For those waiting patiently for the USMCA termination announcement, this is a potential indication and/or signal of pendency.

When President Trump and USTR Jamieson Greer send the official notification, a six-month countdown clock begins running.  As of right now there are no official statements that indicate the likely triggering, it’s a guess.  However, there are datapoints aligning in that direction.

[SOURCE]

No one outside our assembly has contemplated the termination of the USMCA (CUSMA) or what would occur in the aftermath; however, the Bank of Canada has gamed out the financial consequences, briefly in their forward guidance. The ramifications are significant, perhaps more significant than any other global trade announcement.

[…] “it more likely that a new shock or a combination of shocks could cause several vulnerabilities to crystalize at once. If this were to happen, these vulnerabilities could interact and reinforce each other

A cascading series of events could cause a sharp loss of investor confidence and lead to a spike in demand for liquidity or rapid asset sales. Funding markets could come under pressure, and stress could spread more broadly.” [SOURCE]

I suggest we keep a close eye on all U.S-Mexico discussions, as well as geopolitical leverage points that might surface in the U.S-Mexico relationship. My best guess is that once the U.S. and Mexico come to renewed terms on the ‘USMCA’ as a potential bilateral free trade agreement, that will be the moment when the planets are aligned for the termination notification.

The financial markets in Canada are tied directly to the independent strength of the Canadian economy.  Which is to say, the financial system in Canada is dependent on historic ties to the United States.  Pull out all of the dependencies within the economy, a result of a fracturing of the “geopolitical relationship,” and suddenly the Bank of Canada faces a “cascading series of events” they have not previously had to entertain.

A significant number of multinational corporations within Canada are geographically centered due to American proximity and the dependency that has historically been considered a partnership.  That relationship has now changed, and despite Mark Carney saying that Canada can be stronger standing alone, there is no economic model for Canada to retain its wealth position without the inherent subsidy that proximity to America provides.

There is no ‘partnership’ with Europe and/or China, or a combination of partnerships, that can replace the one-way nature of the subsidies from the U.S. economy that Canada enjoys.

If the Canadian people, workers and companies therein, have to rely on their own domestic economic activity to fund their GDP, their lifestyle will have to modify in very significant ways.

Now, I want you to think about the Bank of Canada’s previous statement against the backdrop of this announcement yesterday:

The Dutch central bank (DNB) has transferred approximately 86 metric tons of gold out of the U.S. and Canada to the U.K., seeking to shore up its contingency planning in view of “increasing geopolitical unrest.”

Just over one-quarter of the central bank’s gold reserves held in New York and Ottawa had been shifted to London between March and August, DNB said Wednesday.  [SOURCE]

Prepare your affairs accordingly.

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