d2 06 10.45am satish rai hakuna matata - cifps...moodys us hy default rate spread vs. 10-year high...

Build onStrength

For Advisor and Planner Use Only

Hakuna Matata

Satish Rai, CFAVice Chair, TD Asset Management Inc.Senior Vice President, TD Bank Financial Group

For Advisor and Planner Use Only 2

Agenda• Review the Economic Backdrop and

Global Policy Response• Assess the Consequences of a Liquidity Build-Up• Evaluate the Impact on Various Asset Classes• Lessons Learned

Build onStrength


Economic Backdropand Global Policy Responses


State of the U.S. Economy – Leading Indicators

Source: Russell Investments. As at March 31, 2009


State of the U.S. Economy – Lagging Indicators

Source: Russell Investments. As at March 31, 2009


Size of the U.S. Economy

GDP = $14.2 Trillion

Gross Domestic Product(USD Trillions)

Gross Domestic Product(USD Trillions)

Note: Net Exports = -$0.55 Trillion

Government Spending$2.9

Gross PrivateDomestic

Investment$1.9

PersonalConsumption Expenditures$9.9

Source: National Economic Accounts. As at December 31, 2008


Total U.S. Debt

Source: Ned Davis Research. As at December 31, 2008

Total credit market debt of $52.6 Trillion

Total Credit Market Debt

Municipals8.0%

Asset Backed Securities8.0%

Agencies9.7%

Mortgages26.6%

Corporates18.8%

Money Market11.3% Treasurys

17.7%


Global Economies

Source: International Monetary Fund.As at October 31, 2008. Estimates start after 2008

US$

(Bill

ions

)

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,000

2006 2007 2008 2009 2010 2011 2012 2013

CanadaIndiaChinaUnited States


U.S. Stimulus

$15 trillion in authorized stimulusfor a $14 trillion economy

Source: Fed, FDIC and Treasury websites. As at March 31, 2009

Treasury$5.2

Federal Reserve$7.4

FDIC$2.3


Global Fiscal Policy Response

2.040Canada

1.030UK1.333France1.54India1.6280European Union

2.063Germany2.0105Japan3.6800US5.8100Russia8.9586China

% of GDPUS$ billionCountry

Source: Financial Times, Bloomberg Finance L.P.As at February 28, 2009

Swift and aggressive responsefrom many governments

Build onStrength


What Happens With Such a Build-Up in Liquidity?


U.S. TED* Spread

Credit market stabilitySource: TD Asset Management Inc.Data from September 1, 2008 – April 30, 2009

*TED Spread = U.S. 3 month London Interbank Offered Rate – U.S. 3-month T-bill

Prec

ent(

%)

0.0

0.51.0

1.5

2.0

2.53.0

3.5

4.04.5

5.0S

ep-0

8

Oct

-08

Nov

-08

Dec

-08

Jan-

09

Feb-

09

Mar

-09

Apr

-09


US$ - Trade Weighted Index

No longer appreciatingSource: TD Asset Management Inc.,Bloomberg Finance L.P. Data to April 30, 2009

Inde

x Le

vel

74

76

78

80

82

84

86

88

90S

ep-0

8

Oct

-08

Nov

-08

Dec

-08

Jan-

09

Feb-

09

Mar

-09

Apr

-09


S&P/TSX Composite Index

Financial stabilitySource: Bloomberg Finance L.P. Dec 1, 2008 – April 30, 2009

7000

8000

9000

10000

11000

12000

13000

140001-

Sep

15-S

ep

29-S

ep

13-O

ct

27-O

ct

10-N

ov

24-N

ov

8-D

ec

22-D

ec

5-Ja

n

19-J

an

2-Fe

b

16-F

eb

2-M

ar

16-M

ar

30-M

ar

13-A

pr

27-A

pr

Inde

x Le

vel


Inflation Linked Bonds

Risks of deflation have abated

Yield - DEX RRB Index

Source: PC Bond Analytics. Data to April 30, 2009

Yiel

d (%

)

1.5

2.0

2.5

3.0

Sep

-08

Oct

-08

Nov

-08

Dec

-08

Jan-

09

Feb-

09

Mar

-09

Apr

-09

Build onStrength


What Does This All Mean?


U.S. EconomyU.S. Monthly Change

in Retail Sales

We may have seen the worst

U.S. Existing Home Sales

Source: Bloomberg Finance L.P.Data from January 1, 2008 – March 31, 2009

Source: Bloomberg Finance L.P.Data from January 1, 2008 – March 31, 2009

4.4

4.5

4.6

4.7

4.8

4.9

5.0

5.1

5.2

Jan-0

8Feb

-08

Mar-08

Apr-08

May-08

Jun-0

8Ju

l-08

Aug-0

8Sep

-08

Oct-08

Nov-08

Dec-08

Jan-0

9Feb

-09

Mar-09

-3.0-2.5-2.0-1.5-1.0-0.50.00.51.01.52.02.5

Jan-08

Feb-08Mar-0

8Apr-0

8May-0

8Ju

n-08Ju

l-08

Aug-08

Sep-08

Oct-08

Nov-08

Dec-08

Jan-09

Feb-09Mar-0

9U

nits

/Mill

ion

Mon

th o

ver M

onth

% C

hang

e


1000

1500

2000

2500

3000

3500

4000

4500

5000

5500

6000

Jan-

08

Feb-

08

Mar

-08

Apr-

08

May

-08

Jun-

08

Jul-0

8

Aug-

08

Sep-

08

Oct

-08

Nov

-08

Dec

-08

Jan-

09

Feb-

09

Mar

-09

Apr-

09

Global Economy

Markets appear to be picking up

Shanghai A-Share Index

Source: Bloomberg Finance L.P.Data from January 1, 2008 – April 30, 2009

Inde

x Le

vel


30

50

70

90

110

130

150

Apr-06

Jul-0

6

Oct-06

Jan-0

7

Apr-07

Jul-0

7

Oct-07

Jan-0

8

Apr-08

Jul-0

8

Oct-08

Jan-0

9

Apr-09

130

170

210

250

290

330

370

Aug-07

Nov-07

Feb-08

May-08

Aug-08

Nov-08

Feb-09

Commodities

Refocusing on supply concerns with growthin Asia and stability in the western world

Source: Bloomberg Finance LP. Data to April 30, 2009

USD/Barrel Price

Oil1 Copper

1US West Texas Intermediate Cushing Crude Oil Spot Price


Canadian Financials

Focus will shift from mark to marketlosses to traditional loan losses

Source: Bloomberg Finance L.P., TD Asset Management Inc.Data as at January 1, 2008 – April 30, 2009

Bank Index Performance

Inde

x Le

vel

800

1000

1200

1400

1600

1800

2000

Jan-

08

Jan-

08

Mar

-08

Mar

-08

Apr

-08

May

-08

Jun-

08

Jul-0

8

Aug-

08

Sep-

08

Oct

-08

Nov

-08

Dec

-08

Jan-

09

Feb-

09

Mar

-09

Apr

-09


U.S. Investment Banks

Need to reduce leverage.Will we see a new business model?

Leverage:(Assets/Equity)

Source: Company Quarterly Reports

20x30xMorgan Stanley

18x24xGoldman Sachs

Q4 - 2006 Q4 - 2008


Corporate Bonds

DEX All Corp – DEX Canada Index.Data to May 8, 2009

Perc

ent (

%)

Spreads starting to stabilize

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0A

pr-0

7

Jun-

07

Aug-

07

Oct

-07

Dec

-07

Feb-

08

Apr

-08

Jun-

08

Aug-

08

Oct

-08

Dec

-08

Feb-

09

Apr

-09


High Yield BondsU.S. High Yield Spreads & Default Rates

(1988 – 2009)

Source: Bloomberg Finance L.P., Merrill Lynch.Data as at April 30, 2009

Def

ault

Rat

eH

igh Yield Spread

Moodys US HY Default Rate

Spread Vs. 10-Year

High yield discounting large bankruptcies

0

2

4

6

8

10

12

14

12/3

1/88

12/3

1/90

12/3

1/92

12/3

1/94

12/3

1/96

12/3

1/98

12/3

1/00

12/3

1/02

12/3

1/04

12/3

1/06

12/3

1/08

0

500

1000

1500

2000

2500

Build onStrength


Lessons Learned


…For Asset Managers • Excess leverage poses systematic risks• Liquidity can’t be taken for granted• Canadian banking industry is a model for the world• Emerging economies do not grow in a straight line• Regulation is a necessary component to a

market economy

The business cycle is here to stay


…For Individual Investors

Focus on:• Strong management• Franchise names• Sustainable cash flows• Dominant market share• Low debt levels

Quality companies in a balanced portfolio

Focus on:• Ensuring investment

portfolio remains balanced• Understanding risk tolerance

• Understanding time horizon

Company Level Portfolio Level


Roadmap to Investing

TD Global Sustainability Fund

TD Global Dividend Fund

TD North American Dividend Fund

TD Canadian Equity FundTD Dividend Growth Fund

TD Canadian Bond FundTD Income Advantage Portfolio

Product

Companies with a sustainable approach to their business combined with innovative environmental leaders

Geographic diversification through blue chip companies with a history of growing their dividend

High quality, best in class dividend paying stocks across North America

High quality Canadian companies with sound balance sheets and reasonable valuations

High quality corporate bondsDiversification across several income generating funds

Exposure

Sustainable Investing

Global Exposure

Need

North American Exposure

Domestic Exposure

Fixed Income

A fund to meet your needs


The information contained in this presentation has been provided by TD Asset Management Inc. (“TDAM”) and is for information purposes only. The information has been drawn from sources believed to be reliable. Where such statements are based in whole or in part on information provided by third parties, they are not guaranteed to be accurate or complete. Graphs and charts are used for illustrative purposes only and do not reflect future values or future performance of any fund. The information does not provide financial, legal, tax or investment advice. Particular investment or trading strategies should be evaluated relative to each individual’s objectives and risk tolerance. TDAM, The Toronto-Dominion Bank and its affiliates and related entities are not liable for any errors or omissions in the information or for any loss or damage suffered.Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus, which contains detailed investment information, before investing. Mutual funds are not guaranteed or insured, their values change frequently and past performance may not be repeated.Mutual fund strategies and current holdings are subject to change. TD Mutual Funds are managed by TD Asset Management Inc. a wholly owned subsidiary of The Toronto-Dominion Bank and are available through authorized dealers.Bloomberg and Bloomberg.com are trademarks and service marks of Bloomberg Finance L.P., a Delaware limited partnership, or its subsidiaries. All rights reserved.PC-Bond – THE USER AGREES THAT TSX INC. AND THE PARTIES FROM WHOM TSX INC. OBTAINS DATA DO NOT HAVE ANY LIABILITY FOR THE ACCURACY OR COMPLETENESS OF THE DATA PROVIDED OR FOR DELAYS, INTERRUPTIONS OR OMISSIONS THEREIN OR THE RESULTS TO BE OBTAINED THROUGH THE USE OF THE DATA. THE USER FURTHER AGREES THAT NEITHER TSX INC. NOR THE PARTIES FROM WHOM IT OBTAINS DATA MAKE ANY REPRESENTATION, WARRANTY OR CONDITION, EITHER EXPRESS OR IMPLIED, AS TO THE RESULTS TO BE OBTAINED FROM THE USE OF THE DATA, OR AS TO THE MERCHANTABLE QUALITY OR FITNESS OF THE DATA FOR A PARTICULAR PURPOSE.All trademarks are the property of their respective owners. TD Mutual Funds is a trade-mark of The Toronto-Dominion Bank, used under license.

Build onStrength


Thank You

d2 06 10.45am satish rai hakuna matata - cifps...moodys us hy default rate spread vs. 10-year high...

Documents