Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: Let's turn to the election. Donald Trump doubling down on
Speaker 2: his trade policy, telling the Wall Street Journal he's committed
Speaker 2: to upholding the USMCA. The agreement, of course up for renewal.
Speaker 2: In twenty twenty six, RBCCO Dave McCay wank in on
Speaker 2: US Canada relations, saying it would be inflationary for America
Speaker 2: to make everything so by America can't be a go
Speaker 2: to loan strategy. Dave joined US Now for more. Dave,
Speaker 2: good morning, It's good to see you. Warren Jonathan, Let's
Speaker 2: start there. That's a big, big talking point for both economies. Actually,
Speaker 2: where do you think the US and Canada can work
Speaker 2: closely together? Be on twenty four.
Speaker 3: Well, you start with the history. I mean the longest
Speaker 3: undefended border. You look at the trade and balance trade
Speaker 3: over four hundred billion dollars crossing the border each way
Speaker 3: every year of thirty four states in the US, Canada's
Speaker 3: a number one trading partner. Look at we can take
Speaker 3: on energy. The US exports more goods and services to
Speaker 3: Canada than Canada exports the other way. Energy exports from
Speaker 3: Canada kind of balance that trade. So you look at
Speaker 3: this long standing relationship, you look at supply chains that
Speaker 3: are integrated, very very important. But the message is, you know,
Speaker 3: Canada has a challenge and America has an opportunity. And
Speaker 3: I think that's the key message for Canada. We have
Speaker 3: to put a business lens on our economy and we
Speaker 3: have to think about how do we become more relevant
Speaker 3: to the largest economy in the world, fastest growing economy
Speaker 3: in the world. And you can put a business lens
Speaker 3: on that. You look at what you're good at and
Speaker 3: what America needs. Canada needs to do a better job
Speaker 3: of aligning to what America needs. America needs Canada to
Speaker 3: produce more energy, not only for America but for its
Speaker 3: key trade partners as well globally. America needs Canada to
Speaker 3: be more involved in overall security. Canada can play a
Speaker 3: much bigger role in the Arctic growing area, trade area, resources, minerals,
Speaker 3: all of that. So when you think about the relevance
Speaker 3: of our economies, the integration of our supply chains, the
Speaker 3: natural resources we have, the people reason verses we have,
Speaker 3: America can't go on alone because it's challenged in meeting
Speaker 3: the demand of its economy from a human resource perspective,
Speaker 3: from a mineral's perspective, and therefore kind that can help
Speaker 3: tame inflation in America.
Speaker 2: I'll try and be diplomatic about this. Yeah, how big
Speaker 2: is the spence between everything you sent which just made
Speaker 2: sense and the policy is coming out of current administrations
Speaker 2: both north of the border and Santa the Border.
Speaker 3: Look, the America will choose who they want to run
Speaker 3: the country at the end of the day, there's some
Speaker 3: common policy issues. I think any government in the United
Speaker 3: States and equally any government in Canada as we go
Speaker 3: through a similar election next year, First and foremost a
Speaker 3: fiscal deficit. We will not enjoy long term prosperity unless
Speaker 3: we get control of our fiscal deficit. And therefore, as
Speaker 3: we look at the policies, whatever party they're coming from,
Speaker 3: we have to banish this fiscal deficit. We've already talked
Speaker 3: this morning on your show about Marcus trying to digest
Speaker 3: the amount of debt coming through, how we're going to
Speaker 3: price that debt, how are we going to float that debt.
Speaker 3: We have to get control of these deficits. We don't
Speaker 3: need that stimulus in the economy right now. Economy is
Speaker 3: strong and therefore lower rates will stimulate further business investments.
Speaker 3: So I think from that perspective, we're looking for policy
Speaker 3: that really aims at stabilizing and reducing that deficit. I
Speaker 3: think is really important. So regardless of who's in power,
Speaker 3: we kind of we need that policy change.
Speaker 4: But how desperate is the big business community, especially in
Speaker 4: a place like Canada, for policy that they know is
Speaker 4: going to stick. You're talking about energy, in my mind
Speaker 4: immediately goes to Keystone. Right, three administrations start and go
Speaker 4: of this one project with executive orders. Why would any
Speaker 4: business in Canada want to make decisions about doing business
Speaker 4: in America.
Speaker 3: I think you look at the history that was one
Speaker 3: project exactly, and I think everyone's disappointed that we weren't
Speaker 3: able to conclude that project even though it was so
Speaker 3: close to coming online. At the end of the day,
Speaker 3: we still have the capacity to export to the United States.
Speaker 3: We're exporting in Canada to new markets Transmountain Pipeline was
Speaker 3: complete and therefore or exporting to Asia increasingly. That helps
Speaker 3: America as well. At the end of the day. If
Speaker 3: we can secure energy security for all trading partners, I
Speaker 3: think that's a big part. So Canada can play a role,
Speaker 3: even though pipelines aren't being built directly to the United States.
Speaker 3: We can help trading partners, whether it's in Japan, whether
Speaker 3: it's in South Korea and others who have an energy
Speaker 3: need for their growing economies. So there's roles we can play.
Speaker 3: We're going to go through bumps to the road. This
Speaker 3: is a long standing relationship, enery as you know, and
Speaker 3: therefore we will overcome any obstacles. We have to work together,
Speaker 3: and I think integrating supply chains leveraging those resources. You
Speaker 3: have to think about who you're aligned to. From an
Speaker 3: ideology perspective, I think the democratic process and our belief
Speaker 3: in the democracy, and therefore that long standing partnership I
Speaker 3: think can flourish to the benefit of both sides.
Speaker 4: How are you looking at trade under Harris and Trump,
Speaker 4: Because regardless of who wins, there's going to be this
Speaker 4: review of USMCA.
Speaker 3: I think at the end of the day, when the
Speaker 3: facts are put on the table and thirty four states,
Speaker 3: many of them Red states men and blue states, they
Speaker 3: look at Canada's number one trade partner, you look at
Speaker 3: the long standing relationship. We're going to have disagreements, I
Speaker 3: think at the fringe the way we did last time.
Speaker 3: I think Milkin, Wisconsin was an area of disagreement. There's
Speaker 3: going to be areas of disagreement. At the core, I
Speaker 3: think we see the benefit to both nations, and therefore
Speaker 3: I think we have to keep that front and center
Speaker 3: in business myself as a leader in Canada and a
Speaker 3: very large US operation, We as business leaders have to
Speaker 3: keep the strengths and the need for this at the core.
Speaker 3: And I think we'll argue with the French hopefully and
Speaker 3: resolve those but at the core we know how important
Speaker 3: this is.
Speaker 1: How much are you yourself planning to continue the expansion
Speaker 1: in the US or is that pretty much done?
Speaker 3: No, thank you for asking that. We have a fantastic
Speaker 3: US operation, a top ten capital markets flare at number
Speaker 3: six in wealth distribution. We have a commercial bank and
Speaker 3: a private bank with City National, and therefore we very
Speaker 3: much believe we're serving America and particularly through a capital
Speaker 3: markets operation, large corporate institutional, we're serving high net worth
Speaker 3: and ultra high networth individuals. For the wealth we're growing
Speaker 3: each franchise, whether it's a number of investment bankers we hire,
Speaker 3: the number traders we hire, the amount of balance sheet
Speaker 3: we put into the United States continues to grow. We
Speaker 3: put a significant amount of our balance sheet into the US.
Speaker 3: We're growing our commercial operations into big corporate. And then
Speaker 3: to your question, Lisa Nor South connectivity, we bank companies
Speaker 3: on both sides of the border. We understand the needs
Speaker 3: of the supply chains that are integrated, and therefore we're
Speaker 3: continuing to build out greater transaction banking and treasury management
Speaker 3: North South to help growth in both economies. So we're
Speaker 3: investing in America and it's a we call our second
Speaker 3: home market.
Speaker 1: So to me, this is fascinating because you really understand
Speaker 1: the cross border connection for a lot of companies, and
Speaker 1: I do wonder how much hesitation there is for companies
Speaker 1: to lean into some of their expansion cross borders, given
Speaker 1: the uncertainty and policy that we see. Do you see
Speaker 1: that in practice or is it the opposite.
Speaker 3: No, we do see it in practice. Uncertainty any outcome
Speaker 3: for businesses. We see it right now. Obviously in capital
Speaker 3: markets there's a lot of dialogue, but we haven't seen
Speaker 3: the pipelines come to fruition. We see it in cross
Speaker 3: border clients where you're thinking about making a ten or
Speaker 3: twenty investment. You need to know the rules around those returns,
Speaker 3: and therefore you're hesitating a little bit. You want to
Speaker 3: see how the policy and action, and therefore I think
Speaker 3: as businesses we have to keep advocating for balance policies
Speaker 3: that meet the needs of everyone. I mean, we're really
Speaker 3: looking at in many ways of ca shaped economy. You
Speaker 3: see it in some of your discussion already today businesses
Speaker 3: and large corporates are feeling a little bit better about things,
Speaker 3: are starting to get ready to move forward. But to
Speaker 3: your point, they're looking and they're hesitating a little bit.
Speaker 3: At the margin, small businesses are really struggling with inflation
Speaker 3: and supply chain, and therefore you're seeing a different perspective
Speaker 3: on investing between large corporates in small corporates. You're seeing
Speaker 3: the same thing. On consumers. The top twenty percent of
Speaker 3: US consumers are driving the economy. Forty percent of US
Speaker 3: dollar consumer spending comes from the top twenty percent of consumers.
Speaker 3: Bottom sixty percent of consumers income wise are struggling to
Speaker 3: make ends meet and aren't driving the economy.
Speaker 1: Can you give us a sense of how much you
Speaker 1: expect transactions and other types of investments to come back
Speaker 1: online after the election, regardless of who wins can you
Speaker 1: give a sense of what kind of volume could get
Speaker 1: generated after there is some degree of certainty whenever that
Speaker 1: may be right.
Speaker 3: So you're seeing the fear revenue in the pools is
Speaker 3: up twenty percent. You're seeing capital markets m and a
Speaker 3: advisory pipelines build. We're seeing that in our own pipeline.
Speaker 3: We're feeling good about that. You're seeing more debt capital
Speaker 3: markets activity as the lower rates trigger that. So it's
Speaker 3: a combination of lower rates, pent up demand from sponsors
Speaker 3: and trying to move some of the properties they've been
Speaker 3: sitting on since the pandemic. So you see this pent
Speaker 3: up need. You see their rate environment being more constructive.
Speaker 3: You see the uncertainty of the elections slowing things down.
Speaker 3: But you see the pipeline moving slowly through the process
Speaker 3: and therefore it pretends to an active year in twenty
Speaker 3: twenty five.
Speaker 2: Got to squeeze this in with sixty seconds. Last housing
Speaker 2: market in Canada since we last spoke.
Speaker 3: The houses looking like the housing market stable housings driven
Speaker 3: by demand. Curtainly construction is way off given interest rates,
Speaker 3: so people listing ratios are going up. You're seeing a
Speaker 3: slow resell activity. You're seeing slow construction activity, but that demand,
Speaker 3: given the amount of immigration, we have pent up demands.
Speaker 3: So you're still, Jonathan, a situation of excess demand over supply.
Speaker 3: We are short three million houses in Canada. We're building
Speaker 3: roughly two hundred and fifty to three hundred thousand houses
Speaker 3: a year. We have a ten year backlog on supply,
Speaker 3: and we're more concerned about how fast we're going to build. Therefore,
Speaker 3: that lends to stability and prices over time, even when
Speaker 3: demand drops.
Speaker 2: It's the time of the year where American stace a threat.
Speaker 2: It's Amaves to Canada.
Speaker 3: You know what this goes.
Speaker 2: Thanks going to see the weather's coming one half of
Speaker 2: the country anyway, David Kaye AVC, Thank you appreciate it.