Remember that Canadian jobs number I gleefully reported on August 8, thrilled to have my prejudices reinforced? Well, it’s been cancelled:
Statistics Canada has pulled Friday’s disappointing jobs report after discovering an error and officials are working to release new estimates by the end of the week.
…
Those July numbers are wrong but the federal agency is not giving any indication of the size of the mistake.
…
Ms. [Sylvie] Michaud [Statistics Canada’s Director General of Education, Labour and Income statistics] said that to her knowledge, this is the first time Statistics Canada has ever pulled its Labour Force Survey.
Speaking of numbers, Kevin Carmichael of the Globe highlights two:
At least Fed chair Janet Yellen has been good about telling everyone about the many gauges she’s watching. Two of them, the rate at which companies are hiring and the rate at which workers are quitting, were updated by the Labor Department Tuesday. Unlike the broader unemployment rate, which is returning to a level at which the Fed typically would equate with full employment, these more granular measures of labour market dynamics suggest the U.S. economy is less than fully healed. The data reinforce Ms. Yellen’s argument that higher borrowing costs can wait.
…
If Ms. Yellen perceived the quit rate as low in March, she remains disappointed today. Adjusted for inflation, the quit rate was 1.8 per cent in June, unchanged from the start of the year. The rate was 1.6 per cent in June, 2013.Similarly, employers hired 4.83 million people in June, compared with 4.74 million in May, lifting the hiring rate to 3.5 per cent from 3.4 per cent. The quit and hiring rates sunk during the recession and have steadily climbed from those lows. Yet they still are below pre-recession levels. In the years ahead of the Great Recession, the quit rate floated above 2 per cent and the hiring rate was closer to 4 per cent than 3.5 per cent.
Bloomberg has squared its rot for a big boo-hoo-hoo about competition:
John Turner suspected that brokers were encouraging federal workers to ditch their top-flight retirement plan. So he went under cover.
The former U.S. Labor Department economist called representatives at companies such as Bank of America Corp., Charles Schwab Corp. and Wells Fargo & Co. He identified himself as a potential client grappling with what to do with his own nest egg.
Turner thought he knew the right answer: Leave it alone. As a legacy of his government service, he kept his money in the Thrift Savings Plan, considered the gold standard of 401(k)-type programs for its rock-bottom fees. Yet all but one company told him to roll over all his money into individual retirement accounts. On average, stock funds charge almost 50 times more than the government plan.
“It’s a scandal,” said Turner, director of the Pension Policy Center in Washington. “They are trying to sell me an IRA clearly not in my interest. It’s in their interest. They want to get the fees.”
The pitches are persuasive. Workers who leave jobs with the federal government transferred $10 billion last year out of the Thrift Savings Plan. Forty-five percent of participants who left federal service in 2012 removed all of their funds from the plan and closed their accounts by the end of 2013. To investigate this exodus, the government expects to survey departing workers later this year.
The funds offered by the Thrift Savings Plan look pretty good – index funds with rock-bottom fees; definitely a leading option for the core of a portfolio. And I will certainly not risk evisceration in the comments section by suggesting that the external brokers are all altruistic financial geniuses (genii?) whom I would be happy to trust blindly with the Hymas Fortune.
However, it is well known that many, if not most, employees enrolled in sponsored 401(k)’s are idiots. Two very popular strategies are putting the entire amount into the option labelled as having the lowest risk or, my favourite, the “1/N” strategy where, confronted by N choices, the investor puts an equal amount into each of them.
I see that the Thrift Savings Plan offers ‘Lifecycle’ funds, which ” use professionally determined investment mixes that are tailored to meet investment objectives based on various time horizons”. I’m willing to accept that these represent a decent enough investment strategy, but as someone who has produced various elaborations of the Retirement Calculator from Hell, I know that a lot of estimates and approximations go into doing a good job on this kind of stuff, it’s not easy and it’s not particularly generic, given individual’s circumstances, expectations and foibles.
In many cases, I am sure, gullible federal employees have made a dumb move by transferring their money. But I am equally sure that in just as many cases they’ve been smart to transfer, given their own attitudes towards financial markets. What’s better? Cheap, plain-vanilla financial advice that you ignore, or expensive, plain-vanilla financial advice that you follow?
It was another mixed day for the Canadian preferred share market, with PerpetualDiscounts rocketing up 40bp, FixedResets off 1bp and DeemedRetractibles ahead 14bp. Volatility was minimal – surprisingly, I’d say, the PerpetualDiscount win is broadly based. Volume was low.
| HIMIPref™ Preferred Indices These values reflect the December 2008 revision of the HIMIPref™ Indices Values are provisional and are finalized monthly |
|||||||
| Index | Mean Current Yield (at bid) |
Median YTW |
Median Average Trading Value |
Median Mod Dur (YTW) |
Issues | Day’s Perf. | Index Value |
| Ratchet | 0.00 % | 0.00 % | 0 | 0.00 | 0 | 0.2911 % | 2,641.8 |
| FixedFloater | 4.17 % | 3.41 % | 27,469 | 18.58 | 1 | -0.1754 % | 4,156.5 |
| Floater | 2.90 % | 3.03 % | 45,501 | 19.62 | 4 | 0.2911 % | 2,731.8 |
| OpRet | 4.02 % | 0.75 % | 76,432 | 0.08 | 1 | -0.2350 % | 2,716.8 |
| SplitShare | 4.23 % | 3.84 % | 62,618 | 3.96 | 6 | 0.0184 % | 3,133.2 |
| Interest-Bearing | 0.00 % | 0.00 % | 0 | 0.00 | 0 | -0.2350 % | 2,484.3 |
| Perpetual-Premium | 5.49 % | -2.88 % | 83,086 | 0.08 | 19 | 0.0352 % | 2,434.5 |
| Perpetual-Discount | 5.22 % | 5.20 % | 115,239 | 15.15 | 17 | 0.3986 % | 2,596.7 |
| FixedReset | 4.29 % | 3.55 % | 198,658 | 8.57 | 75 | -0.0108 % | 2,560.0 |
| Deemed-Retractible | 4.98 % | 0.10 % | 108,713 | 0.22 | 42 | 0.1366 % | 2,557.4 |
| FloatingReset | 2.65 % | 2.04 % | 79,825 | 3.83 | 6 | 0.0919 % | 2,524.4 |
| Performance Highlights | |||
| Issue | Index | Change | Notes |
| TRP.PR.A | FixedReset | -1.29 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2044-08-12 Maturity Price : 22.20 Evaluated at bid price : 22.90 Bid-YTW : 3.68 % |
| FTS.PR.J | Perpetual-Discount | 1.25 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2044-08-12 Maturity Price : 23.96 Evaluated at bid price : 24.35 Bid-YTW : 4.94 % |
| Volume Highlights | |||
| Issue | Index | Shares Traded |
Notes |
| RY.PR.X | FixedReset | 256,104 | Called for redemption August 24. YTW SCENARIO Maturity Type : Call Maturity Date : 2014-09-23 Maturity Price : 25.00 Evaluated at bid price : 24.99 Bid-YTW : 4.86 % |
| RY.PR.T | FixedReset | 186,376 | Called for redemption August 24. YTW SCENARIO Maturity Type : Call Maturity Date : 2014-09-23 Maturity Price : 25.00 Evaluated at bid price : 24.99 Bid-YTW : 4.86 % |
| BNS.PR.Q | FixedReset | 113,366 | RBC crossed blocks of 73,800 and 35,300, both at 25.55. YTW SCENARIO Maturity Type : Call Maturity Date : 2018-10-25 Maturity Price : 25.00 Evaluated at bid price : 25.51 Bid-YTW : 3.13 % |
| TD.PF.B | FixedReset | 107,090 | Recent new issue. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2044-08-12 Maturity Price : 23.16 Evaluated at bid price : 24.99 Bid-YTW : 3.61 % |
| ENB.PR.N | FixedReset | 82,467 | Scotia crossed blocks of 25,000 shares, 38,500 and 10,000, all at 24.90. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2044-08-12 Maturity Price : 23.19 Evaluated at bid price : 24.91 Bid-YTW : 4.02 % |
| BNS.PR.A | FloatingReset | 82,104 | RBC crossed 74,500 at 25.64. YTW SCENARIO Maturity Type : Call Maturity Date : 2014-09-11 Maturity Price : 25.50 Evaluated at bid price : 25.67 Bid-YTW : -7.93 % |
| There were 20 other index-included issues trading in excess of 10,000 shares. | |||
| Wide Spread Highlights | ||
| Issue | Index | Quote Data and Yield Notes |
| RY.PR.G | Deemed-Retractible | Quote: 25.61 – 25.98 Spot Rate : 0.3700 Average : 0.2570 YTW SCENARIO |
| TRP.PR.A | FixedReset | Quote: 22.90 – 23.20 Spot Rate : 0.3000 Average : 0.1969 YTW SCENARIO |
| FTS.PR.H | FixedReset | Quote: 21.33 – 21.58 Spot Rate : 0.2500 Average : 0.1536 YTW SCENARIO |
| BAM.PF.D | Perpetual-Discount | Quote: 22.05 – 22.35 Spot Rate : 0.3000 Average : 0.2080 YTW SCENARIO |
| IAG.PR.G | FixedReset | Quote: 26.25 – 26.50 Spot Rate : 0.2500 Average : 0.1769 YTW SCENARIO |
| BAM.PF.A | FixedReset | Quote: 25.55 – 25.79 Spot Rate : 0.2400 Average : 0.1709 YTW SCENARIO |