On Friday, TD announced executive compensation cuts across the board and that CEO Bharat Masrani would be stepping down two months earlier than originally communicated to make way for incoming CEO Raymond Chun.

With the stock up 10% YTD and a sizeable valuation discount to other Canadian banks, investors might be wondering if they have the green light to back up the truck.

Not so fast in our view, as there could be some serious lingering impacts from the asset cap imposed on TD’s U.S. retail segment which has grown over the years into a significant piece of the bank’s business.

If the past has any predictive value (Wells Fargo, HSBC), the asset cap could easily remain in place for more than 5 years, forcing the bank to turn to its other business segments to pick up the slack.

With guidance pulled until the back half of 2025 and new leadership taking the helm, we’d be patient for now and look for data points indicating its Canadian P&C and Wholesale Banking units are outgrowing peers.

The CMHC released housing starts for December yesterday, capping off a year of modest growth, with actual starts for 2024 up 2% y/y at 227.7K, missing estimates of ~245K.

Results were carried by Alberta (up 32% y/y) and Quebec (up 26% y/y), but were held back by weak numbers out of Ontario (down 16% y/y) and B.C. (down 9% y/y), where a soft demand backdrop in multi-unit residential continues due to affordability issues.

We know for demand to return to these markets, affordability needs to improve via more supply - but absorption of new units continues to go the wrong way (% of new builds bought once they are completed).

This is driving new home inventory up, making the backdrop less attractive for developers to build.

We’ll be watching this dynamic closely, because something has to give or the affordability problem in Ontario and B.C. will persist.

The Trump inauguration today is being moved indoors due to “dangerously cold temperatures” at roughly negative 11 degrees celsius with the windchill.

For context, here in Toronto we’re well into the negative 20s today with the windchill, and I can almost guarantee I’ll see at least 5 people wearing shorts.

If America wants to take Canada over, we can be sure that we have at least a few months to prepare.

Natural gas finished Friday’s session down ~8% on forecasts for a warmer end of January and early February reducing demand, in combination with some profit taking on what has been a strong last 6 months for speculators.

Friday’s results were dominated by some of the smaller U.S. banks who beat estimates across the board. Some common themes were elevated investment banking and trading revenues and strong credit quality.

With Canadian bank earnings set to come in a month or so, we could see similar results, where names like National Bank (NA.TO) or Royal Bank (RY.TO) may be well positioned given the business model is overweight capital markets (banking & trading) relative to the rest of the group.