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Canada, U.K. in ‘informal talks’ on trade ahead of key Brexit vote

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The United Kingdom’s high commissioner to Canada says informal talks that could lead to a U.K.-Canada free trade deal in as little as a year are underway — which could ease the economic uncertainty surrounding her country’s fraught debate over when and how it will exit the European Union.

A key vote on Brexit will be held in the British Parliament on Tuesday. High Commissioner Susan le Jeune d’Allegeershecque, the U.K.’s chief diplomat in Canada, said London wants to keep the disruption in its trading partnerships to a minimum.

“We can formally start negotiating a free trade deal on the day we leave the European Union,” she said in an interview airing Saturday on CBC Radio’s The House.

The U.K.’s exit from the EU is set for March 29.

Behind the scenes, informal trade talks are already happening, d’Allegeershecque said.

“These informal talks underline the importance of this relationship in a trade and economic sense,” she said, citing the fact that 40 per cent of Canada’s exports to the European Union go to the U.K.

“I think we’re both acutely aware of the potential negative impact of a cliff-edge and nothing being in place to allow that [relationship] to continue.”

Canada’s no-deal Brexit safety net

A trade deal between Canada and the U.K. would only come into effect in a year’s time if Parliament votes against British Prime Minister Theresa May’s Brexit plan — a vote that’s scheduled for January 15 — and goes ahead with a no-deal Brexit.

A no-deal Brexit would mean the U.K. cutting ties with the European Union overnight, without a transition period.

Great Britain is scheduled to leave the European Union at the end of March, and this New Year’s Day was filled with mixed emotions as the tumultuous Brexit situation is set to continue during the new calendar year. 2:11

If May’s deal is accepted, however, the U.K. would enter a two-year implementation period on March 29 during which the country would be free to negotiate new bilateral trade deals.

The lack of clarity on the Brexit path can be frustrating for Canadians with business interests in the U.K., d’Allegeershecque acknowledged.

“It’s not easy,” she said. “When people ask me what’s going on, at the moment it’s very difficult to predict what’s going to happen.

“The difficulty, of course, is that many Canadian businesses use the U.K. as a way into the rest of the European Union, and it’s that uncertainty that is very difficult for companies to deal with.”

Although Prime Minister May has said that a no-deal Brexit would be “the worst outcome,” the government is preparing for that possibility, d’Allegeershecque said.

“We’re working very hard with the Canadian government and ministries to put in place a sort of safety net in the event of a no-deal Brexit, so that business can continue unaffected.”

That safety net would cover things like air travel between Canada and the U.K. and the transition of CETA, the trade deal between Canada and the EU that will remain in place for the U.K. while it negotiates Brexit, she said.

Co-operating on China

While Canada’s future trading relationship with the U.K. is still up in the air, d’Allegeershecque offered clarity on one issue: the U.K.’s support for Canada in its current dispute with China over the arrest of Huawei CFO Meng Wanzhou and the detention of Canadians Michael Kovrig and Michael Spavor.

“Our support for Canada and our concerns about the reciprocal action in China is pinned on the principle of upholding the rule of law,” she told the CBC’s Chris Hall.

“Obviously there are consequences to that, but the U.K. has never held back from calling out unacceptable behaviour.”

In December, the U.K. joined the U.S. in condemning China for an alleged series of cyberattacks the country’s Foreign Office described as a “widespread and significant” campaign targeting intellectual property and sensitive commercial data.

D’Allegeershecque said the U.K. chose to speak out “despite the possible negative implications” for the country’s relationship with China.

Michael Kovrig, a former Canadian diplomat recently detained by China, speaks during an interview in Hong Kong March 28, 2018. (Associated Press)

“We’ve seen what China has done to Canadian citizens. There’s always a risk that any government that feels slighted or badly treated will act in a way that’s detrimental to the interests of the other country. And we have … all sorts of links that are potentially on the table if a country wanted to retaliate. But I think it shouldn’t stop us doing the right thing.”

China’s ambassador to Canada, Lu Shaye, suggested this week in an op-ed in the Hill Times that Canada and its Western allies — Britain included — are demonstrating “Western egotism and white supremacy” in their approaches to China.

“What they have been doing is not showing respect for the rule of law, but mocking and trampling the rule of law,” Lu wrote.

D’Allegeershecque said she doesn’t agree with the Chinese envoy.

“I think the rule of law was very clearly applied in Canada,” she said.

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S&P 500 posts highest close since November 8 on trade optimism

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NEW YORK (Reuters) – The S&P 500 posted its highest closing level since Nov. 8 on Friday as investors clung to signs of progress in the ongoing trade talks between the United States and China.

Investors assessed a slew of headlines on the talks, with top trade negotiators from the two countries meeting to wrap up a week of discussions on some of the thorniest issues in their trade war.

If the two sides fail to reach a deal by midnight on March 1, then their seven-month trade war could escalate.

“People are expecting some sort of positive news on trade and tariffs with China fairly soon,” said Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia.

“But we won’t know until the end of next week,” he said, and, “there has been a lack of specifics.”

Optimism on the trade front and dovish signals from the U.S. Federal Reserve have driven the recent gains and left indexes well above their lows of December, when the market swooned on fears of an economic slowdown. The S&P 500 is now up about 19 percent since its late-December low.

The S&P 500 technology index was up 1.3 percent, leading gains among the 11 major S&P sectors, while the trade-exposed industrials index climbed 0.6 percent.

The Dow Jones Industrial Average rose 181.18 points, or 0.7 percent, to 26,031.81, the S&P 500 gained 17.79 points, or 0.64 percent, to 2,792.67 and the Nasdaq Composite added 67.84 points, or 0.91 percent, to 7,527.55.

Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., February 22, 2019. REUTERS/Brendan McDermid

All three indexes registered gains for the week, with both the Dow and Nasdaq posting a ninth week of increases.

The number of New York Stock Exchange and Nasdaq stocks hitting 52-week highs hit 367, the most since mid-September and outnumbered those hitting year lows by the widest margin in six months.

Stocks briefly pared gains after U.S. officials briefed on the negotiations said more time is likely needed in the talks given China’s resistance this week to American demands for specific steps by Beijing to end forced transfers of U.S. technology and certain other policies.

Afterward, President Donald Trump said there was a very good chance the United States would strike a deal with China to end the trade war, and that he was inclined to extend his March 1 deadline to reach an agreement.

“Right now the downside risk has been not as steep, but there’s always a concern that something happens last-minute,” said Quincy Krosby, chief market strategist at Prudential Financial in Newark, New Jersey.

“Having a Chinese economy that stabilizes is constructive for global markets,” she said. “That’s what is key in terms of the market looking at the results.”

Kraft Heinz Co tumbled 27.5 percent, and was the biggest drag on the S&P along with a 1.7 percent fall in Class B shares of the company’s controlling stakeholder, Berkshire Hathaway Inc.

The packaged food company posted a quarterly loss, disclosed a Securities and Exchange Commission probe and wrote down the value of its iconic Kraft and Oscar Mayer brands.

Slideshow (2 Images)

Advancing issues outnumbered declining ones on the NYSE by a 2.99-to-1 ratio; on Nasdaq, a 2.45-to-1 ratio favored advancers.

The S&P 500 posted 64 new 52-week highs and three new lows; the Nasdaq Composite recorded 112 new highs and 21 new lows.

About 6.9 billion shares changed hands on U.S. exchanges. That compares with the 7.3 billion-share daily average for the past 20 trading days.

Additional reporting by Shreyashi Sanyal and Sruthi Shankar in Bengaluru; Editing by Chizu Nomiyama and Jonathan Oatis

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FCA sets $14 million annual target compensation for CEO Manley: filing

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FILE PHOTO: Fiat Chrysler Automobiles (FCA) CEO Mike Manley arrives at the memorial service held in honor of former CEO Sergio Marchionne in Turin, Italy, September 14, 2018. REUTERS/Massimo Pinca/File Photo

DETROIT (Reuters) – Fiat Chrysler Automobiles NV (FCA) has set an annual compensation target for Chief Executive Officer Mike Manley consisting of pay, cash and equity bonuses of $14 million, the automaker said in a regulatory filing on Friday.

Manley took over as the head of FCA last July after the abrupt departure of his predecessor Sergio Marchionne. The company paid its new CEO 600,442 euros ($680,240) for 2018 and he will receive a bonus for 2018 of $367,000 to be paid this year.

Manley also was granted FCA 180,364 shares for his work in 2018, which will vest in 2019 if the company meets certain targets. The fair value per share on the date those were granted was $16.61, FCA said.

His target annual compensation consists of a base salary of $1.6 million, and a bonus of $2.4 million and an equity award valued at $10 million, both linked to the company hitting certain performance targets.

Former CEO Marchionne received 6.6 million euros in compensation for 2018, which consisted of nearly 2 million euros in base pay and an annual bonus for 2017 of just over 4.6 million euros.

For the 2014 to 2017 time period, Marchionne also received 2.8 million FCA shares. The fair value per share was $14.84, FCA said.

FCA chairman John Elkann received a base salary of 1.7 million euros and no annual bonus.

Reporting by Nick Carey; Editing by Sonya Hepinstall

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Flattening U.S. yield curve in late 2018 ‘flashing red’ on economy: Fed’s Williams

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President and Chief Executive Officer of the U.S. Federal Reserve Bank of San Francisco, John Williams, addresses a news conference in Zurich, Switzerland September 22, 2017. REUTERS/Arnd Wiegmann/File Photo

NEW YORK (Reuters) – A flattening U.S. yield curve in December, which was close to being inverted, was “flashing red” about a deceleration in U.S. economic growth heading into 2019, despite some solid data at the time, New York Federal Reserve President John Williams said on Friday.

The yield curve flattens as the gap between short and long-dated yields narrow, suggesting investors’ worries about a slowing economy.

The yield curve inverts when shorter-dated yields rise above longer-dated ones. An inverted yield curve has preceded all U.S. recessions in the past 50 years.

Williams was giving closing remarks at a conference about quantitative tools, jointly sponsored by the New York Fed and the Atlanta Federal Reserve.

Reporting by Richard Leong; editing by Diane Craft

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