What are the skills needed to survive different market environments?

NARRATOR: Welcome to Viewpoint, a TD Securities podcast. Listen in as we draw perspectives from a variety of thought leaders on key themes influencing markets, industries, and the global economy today. We hope you enjoy this episode.

PETER HAYNES: Welcome to episode seven of Viewpoint, a TD Securities podcast where we explore trends in capital markets. My name is Peter Haynes, and I'll be your host for today's episode. And I'm pleased to be joined by Chris Vogel and Tim Wiggan, co-heads of global markets at the firm. Gentlemen, thanks for joining us today.

TIM WIGGAN: Thanks for having us.

CHRIS VOGEL: Morning, Peter.

PETER HAYNES: So you were named co-head of global markets following the retirement of Moti Jungreis Gray at the end of 2021. For the benefit of our audience, please tell us a little bit about your career paths that led you to your current position. Chris, I'll start with you.

CHRIS VOGEL: Thanks, Peter. So after graduating school, it took me about three or so years to find myself to the trading floor. And once I was there the first time, I realized this is going to be home for me. I started trading medium-term foreign exchange at Chase Manhattan Bank. And when I used to look across the way, I used to see a lot of growing activity on the interest rate derivatives swap desk. And I said my next move is to try to get there. So I got into derivatives early on. I traded derivatives at Chase Manhattan through the merger with JPMorgan. I stayed on, read a management hedge book, which included mortgages and currencies, commodities, rates, and worked with the head of rates, so that was a different lens. And when they left to go head up capital markets at Bank of America, somehow I found myself there. I was lured by their management, by their passion for markets. And I knew it would be a difficult transition to go from JP Morgan and Bank of America, but it was a good move. They gave me more to do. That's really where it all began.

PETER HAYNES: And I know after school I believe you had a stint in the military. What did the military teach you about being successful in our business?

CHRIS VOGEL: So it was actually before school. I enlisted right out of high school. So I'd say what the military or what the Marine Corps-- I like to call it the Marine Corps and not the military. It teaches you the discipline, resilience, grittiness. And they just instill a tremendous amount of confidence in you.

PETER HAYNES: And that must have come in handy, certainly, through the tough times. We'll talk a little bit about some of the skills you need to be able to survive through different market environments. So, Tim, why don't we talk a little bit about your career path to your current position?

TIM WIGGAN: So I started, Peter, in the business in 1994. I started out a firm called Richardson Greenshields, which I think was relatively well known and is still relatively well known, most notably now in agriculture as well as wealth management. But at the time, they had a full-service dealer that I was able to start at right out of university. So I started there on the institutional equity desk. And within a little under two years of starting, the firm was taken over by RBC. The real genesis of that deal was to get access to the wealth platform that Richardsons had. That said, there was quite an established fixed income entity as well as a smaller equity firm. So I was lucky enough to be offered a job at RBC and went over there post the acquisition. Again, I was at RBC for a little under two years. I was approached by Newcrest around 1997, so went over to Newcrest. Newcrest was around between 1995 and 2000, so I was there for the last three years of the firm's existence. And of course, in 2000, TD purchased the firm. So I came over and basically came over with sales, trading, research, and investment banking partners from Newcrest and have been here ever since.

PETER HAYNES: That's interesting, too-- two acquisitions in your time in the equity business. There probably aren't a lot of other people that are still in the business that went through two acquisitions, as Newcrest is really the last big acquisition I think that's happened on Bay Street. During your time at TD Securities, you went over to TD Asset Management. You were the CEO there for four years. And I know, Chris, you also spent time as the head trader at BlackRock on focusing on fixed income and FX. So you both have the unique position of being able to compare the two sides of the business. So, Tim, I'll ask you, what do you think is the biggest difference between working on the sell side versus the buy side? And what's the biggest misconception that your sell-side peers, like me, would have about the buy side business?

TIM WIGGAN: I would say the biggest difference, Peter, for me was, and for anyone for that matter at TDAM, was the client base. If you think about TD Securities, we, by definition, are a wholesale entity, so we're dealing with institution pensions, governments, hedge funds, mutual fund companies. Whereas at TD Asset Management, we would literally have clients that spanned from the affluent, mass affluent, all the way through to the institutional side. So that was a big change. And for me, learning about the pricing, packaging, and distribution of specifically retail investment products was by far the most interesting, and, I would say, honestly, the steepest part of the learning curve. It's really something that I enjoy following to this day, just understanding or trying to understand and gauge the various fund flows that are happening that really have a major influence on asset prices generally. And I would say to the second question, the biggest misconception-- and I know Chris can speak to this from his experience-- is just the rigor around controls and governance that come from being a fiduciary. And we are operating as agents, albeit with a very high level of integrity. When you are a fiduciary, there is just another level of controls that come into play with really anything that you're dealing in. And especially being part of a larger financial institution, things like affiliate transactions and really anything that you are doing is held to a higher standard, as should be the case, as clearly you're dealing with other people's money.

PETER HAYNES: And, Chris, when you, obviously, from your seat at BlackRock and your seat at TD Securities and your other time on the sell side, have seen a lot of the different types of skill sets that make someone successful in this business, what do you think are the character traits that separate the best of the best in sell-side capital market specialists? And do you have any advice for students that might be considering a career in capital markets? Does every new hire in the desk have to have an engineering or a comp sci background?

CHRIS VOGEL: Peter, I'd say the skill sets that I see more deem the most valuable, I don't know if they're necessarily earmarked for sell side or buy side. And I'm not sure if that was the question. I would say for me, the cornerstones really are there needs to be a high level of competence in whatever you're doing, resiliency, because there will be a few stumbling points along the way, regardless of what you're in. Integrity is a huge one. Sometimes what we do doesn't always get the best reputation. But there's a tremendous amount of integrity within the industry, so that's important. And I'd say lastly, I don't want to get campy and say passion. But I think you have to really, really like what you're doing. I don't know if we always love what we're doing, but you have to really like it because it shows, and it's a grind. And I think it's really important to be drawn, just absolutely drawn to the markets.

PETER HAYNES: Yeah, and I think that passion goes with integrity as well. If you're passionate for something, you care that much, you're always going to be thinking about integrity. And as we always say, you build your entire career your integrity, and then you lose it in one second when you make a mistake. So it's certainly good advice to live by. Tim, when you look at TD Securities and the trajectory of our organization, your investment banking colleagues have a playbook that calls for a significant amount of expansion in the US. What does the playbook for TD Securities in capital markets look like?

TIM WIGGAN: That's a good question. I think the document that I would refer you to, and something that certainly Chris and I spent quite a bit of time on, were the strategic priorities, where we really tried to take a step back and create a bit of direction in terms of where our focus lies. At a high level, what we are aiming to do is create an integrated North American dealer with global reach. And really, everything that we're doing across TD Securities and, for that matter, markets specifically really falls out of that. So I think if I were to just highlight a few of the key points there, clearly, there's a push for market share in any of the businesses where we feel we have a strategic advantage. And that's not all things to everyone. I think there are clear examples where we have advantages. We talk about things like trade velocity and basically putting more volume through our existing pipes. I think there's a recognition that there needs to be a renewed focus around risk appetite and process and some of our policies, something that we're working hard and in partnership with our partners across the control and governance functions. I think there's a recognition that we have work to do on the infrastructure side, again, something that we're now engaged actively with partners, both within TD Securities and within TD Bank as a whole. And then finally and, in my mind, most importantly, continued focus around people, which will always be our competitive advantage and our differentiator, especially in times like we've just come through and continue to deal with as it relates to COVID. So I think that is a very good starting point. And then I would also say in fairness, Chris and I three months in share, roughly, we were very much at the table with Moti informing the strategy that's in place today. And so to some extent, we're more of in execution mode, rather than a wholesale change to our strategic outlook.

PETER HAYNES: And one of the things Tim brought up there, Chris, was going to customers and telling them that where we have areas of competency and where we want to do business-- I'm sure you can recall days in your chair at BlackRock where a broker will come in and say we want BlackRock's business. And you make it very clear, we'll do business with you, but you tell us what you're good at, rather than trying to do everything.

CHRIS VOGEL: Correct.

PETER HAYNES: Let's talk about experience a little bit, Chris, and you've got a lot of that. You've lived through a lot of different volatile trading environments as a trader. What advice do you have for traders, especially young traders that have just entered the business, who are trying to navigate a 2022 where a market that sets up with a flat yield curve, potential stagflation, stock market weakness in the US, and a war that threatens the entire world?

CHRIS VOGEL: Well, Peter, I'm going to date myself here. But the last time we had this type of start to the market in fixed income I believe was 1994, and even I was a young trader back then. I wouldn't say young, new trader. I started in trading a little later. So I think there's a couple of rules I try to live by. Don't fade the Fed. We tend to do a better job of that when they're cutting than when they're hiking. We haven't seen this before. But had you not faded the Fed, you'd be in a better stance. And also, what I always try to tell the gang and myself is to trade this market. History can be a guide. History can be your friend. But the markets are always different. And if we trade this market and remain nimble, make sure our senses are picking up on all that's happening, you'll navigate it just fine. I think when we're wedded to the past or wedded to an old playbook, and playbooks are changing quickly-- We're seeing central banks pivot like we've not seen before. Central banks are feeling front-footed based on what they're doing relative to what's priced in. That's somewhat different. Again, I don't know if history is always your friend in markets like this. And with regard to the war, as tragic as it is, we also haven't really seen something of this magnitude in a long, long time. Unfortunately, Wall Street tends to focus, or markets focus, on one thing. We're into our second month here. It is as poignant as it's been. But it does feel as if the markets have pivoted now back to inflation and back to central banks.

PETER HAYNES: And interestingly enough, the war kind of allowed the market to pivot away from COVID, I think. And you're right, you've got to live in the moment right now. While history will be a good guide, there were different participants and different market structures back then, too. Now we're completely electronic. We have electronic intermediaries that are constantly changing the way the business works Tim, Canada is always a late-cycle winner. And we're seeing that play out with strength in commodities and financials, which has led the TSX to a near 10% outperformance versus the S&P year-to-date. Are you seeing this strength in Canada leading to additional interest globally in our market? And I say our market because I'm here based in Canada. And are you a believer in a long-Canada, short-US market bet for the rest of this year? TIM WIGGAN: Maybe I'll answer the second question first. I'm not a believer in shorting the US market. I think if you look at performance, Canada versus US-- and you're a subject matter expert in this area-- it absolutely has everything to do with the construct of the different indices. I think Canada was poised to do well as we came into the year. And specifically, central banks changed their approach to addressing inflation. And the word transitory was dropped. By definition, that is going to favor late-cycle stocks, financials, materials, energy. And it's going to disadvantage your higher beta stocks and technology. So if you look at the TSX, as you mentioned, it's up about 3% in Q1, the S&P down 5%, and the NASDAQ maybe the best example of that tech comment down 9%. But you can move into Europe and look at the FTSE 100, which is more leveraged to financials and energy. And it's up just under 2%. So I think as we look at what's happening in Europe-- and again, this is something Chris I had the opportunity to talk about when we were on the road in London and Dublin-- I think it could actually favor North America. We have a lot of the resources that are needed in order to sustain economies. And that would include energy, notwithstanding the transition that we're seeing take place in Canada, the US, and around the world, but also agriculture, precious minerals, and base metals. So I think if we are cooperating properly, it's almost a situation where we're reinvigorating NAFTA. I think we could benefit. So I think it's very difficult to say you're short the US and you're long Canada. I think you get into very specific subsectors of the various indices that obviously matter from an equity perspective.

PETER HAYNES: And you think about what North America can do. You have Jamie Biden. Jamie Biden, excuse me. We'll take that out.

CHRIS VOGEL: That's an interesting hybrid. That's a very interesting hybrid.

PETER HAYNES: Cut that. Yeah, Jamie Dimon suggesting a Marshall Plan in the United States with respect to energy development and helping to service Europe through the Russian energy crisis. And then you have in Canada our own Frank McKenna and Ron Ambrose, who are suggesting that this is a CD Howe moment. CD Howe was the minister of everything following the Second World War. And Canada really can do its part in terms of agricultural and energy supply to Europe and help the self-sufficiency of North American energy. Chris, part of the market that Tim talks about being dominated by tech names is actually names that are the information source for a lot of what we do. Information is everywhere. And in fact, it can be overwhelming to try to prioritize what we get to read in terms of understanding how the markets are behaving. What are your go-to sources when it comes to information to lead you through these tough markets?

CHRIS VOGEL: Well, Peter, they've changed, as it's getting more difficult for me to parse through what is the news versus what is editorial and now pivoting to full editorials, because then I know going into it, it's an editorial. There's some prominent market professionals that I am following regularly, Rick Rieder from BlackRock, Jeff Gundlach, Scott Minerd, Jamie Dimon, our own Bharat Masrani. I am not an active Twitter user. But I am consuming that data along with more editorial as I find the Bloombergs, the CNN's, the MSNBC's, and the FOX's a little more difficult to get raw data out of it outside of editorials.

PETER HAYNES: Yeah, it's so polarizing. It's extremely difficult. It's like the governments these days. Tim, as you spend time speaking with senior executives in the institutional investor arena trying to navigate current market conditions, what are the most important issues these executives are focused on for the rest of this year?

TIM WIGGAN: Well, I think coming into the year, just to reiterate my point, that the change in Central Bank's stance as it relates to inflation was very much a front and center concern about the Fed and, again, other central banks being behind the curve as it relates to moving rates to address inflation. I think, obviously, everything changed in February, the Russian invasion of the Ukraine. Obviously, that's a human tragedy and has massive economic implications, one of which I think is deglobalization and the idea-- you've touched on it earlier-- where your supply lines and your reliance on external parties are being questioned and the security of your inputs generally are being questioned. And that obviously has major implications. I would say the other issue that is very much front and center-- again, we touched on it earlier-- is around energy security, whilst not losing track of the need to transition to a more carbon-neutral global environment. And so I would say certainly one theme that is in my mind not going away is the E in ESG. I think all global constituents and certainly institutional asset managers are very much in a dialogue to consider how they play their part in that transition to a more sustainable economy from an environmental perspective. And at TD, it's clearly one of our key focus areas as well.

PETER HAYNES: As we live the markets 24-7, it can be pretty stressful. And if you don't take time for yourself, certainly I think you'll drive yourself mad. So I want to finish up here by talking about some of your outside work passions. And, Chris, I'm going to start with you. I know you love the New York Jets. Tell me how many wins the Jets are going to have in 2022-23.

CHRIS VOGEL: All right, Peter. I'll tell you, I shared with you on the walk over. My youngest son Ryan, who's an optimist, said 17, so I thought that was fun to hear that. I'll make an 8-bid at 9-market.

PETER HAYNES: OK, well, they're not going to win 17 because that would mean they beat the Bills twice and I'm a Bills fan. So that's not going to happen. So eight at nine, that's pretty bullish given the division they are in and some of the improvements we've seen with some of the competitors. The Patriots are going to be good this year. Miami's made some improvements. And I'll look forward to seeing that. We'll have a healthy little side wager on the Bills-Jets games this year.

CHRIS VOGEL: They'll split Buffalo this year.

PETER HAYNES: Oh boy, that's aggressive. So we'll see about that. My youngest son would argue with you. And, Tim, let's switch gears to I know your personal passion, and that's rugby. The Six Nations rugby tournament just ended. And it was a clean sweep for France as they ran the table to finish 5-0. I know I joked a little bit with you about whether or not you were helping England find a new coach if they do need one. But France is hosting the 2023 World Cup. Does the recent Six Nations victory make them your top pick to win next year's Rugby World Cup? TIM WIGGAN: Oh, that's a hard one. I mean, they are an exciting team. The Grand Slam, as you said, I thought Ireland was maybe a bit unlucky not to take a win in their match. Clearly, as you mentioned, playing at home is a big factor. Happy to say that I've secured tickets, so I will be going to my second World Cup in Paris. But the reality is there's a ton of rugby still to be played before October 23. As you know, there's always a massive threat from the southern hemisphere. There's only been one winner from the northern hemisphere in the history of the Rugby World Cup, and it was England. So we'll see. But France, certainly exciting and has to be favored to some extent early on playing at home.

PETER HAYNES: Well, you can get your fix locally here in Toronto of rugby. Our good friend Bill Webb has started a professional organization, the Toronto Arrows. And they played their first home game in Toronto on the past weekend here. And it's great to see local rugby happening again and we'll look forward to it. I'll be crossing paths with you, I'm sure, at some Arrows games. Gentlemen, thank you very much for enlightening our audience, learning a little bit about TD Securities capital markets, and learning a little bit about your journey to where you've got to today. Thank you for joining us. And we'll look forward to speaking to you again down the road.

TIM WIGGAN: Thanks, Peter.

CHRIS VOGEL: Thanks, Peter.

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