1 00:00:02,400 --> 00:00:06,720 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. 2 00:00:06,800 --> 00:00:09,680 Speaker 2: Let's turn to the election. Donald Trump doubling down on 3 00:00:09,680 --> 00:00:12,520 Speaker 2: his trade policy, telling the Wall Street Journal he's committed 4 00:00:12,560 --> 00:00:15,840 Speaker 2: to upholding the USMCA. The agreement, of course up for renewal. 5 00:00:16,160 --> 00:00:19,640 Speaker 2: In twenty twenty six, RBCCO Dave McCay wank in on 6 00:00:19,800 --> 00:00:23,000 Speaker 2: US Canada relations, saying it would be inflationary for America 7 00:00:23,079 --> 00:00:26,600 Speaker 2: to make everything so by America can't be a go 8 00:00:26,680 --> 00:00:29,240 Speaker 2: to loan strategy. Dave joined US Now for more. Dave, 9 00:00:29,240 --> 00:00:31,360 Speaker 2: good morning, It's good to see you. Warren Jonathan, Let's 10 00:00:31,360 --> 00:00:35,280 Speaker 2: start there. That's a big, big talking point for both economies. Actually, 11 00:00:35,479 --> 00:00:37,360 Speaker 2: where do you think the US and Canada can work 12 00:00:37,400 --> 00:00:39,559 Speaker 2: closely together? Be on twenty four. 13 00:00:40,040 --> 00:00:41,960 Speaker 3: Well, you start with the history. I mean the longest 14 00:00:42,040 --> 00:00:45,680 Speaker 3: undefended border. You look at the trade and balance trade 15 00:00:45,680 --> 00:00:49,240 Speaker 3: over four hundred billion dollars crossing the border each way 16 00:00:49,440 --> 00:00:53,280 Speaker 3: every year of thirty four states in the US, Canada's 17 00:00:53,280 --> 00:00:56,760 Speaker 3: a number one trading partner. Look at we can take 18 00:00:56,800 --> 00:00:59,840 Speaker 3: on energy. The US exports more goods and services to 19 00:01:00,000 --> 00:01:02,959 Speaker 3: Canada than Canada exports the other way. Energy exports from 20 00:01:03,000 --> 00:01:05,039 Speaker 3: Canada kind of balance that trade. So you look at 21 00:01:05,040 --> 00:01:08,680 Speaker 3: this long standing relationship, you look at supply chains that 22 00:01:08,720 --> 00:01:12,800 Speaker 3: are integrated, very very important. But the message is, you know, 23 00:01:12,959 --> 00:01:16,040 Speaker 3: Canada has a challenge and America has an opportunity. And 24 00:01:16,080 --> 00:01:18,120 Speaker 3: I think that's the key message for Canada. We have 25 00:01:18,160 --> 00:01:20,440 Speaker 3: to put a business lens on our economy and we 26 00:01:20,480 --> 00:01:22,640 Speaker 3: have to think about how do we become more relevant 27 00:01:22,680 --> 00:01:26,040 Speaker 3: to the largest economy in the world, fastest growing economy 28 00:01:26,080 --> 00:01:27,559 Speaker 3: in the world. And you can put a business lens 29 00:01:27,600 --> 00:01:29,200 Speaker 3: on that. You look at what you're good at and 30 00:01:29,240 --> 00:01:32,360 Speaker 3: what America needs. Canada needs to do a better job 31 00:01:32,400 --> 00:01:35,440 Speaker 3: of aligning to what America needs. America needs Canada to 32 00:01:35,440 --> 00:01:38,960 Speaker 3: produce more energy, not only for America but for its 33 00:01:39,080 --> 00:01:43,760 Speaker 3: key trade partners as well globally. America needs Canada to 34 00:01:43,800 --> 00:01:46,920 Speaker 3: be more involved in overall security. Canada can play a 35 00:01:47,000 --> 00:01:51,600 Speaker 3: much bigger role in the Arctic growing area, trade area, resources, minerals, 36 00:01:52,280 --> 00:01:54,440 Speaker 3: all of that. So when you think about the relevance 37 00:01:54,480 --> 00:01:57,640 Speaker 3: of our economies, the integration of our supply chains, the 38 00:01:57,920 --> 00:02:00,680 Speaker 3: natural resources we have, the people reason verses we have, 39 00:02:01,960 --> 00:02:05,640 Speaker 3: America can't go on alone because it's challenged in meeting 40 00:02:05,680 --> 00:02:08,639 Speaker 3: the demand of its economy from a human resource perspective, 41 00:02:08,639 --> 00:02:11,400 Speaker 3: from a mineral's perspective, and therefore kind that can help 42 00:02:11,440 --> 00:02:12,960 Speaker 3: tame inflation in America. 43 00:02:13,200 --> 00:02:15,600 Speaker 2: I'll try and be diplomatic about this. Yeah, how big 44 00:02:15,600 --> 00:02:17,799 Speaker 2: is the spence between everything you sent which just made 45 00:02:17,840 --> 00:02:21,400 Speaker 2: sense and the policy is coming out of current administrations 46 00:02:21,440 --> 00:02:23,720 Speaker 2: both north of the border and Santa the Border. 47 00:02:25,120 --> 00:02:28,600 Speaker 3: Look, the America will choose who they want to run 48 00:02:28,639 --> 00:02:30,840 Speaker 3: the country at the end of the day, there's some 49 00:02:31,000 --> 00:02:33,800 Speaker 3: common policy issues. I think any government in the United 50 00:02:33,800 --> 00:02:36,920 Speaker 3: States and equally any government in Canada as we go 51 00:02:36,960 --> 00:02:40,520 Speaker 3: through a similar election next year, First and foremost a 52 00:02:40,520 --> 00:02:44,359 Speaker 3: fiscal deficit. We will not enjoy long term prosperity unless 53 00:02:44,360 --> 00:02:46,760 Speaker 3: we get control of our fiscal deficit. And therefore, as 54 00:02:46,800 --> 00:02:49,880 Speaker 3: we look at the policies, whatever party they're coming from, 55 00:02:49,960 --> 00:02:52,519 Speaker 3: we have to banish this fiscal deficit. We've already talked 56 00:02:52,560 --> 00:02:55,280 Speaker 3: this morning on your show about Marcus trying to digest 57 00:02:55,320 --> 00:02:56,920 Speaker 3: the amount of debt coming through, how we're going to 58 00:02:56,919 --> 00:02:58,760 Speaker 3: price that debt, how are we going to float that debt. 59 00:02:59,240 --> 00:03:02,040 Speaker 3: We have to get control of these deficits. We don't 60 00:03:02,080 --> 00:03:04,400 Speaker 3: need that stimulus in the economy right now. Economy is 61 00:03:04,400 --> 00:03:08,080 Speaker 3: strong and therefore lower rates will stimulate further business investments. 62 00:03:08,120 --> 00:03:11,200 Speaker 3: So I think from that perspective, we're looking for policy 63 00:03:12,080 --> 00:03:16,320 Speaker 3: that really aims at stabilizing and reducing that deficit. I 64 00:03:16,360 --> 00:03:18,560 Speaker 3: think is really important. So regardless of who's in power, 65 00:03:18,919 --> 00:03:20,680 Speaker 3: we kind of we need that policy change. 66 00:03:20,880 --> 00:03:23,400 Speaker 4: But how desperate is the big business community, especially in 67 00:03:23,400 --> 00:03:26,240 Speaker 4: a place like Canada, for policy that they know is 68 00:03:26,280 --> 00:03:28,919 Speaker 4: going to stick. You're talking about energy, in my mind 69 00:03:28,960 --> 00:03:33,360 Speaker 4: immediately goes to Keystone. Right, three administrations start and go 70 00:03:33,919 --> 00:03:37,080 Speaker 4: of this one project with executive orders. Why would any 71 00:03:37,280 --> 00:03:39,720 Speaker 4: business in Canada want to make decisions about doing business 72 00:03:39,760 --> 00:03:40,360 Speaker 4: in America. 73 00:03:41,200 --> 00:03:43,040 Speaker 3: I think you look at the history that was one 74 00:03:43,080 --> 00:03:46,000 Speaker 3: project exactly, and I think everyone's disappointed that we weren't 75 00:03:46,040 --> 00:03:48,120 Speaker 3: able to conclude that project even though it was so 76 00:03:48,240 --> 00:03:51,880 Speaker 3: close to coming online. At the end of the day, 77 00:03:51,920 --> 00:03:55,360 Speaker 3: we still have the capacity to export to the United States. 78 00:03:55,600 --> 00:03:59,120 Speaker 3: We're exporting in Canada to new markets Transmountain Pipeline was 79 00:03:59,160 --> 00:04:03,160 Speaker 3: complete and therefore or exporting to Asia increasingly. That helps 80 00:04:03,240 --> 00:04:05,760 Speaker 3: America as well. At the end of the day. If 81 00:04:05,800 --> 00:04:09,200 Speaker 3: we can secure energy security for all trading partners, I 82 00:04:09,200 --> 00:04:11,360 Speaker 3: think that's a big part. So Canada can play a role, 83 00:04:11,440 --> 00:04:14,440 Speaker 3: even though pipelines aren't being built directly to the United States. 84 00:04:14,640 --> 00:04:17,720 Speaker 3: We can help trading partners, whether it's in Japan, whether 85 00:04:17,800 --> 00:04:20,200 Speaker 3: it's in South Korea and others who have an energy 86 00:04:20,240 --> 00:04:23,080 Speaker 3: need for their growing economies. So there's roles we can play. 87 00:04:23,279 --> 00:04:25,160 Speaker 3: We're going to go through bumps to the road. This 88 00:04:25,200 --> 00:04:27,520 Speaker 3: is a long standing relationship, enery as you know, and 89 00:04:27,560 --> 00:04:31,520 Speaker 3: therefore we will overcome any obstacles. We have to work together, 90 00:04:31,560 --> 00:04:35,760 Speaker 3: and I think integrating supply chains leveraging those resources. You 91 00:04:35,880 --> 00:04:38,640 Speaker 3: have to think about who you're aligned to. From an 92 00:04:38,640 --> 00:04:42,119 Speaker 3: ideology perspective, I think the democratic process and our belief 93 00:04:42,120 --> 00:04:45,760 Speaker 3: in the democracy, and therefore that long standing partnership I 94 00:04:45,800 --> 00:04:47,680 Speaker 3: think can flourish to the benefit of both sides. 95 00:04:47,800 --> 00:04:50,320 Speaker 4: How are you looking at trade under Harris and Trump, 96 00:04:50,400 --> 00:04:52,440 Speaker 4: Because regardless of who wins, there's going to be this 97 00:04:52,520 --> 00:04:54,280 Speaker 4: review of USMCA. 98 00:04:55,000 --> 00:04:56,840 Speaker 3: I think at the end of the day, when the 99 00:04:57,520 --> 00:05:00,520 Speaker 3: facts are put on the table and thirty four states, 100 00:05:00,800 --> 00:05:03,640 Speaker 3: many of them Red states men and blue states, they 101 00:05:03,640 --> 00:05:05,880 Speaker 3: look at Canada's number one trade partner, you look at 102 00:05:05,880 --> 00:05:08,919 Speaker 3: the long standing relationship. We're going to have disagreements, I 103 00:05:08,920 --> 00:05:10,760 Speaker 3: think at the fringe the way we did last time. 104 00:05:10,800 --> 00:05:13,680 Speaker 3: I think Milkin, Wisconsin was an area of disagreement. There's 105 00:05:13,680 --> 00:05:16,440 Speaker 3: going to be areas of disagreement. At the core, I 106 00:05:16,480 --> 00:05:18,839 Speaker 3: think we see the benefit to both nations, and therefore 107 00:05:18,920 --> 00:05:20,599 Speaker 3: I think we have to keep that front and center 108 00:05:20,600 --> 00:05:24,120 Speaker 3: in business myself as a leader in Canada and a 109 00:05:24,320 --> 00:05:27,640 Speaker 3: very large US operation, We as business leaders have to 110 00:05:27,720 --> 00:05:29,960 Speaker 3: keep the strengths and the need for this at the core. 111 00:05:30,440 --> 00:05:33,279 Speaker 3: And I think we'll argue with the French hopefully and 112 00:05:33,360 --> 00:05:35,400 Speaker 3: resolve those but at the core we know how important 113 00:05:35,400 --> 00:05:35,680 Speaker 3: this is. 114 00:05:35,839 --> 00:05:39,000 Speaker 1: How much are you yourself planning to continue the expansion 115 00:05:39,040 --> 00:05:41,080 Speaker 1: in the US or is that pretty much done? 116 00:05:41,640 --> 00:05:44,479 Speaker 3: No, thank you for asking that. We have a fantastic 117 00:05:44,600 --> 00:05:47,440 Speaker 3: US operation, a top ten capital markets flare at number 118 00:05:47,480 --> 00:05:50,360 Speaker 3: six in wealth distribution. We have a commercial bank and 119 00:05:50,400 --> 00:05:53,720 Speaker 3: a private bank with City National, and therefore we very 120 00:05:53,800 --> 00:05:57,880 Speaker 3: much believe we're serving America and particularly through a capital 121 00:05:57,920 --> 00:06:01,360 Speaker 3: markets operation, large corporate institutional, we're serving high net worth 122 00:06:01,760 --> 00:06:04,200 Speaker 3: and ultra high networth individuals. For the wealth we're growing 123 00:06:04,200 --> 00:06:07,240 Speaker 3: each franchise, whether it's a number of investment bankers we hire, 124 00:06:07,240 --> 00:06:09,160 Speaker 3: the number traders we hire, the amount of balance sheet 125 00:06:09,160 --> 00:06:11,359 Speaker 3: we put into the United States continues to grow. We 126 00:06:11,360 --> 00:06:14,280 Speaker 3: put a significant amount of our balance sheet into the US. 127 00:06:14,839 --> 00:06:19,160 Speaker 3: We're growing our commercial operations into big corporate. And then 128 00:06:19,320 --> 00:06:22,719 Speaker 3: to your question, Lisa Nor South connectivity, we bank companies 129 00:06:22,720 --> 00:06:25,320 Speaker 3: on both sides of the border. We understand the needs 130 00:06:25,360 --> 00:06:27,960 Speaker 3: of the supply chains that are integrated, and therefore we're 131 00:06:28,000 --> 00:06:32,200 Speaker 3: continuing to build out greater transaction banking and treasury management 132 00:06:32,240 --> 00:06:35,479 Speaker 3: North South to help growth in both economies. So we're 133 00:06:35,480 --> 00:06:38,559 Speaker 3: investing in America and it's a we call our second 134 00:06:38,560 --> 00:06:39,040 Speaker 3: home market. 135 00:06:39,200 --> 00:06:41,479 Speaker 1: So to me, this is fascinating because you really understand 136 00:06:41,480 --> 00:06:43,960 Speaker 1: the cross border connection for a lot of companies, and 137 00:06:44,000 --> 00:06:47,000 Speaker 1: I do wonder how much hesitation there is for companies 138 00:06:47,000 --> 00:06:50,880 Speaker 1: to lean into some of their expansion cross borders, given 139 00:06:50,880 --> 00:06:53,680 Speaker 1: the uncertainty and policy that we see. Do you see 140 00:06:53,680 --> 00:06:56,120 Speaker 1: that in practice or is it the opposite. 141 00:06:56,400 --> 00:07:00,520 Speaker 3: No, we do see it in practice. Uncertainty any outcome 142 00:07:00,560 --> 00:07:03,240 Speaker 3: for businesses. We see it right now. Obviously in capital 143 00:07:03,240 --> 00:07:05,279 Speaker 3: markets there's a lot of dialogue, but we haven't seen 144 00:07:05,360 --> 00:07:07,640 Speaker 3: the pipelines come to fruition. We see it in cross 145 00:07:07,680 --> 00:07:10,280 Speaker 3: border clients where you're thinking about making a ten or 146 00:07:10,320 --> 00:07:13,760 Speaker 3: twenty investment. You need to know the rules around those returns, 147 00:07:13,800 --> 00:07:16,080 Speaker 3: and therefore you're hesitating a little bit. You want to 148 00:07:16,120 --> 00:07:18,720 Speaker 3: see how the policy and action, and therefore I think 149 00:07:18,760 --> 00:07:22,440 Speaker 3: as businesses we have to keep advocating for balance policies 150 00:07:22,440 --> 00:07:24,600 Speaker 3: that meet the needs of everyone. I mean, we're really 151 00:07:24,640 --> 00:07:28,200 Speaker 3: looking at in many ways of ca shaped economy. You 152 00:07:28,240 --> 00:07:31,240 Speaker 3: see it in some of your discussion already today businesses 153 00:07:31,280 --> 00:07:33,920 Speaker 3: and large corporates are feeling a little bit better about things, 154 00:07:34,120 --> 00:07:35,840 Speaker 3: are starting to get ready to move forward. But to 155 00:07:35,880 --> 00:07:37,960 Speaker 3: your point, they're looking and they're hesitating a little bit. 156 00:07:38,160 --> 00:07:41,000 Speaker 3: At the margin, small businesses are really struggling with inflation 157 00:07:41,080 --> 00:07:45,760 Speaker 3: and supply chain, and therefore you're seeing a different perspective 158 00:07:45,800 --> 00:07:50,400 Speaker 3: on investing between large corporates in small corporates. You're seeing 159 00:07:50,400 --> 00:07:52,520 Speaker 3: the same thing. On consumers. The top twenty percent of 160 00:07:52,600 --> 00:07:56,960 Speaker 3: US consumers are driving the economy. Forty percent of US 161 00:07:57,120 --> 00:08:00,200 Speaker 3: dollar consumer spending comes from the top twenty percent of consumers. 162 00:08:00,960 --> 00:08:04,000 Speaker 3: Bottom sixty percent of consumers income wise are struggling to 163 00:08:04,000 --> 00:08:05,640 Speaker 3: make ends meet and aren't driving the economy. 164 00:08:05,720 --> 00:08:08,000 Speaker 1: Can you give us a sense of how much you 165 00:08:08,040 --> 00:08:11,480 Speaker 1: expect transactions and other types of investments to come back 166 00:08:11,480 --> 00:08:13,640 Speaker 1: online after the election, regardless of who wins can you 167 00:08:13,640 --> 00:08:15,880 Speaker 1: give a sense of what kind of volume could get 168 00:08:15,920 --> 00:08:19,360 Speaker 1: generated after there is some degree of certainty whenever that 169 00:08:19,400 --> 00:08:20,680 Speaker 1: may be right. 170 00:08:20,720 --> 00:08:24,040 Speaker 3: So you're seeing the fear revenue in the pools is 171 00:08:24,080 --> 00:08:27,200 Speaker 3: up twenty percent. You're seeing capital markets m and a 172 00:08:27,280 --> 00:08:30,040 Speaker 3: advisory pipelines build. We're seeing that in our own pipeline. 173 00:08:30,080 --> 00:08:33,040 Speaker 3: We're feeling good about that. You're seeing more debt capital 174 00:08:33,120 --> 00:08:35,719 Speaker 3: markets activity as the lower rates trigger that. So it's 175 00:08:35,760 --> 00:08:40,040 Speaker 3: a combination of lower rates, pent up demand from sponsors 176 00:08:40,080 --> 00:08:42,200 Speaker 3: and trying to move some of the properties they've been 177 00:08:42,240 --> 00:08:44,720 Speaker 3: sitting on since the pandemic. So you see this pent 178 00:08:44,840 --> 00:08:47,599 Speaker 3: up need. You see their rate environment being more constructive. 179 00:08:47,600 --> 00:08:50,240 Speaker 3: You see the uncertainty of the elections slowing things down. 180 00:08:50,320 --> 00:08:53,680 Speaker 3: But you see the pipeline moving slowly through the process 181 00:08:53,679 --> 00:08:56,959 Speaker 3: and therefore it pretends to an active year in twenty 182 00:08:57,000 --> 00:08:57,679 Speaker 3: twenty five. 183 00:08:57,720 --> 00:09:00,400 Speaker 2: Got to squeeze this in with sixty seconds. Last housing 184 00:09:00,440 --> 00:09:02,440 Speaker 2: market in Canada since we last spoke. 185 00:09:02,360 --> 00:09:05,400 Speaker 3: The houses looking like the housing market stable housings driven 186 00:09:05,440 --> 00:09:09,440 Speaker 3: by demand. Curtainly construction is way off given interest rates, 187 00:09:09,480 --> 00:09:13,839 Speaker 3: so people listing ratios are going up. You're seeing a 188 00:09:14,080 --> 00:09:17,559 Speaker 3: slow resell activity. You're seeing slow construction activity, but that demand, 189 00:09:17,559 --> 00:09:20,280 Speaker 3: given the amount of immigration, we have pent up demands. 190 00:09:20,280 --> 00:09:24,480 Speaker 3: So you're still, Jonathan, a situation of excess demand over supply. 191 00:09:24,960 --> 00:09:27,840 Speaker 3: We are short three million houses in Canada. We're building 192 00:09:27,960 --> 00:09:30,520 Speaker 3: roughly two hundred and fifty to three hundred thousand houses 193 00:09:30,520 --> 00:09:33,800 Speaker 3: a year. We have a ten year backlog on supply, 194 00:09:34,280 --> 00:09:37,280 Speaker 3: and we're more concerned about how fast we're going to build. Therefore, 195 00:09:37,480 --> 00:09:40,520 Speaker 3: that lends to stability and prices over time, even when 196 00:09:40,520 --> 00:09:41,240 Speaker 3: demand drops. 197 00:09:41,320 --> 00:09:43,160 Speaker 2: It's the time of the year where American stace a threat. 198 00:09:43,200 --> 00:09:43,959 Speaker 2: It's Amaves to Canada. 199 00:09:44,040 --> 00:09:44,840 Speaker 3: You know what this goes. 200 00:09:45,200 --> 00:09:47,360 Speaker 2: Thanks going to see the weather's coming one half of 201 00:09:47,400 --> 00:09:50,960 Speaker 2: the country anyway, David Kaye AVC, Thank you appreciate it.