Speaker 1: This is Bloomberg Surveillance. You can think of cash as
Speaker 1: effectively a very very short duration asset. The problem is,
Speaker 1: right now it's not very attractive. What change does the
Speaker 1: US need more than anything else economically? I would argue
Speaker 1: tax me for a pretty poor way to judge the
Speaker 1: strength or lack there of, of a once vibrant American
Speaker 1: economy and say we're doing better than Japan or Europe,
Speaker 1: which are not growing at all. Bloomberg Surveillance your link
Speaker 1: to the world of economics, finance, and investment on Bloomberg Radio.
Speaker 1: Good morning everyone, Michael McKee and Tom Keane in this
Speaker 1: hour a conversation with a twenty three Prime Minister of Canada,
Speaker 1: Justin Trudeau. Of course, with the heritage of the family
Speaker 1: across all of Canada. Trudeau with degrees from McGill and
Speaker 1: from the University of British Columbia, including working and studying
Speaker 1: in engineering and environmental geography. UH, the Prime Minister has
Speaker 1: made a significant splash across all of international politics and
Speaker 1: economics as well. John Minichols Waite will have that interview
Speaker 1: for us here in a moment Bloomberg Surveillance in a
Speaker 1: four X brief that will be calmer than it would
Speaker 1: have been an hour and a half ago. Um, the
Speaker 1: four X brief has always brought you by interactive brokers
Speaker 1: and we thank them for their support. Doll again one
Speaker 1: eleven sixty nine. That's a stronger yet, but nothing like
Speaker 1: it was an hour and a half ago, where it
Speaker 1: was a solid one ten. We've come back to one
Speaker 1: eleven year, one thirteen oh three in the emerging market currencies,
Speaker 1: and clearly looney, which is not an emerging market, but
Speaker 1: with the commodity challenges of Canada, Canada was a one
Speaker 1: nine handle. That's remarkable coming down from one forty and
Speaker 1: right now, excuse me, the looney Michael McKee one thirty
Speaker 1: uh sixteen as well. So there is our foreign exchange
Speaker 1: report the morning, yea, and the Lunei as it as.
Speaker 1: As the morning goes on, it is all of a
Speaker 1: sudden become very fashionable to talk about Canada, uh and
Speaker 1: what's going on there. They suffered tremendously from the drop
Speaker 1: in oil prices and the Lunei falling right along. Yeah,
Speaker 1: I I think that in my I know for certain
Speaker 1: that you and I are guilty of conflating culture and
Speaker 1: nation across the border. Of course, as you all know,
Speaker 1: this is the Hockey Network, and Mike and I have
Speaker 1: a real predilection to hockey. But but it's not funny.
Speaker 1: The provinces are more discreet and there's a unique politics.
Speaker 1: And as I mentioned this morning the Dutch disease, there
Speaker 1: is an economic rigidity that they have with hydrocarbons in
Speaker 1: the West and the industrial East, and what Vancouver's doing
Speaker 1: that is very, very different, very different. They try to, um,
Speaker 1: they're trying to overcome that, but it's true of of
Speaker 1: hydrocarbon and natural resource countries in general that those tend
Speaker 1: to dominate. They're getting ready for the interview. Um, it
Speaker 1: looks like they're not quite ready yet for for Justin Trudeau.
Speaker 1: But he's here and we will be uh talking with him.
Speaker 1: John Mickelpoint will be talking with him shortly. And I'm
Speaker 1: sure that John, you mentioned the Hockey Network, would not
Speaker 1: be so rude as to point out that no Canadian
Speaker 1: teams are in line to make the playoffs right now,
Speaker 1: you know, the Toronto the Toronto maple Leafs are I
Speaker 1: would suggest a ten year building plan which perhaps after
Speaker 1: he serves as Prime minister, he could take the head
Speaker 1: coach job of his choice across the NHL. That would
Speaker 1: help out as well. To review the currency, folks. And
Speaker 1: I've done this chart uh many times. We'll put this
Speaker 1: out on Bloomberg Radio plus here, I'll run it on
Speaker 1: television tomorrow. Is well, the basic idea of dollar Canada
Speaker 1: is a weaker Canada uh years ago towards his father's
Speaker 1: tenure than his father left office. I'm gonna eyeball it
Speaker 1: in the the early eighties. And then the dollar, the
Speaker 1: Canadian dollar got even weaker, uh right now. And then
Speaker 1: we had the huge dollar Canada boom off commodities and China,
Speaker 1: and they've given up a good portion of that in
Speaker 1: the recent oh eighteen months or so. Right now, we
Speaker 1: need to synthesize quickly here what we see in foreign
Speaker 1: exchange today and in central bank news into our equity
Speaker 1: markets here quickly is David Wilson, Good morning, Good morning
Speaker 1: Tom up. Oh absolutely, I mean Caterpillar was definitely a
Speaker 1: stock to watch in early trading, Dan about two and
Speaker 1: a half percent, the biggest maker of construction and mining machinery,
Speaker 1: said first quarter earnings and sales will trail analyst estimates.
Speaker 1: Commodity producers are cutting capital spending by billions of dollars
Speaker 1: because of lower prices for their products. Mondoliese International also
Speaker 1: down two and a half percent. Billionaire investor Bill Ackman's headspun.
Speaker 1: Pershing Square Capital reduced its steak in the food maker
Speaker 1: through an eight hundred and twenty four million dollar share
Speaker 1: sale Pershing Sentence. Mondoleese Holding became an outside position after
Speaker 1: a plunge in shares of Valiant Pharmaceuticals UH, and the
Speaker 1: fund's net asset value is down twenty six point four
Speaker 1: percent this year. On the other hand, you've got FedEx
Speaker 1: shares higher. The package delivery company's profit and remedy for
Speaker 1: the fiscal third quarterbeat estimates. FedEx raised its full year
Speaker 1: earnings forecasts, and the company expects to cut costs by
Speaker 1: more than one point six billion dollars after completing a
Speaker 1: takeover of Europe's t n T. FedEx at the moment
Speaker 1: up almost six percent in early trading. Office Depot also higher.
Speaker 1: Amazon dot Com is earning the office supply chains corporate businesses,
Speaker 1: according to The New York Post, citing a person from
Speaker 1: the of an unnamed activist investor who bought a stake
Speaker 1: in Office Depot because that company a takeover target for
Speaker 1: Staples and UH at the moment office depot up about
Speaker 1: seven percent. Some other stock moves Jable Circuits higher and
Speaker 1: UH that's a result of fiscal second quarter results that
Speaker 1: beat estimates. Also their forecasts exceeding projections. Company is a
Speaker 1: contract manufacturer of electronics. Williams Sonoma is also up. I
Speaker 1: should say down. Actually the House Squares retailer with fiscal
Speaker 1: fourth quarter earins in remnue that we're lower than estimates.
Speaker 1: The powermaker Gas is lower with an unexpected loss with
Speaker 1: the fiscal first quarter. That's their forecast anyway. On the
Speaker 1: other hand, the arts and crafts retailer Michaels is higher. UH.
Speaker 1: Their fiscal fourth quarter profit in sales exceeded estimates, and
Speaker 1: International Game Technology I D i g T also up.
Speaker 1: Fourth quarter earnings and sales at the maker of casino
Speaker 1: and lot of re equipment beat projections. The Caterpillar one
Speaker 1: really caught my eye this morning because obviously it had
Speaker 1: a big market impact when the headlines hit that they
Speaker 1: were cutting their first quarter earnings, but they are reaffirming
Speaker 1: their full year earnings. UH forty two billion and three
Speaker 1: fifty to four dollars in earnings per share, which suggests
Speaker 1: to me that they're seeing a bad first quarter, but
Speaker 1: they don't think the year is gonna be that bad.
Speaker 1: Things may get better as time goes on. It's a
Speaker 1: matter of anticipating a turnaround. And you actually see that
Speaker 1: more broadly, Michael, in the numbers for the Standard and
Speaker 1: Poor's five hundred people looking for a first quarter decline
Speaker 1: in earnings, little change to the second quarter, and then
Speaker 1: rebound in the third. David Wilson, thank you so much.
Speaker 1: So we're gonna have a conversation with John michaels Waite
Speaker 1: or under in Chief, with the Prime Minister of Canada.
Speaker 1: And right now we're looking for introductions here from our
Speaker 1: Jason Kelly at our New York head corners. Uh. This
Speaker 1: is the twenty third Sime Minister of Canada with John
Speaker 1: michaels wag. Um, justin to thank you for talking to
Speaker 1: Bloomberg where live on Bloomberg Radio and television around the world. Um,
Speaker 1: let's start with the economy. Canada has never done very
Speaker 1: well when commodities are doing badly. Camody is doing badly. Now,
Speaker 1: where do you hope growth is going to come from? Well,
Speaker 1: there's no question that the oil prices were very good
Speaker 1: on water as well, not soil. Um. The oil prices
Speaker 1: are are certainly impacting on a number of regions in
Speaker 1: our country that have seen tremendous growth and contribute contributed
Speaker 1: significantly to Canada's overall economic growth in in meaningful ways
Speaker 1: over the past ten years. Now with the prices falling,
Speaker 1: those areas are going through difficulty. But as as we
Speaker 1: have to understand the pivot that climate change is going
Speaker 1: to require of us, we need to be diversifying, investing
Speaker 1: in the opportunities that that that highlight the the climate
Speaker 1: change isn't just a challenge, it's it's an opportunity. So
Speaker 1: right now we're looking at a frame in which UH,
Speaker 1: with interest rate slow, with our debt to GDP ratio
Speaker 1: being down around thirty one UM, and a need for
Speaker 1: investment in our economy, there's there's an opportunity to get
Speaker 1: those out of work, uh you know, construction jobs in
Speaker 1: the in the oil industry for example, to work at
Speaker 1: building municipal infrastruys or a country. I just thinking, is
Speaker 1: there a country you would like to replicate or is
Speaker 1: there an error in Canada's history you'd like to take
Speaker 1: take Canada back to we'll see his inspiration. I think
Speaker 1: you know, everyone is in in Western economies is thinking
Speaker 1: about the client of the middle class. The challenges you know,
Speaker 1: the post war boom years where the middle class was
Speaker 1: doing well and therefore the economy was doing well. Uh,
Speaker 1: seem a long way away in that question, how do
Speaker 1: we create an economy in which the largest number of
Speaker 1: people have the best possible jobs, understanding that income inequality
Speaker 1: can be a drag not just on success for the
Speaker 1: middle class, but on the overall growth profile of the economy. Uh.
Speaker 1: You know, that question and how to solve it is
Speaker 1: one that is being challenged around the world now. A
Speaker 1: lot of people are on the austerity side, thinking that,
Speaker 1: you know, we have to control a government spending UM.
Speaker 1: Canada's positioning itself on the investment side of that. This,
Speaker 1: this idea that confident, optimistic countries will invest in their
Speaker 1: future is really very much what we're we're focused on. So,
Speaker 1: whether it's investing in innovation around clean tech, around renewable energies,
Speaker 1: around startups and and the knowledge economy, whether it's investing
Speaker 1: in roads and bridges and hospitals and and the kind
Speaker 1: of infrastructure that's going to lead to both quality of
Speaker 1: life and better productivity in the coming years. We think
Speaker 1: that this is a great opportunity to be to be
Speaker 1: building for the coming coming decades. You've talked my investment
Speaker 1: or lot and you've just talked about it again then.
Speaker 1: But a lot of people look at Canada's economy. You've
Speaker 1: got a budget next week. They see economy. It it's
Speaker 1: only growing by one and a half percent a year,
Speaker 1: and they think that needs stimulus, not long term spending
Speaker 1: light infrastructure. Your government seems unable to mention the word stimulus. Well,
Speaker 1: I mean a stimulus. We had a massive stimulus package
Speaker 1: and I'll say stimulus as many times as you like.
Speaker 1: Uh in uh a following following the recession at the
Speaker 1: way that the two thousand and eight thousand nine recession,
Speaker 1: and you know, we're talking at eighty billion dollars. There's
Speaker 1: such an in debt uh that we had kicked off
Speaker 1: with um. This is much more modest, much more responsible.
Speaker 1: What we're what we're looking at is not so much
Speaker 1: trying to jolt the economy into life as try to
Speaker 1: lay the found work, the groundwork and the foundation for
Speaker 1: better growth, better productivity over the long term, and not
Speaker 1: just an instant influx of the need for an instant
Speaker 1: I think, I think the challenge when you're trying to
Speaker 1: you know, shovel money out the doors, it doesn't always
Speaker 1: get spent on the right things. For example, what we've
Speaker 1: decided on our on our infrastructure spend, which is going
Speaker 1: to be a massive expenditures investments in infrastructure over the
Speaker 1: next ten years. The first two years, we're going to
Speaker 1: do the unsexy things that governments you hate to announce,
Speaker 1: recapitalization of infrastructure, um, you know, maintenance upgrades, the things
Speaker 1: you don't get the class needed, and not sending it
Speaker 1: to wealthy families like mine. And that's that's very clear.
Speaker 1: On old aged security. UM. Actually, there's a there's a
Speaker 1: nice parallel here. Uh. My predecessor went to Davos and
Speaker 1: announced in a Bloomberg interview that he was going to
Speaker 1: be raising very wisely. Uh there's a reviews are mixed
Speaker 1: in Canada on how wise this was of announced he
Speaker 1: was going to raise the age at which you reached
Speaker 1: old aged security uh at to sixty seven from sixty five.
Speaker 1: And we think that was a mistake and I certainly
Speaker 1: campaigned against it, but I'm happy to confirm here in
Speaker 1: New York in a blue Berg interview that next week's
Speaker 1: budget will feature that we will confirm that we are
Speaker 1: keeping the old retirement age at sixty five because how
Speaker 1: we uh not raising into sixty seven? Because how we
Speaker 1: care for our most vulnerable in society? It is really important.
Speaker 1: But don't you worry about that? In a sense most
Speaker 1: you look around the world, most people are gradually pushing
Speaker 1: out um the age at which people can take pensions.
Speaker 1: With the age at which people would take these benefits
Speaker 1: you're running against most economists would push forward. Well, I
Speaker 1: think the sense is that just you know, tweaking the
Speaker 1: age like that is a very simplistic solution that won't
Speaker 1: work to a very complex problem. How do we encourage
Speaker 1: people to stay active as members of the workforce for longer.
Speaker 1: How do we make sure that we're you know, creating
Speaker 1: the opportunity to stay healthy longer. How are we encouraging
Speaker 1: a link and mentorship between our older citizens and the
Speaker 1: younger citizens who need to have all the capacities they
Speaker 1: can if they're gonna you know, be created the success
Speaker 1: needed to support our aging demographics. All those things together
Speaker 1: means there's a lot of discussions to have. We're gonna
Speaker 1: be working on increasing the Canada pension Plan. So there's
Speaker 1: a bundle of things to look at. But the place
Speaker 1: that we are, uh, you know, returning to because it
Speaker 1: was a mistake to bounce it up to sixty seven,
Speaker 1: is we're starting from sixty five. But that's in general.
Speaker 1: I'm just thinking whilst you were talking, you look at Europe.
Speaker 1: The sort of things that places like France get criticized
Speaker 1: for is keeping the pension age really low. And in general,
Speaker 1: your generation, my generation, your on more than mine, we're
Speaker 1: all likely to live much longer. Surely the whole pressure
Speaker 1: on pensions is to push out these benefits longer. Well,
Speaker 1: I think that there needs to be a little bit
Speaker 1: of sophistication in the way we look at it. Obviously,
Speaker 1: someone who has worked as a as an investment banker,
Speaker 1: as a lawyer all their life, sixty five is not
Speaker 1: necessarily an age where they need to retire. Someone who's
Speaker 1: still getting recently strong, indeed, even my but someone who
Speaker 1: has yeah, but he's nowhere near sixty. Uh. Anyone who
Speaker 1: who has worked with their hands as a as a
Speaker 1: laborer or as an assembly line worker, or work in
Speaker 1: the resource industries. Uh, and has been in a much
Speaker 1: more physical job once you start reaching sixty five. Regardless
Speaker 1: of all the advances in Canada's extraordinary medical system. UH,
Speaker 1: the the you know, there are real challenges around how
Speaker 1: much longer someone can keep working in certain jobs. So
Speaker 1: I think, UH, a nuanced and responsible discussion around that
Speaker 1: is is what we're waiting for. So to go back
Speaker 1: to the very rich, you know you target to them
Speaker 1: a bit in the marginal tax rate. Um, what about
Speaker 1: what other things might you look at it, especially in
Speaker 1: this budget. Would you look at capable gains? Would you
Speaker 1: look at stock options? These are things that you talked
Speaker 1: about on the campaign trail. Well, we'll we'll certainly see
Speaker 1: next Tuesday afternoon what what actually is in the budget.
Speaker 1: But I mean the phrase that we the frame that
Speaker 1: we've always taken on this is, uh, we certainly have
Speaker 1: nothing against success. Indeed, we want more people to be
Speaker 1: success full in Canada and in I have very um
Speaker 1: few worries that if we put more money in the
Speaker 1: pockets of average consumers in our country, if we make
Speaker 1: the middle class more confident not just about their own
Speaker 1: future but about their kids future, Uh, the general economic
Speaker 1: climate will be such that our big businesses will find
Speaker 1: plenty of opportunities to make already already seeing tech companies shopify.
Speaker 1: These sort of people coming out against this again. I
Speaker 1: go back to France when Alone came in. He came
Speaker 1: up with all these different ideas. Somebody got quote at
Speaker 1: the times would be like Cuba without the sunshine. Um,
Speaker 1: do you do you worry that you might be driving
Speaker 1: a why entrepreneurs? Well, I mean, I'm I'm going to
Speaker 1: answer those questions more clearly once we put forward the
Speaker 1: budget in a few days. But I will underline the
Speaker 1: fact that I got to be in the position I
Speaker 1: am by listening to people, by listening to experts, by
Speaker 1: understanding what economists and business owners and ordinary Canadians had
Speaker 1: to say about where they wanted the economy to go,
Speaker 1: what was going to help them, what was not going
Speaker 1: to help them. Uh. And we've made our decisions very
Speaker 1: much based on evidence based research and policies. So you
Speaker 1: don't worry about a brain drain if people are talent
Speaker 1: drains the south of the border, if you too hard,
Speaker 1: I don't worry about hypotheticals. I worry about what really
Speaker 1: going to happen. Uh. And and The decisions that we're
Speaker 1: taking are ones designed to encourage entrepreneurship, to reward businesses
Speaker 1: that are growing, UH, and to encourage Canadians to feel
Speaker 1: optimistic and confident, not just about their own future, but
Speaker 1: about their their their children's future. You just talk You
Speaker 1: just talked about entrepreneurship and businesses that are growing. You
Speaker 1: take the Planemaker Bombardier. It's stock I just looked. Used
Speaker 1: to trade seven dollars. Now it's barely a dollar. It
Speaker 1: wants to take it wants a billion dollars from you.
Speaker 1: You seem inclined to give it to them. You know,
Speaker 1: why should the government be helping businesses like that? Well,
Speaker 1: first of all, UH, you start with the place that
Speaker 1: the new C series aircraft that Bombardi has put forward
Speaker 1: has been allowed it as an extraordinary airplane. It really
Speaker 1: it is uh more efficient, more uh more fabulous in
Speaker 1: all ways than than than just about any other plane
Speaker 1: on the market. So there is an understanding the Canadian
Speaker 1: aerospace UH and Bombardi itself has a bright future product
Speaker 1: of course, but we also know that from Boeing to Airbus,
Speaker 1: to to Embryo, to all the big aerospace companies around
Speaker 1: the world, they've always needed significant government support. And what
Speaker 1: we look at is how do we ensure that there
Speaker 1: is a strong aerospace industry in Canada, Uh, not just
Speaker 1: right now, but in five years and ten years and
Speaker 1: thirty years. How do we continue to make sure that
Speaker 1: the high quality jobs and the innovative solutions put forward
Speaker 1: by our aerospace industry are there for the long haul.
Speaker 1: So we are very much looking at this as you know,
Speaker 1: what is the right investment and is smart investment for
Speaker 1: Canadian jobs, for the Canadian economy and for the global market.
Speaker 1: And that's that's the lens we're taking on that decision,
Speaker 1: and that's why we're taking our time. You would feel
Speaker 1: happy to get saying to people at the hospital you
Speaker 1: can't build, say I'm happy about putting this money behind Bombody.
Speaker 1: Then something that I think your government is about choices
Speaker 1: and when you make the right choices to create opportunities
Speaker 1: to grow the economy to make sure that there are
Speaker 1: good jobs. In many cases, it doesn't have to be
Speaker 1: in either or it can be knowing that you're growing
Speaker 1: the economy in meaningful ways which will allow you to
Speaker 1: continue to invest in things that matter. And do you
Speaker 1: have an idea when we could expect and answer to
Speaker 1: the question of you know, when this is when when
Speaker 1: you're going to answer bombody is questions this this will
Speaker 1: be answered when we have the right answer to give
Speaker 1: and and we're taking our time. We're taking our time
Speaker 1: in a deliberate and thoughtful way to make sure that
Speaker 1: we're doing the right thing in the interests of both
Speaker 1: the Canadian industry and you know, high quality jobs, but
Speaker 1: also our responsibilities towards taxpayers to to get the opportunity
Speaker 1: costs right. What's your biggest worry on the economy when
Speaker 1: you when you, um, I just you know, a lot
Speaker 1: of what I worry about is that uh, ordinary folks
Speaker 1: are going to withdraw