Category: Market Action

There was lots of fun with European bonds today:

German two-year rates dropped below 0.3 percent for the first time, while the extra yield investors demand to hold 10- year bonds from France, Belgium, Spain and Austria instead of bunds all climbed to euro-era records. Italy’s 10-year yield rose above 7 percent as prime minister-in-waiting Mario Monti wrapped up talks on forming a new government. Spain and Belgium sold less than the maximum target of bills at auctions today as financing costs increased.

Italy’s 10-year yield climbed 37 basis points, or 0.37 percentage point, to 7.07 percent at 5 p.m. in London. It rose to a euro-era record 7.48 percent on Nov. 9. The 4.75 percent bond due September 2021 slid 2.285, or 22.85 euros per 1,000- euro face amount ($1,351), to 84.57.

The spread investors demand to hold 10-year French debt instead of German bunds widened 26 basis points, the most since the euro started in 1999, based on closing-market rates, to 190 basis points. It touched 191 basis points, also the most since the common currency was introduced. The yield on the 10-year bund fell one basis point to 1.77 percent, less than half France’s 3.67 percent rate.

Meanwhile, here’s a little colour to support my support for a Greek referendum:

One of the biggest uncertainties for Greek-Canadian business owners has been the disruption brought on by a series of strikes. Panagiotis Tsiriotakis imports olive oil from his family’s land in Crete, bottles it and sells it to Canadian retailers. He notes that every day, a different group goes on strike in Greece, from trucking to customs to the ports. “Then the ships don’t even go into port to collect it,” he said. “Nothing is stable right now.”

What used to take a few weeks to cross the oceans can now be up to two months. Inventories in his Toronto warehouse have dwindled and he’s worried he won’t be able to keep up with demand.

The travel business is also seeing disruptions. Aris Sideratos, founder and owner of Skyway Tours Ltd. in Toronto’s Greektown, said that demand for vacation packages in Greece has slid 30 per cent from last year and that some non-Greek tourists have avoided the country because they’re afraid of strikes and riots.

It will be just lovely if the Greek government organizes acceptance of the bail-out funds. But will the Greek populace be willing to aquiesce to the terms of repayment?

Sino-Forest got some good news:

The committee said in an interim report that it obtained information from Chinese forestry bureaus verifying 77 percent of Sino-Forest’s reported timber assets. It also said it confirmed the Mississauga, Ontario- and Hong Kong-based company’s cash balance.

While Sino-Forest has been suspended from trading since August, shares of its Greenheart Group Ltd. unit soared 93 percent yesterday in Hong Kong after publication of the report. Sino-Forest’s 10.25 percent bonds, which mature in 2014, gained 24.75 cents on the dollar to 62 cents as of 4:30 p.m. in Toronto yesterday, according to Trace, the bond price reporting system of the Financial Industry Regulatory. The 6.25 percent bonds due October 2017 rose as much as 27.45 cents to 60 cents.

Richard Fisher of the Dallas Fed made an important speech titled Taming the Too-Big-to-Fails: Will Dodd–Frank Be the Ticket or Is Lap-Band Surgery Required? (With Reference to Vinny Guadagnino, Andrew Haldane, Paul Volcker, John Milton, Tom Hoenig and Churchill’s ‘Terminological Inexactitude’) (clearly, Mr. Fisher takes great pleasure in titling his speeches):

return to Andrew Haldane of the Bank of England. Haldane makes an intriguing parallel between the financial system and epidemiological networks. Conventional capital requirements seek to equalize failure probabilities across institutions to a certain threshold, say 0.1 percent. But using a systemwide approach would result in a different calibration, if the objective were to set a firm’s capital requirements equal to the marginal cost of its failure to the system as a whole. Regulatory capital requirements would then be higher for banks posing the greatest risk to the system, which is what Dodd–Frank proposes, and what the current Basel III requirements are also considering.

To Haldane, this is a new approach in banking, but not in epidemiology where “focusing preventive action on ‘super-spreaders’ within the network to limit the potential for systemwide spread” is the norm. As Haldane emphasizes, “If anything, this same logic applies with even greater force in banking.”[17] To me, treating too-big-to-fail institutions as potential “super-spreaders” of financial germs has a great deal of appeal.
…
Yet, in my view, there is only one fail-safe way to deal with too big to fail. I believe that too-big-to-fail banks are too-dangerous-to-permit.[26] As Mervyn King, head of the Bank of England, once said, “If some banks are thought to be too big to fail, then … they are too big.” I favor an international accord that would break up these institutions into more manageable size. More manageable not only for regulators, but also for the executives of these institutions. For there is scant chance that managers of $1 trillion or $2 trillion banking enterprises can possibly “know their customer,” follow time-honored principles of banking and fashion reliable risk management models for organizations as complex as these megabanks have become.

Am I too radical? I think not. I find myself in good company―Paul Volcker, for example, advocates “reducing their size, curtailing their interconnectedness, or limiting their activities.”[27]

In my view, downsizing the behemoths over time into institutions that can be prudently managed and regulated across borders is the appropriate policy response. Then, creative destruction can work its wonders in the financial sector, just as it does elsewhere in our economy.

We shouldn’t just pay lip service to letting the discipline of the market work. Ideally, we should rely on market forces to work not only in good times, but also in times of difficulties. Ultimately, we should move to end too big to fail and the apparatus of bailouts and do so well before bankers lose their memory of the recent crisis and embark on another round of excessive risk taking. Only then will we have a financial system fit and proper for servicing an economy as dynamic as that of the United States.

Premier Charest stated today that single mums seeking to buy milk for their children are not represented by any government he has anything to do with:

There is now speculation the Canadian government might come under pressure to dismantle the system in negotiations for a trans-Pacific trade zone.

Not so fast, Mr. Charest said Tuesday.

He says supply management has not been on the table during ongoing Canada-European Union trade talks, nor should it be during the upcoming Trans Pacific Partnership negotiations.

He says the place to have a broad conversation about agriculture programs is at the global level, at the World Trade Organization. He said the same applies to other countries’ agriculture subsidies.

“The supply-management system is non-negotiable,” he told reporters, speaking about the trans-Pacific trade talks.
…
Canadians pay two to three times more than world market prices for products like milk, butter, cheese and eggs, according to the Organization for Economic Co-operation and Development.

Let them drink Coke!

I think there must be something going on behind the scenes at Atlantic Power / CPI Preferred Equity with respect to the ratings on CZP.PR.A & CZP.PR.B. The takeover closed two weeks ago, after DBRS had warned of a massive downgrade … and nothing’s happening. Perhaps ATP is frantically trying to put some kind of deal together? We shall see!

It was a mildly downish day for the Canadian preferred share market, with PerpetualDiscounts up 1bp, FixedResets down 7bp and DeemedRetractibles losing 8bp. Volatility was mild. Volume was average.

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	0.5838 %	2,124.9
FixedFloater	4.83 %	4.55 %	28,819	17.22	1	-0.7576 %	3,187.5
Floater	3.39 %	3.40 %	157,624	18.70	2	0.5838 %	2,294.3
OpRet	4.94 %	2.38 %	53,213	1.50	7	0.3459 %	2,489.7
SplitShare	5.75 %	6.53 %	58,427	5.12	3	-0.0280 %	2,514.0
Interest-Bearing	0.00 %	0.00 %	0	0.00	0	0.3459 %	2,276.6
Perpetual-Premium	5.57 %	-0.12 %	100,600	0.14	13	0.1020 %	2,158.4
Perpetual-Discount	5.31 %	5.21 %	106,687	14.78	17	0.0121 %	2,296.5
FixedReset	5.10 %	2.93 %	222,904	2.50	63	-0.0732 %	2,348.6
Deemed-Retractible	5.03 %	4.40 %	213,798	3.66	46	-0.0764 %	2,222.3

Performance Highlights
Issue	Index	Change	Notes
BAM.PR.N	Perpetual-Discount	-1.53 %	YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2041-11-15 Maturity Price : 22.80 Evaluated at bid price : 23.20 Bid-YTW : 5.17 %
BAM.PR.M	Perpetual-Discount	-1.24 %	YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2041-11-15 Maturity Price : 22.66 Evaluated at bid price : 23.04 Bid-YTW : 5.21 %
IAG.PR.A	Deemed-Retractible	-1.20 %	YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 23.04 Bid-YTW : 5.73 %
BAM.PR.O	OpRet	1.44 %	YTW SCENARIO Maturity Type : Option Certainty Maturity Date : 2013-06-30 Maturity Price : 25.00 Evaluated at bid price : 26.00 Bid-YTW : 2.88 %

Volume Highlights
Issue	Index	Shares Traded	Notes
TD.PR.Q	Deemed-Retractible	239,740	Block traders gone wild! Scotia crossed blocks of 50,000 shares, 25,000 and 24,200. RBC crossed 25,000. TD crossed blocks of 50,000 shares, 20,000 and 30,000. All blocks crossed at 26.60. YTW SCENARIO Maturity Type : Call Maturity Date : 2013-01-31 Maturity Price : 26.00 Evaluated at bid price : 26.61 Bid-YTW : 3.58 %
TD.PR.I	FixedReset	109,725	Nesbitt crossed 100,000 at 27.45. YTW SCENARIO Maturity Type : Call Maturity Date : 2014-07-31 Maturity Price : 25.00 Evaluated at bid price : 27.45 Bid-YTW : 2.60 %
TD.PR.E	FixedReset	84,850	TD crossed blocks of 29,600 and 25,000, both at 27.30; RBC crossed 10,000 at 27.30 and another 10,000 at 27.28. YTW SCENARIO Maturity Type : Call Maturity Date : 2014-04-30 Maturity Price : 25.00 Evaluated at bid price : 27.28 Bid-YTW : 2.51 %
BNS.PR.N	Deemed-Retractible	77,055	Desjardins crossed 25,000 at 26.37. YTW SCENARIO Maturity Type : Call Maturity Date : 2013-01-29 Maturity Price : 26.00 Evaluated at bid price : 26.36 Bid-YTW : 4.04 %
TD.PR.Y	FixedReset	64,925	Nesbitt crossed 60,000 at 26.30. YTW SCENARIO Maturity Type : Call Maturity Date : 2013-10-31 Maturity Price : 25.00 Evaluated at bid price : 26.20 Bid-YTW : 2.69 %
SLF.PR.I	FixedReset	64,740	Recent new issue. YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-12-31 Maturity Price : 25.00 Evaluated at bid price : 24.70 Bid-YTW : 4.36 %
There were 32 other index-included issues trading in excess of 10,000 shares.

Wide Spread Highlights
Issue	Index	Quote Data and Yield Notes
PWF.PR.E	Perpetual-Discount	Quote: 25.22 – 25.67 Spot Rate : 0.4500 Average : 0.2909 YTW SCENARIO Maturity Type : Call Maturity Date : 2013-01-31 Maturity Price : 25.00 Evaluated at bid price : 25.22 Bid-YTW : 4.95 %
BMO.PR.M	FixedReset	Quote: 26.07 – 26.42 Spot Rate : 0.3500 Average : 0.2417 YTW SCENARIO Maturity Type : Call Maturity Date : 2013-08-25 Maturity Price : 25.00 Evaluated at bid price : 26.07 Bid-YTW : 2.47 %
HSB.PR.C	Deemed-Retractible	Quote: 25.50 – 25.87 Spot Rate : 0.3700 Average : 0.2670 YTW SCENARIO Maturity Type : Call Maturity Date : 2013-06-30 Maturity Price : 25.25 Evaluated at bid price : 25.50 Bid-YTW : 4.86 %
IAG.PR.A	Deemed-Retractible	Quote: 23.04 – 23.38 Spot Rate : 0.3400 Average : 0.2672 YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 23.04 Bid-YTW : 5.73 %
BAM.PR.G	FixedFloater	Quote: 19.65 – 20.00 Spot Rate : 0.3500 Average : 0.2784 YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2041-11-15 Maturity Price : 25.00 Evaluated at bid price : 19.65 Bid-YTW : 4.55 %
BMO.PR.O	FixedReset	Quote: 27.43 – 27.65 Spot Rate : 0.2200 Average : 0.1489 YTW SCENARIO Maturity Type : Call Maturity Date : 2014-05-25 Maturity Price : 25.00 Evaluated at bid price : 27.43 Bid-YTW : 2.44 %

Hungary may become a junk credit:

Hungary’s sovereign credit grade may be cut to junk this month after Standard & Poor’s Ratings Services placed the country’s lowest investment grade on “CreditWatch with negative implications.”

S&P is likely to make a decision this month on Hungary’s credit grade, currently at BBB-, the rating company said in a statement today. Fitch Ratings yesterday cut the outlook on Hungary’s lowest investment grade to negative from stable, joining S&P and Moody’s Investors

Milkfare has cost us yet another trade agreement:

“The [Trans Pacific Partnership] will boost our economies, lowering barriers to trade and investment, increasing exports, and creating more jobs for our people,” U.S. President Barack Obama said in announcing the new framework ahead of the start of the formal APEC leader summit in Hawaii on Saturday.

But that won’t be the case for Canada.

While Canada would like to be part of the Trans Pacific Partnership, it doesn’t agree with the cost of membership, particularly the suggestion that it needs to signal a willingness to abandon supply management policies, International Trade Minister Ed Fast said Saturday.

Yellow Media sold some assets:

Yellow Media Inc. (TSX: YLO) announces that it has sold the assets of LesPAC Inc. to Mediagrif Interactive Technologies Inc. for a purchase price of $72.5 million. The transaction is effective immediately.
…
For the year ended December 31, 2010, LesPAC Inc. reported revenues of $12.7M.

Be nice if they could sell the whole damn company for six times revenue!

According to their credit agreement with the banks:

“Prepayment Trigger Event” means any disposition or dispositions of assets of the Restricted Entities in any fiscal year of the Borrower, the aggregate proceeds for which exceed $25,000,000 during such fiscal year.
…
5.2 Mandatory Prepayments

On each occasion that a Prepayment Trigger Event occurs, the Borrower shall give written notice thereof to the Administrative Agent and shall, contemporaneously with the occurrence of such Prepayment Trigger Event, prepay outstanding credit granted to the Borrower under the Facilities in an amount equal to 100% of the Net Cash Proceeds. Section 2.11 shall be complied with in connection with any such prepayment. Other than any payments required pursuant to Section 2.11, there are no premiums, penalties or other additional payments associated with any mandatory prepayments under this Section 5.2. Amounts which are prepaid as aforesaid shall be applied firstly to the scheduled instalments under the NRT Facility (including the instalment due and payable on the Maturity Date) in inverse order of maturity and secondly to the Revolving Facility. In each case, any amounts which are prepaid as aforesaid may not be reborrowed.

It was a solid day for the Canadian preferred share market, with PerpetualDiscounts gaining 6bp, FixedResets up 10bp and DeemedRetractibles winning 15bp. Volatility was good. Volume was light, despite a few issues showing some big trades.

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	-0.1942 %	2,112.6
FixedFloater	4.80 %	4.50 %	26,674	17.28	1	0.0000 %	3,211.9
Floater	3.41 %	3.43 %	155,419	18.64	2	-0.1942 %	2,281.0
OpRet	4.96 %	3.10 %	55,121	1.50	7	0.1650 %	2,481.1
SplitShare	5.75 %	6.57 %	58,442	5.12	3	0.1401 %	2,514.7
Interest-Bearing	0.00 %	0.00 %	0	0.00	0	0.1650 %	2,268.7
Perpetual-Premium	5.57 %	1.83 %	101,622	0.15	13	0.0780 %	2,156.2
Perpetual-Discount	5.31 %	5.32 %	107,732	14.78	17	0.0556 %	2,296.2
FixedReset	5.10 %	2.90 %	221,015	2.50	63	0.0963 %	2,350.3
Deemed-Retractible	5.03 %	4.34 %	201,217	3.45	46	0.1461 %	2,224.0

Performance Highlights
Issue	Index	Change	Notes
ENB.PR.A	Perpetual-Premium	-1.17 %	YTW SCENARIO Maturity Type : Call Maturity Date : 2011-12-14 Maturity Price : 25.00 Evaluated at bid price : 25.37 Bid-YTW : -14.92 %
POW.PR.D	Perpetual-Discount	1.20 %	YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2041-11-14 Maturity Price : 24.25 Evaluated at bid price : 24.55 Bid-YTW : 5.13 %
IAG.PR.A	Deemed-Retractible	1.22 %	YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 23.32 Bid-YTW : 5.58 %
SLF.PR.H	FixedReset	1.25 %	YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 24.31 Bid-YTW : 4.22 %
TCA.PR.X	Perpetual-Premium	1.27 %	YTW SCENARIO Maturity Type : Call Maturity Date : 2013-10-15 Maturity Price : 50.00 Evaluated at bid price : 52.66 Bid-YTW : 2.86 %

Volume Highlights
Issue	Index	Shares Traded	Notes
TD.PR.I	FixedReset	351,635	Nesbitt crossed blocks of 200,000 shares, 46,000 and 100,000, all at 27.45. Nice tickets! YTW SCENARIO Maturity Type : Call Maturity Date : 2014-07-31 Maturity Price : 25.00 Evaluated at bid price : 27.46 Bid-YTW : 2.58 %
ENB.PR.B	FixedReset	296,965	Scotia sold 11,200 to anonymous at 25.30. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2041-11-14 Maturity Price : 23.22 Evaluated at bid price : 25.30 Bid-YTW : 3.70 %
CM.PR.L	FixedReset	199,245	Nesbitt crossed 50,000 and 25,000 at 27.60. RBC crossed blocks of 35,000 and 65,000, both at the same price. TD crossed 20,000 at the same price again. YTW SCENARIO Maturity Type : Call Maturity Date : 2014-04-30 Maturity Price : 25.00 Evaluated at bid price : 27.47 Bid-YTW : 2.46 %
CM.PR.E	Perpetual-Discount	125,750	RBC crossed 98,500 at 25.05. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2041-11-14 Maturity Price : 24.73 Evaluated at bid price : 25.04 Bid-YTW : 5.63 %
TD.PR.A	FixedReset	99,914	RBC crossed 81,000 and 10,000, both at 26.30. YTW SCENARIO Maturity Type : Call Maturity Date : 2014-01-31 Maturity Price : 25.00 Evaluated at bid price : 26.24 Bid-YTW : 2.77 %
CM.PR.G	Perpetual-Discount	90,618	Desjardins crossed 65,000 at 24.92. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2041-11-14 Maturity Price : 24.58 Evaluated at bid price : 24.90 Bid-YTW : 5.45 %
There were 18 other index-included issues trading in excess of 10,000 shares.

Wide Spread Highlights
Issue	Index	Quote Data and Yield Notes
BAM.PR.O	OpRet	Quote: 25.63 – 26.09 Spot Rate : 0.4600 Average : 0.3200 YTW SCENARIO Maturity Type : Option Certainty Maturity Date : 2013-06-30 Maturity Price : 25.00 Evaluated at bid price : 25.63 Bid-YTW : 3.81 %
RY.PR.I	FixedReset	Quote: 26.06 – 26.39 Spot Rate : 0.3300 Average : 0.2175 YTW SCENARIO Maturity Type : Call Maturity Date : 2014-02-24 Maturity Price : 25.00 Evaluated at bid price : 26.06 Bid-YTW : 3.02 %
RY.PR.L	FixedReset	Quote: 26.41 – 26.75 Spot Rate : 0.3400 Average : 0.2345 YTW SCENARIO Maturity Type : Call Maturity Date : 2014-02-24 Maturity Price : 25.00 Evaluated at bid price : 26.41 Bid-YTW : 2.97 %
PWF.PR.I	Perpetual-Premium	Quote: 25.47 – 25.79 Spot Rate : 0.3200 Average : 0.2168 YTW SCENARIO Maturity Type : Call Maturity Date : 2011-12-14 Maturity Price : 25.25 Evaluated at bid price : 25.47 Bid-YTW : -1.87 %
TCA.PR.Y	Perpetual-Premium	Quote: 52.64 – 52.96 Spot Rate : 0.3200 Average : 0.2183 YTW SCENARIO Maturity Type : Call Maturity Date : 2014-03-05 Maturity Price : 50.00 Evaluated at bid price : 52.64 Bid-YTW : 3.31 %
CU.PR.B	Perpetual-Premium	Quote: 25.55 – 25.83 Spot Rate : 0.2800 Average : 0.1901 YTW SCENARIO Maturity Type : Call Maturity Date : 2011-12-14 Maturity Price : 25.25 Evaluated at bid price : 25.55 Bid-YTW : -11.47 %

Money funds are drawing back from Europe:

The biggest U.S. prime money-market funds cut their investments in Deutsche Bank AG (DBK) by $8.1 billion in October, the largest drop among 35 of the largest banks in Europe, the U.S., Japan and Canada, Bloomberg analysis shows.

The amount of Deutsche Bank short-term obligations held by the eight biggest U.S. funds eligible to purchase corporate debt, which included offerings from Fidelity Investments, JPMorgan Chase & Co. (JPM) and BlackRock Inc. (BLK), declined by 56 percent to $6.3 billion from Sept. 30 to Oct. 31, according to monthly portfolio updates compiled by Bloomberg and published in today’s Bloomberg Risk newsletter.

Deutsche Bank Chief Financial Officer Stefan Krause said that money funds aren’t a major source of funding on an Oct. 25 earnings call. Krause estimated that the funds provided 3 percent of the bank’s total funding.

Germany’s largest bank said it increased its discretionary unsecured wholesale funding to 135 billion euros from 113 billion euros between the end of June and the end of September, according to a presentation given by Krause at the time.

TMX DataLinx continues to have problems, so today’s report is again based on Yahoo!

It was a fine day for the Canadian preferred share market, with PerpetualDiscounts up 18bp, FixedResets gaining 13bp and DeemedRetractibles winning 20bp. Volatility was muted. Volume was light, although some nice blocks got crossed, particularly by Desjardins.

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	-0.2583 %	2,116.7
FixedFloater	4.80 %	4.50 %	26,267	17.29	1	0.4566 %	3,211.9
Floater	3.40 %	3.43 %	68,928	18.66	2	-0.2583 %	2,285.4
OpRet	4.96 %	3.19 %	54,366	1.51	7	-0.0879 %	2,477.0
SplitShare	5.76 %	6.56 %	59,076	5.13	3	0.0841 %	2,511.1
Interest-Bearing	0.00 %	0.00 %	0	0.00	0	-0.0879 %	2,265.0
Perpetual-Premium	5.58 %	2.53 %	102,751	0.16	13	-0.0930 %	2,154.5
Perpetual-Discount	5.31 %	5.31 %	109,077	14.79	17	0.1792 %	2,294.9
FixedReset	5.10 %	2.88 %	214,432	2.51	63	0.1334 %	2,348.0
Deemed-Retractible	5.03 %	4.37 %	202,776	3.89	46	0.2048 %	2,220.8

Performance Highlights
Issue	Index	Change	Notes
TCA.PR.X	Perpetual-Premium	-1.46 %	YTW SCENARIO Maturity Type : Call Maturity Date : 2013-10-15 Maturity Price : 50.00 Evaluated at bid price : 52.00 Bid-YTW : 3.54 %
BAM.PR.M	Perpetual-Discount	1.91 %	YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2041-11-11 Maturity Price : 23.02 Evaluated at bid price : 23.46 Bid-YTW : 5.11 %
IAG.PR.A	Deemed-Retractible	2.13 %	YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 23.04 Bid-YTW : 5.73 %

Volume Highlights
Issue	Index	Shares Traded	Notes
CM.PR.E	Perpetual-Discount	757,100	Block city! All crosses were at 25.00. Desjardins crossed seven blocks: two of 100,000 each 50,000 15,000 two of 10,000 each 200,000 Nesbitt crossed 50,000 and TD crossed 86,000. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2041-11-11 Maturity Price : 24.72 Evaluated at bid price : 25.03 Bid-YTW : 5.63 %
SLF.PR.I	FixedReset	162,992	Recent new issue. YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-12-31 Maturity Price : 25.00 Evaluated at bid price : 24.70 Bid-YTW : 4.35 %
TD.PR.R	Deemed-Retractible	152,600	Scotia crossed blocks of 50,000 and 75,000, both at 26.70. TD crossed 25,000 at the same price. YTW SCENARIO Maturity Type : Call Maturity Date : 2013-04-30 Maturity Price : 26.00 Evaluated at bid price : 26.76 Bid-YTW : 3.44 %
BNS.PR.X	FixedReset	138,700	Nesbitt crossed blocks of 85,000 and 50,000, both at 27.25. YTW SCENARIO Maturity Type : Call Maturity Date : 2014-04-25 Maturity Price : 25.00 Evaluated at bid price : 27.30 Bid-YTW : 2.45 %
TD.PR.E	FixedReset	91,785	RBC crossed blocks of 49,900 and 10,200, both at 27.30; Scotia crossed 23,900 at the same price.YTW SCENARIO Maturity Type : Call Maturity Date : 2014-04-30 Maturity Price : 25.00 Evaluated at bid price : 27.31 Bid-YTW : 2.45 %
CM.PR.L	FixedReset	89,500	Nesbitt crossed blocks of 23,300 and 47,400, both at 27.59. YTW SCENARIO Maturity Type : Call Maturity Date : 2014-04-30 Maturity Price : 25.00 Evaluated at bid price : 27.51 Bid-YTW : 2.38 %
There were 17 other index-included issues trading in excess of 10,000 shares.

Wide Spread Highlights
Issue	Index	Quote Data and Yield Notes
IAG.PR.F	Deemed-Retractible	Quote: 26.00 – 26.90 Spot Rate : 0.9000 Average : 0.5408 YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 26.00 Bid-YTW : 5.51 %
POW.PR.D	Perpetual-Discount	Quote: 24.26 – 24.70 Spot Rate : 0.4400 Average : 0.3182 YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2041-11-11 Maturity Price : 23.82 Evaluated at bid price : 24.26 Bid-YTW : 5.18 %
IAG.PR.C	FixedReset	Quote: 26.50 – 26.94 Spot Rate : 0.4400 Average : 0.3301 YTW SCENARIO Maturity Type : Call Maturity Date : 2013-12-31 Maturity Price : 25.00 Evaluated at bid price : 26.50 Bid-YTW : 3.63 %
HSE.PR.A	FixedReset	Quote: 25.75 – 26.20 Spot Rate : 0.4500 Average : 0.3421 YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2041-11-11 Maturity Price : 23.44 Evaluated at bid price : 25.75 Bid-YTW : 3.15 %
TCA.PR.X	Perpetual-Premium	Quote: 52.00 – 52.48 Spot Rate : 0.4800 Average : 0.3755 YTW SCENARIO Maturity Type : Call Maturity Date : 2013-10-15 Maturity Price : 50.00 Evaluated at bid price : 52.00 Bid-YTW : 3.54 %
IAG.PR.A	Deemed-Retractible	Quote: 23.04 – 23.39 Spot Rate : 0.3500 Average : 0.2504 YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 23.04 Bid-YTW : 5.73 %

Whoopsy! S&P jumped the gun on France:

Standard & Poor’s roiled global equity, bond, currency and commodity markets when it sent and then corrected an erroneous message to subscribers suggesting France’s top credit rating had been downgraded.

The benchmark Stoxx Europe 600 Index extended its decline to 1.5 percent to 234.11 and French 10-year bond yields surged as much as 28 basis points to 3.48 percent, the highest level since July. The euro pared gains and U.S. equities briefly dropped after the mistaken announcement. Commodities erased gains before resuming increases after S&P affirmed France’s AAA rating in a later statement.
…
S&P’s erroneous message was put out at 3:57 p.m. Paris time. The company sent a release at 5:40 p.m. Paris time saying the message was incorrect and affirming France’s rating.

Meanwhile Cameron appears to favour monetization of European debt:

U.K. Prime Minister David Cameron suggested that the European Central Bank should use its resources to underpin the euro-area bailout fund and give it enough capacity to rescue the region’s larger economies.

“If the leaders of the euro zone want to save their currency then they, together with institutions of the euro zone, must act now,” Cameron said in a speech in London today. “The longer the delay, the greater the danger.”
…
Cameron said yesterday Italy’s position is close to being unsustainable, given the rise in bond yields.

“If you don’t have credibility about your plans to deal with your debts and deal with your deficits, whether you like the markets or not, they won’t lend you any money,” Cameron told lawmakers. “That’s what we are seeing in countries like Greece and now tragically in Italy, where the price of borrowing money is getting to a totally unsustainable level.”

Greece finally got a new Prime Minister:

Lucas Papademos, named today to be interim prime minister of Greece, steered the country into the euro region as central bank governor more than a decade ago. Now the former European Central Bank vice president will have to secure the country’s euro membership for a second time.

Papademos, who has never held elected office, helped foster economic growth rates that surpassed Germany’s and France’s in his eight years at Greece’s central bank before moving to the ECB in 2002. Most recently a visiting professor at Harvard University in Cambridge, Massachusetts, and an adviser to departing Prime Minister George Papandreou, Papademos takes over a country weeks from being unable to meet its debt obligations.

The OSC has provided a report on Dialogue 2011, referred to as “an important forum to consult with our stakeholders”, held on November 1.

The Toronto Stock Exchange’s DataLinx service is having problems again, so this report has been prepared using prices from Yahoo!

It was an uneventful day in the Canadian preferred share market, with PerpetualDiscounts up 2bp, FixedResets gaining 5bp and DeemedRetractibles down 5bp. Volatility was good. Volume was average.

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	-0.2576 %	2,122.1
FixedFloater	4.82 %	4.53 %	26,163	17.26	1	0.1524 %	3,197.3
Floater	3.39 %	3.41 %	159,606	18.70	2	-0.2576 %	2,291.4
OpRet	4.96 %	0.94 %	54,498	1.51	7	-0.1646 %	2,479.2
SplitShare	5.77 %	6.60 %	59,674	5.13	3	0.2953 %	2,509.0
Interest-Bearing	0.00 %	0.00 %	0	0.00	0	-0.1646 %	2,267.0
Perpetual-Premium	5.57 %	2.73 %	103,756	0.15	13	0.0251 %	2,156.5
Perpetual-Discount	5.32 %	5.21 %	108,941	14.73	17	0.0218 %	2,290.8
FixedReset	5.11 %	2.96 %	211,446	2.51	63	0.0542 %	2,344.9
Deemed-Retractible	5.04 %	4.36 %	205,970	3.46	46	-0.0497 %	2,216.2

Performance Highlights
Issue	Index	Change	Notes
MFC.PR.E	FixedReset	-1.33 %	YTW SCENARIO Maturity Type : Call Maturity Date : 2014-09-19 Maturity Price : 25.00 Evaluated at bid price : 25.96 Bid-YTW : 4.49 %
MFC.PR.C	Deemed-Retractible	-1.25 %	YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 21.25 Bid-YTW : 6.67 %
GWO.PR.G	Deemed-Retractible	-1.21 %	YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 24.55 Bid-YTW : 5.54 %
BNS.PR.L	Deemed-Retractible	-1.21 %	YTW SCENARIO Maturity Type : Call Maturity Date : 2015-04-28 Maturity Price : 25.25 Evaluated at bid price : 25.39 Bid-YTW : 4.34 %
MFC.PR.B	Deemed-Retractible	-1.16 %	YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 22.07 Bid-YTW : 6.35 %
CM.PR.P	Deemed-Retractible	1.01 %	YTW SCENARIO Maturity Type : Call Maturity Date : 2012-10-29 Maturity Price : 25.00 Evaluated at bid price : 25.88 Bid-YTW : 1.97 %
BAM.PR.N	Perpetual-Discount	1.30 %	YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2041-11-10 Maturity Price : 22.98 Evaluated at bid price : 23.41 Bid-YTW : 5.12 %
GWO.PR.N	FixedReset	1.38 %	YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 24.90 Bid-YTW : 3.22 %
HSB.PR.C	Deemed-Retractible	1.99 %	YTW SCENARIO Maturity Type : Call Maturity Date : 2013-06-30 Maturity Price : 25.25 Evaluated at bid price : 25.65 Bid-YTW : 4.43 %

Volume Highlights
Issue	Index	Shares Traded	Notes
SLF.PR.I	FixedReset	398,680	New issue settled today. YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-12-31 Maturity Price : 25.00 Evaluated at bid price : 24.55 Bid-YTW : 4.41 %
CM.PR.E	Perpetual-Discount	160,844	Nesbitt crossed 100,000 at 25.00; Scotia crossed 25,000 at 24.99. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2041-11-10 Maturity Price : 24.69 Evaluated at bid price : 24.99 Bid-YTW : 5.64 %
CM.PR.D	Perpetual-Premium	109,636	Scotia crossed blocks of 25,000 and 19,000, both at 25.32. RBC crossed 49,900 at 25.33. YTW SCENARIO Maturity Type : Call Maturity Date : 2012-04-30 Maturity Price : 25.00 Evaluated at bid price : 25.33 Bid-YTW : 3.21 %
BNS.PR.Z	FixedReset	73,802	Recent secondary offering. YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 24.99 Bid-YTW : 3.18 %
TD.PR.K	FixedReset	59,039	Scotia crossed blocks of 30,00 and 26,500, both at 27.40. YTW SCENARIO Maturity Type : Call Maturity Date : 2014-07-31 Maturity Price : 25.00 Evaluated at bid price : 27.44 Bid-YTW : 2.60 %
TD.PR.E	FixedReset	54,828	RBC crossed blocks of 24,900 and 25,000, both at 27.30. YTW SCENARIO Maturity Type : Call Maturity Date : 2014-04-30 Maturity Price : 25.00 Evaluated at bid price : 27.30 Bid-YTW : 2.46 %
There were 32 other index-included issues trading in excess of 10,000 shares.

Wide Spread Highlights
Issue	Index	Quote Data and Yield Notes
BAM.PR.M	Perpetual-Discount	Quote: 23.02 – 23.45 Spot Rate : 0.4300 Average : 0.3218 YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2041-11-10 Maturity Price : 22.64 Evaluated at bid price : 23.02 Bid-YTW : 5.21 %
BAM.PR.G	FixedFloater	Quote: 19.71 – 19.99 Spot Rate : 0.2800 Average : 0.1992 YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2041-11-10 Maturity Price : 25.00 Evaluated at bid price : 19.71 Bid-YTW : 4.53 %
RY.PR.F	Deemed-Retractible	Quote: 25.11 – 25.50 Spot Rate : 0.3900 Average : 0.3119 YTW SCENARIO Maturity Type : Call Maturity Date : 2016-05-24 Maturity Price : 25.00 Evaluated at bid price : 25.11 Bid-YTW : 4.32 %
HSE.PR.A	FixedReset	Quote: 25.75 – 26.05 Spot Rate : 0.3000 Average : 0.2238 YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2041-11-10 Maturity Price : 23.44 Evaluated at bid price : 25.75 Bid-YTW : 3.14 %
CM.PR.M	FixedReset	Quote: 27.36 – 27.82 Spot Rate : 0.4600 Average : 0.3845 YTW SCENARIO Maturity Type : Call Maturity Date : 2014-07-31 Maturity Price : 25.00 Evaluated at bid price : 27.36 Bid-YTW : 2.96 %
GWO.PR.I	Deemed-Retractible	Quote: 22.56 – 22.87 Spot Rate : 0.3100 Average : 0.2536 YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 22.56 Bid-YTW : 5.88 %

Oh, those wacky Europeans and their Risk-Weighted Assets!

Banks in Europe are undercutting regulators’ demands that they boost capital by declaring assets they hold less risky today than they were yesterday.

Banco Santander SA (SAN), Spain’s largest lender, and Banco Bilbao Vizcaya Argentaria SA (BBVA), the second-biggest, say they can go halfway to adding 13.6 billion euros ($18.8 billion) of capital by changing how they calculate risk-weightings, the probability of default lenders assign to loans, mortgages and derivatives. The practice, known as “risk-weighted asset optimization,” allows banks to boost capital ratios without cutting lending, selling assets or tapping shareholders.
…
Spanish banks aren’t alone in using the practice. Unione di Banche Italiane SCPA (UBI), Italy’s fourth-biggest bank, said it will change its risk-weighting model instead of turning to investors for the 1.5 billion euros regulators say it needs. Commerzbank AG (CBK), Germany’s second-biggest lender, said it will do the same. Lloyds Banking Group Plc (LLOY), Britain’s biggest mortgage lender, and HSBC Holdings Plc (HSBA), Europe’s largest bank, both said they cut risk-weighted assets by changing the model.
…
The proportion of risk-weighted assets to total assets at European banks is half that of American banks, according to an April 6 Barclays Capital report written by analysts Simon Samuels and Mike Harrison.
…
Sheila Bair, who stepped down as chairman of the Federal Deposit Insurance Corp. in June, has called Europe’s adoption of risk-weighting “naive.”
…
Some regulators, including Bair, have pushed for a leverage ratio that would require lenders to hold a fixed amount of capital against total assets.
…
Banco Santander, based in Madrid, and BBVA in Bilbao said they’re justified in adjusting risk-weightings because Spanish regulators have held them to higher standards than elsewhere.

Spanish banks have an average ratio of risk-weighted assets to total assets of 52 percent compared with 32 percent for U.K. banks, 31 percent for French and Benelux banks and 35 percent for German banks, analysts at Keefe, Bruyette & Woods Inc., wrote in an Oct. 26 report.

DARPA’s looking for hackers:

At the conference, officials of the Defense Advanced Research Projects Agency pleaded with hackers to help them out and said that the agency plans to boost spending as it battles unnamed adversaries in cyberspace.

Regina Dugan, DARPA director, addressed an audience that comprised what the agency called “visionary hackers,” academics and others, according to a Reuters story.

Ms. Dugan contended that the military needs “more and better options” to meet cyber threats to a growing range of industrial and other systems controlled by computers vulnerable to penetration, including cars with advanced computer diagnostic boards. Of concern are brakes, accelerators, steering and other modern car systems that “we need to worry about” because they could be remotely hacked via such diagnostic controls, said another DARPA program manager.
…
DARPA officials said the country is at risk particularly since the playing field is far from level. Layered security defenses have grown increasingly bloated, according to a recent in-house analysis, while attackers operate with lean, mean malware.

The agency’s analysis reports that some security packages are weighing in at an eye-popping 10 million lines of code, while malicious software on average runs on a whip-thin 125 lines.

To combat such threats, DARPA officials called for both an increase in the development of cyber defensive technologies and of offensive weapon systems.

There’ll be some good money for talented kids in that pot! I presume that Canadian federal government programmers need not apply:

The applications that are not “kicked out” of Service Canada’s automated system at the start cannot be fixed on the computer until a 28-day period has passed, even if the errors are reported to agents in the Service Canada processing office.

These applications then need to be processed manually by agents. The agents have an additional 21 days to do the recalculations, but, because their workforce is shrinking, the time frame is often not met and much longer delays of weeks or months are becoming commonplace.

What’s happening in Greece???

Greece’s critical power-sharing talks have hit a significant hurdle, with political leaders leaving a top-level meeting that had been expected to conclude three days of negotiations without naming a new prime minister to take over from George Papandreou.

The president’s office said Wednesday the meeting would reconvene on Thursday morning. It gave no reason. Earlier, Giorgos Karatzaferis, the head of a small right-wing party, had stormed out of the meeting, accusing the heads of the two main parties of using “trickery” but not giving any details.

I’ve already expressed doubts as to whether the population will permit the “paying back” part of the bail-out plan – but will the politicians even get as far as the “taking the money” part? Bloomberg reports:

Negotiations on a government between Papandreou and Samaras dragged on for a third day today as the two sides disagreed on a prime minister and the opposition balked at European Union demands for written commitments to secure a bailout package.

The new government must implement budget measures and decisions related to an Oct. 26 European bailout package that’s worth 130 billion euros ($177 billion), including a debt swap, before holding elections.

Immediately at stake is the fate of an 8 billion-euro loan installment under an earlier aid package, a 110 billion-euro EU- led bailout agreed in May 2010. The tranche must be paid before the middle of December to prevent a collapse of the country’s financial system.

Italy’s not having much fun either:

The euro-region’s defenses are being breached.

Investors today propelled Italy’s 10-year bond yield to close at a euro-era high of 7.25 percent after the promised exit of Prime Minister Silvio Berlusconi failed to convince them that his country can slash Europe’s second-largest debt burden.

This sounds like dealers are setting up for a lousy auction:

Italy may struggle to sell 5 billion euros ($6.8 billion) of Treasury bills tomorrow, after bond yields surged to euro-era records on Prime Minister Silvio Berlusconi’s resignation offer and LCH Clearnet SA demanded more collateral on the country’s bonds.

Italy auctions one-year bills tomorrow at 11:00 a.m. in Rome, followed by a sale of five-year bonds on Nov. 14. The auction comes after the country’s 10-year bond yield jumped 57 basis points to 7.33 percent, crossing the 7 percent threshold that led Greece, Portugal and Ireland to seek bailouts. Italy paid 3.57 percent the last time it sold one-year bills on Oct. 11. Similar maturity debt currently yields about 8.41 percent.

DBRS downgraded Italy a notch:

DBRS Ratings Limited (DBRS) has today downgraded the ratings on the Republic of Italy’s long-term foreign and local currency debt to A (high) from AA (low). The trend on both ratings remains Negative. The downgrade reflects: (1) persistent stress in market funding conditions; (2) fiscal consolidation implementation risks due to economic and political uncertainties; and, (3) structural economic growth challenges.

European difficulties are having effects in the Antipodes:

New Zealand’s central bank deferred plans to tighten bank lending rules as global turmoil increases the risks for the nation’s economy and financial system.

The Reserve Bank will delay an increase in the core funding ratio to 75 percent from 70 percent by about six months to Jan. 1, 2013, according to its Financial Stability Report released in Wellington today. The ratio sets the minimum share of bank loans that must be funded from local deposits or wholesale borrowings of one year or longer.

“Conditions in global funding markets have deteriorated,” the central bank said in the report. “It would have been very difficult to place new longer-term unsecured debt issues over the past three months as the sovereign debt crisis played out.”

The central bank introduced the ratio in July to reduce local banks’ reliance on short-term debt raised overseas, intending to counter the impact of that funding getting frozen.

Jefferson County’s gone bust:

Jefferson County, Alabama, commissioners voted 4-1 to file the largest U.S. municipal bankruptcy after reaching an impasse over concessions with holders of $3.14 billion of bonds.

JPMorgan Chase & Co. (JPM), which arranged most of the debt to fund a sewer renovation, will likely take the biggest loss.

A provisional agreement with creditors that commissioners approved in September included $1.1 billion in concessions and called for sewer-rate increases of as much as 8.2 percent for the first three years. The county was unable to get signed commitments from creditors, Commission PresidentDavid Carrington said today
…
The vote by officials in Alabama’s most populous county occurred about a month after Pennsylvania’s capital of Harrisburg sought court protection citing millions in overdue bond payments tied to a trash-to-energy incinerator. A Jefferson filing would eclipse that of California’s Orange County in 1994.
…
The crisis in Alabama arose when investors dumped Jefferson county’s bonds as the subprime mortgage-market meltdown sent ripples through Wall Street. Jefferson’s floating-rate securities were coupled with interest-rate swaps, a money-saving strategy pitched by banks that backfired. As credit markets convulsed in 2008, the county’s interest costs soared. When banks demanded early payoffs of the bonds, the county defaulted.

The debt deals also were rife with political corruption, leading the cost of the sewer project to soar as it was built during the 1990s. Former commission president and Birmingham Mayor Larry Langford, a Democrat, was convicted of accepting bribes in connection with the financing.

Two former JPMorgan bankers are fighting Securities and Exchange Commission charges that they made $8 million in undisclosed payments to friends of commissioners to secure the bank’s role in the deals. In 2009, JPMorgan agreed to a $722 million settlement with the SEC.

Be careful doing business in Ontario! Don’t sell securities that go down; only sell securities that go up, OK? Companies are now required to report on changes in the analytical methodology of third parties, and to guess how liquid the market for their securities is going to be.

There is renewed speculation that the TMX / Maple deal will close:

TMX, owner of the Toronto Stock Exchange, rose to C$44.70 this month, shrinking the gap to Maple Group Acquisition Corp.’s C$50-a-share offer to the narrowest since it became the sole bidder in June, according to data compiled by Bloomberg.
…
“The deal will get done and the regulators will probably do a little tinkering around the edges,” Thomas Caldwell, Toronto-based chief executive officer of Caldwell Securities Ltd., which oversees about $1 billion including TMX shares, said in a telephone interview. “At the end of the day, Maple Group’s offering C$50 a share. Price is going to decide this.”
…
The Competition Bureau is reviewing the C$3.73 billion ($3.64 billion) TMX transaction. Quebec’s Autorite des Marches Financiers scheduled hearings on Nov. 24 and Nov. 25 and the Ontario Securities Commission has hearings Dec. 1 and Dec. 2.

“Regulatory approval is more likely with the board and management supporting the transaction,” Edward Ditmire, an analyst at Macquarie in New York, said in a telephone interview. He says there’s a better than 50 percent chance the deal closes.

It will be a black day for Canada if the banks succeed in cementing a bit more of the Old-boy Club hegemony in the financial landscape. A foreign buyer for the TMX is greatly desirable.

Just in time for the Christmas shopping season comes this insurance news:

Should you be burdened with a particular fear of the supernatural, then you are well looked after when it comes to unusual insurance policies. Ghost, werewolf and vampire insurance can also be procured very easily, with each policy redeemable in the event of an attack by these creatures of the night.

Bell Aliant, proud guarantor of BAF.PR.A, was confirmed by DBRS:

DBRS has today confirmed the short- and long-term ratings of Bell Aliant Regional Communications, Limited Partnership (Bell Aliant or the Company) at R-1 (low) and BBB (high), respectively, along with the preferred share rating at Pfd-3 (high). The trends are Stable. The confirmation reflects a business risk profile that, while undergoing a transition from legacy voice services to focusing on growth areas such as data and video, has to-date been manageable. The ratings also incorporate Bell Aliant’s relatively stable financial risk profile, which remains slightly higher than its Canadian peers but within an acceptable range. DBRS believes that for Bell Aliant, the successful transition to providing new services – both in terms of investment and execution – remains more acute than for other telcos that typically have wireless services throughout their territory to provide growth while this fixed-line transition occurs.

It was a mixed day for the Canadian preferred share market, with PerpetualDiscounts winning 11bp, FixedResets down 3bp and DeemedRetractibles gaining 6bp. Volatility was average. Volume was light.

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	0.0967 %	2,127.6
FixedFloater	4.83 %	4.53 %	26,123	17.25	1	-0.1015 %	3,192.4
Floater	3.38 %	3.40 %	161,266	18.72	2	0.0967 %	2,297.3
OpRet	4.95 %	0.96 %	55,181	1.51	7	0.1845 %	2,483.3
SplitShare	5.78 %	6.77 %	60,433	5.12	3	-0.2525 %	2,501.6
Interest-Bearing	0.00 %	0.00 %	0	0.00	0	0.1845 %	2,270.7
Perpetual-Premium	5.57 %	2.54 %	106,033	0.15	13	0.1653 %	2,156.0
Perpetual-Discount	5.32 %	5.43 %	108,968	14.74	17	0.1115 %	2,290.3
FixedReset	5.13 %	3.07 %	208,077	2.52	62	-0.0299 %	2,343.6
Deemed-Retractible	5.04 %	4.33 %	207,277	3.46	46	0.0575 %	2,217.3

Performance Highlights
Issue	Index	Change	Notes
SLF.PR.H	FixedReset	-2.37 %	YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 23.90 Bid-YTW : 4.40 %
ELF.PR.F	Perpetual-Discount	-1.14 %	YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2041-11-09 Maturity Price : 22.17 Evaluated at bid price : 22.45 Bid-YTW : 5.96 %
CM.PR.P	Deemed-Retractible	-1.12 %	YTW SCENARIO Maturity Type : Call Maturity Date : 2012-10-29 Maturity Price : 25.00 Evaluated at bid price : 25.62 Bid-YTW : 3.04 %
POW.PR.D	Perpetual-Discount	1.03 %	YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2041-11-09 Maturity Price : 24.25 Evaluated at bid price : 24.55 Bid-YTW : 5.13 %
BNS.PR.L	Deemed-Retractible	1.18 %	YTW SCENARIO Maturity Type : Call Maturity Date : 2015-04-28 Maturity Price : 25.25 Evaluated at bid price : 25.70 Bid-YTW : 3.95 %

Volume Highlights
Issue	Index	Shares Traded	Notes
ENB.PR.B	FixedReset	69,654	TD crossed 15,000 at 25.60; RBC crossed 25,000 at the same price. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2041-11-09 Maturity Price : 23.27 Evaluated at bid price : 25.45 Bid-YTW : 3.64 %
CM.PR.G	Perpetual-Discount	59,975	Scotia crossed blocks of 10,000 and 25,000, both at 24.95. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2041-11-09 Maturity Price : 24.59 Evaluated at bid price : 24.91 Bid-YTW : 5.45 %
GWO.PR.I	Deemed-Retractible	59,574	RBC crossed 49,900 at 22.64. YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 22.56 Bid-YTW : 5.88 %
MFC.PR.C	Deemed-Retractible	43,693	rBC crossed 28,600 at 21.60. YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 21.52 Bid-YTW : 6.51 %
BAM.PR.Z	FixedReset	34,065	Recent new issue. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2041-11-09 Maturity Price : 23.11 Evaluated at bid price : 25.02 Bid-YTW : 4.38 %
CM.PR.E	Perpetual-Discount	32,383	YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2041-11-09 Maturity Price : 24.68 Evaluated at bid price : 24.98 Bid-YTW : 5.64 %
There were 21 other index-included issues trading in excess of 10,000 shares.

Wide Spread Highlights
Issue	Index	Quote Data and Yield Notes
BAM.PR.H	OpRet	Quote: 25.36 – 26.83 Spot Rate : 1.4700 Average : 0.9090 YTW SCENARIO Maturity Type : Call Maturity Date : 2011-12-09 Maturity Price : 25.00 Evaluated at bid price : 25.36 Bid-YTW : -4.02 %
W.PR.H	Perpetual-Discount	Quote: 25.08 – 25.47 Spot Rate : 0.3900 Average : 0.2390 YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2041-11-09 Maturity Price : 23.88 Evaluated at bid price : 25.08 Bid-YTW : 5.48 %
RY.PR.F	Deemed-Retractible	Quote: 25.15 – 25.50 Spot Rate : 0.3500 Average : 0.2263 YTW SCENARIO Maturity Type : Call Maturity Date : 2016-05-24 Maturity Price : 25.00 Evaluated at bid price : 25.15 Bid-YTW : 4.28 %
CU.PR.B	Perpetual-Premium	Quote: 25.55 – 25.90 Spot Rate : 0.3500 Average : 0.2323 YTW SCENARIO Maturity Type : Call Maturity Date : 2011-12-09 Maturity Price : 25.25 Evaluated at bid price : 25.55 Bid-YTW : -12.40 %
CM.PR.M	FixedReset	Quote: 27.32 – 27.73 Spot Rate : 0.4100 Average : 0.3018 YTW SCENARIO Maturity Type : Call Maturity Date : 2014-07-31 Maturity Price : 25.00 Evaluated at bid price : 27.32 Bid-YTW : 3.01 %
TD.PR.G	FixedReset	Quote: 27.15 – 27.34 Spot Rate : 0.1900 Average : 0.1125 YTW SCENARIO Maturity Type : Call Maturity Date : 2014-04-30 Maturity Price : 25.00 Evaluated at bid price : 27.15 Bid-YTW : 2.70 %

Rumours are floating about specific bank capital surcharges:

Citigroup Inc. (C), JPMorgan Chase & Co., BNP Paribas SA, Royal Bank of Scotland Group Plc, and HSBC Holdings Plc (HSBA) may face top capital surcharges of 2.5 percentage points, according to a provisional list prepared by global regulators and obtained by Bloomberg News.

The list was drawn up as part of plans by the Group of 20 nations to force banks whose failure could damage the global economy to boost their reserves by 1 to 2.5 percentage points above minimum levels agreed on by international regulators. Bank of America Corp. (BAC), Barclays Plc (BARC) and Germany’s biggest bank Deutsche Bank AG (DBK) may face surcharges of 2 percentage points, according to the list.

At least one ECB council member is objecting to the piggy-bank paradigm:

European Central Bank council member Jens Weidmann said the ECB cannot bail out governments by printing money.

“One of the severest forms of monetary policy being roped in for fiscal purposes is monetary financing, in colloquial terms also known as the financing of public debt via the money printing press,” Weidmann, who heads Germany’s Bundesbank, said in a speech in Berlin today. The prohibition of monetary financing in the euro area “is one of the most important achievements in central banking” and “specifically for Germany, it is also a key lesson from the experience of hyperinflation after World War I,” he said.

The ECB is under pressure to ramp up its bond purchases to cap soaring yields in Italy as governments fail to contain the two-year-old sovereign debt crisis. Weidmann also rejected proposals to use Bundesbank currency and gold reserves to help finance purchases by a special fund, saying this is another form of monetary financing.

Pierre Trudeau was a visionary! First in Greece, now in Italy, the slogan is “Elect me and I’ll quit!

Prime Minister Silvio Berlusconi offered to resign as soon as Parliament approves austerity measures in a vote next week, after defections from his ruling party left him without a majority.

“Once that task has been achieved, the prime minister will tender his resignation to the President,” who will then begin consultations with all political parties, President Giorgio Napolitano said tonight in an e-mailed statement after meeting Berlusconi in Rome.

The resignation offer came after Berlusconi failed to muster an absolute majority on a routine parliamentary ballot, obtaining only 308 votes in the 630-seat Chamber of Deputies today.
…
The yield on Italy’s benchmark 10-year bond jumped 11 basis points today to 6.77 percent, the most since the euro’s introduction in 1999 and near the 7 percent level that drove Greece, Ireland and Portugal to seek international bailouts. The extra premium investors demand to hold the debt instead of German bunds widened to a record 497 basis points.

The desperation of European politicians is leading them down some awfully stupid and dangerous pathways:

Bank regulators may get more powers to enforce a European Union plan to recapitalize lenders, including the ability to ban weaker banks from paying bonuses, under a proposal from the European Commission.

The commission, the EU’s executive arm, will propose the law “in the coming days,” Michel Barnier, the EU’s financial services chief said today.

Europe’s banks will need to raise 106 billion euros ($146 billion) in fresh capital under tougher rules being introduced in response to the euro area’s sovereign-debt crisis, the European Banking Authority said last month.
…
Policy makers want banks to use funds from withholding bonuses and dividends to reach the capital target, rather than reducing the size of their balance sheets.

The EBA will “ensure that there isn’t deleveraging, and in particular also that there isn’t deleveraging in host countries in which trans-national groups operate as a result of the need to achieve certain capital levels,” Polish Finance Minister Jacek Rostowski said in a speech in Brussels.

Well, if they’re trying to increase capital flight, that’s a really good way to do it! It’s getting to the point where I’m not sure I understand why anybody would entrust any money at all to European bank – whether as equity or insured deposit.

What-Debt? and Spend-Every-Penny (the guys who turned a structural surplus into a structural deficit) are now bringing us Europe: the sequel:

The Harper government will take longer to erase the deficit, won’t raise Employment Insurance premiums as high and will extend a temporary work-sharing program in response to a worsening Canadian economy.

Finance Minister Jim Flaherty released his fall economic update Tuesday, providing the first clear examples of the “flexibility” his government has promised in the face of slower-than-expected economic growth.
…
These assumptions for slower growth mean Ottawa is now projecting Canada will not produce a fiscal surplus until 2015-16 or 2016-17, depending on the success of a previously-announced plan to find $4-billion a year in spending cuts.

Prime Minister Stephen Harper had promised during the 2011 election campaign that Canada would be in surplus by 2014-15.
…
The size of the federal debt is now projected to rise from $550.3-billion in 2010-11 to $640.6-billion by 2015-16.

I have no problem with deficit spending, as long as it is accompanied by a plan showing how it will paid for through the cycle. Unfortunately, the Junior Republicans can’t be bothered to think so far ahead.

It was a good day for the Canadian preferred share market, with PerpetualDiscounts gaining 17bp, FixedResets up 4bp and DeemedRetractibles winning 25bp. SLF issues were again notable on the downside of the Performance Highlights table. Volume was good.

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	0.0968 %	2,125.6
FixedFloater	4.82 %	4.53 %	25,353	17.26	1	1.2853 %	3,195.6
Floater	3.38 %	3.41 %	162,401	18.70	2	0.0968 %	2,295.1
OpRet	4.94 %	0.94 %	54,802	1.50	7	-0.1258 %	2,478.7
SplitShare	5.77 %	6.60 %	59,250	5.13	3	-0.2379 %	2,508.0
Interest-Bearing	0.00 %	0.00 %	0	0.00	0	-0.1258 %	2,266.5
Perpetual-Premium	5.57 %	2.79 %	105,708	0.16	13	0.0516 %	2,152.4
Perpetual-Discount	5.33 %	5.31 %	109,499	14.74	17	0.1717 %	2,287.7
FixedReset	5.12 %	2.97 %	209,150	2.51	62	0.0390 %	2,344.3
Deemed-Retractible	5.04 %	4.39 %	208,499	3.82	46	0.2464 %	2,216.1

Performance Highlights
Issue	Index	Change	Notes
GWO.PR.I	Deemed-Retractible	-1.32 %	YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 22.50 Bid-YTW : 5.91 %
FTS.PR.C	OpRet	-1.14 %	YTW SCENARIO Maturity Type : Call Maturity Date : 2011-12-08 Maturity Price : 25.50 Evaluated at bid price : 26.10 Bid-YTW : -10.67 %
SLF.PR.A	Deemed-Retractible	-1.12 %	YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 22.12 Bid-YTW : 6.41 %
SLF.PR.B	Deemed-Retractible	-1.11 %	YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 22.37 Bid-YTW : 6.32 %
BMO.PR.Q	FixedReset	-1.06 %	YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 25.23 Bid-YTW : 3.09 %
FTS.PR.H	FixedReset	1.18 %	YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2041-11-08 Maturity Price : 23.53 Evaluated at bid price : 25.75 Bid-YTW : 2.82 %
BAM.PR.N	Perpetual-Discount	1.28 %	YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2041-11-08 Maturity Price : 22.62 Evaluated at bid price : 22.97 Bid-YTW : 5.22 %
BAM.PR.G	FixedFloater	1.29 %	YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2041-11-08 Maturity Price : 25.00 Evaluated at bid price : 19.70 Bid-YTW : 4.53 %
TD.PR.O	Deemed-Retractible	1.38 %	YTW SCENARIO Maturity Type : Call Maturity Date : 2012-10-31 Maturity Price : 25.50 Evaluated at bid price : 25.78 Bid-YTW : 3.72 %
IAG.PR.A	Deemed-Retractible	1.71 %	YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 22.66 Bid-YTW : 5.93 %

Volume Highlights
Issue	Index	Shares Traded	Notes
SLF.PR.F	FixedReset	292,424	RBC crossed blocks of 267,700 and 18,400, both at 26.00. YTW SCENARIO Maturity Type : Call Maturity Date : 2014-06-30 Maturity Price : 25.00 Evaluated at bid price : 26.11 Bid-YTW : 4.50 %
CM.PR.E	Perpetual-Discount	246,600	TD crossed blocks of 99,700 and 100,000, both at 25.00. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2041-11-08 Maturity Price : 24.69 Evaluated at bid price : 24.99 Bid-YTW : 5.63 %
SLF.PR.G	FixedReset	110,370	RBC crossed blocks of 47,200 shares, 14,200 and 10,800, all at 24.50. Desjardins crossed 11,500 at the same price. YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 24.51 Bid-YTW : 3.68 %
CM.PR.G	Perpetual-Discount	88,703	Scotia crossed 50,000 at 24.95. Desjardins crossed 12,000 at the same price. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2041-11-08 Maturity Price : 24.60 Evaluated at bid price : 24.92 Bid-YTW : 5.44 %
RY.PR.R	FixedReset	81,875	Scotia crossed blocks of 30,000 and 44,700, both at 26.93. YTW SCENARIO Maturity Type : Call Maturity Date : 2014-02-24 Maturity Price : 25.00 Evaluated at bid price : 26.90 Bid-YTW : 2.71 %
BAM.PR.O	OpRet	50,900	TD crossed 50,000 at 25.80. YTW SCENARIO Maturity Type : Option Certainty Maturity Date : 2013-06-30 Maturity Price : 25.00 Evaluated at bid price : 25.58 Bid-YTW : 3.90 %
There were 38 other index-included issues trading in excess of 10,000 shares.

Wide Spread Highlights
Issue	Index	Quote Data and Yield Notes
GWO.PR.J	FixedReset	Quote: 26.07 – 26.60 Spot Rate : 0.5300 Average : 0.3725 YTW SCENARIO Maturity Type : Call Maturity Date : 2013-12-31 Maturity Price : 25.00 Evaluated at bid price : 26.07 Bid-YTW : 4.24 %
GWO.PR.M	Deemed-Retractible	Quote: 25.95 – 26.49 Spot Rate : 0.5400 Average : 0.3975 YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 25.95 Bid-YTW : 5.43 %
BNA.PR.E	SplitShare	Quote: 23.09 – 23.75 Spot Rate : 0.6600 Average : 0.5198 YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2017-12-10 Maturity Price : 25.00 Evaluated at bid price : 23.09 Bid-YTW : 6.60 %
HSB.PR.C	Deemed-Retractible	Quote: 25.24 – 25.80 Spot Rate : 0.5600 Average : 0.4300 YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 25.24 Bid-YTW : 5.08 %
HSB.PR.D	Deemed-Retractible	Quote: 25.30 – 25.70 Spot Rate : 0.4000 Average : 0.2910 YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 25.30 Bid-YTW : 4.95 %
IGM.PR.B	Perpetual-Premium	Quote: 26.20 – 26.50 Spot Rate : 0.3000 Average : 0.2062 YTW SCENARIO Maturity Type : Call Maturity Date : 2018-12-31 Maturity Price : 25.00 Evaluated at bid price : 26.20 Bid-YTW : 5.15 %

Another small step in the decline of the West:

Hong Kong companies are issuing a record amount of bonds in Singapore dollars as Europe’s debt crisis boosts relative yields on securities denominated in the U.S. currency, enhancing the city-state’s appeal as a rival financial center.

Singapore-dollar bond sales by borrowers from Hong Kong have risen to $2 billion this year, from $671 million in all of 2010, according to data compiled by Bloomberg. Developers including Henderson Land Development Co. accounted for at least 96 percent of the total. At the same time, Hong Kong companies’ offerings of U.S. dollar notes have shrunk to $1.8 billion from $7 billion in 2010.

Hong Kong borrowers are turning to Singapore as Europe’s deepening debt crisis has driven relative yields on Asian U.S. dollar debt higher. Singapore’s currency market, Asia’s biggest by trading volume, is an additional attraction, enabling efficient conversion to other regional denominations.

To the astonishment of regulators everywhere some banks are bailing out of southern Europe:

BNP Paribas, France’s biggest bank, booked a loss of 812 million euros ($1 billion) in the past four months from reducing its holdings of European sovereign debt, while Commerzbank took losses as it cut its Greek, Irish, Italian, Portuguese and Spanish bonds by 22 percent to 13 billion euros this year.

Banks are selling debt of southern European nations as investors punish companies with large holdings and regulators demand higher reserves to shoulder possible losses. The European Banking Authority is requiring lenders to boost capital by 106 billion euros after marking their government debt to market values. The trend may undermine European leaders’ efforts to lower borrowing costs for countries such as Greece and Italy while generating larger writedowns and capital shortfalls.

Greece might have a new government soon:

Papandreou and Antonis Samaras, leader of New Democracy, “made progress in talks” yesterday “to name a head of a national unity government,” Elias Mosialos, a Greek government spokesman, said in an e-mailed statement. The two men spoke by phone a number of times yesterday, said a Greek government official who declined to be named. Talks will resume in Athens today, the official said.
…
The unity government’s mission will be implementing the European summit decision from Oct. 26 on a second Greek financing package of 130 billion euros ($179 billion) before leading the country to elections, according to an e-mailed statement from the premier’s office. Papandreou, who has agreed to step aside for a new prime minister, spoke yesterday with German Chancellor Angela Merkel; Jean-Claude Juncker, who heads the group of euro area finance ministers; and European Commission President Jose Barroso.

Not much point talking to Juncker, because he’s a liar. Anyway, it’s lovely that the unity government will be implementing the borrowing part of the plan, but it’s unclear to me whether they will be able to deliver on the paying-back part of the plan. Capital flight is becoming a big problem:

Unsparing in its criticism of Greece, Bild launches another broadside against its favourite target: “Greeks stash 200 billion euros in Swiss bank accounts!” headlines the Berlin tabloid, whose influence on the Chancellorship is an open secret. “While Europe struggles to help Greece with multi-billion euro bailout plans, more and more Greeks are transferring their money out of the country” to avoid the consequences of a crash in the national economy, announces Bild. “Stop the capital flight!” insists the tabloid’s editorial, which lambasts the Greek elite for refusing to introduce a tax on money transfers or penalties for tax evasion.

The Globe & Mail reports:

That disenchantment has also been reflected in the flight of capital from the country in recent weeks. The New York Times, citing banking sources in Athens, estimated that €10-billion to €20-billion were whisked away to safer countries in September and October, escalating a trend that saw €46-billion in deposits leave Greek banks since January 2010.

The wealthy have reportedly been paying cash for homes in London, while those with more modest incomes are stuffing euro notes into safe-deposit boxes.

I’m sure that human flight is a problem, too, although I confess I have no evidence to support this. But come on! If you were Greek, aged under, say, 35, and were trained in an actual skill (doctors and nurses, for instance, have highly transportable skills) wouldn’t you be thinking that maybe France, Germany, or the UK would be better places to make a living?

And let’s not even mention Italy, it’s too depressing. Oh, all right, we’ll talk about Italy:

Italy’s cost of borrowing money soared to its highest point since the euro zone was formed, signalling a growing conviction the sovereign debt crisis is about to get worse as the currency union’s third-largest economy creeps closer to a financial cliff.

The yield on 10-year Italian bonds hit 6.68 per cent – a 14-year high – on Monday before narrowing to 6.45 per cent, amid reports that embattled Prime Minister Silvio Berlusconi was about to resign. Greece, Ireland and Portugal each were forced to seek bailouts soon after their bond yields climbed past 7 per cent.

As long as we’re talking about Europe, DBRS has some interesting things to say about Belgian mortgages:

Firstly, according to data from obtained by DBRS, Belgium has owner-occupation levels that are higher than neighbouring European countries at 71%, compared to 55% for France and 53% for the Netherlands. This is partly as a result of the house price growth over the last decade outstripping the commensurate growth in rental return. It is also infl uenced by the fact that Belgium has very high property purchase transaction costs (both buying and selling property) relative to other European jurisdictions. DBRS understands that purchase costs are routinely in the range of 10-20% of the property cost. Both these factors combined have meant that investment in property for speculative purposes is relatively unattractive as the rental yield is, comparative to other European jurisdictions, low, and day one cash outlay is high.
…
In Belgium fi xed rate mortgages represent the majority of the market and the majority of the loans have a fixed rate of interest for 10 years or more or for the entire term of the loan. Variable rate loans also feature and differ from the completely variable rate loans found in other jurisdictions in that their variability is restricted by caps and fl oors in the interest rate. Rate caps offer borrowers some protection from spikes in interest rates by limiting the potential mortgage payments due by borrowers regardless of prevailing interest rates.

As part of the continuing campaign to make it impossible for Bad People to do business by making it impossible for anybody to do business, the federal government has issued a Consultation Paper on Proposed Amendments to the Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations on Ascertaining Identity. Naturally, no attempt is made to justify the proposed revisions to protocol in terms of actual results; it is sufficient to pick objectives out of the air, say ‘This makes sense!’ and then enforce it.

BIS has issued a working paper by Michael Brei, Leonardo Gambacorta and Goetz von Peter titled Rescue packages and bank lending:

This paper examines whether the rescue measures adopted during the global financial crisis helped to sustain the supply of bank lending. The analysis proposes a setup that allows testing for structural shifts in the bank lending equation, and employs a novel dataset covering large international banks headquartered in 14 major advanced economies for the period 1995–2010. While stronger capitalisation sustains loan growth in normal times, banks during a crisis can turn additional capital into greater lending only once their capitalisation exceeds a critical threshold. This suggests that recapitalisations may not translate into greater credit supply until bank balance sheets are sufficiently strengthened.

A scandal regarding Olympus has been simmering for a while and has now come to a boil – Olympus was naughty:

Olympus Corp. (7733) said it hid losses by paying inflated fees to advisers on the 2008 acquisition of Gyrus Group Plc, the first admission of wrongdoing from the Japanese camera and medical-equipment maker since accusations from its former chief executive officer surfaced four weeks ago.

The stock plunged by the daily limit after the company said it also used three other acquisitions to help hide the losses on investments from the 1990s. Allegations by Michael C. Woodford after he was axed as CEO on Oct. 14 had wiped more than half the value from the company’s stock before today.

Prohibition is drying up in the States:

U.S. states that have kept a tight rein on alcohol sales since the Prohibition era may be loosening their grip.

Lawmakers in Utah, where even high-alcohol beer is sold through state liquor stores, were urged by an advisory panel this year to put the business in private hands. Pennsylvania, Virginia and North Carolina have considered privatizing state liquor outlets. Tomorrow in Washington, votes will be counted on a ballot measure backed by Costco Wholesale Corp. (COST) that would end state control of liquor retailing.

Budget deficits forecast to reach $103 billion this fiscal year are making states more willing to open the taps, to the dismay of some public-health advocates who warn it may exacerbate social ills. Companies including Costco, bourbon maker Beam Inc. and Warren Buffett’s Berkshire Hathaway Inc. (BRK/A), which owns food and alcohol distributor McLane Co., may gain a larger share of the $8.5 billion in gross sales last year in the 18 states where liquor is still controlled.

One wonders if Ontario will ever follow!

There was a defense of milkfare in Saturday’s Globe:

[Federal Agriculture Minister Gerry Ritz] noted the Americans approved $450-million (U.S.) last year to backstop their dairy industry.

How much did Ottawa spend on backstopping Canadian dairy farmers?

“Zip,” Mr. Ritz said.

Oh, and how much did consumers pay directly to subsidize the bucolic lifestyle of the favoured few?

Every year the distortions caused by the system grow larger. Canadians may not realize it when they go to the grocery store, but they’re paying twice the world average for dairy products – and up to three times what Americans pay. That’s a hidden $3-billion a year tax on all of us.

Roughly half the money flows back to dairy farmers, making them richer than other farmers, who work just as hard. Bloated government agencies and marketing boards soak up a significant chunk of the rest.

I’d rather make my donation directly, assuming that I have to make one at all. But maybe that’s just me.

It was a mixed day for the Canadian preferred share market, with PerpetualDiscounts gaining 5bp, FixedResets down 9bp and DeemedRetractibles losing 21bp. Good volatility, all losers, with Sun Life notable again for its losses. Volume was light.

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	-0.0967 %	2,123.5
FixedFloater	4.88 %	4.60 %	24,479	17.17	1	0.0000 %	3,155.1
Floater	3.39 %	3.41 %	69,476	18.70	2	-0.0967 %	2,292.8
OpRet	4.94 %	0.95 %	50,756	1.50	7	-0.0984 %	2,481.8
SplitShare	5.75 %	6.41 %	59,861	5.14	3	-0.3903 %	2,514.0
Interest-Bearing	0.00 %	0.00 %	0	0.00	0	-0.0984 %	2,269.4
Perpetual-Premium	5.56 %	3.30 %	107,007	0.47	13	0.0779 %	2,151.3
Perpetual-Discount	5.33 %	5.40 %	108,518	14.74	17	0.0510 %	2,283.8
FixedReset	5.12 %	3.01 %	207,994	2.51	62	-0.0855 %	2,343.4
Deemed-Retractible	5.06 %	4.45 %	211,431	3.82	46	-0.2119 %	2,210.6

Performance Highlights
Issue	Index	Change	Notes
SLF.PR.F	FixedReset	-1.80 %	YTW SCENARIO Maturity Type : Call Maturity Date : 2014-06-30 Maturity Price : 25.00 Evaluated at bid price : 26.16 Bid-YTW : 4.41 %
SLF.PR.A	Deemed-Retractible	-1.71 %	YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 22.37 Bid-YTW : 6.26 %
IAG.PR.A	Deemed-Retractible	-1.63 %	YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 22.28 Bid-YTW : 6.15 %
BAM.PR.H	OpRet	-1.63 %	YTW SCENARIO Maturity Type : Call Maturity Date : 2011-12-07 Maturity Price : 25.00 Evaluated at bid price : 25.35 Bid-YTW : -3.92 %
SLF.PR.B	Deemed-Retractible	-1.22 %	YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 22.62 Bid-YTW : 6.17 %
GWO.PR.J	FixedReset	-1.21 %	YTW SCENARIO Maturity Type : Call Maturity Date : 2013-12-31 Maturity Price : 25.00 Evaluated at bid price : 26.18 Bid-YTW : 4.02 %

Volume Highlights
Issue	Index	Shares Traded	Notes
CM.PR.G	Perpetual-Discount	75,245	Desjardins crossed 27,000 at 24.90. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2041-11-07 Maturity Price : 24.58 Evaluated at bid price : 24.90 Bid-YTW : 5.45 %
BAM.PR.Z	FixedReset	35,160	Recent new issue. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2041-11-07 Maturity Price : 23.11 Evaluated at bid price : 25.02 Bid-YTW : 4.38 %
BNS.PR.Z	FixedReset	33,500	Recent secondary offering. YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 24.92 Bid-YTW : 3.21 %
GWO.PR.J	FixedReset	30,964	Scotia crossed 14,000 at 26.50. YTW SCENARIO Maturity Type : Call Maturity Date : 2013-12-31 Maturity Price : 25.00 Evaluated at bid price : 26.18 Bid-YTW : 4.02 %
RY.PR.W	Perpetual-Discount	28,355	YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2041-11-07 Maturity Price : 24.40 Evaluated at bid price : 24.91 Bid-YTW : 4.90 %
BMO.PR.N	FixedReset	27,385	YTW SCENARIO Maturity Type : Call Maturity Date : 2014-02-25 Maturity Price : 25.00 Evaluated at bid price : 27.17 Bid-YTW : 2.47 %
There were 25 other index-included issues trading in excess of 10,000 shares.

Wide Spread Highlights
Issue	Index	Quote Data and Yield Notes
TCA.PR.Y	Perpetual-Premium	Quote: 52.62 – 53.34 Spot Rate : 0.7200 Average : 0.4623 YTW SCENARIO Maturity Type : Call Maturity Date : 2014-03-05 Maturity Price : 50.00 Evaluated at bid price : 52.62 Bid-YTW : 3.30 %
SLF.PR.F	FixedReset	Quote: 26.16 – 26.90 Spot Rate : 0.7400 Average : 0.4972 YTW SCENARIO Maturity Type : Call Maturity Date : 2014-06-30 Maturity Price : 25.00 Evaluated at bid price : 26.16 Bid-YTW : 4.41 %
FTS.PR.C	OpRet	Quote: 26.40 – 26.95 Spot Rate : 0.5500 Average : 0.3634 YTW SCENARIO Maturity Type : Call Maturity Date : 2011-12-07 Maturity Price : 25.50 Evaluated at bid price : 26.40 Bid-YTW : -23.58 %
HSB.PR.C	Deemed-Retractible	Quote: 25.15 – 25.56 Spot Rate : 0.4100 Average : 0.2875 YTW SCENARIO Maturity Type : Call Maturity Date : 2014-06-30 Maturity Price : 25.00 Evaluated at bid price : 25.15 Bid-YTW : 5.11 %
IAG.PR.F	Deemed-Retractible	Quote: 25.70 – 26.20 Spot Rate : 0.5000 Average : 0.3802 YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 25.70 Bid-YTW : 5.66 %
CM.PR.P	Deemed-Retractible	Quote: 25.85 – 26.21 Spot Rate : 0.3600 Average : 0.2443 YTW SCENARIO Maturity Type : Call Maturity Date : 2012-10-29 Maturity Price : 25.00 Evaluated at bid price : 25.85 Bid-YTW : 2.08 %

It would seem that nobody can make a decision about Greece:

World leaders failed to agree on increasing the resources of the International Monetary Fund, dashing the hopes of European governments keen to tap more foreign aid to buttress their crisis-fighting efforts.

Governments are awaiting further details of Europe’s week- old rescue package before they commit cash, German Chancellor Angela Merkel said today on the final day of a Group of 20 summit in Cannes, France.

The reluctance of the leaders of the world’s biggest economies to immediately channel funds to the euro area reflects frustration with Europe’s failure to end a crisis that sparked again this week, with Greece’s government lurching towards collapse and Italy facing intensifying pressure to restore fiscal order.

To be frank, I don’t know what is happening in Greece:

Prime Minister George Papandreou won a confidence vote after offering to form a government of national unity that may lead to him stepping down as he sought to reach an accord on European aid needed to avert default.

The premier said he’ll meet with President Karolos Papoulias to discuss his proposal to create a unity government. Main opposition leader Antonis Samaras rejected the offer and called for elections.

Lapdog Carney got his reward:

Mark Carney, governor of the Bank of Canada, has been confirmed as new chairman of the Financial Stability Board, the G20’s global banking watchdog.

Mr. Carney serves as an inspiration to yes-men and sycophants everywhere.

Interesting paper by Rui Zhu, Utpal M. Dholaki, Xinlei Chen and René Algesheimer: Does Online Community Participation Foster Risky Financial Behavior?:

Although consumers increasingly use online communities for various activities, little is known regarding how participation in them affects individuals’ decision making strategies. Through a series of field and laboratory studies, we demonstrate that participation in an online community increases risk seeking tendency of individuals in financial decisions and behaviors. Our results reveal that participation in an online community leads consumers to perceive support from other members, that is they believe they will be helped by other community members should difficulties arise. Such a perception leads online community members to make riskier financial decisions than non-participants. We also discover a boundary condition to the effect: online community members are more risk seeking only when they have relatively strong ties with other members; when ties are weak, they exhibit similar risk preferences as non-members.

As I have suspected all along, it appears that the ‘MF Global Missing Funds’ hysteria was ramped up by the regulators and trustee to serve their own purposes:

Customer funds missing from bankrupt brokerage MF Global Inc. have been located in a custodial account at JPMorgan Chase & Co. (JPM), according to two people with knowledge of the matter.

An MF Global custodial account at JPMorgan contained about $658.8 million of client funds as of Oct. 31, according to one of the people, who declined to be identified because they weren’t authorized to speak publicly.

MF Global’s customer funds had a shortfall of $633 million, or more than 11 percent, out of a segregated fund requirement of about $5.4 billion, regulators said yesterday.

Does anybody think this hasn’t been known all along? But this way, we can praise the extraordinary detective work of the trustee and regulatory authorities, whose hard work, dedication, and extraordinary forensic auditing ability led them to ask the question: “Where’s the $600-million?” and pierce through all the layers of evasions and ambiguity to uncover the truth behind the answer “At JPMorgan. Why?”.

On November 2 I mentioned some projections that some banks would meet their new capital requirements by backing away from non-core lending. Commerzbank steps up to illustrate:

Germany’s second-largest lender Commerzbank AG will refuse loans which don’t help Germany or Poland, as the euro zone crisis makes European banks more protectionist in choosing between writing new business and meeting stringent capital requirements.

“We are not doing business which is not to the benefit of Germany or Poland,” chief financial officer Eric Strutz told analysts on a conference call discussing third-quarter earnings on Friday. “We have to focus on supporting the German economy as other banks pull out.”
…
Commerzbank, which is 25 per cent owned by the state, is accelerating the pullback from euro zone nations and cutting risky assets to avoid another state bailout after a €798-million ($1.10-billion U.S.) impairment on Greek assets pushed it to a third-quarter operating loss.

Having cut exposure to indebted euro zone countries by more than 20 per cent to €13-billion, including a 52 per cent haircut on Greek debt, the Frankfurt-based lender said it would continue reducing its public sector debt in Portugal, Italy, Spain, Ireland and Greece, mirroring a similar move made by French rival BNP Paribas SA.
…
Commerzbank said it had a core Tier One ratio of 9.4 per cent at the end of September and needs to raise €2.9-billion to meet tougher capital requirements set out by the European bank regulators.

“We can meet the required capital ratio by, for example, reducing risk assets in non-core areas, selling non-strategic assets or by means of retained earnings and we do not intend to tap new state funds,” Commerzbank said.

Commerzbank will keep its Eastern European BRE Bank unit and its online arm comdirect but may sell other units as it seeks to cut risky assets by a further €30-billion. Its property financing unit Eurohypo will also stop taking new business, the bank said.

It was a mixed day for the Canadian preferred share market, with PerpetualDiscounts winning 10bp, FixedResets down 5bp and DeemedRetractibles losing 8bp. Lots of volatility, with SLF issues notable amonst the losers. Volume was on the light side of average.

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	-0.0644 %	2,125.6
FixedFloater	4.88 %	4.60 %	24,383	17.18	1	-0.5115 %	3,155.1
Floater	3.38 %	3.41 %	72,188	18.71	2	-0.0644 %	2,295.1
OpRet	4.93 %	0.95 %	50,640	1.51	7	0.2465 %	2,484.3
SplitShare	5.73 %	6.24 %	59,903	5.16	3	0.2235 %	2,523.8
Interest-Bearing	0.00 %	0.00 %	0	0.00	0	0.2465 %	2,271.6
Perpetual-Premium	5.57 %	0.75 %	106,680	0.10	13	-0.0240 %	2,149.7
Perpetual-Discount	5.34 %	5.43 %	108,686	14.74	17	0.1021 %	2,282.7
FixedReset	5.12 %	3.03 %	210,542	2.44	62	-0.0486 %	2,345.4
Deemed-Retractible	5.04 %	4.40 %	214,101	3.91	46	-0.0836 %	2,215.3

Performance Highlights
Issue	Index	Change	Notes
CM.PR.K	FixedReset	-1.83 %	YTW SCENARIO Maturity Type : Call Maturity Date : 2014-07-31 Maturity Price : 25.00 Evaluated at bid price : 26.25 Bid-YTW : 3.47 %
SLF.PR.E	Deemed-Retractible	-1.74 %	YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 21.40 Bid-YTW : 6.55 %
SLF.PR.C	Deemed-Retractible	-1.71 %	YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 21.21 Bid-YTW : 6.60 %
SLF.PR.F	FixedReset	-1.66 %	YTW SCENARIO Maturity Type : Call Maturity Date : 2014-06-30 Maturity Price : 25.00 Evaluated at bid price : 26.64 Bid-YTW : 3.65 %
SLF.PR.D	Deemed-Retractible	-1.53 %	YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 21.20 Bid-YTW : 6.61 %
SLF.PR.G	FixedReset	-1.44 %	YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 24.65 Bid-YTW : 3.78 %
MFC.PR.C	Deemed-Retractible	-1.21 %	YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 21.16 Bid-YTW : 6.71 %
BAM.PR.J	OpRet	1.02 %	YTW SCENARIO Maturity Type : Call Maturity Date : 2014-03-31 Maturity Price : 26.00 Evaluated at bid price : 26.80 Bid-YTW : 4.09 %
BAM.PR.X	FixedReset	1.12 %	YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2041-11-04 Maturity Price : 22.89 Evaluated at bid price : 24.35 Bid-YTW : 3.79 %
BAM.PR.H	OpRet	1.46 %	YTW SCENARIO Maturity Type : Call Maturity Date : 2011-12-04 Maturity Price : 25.00 Evaluated at bid price : 25.77 Bid-YTW : -23.09 %

Volume Highlights
Issue	Index	Shares Traded	Notes
CM.PR.E	Perpetual-Discount	652,815	Nesbitt crossed blocks of 250,000 shares, 45,600 shares, 20,000 and 100,000, all at 25.00. TD crossed 100,000 at the same price. Nesbitt sold 24,500 to anonymous at 25.01. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2041-11-04 Maturity Price : 24.69 Evaluated at bid price : 24.99 Bid-YTW : 5.63 %
TD.PR.K	FixedReset	92,643	TD crossed blocks of 54,400 and 32,000, both at 27.35. YTW SCENARIO Maturity Type : Call Maturity Date : 2014-07-31 Maturity Price : 25.00 Evaluated at bid price : 27.36 Bid-YTW : 2.70 %
BAM.PR.Z	FixedReset	89,395	Recent new issue. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2041-11-04 Maturity Price : 23.11 Evaluated at bid price : 25.03 Bid-YTW : 4.56 %
ENB.PR.B	FixedReset	68,480	RBC crossed 20,000 at 25.75. YTW SCENARIO Maturity Type : Call Maturity Date : 2017-06-01 Maturity Price : 25.00 Evaluated at bid price : 25.70 Bid-YTW : 3.54 %
SLF.PR.H	FixedReset	55,370	Anonymous crossed (?) 10,100 at 24.30. YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 24.35 Bid-YTW : 4.30 %
BMO.PR.J	Deemed-Retractible	47,497	TD crossed 37,700 at 25.40. YTW SCENARIO Maturity Type : Call Maturity Date : 2016-02-25 Maturity Price : 25.00 Evaluated at bid price : 25.36 Bid-YTW : 4.09 %
There were 29 other index-included issues trading in excess of 10,000 shares.

Wide Spread Highlights
Issue	Index	Quote Data and Yield Notes
BAM.PR.H	OpRet	Quote: 25.77 – 27.47 Spot Rate : 1.7000 Average : 1.0127 YTW SCENARIO Maturity Type : Call Maturity Date : 2011-12-04 Maturity Price : 25.00 Evaluated at bid price : 25.77 Bid-YTW : -23.09 %
CM.PR.K	FixedReset	Quote: 26.25 – 26.76 Spot Rate : 0.5100 Average : 0.3292 YTW SCENARIO Maturity Type : Call Maturity Date : 2014-07-31 Maturity Price : 25.00 Evaluated at bid price : 26.25 Bid-YTW : 3.47 %
CM.PR.M	FixedReset	Quote: 27.48 – 27.84 Spot Rate : 0.3600 Average : 0.2471 YTW SCENARIO Maturity Type : Call Maturity Date : 2014-07-31 Maturity Price : 25.00 Evaluated at bid price : 27.48 Bid-YTW : 2.76 %
MFC.PR.C	Deemed-Retractible	Quote: 21.16 – 21.50 Spot Rate : 0.3400 Average : 0.2524 YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 21.16 Bid-YTW : 6.71 %
TRP.PR.C	FixedReset	Quote: 25.60 – 25.84 Spot Rate : 0.2400 Average : 0.1555 YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2041-11-04 Maturity Price : 23.41 Evaluated at bid price : 25.60 Bid-YTW : 3.18 %
TD.PR.Y	FixedReset	Quote: 26.15 – 26.37 Spot Rate : 0.2200 Average : 0.1389 YTW SCENARIO Maturity Type : Call Maturity Date : 2013-10-31 Maturity Price : 25.00 Evaluated at bid price : 26.15 Bid-YTW : 2.75 %

There was possible insider trading in MF Global bonds:

The U.S. Securities and Exchange Commission is reviewing trades in MF Global Holdings Ltd. (MF) convertible bonds to determine whether some investors sold the debt based on confidential information before the firm’s demise, according to two people with direct knowledge of the matter.

Investigators are in part focusing on trades that were made ahead of announcements that the firm’s credit rating had been downgraded, the people said, speaking on condition of anonymity because the matter isn’t public.

It’s not clear whether or not a Greek referendum is planned:

Just hours after saying Greeks need to decide on whether their future is in the euro, Papandreou said the country belongs in the currency bloc. He welcomed support shown by the main opposition New Democracy party for last week’s rescue pact agreed with European Union leaders in Brussels. Finance Minister Evangelos Venizelos said Greece won’t hold a referendum.

“We had a dilemma: either real consensus or referendum,” Papandreou told ministers, according to an e-mailed transcript of his statements. “As I said yesterday, coming out of the meeting, if there were consensus we wouldn’t need a referendum. I said if the opposition comes to the table to agree on the loan, there’s no need for a referendum.”

Some say no:

Greek Finance Minister Evangelos Venizelos, speaking to party lawmakers in Parliament in Athens today, said the nation won’t hold a referendum. Just hours after saying Greeks need to decide on whether their future is in the euro, Papandreou said the country belongs in the currency bloc.

“Papandreou absolutely blinked in this game of chicken,” Michael Holland, chairman and founder of New York-based Holland & Co., said in a telephone interview. His firm oversees more than $4 billion. “The interesting thing is that it took him so long to blink. The world’s markets told him he was wrong and he still persisted for an extended period of time. It was insane.”

It’s not clear to me whether the world’s markets get any say in the matter. The question is: can he simultaneously meet the EU requirements and reduce the incidence of riots and national strikes to a dull roar? I suggest he’s between a rock and a hard place; and if the Greek government pledges to meet the demands, the Greek population will make it impossible. Remember, we’re not talking about some professional snivellers snivelling about shooting the hippo – we’re talking about a dramatic and broadly based reduction in living standards.

Speaking of snivelling, we may be in for a new round of the HFT debate:

Estimates vary, but some traders say that as much as 35 per cent of volume on Canadian stock markets is now generated by high frequency trading firms that are jumping in and out of markets with buy and sell orders in hopes of profiting from tiny inefficiencies. In the U.S., some estimates place the amount of volume generated by HFTs at 60 per cent of all trading.
…
Canadian regulators are grappling with what to do about dark pools. Who should be allowed to trade on them, and on what terms? While dark pools do allow money managers to avoid high frequency traders, they can also sap volume from stock markets, eroding their value as a place for others to trade. Too many dark pools is most definitely not a good thing. In the U.S., so much trading takes place away from stock markets that what’s left on the public markets like NYSE and Nasdaq is “the exhaust,” as [LiquidNet CEO] Mr. [Seth] Merrin puts it.
…
The implication is that dark pools shouldn’t allow small orders, and shouldn’t be just ways for brokerages to avoid fees on their order flow. They should be reserved truly for orders that can’t be efficiently traded in light markets.

That’s right – make sure that retail doesn’t get any cut of the efficiencies! That’s what pays regulators’ salaries!

S&P confirmed MFC:

• Manulife Financial Corp. reported third-quarter net losses driven by equity-market and interest rate declines and net charges from its annual review of actuarial methods and assumptions.
• We are affirming our ‘A-‘ long-term counterparty credit rating on Manulife and our ratings on its subsidiaries.The company’s Canadian fair-value accounting framework is considerably more volatile, for comparable risks, than the relatively
  book-value-focused U.S. accounting framework.

• We expect Manulife to sustain its extensive global competitive advantages and its favorable capitalization.

TMX DataLinx seems to have resolved their networking problems – the quotes listed today are official.

It was a day of uneven strength for the Canadian preferred share market, with PerpetualDiscounts winning 40bp, FixedResets up 6bp and DeemedRetractibles gaining 18bp. There was a long list of Performance Highlights, heavily skewed towards winners. Volume was quite good.

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	1.5707 %	2,126.9
FixedFloater	4.86 %	4.57 %	24,128	17.22	1	0.5141 %	3,171.3
Floater	3.38 %	3.40 %	162,561	18.73	2	1.5707 %	2,296.5
OpRet	4.94 %	0.66 %	50,622	1.52	7	0.4236 %	2,478.1
SplitShare	5.75 %	6.24 %	60,720	5.16	3	0.4350 %	2,518.2
Interest-Bearing	0.00 %	0.00 %	0	0.00	0	0.4236 %	2,266.0
Perpetual-Premium	5.56 %	-0.21 %	106,268	0.10	13	0.2778 %	2,150.2
Perpetual-Discount	5.34 %	5.43 %	108,907	14.73	17	0.4003 %	2,280.3
FixedReset	5.12 %	2.95 %	209,051	2.45	62	0.0591 %	2,346.6
Deemed-Retractible	5.04 %	4.40 %	216,707	3.91	46	0.1763 %	2,217.2

Performance Highlights
Issue	Index	Change	Notes
SLF.PR.H	FixedReset	-2.03 %	YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 24.17 Bid-YTW : 4.39 %
CU.PR.C	FixedReset	-1.01 %	YTW SCENARIO Maturity Type : Call Maturity Date : 2017-06-01 Maturity Price : 25.00 Evaluated at bid price : 25.45 Bid-YTW : 3.75 %
ELF.PR.F	Perpetual-Discount	1.03 %	YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2041-11-03 Maturity Price : 22.30 Evaluated at bid price : 22.58 Bid-YTW : 5.91 %
BAM.PR.B	Floater	1.04 %	YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2041-11-03 Maturity Price : 15.54 Evaluated at bid price : 15.54 Bid-YTW : 3.40 %
CM.PR.P	Deemed-Retractible	1.09 %	YTW SCENARIO Maturity Type : Call Maturity Date : 2012-10-29 Maturity Price : 25.00 Evaluated at bid price : 25.88 Bid-YTW : 1.93 %
BAM.PR.M	Perpetual-Discount	1.11 %	YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2041-11-03 Maturity Price : 22.46 Evaluated at bid price : 22.81 Bid-YTW : 5.25 %
GWO.PR.L	Deemed-Retractible	1.19 %	YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 25.50 Bid-YTW : 5.50 %
GWO.PR.F	Deemed-Retractible	1.19 %	YTW SCENARIO Maturity Type : Call Maturity Date : 2011-12-03 Maturity Price : 25.25 Evaluated at bid price : 25.46 Bid-YTW : 2.33 %
GWO.PR.G	Deemed-Retractible	1.21 %	YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 25.00 Bid-YTW : 5.30 %
PWF.PR.F	Perpetual-Discount	1.71 %	YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2041-11-03 Maturity Price : 24.65 Evaluated at bid price : 24.91 Bid-YTW : 5.29 %
FTS.PR.E	OpRet	1.77 %	YTW SCENARIO Maturity Type : Call Maturity Date : 2013-06-01 Maturity Price : 25.75 Evaluated at bid price : 27.62 Bid-YTW : 0.66 %
BAM.PR.K	Floater	2.11 %	YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2041-11-03 Maturity Price : 15.50 Evaluated at bid price : 15.50 Bid-YTW : 3.41 %

Volume Highlights
Issue	Index	Shares Traded	Notes
BAM.PR.Z	FixedReset	221,540	Recent new issue. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2041-11-03 Maturity Price : 23.09 Evaluated at bid price : 24.95 Bid-YTW : 4.58 %
IAG.PR.C	FixedReset	120,532	Nesbit sold blocks of 24,000 and 15,000 to RBC, both at 26.50. Desjardins crossed 20,000 at the same price. RBC crossed blocks of 10,000 and 25,000 at the same price again. YTW SCENARIO Maturity Type : Call Maturity Date : 2013-12-31 Maturity Price : 25.00 Evaluated at bid price : 26.50 Bid-YTW : 3.59 %
CM.PR.E	Perpetual-Discount	107,455	Desjardins crossed 62,600 at 25.00. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2041-11-03 Maturity Price : 24.69 Evaluated at bid price : 25.00 Bid-YTW : 5.63 %
MFC.PR.F	FixedReset	107,300	RBC crossed 80,300 at 24.50. YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 24.36 Bid-YTW : 4.00 %
BMO.PR.Q	FixedReset	92,435	Nesbitt crossed 75,000 at 25.60. YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 25.52 Bid-YTW : 3.09 %
ENB.PR.B	FixedReset	62,250	YTW SCENARIO Maturity Type : Call Maturity Date : 2017-06-01 Maturity Price : 25.00 Evaluated at bid price : 25.65 Bid-YTW : 3.57 %
There were 39 other index-included issues trading in excess of 10,000 shares.

Wide Spread Highlights
Issue	Index	Quote Data and Yield Notes
HSB.PR.D	Deemed-Retractible	Quote: 25.07 – 25.49 Spot Rate : 0.4200 Average : 0.2497 YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 25.07 Bid-YTW : 5.05 %
BAM.PR.H	OpRet	Quote: 25.40 – 25.82 Spot Rate : 0.4200 Average : 0.2592 YTW SCENARIO Maturity Type : Call Maturity Date : 2011-12-03 Maturity Price : 25.00 Evaluated at bid price : 25.40 Bid-YTW : -7.00 %
MFC.PR.F	FixedReset	Quote: 24.36 – 24.74 Spot Rate : 0.3800 Average : 0.2466 YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 24.36 Bid-YTW : 4.00 %
SLF.PR.H	FixedReset	Quote: 24.17 – 24.45 Spot Rate : 0.2800 Average : 0.1702 YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 24.17 Bid-YTW : 4.39 %
TD.PR.O	Deemed-Retractible	Quote: 25.51 – 25.75 Spot Rate : 0.2400 Average : 0.1650 YTW SCENARIO Maturity Type : Call Maturity Date : 2013-10-31 Maturity Price : 25.25 Evaluated at bid price : 25.51 Bid-YTW : 4.30 %
MFC.PR.D	FixedReset	Quote: 26.87 – 27.10 Spot Rate : 0.2300 Average : 0.1624 YTW SCENARIO Maturity Type : Call Maturity Date : 2014-06-19 Maturity Price : 25.00 Evaluated at bid price : 26.87 Bid-YTW : 3.94 %

The FOMC statement was pretty gloomy:

To support a stronger economic recovery and to help ensure that inflation, over time, is at levels consistent with the dual mandate, the Committee decided today to continue its program to extend the average maturity of its holdings of securities as announced in September. The Committee is maintaining its existing policies of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction. The Committee will regularly review the size and composition of its securities holdings and is prepared to adjust those holdings as appropriate.

The Committee also decided to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that economic conditions–including low rates of resource utilization and a subdued outlook for inflation over the medium run–are likely to warrant exceptionally low levels for the federal funds rate at least through mid-2013

Of perhaps more interest was the voting:

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Richard W. Fisher; Narayana Kocherlakota; Charles I. Plosser; Sarah Bloom Raskin; Daniel K. Tarullo; and Janet L. Yellen. Voting against the action was Charles L. Evans, who supported additional policy accommodation at this time.

I reported on October 13 that Kocherlakota was decrying Opertation Twist, and extracted a big piece of Fisher’s dissent on September 27. This time, however, the dissenter wants looser policy. Uh-oh.

Speaking of Central Banks, Lapdog Carney’s opening statement to the House of Commons Standing Committee on Finance discussed the inflation target:

At the time of the last renewal, the Bank committed to continue its research into potential improvements that might build on the success of the current framework. A concerted and ambitious research agenda focused on evaluating whether two specific changes – targeting a lower rate of inflation or a path for the level of prices – could provide significant net benefits to the Canadian economy and Canadian households. Subsequently, the experience of the global financial and economic crisis prompted the Bank to add a third item to its research agenda – asking to what extent monetary policy should take account of financial stability considerations.

Allow me to highlight just some of the initiatives and work undertaken by the Bank over the past five years. Since 2008, we have had three major conferences for our staff and other researchers to present work on inflation targeting and the monetary policy framework. The most important of these research papers have been published in three special issues of the Bank of Canada Review – Winter 2007–08, Spring 2009 and Summer 2010. As well, Governing Council members have spoken regularly and publicly about the issues.

The research he mentions is basically with respect to Price Level Targetting, which has been discussed on PrefBlog and which I favour. What makes this interesting, however, is that there was no mention of the rumoured move to a dual mandate:

In an all-party vote on Thursday, members of the House of Commons finance committee decided they will hold at least one hearing on whether the bank’s mandate should be changed to include targets beyond inflation, such as full employment or nominal gross domestic product.

However such large-scale changes appear to be off the table.

“The Governor and I have discussed this [inflation targeting mandate renewal] at some length and I think we are understanding each other. We are … in line with each other on this,” Mr. Flaherty said. “So we’re not talking about a new policy or a new mandate for the Bank of Canada. What we are talking about is being more explicit about what the mandate of the Bank of Canada is.”

Mr. Flaherty’s comments are in line with a report by The Globe and Mail on Monday that the 2-per-cent target is expected to be renewed with a more forceful assertion of what the bank calls “flexible inflation targeting,” or the governor’s right to take longer than usual to bring inflation to the 2-per-cent target.

BIS has released a Consultative Document: Capitalisation of bank exposures to central counterparties:

CCPs can improve the safety and soundness of OTC derivatives markets through the multilateral netting of exposures, the enforcement of robust risk management standards, including mandatory posting of initial margin, and the mutualisation of losses should a clearing member fail.

Gee, mutualisation of losses is really working out well with respect to Greek debt in Europe, isn’t it? The banks have decided they’re in the business of making a profit:

The European Union’s plan for recapitalizing banks has “serious problems” that will hurt economic growth and make it harder for some nations to borrow, the Institute of International Finance said.

There is a “clear need” to restore confidence in Europe’s banks, IIF Managing Director Charles Dallara said today in a letter to the Group of 20 nations on the eve of a summit in Cannes, France. Yet the extra capital requirements at the center of the EU’s strategy will come with “considerable cost” because of a flawed scope and approach, he said.
…
Banks are likely to decide that the costs of raising capital are “prohibitive,” Dallara said in his letter to the G-20. Rather than accept forced injections, banks are more likely to sell risky assets and cut back on lending, which will make it harder for countries on Europe’s periphery to access capital markets.

“The market value of the debt of the countries most under scrutiny is likely to decline further as banks unload sovereign bonds,” Dallara said. “This is contrary to the goal of stabilizing and underpinning the outlook for sovereign debt in Europe.”

If banks acted to meet the new requirements relying only on retained earnings and a reduction in credit supply, “overall credit exposure to the euro-area private sector would need to decline by at least 5 percent,” he said. “It is essential that the higher European capital requirements are a temporary measure as intended, not sustained over time and not seen as a new standard to be imposed more widely.”

The Europeans are furious with Papandreou:

Crisis talks were under way in the French resort of Cannes on the eve of a Group of 20 summit after Papandreou was summoned by European counterparts to explain his call for a referendum that risks delaying aid the country needs to avert default. In Athens, Greek lawmakers debated a confidence motion that could bring down his government.

The stewards of the euro “won’t accept” a break from last week’s agreement, Luxembourg Prime Minister Jean-Claude Juncker told reporters in Cannes. German Chancellor Angela Merkel said “we have to get to the point where we know exactly what comes next.”
…
European Commission President Jose Barroso said the referendum may hold up Greece receiving 8 billion euros ($11 billion) of already delayed support. “In the European Union, we have agreed on far-reaching measures to support Greece,” he said in a statement. “But for those measures to be implemented it is critically important to have stability in the country.”

Europe’s woes are returning G-20 leaders to the crisis footing they adopted three years ago after the collapse of Lehman Brothers Holdings Inc. Australian Prime Minister Julia Gillard said in Cannes that Europe faces questions that “need to be answered and answered quickly,” while Chinese President Hu Jintao told Lagarde the crisis must be “prevented from spreading further.”

The European royalty is talking tough:

The euro declined, trading 0.7 percent from a three-week low against the dollar, as European leaders said Greece will hold a referendum next month to determine whether it will stay in the 17-nation currency.

The euro dropped against most of its 16 major counterparts as French President Nicolas Sarkozy said Greece won’t receive a “single cent” in aid without holding to its bailout agreement’s terms.
…
Crisis talks ended in the French resort of Cannes with German Chancellor Angela Merkel and Sarkozy withholding 8 billion euros ($11 billion) of assistance to Greece and warning it will surrender all European aid if the nation votes against a bailout package agreed last week.

The hardball tactics open the door for the first time for a country to leave the 12-year-old currency bloc that its founders declared was “irrevocable.”

Remember all that leverage that was going to save the world?:

Market turmoil has got the best of Europe’s big bailout fund, forcing it to pull its latest bond issue.

On Wednesday the European Financial Stability Facility confirmed that its €3-billion ($4.12-billion U.S.) bond offering, intended to finance the next bailout loan to Ireland, has been postponed because of “market conditions,” according to the group’s spokesperson.

The earliest the deal could come back is next week, and the new timeline could cause trouble. Ireland has €4.4-billion worth of debt coming due on Nov. 11, according to FT Alphaville.

OSFI has released a letter regarding the Financial Stability Board Principles on Mortgage Lending. They note that they expect to see a LOT MORE paperwork and cover-your-ass bullshit in the future. My idea, that OSFI should surcharge risk-weightings for mortgage exposure – or any other kind of exposure, for that matter – when this exposure greatly exceeds historical norms (as it does, er, now) has not yet been mentioned. The FSB document is titled Consultation Paper: FSB Principles for Sound Residential Mortgage Underwriting Practices:

As the global crisis demonstrated, the consequences of weak residential mortgage underwriting practices in one country can be transferred globally through securitisation of mortgages underwritten to weak standards. As such, it is important to have sound underwriting practices at the point at which a mortgage loan is originally made.

In other words, caveat vendor. Gee, what a wonderful world it will be when we finally have enough rules, eh?

Regardless of whether or not there actually is money missing from segregated accounts at MF Global, their sloppy bookkeeping cost them a deal:

Corzine, 64, steered MF Global into bankruptcy proceedings on Oct. 31 after increasing risk-taking at the firm, including investments in European sovereign debt that roiled markets. Discrepancies over the missing funds that were used to back futures trades sent Interactive Brokers Group Inc. (IBKR) fleeing from a potential acquisition that may have averted the filing, according to a board member at the Greenwich, Connecticut, firm.

“The board certainly considered that purchase and stepped away from it at a point where it became clear there were lots of uncertainties about the accounts and segregated funds,” Hans Stoll, an Interactive Brokers director and a professor of finance at Vanderbilt University in Nashville, Tennessee, said yesterday in a telephone interview.

When your contemplating doing a big deal on 48 hours notice, the last thing you want is uncertainty over the bookkeeping! However, everything is highly unclear at the moment, at least to the public:

.MF Global Holdings Ltd. (MF) customers may have to wait years to get their money back if the futures broker is sued, according to Frederick Grede, the liquidation trustee overseeing the bankruptcy of Sentinel Management Group Inc.

“People should expect that the money on deposit with MF Global will be tied up for some time,” Grede said in a telephone interview today. Grede, a former chief executive officer of the Hong Kong Futures Exchange, has sought to recover about $600 million of customer money from Sentinel, the futures broker that filed for bankruptcy in 2007. “If litigation is involved it well could be years” for MF Global customers, he said.

The day it filed the eighth-largest U.S. bankruptcy on Oct. 31, New York-based MF Global disclosed a shortfall in customer accounts that people with knowledge of the matter said may be about $700 million. CME Group Inc., which has the authority to audit those accounts, said yesterday it didn’t know how much client money was missing.

Grede said it was likely that the client funds won’t be released until the bankruptcy court approves the decision. “To move the money out of MF Global, they have to get the trustee to agree, and I believe the trustee will want the court to agree as well,” he said.

Experience suggests to me that the actual players know very well what the answer to the segregated account mystery is, but are posturing for political purposes. However, the accusations are getting more specific:

MF Global Holdings Ltd. (MF) may have transferred customer money last week following an audit by CME Group Inc. (CME), which has regulatory authority over the futures broker.

The transfer “may have been designed to avoid detection in so far as MF Global did not disclose or report such transfers” to the Commodity Futures Trading Commission or CME Group, the Chicago-based exchange owner said today an e-mailed statement.
…
All MF Global customer positions held at CME Group, and not third-party custodians such as banks, are accounted for, the company said in the statement. “MF Global’s customer positions on CME Group exchanges were and continue to be substantially over-collateralized,” CME Group said. The “apparent shortfall” was in accounts held by MF Global, CME Group said.

In other words, if you had an account with MF Global with $100,000 cash, and your contracts actually required $75,000 of exchange collateral, that part would have been posted OK, but – it is alleged – they were naughty with the remaining $25,000. Even more specific is the claim:

MF Global Inc.’s commodity customer funds have a shortfall of $633 million, or about 11.6 percent, out of a segregated fund requirement of about $5.4 billion, the Commodity Futures Trading Commission said.

At a hearing today in U.S. Bankruptcy Court in Manhattan, lawyers for the CFTC said the trustee for the bankrupt broker- dealer may recover the shortfall.
…
“It now appears that the firm made subsequent transfers of customer segregated funds in a manner that may have been designed to avoid detection,” as the transactions weren’t reported to regulators until Oct. 31, it said.

However, it’s still unclear to me just what has happened, or is claimed to have happened. The truth will out, but, as is always the case, the nature of that truth will only be reported after a few years have passed. The company is represented in court by the trustee – not by lawyers appointed by former management – and the trustee has an interest in painting as black a picture as possible in order to maximize his fee income.

I have noticed not just one, but two interesting juxtapositions in the press recently. The first is some weeping and wailing over smoking in hospitals, reflecting the usual arrogant mindset of the medical profession:

As an emerging standard for Canadian hospitals, smoke-free property is intended to reduce exposure to second-hand smoke, communicate denormalization messages about smoking and enhance tobacco cessation.

However, noncompliance and inadequate treatment for tobacco dependence appear to be the norm. Enhancing appropriate health care for patients who use tobacco to include consistent and effective treatment for the symptoms of withdrawal may improve this problem. Reframing tobacco use as an addiction may be an important root strategy to shift practise norms. People who smoke will have symptoms of withdrawal during a stay in a hospital with a smoke-free policy. With the advent of these policies, abstinence support with effective management of withdrawal symptoms for patients in hospital is imperative.

Harm reduction, as defended by the Supreme Court, is given short shrift in the study – mentioned, but very briefly and not in so many words.

The other juxtapositon involved great alarm over string attached to Chinese funding of US universities:

The Confucius Institute at North Carolina State University made its feelings known after the Dalai Lama accepted an invitation to speak in 2009 on the Raleigh campus. China’s military took over Tibet in 1959, exiling the spiritual leader considered a traitor in China for advocating Tibetan self-rule.

Confucius Institute director Bailian Li told North Carolina State provost Warwick Arden that a visit by the Lama could disrupt “some of the strong relationships we were developing with China,” Arden said. Besides the institute, joint programs include student exchanges, summer research and faculty collaboration.

And this was published on the same day as a piece about US de-funding of UNESCO:

A day after the Palestinians won full membership in the UN group with 107 votes in favor and 14 against, the U.S. cut off its funding, almost a quarter of the agency’s budget. Moreover, swing votes the Palestinians need to bolster their support on the Security Council for full UN membership have evaporated.

Today’s numbers are all provisional (although probably pretty good) as TMX DataLinx continues to experience networking problems.

It was a good day for the Canadian preferred share market, with PerpetualDiscounts up 10bp, FixedResets winning 15bp and DeemedRetractibles gaining 14bp. There were only three issues in the Performance Highlights table, but all three were positive. Volume was a little light.

PerpetualDiscounts now yield 5.44%, equivalent to 7.07% interest at the standard equivalency factor of 1.3x. Long corporates now yield about 4.95%, so the pre-tax interest equivalency spread (also called the Seniority Spread) is now about 210bp, a slight widening from the 205bp reported on October 26.

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	0.8581 %	2,094.1
FixedFloater	4.88 %	4.60 %	23,864	17.18	1	1.0390 %	3,155.1
Floater	3.44 %	3.44 %	155,094	18.65	2	0.8581 %	2,261.0
OpRet	4.97 %	1.81 %	50,783	1.51	7	0.2703 %	2,467.7
SplitShare	5.77 %	6.40 %	61,386	5.16	3	0.2391 %	2,507.3
Interest-Bearing	0.00 %	0.00 %	0	0.00	0	0.2703 %	2,256.5
Perpetual-Premium	5.58 %	2.42 %	106,332	0.10	13	0.2394 %	2,144.2
Perpetual-Discount	5.36 %	5.44 %	110,078	14.76	17	0.0953 %	2,271.2
FixedReset	5.12 %	3.08 %	210,336	2.45	62	0.1540 %	2,345.2
Deemed-Retractible	5.05 %	4.45 %	219,543	3.92	46	0.1364 %	2,213.3

Performance Highlights
Issue	Index	Change	Notes
GWO.PR.N	FixedReset	1.02 %	YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 24.80 Bid-YTW : 3.41 %
BAM.PR.G	FixedFloater	1.04 %	YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2041-11-02 Maturity Price : 25.00 Evaluated at bid price : 19.45 Bid-YTW : 4.60 %
BAM.PR.M	Perpetual-Discount	1.17 %	YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2041-11-02 Maturity Price : 22.20 Evaluated at bid price : 22.56 Bid-YTW : 5.31 %

Volume Highlights
Issue	Index	Shares Traded	Notes
BAM.PR.Z	FixedReset	506,476	New issue settled today. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2041-11-02 Maturity Price : 23.10 Evaluated at bid price : 25.00 Bid-YTW : 4.57 %
HSE.PR.A	FixedReset	93,687	Anonymous sold 16,700 to TD and blocks of 10,000 and 15,100 to RBC, all at 25.40. RBC crossed 35,000 at the same price. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2041-11-02 Maturity Price : 23.34 Evaluated at bid price : 25.43 Bid-YTW : 3.42 %
IFC.PR.A	FixedReset	58,435	Nesbitt crossed 44,000 at 25.15. YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 25.12 Bid-YTW : 3.92 %
CM.PR.E	Perpetual-Discount	55,532	Desjardins crossed 25,000 at 25.00. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2041-11-02 Maturity Price : 24.69 Evaluated at bid price : 25.00 Bid-YTW : 5.62 %
BNS.PR.Z	FixedReset	38,483	Recent secondary offering. YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 24.95 Bid-YTW : 3.34 %
MFC.PR.E	FixedReset	37,341	Scotia crossed 16,000 at 26.20. YTW SCENARIO Maturity Type : Call Maturity Date : 2014-09-19 Maturity Price : 25.00 Evaluated at bid price : 26.06 Bid-YTW : 4.30 %
There were 27 other index-included issues trading in excess of 10,000 shares.

Wide Spread Highlights
Issue	Index	Quote Data and Yield Notes
BNA.PR.E	SplitShare	Quote: 23.30 – 23.80 Spot Rate : 0.5000 Average : 0.4035 YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2017-12-10 Maturity Price : 25.00 Evaluated at bid price : 23.30 Bid-YTW : 6.40 %
GWO.PR.L	Deemed-Retractible	Quote: 25.20 – 25.59 Spot Rate : 0.3900 Average : 0.2983 YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 25.20 Bid-YTW : 5.65 %
TD.PR.I	FixedReset	Quote: 27.33 – 27.56 Spot Rate : 0.2300 Average : 0.1497 YTW SCENARIO Maturity Type : Call Maturity Date : 2014-07-31 Maturity Price : 25.00 Evaluated at bid price : 27.33 Bid-YTW : 2.74 %
ELF.PR.F	Perpetual-Discount	Quote: 22.35 – 22.73 Spot Rate : 0.3800 Average : 0.3006 YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2041-11-02 Maturity Price : 22.06 Evaluated at bid price : 22.35 Bid-YTW : 5.97 %
MFC.PR.B	Deemed-Retractible	Quote: 21.95 – 22.29 Spot Rate : 0.3400 Average : 0.2616 YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 21.95 Bid-YTW : 6.40 %
MFC.PR.E	FixedReset	Quote: 26.06 – 26.29 Spot Rate : 0.2300 Average : 0.1554 YTW SCENARIO Maturity Type : Call Maturity Date : 2014-09-19 Maturity Price : 25.00 Evaluated at bid price : 26.06 Bid-YTW : 4.30 %