.

[00:47:47] It's going to have different, you know, different outcomes in poor economies.

[00:47:50] And I mean, the stock has not done all that bad, but I mean, it's not expected to do all

[00:47:55] that good, especially considering, you know, the current economic backdrop we're in.

[00:48:00] I still like it for the longterm, for sure.

[00:48:02] Yeah.

[00:48:02] It's a pretty core position.

[00:48:04] I like it because, yeah, like, you know, just the moat associated with them.

[00:48:08] To me, these are the best example of you buying this company, you kind of set and forget.

[00:48:15] Set and forget.

[00:48:15] Like this is the ultimate company that you can just buy and forget it.

[00:48:19] Even if you end up purchasing it at a high valuation, if you plan on owning it for decades,

[00:48:25] you'll probably end up doing just fine.

[00:48:27] Even if you bought it at a peak, say a year or two ago.

[00:48:30] Yeah.

[00:48:31] And I mean, they bought, the one thing is, is like, they're really never that cheap.

[00:48:35] I mean, the railways never really trade all that cheap.

[00:48:37] I mean, CN Rail has not done good over the last year and it's still trades at,

[00:48:41] you know, 20, 28 X it's, it's free cashflow.

[00:48:45] So, I mean, that's one thing I've said for a very long time.

[00:48:48] The railways never trade cheap.

[00:48:50] So it's, uh, and it's just because of the business model.

[00:48:54] Like it's, it's, you can say that, you know, Canadian telecoms are, you know,

[00:48:57] the business is very hard to, uh, you know, very high barrier to entry.

[00:49:01] I would argue that railways are even, are even higher.

[00:49:04] Yeah.

[00:49:04] Yeah, definitely.

[00:49:05] And they're less likely to get disrupted.

[00:49:07] Let's not forget the telecoms.

[00:49:09] I mean, I know not everyone likes Elon Musk and he's very polarizing, but SpaceX, you can get,

[00:49:16] uh, their, um, what, what's it called again?

[00:49:19] I, I kind of.

[00:49:20] Yeah.

[00:49:20] Not SpaceX.

[00:49:21] But their satellite internet.

[00:49:22] Starlink.

[00:49:23] Is that it?

[00:49:23] Starlink.

[00:49:24] There you go.

[00:49:24] Yeah.

[00:49:25] Starlink.

[00:49:25] You got it.

[00:49:26] So I just had a blank cause, uh, I think, you know, I, I didn't sleep that well last night.

[00:49:30] So if I'm searching my words a little bit, uh, that is the reason, uh, during this episode,

[00:49:36] but yeah, the Starlink could definitely be a big disruptor for them.

[00:49:39] So it's something else that I, I forgot to mention when you were talking about Rogers.

[00:49:43] Well, I think, I mean, anything else to, uh, to add, or I think that's, uh, that's a good

[00:49:48] point to wrap it up.

[00:49:49] That's it.

[00:49:50] Okay.

[00:49:51] Yeah.

[00:49:52] Well, thank you everyone for, uh, for listening again.

[00:49:55] Uh, we do appreciate the support, whether it's on Twitter, the emails, join TCI.

[00:50:00] Uh, it's really appreciated all the nice reviews we get as well.

[00:50:04] We will be back, I guess next week.

[00:50:06] It'll be a bit of a different one.

[00:50:08] So we already recorded it.

[00:50:09] It is going to be a mailbag episode.

[00:50:12] So if you sent us, uh, questions in the last like couple of weeks to a month, uh, there's

[00:50:18] a chance that we might actually be answering them next Thursday.

[00:50:21] But if not, we'll be back two weeks after that with our regular timing news and earnings.

[00:50:26] So we'll probably have some catching up to do.

[00:50:28] You can find me at fiat underscore iceberg on Twitter and Dan at stock trades underscore

[00:50:35] CA.

[00:50:36] Okay.

[00:50:36] That's perfect.

[00:50:37] I didn't want to test my memory with the lack of sleep.

[00:50:39] So I figured it was just best to get it straight from the source.

[00:50:43] So, uh, thanks again for listening, everyone.

[00:50:45] The Canadian investor podcast should not be construed as investment or financial advice.

[00:50:51] The hosts and guests featured may own securities or assets discussed on this podcast.

[00:50:57] Always do your own due diligence or consult with a financial professional before making

[00:51:02] any financial or investment decisions.