Category: Market Action

The Bank of Canada increased the overnight rate by 0.25% to 4.5%, as universally expected. There is the usual amount of entrail-interpretation going on in the marketplace – for what it’s worth, I consider the tone of the press release to be neutral – and think that the strong CAD is doing a lot of the heavy lifting for the Bank. But there are the usual pseudo-quants from the “Look, Mom, I got a spreadsheet!” school, claiming, f’rinstance, that since increases have previously occurred in clumps, future increases will also occur in clumps. Apparently, most shops are predicting a September hike, but the track records of these firms was not disclosed. I’m not disclosing my track record of BOC watching, either, mainly because I haven’t got a clue what it is. So be warned!

Bonds had a strong day, on the back of an apparent flight to quality related to sub-prime mortgages in the US and the strength has now spread to Japan amidst muttering that maybe Japan holds too many Treasuries. What a difference a week makes, eh? It was just last Friday I was reporting on the extreme lousiness of the bond market, but Captain Quality has saved the day! I guess a lot of mortgage cheques didn’t arrive in the mail on Monday morning.

SBN.PR.A has announced a normal course issuer bid, less than six weeks after issuing additional shares and less than two months after closing the new issue. It’s not clear how seriously this press release is meant to be taken … there’s not a lot of discount in market-to-NAV for the units … which is why I’m not dignifying the release with its own post.

CXC.PR.A has announced exercise of the underwriters’ greenshoe. This issue is not tracked by HIMIPref™ and I have no plans to do so at this moment – it’s too small. Like many such issues, however, it could make a lot of sense for a small investor planning to buy 100 shares and hold until redemption, given its 5% coupon and discount price

There were nine other $25-equivalent index-included issues trading over 10,000 shares today.

Quiet day today. Volatility continues to be high, as it has for the past two months, but nothing unusual when considered in the context of this short period.

The Bank of Canada will announce the Overnight Rate on July 10. Universally expected to be up 25bp to 4.50%; the suspense lies in what sort of language they use to prepare us for the next meeting.

There were three other $25-equivalent index-included issues trading over 10,000 shares today.

Bondholders will be glad this horrible week is over, as bonds slipped again after the US Employment Numbers (and wage numbers!) came out.

The Teachers/BCE agreement has been released on SEDAR. I didn’t find much of interest, but there was one tidbit: a “Superior Bid” only has to target 50.1% of the common shareholders, but has to be deemed (by BCE’s board) to be financially superior for the Affected Shareholders – and the latter group includes preferreds! Now there’s something that could possibly cause some ill-feeling in the future!

There were ten other $25-equivalent index-included issues trading over 10,000 shares today.

Not a good day for bonds, but preferreds held up pretty well. The Bank of England raised its rate, while there was some tough talk from Trichet. The Bank of Canada released its Summer Survey – it announces its rate decision (“Up!” – JH & just about everybody else) next week.

Global 45 Fund, GFV.PR.A, announced a normal course issuer bid. This issue is not tracked by HIMIPref™.

There were seventeen other $25-equivalent index-included issues trading over 10,000 shares today.

The BCE issues settled back a little after their enormous gains of yesterday – I suspect that they’ll be volatile for a little while longer, as greed wars with fear. I wrote yet another post on the BCE/Teachers Plan of Arrangement today and estimated that taking out the preferreds is costing the common shareholders $1.50 per share.

Econbrowser publicized a new Internet connectivity toy that I was eager to try – but I can’t say I was too impressed by the results. What this world needs is a plethora of blogs about Canadian shares, then we can get into furious arguments with each other, just like the political guys. The chart for PrefInfo.com looks more as expected, anyway.

There were twelve other $25-equivalent index-included issues trading over 10,000 shares today.

Well, I had a marvellous dinner with a very good friend, but it left no time to do much beyond the most vital system updating! I’ll catch up tomorrow, but in the meantime, feast your eyes on the average returns of the Ratchet Rate Index and the Fixed Floater Index. It will be a while before we see those kinds of numbers again!

Later:

There were eightteen other $25-equivalent index-included issues trading over 10,000 shares today.

Another quarter’s been put to bed! Today was a strong day for bonds and a good day for bond traders, who quit work early in the afternoon. I’ve never quite understood how they get away with that, but they do put in pretty long hours.

There were thirteen other $25-equivalent index-included issues trading over 10,000 shares today.

Very sorry … due to month-end scheduling difficulties, the report for June 28 will be delayed. I hope to have everything caught up by the end of the day.

Later…

There were eleven other $25-equivalent index-included issues trading over 10,000 shares today.

BCE issues were hammered again, presumably in a delayed reaction to the Telus affront. The FixedFloater index (comprised entirely of BCE issues) is above its early-June lows, but has now given up the monster gains that accompanied the initial approach.

CPD, the subject of a recent article, went ex-dividend on 6/26 for just a hair under $0.20 per share, so don’t faint when you look at the NAVs!

There were twenty-six other $25-equivalent index-included issues trading over 10,000 shares today.

BCE issues were very disappointed to learn that Telus doesn’t want BCE and lost back much of their recent gains. Predict this, predict that, no information … what a life, eh? I’ll stick to analyzing cash-flows.

There were thirteen other $25-equivalent index-included issues trading over 10,000 shares today.