>> LET'S CHECK OUT SHARES OF TD. THEY'RE ACTUALLY RECOVERING TODAY. NO, YESTERDAY WHEN THE COMPANY UNEXPECTEDLY REPORTED AN INCREASE IN PROFIT BETTER THAN EXPECTED RESULTS. AND GENERALLY ACROSS THE BOARD, WE SAW THE STOCK SELL-OFF. THERE WERE THOSE CONCERNS ABOUT HOW MUCH IS ANTI-MONEY LAUNDERING ISSUES GOING TO COST A BUSINESS, NOT JUST IN FINES, BUT IT EXPENSE GROWTH. THAT'S ONE OF THE REASONS THAT THE STOCK FELL YESTERDAY, AN ANALYST DOWNGRADED TO UNDERPERFORM. TODAY, THOUGH, WE ARE SEEING A RECOVERY OF GOT AN ANALYST ON DECK WITH ME RIGHT NOW. HE'S ALSO PRETTY BEARISH ON THE PROSPECTS. LET'S BRING IN NIGEL D'SOUZA, FINANCIAL SERVICES ANALYST AT VERITAS. THANKS SO MUCH FOR JOINING THANKS FROM THE SOURCE OF YOUR BEARISHNESS. IS IT LARGELY THE A MALE ISSUES? IT IS BECAUSE YOU KNOW, YOU THINK ABOUT THE MONANA MONITOR SIDE THE MONETARY SIDE. >> HE'S NOT THERE ARE OF CONCERN TO YOU HAS CLOSE TO 5 BILLION EXCESS CAPITAL WITHN THE FINAL BE, PROBABLY AROUND US 2 BILLION, BUT THEY CAN ABSORB OUT, THEY CAN TO JUST >> THE COST OF THE FINE. THIS IS THE OTHER SIDE, THE NON MONETARY POLICIES THAT MAY COME THROUGH THAT COULD RESTRICT ASKED GROWTH THAT COULD LIMIT NEW BUSINESS ACTIVITIES, INCLUDING YOU BRANCH OPENINGS. IT COULD ALSO PREVENT IT FROM ACQUIRING OTHER ASSETS. SO THERE IS A RISK YOU'RE TO THE OUTLOOK FOR EARNINGS GROWTH FOR TEASE U.S. FRANCHISE. AND THAT'S ON TOP OF A CHALLENGING INDUSTRY. IT FOR US BANKING WHERE COST OF FUNDING IS GOING UP, NOT JUST GOING TO PAUSE, BALANCE OR DECLINING CAUGHT BANKS TO PAY MORE. WE TEND TO PAUSE. THEY DO HAVE AND WHEN THEY DO PAY MORE DEPART TO SOMETIMES STILL LEAVE TO HIGH-YIELD ALTERNATIVES LIKE MONEY MARKET FUNDS. SO IT'S NOT A CONSTRUCTED BACKDROP FOR US BANKING AND THIS ISSUE IS NOT GOING TO GO AWAY ANYTIME SOON. ANY NON MONETARY PENALTIES OR A CEASE AND DESIST ORDER, WE THINK WILL TAKE AT LEAST 3 YEARS, POTENTIALLY 5 YEARS OR MORE TO RESOLVE UNTIL THAT GOES AWAY. IT'S TOUGH TO BE POSITIVE. THE QUESTION IS, IS THAT ARE ALREADY BAKED INTO THE I THINK IS DISCOUNTED. THERE'S NO QUESTION THAT HE'S TRADING BELOW ITS HISTORICAL VALUATION. >> THE ISSUE IS THAT WITHOUT GETTING MORE CLARITY ON THE OUTLOOK FOR EARNINGS, IT'S HARD TO START AS ANALYST DETERMINE WHAT IS PRICED IN AND WHAT IS OVER AND UNTIL WE ARE ARE AWARE AND T DISCLOSES WHAT THEM ON TOURNAMENT APRIL, THESE ARE IT'S DIFFICULT TO GAME OUT. THE PROJECTED FOR EARNINGS WITH THAT WITHOUT HAVING MORE CLOUD IN EARNINGS IS DIFFICULT JUSTIFY WHAT THE PRICE SHOULD BE. SO I WAS SPOKE WITH A SHAREHOLDER WHO LOOKED AT IT IN 2 WAYS, YOU KNOW, WHEN THEY GET THE MONETARY PENALTY, THEY CAN ABSORB IT EASILY GOT HIGH CAPITAL LEVELS. >> THAT TOO, IS THEY GET THE PENALTY. PLUS, THEY HAVE A CONSENT ORDER. WELL, THEN THEY JUST HAVE ALL THIS CAPITAL STILL AND THEY USE IT TO BUY BACK STOCK, MAYBE SELL DOWN A LITTLE BIT MORE OF THE SCHWAB. >> HOLDING THAT THIS THE BANK, AT LEAST FROM A BALANCE SHEET PERSPECTIVE, CAN ABSORB IT AND DO SOMETHING ABOUT IT. >> SO WE THINK ABOUT THE EXCESS CAPITAL CLOSE TO 5 BILLION. ASSUME A FINE OF 2 BILLION, THEN WE'RE RIGHT ON THAT, THAT T THAT'S MADE UP HALF OF THAT CAPITAL. AND THEN IF YOU LOOK AT THE REMAINING BUYBACK PROGRAM, YOU CAN BUY BACK AND ADDITIONAL 32 MILLION SHARES. THAT'S ANOTHER TO DOING SO. THE TEXAS CAPITOL, A TD BANK HAS THAT COULD GO AWAY PRETTY PRETTY QUICKLY AFTER COMPLETES ITS BUYBACK PROGRAM AFTER WE HAVE THE MONETARY POLICY AND THEN IT'S NO DIFFERENT YOUR BANK AND THE SPACE OPERATING AT A RATIO OF CAPITAL AROUND 12 AND A HALF TO 13%. SO THE THE BUYBACKS, YOU KNOW, THAT'S A ONE TO 2% BENEFIT A REDUCTION IN SHARES OUTSTANDING, BUT IT'S NOT ENOUGH TO OUTWEIGH THE LONG-TERM HEADWIND FROM A CEASE AND DESIST ORDER BY THE REGULATOR IN THE U.S. ESPECIALLY IF THERE'S OPPORTUNITIES FOR ORGANIC FOR MARKET SHARE AGAINST HE CAN PARTICIPATE. SO THAT REALLY THAT REALLY IS GOING TO THE U.S. FRANCHISE TO AT LEAST 3 TO 5 YEARS. SO THE ORGANIC GROWTH ISSUE IS, IS IS A CONCERN. I GUESS I'M TRYING TO UNDERSTAND, YOU KNOW, ROYALS. >> MOVING TOWARDS HIGHS, NATIONALS MOVING TOWARDS HIGHS. JP MORGAN'S MOVING TOWARDS ALL-TIME BANK OF AMERICA. SO ALL BANK STOCKS, YOU KNOW, NOTWITHSTANDING YOUR COMMENT ABOUT MAYBE THAT OUTLOOK AS A LITTLE CLOUD, BUT THEY'RE ALL DOING JUST FINE. >> OPERATIONALLY TD SEEMS TO BE DOING JUST FINE. THIS PENALTY JUST SEEMS SO ON THE COMPANY WHERE WE KNOW FROM MOUNT SHE PERSPECTIVE, THEY'LL BE ABLE TO HANDLE IT WON'T BE PLEASANT, THEY'LL BE ABLE TO HANDLE IT. AND THE REST OF THE BUSINESS IS DOING JUST FINE. >> SO I THINK THAT'S AN IMPORTANT POINT. WE NEED TO DECONSTRUCT TO WHY THE RESULTS FOR GOOD THIS QUARTER AND THE UPSIDE SURPRISE WAS DRIVEN ALMOST ENTIRELY BY THEIR CAPITAL MARKETS BUSINESS AND THEIR WEALTH MANAGEMENT BUSINESS. SO THAT'S A FUNCTION OF VERY ACCOMMODATIVE IN SUPPORT OF FINANCIAL MARKET CONDITIONS THAT COULD CHANGE. WE DON'T KNOW. WE CAN'T PREDICT THAT, BUT THAT'S NOT A RELIABLE RECURRING STREAM THEIR CORE EARNINGS. AND THE MARKET MAY NOT NECESSARILY THE BOARD BANKS THAT EARNING EXPECTATIONS PURELY ON CAPITAL MARKETS AND WEALTH MANAGEMENT, ESPECIALLY WHEN THE UNDERLYING TRENDS FOR PERSONAL COMMERCIAL BANKING ARE FAVOURABLE AT THE MOMENT WHERE YOU HAVE NET INTEREST MARGIN CONTRACTION AND CREDIT LOSSES CONTINUE TO MOVE HIGHER. SO IF WE GO THROUGH NEXT WEEK AND WE HAVE BEATS, WHICH ARE MORE LIKELY NOW GIVEN TO THESE RESULTS BASED ON CAPITAL MARKETS ON BETTER. BUT THE CANADIAN OR INTERNATIONAL BANKING FRANCHISE ARE DOING FAIR AND POOR. HIS MARGINS ARE CAN TIGHTEN. BANK WASN'T GOOD. >> ALL THE MARGINS WITH AN EXPANDED. SO ISN'T LIKE IT COULD HAVE A GOOD QUARTER, BUT THE OUTLOOK FOR MARGINS TD EXPECTS MARGIN CONTRACTION NOW CANADA. OKAY, SO WHAT IS OUTSIDE OF THE MLSE IS WHAT IS TELL YOU ABOUT WHAT WE'RE LIKELY TO SEE IT FROM THE REST OF THE CANADIAN BANKS. IT SOUNDS LIKE GOOD CAPITAL MARKETS THAT MARGIN EXPANSION IS IS SORT OF AN OUTSTANDING QUESTION, MIGHT BE BANK SPECIFIC. SO I THINK IF THE STRONG RESULTS FOR CAPITAL MARKETS AND WEALTH MANAGEMENT CARRIES OVER TO THE REST OF THE BANKS TO GOING TO SEE MORE LIKELY THAN NOT BEATS. >> NEXT WEEK, UNLESS WE GET A ONE-OFF SURPRISES EITHER. HIGHER CREDIT LOSS THAN EXPECTED OTHER ITEMS THAT ARE MORE DIFFICULT TO PREDICT. THE BIGGER ISSUE IS THAT IF ALL BANKS ALSO REFLECT THE TRANSFER TD, WHICH IS MARCHING ATTRACTION U.S. BANKING AND LIMITED OR NO MARGIN EXPANSION THE BANKING AND CREDIT LOSSES. OR CAN YOU CONTINUE MOVE HIGHER? YOU MAY NOT SEE A POSITIVE REACTION BY THE MARKET BECAUSE GOING TO LOOK AHEAD TO WEAKNESS UNNECESSARILY BANK ON FINANCIAL MARKET CONDITIONS REMAINING YOU HAVE A SELLER REDUCE ALL THE CANADIAN BANKS EXCEPT ONE CANADIAN WESTERN BANK. WHAT DO YOU LIKE? >> ITS DISCOUNT IT PRETTY SUBSTANTIALLY STREAM BELOW BOOK VALUE AND THE DIFFERENT SPECIES CAN YOU WESTERN BANK AND OTHER BANKS ARE JUST KIND OF LIKE A SCOTIA RTD IS THERE AREN'T BANK SPECIFIC RISKS FOR KEY WESTERN BANK. >> LIKE A TRANSITION TO A NEW CEO OR A NEW STRATEGIC PLAN OR MLA REGULATORY ISSUES. SO WHAT'S CWB HISTORICALLY, THEY'VE DONE BETTER ON CREDIT LOSSES TO CYCLE. TYPICALLY STABLE INTEREST MARGIN, SO THEY SHOULD BE ABLE TO PERFORM FAIRLY WELL AS WE MOVE THROUGH THIS AND IT'S IS ONE OF THE ONLY BANKS IN THE SPACE THAT I TNK IS TRADING AT A SIGNIFICANT DISCOUNT WITHOUT