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