Russia's Nuclear Threat
Host: Peter Haynes, Managing Director and Head of Index and Market Structure Research, TD Securities
Guest: Frank McKenna, Deputy Chair, TD Securities
In Episode 31, Frank and Peter catch up on world events, including the war in Ukraine and Putin's saber rattling over nuclear weapons, the changing political landscape in Europe and the U.K., the U.S. mid-terms and the Conservative Party's new leader in Canada. Frank provides a view from Cap Pele of the damage from Hurricane Fiona, which he considers to be the strongest storm to hit landfall in Canada in recorded history. He also shares his perspective on why U.S. leaders are unable to change the narrative on immigration -- from one of vitriol to one of need given changing demographics . Peter asks Frank his favourite fishing story from New Brunswick's famous Miramichi River and the two of them finish up with the Blue Jays as we head into the play-off run.
FRANK MCKENNA: There's no doubt he is backed into a corner now of his own making and he's a desperate man so we shouldn't underestimate what he could do.
PETER HAYNES: Welcome to episode 31 of our monthly TD Securities Podcast on geopolitics, with our guest, the honorable Frank McKenna. My name is Peter Haynes. I'll be the host for today's episode, entitled Russia's Nuclear Threat. Before we get started, I want to remind listeners that the TD Securities Podcast I'm doing here today is for informational purposes. The views described in today's podcast are of the individuals and may or may not represent the view of TD Bank or its subsidiaries. And these views should not be relied upon as investment, tax, or other advice. Frank, it's late September and you've been back in Toronto for a few weeks now, leaving behind Canada's East Coast, where you spend your summers. This beautiful part of our country suffered through a very tough weekend with Hurricane Fiona hitting landfall on Saturday. First of all, can you give us a damage report from your hometown, Cap-Pelé, New Brunswick? And now that the eye of the storm has passed, where does this storm rank in the history of East Coast Canada weather events?
FRANK MCKENNA: It was a huge storm. We were not at home when it happened. So my son and daughter-in-law left their home in Moncton and stayed at our house, fortunately. I would say quite a lot of damage. In our case, our fence was blown down and the steps to the beach were torn up. The pressure was so extreme. The ocean water actually entered our house, went through the windows. And so fortunately, my son was there to mop up the floors. And big boulders that we have to protect the shore were removed around. And that's typical. Cap-Pelé was hit hard. The trailer parks were all flooded. A lot of roofs were blown off. And that's fairly typical of the region. Cape Breton was hit hard. PEI was hit very hard. So there's a lot of damage. A lot of trees down, which, of course, has put power out. And power is still out for hundreds of thousands of people. In terms of where this fits in the category, I guess, by some measures, it's the worst storm we've ever had. In terms of barometric pressure, it's the worst storm ever to hit Canada, I believe. We've had some bad ones in the East. I go all the way back. I was talking to my sisters about when we were kids, growing up Hurricane Hazel, which was bad. We've also had one Juan, Dorian, and Igor. But I would say, this one is, probably, right around the top of the list in terms of damage and impact. It was a big storm. It was a hurricane. And it made a big left hook, coming up the coast, and just went right into the middle of our populated areas.
PETER HAYNES: Well, I guess the saving grace, if there is one, Frank, is it appears as though there are a limited number of fatalities. I think, I heard the number was one, which is even sad in and of itself. So I guess there is some saving grace there. I did see a story on the weekend that the oldest tree in Nova Scotia was torn down so it's sad. But I guess, these things are part of the world that we live in. So I'm glad to hear things are OK. I won't say great. I know my colleague Trevor Johnson, who works in Dartmouth, is going to be offline until, I think, tomorrow night, they're saying. So he's unable to connect in because the power remains out. So well, hopefully, we're not going to have to be having this conversation again any time soon. But I'm glad to hear things aren't as bad as, perhaps, they could have been. The fall school year is now three weeks old and we don't hear much about COVID outbreaks, or new variants, or potential next waves. And I must admit, the downtown underground in Toronto is, dare I say it, almost bustling. Can we declare the pandemic over? And if so, when will the Canadian government see fit to eliminate all remaining COVID restrictions, including the irritating ArriveCAN app and masks on planes?
FRANK MCKENNA: I'd say, for all intents and purposes, is over. As we know, that that doesn't mean that we aren't going to get flare ups and we could end up with new variants and all of the above. And it depends on where you are. I was in New York for the last couple of days and the pandemic is definitely over in New York. There was no sign of masking or anything. And in fact, the Air Canada attendant had to pass masks out on the way into the plane because nobody was masked heading towards the loading area. But having said that, we need to be vigilant because the last variant we've been through has been mercifully quite benign in terms of deaths and hospitalizations, but we could get flare ups again. And as for what you've talked about, ArriveCANADA, that is done. Put a fork in it. That'll be announced in the coming hours. And masks on planes-- so I think that we are turning the corner on those measures.
PETER HAYNES: So are you saying-- you think that the federal mandate for masks on planes and trains will be eliminated as part of the unwind of ArriveCAN?
FRANK MCKENNA: I think so, but on that one, I don't know. I do know that ArriveCAN is going to become optional, not mandatory. And proof of vaccination coming in is not going to be required. I guess, the final issue is whether or not we'll still require masks on planes. I'll know tomorrow morning because I'm flying out to BC for some events. So we'll know very quickly.
PETER HAYNES: Yep, yep. I'm flying tomorrow, too. So I'm in the same boat as you. Well, the past month brought quite a bit of world news. And so let's do a quick around the world and we'll start with the war in Ukraine, which actually we haven't spoken about in a couple of months. Last week, President Putin ordered a partial enlistment of 300,000 Russian men aged 20 to 35 with military experience, in what was a clear escalation of the Russian war against Ukraine. In addition, both Putin and former President Medvedev both suggested that tactical nuclear weapons could be used to defend Russian territories, including-- I think this is very important-- any areas that have been incorporated by Russia that were formerly part of Ukraine. What do you make of Russia's recent behavior? And are you surprised?
FRANK MCKENNA: Well, I think it's extraordinarily threatening behavior. I guess, I'm not surprised because Putin has backed himself in a corner. He's underestimated the enemy from day one. He didn't think the West would hold together. He didn't think that we would use SWIFT against him. He didn't think that we would seize foreign reserves. He didn't think that we would do the sanctions regime that we did or that Europe would end up holding out as they have and Germany would increase its defense budget and Finland and Sweden would join NATO and all of that. And what he didn't particularly get is how good the Ukrainian army were, how well trained they were, and how fighting for one country is a lot different from people who have no idea of why they're in a battle. And he's had very significant battlefield reverses in Kharkiv and, I think, to some extent, in Kherson. And they could very well lose Kherson. And information is that the only reason there hasn't been a surrender or retreat in Kherson of Russian forces because Putin has personally ordered them not to budge so that he wouldn't lose more face. So he's backed into a corner where he's lost a lot of men and materials. And so he needs this ragtag army that he's putting together, of people without significant combat experience. And he's coupled that with mercenaries in the Wagner Group and he's brought people in from Africa and he's brought people in from Syria and he's got people turned out of the jails, all of the above. I don't think it'll make a dent in the battlefield. I was watching a war report, or reading a war report yesterday of in the front lines. I think it was around Kherson. And the battlefield medics said that they didn't have a single gunshot wound. It was all shrapnel. Everything was as a result of massive artillery barrages. And so you can have 300,000 more people, but this is not like Passchendaele, where you just throw waves of people against machine guns and so on. This is a war fought 40 and 50 miles away with large weapons. So more people I don't think will make the difference. Do I think that he'll use nuclear weapons? I don't, but he is increasingly desperate. And you've pointed out what he's doing, which is really a disgraceful gambit. And he's basically-- after invading territories, he's holding fake referendums then declaring them Russian territory. And so if the poor Ukrainians fight back, they're attacking Russia, and therefore, he feels he can justify the use of nukes. Tactical nuclear weapons are still nuclear weapons. They range from 1 kiloton to 100 kilotons. The bombs that hit Nagasaki and Hiroshima by comparison were in the 15-kiloton range to 21-kiloton range. So it's massive destructive power from these weapons. And more importantly, it represents a hugely important escalation. And I'm not sure that he cares about the loss of life. He hasn't proven that that matters much, but I think he would be worried about the Western response. And he could be very worried about China's reaction. China is strongly opposed to the first use of nuclear weapons. And if he loses China's patronage, buying his oil and, more or less, giving them some cover here and there. I think that would be very grave as well. So I think more for that reason, it's on the low end of probability that he uses a nuclear weapon. But there's no doubt, he is backed into a corner now of his own making and he's a desperate man so we shouldn't underestimate what he could do.
PETER HAYNES: You mentioned China, and some of the recent comments we've heard from two of Putin's allies, both China and India, have been mildly harsh towards some of the recent Russian actions. Do you have any sense that Putin's sphere of influence and support is waning globally, for the few countries that do support him?
FRANK MCKENNA: Yeah, very much, Peter. I think that it is. That was quite astonishing that after the Shanghai Conference, that both Modi and Xi mildly chastised him, but they referred to conversations that they've had with him which sounded even more ominous. The fact that they are discussing openly this misadventure in the Ukraine with him, I think, is quite telling. I'm told by reasonably reliable people that he was told, by at least one of these leaders, things about the battlefield that he didn't even know, information about just how badly it was going for him that he hadn't even realized. So they're very interested in what's going on. And I think they're leaning increasingly against the war in Ukraine. And you're getting the same thing from other allies such as Erdogan and Turkey and maybe even some of the leadership in the Middle East. I think they're starting to realize this is truly destabilizing for the whole world and dangerous in the extreme. And so yes, I think he's losing some of his cover, some of his international cover.
PETER HAYNES: I worry that sometimes when we read the press in the West that we get a Western view of what's going on in world events. And oftentimes, people that are sitting in the UK will tell you a different perspective. And I know Putin started this mess. But when you take a step back and try to look at both sides, how can anyone argue with Putin's claim that Russia is, in fact, fighting a proxy war against the West when, as you mentioned earlier, the West is training Ukrainian soldiers? They're providing the state of the art weaponry to allow for the war to be 50 miles apart and they're also providing all the funding necessary for Ukraine to fight against Russia. I do think that I know Putin started this mess. But how can anyone argue with that claim about a proxy war?
FRANK MCKENNA: That I think it's accurate. In a way, the West is engaged in a proxy war, although Western troops are not on the ground in the Ukraine. So the answer is probably yes, but let's step back a little bit further. Russia invaded Ukraine. This was not a case where both sides wanted to go to war. Russia invaded Ukraine, thinking they could knock it over into or three days, and they couldn't. And Ukraine fought back and they don't like it. But if we were to simply sit back and not do anything, what would be next? He'd already took the Crimea area. Would the next thing be to move on Georgia, or Moldova, or Estonia, or Lithuania, or any of these other countries around the border? And what would we do then? Would we simply allow that to happen? And we have to acknowledge as well that he's also, in a way, engaged in a proxy war. He's using armed drones, very effective drones, from Iran in the battlefield. He's brought in weapons from North Korea. So he's engaging other countries on his side as well. Remember, we're talking about a bully here. We're talking about the largest countries in the world in terms of land mass and a country with 160 or 170 million people, probably three or four times as big as the Ukraine. And so the victim is fighting back. And I think that it's quite appropriate for the West to try to help out a country where the bully might not only take that country but just keep on rolling.
PETER HAYNES: I guess, he's using energy as a weapon as well against Europe and we'll see over the coming months, through the winter cold, how Europe's going to be able to react to some of his throttling of Russian energy.
FRANK MCKENNA: Yeah, Peter, let's just take a moment on that because Europe is paying a huge price here. In North America, we do lots of tutt-tutting about it, but they're paying a huge price. And I think they have the resolve. They say they have resolve. If it's a bitterly cold winter, it'll be a problem. 85% of the reserves of gas have been filled up and they're making deals now with-- just today, the Germans have made a deal with the Emirates to get the natural gas and diesel in. But if it's a severe winter, it's going to put a huge amount of pressure on the political stability of Europe. We're already seeing significant protest movements forming from people who are saying, why are we paying a price for the war in Ukraine? So that'll be something to watch. And Putin is clearly counting on this battle of attrition to end in his favor.
PETER HAYNES: And as we work our way through Europe, I'm going to get to the UK in a moment. Italy just elected a coalition, led by a extreme right-wing leader, following some recent movements in Spain and other countries in Europe. We've talked to briefly about this in the past, Frank. What is your high-level view of the move towards globalization in Europe based on some of these leadership decisions that have come most recently in Italy?
FRANK MCKENNA: Yeah, it is the most right-wing leader since Mussolini. That's just been elected, a woman. Meloni, I think it is. But she has not, fortunately, been anti-Ukraine, where some of the people she ran against were. So I think Italy still continues its resolve and the coalition, so to speak. But it represents a swinging of the pendulum around the world. The United States probably started it all under Trump, this anti-globalization effort. But every reaction has-- every action has a reaction, and globalization is now getting some pushback. And particularly, because of COVID and the war in Ukraine, everybody is trying to make sure that strategic industries are located within their country. I'm talking about pharma. I'm talking about semiconductors, chips, et cetera. So there is a high level of resolve for countries to put moats and gates up around their borders, which, I think, is unhealthy in the extreme, but it does seem to be a trend that we're seeing.
PETER HAYNES: So let's move over to the UK, where there's a new sheriff in town, following Boris Johnson's resignation. The new leader of the Conservative Party and Prime Minister of Great Britain is Liz Truss. Last week, Truss met US President Joe Biden and the two discussed Truss's push to amend or eliminate the Northern Ireland Protocol. Biden asked Truss to leave the agreement alone, to which British commentators suggested that the agreement was none of Biden's business. Can you just explain for our listeners what is the Northern Ireland Protocol? And why do some think this agreement is so important to peace in the region?
FRANK MCKENNA: Yeah, just before then, the UK, under Prime Minister Truss, has just introduced a massive package of tax reduction relief and deregulation in order to try to stimulate the economy and help protect people who are feeling the ravages of inflation. And there's been a violent counter-reaction to that, with the pound dropping very significantly. There's even a strong sense that the Bank of England may have to raise interest rates as much as 100 basis points. So it means that this effort at trying to help people results in purchasing power being eroded and, possibly, interest rates further decimating the economy. So right now, I'd say she's got her hands full with their domestic issues. But the Good Friday Accord was the beginning of all of this. And the US was a major instigator of that, under President Clinton, and, more or less, a co-guarantor. And the Good Friday Accord was designed to try to remove the physical border between Northern Ireland and the Republic of Ireland and try to stop the violence, which has been a fact of life for so many decades. And it succeeded and it has continued to succeed. But the problem with Brexit-- that everybody knew but tried to apply fudge to-- was that one part of Ireland-- that being the Republic of Ireland-- was going to be in the European Union and the other part of Ireland was not. And that meant that all the border controls and everything which have been put up, as a result of Brexit, would not apply in Ireland unless you were to repudiate the Good Friday Accords. So everybody knew this was going to be a problem. Boris Johnson just tried to fudge it all over and pretend it didn't exist, and it is a problem. And so what they had to do, as a compromise, is to move the border back to the Irish Sea so that goods can go freely back and forth across the Irish borders, but between Northern Ireland and the UK, they couldn't. And all of a sudden-- not all of a sudden, they gave fair warning-- the Parliament of the United Kingdom, under the Tory government, has decided to repudiate part of the protocol that was put in place to protect the Good Friday Accords on the border. Europe is up in arms over it and intend to litigate it. And it's a very interesting question as to who will be right on this, but it is a direct repudiation of the Brexit agreement that had been signed. So Biden, who is the most Irish of US prime ministers weighed in, I think, because of a personal interest in Ireland, but also because the United States was a negotiator and co-guarantor of the Good Friday Accords, which could be affected negatively by the legislation that the UK has proposed-- and does he have an interest in it? I think he does. And not only that, the UK is trying to negotiate a free trade agreement with the United States to prove that they can do just as well under Brexit as they would do as being part of the EU. And the United States has the right, of course, to say, no, we're not prepared to do an agreement unless you meet certain conditions. So I don't have much sympathy for the UK press who are saying it's none of your business. I think Biden could say, well, that's fine. I'm not going to negotiate with you on other matters.
PETER HAYNES: As you say, every action has a reaction. Let's cross the pond here and talk about the US for a moment. All eyes are on the November midterms. I'm sure we're going to cover this election cycle in greater detail towards the end of October, just before the elections. But for now, what are the Senate races that you're watching most closely? And has Biden's recent positive momentum raised the possibility that he holds on to control of the entire legislative branch?
FRANK MCKENNA: It's no doubt that Biden set some momentum and the Democratic Party. And that includes everything, from the ineptly named Inflation Reduction Act, to CHIPS Act, to gun control legislation, which got through, and to the way in which he's prosecuted the war in Ukraine, which I think is generally favorably received. So there's no doubt there's been some improvement there. Then there are external events that have come in like Roe v Wade, which seems to have energized Democrats more than Republicans. And then you've got the virulent and active presence of Trump, who, in a way, much to the chagrin of Republicans, seems to be the face of the Republican Party in these campaigns. All of that have made it more competitive. Six months ago, this was not even competitive. The usual path would have been followed and that is for a major change in the power stand and in the standing of the parties during the midterms. It's closer. But no, the Democrats are not going to retain control of the House. There's just too much of a delta there for them to overcome. In the Senate, it is an absolute coin toss. It's very close. The Republicans have nominated a number of candidates who are not considered to be attractive, mainly because they're really strong Trump supporters and election deniers and so on. So it's going to be a toss up when it wouldn't have been a couple of months ago. The races that I'm watching, Nevada is one. Democrats could actually lose ground there. I would say Wisconsin, where the Republicans could lose ground there. Pennsylvania, which is a very interesting one, it had been a Republican Senate seat and they probably will lose that to the Democrats. That's where Dr. Oz is running. And then you've got Georgia, which the Democrats had won just after the last general election, and that's a dead tie, but the Democrats could lose there. New Hampshire, the Democrats were in a dead tie and probably slated to lose, but the Republicans nominated a horrible MAGA candidate who has now given the Democrats a clear shot at winning that again. And then in Ohio, which is always a close race but traditionally Republican, it's reasonably close. So all of those are-- most of them are too close to call. I'd say there are about seven or eight tossup, so-called tossup, seats right now. And depending on which way the wind blows, that will either be one seat or, at most, two seats Republican or Democrat in the Senate. So a big shift but still, a lot can happen in a month and a half.
PETER HAYNES: Yeah, we're not at the end. But if you do look forward to the next federal election, for president, there's a couple of Republican wannabe candidates that have been in the headlines lately and it's on the topic of immigration. So it seems to be that both Florida Governor DeSantis and Texas Governor Abbott have been trying to, through highly publicized stunts, sending regards to Democratic sanctuary states. We saw that recently with the Martha's Vineyard stunt. And then there was another one where they sent a bus of, I think, Venezuelan illegal immigrants to Washington. And these stunts seem to be aimed at getting national attention around illegal immigrants coming into Florida and to-- oh, sorry-- to a lesser extent Florida but more to Texas. But I just don't get the debate on immigration, Frank. So why can't politicians change the narrative to one of simple demographics when it comes to immigration, particularly in the US? I know Canada, we don't have that same debate, but in the United States, immigration seems to be a swear word. Since 1977, the average US family has produced less than two children. With on average, one of them able to procreate. This means the population is in secular decline in the US and in order to keep the country's population stable, the government must allow immigration. Frank, can you square this topic for our listeners?
FRANK MCKENNA: Well, when I was in Washington, whenever I've found something totally illogical and asked the question, why is this the case? They'd say, oh, it's just political. Well, that's probably the answer here. In the United States, immigration has become extraordinarily politicized. And there are a couple of reasons that, I guess, one can understand. And by the way in Canada, it's quite extraordinarily unpoliticized to the credit of all the political parties. There's general consensus around immigration, but there are some factors, which I'll mention, that are different. First of all, the temporary foreign worker program in Canada is pretty well understood and pretty well defined. There was a conference on Cornell University, a couple of years ago, comparing the US program and the Canadian program and the Canadian program is vastly superior. So in the United States, it's been hard for temporary foreign workers to come into the United States to work then to go home and be able to get back again, et cetera, et cetera, to keep the continuity of the job and to make sure they have that income in their life. In Canada, it's very, very well accepted that temporary foreign workers will come here. They'll follow the rules. Then they'll go back to their country and then come back the next year to help with the harvest of the fish, plants. My village, half the village, virtually in the summer, are from the Philippines, or Mexico, Jamaicans, and so on. So our program works better. Secondly, we have a pretty organized immigration program with a number of strands that is the envy of the world. So a lot of our immigration program is geared towards bringing skilled workers in and various needy occupations, et cetera, et cetera. In the United States, the immigration is uncontrolled. They do have immigration with the rest of the world, but there's almost 2 million people a year coming across the border from Latin America. So they're getting a preponderance of a particular demographic, Latinos coming in. And it's largely uncontrolled, where the immigrants or refugees are picking the country rather than the country picking them. And so there's pushback on that and it tends to be concentrated, that large immigration, in a couple of states. And so that would include Florida and Texas with Republican governors who are making political hay out of this. So at the end of the day, the United States needs immigration. It needs it badly, in fact. And I think they've lost out a lot during the Trump years and the pandemic when highly skilled Indian engineers and et cetera couldn't get into the United States. A third of the companies in Silicon Valley were headed by Indian leaders. And so I think they lose out when they lose control of that. But it is a big political issue in the United States and it's largely because of the lack of control and the concentration of immigrants in certain demographic areas. And by the way, as a result of all this population growth, those markets are doing extremely well. I mean, immigrants, they bring an energy and they bring consumptive power and it tends to be a lot of growth associated with population growth.
PETER HAYNES: Well, we'll take this offline, Frank, for another episode, but it really does lend itself to question. I know we heard so much about the border wall for how these states that are bordering Latin America and can possibly try to find a way to dispel the immigration problem that they have, the illegal immigration problem, and just recognize it is difficult for them because there are so many people entering the country illegally. So as we move on to finish up with the discussion on Canadian politics, I want to circle back to the East Coast for a moment. I mentioned a few episodes ago that I would endeavor to pry out some good Frank McKenna stories. One of the most famous tourist attractions in New Brunswick and, perhaps, the best fishing destination in Canada is the Miramichi River. Can you tell us a few of your favorite or your favorite fishing story from the Miramichi? And because we don't have video, you can clearly tell like any good fisherman would about three times as big as it is in reality.
FRANK MCKENNA: Well, it's a wonderful river system and it includes everything from the Dungarvon to the Northwest Miramichi, and the Southwest Miramichi, and the Renous. And so it's a big complex river system that has extraordinary access to salmon. And of course, the story of the salmon is one of the great stories, I think, of the world about how they leave and go away thousands of miles and come back to the very same gravel bed where they were spawned. So I think that's exciting. And the Miramichi has brought a lot of famous people in. I met Ted Williams the first time ever in my life, returning from a fishing trip to the Miramichi. But the funniest story was when I was ambassador in Washington and one of the first events I had to go to was the Correspondents Dinner, which is a really big deal down there. All the cabinet go and the presidents go and all the national press that you see on TV and senators and everybody. So it's a big deal. And I was there as ambassador. And they had a little break in the event and everybody was looking for people to talk to and, of course, I knew absolutely nobody. The only other person who seemed totally disinterested in talking to anybody was Dick Cheney, the vise president of the United States. So I walked over to him because I was trying to break the ice a little bit with him. He was mad at us because we didn't enjoin the invasion of Iraq with the United States. So I walked over and introduced myself. Oh, oh, he said he kind of sniffed on everything. He said, Canada. Yeah, yeah. He said, OK. He said he said actually know Canada a little bit. He said, you'd never have heard of this. He said, but I spend every summer in a place called the Miramichi. I started laughing. And I said, I've heard of it. I spent 15 years representing it in the legislature. Oh. And I said, what do you do there? He said, I fish there. He said, every summer of my life, he said, well, the happiest experience is going to the Miramichi and fishing salmon. So on that basis, we formed a bit of a bond. And surprisingly enough, I probably became one of his few friends in Washington. And he even invited me on a hunting trip with him at one point, which, fortunately, I couldn't make because he the guy that he did hunt with, he shot him in the ass. So--
[LAUGHING] So I avoided that. But anyway, it hit the-- any way you can make a connection, you make a connection. That one fell in my lap.
PETER HAYNES: Sure did. So as we finish up on politics here, Frank, the Conservative Party in Canada elected its new leader this month and to no one's surprise, Pierre Poilievre, he won the party nomination. Poilievre is known as a populist leader. And obviously, we were talking about Italy and other places electing populist leaders. And this has worried some in the Conservative Party that believe he will be hard to elect, given some of his more extreme positions. Frank, you make no secret of your close relationship and friendship with former Prime Minister Mulroney. And just last week, the former Prime Minister sat down for dinner at Poilievre's request. According to media reports Mulroney told Poilievre to lead from the center. What else do you think was said at that meeting? And do you get the sense that Poilievre will heed Prime Minister Mulroney's advice?
FRANK MCKENNA: Well, first of all, Poilievre, with almost 70% of the support, the biggest victory in a nominating process in Canadian history. So he automatically brings with him a lot of credibility within the party. I think, in fact, I can tell you categorically, the meeting between Mulroney and Poilievre, I think, it was a sign of Poilievre's political wisdom that he immediately reached out to Mulroney because Mulroney, in a way, is symbolic of the centrist part of the Conservative Party. And they scheduled dinner for an hour and it ended up going for 2 and 1/2 hours, so they had a lot to talk about. And Mulroney's advice has already been, in my view, respected. Poilievre is going to be talking to every member of his caucus before he starts making major appointments. That's classic Mulroney. People forget that Mulroney when he was at the depths of his popularity-- his popularity was lower than the interest rate in Canada, at the time. He never lost a single caucus member and that was because he worked his caucus really hard and talked to them constantly, had a wonderful rapport with them, so that will become a hallmark of Poilievre as well, if he's listened to Mulroney, and I believe that he has. And Mulroney will try and sandpaper off some of the hard edges around Poilievre. Governments get defeated and the current government, I think, is governing in an environment where people are essentially just sick and tired of being sick and tired, whether it's COVID, or inflation, or whatever. And so when your opponent-- I was told early on. When your is on the ground gasping for breath, don't jump on top of them and start giving them more oxygen. Just be careful. And so Mulroney will try to sandpaper off some of those hard edges. When you've got some pretty good economic ideas, why get into firing the governor of the Bank of Canada or introducing cryptocurrency and things like that. All you do is give your opponents a chance to categorize you in a very unflattering way. So I think-- or getting in bed with the convoy protesters and all of that. I think Poilievre was smart enough that he will listen to that kind of advice from Mulroney, and reach out to the party, and work hard at bringing people together. And I think, that he's very quick, use of social media well, quick on his feet, et cetera. And so I think he's going to be a very considerable threat to the incumbent government.
PETER HAYNES: As of today, is that incumbent government, at the next election, going to be led by Justin Trudeau do you think? Because I keep getting a sense that he's going back and forth about whether he'll run again.
FRANK MCKENNA: Well, I would have said that a few months ago. I've talked to a number of people who are very close to him, cabinet ministers and others, just in the last two weeks, and they say that he has, after his vacation come back, strongly resolved to run again and that is what he's going to be doing. I was quite surprised because a month or two ago, I would have said that he will be leaving and with his head high rather than-- because his level of popularity is at an all time low. At least, people around him say that he is absolutely committed to running again. My own view would be that no matter what one says or what one feels, as you get closer to the event, you do take the temperature and nobody wants to be like a lemming off a cliff here if there's no chance of winning at all. I think he may reconsider his options, but at the present time, he believes that Poilievre needs to be challenged because of his views, which are much more right wing than the Canadian general mood, and he thinks that he's the person to do it. And I guess, we'll end up seeing-- I know there are a lot of people in the Liberal Party think that we might be better served with a different leader, but Trudeau right now seems quite committed to running.
PETER HAYNES: Well, we're going to definitely be digging in on that one in the coming months. But as we end up here, Frank, in the coming days, we're going to be talking about playoff baseball here. There's only 10 days left in the season. And the Jays find themselves in a battle for the top wild card position in the American League. And as we taped today, there are two games up on Tampa and finish that series very strongly. What is the single most important factor that's going to determine how deep a playoff run the Jays make this year?
FRANK MCKENNA: Well, you and I could list a half a dozen things from middle relievers right through to some individual players. And by the way, I have to take my hat off to you. You were much stronger with Merrifield and Tapia than I was and two of them have proven out to be very large contributors. But if you want me to pick one, I would say Vladie Guerrero. Most human baseball players would say, well, that's a pretty good year, batting close to 280, 90 RBIs, and 30 home runs. But for him, that is really way below his potential level. And we saw Bichette a couple of weeks ago strapped the team on his back and carry them through a number of games. And right now, Guerrero has to strap the team on his back and carry them. And if you can get him hitting with hitting we're starting to see from Teoscar, and Chapman, and others all through the lineup, and Kirk, and everybody else, I think we'll be a formidable competitor. But he just can't keep grounding into double plays and hitting into outs with people on base. So that would be my single biggest contributor. What about you?
PETER HAYNES: Well, I have a difficult time arguing with you on that. Obviously, you get into a series against Tampa Bay or Seattle in the playoffs and you're going to have to have good pitching, or even Cleveland, potentially. And I like our front end of our rotation because Manoah is a beast. Gausman's great. Now the question is, who's your three? Is it Stripling, or is it Berrios? And we'll have to see how the team picks that. But I guess, the exciting thing for Toronto is going to be the fact that we're probably going to see Aaron Judge tie and potentially break Roger Maris's record in our own home diamond in the next three days. I noticed the gentleman who caught the 700th homer for Albert Pujols decided to get it authenticated and take it home, which is his right. It'll be interesting to see. I can almost guarantee you. I shouldn't say this definitively. If it's a Toronto Blue Jays fan, they will hand the ball to Aaron Judge and say, thank you very much, as opposed to taking it away and trying to make hundreds of thousands of dollars, which it's worth admittedly. So we'll see, but that'll be fun. And I look forward to chatting again at the end of October. Hopefully, the Jays are still playing baseball at that time. Frank, thanks for your time today.
FRANK MCKENNA: OK, thank you, Peter.
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Managing Director and Head of Index and Market Structure Research, TD Securities
Managing Director and Head of Index and Market Structure Research, TD Securities
Managing Director and Head of Index and Market Structure Research, TD Securities
Peter joined TD Securities in June 1995 and currently leads our Index and Market Structure research team. He also manages some key institutional relationships across the trading floor and hosts two podcast series: one on market structure and one on geopolitics. He started his career at the Toronto Stock Exchange in its index and derivatives marketing department before moving to Credit Lyonnais in Montreal. Peter is a member of S&P’s U.S., Canadian and Global Index Advisory Panels, and spent four years on the Ontario Securities Commission’s Market Structure Advisory Committee.
Deputy Chair, TD Securities
Deputy Chair, TD Securities
Deputy Chair, TD Securities
As Deputy Chair, Frank is focused on supporting TD Securities' continued global expansion. He has been an executive with TD Bank Group since 2006 and previously served as Premier of New Brunswick and as Canadian Ambassador to the United States.