You’ve got to go a long way to find inflation but there is some:
Australia’s consumer prices gained more than economists forecast last quarter, sending the local currency higher as money markets pared bets the central bank will extend its two-year easing of monetary policy this year.
The trimmed mean gauge of core prices rose 0.7 percent from the previous quarter, the Bureau of Statistics said in Sydney today, compared with the median forecast of 25 economists for a 0.6 percent gain. The consumer price index gained 1.2 percent from the previous three months, compared with economists forecast for a 0.8 percent increase.
Reserve Bank of Australia Governor Glenn Stevens reduced borrowing costs eight times — for a total of 2.25 percentage points — from November 2011 to a record low 2.5 percent in August. With annual price rises within its 2 percent to 3 percent target, he’s seeking to boost job-intensive industries such as construction as a mining investment boom crests.
You won’t find much in Canada!
Inflation in Canada has remained low in recent months, reflecting the significant slack in the economy, heightened competition in the retail sector, and other sector-specific factors. With larger and more persistent excess supply in the economy, both total CPI and core inflation are expected to return more gradually to 2 per cent, around the end of 2015.
Although the Bank considers the risks around its projected inflation path to be balanced, the fact that inflation has been persistently below target means that downside risks to inflation assume increasing importance. However, the Bank must also take into consideration the risk of exacerbating already-elevated household imbalances. Weighing these considerations, the Bank judges that the substantial monetary policy stimulus currently in place remains appropriate and therefore has decided to maintain the target for the overnight rate at 1 per cent.
Michael Babad of the Globe emphasizes the ‘household imbalances’ risk:
It’s not that things aren’t necessarily going as expected, it’s the tweaks to the language. In September, for example, the central bank said in its policy announcement that housing had been “slightly stronger than anticipated,”
The central bank’s comments today underscore the angst surrounding Canada’s housing market and record high debt burdens among consumers.
The housing market slumped in the summer of 2012 after Finance Minister Jim Flaherty moved to cool it off with another round of mortgage restrictions.
Of course, Spend-Every-Penny continues to pump up the housing market with reckless provisions of guarantees by the CMHC. These have the ultimate effect of funding mortgage loans much cheaper for the banks than business loans.
The “crowdfunding” idea continues to move ahead slowly:
Entrepreneurs and start-up companies looking for backing will be able to solicit small investments over the Internet from the general public under a new proposal unveiled by U.S. regulators on Wednesday.
…
The crowdfunding rule would let small businesses raise more than $1-million a year by tapping unaccredited investors.
Companies could sell stakes to mom-and-pop investors without registering the securities with the SEC, a move designed to make it cheaper and less cumbersome for struggling startups trying to get their businesses off the ground.
They would still be required to raise the money through regulated broker-dealers such as CircleUp or through crowdfunding portals.
How many entities might register as crowdfunding portals is still unknown, as many are holding off making any decisions until they see how the SEC’s rules shape up.
Under the proposal, crowdfunding portals would be required to provide investors with educational materials and take certain steps to reduce the risk of fraud.
SEC Commissioner Michael S. Piwowar is supportive:
Still, the worthy goals of crowdfunding do not alter the fact that this new mechanism for raising capital presents a number of challenges. The JOBS Act not only requires the Commission to develop a completely new regulatory framework that promotes capital formation for startup companies, but also to implement this innovative framework in a way that protects investors from fraud.
Despite these challenges, crowdfunding presents a number of opportunities. Small businesses – the engines of innovation, economic growth, and job creation – will have the opportunity to access capital from sources that have been previously unavailable. All investors – not just the so-called “accredited investors” – will have the opportunity to invest in entrepreneurs and their ideas at an earlier stage than ever before. The concept of the “wisdom of the crowd,” which has proven to be useful in other areas, will now be unleashed to allocate capital to more productive uses.
Not surprisingly, SEC Commissioner Luis A. Aguilar supports less regulation as long as it is replaced with new regulation:
The use of crowdfunding to reach potentially vulnerable segments of society is a particular concern. Many of the SEC’s enforcement cases arise from “affinity frauds” that exploit the trust and friendship that often exists among members of any ethnic, religious, or other community.[Footnote] Given the possibility that crowdfunding may facilitate affinity fraud by making it easier to identify and target vulnerable groups, I would urge the Commission’s enforcement staff and state securities regulators to take a proactive approach to monitor the crowdfunding space for potential problems. In that regard, I am pleased to note that the North American Securities Administrators Association announced the formation of a task force on Internet fraud investigations shortly after the enactment of the JOBS Act.[Footnote]
…
It is therefore essential that the Commission work to establish this new financing technique in a responsible manner. Because of the importance of small business funding, I support the issuance of this proposal. However, I recognize that crowdfunding may entail substantial risks. I look forward to public comments, particularly from investors and investor advocates, as to how the rules can be improved. I also note that Title III of the JOBS Act expressly requires that, in carrying out the rulemaking required to implement the crowdfunding exemption, the Commission shall consult with the state securities commissions.[Footnote] To that end, I look forward to hearing from state regulators.
SEC Commissioner Kara M. Stein wants to ensure there are lots of jobs created handling the red-tape:
First, there is ambiguity in the statute about how much any single investor should be permitted to invest. There are essentially two tests: one based on the income of the investor, and another based on the net worth of the investor. However, it’s not clear from the statute which test should apply and when. One approach is to separately look at both the investor’s income and net worth, and allow the investor to invest up to the maximum amount allowed by the test permitting the greater investment amount. That is the approach taken in the proposed rule. The proposed rule also excludes from the calculation of net worth an individual’s primary residence. No senior citizen living off of a modest, fixed income should be at risk of losing her home to a crowdfunding venture. But even with primary residences excluded from the calculation, I remain concerned that taking the “greater than” approach may expose seniors or others to risks and losses they cannot afford. Another approach could be to limit the investor to the lower investment amount dictated by either the annual income or net worth tests. The release requests comment on which approach is appropriate, and I look forward to hearing from commenters on all sides of this fundamental issue.
The second area I’d like to highlight is whether we should permit funding portals not based in the United States to register and operate in the United States. The release proposes to allow non-U.S. funding portals to register as long as they meet certain requirements, including the portal’s ability to submit to an on-site examination. Given the complexities currently surrounding compliance and enforcement with respect to non-U.S. entities, I believe we need to hear from all parties on this issue and make certain, at a minimum, that all funding portals are fully within our examination and enforcement jurisdiction. I look forward to hearing commenters’ perspectives on this aspect of the proposal.
Third, there is substantial discussion in the release with respect to an issuer’s responsibility to keep complete and accurate records of its securityholders. I believe this is a critically important issue that could have far-reaching implications for the marketplace. A business simply must be able to track who its owners are. While I understand that requiring a registered transfer agent would increase the costs to an issuer, I would like to hear from commenters about possible third-party, cost-effective solutions to help crowdfunding issuers manage their recordkeeping responsibilities.
SEC Commissioner Daniel M. Gallagher is too shy to reveal his views:
The JOBs Act has provided for many investor protections in Title III, including disclosure requirements and the mandatory use of intermediaries called funding portals, and I believe our proposal is generally careful to not add additional, unnecessary frictions into this marketplace. That said, the proof is in the pudding and I look forward to hearing from commenters on whether the balance of investor protection and innovation we are seeking is appropriate.
And to be sure, there is a lot to comment on. In addition to the substantive rule proposal reflected in the proposed rule text and related release language, there are 295 questions in the release. On the actual rule proposal as well as the questions, I especially want to hear from both the small business entrepreneurs we seek to assist, and those investors who look forward to supporting them.
The full release is over 400 pages long. For those with less patience, the press release states:
Consistent with the JOBS Act, the proposed rules would among other things permit individuals to invest subject to certain thresholds, limit the amount of money a company can raise, require companies to disclose certain information about their offers, and create a regulatory framework for the intermediaries that would facilitate the crowdfunding transactions.
Under the proposed rules:
A company would be able to raise a maximum aggregate amount of $1 million through crowdfunding offerings in a 12-month period.
Investors, over the course of a 12-month period, would be permitted to invest up to:
- $2,000 or 5 percent of their annual income or net worth, whichever is greater, if both their annual income and net worth are less than $100,000.
- 10 percent of their annual income or net worth, whichever is greater, if either their annual income or net worth is equal to or more than $100,000. During the 12-month period, these investors would not be able to purchase more than $100,000 of securities through crowdfunding.
Certain companies would not be eligible to use the crowdfunding exemption. Ineligible companies include non-U.S. companies, companies that already are SEC reporting companies, certain investment companies, companies that are disqualified under the proposed disqualification rules, companies that have failed to comply with the annual reporting requirements in the proposed rules, and companies that have no specific business plan or have indicated their business plan is to engage in a merger or acquisition with an unidentified company or companies.
As mandated by Title III of the JOBS Act, securities purchased in a crowdfunding transaction could not be resold for a period of one year. Holders of these securities would not count toward the threshold that requires a company to register with the SEC under Section 12(g) of the Exchange Act.
Enforcing the limits per investor sounds like a job and a half! So fear not! There will be plenty of work for the regulators!
Interestingly, Canada Post no longer wants its debt rated by S&P:
- We are affirming our ‘AAA’ long-term issuer credit and senior unsecured debt ratings and ‘A-1+’ short-term rating on Canada Post Corp. (CPC).
- We have revised our assessment of CPC’s role with and link to the Canadian federal government to “critical” and “integral’ from “very important” and “very strong”, respectively, under our government-related entities criteria.
- Accordingly, we have revised the company’s likelihood of receiving extraordinary government support to “almost certain” from “very high”.
- We are withdrawing our ratings at CPC’s request.
I’m not quite sure what to make of that, particularly in light of Royal Mail’s IPO success:
Forget Twitter. The hottest stock offering of the year is the Royal Mail.
Shares in Britain’s 500-year-old postal service soared as high as 50 per cent over their initial offering price in the days after being listed this month, proving that a very mature business can still excite investors.
That has triggered a sense of postal envy in Ottawa. This could have been Canada Post’s big payday.
…
If nothing is done to fix its broken business model Canada Post says it will be losing nearly $1-billion a year by 2020.
…
None of the proposed options for fixing the post office are very palatable. They include moving all Canadians to community mailboxes, going to three-day-a week delivery from the current five, franchising more post offices, raising stamp prices and slowing mail delivery, according to a recent Conference Board of Canada report commissioned by the post office.
I don’t understand why the reporter thinks three-day-a-week delivery is unpalatable. What comes in the mail? Magazines and bills. Twice a week is fine for residential service. Maybe more often in high-volume areas, like downtown Toronto.
DBRS updated its report on Veresen, proud issuer of VSN.PR.A and VSN.PR.C:
Veresen continues to pursue its growth and diversification initiatives. In May 2013, the Company filed an application with the Federal Energy Regulatory Commission (FERC) to construct and operate an LNG export facility and related power and pipeline infrastructure at Coos Bay, Oregon (Jordan Cove Energy Project, or the Project). The estimated cost of the Project is $7.5 billion, with an expected in-service date of 2018. DBRS recognizes that the Project is significant and transformative, as it adds growth and diversification to Veresen’s business, and expects that its success will have a positive impact on the Company’s business risk profile. However, the Project is much larger than those undertaken by the Company in the past and entails significant execution risks. The underpinning of firm long-term anchor shipping contracts will be critical to financing the Project in the market, and DBRS expects the Project to be syndicated, due to its relative size and complexity. DBRS will continue to monitor the developments on the Project to assess any impact on the Company’s financial profile.
It was a mixed day for the Canadian preferred share market, with PerpetualDiscounts off 1bp, FixedResets down 6bp and DeemedRetractibles gaining 3bp. Volatility was at normal levels. Volume was high.
PerpetualDiscounts now yield 5.58%, equivalent to 7.25% interest at the standard equivalency factor of 1.3x. Long corporates now yield about 4.8%, so the pre-tax interest-equivalent spread (in this context, the “Seniority Spread”) is now about 245bp, unchanged from October 9.
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 |
0.9281 % |
2,495.9 |
| FixedFloater |
4.27 % |
3.54 % |
27,149 |
18.32 |
1 |
0.0450 % |
3,927.7 |
| Floater |
2.71 % |
2.96 % |
63,110 |
19.83 |
5 |
0.9281 % |
2,694.9 |
| OpRet |
4.62 % |
2.84 % |
64,791 |
0.59 |
3 |
-0.0898 % |
2,640.8 |
| SplitShare |
4.78 % |
5.28 % |
67,507 |
3.98 |
6 |
-0.2004 % |
2,937.0 |
| Interest-Bearing |
0.00 % |
0.00 % |
0 |
0.00 |
0 |
-0.0898 % |
2,414.8 |
| Perpetual-Premium |
5.81 % |
4.45 % |
108,272 |
0.08 |
7 |
-0.0057 % |
2,286.8 |
| Perpetual-Discount |
5.54 % |
5.58 % |
166,215 |
14.37 |
30 |
-0.0072 % |
2,350.0 |
| FixedReset |
4.98 % |
3.72 % |
232,432 |
3.57 |
85 |
-0.0637 % |
2,442.3 |
| Deemed-Retractible |
5.13 % |
4.32 % |
189,771 |
2.22 |
43 |
0.0267 % |
2,385.2 |
| Performance Highlights |
| Issue |
Index |
Change |
Notes |
| TRP.PR.C |
FixedReset |
-1.56 % |
YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2043-10-23
Maturity Price : 21.61
Evaluated at bid price : 22.03
Bid-YTW : 3.96 % |
| BAM.PR.X |
FixedReset |
-1.55 % |
YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2043-10-23
Maturity Price : 21.35
Evaluated at bid price : 21.66
Bid-YTW : 4.45 % |
| IFC.PR.C |
FixedReset |
-1.44 % |
YTW SCENARIO
Maturity Type : Call
Maturity Date : 2016-09-30
Maturity Price : 25.00
Evaluated at bid price : 25.29
Bid-YTW : 3.90 % |
| BAM.PR.K |
Floater |
1.14 % |
YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2043-10-23
Maturity Price : 17.82
Evaluated at bid price : 17.82
Bid-YTW : 2.96 % |
| BAM.PR.C |
Floater |
1.19 % |
YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2043-10-23
Maturity Price : 17.80
Evaluated at bid price : 17.80
Bid-YTW : 2.97 % |
| CIU.PR.C |
FixedReset |
2.78 % |
YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2043-10-23
Maturity Price : 19.99
Evaluated at bid price : 19.99
Bid-YTW : 4.17 % |
| Volume Highlights |
| Issue |
Index |
Shares
Traded |
Notes |
| TD.PR.T |
FixedReset |
128,118 |
Scotia crossed blocks of 25,000 and 18,600, both at 25.20. RBC crossed 25,000 and 44,400, both at the same price.
YTW SCENARIO
Maturity Type : Call
Maturity Date : 2018-07-31
Maturity Price : 25.00
Evaluated at bid price : 25.16
Bid-YTW : 2.25 % |
| RY.PR.P |
FixedReset |
79,146 |
Nesbitt crossed 75,000 at 25.18.
YTW SCENARIO
Maturity Type : Call
Maturity Date : 2014-02-24
Maturity Price : 25.00
Evaluated at bid price : 25.15
Bid-YTW : 2.86 % |
| GWO.PR.R |
Deemed-Retractible |
57,297 |
Desjardins crossed 26,400 at 22.40.
YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 22.30
Bid-YTW : 6.22 % |
| GWO.PR.J |
FixedReset |
55,601 |
Desjardins crossed 50,000 at 25.19.
YTW SCENARIO
Maturity Type : Call
Maturity Date : 2013-12-31
Maturity Price : 25.00
Evaluated at bid price : 25.16
Bid-YTW : 4.64 % |
| IAG.PR.G |
FixedReset |
54,505 |
RBC crossed 44,000 at 25.45.
YTW SCENARIO
Maturity Type : Call
Maturity Date : 2017-06-30
Maturity Price : 25.00
Evaluated at bid price : 25.37
Bid-YTW : 3.97 % |
| IAG.PR.C |
FixedReset |
51,751 |
Desjardins crossed 50,000 at 25.22.
YTW SCENARIO
Maturity Type : Call
Maturity Date : 2013-12-31
Maturity Price : 25.00
Evaluated at bid price : 25.20
Bid-YTW : 4.05 % |
| There were 46 other index-included issues trading in excess of 10,000 shares. |
| Wide Spread Highlights |
| Issue |
Index |
Quote Data and Yield Notes |
| PWF.PR.A |
Floater |
Quote: 23.11 – 23.99
Spot Rate : 0.8800
Average : 0.6371
YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2043-10-23
Maturity Price : 22.83
Evaluated at bid price : 23.11
Bid-YTW : 2.23 % |
| SLF.PR.G |
FixedReset |
Quote: 22.86 – 23.24
Spot Rate : 0.3800
Average : 0.2341
YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 22.86
Bid-YTW : 4.46 % |
| GWO.PR.N |
FixedReset |
Quote: 21.81 – 22.29
Spot Rate : 0.4800
Average : 0.3403
YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 21.81
Bid-YTW : 4.80 % |
| BAM.PR.G |
FixedFloater |
Quote: 22.23 – 22.72
Spot Rate : 0.4900
Average : 0.3566
YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2043-10-23
Maturity Price : 22.57
Evaluated at bid price : 22.23
Bid-YTW : 3.54 % |
| FTS.PR.F |
Perpetual-Discount |
Quote: 23.03 – 23.41
Spot Rate : 0.3800
Average : 0.2509
YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2043-10-23
Maturity Price : 22.74
Evaluated at bid price : 23.03
Bid-YTW : 5.39 % |
| CIU.PR.C |
FixedReset |
Quote: 19.99 – 20.49
Spot Rate : 0.5000
Average : 0.3853
YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2043-10-23
Maturity Price : 19.99
Evaluated at bid price : 19.99
Bid-YTW : 4.17 % |
