The Long Road to the U.S. Election Nears an End – Or Does It?

CHRIS KRUEGER: Election night could well turn into election winter. I mean, it's going to take a while to count something in the ballpark of 150 million ballots.
PETER HAYNES: Welcome to episode 57 of Geopolitics with the Honorable Frank McKenna. My name is Peter Haynes at TD Securities, and I'm your host for today's podcast. Well, Frank, we only have a couple of weeks until the US decides on its next President. So I thought it would make some sense for us to invite in our friend and colleague Chris Krueger to this month's podcast.
For our listeners that might not know, Chris is part of TD Cowen's number one ranked Washington Research Group and is our resident Washington expert on politics. So let me tell you something. He's in high demand currently. I know he's traveling up to do a speech with you tomorrow, I believe, Frank. And Chris, thanks a lot for carving out some time for us today.
CHRIS KRUEGER: Absolutely. Great to be with you all again.
PETER HAYNES: Great. Well, Frank, as I say, you're going to be seeing Chris tomorrow. I'm sure there's going to be lots of questions about November 5th. And I'm going to just start one off for you. Frank, is November 5th US election the most consequential of your lifetime.
FRANK MCKENNA: I believe it is for the world. Whether it is for the United States is a different story. I guess it'll depend on how things unfold. But I think it is for the world. And I say that because at least one of the parties has forsaken its traditional commitment to multilateralism. Should Trump and his party win, and should he do what he's talking about doing, it would represent a very serious assault on multilateral institutions around the world.
First of all, that would manifest itself in tariffs that would result in a tariff war that would be global in scope. And secondly, the pulling back of traditional US commitment to everything from the WHO to the WTO to NATO. This could mean an ominous result for the Ukraine if the United States pulls back from its obligations there and also for climate accords, such as the Paris Accords, et cetera. So from that perspective, from a world perspective, I would say that the consequences are very high, the highest and most consequential election that we've seen in our lifetime.
PETER HAYNES: Well, Chris, we have less than two weeks to go until Americans do, in fact, go to the polls, and a lot of votes have already been cast. So it appears there really is little that the candidates can do at this point to decide the election. First of all, do you agree with that statement? And secondly, what would be the three most important variables that you think will tip the balance in one direction or the other?
CHRIS KRUEGER: To your broader point, Peter, I mean, we're recording this two weeks out. Over 15 million ballots have already been cast. Every battleground state is in some form of early voting. As a refresher, you've got the Rust Belt trio of Pennsylvania, Michigan, and Wisconsin, often referred to as the Blue Wall.
Then you have the four Sun Belt states of North Carolina, Georgia, Arizona, and Nevada. I mean, to the extent that there still are undecided voters, yes. I mean, the next two weeks are determinative. But again, 15 million have already cast.
In terms of three variables, I'll give you both three voting cohorts to think about. I think this is largely the narrative in these three voting cohorts. The first is education status. Probably the key narrative will be whether Harris can win over enough college degree Republicans to offset Trump's massive advantage among non-college degree holders.
The second is what is quickly become not just the gender gap but the gender chasm. This is going to be the third straight presidential cycle where the gender gap approaches 25 points. Trump has almost a double digit lead with men. Harris has more than a double digit lead with women. This gender chasm was really supercharged with the Supreme Court's decision a little over two years ago to overturn Roe v Wade and then the subsequent Republican-led state abortion bans and restrictions.
And then the third cohort, it's probably a mix of the first two. But this is a group we've focused on a lot, and that's the Nikki Haley primary voters. And Peter, we keep coming back to this because it's actual votes, right? It's not polls, or vibes, or innuendo. It's actual raw votes.
And they're substantial. Nearly 160,000 in Pennsylvania and nearly 300,000 in Michigan. And that's after Haley was out of the race, And. These are registered Republicans. So these aren't independents who maybe lean one way or the other. These are registered Republican votes in closed primaries.
Both of these margins are nearly double the Biden win margins in those states in 2020. I think this helps explain the Liz Cheney campaigning with Harris through the battleground states last week and this week.
PETER HAYNES: Can you just give us an outline of what you expect the candidates to be doing for the next two weeks?
CHRIS KRUEGER: They're going to be in those seven states. From last week, that blue wall seems the most likely path to 270. I mean, in reality, it's Pennsylvania. Bruce Springsteen is going to be giving a handful of concerts at Harris rallies. Harris is also campaigning with probably the two most popular Democrats in the country at early voting sites in Georgia. That's Barack and Michelle Obama. Trump's schedule is a little more unclear. I suspect it's a focus on Georgia, North Carolina, Arizona. He also has the big rally in Madison Square Garden in Midtown Manhattan.
PETER HAYNES: And Chris, there's this concept in the US where we've heard a lot about it in this particular election, I know it's not new. But it's the so-called get out and vote initiatives for both parties. Can you tell the listeners where did this come from, and what exactly does that mean over the next two weeks?
CHRIS KRUEGER: This is get out the vote. This is the blocking and tackling of elections that Frank knows more probably more than anybody about. How are you getting your base to the polls? And they have, they being the Harris campaign and the Trump campaign, have very different get out the vote strategies and tactics.
Harris really leaning on traditional Democratic get out the vote operations, largely led by the public sector unions. Tim Walz, a card-carrying member of the Teachers Union. This is really the core, one of the core Democratic strengths. Once again, shout out the Swifties as we have seen hundreds of thousands of 18 to 35-year-old female voters registering to vote, again, galvanized by that Roe v Wade decision.
Trump and the GOP focused-- it seems a bit more focused on election integrity. This stems from a lot of Trump's false claims about 2020. You have a lot of the Republican National Committee operation focused on poll watchers on November 5th as opposed to door knockers the days, weeks, and months before. That's where we are. It's the blocking and tackling time of the campaign, the so-called ground game.
PETER HAYNES: Frank, if you were campaign manager for Harris or you were a campaign manager for Trump, would you have recommended any different strategies, whether it's related to get out the vote or in general, how both candidates have handled their campaign?
FRANK MCKENNA: No. I don't think so. They both played to their strengths. Harris has actually moved the sticks considerably from her ascendancy on the scene, which has been fairly late in the political cycle. I think they've prosecuted their case well.
If I were the Trump team, and I'm sure the Trump team agree with me on this, I would have a little less Trump off the leash and a little more Trump discipline. His strong points are on a couple of policy issues that matter in terms of saliency, the economy, and immigration.
And he has I think, quite successfully, or the Republicans have quite successfully come to own those issues. And they ranked very, very high in terms of what voters care about. To the extent that he stays on message with on those issues. It's in his favor.
When he starts talking about Arnie Palmer's genitalia or starts spewing some of his hatred towards newscasters, candidates, all sorts of other things, I think that hurts him with independent voters and the kind of Nikki Haley voters that Chris was talking about. So I think to the extent in the Trump camp that they can keep him on lock solid on message using teleprompters would see that being very much to their advantage.
PETER HAYNES: Well, Frank, you mentioned multilateralism was a threat with respect to a Trump victory. And Canada is really not insulated from that threat. And I want to ask you about USMCA. Both of the candidates have threatened to trigger the reopening of USMCA, which I believe can be done every six years, which was an aspect of the new free trade agreement that Trump negotiated in the 2020 rewrite.
In the case of Harris, she doesn't think the environmental standards of the agreement went far enough, whereas Trump's threats are a little more ominous and concerning in light of his blanket tariff statements and I would say concerning to Canadians. Do you see a scenario where the core of the USMCA is blown up?
FRANK MCKENNA: There's quite a bit to unpack here. To start with, I just need to note again, the Canadians have an extraordinarily significant interest in the US election, but we don't elect the US President and our responsibility as a country is to respect the choice of a Democratic neighbor of the United States of America.
But we do have a self-interest here in an issue such as the one that you've described. So there's two or three things that are important to note here. One, I don't think Kamala Harris is off base in wanting to strengthen environmental standards. Canada would probably, in fact, almost certainly support that. We don't particularly think that we're a problem with respect to that issue.
Secondly, Trump is not wrong in believing that Mexico has become a halfway station for Chinese manufacturing, cheap production that is being sent through Mexico into the United States. I don't think he's wrong on that. I think Canada would also share that concern.
So the overall scope of the agreement is largely very, very supportive of the economy of all three countries. It manages the world's biggest trading relationship. It's provided guardrails for that relationship to flourish. So it overall is an extraordinarily beneficial relationship.
It's important to note for Canada that although Trump has got a reopener clause in there, it is not a suicidal switch either. What happens is the parties open in 2026 a table where they air their concerns with respect to the agreement. Hopefully they're able to find a reconciliation of those concerns, in which case everything continues in the normal pattern.
However, if the concerns aren't met and everybody's happy, that is not the end of the agreement. The agreement automatically continues every year for the next 10 years after that until 2036, with a reopener every year to rediscuss the issues and find out whether we can get to a broader agreement.
So we shouldn't think that everything blows up in 2026. That's not the case. It keeps getting punted down the road. And that may be the end result. So that would not be fatal to our economy. But as we get closer to 2036, there would be less and less certainty for all three nations in terms of making decisions based on the existence of a trading agreement and particularly in the case of nearshoring industries that are in Canada and Mexico. They would be, I would think, very concerned about their status going forward. So it is ominous to have that clock ticking, but it's not a device that explodes on 2026.
What may be even more threatening, Peter, is what I call asymmetric threats. What I've talked about with USMCA is a symmetric threat. It's predictable. We know it's there, and we know how it needs to be managed. What concerns us more is what Trump did the last time, invoking national security interests to actually put barriers, tariff barriers up on steel and aluminum against Canada, which is the United States' closest strategic ally. It's a NATO alliance country, a NORAD alliance country, and supplies a lot of the steel and aluminum to the US Defense industry. It ultimately had to be rolled back. But in the meantime, it was very painful for industry on both sides of the border.
Lighthizer, who was the USTR the last time around and the author of a lot of Trump's bidding on trade and tariff, has made it clear that Canada and Mexico would not be exempt from 10% tariffs if they go ahead. If that were to happen, that would trigger all kinds of dispute resolution mechanisms in the USMCA.
And that's where things get really hairy because it may very well be that the Trump people simply ignore the agreement and simply refuse to appoint appellate judges, et cetera, Et. cetera. But basically say, in spite of the agreement we have, which is rock solid, we are still going to impose tariffs against you. That would get really messy in a hurry. It would result in retaliatory tariffs and really a full-on trade war.
PETER HAYNES: That sounds like a familiar playbook. And I'm thinking about softwood lumber, Frank. In fact, softwood lumber was a file that you thought might get resolved during the lame duck Congress here just before the election. It doesn't appear or I haven't read much about that topic. Do you know if there was much behind the scenes trying to solve the softwood lumber arrangement during the lame duck Congress, or did that just kind of die in the vine?
FRANK MCKENNA: Well, I've been very involved in the softwood lumber dispute and negotiated the last agreement when I was ambassador in Washington. And I know that it only can come about is if both leaders, Prime Minister and the President, take a personal responsibility to try to get an agreement against the vested interests of a lot of their different constituencies.
And that's what we were able to do the last time with Martin and with Bush. This time, there does not seem to be the same amount of deal tension as of now. I've been trying to reignite this debate. I've spoken to Chrystia Freeland, who of course has been our negotiator on USMCA before. And Mary Ng, who is our minister of international trade.
Both are strongly committed trying to get a softwood lumber deal done in the lame duck session. That would be after the election when Biden might have a couple of months of latitude, and our prime minister might have a couple of months to try to put heads together and see if we can hammer out a deal.
There's $10 billion in escrow on the table. There's a lot of money to lubricate the skids. Mills are hurting in Canada, which further motivates Canadian companies. And the tariff is literally doubling during the next year, which should motivate Canadian companies even more.
So there is some momentum. I've pitched this to the Prime Minister. I don't know whether or not this will be elevated to the level of President and Prime Minister after the lame duck session. I do know one negative event took place this week, and that was the very mixed result in British Columbia. Premier Eby really lost his mandate, lost a huge number of seats and is hanging on by a thumbnail.
And it's going to be a very difficult period of time for British Columbia to muster its forces and find some degree of unanimity amongst the various interests in the Coast and Inland BC. So I would say that is going to make it more difficult, the volatile political situation in British Columbia, to try to get some political energy behind this in Canada.
PETER HAYNES: Well, there's a lot of balls to play at the same time there. That's difficult. I know I've heard some of these conversations recently. I'm not apocalyptic, but I know some people are. So as we approach election day, it seems like more investors are curious to know about scenarios that might disrupt the peaceful transition of power.
For instance, what would happen if a recount was required in, say, Michigan at one of the polling stations, and some terrorists decided to burn down the polling station. I know it sounds farfetched, but we watched January 6 with dismay, and we all hear the rhetoric. Chris, can you walk our listeners through the key dates in the transition that we need to pay attention to? And how would these type of outlier events impact the dates in question?
CHRIS KRUEGER: Peter, we've floated this idea that election night could well turn into election winter. I mean, it's going to take a while to count something in the ballpark of 150 million ballots. Many states are not permitted to begin counting early votes until election day. Recall, in 2020, it took until 11:26 AM on Saturday for the Associated Press to call it for Biden following Pennsylvania. We also currently already have 165 lawsuits filed across 37 states regarding the presidential.
Would note that those seven key states all have governors and/or secretaries of state who have said they will certify the election winner. They are there to call balls and strikes and follow the law. You also have the Electoral Count Reform Act, which cleaned up a lot of the language that helped fuel the January 6 riot.
There are five key dates in question for the presidential after November 5th. The first isn't until December 11th. That's the national deadline to stop counting in all the United States. December 17th is when the electors in the state capitals certify the election. If you recall, in 2000, in Florida, that was the action forcing catalyst that made the Supreme Court get involved and certified for Bush over Gore.
January 3rd, the new Congress is sworn in. January 6th is when the Congress certifies. January 6th in the US has now been designated as a national security event, much like the Super Bowl or the presidential inauguration. So the Secret Service runs security for that, and the city will largely be militarized for that event.
And then January 20th is the presidential inauguration. So you have nine weeks from election day to January 20th. I think there's less concern over January 6th But I do have some anxiety about December 17th in the state capitals.
PETER HAYNES: I think that in some of the conversations I've heard you having with some investors, the only date of all the dates that seems to be hard and fast is that January 20th around noon, when the actual transition occurs. Is that you're feeling right now as you study this issue in more detail?
CHRIS KRUEGER: That's the only truly hard and fast date. I mean, the others, it would take something extraordinary for those dates to move. And we saw that almost four years ago, like January 6th, the Congress didn't end up certifying Biden and Harris until the early morning hours of January 7th because of the riot, et cetera. By January 20th at 12:00 PM, a new President is inaugurated. The previous four dates are all statute, but they could in theory be pushed, though January 20 is hard.
PETER HAYNES: Well, here's hoping that we have a peaceful transition of power. I know everybody's wanting that to occur and hoping that's the case. Frank, let's turn to down ballot votes. What do you place the odds that Democrats retain the Senate, and what do you place the odds that Republicans retain the House?
FRANK MCKENNA: Well, I'll start with the House because I think it's really a toss up, 50/50. Slight possibility for the Democrats there. There are some seats in California and New York that are loose. The math favors the Democrats a little bit more than the Republicans. And they should have good political organizations in both those states.
But it really, literally is a toss up as to whether the House will switch or not. Slight possibility of that. No possibility of the Senate staying in the hands of the Democrats. The Republicans will win the Senate. The math favors them very strongly. Democrats have twice as many seats at play as the Republicans.
Places like Montana, West Virginia are likely to switch over. Ohio and Pennsylvania are in play for the Republicans. They're held by strong Democrats, but they're in play for the Republicans. Maryland has a very strong Democratic background, but Republican is running who is highly respected there. So Maryland might be in play. I don't think so. It might be in play.
The only scenarios which might work for the Democrats are if they were able to hang on to Ohio, Pennsylvania, Maryland, for example, and win a state like Texas. And Texas is always rumored to be in play. And in fact, it's somewhat tight in terms of the polling. But at the end of the night, Texas almost always reverts back to its Republican instincts. And so I think that will be a bit of a long shot.
There is one outlier in play though, and I'm going to throw this over to Chris, and that's Nebraska. It's not a state that would ever come up in a conversation normally about it being a problem for Republicans. But there is a scenario that might play out in Nebraska that could make things very interesting. So 2026, the math changes. And there's a pretty good chance that we will see the Democrats able to take control of the Senate. Chris, over to you on that.
CHRIS KRUEGER: Yeah. Well, so Nebraska, not typically a state where you would think Republicans could lose. I mean, Donald Trump is going to win Nebraska by something like 20 points, although he's probably not going to win all of the electoral college votes out of Nebraska because Nebraska and Maine are the two states in the US that award their votes via congressional district. And this is the blue dot in the middle of the sea of red, and that's the Omaha-based district.
Outside of Omaha though, you have Deb Fischer, the Republican Senator, running for re-election against an independent candidate. He's pro-Second Amendment, pro border wall. He led a union strike in Nebraska. Independent across the board. Is sort of within striking range there. He said he will not join a party should he win. I sort of doubt that. I mean, the first vote they have to take is to vote for leader.
Also, if you're an independent and you don't caucus with the party, you don't get any committee assignments. But yeah, keep an eye on Nebraska, not only for that Senate race but also there's a key House race there and then the electoral college vote. I mean, I think bigger picture on the House and the Senate races.
This could take a really long time to out. It's not subject to that presidential timetable I just mentioned. I think Frank did a nice job, a good job with the geography. I mean, I think just broadly speaking, it's a 51/49 Democratic-controlled Senate that is very likely going to go Republican.
The map is just really rough for Democrats. Democrats have to win all the battleground states they're defending and then two of Florida, Ohio, Montana, Texas. When you're a Democrat in those four states, four states that voted for Donald Trump twice and probably three times by acclamation, that's just really tough.
Right now, the House has 435 seats. Republicans have a four-seat majority. The map is tough for Republicans though. That's because only really about 40 of these seats are in play. And as Frank mentioned, a lot of those seats are in California, and a bunch of them are also in the Hudson River Valley and out on Strong Island.
So California doesn't close until 11:00 PM Eastern and is pretty notorious for slow counts. So would be really surprised if we knew the House outcome anytime soon. And that's a really big deal for next year because you have a number of tax and debt cliffs on the horizon.
PETER HAYNES: Yeah, we're going to talk about that in a second. But let me just ask, what happens-- I'm sorry I'm asking these what if scenarios. But what happens when you vote in a new Congress on January 3rd, but you might have some of those congressional seats still not decided?
You had an indication of Al Franken, was it back in 2004 that you were talking about in a previous call I was on, where they didn't know for a while? Is that, like what happens in that scenario?
CHRIS KRUEGER: Well, when the new Congress is sworn in on January 3rd, the first vote is for Speaker of the House. And so you need a majority of those voting to be elected Speaker of the House. The House also certifies their own races. You do have the state certification process. So if we are in recounts, like with Franken in Minnesota, I mean, those can take a while. The margin being as tight as it is too, if you thought 2023 was bizarre with House Speaker elections, just wait for 2025.
PETER HAYNES: Oh, yeah. Let's get there. OK. You mentioned about tax cliffs. That was something I learned very quickly in listening to your expertise, Chris, was the importance of paying attention to expiring government fiscal arrangements, such as funding, the ongoing operations of Washington, and in the case of current events, the expiry of the Trump tax breaks.
To the general public, these issues tend to flare up like hemorrhoids. But to astute followers, there are warning signs that are flashing well in advance. Chris, can you provide an update on these two issues and any others of significance and how these deadlines might be impacted by the outcome of the election.
CHRIS KRUEGER: The Center for Responsible Federal Budget, I think one of the few more centrist organizations in town. I mean, they peg the fiscal delta if you take the extremes of either candidate's plans at a $15 trillion delta, that's more than US GDP, , per year. So on January 1st, we hit our heads on the debt ceiling. Extraordinary measures will kick off.
The ex-date for when the US would enter default scenarios is as early as June, maybe as late as October, but that's going to be an issue next year regardless of election outcome. But then the big one, the biggest of all time, is a $5 trillion tax and fiscal cliff that we would go off on December 31st of next year.
That's a combination of the sun setting of the 2017 Tax Cuts and Jobs Act individual rates and changes and then the expiration of the Obamacare subsidies. These are government funds that go to individuals to help them purchase health insurance on the Affordable Care Act exchanges.
In very broad strokes, Trump has talked about extending all of these rates, costs about $4.5 trillion, if not cutting them further. Harris has talked about letting the top brackets for those making above $400,000 to revert back to Obama era levels. So the 37% top rate would revert to 39.6.
Important just to note too that the corporate rate is not on an automatic sunset the way the individual rates are. Trump has said the 21% corporate rate, would like to take that to 20. Harris has said 21 should go to 28. We think the ceiling is probably around 25. But this is entirely the purview of the House and the Senate. These are not things you can do unilaterally. So that really underlines how important the stakes are for the House and the Senate next year.
PETER HAYNES: Yeah, those are big numbers that you're talking about. Frank, you mentioned that as Canadians, we're spectators in this election, and we have to respect the will of the American people. Are there any other issues that Canadians should be concerned with in terms of the US election?
FRANK MCKENNA: Well, there are. And again, I should point out that even though this all looks messy, it is democracy. And the United States has been very good at when they've exhausted all of the other possibilities coming up with the solutions that are necessary, either on the debt ceiling or just certifying elections and so on.
For Canada, there are definitely issues. If Kamala Harris is reelected, I'd say much lower level and intensity. We know that administration. We know that they have some protectionist instincts, but we've been able to deal with that.
The bigger concerns for Canada would have to arise out of a Trump presidency. A tariff war would be very bad news for us. An attack on multilateral institutions would be bad news for Canada's one of the more global traders on the planet. 77% of our exports actually go to the United States. So any attack on a multilateral world, carrying down the WTO or any of those institutions would be harmful to us.
NATO. That would be very concerning to us if the United States pulls away from its obligations, if it allows Ukraine really to be overrun by Russia, that would be very concerning. Environmental issues. If the United States were to dramatically lower environmental standards, it would render our energy industries particularly somewhat uncompetitive very quickly.
For example, if they took off methane emissions standards where we have quite rigorous ones, that would be very difficult. If corporate taxes were to drop in the United States, that would make it difficult for our corporations to compete. And then if the United States goes ahead with what Trump and now Johnson and others talk about in terms of mass deportation of undocumented people, that would have consequences, I think, for Canada.
A lot of these people may end up trying to come into Canada. That would be difficult for us to absorb. A lot of them may try to come to Canada and then sneak back into the United States, and that would be very difficult for our relationship on the northern border. So those are unpredictable consequences. And we just don't know whether the Republican administration would be truly committed to that, to removing literally millions of people from their soil. If so, that would have significant consequences for us.
PETER HAYNES: Are any of those issues you discussed, Frank, issues that Canada would literally have to follow suit on? You mentioned methane emissions and some of the other factors there. Or would Canada just become less competitive and have to adapt and be less profitable?
FRANK MCKENNA: I find it hard to believe that Canada would lower methane emissions, for example, because it's not just the United States. We have to compete or market our product and the rest of the world. Similarly, on taxes, our taxes are very competitive now around the world, and there's only so low you can go and sustain it with your fiscal framework.
We don't have the reserve currency of the world. We don't have the printing press. So there are limitations on what we can do. And quite frankly, my belief is that the United States has limitations as well on the amount of debt they can run up. They just haven't recognized it yet. But at any point in time, they could hit a cliff as well, and the consequences would not be very pretty.
PETER HAYNES: So Chris, there's an event outcome betting site called Kalshi. And Kalshi won a lawsuit with the CFTC recently that allows it to now operate as a regulated venue for trading the election outcome, amongst other things. Chris, if you are placing a bet on the presidential race on Kalshi, which candidate would you back right now?
CHRIS KRUEGER: I wouldn't because I'm a little perplexed how people have a ton of conviction on this. I'm also 6 and 1 with my daughter in our fantasy football league, so I'm not going to push my luck. But if you're making me in the spirit of partnership, I would say Harris with a Republican Senate and a narrow Democratic House, but would be betting with someone else's money.
PETER HAYNES: Frank?
FRANK MCKENNA: I would agree on the Senate and the House. I probably today would be more inclined to say a narrow Trump victory. Just following polls and every day too assiduously truthfully for my own health. My sense is that Trump has been able to survive all and any attacks against him and seems to be slightly advancing in the battleground states.
So I would have the same overall configuration as Chris. But probably today, I would be at the presidential level going slightly Trump. But definitely a change in the Senate and agree on the House.
PETER HAYNES: You guys want to take a guess as to where the market is on the election right now on a probability scale?
FRANK MCKENNA: Oh, It's strongly Republican?
PETER HAYNES: What do you think the numbers were-- Let me put it this way, Frank. On October 10th on Kalshi, it was 50/50. What do you think it is right now?
FRANK MCKENNA: I'd say 75/25.
PETER HAYNES: What about you, Chris?
CHRIS KRUEGER: Well, I think to be clear that the self-selection bias on crypto-based prediction markets is massive, and the betting sites were wrong the last three, in '12, '16, and '20. So yeah, it's probably overwhelmingly Trump.
PETER HAYNES: 59/41, but it's gone from 50/50 just in that two-week period. 59 for Trump.
CHRIS KRUEGER: Probably more of a market structure question here for you, Peter, but what is the liquidity on these sites? Aren't these pretty-- My sense is that they're rife with manipulation to generate news cycle coverage.
PETER HAYNES: That's quite possible. I was at a conference recently where the CEO of Kalshi was talking about how his market worked. You can wager up to $100 million on the election in any one sitting. So they've clearly got some market makers that are willing to take the other side of that. How they're hedging, I don't know.
But I will say, Chris, that for those people that want to bet on the outcome, this is clean. What you see is a lot of brokerage firms will be going around right now saying here's a basket of shares you should own if Trump wins, or here's a strategy you should have if Harris wins for the market reaction. But this one's just clean. And I think that's why people like that sort of binary outcome. I'm not saying it's a place where I'd be hanging out, but it is something that's been gaining some air time in our industry.
So Frank, I'd be remiss if I didn't ask you for a couple of matters that are in the news currently. I'll run through them, and then I'll let you answer. Number one is this so-called rumored caucus letter from Liberal members wanting Trudeau to resign. Do you make much of the rhetoric around that?
And then number two, the RCMP's recent dialogue on India and its concerns about renewed threats to Sikh Canadians who are in favor of a separatist state in India to be known as Khalistan. What's your take on those two issues?
FRANK MCKENNA: Well, I don't think there's any doubt that there's discontent in the Liberal caucus. The polling numbers are very bad. I'm told most recently, maybe 30 caucus members. He's got to understand the anti-incumbency mood in the country.
Election in British Columbia and the NDP, which had a very significant lead, were humiliated on election night against a party that only had 1.5% of the vote the last time around. So that was an anti-incumbent mood.
In New Brunswick last night, the Conservative government was ousted with a massive vote for the Liberal Party. And in Saskatchewan, the Saskatchewan party, which is very, conservative party and had a massive election victory last time, is slightly trailing in the polls to the NDP now.
So if I were an incumbent, I would say the odds are against me. And if I was an incumbent that was at the 10-year marker, which is almost drop dead date in Canadian history, I would say the odds are even further against me.
I'm told from cabinet ministers that I've talked to this week that the prime minister is probably waiting for the US election results before he makes any final determination. A win by Harris he might construe would tell Canadians they're better off electing a government that would line up well with the Harris administration. That might be his calculus. But my own view is that it's going to be hard to turn things around, and there's a decent chance we'll be into a leadership campaign in the coming months.
With respect to the RCMP in India, the RCMP is a very professional organization, and I don't think they would have gone public with their concerns unless they had a massive amount of evidence of immediate threats to people as well as being able to document those threats going all the way to the top of the house in the India administration in Canada.
I think that's been further substantiated by the United States just this week accusing a former employee of the Indian government of plotting to murder an American citizen. So there's no doubt that there is something real going on here.
Where Canada has out slight weakness in its position is that there's no doubt that we have tolerated Sikh extremism to the extent that there is a pro-Khalistan movement in Canada amongst some Sikhs, probably not the majority even but amongst some Sikhs, which is really bothersome to India.
We're a free and open democracy. It's very difficult for us to tell people they can't organize or they can't express an opinion on a subject matter, even if it's in another country. And one that we don't happen to hold as a country. Overall, as a country, we're opposed to the creation of a Khalistan state in India, but we have not been able to rein in some of our population who have strong views on that matter.
So overall, this is a very serious matter evolving at an extraordinarily important economic relationship. And because of my respect for the RCMP, I can only assume that the evidence they have is very, very solid for them to go public.
PETER HAYNES: And one quick followup, Frank. Best guess on when the government would collapse in Canada, such that we'd be going to the polls. Will that happen before the end of the year? In your best guess, of course.
FRANK MCKENNA: Yeah. Well, the bloc have set a threat for the end of this month around two issues. One, supply management and the other around senior citizen supplement. Neither one will be won by the bloc. I do not think that that will be the causa belli of an election.
I think if necessary, the NDP, especially considering the licking they took in British Columbia, may very well pull back from the brink and support the government. If that were to happen, I think the government is safe until the spring when they bring in a budget, and that would be the subject of a non-confidence motion, bring down the government.
So either the government falls in the next two weeks, which I don't think will happen, or we're likely into late winter, early spring, at which time the government will definitely fall. This government will not survive until next fall. It will be over and done with sometime by spring at the latest.
PETER HAYNES: Well, Chris, you heard it here first. You can come up here and pay attention to our election next year if you're bored in the United States after you guys have finished all your shenanigans down south. So look, that was great, guys. I think it's a great prep for what we're going to be paying attention to in the next couple of weeks. And Frank, thank you for your insights with respect to Canada here as we finish up.
So on to baseball for my money, this year's MLB playoffs might be the most compelling of all in my lifetime. And now we get Judge Ohtani in the World Series. Frank, what's your hot take on the MLB playoffs, and who's going to win the World Series?
FRANK MCKENNA: Well, first of all, I agree with you about the drama of it all. But I have another point I want to make on that. It's not coincidental that these two teams are also the most expensive teams in the major leagues and represent two very large cities.
And that tells me that baseball has not got it right in terms of any kind of salary cap or equalization formula. What we have playing for the World Series are the best teams that money can buy. And so I don't think that's right.
Number two, Toronto actually has the resources with all of Canada as its marketplace to be in the same league and they've chosen not to. And I have spent the last month literally crying every night, not able to watch my beloved Blue Jays because I believe, out of lack of conviction by management and inadequate ownership and management of the team, we've just not been a competitive team.
And I think ownership and management owe the country a better team than the one they produce. So I'll get down to the two teams that are playing there. Both teams are loaded with superstars. Really great, high priced talent. I'm going to go with Los Angeles because I love the infectious smile of Teoscar Hernández and the way he plays the game with so much joy. And for that reason alone, I'm going to be cheering for LA.
PETER HAYNES: I agree with everything you just said there. What these two teams have proven is that it's hard to win with one star.
FRANK MCKENNA: Yeah.
PETER HAYNES: You need multiple stars. You need protection in that lineup. And the way the bullpens have been just ridden like a rented mule in these playoffs is unreal. The Blue Jays are not even close to the level of play, from the management down to on the field product of these teams that are playing right now. It's night and day, and I've been compelled at every minute of these playoffs.
Chris, I know you're a Red Sox fan, but I'm curious if you've been able to watch any playoff baseball, or are you too worried about your terrible Patriots and spending too much time buried in constitutional textbooks?
CHRIS KRUEGER: Gosh, you sound like the Patriots head coach. No. In Drake May we trust. Had to remind my kids, Clementine and Clark, last night that we've had three Super Bowl titles during their lifetimes. On the World Series, I do think it's interesting that Harris is from California and Trump is from Queens. I mean, I presume Harris is pulling for the Dodgers and Trump the Yankees.
Of note, the last time the Dodgers won the World Series, Trump lost re-election. So I'm excited to watch the upcoming documentary about the 2004 Red Sox, which was 20 years ago. It feels like about 10 lifetimes.
PETER HAYNES: Is that the bloody sock Curt Schilling game 6?
CHRIS KRUEGER: Yes, sir.
PETER HAYNES: Yeah. I thought so. Yeah. OK. Well, I'll watch that.
CHRIS KRUEGER: Down three zip in the ALCS against the Yankees and then just ran the table.
PETER HAYNES: Frank and Chris, thank you very much on behalf of our listeners for your insights. And Chris, we'll see you at our conference on November 7th. That's two days after the election. There'll be certainly lots to talk about at that point in time and be able to call you out on some of your predictions here. So thanks again, guys.
FRANK MCKENNA: Thank you.
CHRIS KRUEGER: Thanks. Great to be with you all.
PETER HAYNES: Thank you for listening to Geopolitics. This TD Securities podcast is for informational purposes. The views described in today's podcast are of the individual's and may or may not represent the views of TD Bank or its subsidiaries, and these views should not be relied upon as investment, tax, or other advice.

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