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Daily Pulse

One of our most accessible tools, this daily comment keeps you abreast of developments on the North American and international financial markets.

Michel Doucet

Michel Doucet
Vice-President and
Portfolio Manager

November 12, 2019

Canada

Purpose Investments Inc. is working with Morgan Stanley to sell a minority stake in the company, according to a person with knowledge of the matter. The Toronto-based ETF provider is looking to sell a 25-per-cent stake or less to a global player to help it expand into other markets, said the person, who asked not to be identified because the details are private. Ontario Municipal Employees Retirement System, one of Canada’s largest pension funds, is a minority shareholder in the company. Purpose and Morgan Stanley declined to comment. Omers didn’t immediately respond to requests for comment.

United States

The Trump administration may delay a decision on whether to slap tariffs on European automobiles after an intense lobbying campaign by German carmakers highlighted plans to shift global production to American suppliers, people familiar with the White House deliberations said. In May, President Donald Trump gave himself a deadline of mid-November to decide whether to impose levies on cars and auto parts from the European Union. The EU threatened to retaliate with tariffs on US$39 billion of American goods if the president carried out his threat. Trump is expected to extend this week’s deadline again, according to people familiar with the plans, but the president has not yet made a final decision.

U.S. President Donald Trump is scheduled to discuss the country’s trade policy at the Economic Club of New York on Tuesday, and the markets are likely to hang on every word. U.S. stock markets have hit record highs in recent weeks on hopes the White House and Beijing are close to a trade deal that could go a long way toward dispelling the uncertainty dogging the global economy. Last week, officials from both sides said they had a deal to roll back tariffs, only to have Trump deny any deal was agreed on. A positive speech on U.S.-China trade would likely satisfy market participants even without specific details of the “Phase 1” agreement under negotiation, said Jim Paulsen, chief investment officer at The Leuthold Group in Minneapolis.

Europe

German Chancellor Angela Merkel said on Tuesday that she expected Britain’s parliament to approve British Prime Minister Boris Johnson’s divorce deal with the European Union. Johnson, who had promised to deliver Brexit on Oct. 31 “do or die”, demanded a Dec. 12 election after parliament - where he has no majority - frustrated his attempts to ratify the last-minute divorce deal he struck with the EU in October. “I give this treaty a very, very big chance of being agreed to in Britain too and that would be good for all of us,” Merkel told a business event in Berlin.

Europe must resist the temptation to water down post-crisis bank regulation known as Basel III and needs to implement the rules to prepare lenders for an eventual crisis, European Central Bank supervisor Andrea Enria said on Tuesday. “European legislators must stand up to national interests and the lobbying of some banks,” Enria told a conference on Tuesday. “Basel III needs to be implemented faithfully, consistently and in good time.”

Asia

After more than six years of negotiations, more than a dozen countries in Asia Pacific are now aiming to sign what would be the world’s largest trade agreement in 2020. The deal, called Regional Comprehensive Economic Partnership or RCEP, involves all 10 countries from the Association of Southeast Asian Nations (ASEAN) bloc and five of its major trading partners: Australia, China, Japan, New Zealand and South Korea. Together, the 15 countries make up close to one-third of the world population and global gross domestic product, according to a Reuters report. That’s larger than other regional trading blocs such as the European Union and the United States-Mexico-Canada Agreement, or USMCA. The mega-deal started with 16 countries but India decided not to join the trade pact over concerns that it would hurt the South Asian country’s domestic producers.

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