Global Election Calendar

FRANK MCKENNA: Canada needs to be extraordinarily aggressive, I think, and careful in dealing with Mexico because Mexico is going to become a real problem in the three-way relationship.
PETER HAYNES: Welcome to the June episode of Geopolitics with The Honourable Frank McKenna. My name is Peter Haynes at TD Securities. I get the pleasure to host this monthly podcast series where we travel around the world to cover the most important global geopolitical issues of the day, all from our perch here in Canada. Well, I see, Frank, that your perch right now, I believe, is in Cap-Pelé, and we just came off of Father's Day. Were you able to celebrate that with any of your children?
FRANK MCKENNA: Yeah, no, it was terrific. My son was here, and my grandson from Calgary was here. So we went out, and we played golf, and all of the other kids dialed in. It was wonderful.
And Peter, I keep telling the kids it was my best Father's Day ever. They gave me a cigar, which I smoked. Took a picture of that. They gave me a flag, which I put up and flew quite proudly. And they gave me a ball finder, and I needed to use it on just about every hole of the 18 holes I played yesterday. And my son took a picture, I think, of every time I was scrambling down a bank with my ball finder. So there you go.
PETER HAYNES: I love it. I was also fortunate to spend my Sunday on the golf course with my son. We actually played the course that the Canadian Open is moving to next year, up at Osprey Valley.
FRANK MCKENNA: Oh, wow.
PETER HAYNES: And I can tell you, having played it, that, unless they do something to trick it up, they're going to eat it alive. This is no Pinehurst, which we saw on the weekend. They're going to eat it alive, although it's a beautiful, beautiful golf course. So we'll see for that next year.
So, before we get started, though, Frank, I do want to tell our listeners about something exciting happening next month with our podcast series. We're going to be taping, for the first time, a live episode on July 29-- or in front of a live audience, I should say. And this is thanks to a suggestion from David Cho, who works in TD's global market supervision team. And he had asked whether we'd done anything live, and I said no. And he said, well, why don't we try and host something for the young associates, summer students, and young professionals at TD Securities?
So we'll be doing that on July 29. And these folks represent the future of the organization, and they'll be around here a lot longer than you and I will. So they'll be the ones peppering you with questions, and I'm sure you're happy that you get a break from me for a change.
FRANK MCKENNA: Oh, by the way, I should tell you, Peter, I had the pleasure of playing Pinehurst before, and those turtleback greens are just devastating. And I felt very sorry for Rory McIlroy. I could feel for him. Getting to the green is not all that tough, but doing anything on the green-- really, really tough.
PETER HAYNES: Yeah, I think every golfer can feel the pain of missing a 3-foot putt. We've missed a lot of those in our lives, but not where the US Open's on the line, aye?
FRANK MCKENNA: Well, that's why I take them as gimmes now, Peter.
[LAUGHTER]
PETER HAYNES: Yeah, just get the rate going. I agree with you, Frank. We're too old to worry about that stuff. In North America, all eyes have been on interest rates recently. Participants in Canada just absorbed a rate cut of 25 BPS that was announced on June 5. And our friends south of the border are wondering, when the Fed signaled last week in its announcement that there would only be one rate cut south of the border in 2024, whether or not that will suffice.
Now, for Canada, the short-term result from the June 5 cut, which I guess was 70% expected, was that we've seen continued weakness in our currency, which is now looking to test that 1.40 resistance level, which it's not seen since the beginning of the pandemic. I'll ask you, Frank, were you in agreement with the Bank of Canada's decision to cut rates? And how much attention is the weakness in the dollar getting with politicians in Ottawa?
FRANK MCKENNA: Yeah, I was very much in agreement with that. I'd say growth in Canada is more anemic and inflation more subdued, so it seemed totally appropriate. And there are differences between the two countries. The growth in the United States is certainly more robust. Also, their mortgage profile is different. They have a lot of 30-year mortgages, so not as much damage from resetting. In Canada, we've got shorter-term mortgages, and even though there's some shock absorbers built in, it is certainly more damaging to consumers who have to renew. So there's a lot of good reasons for it.
If we needed a positive affirmation that the Fed isn't political in the United States, it's the fact that they've held off on cutting rates at a time when it would have been extraordinarily beneficial to President Biden to have rate cuts and to be able to show interest rates are coming down. So they're, I guess, continuing to want a longer statistical profile, so you have to watch that with interest. But it's certainly difficult on the government in the United States, very difficult on them, not having rates coming down.
In terms of the dollar, I don't think there's any doubt that the central bank's keeping a really wary eye on the dollar. And in many ways, the dollar is just a proxy for the strength of one's economy, and our economy, I'd say, is certainly somewhat weaker than that in the United States.
And it's a bit of a mixed bag. As you know. It's not good for consumers overall and importers, but for exporters, it can be a bit of a turbo charge and sometimes helpful for export industries.
But just to let you know that the dollar's watched, I could give you an anecdote from some years ago with Chrétien. And we were talking about the dollar. He was saying, oh, Frank, I'd watch that dollar very carefully. He said, if that dollar gets a little too strong-- he said, I just talk to people about Quebec's separation and what a threat that is, and the dollar is solid. He said, it works magical.
[LAUGHTER]
I think it's one of those stories that probably isn't particularly true, but it gives you a little idea of just how commonsensical Jean Chrétien was about something like that.
PETER HAYNES: Yeah, that's great. Well, it'll be interesting to see. I guess the market's pricing in, in Canada, between 50 and 75 basis points of additional rate cuts for the rest of the year. And with that profile ahead and the US staying where they are, it'll be interesting to see if that does result in additional weakness.
Now, obviously, we know the market prices these things in advance, so in Ottawa, amongst politicians across the country, corporate leaders across the country, and the investors that you're speaking to, what are the top three topics on your list, currently? And you cannot include Blue Jays management and the future of the Blue Jays in your answer here. We'll get to that later.
FRANK MCKENNA: There are a lot of issues because the world's quite topsy-turvy now. But I would say number one is the US election. It's stunningly material to Canada as an economic matter, but it's also something that absorbs us, just in terms of human interest. So who's going to win? What does all of that mean? And right on the heels of that, of course, because it's all contemporary with the elections in the UK, France, and India. So that's number one.
Number two-- interest rates. I was sitting in a doctor's office for something routine, I think getting blood taken or something, and they're pulling blood out of my arm. The nurse said, where do you think interest rates are going to go? My son is looking at a renewal.
Just three days later, I was somewhere else, getting looked after in a store or something, and somebody said, what do you think about interest rates? Where is it going to go? I'm thinking about buying a house. So I think people are quite consumed about affordability issues now, and so interest rates are quite relevant.
And the third one, I would have to say, just because of the few weeks that we're in in Canada, is the capital gains inclusion rate. And the government might be saying there's only 1% of 1% that it affects, but I can tell you it affects 100% of the people that I talk to because that's all they want to talk about. Should I exercise my option? Should I sell shares? Should I take pregnant gains? What should I do, or how should we deal with it? Would this be changed in a future government? Et cetera, et cetera, et cetera.
So there just seems to be a lot of interest in it right now. And I can only believe that there's going to be a bit of a wall of money going into the coffers of the government of Canada over the next four or five days as people make some decisions to get ahead of this tax change.
PETER HAYNES: Yeah, and potentially have some lid on the Canadian market as a result of that, if, in fact, they're mostly unwinding positions here.
So you mentioned elections, Frank, and that's what we're going to spend the majority of this podcast discussing because they're front-burner items right now, particularly in Europe. And it's interesting. If I was to rank the elections in importance-- well, you just ranked the US election as the first thing on the minds of the people you're speaking to right now. If I think about it globally and I look at the attention, based on global media, I would say that France's election is in first place, in terms of attention, then the UK, and then the US, albeit I know that that is really because both of those European elections will be done in early July. Would you agree with me at a global level?
FRANK MCKENNA: Yeah, I think if you were just talking this week, that would be true. But in terms of materiality, the US is by far and away the most important election. But I agree with you. France and UK have leaped very high up the list right now because we're in the middle of it.
PETER HAYNES: Well, let's get into France to start with here, a situation that is both complicated by the virtue of France's position in the EU, and it's fluid, given the surprise timing. And President Macron really did shock the country and, in turn, financial markets when he called for parliamentary elections in a two-stage event that will take place on June 30 and July 7.
Now, Macron's calculus is that he can hold a centrist coalition and fight off both a new alliance on the left and a right-wing National Rally Party led by a familiar name in French politics, Marine Le Pen, who will challenge Macron when presidential elections come down the road, and has her own hand-picked leader to potentially be prime minister if they win the election, and that's Jordan Bardella, a young guy. I think he's under 30 years old.
Now, financial markets are worried that Macron is wrong, and they're thinking that we might see a potential for a Liz Truss-like run on French assets, as there's talk about unfunded tax cuts, like VAT cuts and things like that. And that could result [? in ?] some of these other policy decisions that both the left and right are planning to implement.
Now, not surprisingly, the French stock market has been very weak, underperforming other markets around the world. And the French bond market, when the German bond market rallied on the back of US rally recently, didn't move. And basically, as I understand it from our bond desk, the entire developed world is currently selling the French bond market.
Walk us through why, now, this election call was made by Macron, and what is your guess on how this election plays out and any implications for France under the various scenarios?
FRANK MCKENNA: I think you've assessed it correctly, the reason that he called it. He thought that he could, perhaps, surprise his political opponents and put together a centrist coalition that would hold against the left and the right. This may turn out to be as huge a mistake as call on Brexit, maybe one of those events that people will scratch their head about for decades to come.
The way it looks right now is that Le Pen's party is ahead, significantly ahead, to the point where Le Pen is now going public-- or Bardella, the prime minister in waiting, is going public-- and saying, give us a majority. We're close. Give us a majority, and we can really do what we want to do.
So the Macron coalition is now in third place. I mean, this is unbelievable. The right-wing coalition is in first place, and the socialist coalition, consisting of four far-left parties, have all come together, they're in second place, and they're actually challenging the right wing. And so, instead of Macron pushing both aside and people saying, we have to have a centrist coalition, they're squeezing the centrist coalition into third place.
So what this looks like it's leading to now is what we call a cohabitation government, which we'd probably call a coalition government in Canada, which means that Macron, as the president, is going to have to work with a very hostile prime minister. That's for the next two or three years of the term, if Macron can survive.
And there are a lot of things that are happening now. We're seeing a 76-basis-point spread with German bonds now, which is quite unprecedented. We're seeing people start to look at the programs of these parties, and that's starting to really chill markets and individuals.
Some of the things they're looking at-- slashing sales tax on energy. That's $13 billion. This is from the right-wing coalition. They claim they would fund that by ending tax fraud. That's just a throwaway line that everybody uses. It really means that it's going to be deficit finance. But they would reduce transfers to the EU dramatically, [? which ?] have a big effect on the EU.
They would change pension reform. Macron's paid a huge political price by changing the pension age, which is really significant in a country like France, which has been living beyond its means for a long, long time, running up deficits which are unaffordable.
So you've got all of that happening. Both the left wing and the right wing are very hostile to Europe. So this is going to make holding the European coalition together very difficult. And this comes on top of European elections, which, both in Germany and France, produced results that are very anti-Europe.
So, all in all, we're seeing strong right-wing movements developing in Europe, and we're seeing a very significant anti-EU movement. So I would say this is quite ominous for stability in Europe and around the world.
PETER HAYNES: There's been some talk-- and admittedly, it's because there's an election and so much uncertainty-- of Frexit. Are you fearful that either of those extreme parties who are hostile towards the EU-- or coalitions, I should say-- would even mention that word?
FRANK MCKENNA: Well, talk is cheap, and it's easy to be against things. But then, when you get right down to it, my experience in spending a lot of time with European parliamentarians is that, in spite of all the bluster and bluff, they're extraordinarily committed to the European project, and they are because they know the alternative. We can flirt with stuff in North America, but in Europe, they had wars that cost tens of millions of lives as a result of political friction.
And so Europe is really strongly committed to the European project, to the EU. And so I think, ultimately, they'll fend off forces which are looking for a change. And they also look at the UK, which is suffering significantly, economically, as a result of its decision to pull out of the EU.
PETER HAYNES: Well, let's actually turn our attention to the upcoming election in the UK, which is another one that's on the front burner here, and it's going to take place in between those-- two-stage event in Paris. And that is the July 4 election, where an incumbent Conservative Party leader, a party led by Prime Minister Rishi Sunak, will face an extremely uphill battle against the Labour Party, which appears to be coasting to a victory.
So far, the campaign in Europe has been what some described as boring, as the Labour Party, led by Keir Starmer, who I think most people would say is boring, says nothing controversial that could upend its huge advantage, and the Tories are tossing out whatever policies they can against the wall to see if they can get something to stick that will be vote-getting. Is the outcome of this election a foregone conclusion, or are there any wild cards that could upend a Starmer steamroll?
FRANK MCKENNA: Yeah, I think you can put a fork in it. This election is effectively over. And I think the real issue left is, what's going to be left of the Conservative Party when all is said and done?
And by the way, Keir Starmer strategy, the boring, "keep your mouth shut" strategy, I think, is very effective. In fact, most politicians should be more like fish-- keep their mouth shut and they never get hooked. In this case, I think he's running a good campaign.
The very interesting statement that I read this week-- question was, what was Margaret Thatcher's greatest accomplishment? And you could argue all kinds of things, but the answer was Tony Blair. And effectively, Margaret Thatcher and her policies, et cetera, and the reaction to her policies led to Tony Blair taking over the Labour Party, moving the Labour Party from a left-wing movement to a centrist movement and a credible governing party.
And you could say the same thing about David Cameron and Boris Johnson. Their greatest accomplishment is Keir Starmer. It's moving the Labour Party from Jeremy Corbin into a centrist party which is capable of governing where most of the public seem to find support.
So I don't think there will be surprises, except the extent of the Tory loss. There is a wild card, and that's Nigel Lafarge. Nigel Lafarge basically lied. Of course, he lied about Brexit, too. He lied about a lot of things. He's a true populist, and he'll say whatever he needs to say. He's the UK's Donald Trump. But he said that he wouldn't be re-entering politics.
He immediately jumped in as the leader of the Reform Party. He's running for a seat. He's almost certainly going to win that seat, and he's going to carve the Tories up on the right side. I mean, really carve them up. Reform is going to take a lot of votes away from the Conservative Party, and a lot of marginal seats will end up going to Labour.
So that's what we're going to have, in my humble view. We're going to have a Labour Party with a very large majority. We're going to have a Conservative Party that is going to be hugely diminished and may end up third in popular vote when all is said and done.
PETER HAYNES: So the Tory Party ends up with two extremes. There's 40 or 50 people on the left that'll win, 40 or 50 people on the right that'll win. There's not really anyone in the middle. And one of the potential scenarios is that Nigel Farage will actually be able to form some sort of coalition with whatever's left of the right side of the Conservative Party and, therefore, create a very right-wing movement in the UK. What does that scenario mean for that country in the future?
FRANK MCKENNA: Well, I wouldn't like to see it. So the argument that Lafarge makes, and the right wing of the Conservative Party, is that we're not conservative enough. We didn't go far enough, in terms of Brexit. We should totally disassociate ourselves from Europe, et cetera, et cetera, et cetera.
So already, within the Conservative Party, there are recriminations, and people are starting to say, well, look, we lost our way with Liz Truss, and we lost our way with Boris Johnson and so on. We just got too right-wing. But the right-wingers are saying, no, no, no, no, no, that's not true. We just ended up being too liberal or too centrist, and so we lost our way by doing that.
So that battle will shake out, just like it does in every political movement. When the election is over, there'll be lots of knives out, lots of recrimination, lots of soul-searching. But there is a real chance that what you say could come to pass, and that is a right-wing rump of the Conservative Party would join a reform movement, and that would become the real opposition in the UK.
PETER HAYNES: And the sad part here is the one name, Rishi Sunak, that people aren't talking much about will likely have to step down as conservative leader in the event that they get decimated, as expected. And you don't hear too many people be critical of him, Frank. He kind of stabilized the country after the Truss unfunded tax mess and what it did to the bond market. So, unfortunately--
FRANK MCKENNA: I found him an attractive political leader. I thought that he was making serious efforts to try to right the ship and steer the country and deal with its issues.
But look, it sometimes doesn't matter. 14 years is about the tenure of that government. People want a change. I said this once before, and I'll say it again, that this is very similar, sometimes, to changing a diaper. People change them from time to time for the same reasons.
PETER HAYNES: [LAUGHS]
FRANK MCKENNA: I'm afraid that political parties have a natural lifespan, and it doesn't matter how compelling the leader is, or charismatic. You just tend to run out of time, and I'm afraid that's the case here. Under other circumstances, as an incumbent prime minister, he'd probably be a terrific choice.
But I still think-- and this is a matter of opinion, Peter. I still think every leader in the UK's going to pay a price for Brexit for some time to come. And can reformulate it all you want, and you can argue all sides of it, but at the end of the day, that did not turn out to be a good decision.
PETER HAYNES: Just before we move on to some of the elections that just happened, I want to finish on a question around Sunak. He's a young, fairly charismatic leader who's done a pretty good job who's probably going to disappear from politics for a period of time. Can you think, in your history, of somebody like him who's re-emerged and become a successful leader a second time around?
FRANK MCKENNA: Well, it's rare, but, in a way, David Cameron did it. He was defeated as prime minister, thrown out of office, but he's emerged back as secretary of state in the UK and has looked reasonably good at that.
Bill Clinton's the best example. He was the governor of Arkansas, and people forget that he was actually defeated as governor of Arkansas, and sat in the opposition there before he campaigned for a seat and came back and won as governor of Arkansas and went on to win a two-term presidency.
And of course, the classic example is Winston Churchill, who was always reeling from pillar to post in terms of electoral success in the UK. And after winning the war, arguably, leading a victory, compelling victory in World War II, he was thrown out of office. There are examples of people who've done that. And of course, Pierre Trudeau Sr, who had been defeated after he took his walk-- well, he took his walk in the snow and left. But when an opening came within the next year or two, he came back and became prime minister again. So it can happen.
PETER HAYNES: So you mentioned David Cameron. I have a soft spot for David Cameron because, when they hosted the G8 summit in Huntsville, Ontario, all of the leaders stayed at Deerhurst, which is a fairly famous resort in Muskoka, and David Cameron was the only one that went into the lake. He was the only one who went for a swim of all the eight leaders, so I have a soft spot for him for that.
So let's look back on a couple of elections that took place recently in Mexico and India and discuss the implications of the results. And I'm going to start in Mexico. So outgoing Mexican president-- and I'm not even going to try to pronounce his name. I'm just going to call him AMLO, like everybody uses the acronym. His hand-picked successor, Claudia Sheinbaum, skated to a majority win in the recent Mexican nationwide elections. There are lots of questions about Sheinbaum's independence from AMLO and whether she would stand by her mentor's controversial reforms, which include elections for Supreme Court judges and a minimum-wage increase that would match inflation on a yearly basis.
These reforms are scheduled to take effect before the new Congress sits in the fall, and the impact on the Mexican peso has been quite negative, with the local currency down as much as 12% in the period since the June 2 election. What do you make of the direction of the new leader of Mexico, and how do you think she will fit in with a Trump-Trudeau partnership in USMCA?
FRANK MCKENNA: What's really remarkable is her level of accomplishment. This is an amazing woman, the first Jewish leader in Mexico, to start with, but she's a PhD in energy engineering. She's authored over 100 articles, two books. So a really accomplished leader has been elected.
But directly to your point, I don't think that she will change direction from Obrador and his direction. She is his protege in every sense of the word. She served under him in Mexico City, in his cabinet, and then went on to become mayor of Mexico City. In his tradition, she's very, very loyal to Obrador-- AMLO, as we call him. So she really is his protege, and she has really come to office on his coattails. So I don't think she's going to rock the boat at all, in terms of making any changes in the next few months.
And by the way, some people, in view of what happened in India and what's going to happen in France and the UK and everything else, have asked the question, why is it that Mexico seems to have gone in a completely different direction and re-elected the same party with an even bigger majority? And one of the answers that's been given-- I don't know if it's accurate-- is that there's a term limit in Mexico, and that Obrador was limited to five years, and really didn't have a chance to wear out his popularity, as so many leaders do. And so they made a transition and a change before it was stale-dated, a stale-dated government. So it's just something interesting for people to think about because it may make the case for shorter-term governments than we've been seeing around the world.
PETER HAYNES: A technical question, Frank. Do you know if AMLO can come back again after he sits out five years, or is he one term limited as president and never to return, like the governor of Virginia, for instance?
FRANK MCKENNA: That's a great question. I don't know the answer to that. And by the way, I didn't answer your question, what does it all mean for Canada and the US? Canada needs to be extraordinarily aggressive, I think, and careful in dealing with Mexico because Mexico is going to become a real problem in the three-way relationship. We originally had a free-trade agreement, which we negotiated in '87-'88 with the United States called the FTA. Worked well between Canada and the United States.
Mexico decided to barge in some years later to try to have a bilateral with the United States. Fortunately, Mulroney's relationship with Bush was strong enough that he said, no, no, no, you're not going to have a bilateral relationship and carve Canada out. So that's how we ended up with a trilateral relationship, which, of course, was NAFTA and now CUSMA.
The problem is that, in my view, Mexico has been aggressively taking advantage of that relationship in a way that's not good for the other two partners. The Chinese manufacturing that so outraged the United States has simply moved to Mexico, and they welcomed it. So what you end up with-- lower environmental standards, lower labor prices, and lower labor standards, and really aggressive, cheap products on the border of the United States, which is one of the motivating factors in the United States' wanting to renegotiate the free-trade deal.
So Canada, on the other hand, has been a good boy scout. We've got high environmental standards, high labor rates, and high labor standards, et cetera, et cetera. But we're going to pay a price. We're going to get whiplashed in this shootout that's going to take place with Mexico and the United States.
And then, on top of that, we have the immigration issue. Mexico seems to turn on the taps or turn off the taps at will as to how many illegal immigrants are crossing the border, and that's creating havoc in the United States as well and creating pressure on both borders.
So I think it's wonderful that we're all friends and partners, but Mexico's got to play fair, and Canada's got to call their bluff because, in the last negotiations, we got stabbed in the back by Mexico at one stage, who almost went it alone with the United States, carving Canada out. And now we have to make sure that Mexico's abuse of the rules does not blow back on Canada in such a way that we lose our privileged access to the US.
PETER HAYNES: You said it better than me, Frank. I shouldn't have made the assumption that it would be Trump that would be the leader of the United States. We'll just call it the United States, Mexico, and Canada, rather than to suggest that Trump wins, because, obviously, that election is still to play out.
Let's move to India now, another country you mentioned earlier and one that has a delicate relationship with Canada, the country that you and I live in. In my parallel podcast life, my next market-structure podcast will focus on APAC. And in my prep work, every single investor that I spoke to said the same thing-- money in this region is coming out of China, and it's going into India.
In the wake of President Narendra Modi's loss of a majority at recent elections, although he remained president, there's been some criticisms leveled about voter suppression, intimidation, and overall general loss of personal rights and democratic freedoms in the country, and they've all favored the incumbent majority. Modi's Bharatiya Janata Party, BJP, still was unable to gain a majority despite all of these benefits that, again, favored the incumbent.
Is this minority coalition outcome that's now led by Modi a good thing for India in the eyes of the Western world? And how do you think it will shape Modi's view of his relationship with the US in particular, given India's growing importance in the global economy?
FRANK MCKENNA: This is a really interesting case study. In my view, the results in India were a shock to the world and a shock to Modi as well. And only against expectations, Modi did well. But, compared to expectations, he did not do well, and did not end up having a majority government, and is being forced into a coalition.
I think a lot of the world would say, well, this is not a bad result. We've got Modi, who we like-- predictable, pro-business, well-run country-- but we've got Modi on a leash, which we like. And so I don't think the result is a net negative around the world. Most people would probably welcome that result.
In terms of its importance, I think there's absolutely no doubt what you're saying. India is just becoming extraordinarily important. And in the recent Indo-Pacific strategy that Canada produced, that importance was emphasized over and over again.
I hosted, for the minister of global affairs, a bit of a session with all of the pension funds in Canada. Each one of them said, we will be slowly revectoring out of China into India. We're talking $2 trillion-- not all of that, of course, in those markets, but we're talking huge funds.
That's typical of what we're hearing all around the world. Nobody wants to make a big scene about exiting China, and nobody will probably be exiting completely, but they are certainly revectoring their investments and money towards India, out of China, and just find India a more predictable partner.
So I would say that big money is voting with its feet on that very issue. India's going to be the recipient of that. We have to see now whether Modi becomes a bit chastened as a result of this electoral setback. The extraterritorial assassinations that have taken place in Pakistan, US, Canada, et cetera, or efforts at same-- all of those things need to be dialed back, and some of his religious zealotry needs to be dialed back, I think, for the rest of the world to be truly comfortable.
PETER HAYNES: So, Frank, one of the aspects of the sort we call voter intimidation was the efforts in social media. I guess BJP, Modi's party, had a really, really strong presence in social media. And I read a really interesting article about a study where they took a whole bunch of people, and they had a control group and then a whole bunch of other people. And that group was basically taught how to learn from misinformation in social media. And they then, at the end, basically went back and looked at how much better those individuals were at making an informed decision about who to elect, rather than being caught up in social media.
And I thought it was really interesting because maybe the future of teaching in school will be to help our younger generation learn how to dissect false information on social media, given it's going to be the medium that is going to be so determined in future elections. I just found it quite enlightening.
FRANK MCKENNA: You're really on to something, Peter. And as you know, I've created a digital institute in New Brunswick which is designed to try to go through the transition to the digital and innovative economy. And part of the programming we're introducing is digital hygiene, trying to do exactly what you're talking about-- make people more sensitive to the platforms that they're on and more questioning of what they're hearing on those platforms and just more careful in how they express themselves on those platforms.
PETER HAYNES: And Frank, it's the most educated people that you know and I know that get caught up in misinformation in social media. It's mind-boggling. I catch myself in reading things and believing them and not necessarily testing them.
So let's go back to the most important topic on the agenda, even though it might not be right now, and that is November 5, which is the US election. So, two topics that are current right now with respect to that election-- first of all, is the debates. How much impact do you expect from the first of the upcoming presidential debates on June 27?
FRANK MCKENNA: Most debates, political debates, don't move the dial a lot-- only at the margins. This has the potential to be more impactful. And the reason why, I think, is because of the two personalities. Both have huge negatives that the other candidate will try to exploit.
In the case of Trump, if he were to lose his cool, in a way, or to explode, or to just be thoroughly obnoxious, that would reinforce the image, of some people, of him, and that would be a negative. In the case of Biden, if he were to have difficulty staying focused, if he were to display any signs of deteriorating health or the effects of age, that would be a big negative because it would reinforce certain views as well.
Have to remember that the party faithful, in large measure, will not be moved 1 millimeter by this debate. But there's a small handful of independent voters who will decide the election, and they could be influenced. So I would say that, as much as anything, it won't be so much what these characters say, but as how they look, and whether or not they make any significant mistake that comes about because of certain character deficiencies or personality deficiencies.
PETER HAYNES: OK, the second issue is Trump's running mate, which he's expected to announce, I believe, at the Republican convention in mid-July in Milwaukee. What's your best guess for this horse race? And from what I've read, there seem to be different horses that are leading this race, depending on the day.
FRANK MCKENNA: Well, I think that's exactly right, and I think that's exactly the way Trump wants it. This really is a replay of The Apprentice. These people are going to be, literally, having to audition. And they're doing that now. They're going down to Mar-a-Lago, and they're fawning and prancing and preening in front of Trump, and he likes it. He's casting. This is central casting, and he knows how to do this, and he's bringing these people in.
And the idea that every day may have a different rumor would be very appealing to him. It keeps him in the news, and it keeps the candidates in the news.
And what he'll be looking for will be people who will flatter him and fawn over him. He'll also be looking for election deniers and people who have a certain view on January the 6th. And I think those characteristics will overshadow the competency characteristic, which usually is considered to be the most important one. He will want loyal people. He will want people that look good, act good, sound good, but that do not overshadow him. So for him, it'll be a lot about the personalities.
And he's got a lot of people to choose from. The Republican Party has some extraordinarily qualified people if you leave aside their ideological proclivities, and a lot of people may like them ideologically as well.
But you've got Tim Scott, who, of course, is an African-American. He's very sycophantic with Trump, which, to me, would be a negative, but to Trump probably wouldn't be. He's got Marco Rubio in Florida, a senator. JD Vance, who's running quite hot now in Ohio, which is strategically important-- Yale background, military background, very bellicose, aggressive, something that Trump would like a lot.
Nikki Haley, I think, would be their best candidate-- a woman of color, very sharp, has been on the world stage, run a state. But I doubt if Trump is going to be able to countenance the idea that he could have somebody that would challenge him. I think that could rule her out, but she'd be a great catch if she would do it.
Doug Burgum, the governor of North Dakota-- very accomplished, wealthy. I think he would run well. Elise Stefanik, who is a young mother from New York, Harvard-educated, and very, very much an election denier and very supportive of Trump. Tom Cotton, who's a former Ranger and a former McKinsey guy, extremely hawkish-- he just doubles down on everything that Trump is-- a white, Southern male who is quite right-wing on issues. Then he's got Ben Carson, who was in his cabinet, who's a surgeon, African-American-- rags-to-riches story, very loyal. Quite laid back and may not be assertive enough for Trump's taste.
But these are all strong choices, quite frankly, and so he's got lots of strong choices that he could take from. The question is whether he'll whether he'll pick somebody who fills in a certain weakness that he may have or whether he'll try to double down on people who are as ideologically committed as he is. So it'll be very interesting to see.
But the one thing you can be sure is that there will be a lot of very accomplished people who'll be on their knees over the next couple of weeks, auditioning for this role. It'll be a significant prize because people talk about Biden's health and who would replace him if anything happened. But remember, Trump is 78 years old as well, and people will also be interested in who could come behind him if anything happened.
PETER HAYNES: You mentioned The Apprentice. And Frank, I don't know why Trump doesn't do this, but why wouldn't he, just one by one, bring each of those candidates into the boardroom? Tim Scott, you're fired. Ben Carson, you're fired. Wouldn't that make incredible television and keep him in the news every single day? I mean, I think it would be kind of funny. And then he could do the final on the stage in Milwaukee.
And that was interesting, too, by the way. He got himself in a little hot water with-- he referred to Milwaukee as a dump or something like that. That wasn't his finest moment.
FRANK MCKENNA: Yeah, it's not a good thing to trash the city that you're going to have your convention in. But again, that's what people will be looking for in the debate. Will he show intemperance, or will he, as I think he will, be really well coached and under good control? But it's going to be a large audience.
And people remember. I can go back through the debates. 90% of them, there's nothing, but there's at least three or four, maybe half a dozen debates in my lifetime that I can remember that were really consequential. That's what people will be looking for.
PETER HAYNES: OK, so we'll finish up with the Blue Jays here, Frank. I got to ask you about the state of the team heading into the All-Star game and trade deadline. The Jays are hanging around .500. .140 seems to be a resistance level for the Blue Jays, like 1.40 is for the Canadian dollar. They lost again last night. That keeps them just below .500. However, they are within spitting distance of the third wild card in the AL.
So I personally find myself a complete mess because I think, on the one hand, we're nowhere near good enough. That's how I feel watching this team every day to potentially win a World Series, and we should sell. But on the other hand, I think, with our starting rotation, if we get there, we could run the table in October. What do you want to do-- buy or sell? And you can't hold.
FRANK MCKENNA: [LAUGHS] Well, to start with, my opinion is just going to be like everybody else's, and it's based on what I like in baseball. I like a team that is athletic and exciting, creative, not boring-- just a team that is entertaining. So, with that in mind, I would say that Jays should not be sellers, and here's why I think that.
Number one, I don't think we have much to sell. You've got Springer. I like a lot of things about him, but he's batting below .200 now, and he's got a $150 million contract, so I don't know how you sell that. Justin Thomas-- one-year contract at $13 million. Who's going to take that, batting closer to .200 than .300. Kiermaier, batting less than .200-- one year at $10.5 million. Kirk-- lack of athleticism, I think, is a real disadvantage. $2.8 million, only one-year contract.
And then you've got Guerrero and Bichette. They would be prized assets, but they're way below their real value because they're not having terrific years. Even Guerrero, even though his numbers may be .285 or .290-- it's all based on singles, and he's not going to get in the Hall of Fame hitting singles.
So I don't think you can extract good value if you were sellers, Peter. That would be my humble view. So I guess, if it were up to me, I would probably do something with management. That's a different issue.
But I'd keep the pitching. And I love the idea that they're bringing the kids up. You might as well. If you're going to have a .250 hitter, you might as well have a kid doing that, making $650,000 than somebody making $13 million. So I would keep Clement and David Schneider and Spencer Horwitz and Addison Barger. I'd bring up Orelvis Martínez and build around them.
And if I were going to add-- and think we should-- I would add young, athletic people that we could tie up that would be a lot of fun to watch for years to come. It would be additive.
I would keep the pitching. I think, largely, the pitching is solid. Certainly, the starting pitcher is as good as any in the league, and it's generally solid. So that would be a quick-and-dirty, I guess, about what I would do.
If there was some good talent available-- young, athletic talent, creative, exciting talent-- that could be tied up in longer-term contracts, I would go for that. But otherwise, I wouldn't give away our talent at these kinds of really depressed prices.
PETER HAYNES: I think George Springer's a great guy. I really am impressed with him and his demeanor, and he's got a great story, working through learning disabilities since he was a child, and I love his story. But I am starting to wonder whether or not the Jays might do what Houston did with their first baseman, Abreu, who had a big contract, and they just released him. They DFA'd him. And you think, we have no power in our outfield at all, other than, obviously, Varsho a bit. And I'm really sad saying that, but I'm worried that the decline in Springer is so material.
The other aspect, Frank, is-- and we said this last year-- we had perfect health with our pitching staff, and now look at our bullpen. It's a complete disaster, due to health, and that is a real problem. So if we have to rely on Nate Pearson to close over the next couple of weeks, we're going to lose games that we're unhappy losing.
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So that's a problem. But OK, well, we'll be back right around the trade deadline next month. And I'm sure we'll be carrying this on, and we'll be doing that live, and I look forward to participating in that. Frank, thanks for your time, as always.
FRANK MCKENNA: OK. Thank you, Peter.

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