The Stable Genius ratcheted up the trade war today:
Hours after Beijing said it would increase tariffs on American goods in response to President Trump’s latest round of Chinese levies, the president ordered companies in the United States to stop doing business with China and warned of additional retaliation.
In a series of angry Twitter posts, Mr. Trump said “Our great American companies are hereby ordered to immediately start looking for an alternative to China, including bringing our companies HOME and making your products in the USA.”
The president also said he was ordering the United States Postal Service and private American companies like FedEx, Amazon and UPS to search packages from China for the opioid Fentanyl and refuse delivery.
Powell came perilously close to criticizing policy:
As the year has progressed, we have been monitoring three factors that are weighing on this favorable outlook: slowing global growth, trade policy uncertainty, and muted inflation. The global growth outlook has been deteriorating since the middle of last year. Trade policy uncertainty seems to be playing a role in the global slowdown and in weak manufacturing and capital spending in the United States. Inflation fell below our objective at the start of the year. It appears to be moving back up closer to our symmetric 2 percent objective, but there are concerns about a more prolonged shortfall.
…
Turning to the current context, we are carefully watching developments as we assess their implications for the U.S. outlook and the path of monetary policy. The three weeks since our July FOMC meeting have been eventful, beginning with the announcement of new tariffs on imports from China. We have seen further evidence of a global slowdown, notably in Germany and China. Geopolitical events have been much in the news, including the growing possibility of a hard Brexit, rising tensions in Hong Kong, and the dissolution of the Italian government. Financial markets have reacted strongly to this complex, turbulent picture. Equity markets have been volatile. Long-term bond rates around the world have moved down sharply to near post-crisis lows. Meanwhile, the U.S. economy has continued to perform well overall, driven by consumer spending. Job creation has slowed from last year’s pace but is still above overall labor force growth. Inflation seems to be moving up closer to 2 percent. Based on our assessment of the implications of these developments, we will act as appropriate to sustain the expansion, with a strong labor market and inflation near its symmetric 2 percent objective.
So Stable Genius had to bolster his excuses for the next recession:
Jerome H. Powell, the Federal Reserve chair, kept future interest rate cuts squarely on the table on Friday but suggested that the central bank was limited in its ability to counteract President Trump’s trade policies, which are stoking uncertainty and posing risks to the economic outlook.
Mr. Powell’s remarks drew a swift and angry reaction from Mr. Trump, who equated the Fed leader with the president’s adversary in the trade war, President Xi Jinping of China.
“My only question is, who is our bigger enemy, Jay Powell or Chairman Xi?,” Mr. Trump wrote in one of a series of Twitter posts.
The markets noticed:
The Dow Jones Industrial Average fell 622.19 points, or 2.37 per cent, to 25,630.05, the S&P 500 lost 75.7 points, or 2.59 per cent, to 2,847.25 and the Nasdaq Composite dropped 239.62 points, or 3 per cent, to 7,751.77.
In Toronto, the S&P/TSX Composite index was unofficially down 215.88 points, or 1.33 per cent, at 16,037.58.
…
The two-year/10-year yield curve inverted last week for the first time since 2007, a signal that a U.S. recession is likely in one to two years. The curve has traded in and out of inversion over the past three days.U.S. Treasury yields fell, with 10-year notes last up 25/32 in price to yield 1.5266 per cent, from 1.61 per cent late on Thursday.
The two-year/10-year yield curve tripped to negative territory early in the session and for a third consecutive day.
The U.S. dollar fell after Powell’s comments and dropped further after Trump’s tweets.
… and, just as I go to press, I learn that Stable Genius has freaked out again:
Twelve hours after China said it would retaliate against Mr. Trump’s next round of tariffs by raising taxes on American goods, Mr. Trump said he would boost existing tariffs on $250 billion worth of Chinese goods to 30 percent from 25 percent on Oct. 1.
And he said the United States would tax another $300 billion worth of Chinese imports at a 15 percent rate, rather than the 10 percent he had initially planned. Those levies go into effect on Sept. 1.
“China should not have put new Tariffs on 75 BILLION DOLLARS of United States product (politically motivated!),” Mr. Trump tweeted. “Starting on October 1st, the 250 BILLION DOLLARS of goods and products from China, currently being taxed at 25%, will be taxed at 30%.”
I’m sure we’re all shocked that the Chinese would do something “politically motivated”.
And the preferred share market was back to normal, with all three mainstream indicators setting new lows:
TXPR closed at 573.00, down 0.48% on the day after touching a new 52-week low of 572.88. Volume was 2.71-million, third-highest of the past 30 days, behind only August 14 and August 15.
CPD closed at 11.48, down 0.35% on the day after touching a new 52-week low of 11.44. Volume of 61,338 was low in the context of the past 30 days.
ZPR closed at 9.10, down 0.55% on the day after touching a new 52-week low of 9.08. Volume of 159,026 was a little above average but nothing special in the context of the past 30 days.
Five-year Canada yields were down 12bp to 1.21% today – but even that big drop leaves us 1bp higher than last Friday’s yield.
| 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 | -0.1958 % | 1,761.5 |
| FixedFloater | 0.00 % | 0.00 % | 0 | 0.00 | 0 | -0.1958 % | 3,232.3 |
| Floater | 6.78 % | 7.04 % | 42,460 | 12.41 | 4 | -0.1958 % | 1,862.8 |
| OpRet | 0.00 % | 0.00 % | 0 | 0.00 | 0 | 0.1531 % | 3,364.6 |
| SplitShare | 4.68 % | 4.57 % | 61,061 | 4.09 | 7 | 0.1531 % | 4,018.0 |
| Interest-Bearing | 0.00 % | 0.00 % | 0 | 0.00 | 0 | 0.1531 % | 3,135.0 |
| Perpetual-Premium | 5.66 % | -4.36 % | 66,477 | 0.09 | 9 | -0.1589 % | 2,961.6 |
| Perpetual-Discount | 5.54 % | 5.64 % | 56,583 | 14.47 | 25 | -0.1644 % | 3,078.0 |
| FixedReset Disc | 6.00 % | 5.64 % | 157,552 | 14.48 | 66 | -0.6278 % | 1,941.5 |
| Deemed-Retractible | 5.31 % | 6.26 % | 73,191 | 7.82 | 27 | -0.2434 % | 3,070.2 |
| FloatingReset | 4.76 % | 7.61 % | 58,573 | 7.85 | 3 | -0.2260 % | 2,230.9 |
| FixedReset Prem | 5.23 % | 5.03 % | 169,269 | 1.89 | 21 | -0.3221 % | 2,548.0 |
| FixedReset Bank Non | 1.99 % | 4.43 % | 88,278 | 2.36 | 3 | 0.1819 % | 2,647.7 |
| FixedReset Ins Non | 5.74 % | 8.54 % | 100,812 | 7.93 | 21 | -1.0464 % | 2,000.5 |
| Performance Highlights | |||
| Issue | Index | Change | Notes |
| HSE.PR.A | FixedReset Disc | -5.49 % | A nonsensical quote provided at high cost by Nonsense Central, as the issue traded 600 shares today in a range of 10.95-09 before being quoted at 10.51-22. The closing price was 10.95, reached at 2:44pm.
I have not checked whether the lamentable state of the quote is due to inadequate Toronto Stock Exchange reporting or inadequate Toronto Stock Exchange supervision of market-makers. YTW SCENARIO |
| PWF.PR.T | FixedReset Disc | -3.82 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2049-08-23 Maturity Price : 16.35 Evaluated at bid price : 16.35 Bid-YTW : 5.80 % |
| EMA.PR.F | FixedReset Disc | -3.59 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2049-08-23 Maturity Price : 14.76 Evaluated at bid price : 14.76 Bid-YTW : 6.57 % |
| PWF.PR.P | FixedReset Disc | -3.16 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2049-08-23 Maturity Price : 11.94 Evaluated at bid price : 11.94 Bid-YTW : 5.86 % |
| MFC.PR.I | FixedReset Ins Non | -2.55 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2030-01-31 Maturity Price : 25.00 Evaluated at bid price : 17.22 Bid-YTW : 8.79 % |
| CM.PR.P | FixedReset Disc | -2.43 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2049-08-23 Maturity Price : 14.83 Evaluated at bid price : 14.83 Bid-YTW : 5.90 % |
| MFC.PR.M | FixedReset Ins Non | -2.41 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2030-01-31 Maturity Price : 25.00 Evaluated at bid price : 15.01 Bid-YTW : 9.76 % |
| IAF.PR.G | FixedReset Ins Non | -2.25 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2030-01-31 Maturity Price : 25.00 Evaluated at bid price : 17.84 Bid-YTW : 8.22 % |
| IFC.PR.G | FixedReset Ins Non | -2.20 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2030-01-31 Maturity Price : 25.00 Evaluated at bid price : 17.78 Bid-YTW : 8.69 % |
| TRP.PR.A | FixedReset Disc | -2.15 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2049-08-23 Maturity Price : 11.85 Evaluated at bid price : 11.85 Bid-YTW : 6.75 % |
| TD.PF.A | FixedReset Disc | -2.06 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2049-08-23 Maturity Price : 15.68 Evaluated at bid price : 15.68 Bid-YTW : 5.56 % |
| MFC.PR.Q | FixedReset Ins Non | -1.99 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2030-01-31 Maturity Price : 25.00 Evaluated at bid price : 17.70 Bid-YTW : 8.44 % |
| MFC.PR.G | FixedReset Ins Non | -1.92 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2030-01-31 Maturity Price : 25.00 Evaluated at bid price : 16.83 Bid-YTW : 8.93 % |
| MFC.PR.N | FixedReset Ins Non | -1.68 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2030-01-31 Maturity Price : 25.00 Evaluated at bid price : 14.60 Bid-YTW : 10.05 % |
| CM.PR.Y | FixedReset Disc | -1.67 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2049-08-23 Maturity Price : 22.55 Evaluated at bid price : 23.50 Bid-YTW : 5.30 % |
| SLF.PR.I | FixedReset Ins Non | -1.65 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2030-01-31 Maturity Price : 25.00 Evaluated at bid price : 17.31 Bid-YTW : 8.53 % |
| TD.PF.C | FixedReset Disc | -1.57 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2049-08-23 Maturity Price : 15.70 Evaluated at bid price : 15.70 Bid-YTW : 5.58 % |
| NA.PR.W | FixedReset Disc | -1.55 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2049-08-23 Maturity Price : 14.62 Evaluated at bid price : 14.62 Bid-YTW : 5.98 % |
| HSE.PR.G | FixedReset Disc | -1.49 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2049-08-23 Maturity Price : 16.55 Evaluated at bid price : 16.55 Bid-YTW : 7.28 % |
| IAF.PR.I | FixedReset Ins Non | -1.47 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2030-01-31 Maturity Price : 25.00 Evaluated at bid price : 18.09 Bid-YTW : 8.54 % |
| MFC.PR.H | FixedReset Ins Non | -1.41 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2030-01-31 Maturity Price : 25.00 Evaluated at bid price : 19.60 Bid-YTW : 7.32 % |
| TRP.PR.F | FloatingReset | -1.32 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2049-08-23 Maturity Price : 11.94 Evaluated at bid price : 11.94 Bid-YTW : 7.61 % |
| BAM.PF.C | Perpetual-Discount | -1.32 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2049-08-23 Maturity Price : 20.24 Evaluated at bid price : 20.24 Bid-YTW : 6.10 % |
| NA.PR.S | FixedReset Disc | -1.31 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2049-08-23 Maturity Price : 15.80 Evaluated at bid price : 15.80 Bid-YTW : 5.95 % |
| CCS.PR.C | Deemed-Retractible | -1.31 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2030-01-31 Maturity Price : 25.00 Evaluated at bid price : 24.20 Bid-YTW : 5.53 % |
| TRP.PR.G | FixedReset Disc | -1.27 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2049-08-23 Maturity Price : 15.60 Evaluated at bid price : 15.60 Bid-YTW : 6.68 % |
| SLF.PR.C | Deemed-Retractible | -1.22 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2030-01-31 Maturity Price : 25.00 Evaluated at bid price : 20.30 Bid-YTW : 7.17 % |
| TRP.PR.D | FixedReset Disc | -1.21 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2049-08-23 Maturity Price : 14.67 Evaluated at bid price : 14.67 Bid-YTW : 6.35 % |
| CU.PR.H | Perpetual-Discount | -1.20 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2049-08-23 Maturity Price : 23.39 Evaluated at bid price : 23.86 Bid-YTW : 5.50 % |
| BIP.PR.E | FixedReset Disc | -1.19 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2049-08-23 Maturity Price : 20.75 Evaluated at bid price : 20.75 Bid-YTW : 6.13 % |
| IFC.PR.E | Deemed-Retractible | -1.19 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2030-01-31 Maturity Price : 25.00 Evaluated at bid price : 23.28 Bid-YTW : 6.25 % |
| BAM.PR.T | FixedReset Disc | -1.04 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2049-08-23 Maturity Price : 13.38 Evaluated at bid price : 13.38 Bid-YTW : 6.69 % |
| PWF.PR.S | Perpetual-Discount | -1.03 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2049-08-23 Maturity Price : 21.05 Evaluated at bid price : 21.05 Bid-YTW : 5.77 % |
| PWF.PR.Z | Perpetual-Discount | 1.07 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2049-08-23 Maturity Price : 22.25 Evaluated at bid price : 22.60 Bid-YTW : 5.74 % |
| CU.PR.F | Perpetual-Discount | 1.09 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2049-08-23 Maturity Price : 21.35 Evaluated at bid price : 21.35 Bid-YTW : 5.30 % |
| GWO.PR.H | Deemed-Retractible | 1.10 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2030-01-31 Maturity Price : 25.00 Evaluated at bid price : 22.00 Bid-YTW : 6.59 % |
| PVS.PR.D | SplitShare | 1.16 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2021-10-08 Maturity Price : 25.00 Evaluated at bid price : 25.30 Bid-YTW : 3.84 % |
| BNS.PR.I | FixedReset Disc | 1.33 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2049-08-23 Maturity Price : 19.03 Evaluated at bid price : 19.03 Bid-YTW : 5.24 % |
| MFC.PR.K | FixedReset Ins Non | 1.34 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2030-01-31 Maturity Price : 25.00 Evaluated at bid price : 16.62 Bid-YTW : 8.89 % |
| PWF.PR.L | Perpetual-Discount | 1.40 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2049-08-23 Maturity Price : 22.12 Evaluated at bid price : 22.40 Bid-YTW : 5.74 % |
| HSE.PR.E | FixedReset Disc | 1.66 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2049-08-23 Maturity Price : 17.18 Evaluated at bid price : 17.18 Bid-YTW : 7.07 % |
| BAM.PF.B | FixedReset Disc | 1.81 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2049-08-23 Maturity Price : 16.30 Evaluated at bid price : 16.30 Bid-YTW : 6.28 % |
| Volume Highlights | |||
| Issue | Index | Shares Traded |
Notes |
| MFC.PR.N | FixedReset Ins Non | 200,500 | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2030-01-31 Maturity Price : 25.00 Evaluated at bid price : 14.60 Bid-YTW : 10.05 % |
| BMO.PR.S | FixedReset Disc | 184,860 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2049-08-23 Maturity Price : 16.64 Evaluated at bid price : 16.64 Bid-YTW : 5.48 % |
| BMO.PR.W | FixedReset Disc | 70,591 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2049-08-23 Maturity Price : 15.50 Evaluated at bid price : 15.50 Bid-YTW : 5.57 % |
| SLF.PR.E | Deemed-Retractible | 59,182 | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2030-01-31 Maturity Price : 25.00 Evaluated at bid price : 20.77 Bid-YTW : 6.93 % |
| BAM.PF.B | FixedReset Disc | 56,425 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2049-08-23 Maturity Price : 16.30 Evaluated at bid price : 16.30 Bid-YTW : 6.28 % |
| BAM.PF.A | FixedReset Disc | 43,157 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2049-08-23 Maturity Price : 17.75 Evaluated at bid price : 17.75 Bid-YTW : 6.25 % |
| There were 41 other index-included issues trading in excess of 10,000 shares. | |||
| Wide Spread Highlights | ||
| Issue | Index | Quote Data and Yield Notes |
| HSE.PR.E | FixedReset Disc | Quote: 17.18 – 18.29 Spot Rate : 1.1100 Average : 0.7031 YTW SCENARIO |
| HSE.PR.C | FixedReset Disc | Quote: 15.85 – 16.50 Spot Rate : 0.6500 Average : 0.4401 YTW SCENARIO |
| IAF.PR.G | FixedReset Ins Non | Quote: 17.84 – 18.40 Spot Rate : 0.5600 Average : 0.3609 YTW SCENARIO |
| EMA.PR.F | FixedReset Disc | Quote: 14.76 – 15.44 Spot Rate : 0.6800 Average : 0.4882 YTW SCENARIO |
| PVS.PR.F | SplitShare | Quote: 25.20 – 25.79 Spot Rate : 0.5900 Average : 0.4270 YTW SCENARIO |
| PWF.PR.E | Perpetual-Discount | Quote: 23.89 – 24.47 Spot Rate : 0.5800 Average : 0.4230 YTW SCENARIO |
Are we nearing the bottom?
I think we are nearing at least a bottom.
Why?
Rob Carrick has started citing James for expert advice in his columns!
If you spot James’ appearances in the Globe, it has appeared when the market was going through periods of extreme distress.
So a few more days or weeks of pummeling and we can start the ride up again….that’s the hope at least.
I think we are nearing at least a bottom.
Why?
Rob Carrick has started citing James for expert advice in his columns!
Hey, neat! My own indicator! I’m right up there with “The Greenspan Put” and “The Wile E. Coyote Moment”!
See A close-up look at preferred share ETFs, a mega-hit with investors turned surprise money-loser
We need a name for this.
The Hymas Hop? Hike? Hope?
I propose the HymasOmen for marking a bottom in Canadian preferred shares.
Then people will look for a double or triple HymasOmen for calling it The bottom.