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Business Briefing New trade pact at risk of ‘a major NAFTA accident’ (which means the Canadian dollar is, too)

Briefing highlights

  • Trade pact at risk of ‘accident’
  • An Ontario scene I’d love to see
  • Stocks, loonie, oil at a glance
  • Toronto homes sales flat in March
  • Trump to Powell: ‘I guess I’m stuck with you’
  • Brookfield said to eye China deal
  • Required Reading

Risk of ‘accident’

A major U.S. bank is warning investors about the “risks of a major NAFTA accident” as President Donald Trump battles the House Democrats, and Canada and Mexico fight the Americans.

Which means the Canadian dollar is also at risk of an accident.

JPMorgan Chase didn’t say it like that – those are my words – but it did say those risks reinforce its “bearish” views on the loonie.

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The three governments have penned the U.S.-Mexico-Canada deal, which is supposed to be the successor to the North American free-trade agreement, but the pact has yet to be ratified.

Which is where said accident could come into play, according to JPMorgan global foreign exchange strategist Daniel Hui and his colleagues, Paul Meggyesi and Patrick Locke.

“A few months after signing the new USMCA/NAFTA 2.0, the ratification process is gathering steam and there are indications that the administration seeks to complete the deal potentially by August – but in our view, this compressed timeline could very well put President Trump on a collision course with House Speaker Nancy Pelosi sooner rather than later, with risks of a major NAFTA accident,” Mr. Hui, Mr. Meggyesi and Mr. Locke said in a report on currency markets.

“Accelerating the approval process will likely meet resistance from House Democrats, led by Speaker Pelosi,” they added, warning of this “significant risk.”

House Speaker Nancy Pelosi

The Associated Press

Trying to get it done by August would mean Congress would have to vote soon. Mr. Trump could also up the ante by pulling out of the original NAFTA as a bargaining ploy, which “risks derailing passage altogether by Democrats,” the JPMorgan strategists said.

“This is an important channel we’ve flagged that could ultimately devolve into a NAFTA worst-case blowup.”

Among the hurdles they see: Democrats want changes, the U.S. International Trade Commission’s report on the impact isn’t completed, unions are “signalling resistance” and Canada and Mexico want steel and aluminum tariffs removed.

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The JPMorgan strategists laid out two timelines, one that could see the pact ratified before the summer recess, the other a possible “path of delays” that would mean approval by the end of the year after Mr. Trump pulls a six-month trigger on NAFTA and the Democrats delay a final vote to December.

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A scene I’d love to see

Photo illustration

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Markets at a glance

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Toronto home sales flat

Toronto region home sales were flat in March as buyers remained on the sidelines and available inventory fell, leaving the market continuing its sideways drift, The Globe and Mail’s Janet McFarland reports.

The Toronto Real Estate Board said 7,187 homes sold in the Greater Toronto Area last month, virtually identical to the 7,188 sales reported in March last year.

Sale prices rose just 0.5 per cent on a year-over-year basis to an average of $788,335 for all types of homes across the GTA.

“The market continues to look stable at somewhat soggy levels, but we wouldn’t be surprised if activity firms up in the months ahead (better weather and likely lower mortgage rates),” said Bank of Montreal senior economist Robert Kavcic.

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Ticker

Brookfield said to eye China deal

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Canada’s Brookfield Asset Management Inc. is eyeing the purchase of three Shanghai office towers and a mall for about US$2-billion, Bloomberg reports, quoting sources. That would be among the largest commercial property transactions in China by a foreign concern.

HBC posts loss from continuing operations

Hudson’s Bay Co. reported a fourth-quarter loss from continuing operations of $226-million.

Roots profit slips

Roots reported a lower fourth-quarter profit, but sales edged higher.

‘Stuck with you’

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Having slammed the Federal Reserve several times for raising interest rates, President Donald Trump has now told central bank chair Jerome Powell in a phone call that “I guess I’m stuck with you,” The Wall Street Journal reports.

Federal Reserve chairman Jerome Powell

JONATHAN ERNST/Reuters

Ford to ramp up in China

Ford Motor Co. plan to launch more than 30 new models in China over next three years, Reuters reports.

Required Reading

What Quadriga monitor says

The late CEO of a Canadian cryptocurrency exchange appears to have mixed personal and corporate funds, according to the court-appointed monitor overseeing the search for millions of dollars lost by QuadrigaCX. Alexandra Posadzki and Joe Castaldo report.

Sobeys suppliers angry

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Tensions are rising between Sobeys Inc. and its suppliers after the country’s second largest grocer told them this week it is overhauling payment terms, leaving many of them with a bigger financial burden. Marina Strauss reports.

Three stocks analysts love

Looking for stocks with attractive dividend yields and the ability to raise their payouts? Consider putting utilities and power producers on your shopping list, investment writer John Heinzl advises.

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If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

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