PrefBlog

The BoC has released a paper by Bo Young Chang and Bruno Feunou titled Measuring Uncertainty in Monetary Policy Using Implied Volatility and Realized Volatility:

We measure uncertainty surrounding the central bank’s future policy rates using implied volatility computed from interest rate option prices and realized volatility computed from intraday prices of interest rate futures. Both volatility measures show that uncertainty decreased following the most important policy actions taken by the Bank of Canada as a response to the financial crisis of 2007–08, such as the conditional commitment of 2009–10, the unscheduled cut in the target rate coordinated with other major central banks, and the introduction of term purchase and resale agreements. We also find that, on average, uncertainty decreases following the Bank of Canada’s policy rate announcements. Furthermore, our measures of policy rate uncertainty improve the estimation of policy rate expectations from overnight index swap (OIS) rates by predicting the risk premium in the OIS market.

It was a mixed day for the Canadian preferred share market, with PerpetualDiscounts off 1bp, FixedResets down 5bp and DeemedRetractibles gaining 9bp. Volatility was high, but without obvious patterns. Volume was high.

There are so many investors buying US real estate that there is chatter that end-users are being squeezed out of the market:

Home purchases by institutional buyers reached a record high in September and all-cash buyers accounted for almost half of sales as investors responded to rising demand from renters.

Institutional purchases accounted for 14 percent of sales, according to a report today from RealtyTrac. That was the highest share since the real estate data firm began in 2011 to track transactions by that group, which it defines as buyers of 10 or more homes a year. All-cash sales rose to 49 percent from 40 percent in August and 30 percent a year earlier, a sign that rising mortgage rates since May have kept some people out of the market and that smaller investors are stepping up purchases.

“Both investors and traditional buyers are trying to snap up cheap homes before prices go higher, but the investors have the advantage of paying cash and not having to go through a convoluted mortgage process,” said Michael Hanson, a former Federal Reserve economist now working for Bank of America Corp. in New York. “People are being bid out of some markets because of investor demand.”

High-end real-estate in the Hamptons is surging:

Josh Guberman paid $3.4 million in 2011 for a house that had lingered on the market in New York’s Hamptons for almost a year. He knew what it was missing.

Guberman tripled the size of the 3,400-square-foot (316-square-meter) property in Southampton, creating nine bedrooms, a wine cellar and zen garden, before putting it on the market again. In July, a buyer paid $8.8 million, $50,000 more than the asking price.
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In Suffolk County, home to the Hamptons, 188 residential properties priced at at least $750,000 changed hands within a year of the previous purchase, according to third-quarter data from RealtyTrac. That’s up from 22 such high-end flips at the same time in 2012, the Irvine, California-based firm said.

Treasuries are responding to the wider economy:

Treasury 10-year note yields traded at almost a three-month low as signs of a loss of momentum in global economic growth stoked bets the Federal Reserve will delay slowing its stimulus program until next year.

U.S. government debt was poised for a weekly gain as more Americans than forecast filed applications for jobless benefits last week and the trade deficit was little changed in August as imports and exports stalled. Treasury Inflation Protected Securities headed for the biggest two-month increase in more than a year as a sale of $7 billion of 30-year TIPS drew strong demand in the first auction since lawmakers voted to raise the debt ceiling. The U.S. will sell $96 billion in notes next week.

Liquidity rules in the US are being used as an instrument of financial repression:

The biggest U.S. banks would be required to hold enough easily sold assets to survive a 30-day credit drought under Federal Reserve liquidity rules that exceed international standards adopted earlier this year.

The Fed liquidity coverage ratio proposal approved unanimously today at a meeting in Washington continues the U.S. trend of pushing further than Basel III accords, calling for earlier execution than in the European Union. The U.S. plan, most stringent for banks with more than $250 billion in assets or substantial international reach, seeks implementation by 2017 — two years ahead of the Basel deadline set in January.
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The banks can use an unlimited amount of cash, Treasuries and central-bank reserves to fulfill the requirement and can also keep 40 percent of it in less liquid assets.

Those other assets can include sovereign debt with a 20 percent risk weight and debt from Fannie Mae and Freddie Mac (FMCC) — subject to a 15 percent haircut. A narrower 15 percent of the liquidity can be in investment-grade corporate debt and publicly traded company stock, with a 50 percent haircut.

Equities as part of a liquidity reserve, even with a 50% haircut? One wonders at the dealmaking process that produced that decision.

David Parkinson of the Globe remarks:

And what happened when the Fed decided at its mid-September policy meeting not to begin tapering after all? Since then, the U.S. 10-year yield has backtracked 35 basis points – and Canada’s 10-year yield has matched it point-for-point.

There’s another ridiculous article on Canadian mortgages:

It was expected that higher interest rates would do the rest of the work. But that’s now in question, after the Bank of Canada pushed out the timeline for raising short-term rates.
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There are some minor moves that Ottawa is already planning that could have a bit of a cooling impact on the market. Sources say the Department of Finance has circulated a discussion paper on portfolio insurance. It proposes some changes such as limiting portfolio insurance to terms, such as five years, rather than having it be for the full life of the mortgages, and taking away the ability of banks to substitute one mortgage for another within a portfolio. Changes such as these would further reduce Ottawa’s exposure to the housing market.

Of course, selling less mortgage insurance would also reduce Ottawa’s exposure to the housing market. And charging more for it would certainly mitigate and probably reduce Ottawa’s exposure to the housing market. Why isn’t Spend-Every-Penny’s recklessness in fuelling the housing boom ever addressed?

It was a good day for the Canadian preferred share market, with PerpetualDiscounts winning 18bp, FixedResets up 9bp and DeemedRetractibles gaining 6bp. A surprisingly lengthy Performance Highlights table shows no clear patterns. Volume was very high.

You’ve got to go a long way to find inflation but there is some:

Australia’s consumer prices gained more than economists forecast last quarter, sending the local currency higher as money markets pared bets the central bank will extend its two-year easing of monetary policy this year.

The trimmed mean gauge of core prices rose 0.7 percent from the previous quarter, the Bureau of Statistics said in Sydney today, compared with the median forecast of 25 economists for a 0.6 percent gain. The consumer price index gained 1.2 percent from the previous three months, compared with economists forecast for a 0.8 percent increase.

Reserve Bank of Australia Governor Glenn Stevens reduced borrowing costs eight times — for a total of 2.25 percentage points — from November 2011 to a record low 2.5 percent in August. With annual price rises within its 2 percent to 3 percent target, he’s seeking to boost job-intensive industries such as construction as a mining investment boom crests.

You won’t find much in Canada!

Inflation in Canada has remained low in recent months, reflecting the significant slack in the economy, heightened competition in the retail sector, and other sector-specific factors. With larger and more persistent excess supply in the economy, both total CPI and core inflation are expected to return more gradually to 2 per cent, around the end of 2015.

Although the Bank considers the risks around its projected inflation path to be balanced, the fact that inflation has been persistently below target means that downside risks to inflation assume increasing importance. However, the Bank must also take into consideration the risk of exacerbating already-elevated household imbalances. Weighing these considerations, the Bank judges that the substantial monetary policy stimulus currently in place remains appropriate and therefore has decided to maintain the target for the overnight rate at 1 per cent.

Michael Babad of the Globe emphasizes the ‘household imbalances’ risk:

It’s not that things aren’t necessarily going as expected, it’s the tweaks to the language. In September, for example, the central bank said in its policy announcement that housing had been “slightly stronger than anticipated,”

The central bank’s comments today underscore the angst surrounding Canada’s housing market and record high debt burdens among consumers.

The housing market slumped in the summer of 2012 after Finance Minister Jim Flaherty moved to cool it off with another round of mortgage restrictions.

Of course, Spend-Every-Penny continues to pump up the housing market with reckless provisions of guarantees by the CMHC. These have the ultimate effect of funding mortgage loans much cheaper for the banks than business loans.

The “crowdfunding” idea continues to move ahead slowly:

Entrepreneurs and start-up companies looking for backing will be able to solicit small investments over the Internet from the general public under a new proposal unveiled by U.S. regulators on Wednesday.
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The crowdfunding rule would let small businesses raise more than $1-million a year by tapping unaccredited investors.

Companies could sell stakes to mom-and-pop investors without registering the securities with the SEC, a move designed to make it cheaper and less cumbersome for struggling startups trying to get their businesses off the ground.

They would still be required to raise the money through regulated broker-dealers such as CircleUp or through crowdfunding portals.

How many entities might register as crowdfunding portals is still unknown, as many are holding off making any decisions until they see how the SEC’s rules shape up.

Under the proposal, crowdfunding portals would be required to provide investors with educational materials and take certain steps to reduce the risk of fraud.

SEC Commissioner Michael S. Piwowar is supportive:

Still, the worthy goals of crowdfunding do not alter the fact that this new mechanism for raising capital presents a number of challenges. The JOBS Act not only requires the Commission to develop a completely new regulatory framework that promotes capital formation for startup companies, but also to implement this innovative framework in a way that protects investors from fraud.

Despite these challenges, crowdfunding presents a number of opportunities. Small businesses – the engines of innovation, economic growth, and job creation – will have the opportunity to access capital from sources that have been previously unavailable. All investors – not just the so-called “accredited investors” – will have the opportunity to invest in entrepreneurs and their ideas at an earlier stage than ever before. The concept of the “wisdom of the crowd,” which has proven to be useful in other areas, will now be unleashed to allocate capital to more productive uses.

Not surprisingly, SEC Commissioner Luis A. Aguilar supports less regulation as long as it is replaced with new regulation:

The use of crowdfunding to reach potentially vulnerable segments of society is a particular concern. Many of the SEC’s enforcement cases arise from “affinity frauds” that exploit the trust and friendship that often exists among members of any ethnic, religious, or other community.[Footnote] Given the possibility that crowdfunding may facilitate affinity fraud by making it easier to identify and target vulnerable groups, I would urge the Commission’s enforcement staff and state securities regulators to take a proactive approach to monitor the crowdfunding space for potential problems. In that regard, I am pleased to note that the North American Securities Administrators Association announced the formation of a task force on Internet fraud investigations shortly after the enactment of the JOBS Act.[Footnote]
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It is therefore essential that the Commission work to establish this new financing technique in a responsible manner. Because of the importance of small business funding, I support the issuance of this proposal. However, I recognize that crowdfunding may entail substantial risks. I look forward to public comments, particularly from investors and investor advocates, as to how the rules can be improved. I also note that Title III of the JOBS Act expressly requires that, in carrying out the rulemaking required to implement the crowdfunding exemption, the Commission shall consult with the state securities commissions.[Footnote] To that end, I look forward to hearing from state regulators.

SEC Commissioner Kara M. Stein wants to ensure there are lots of jobs created handling the red-tape:

First, there is ambiguity in the statute about how much any single investor should be permitted to invest. There are essentially two tests: one based on the income of the investor, and another based on the net worth of the investor. However, it’s not clear from the statute which test should apply and when. One approach is to separately look at both the investor’s income and net worth, and allow the investor to invest up to the maximum amount allowed by the test permitting the greater investment amount. That is the approach taken in the proposed rule. The proposed rule also excludes from the calculation of net worth an individual’s primary residence. No senior citizen living off of a modest, fixed income should be at risk of losing her home to a crowdfunding venture. But even with primary residences excluded from the calculation, I remain concerned that taking the “greater than” approach may expose seniors or others to risks and losses they cannot afford. Another approach could be to limit the investor to the lower investment amount dictated by either the annual income or net worth tests. The release requests comment on which approach is appropriate, and I look forward to hearing from commenters on all sides of this fundamental issue.

The second area I’d like to highlight is whether we should permit funding portals not based in the United States to register and operate in the United States. The release proposes to allow non-U.S. funding portals to register as long as they meet certain requirements, including the portal’s ability to submit to an on-site examination. Given the complexities currently surrounding compliance and enforcement with respect to non-U.S. entities, I believe we need to hear from all parties on this issue and make certain, at a minimum, that all funding portals are fully within our examination and enforcement jurisdiction. I look forward to hearing commenters’ perspectives on this aspect of the proposal.

Third, there is substantial discussion in the release with respect to an issuer’s responsibility to keep complete and accurate records of its securityholders. I believe this is a critically important issue that could have far-reaching implications for the marketplace. A business simply must be able to track who its owners are. While I understand that requiring a registered transfer agent would increase the costs to an issuer, I would like to hear from commenters about possible third-party, cost-effective solutions to help crowdfunding issuers manage their recordkeeping responsibilities.

SEC Commissioner Daniel M. Gallagher is too shy to reveal his views:

The JOBs Act has provided for many investor protections in Title III, including disclosure requirements and the mandatory use of intermediaries called funding portals, and I believe our proposal is generally careful to not add additional, unnecessary frictions into this marketplace. That said, the proof is in the pudding and I look forward to hearing from commenters on whether the balance of investor protection and innovation we are seeking is appropriate.

And to be sure, there is a lot to comment on. In addition to the substantive rule proposal reflected in the proposed rule text and related release language, there are 295 questions in the release. On the actual rule proposal as well as the questions, I especially want to hear from both the small business entrepreneurs we seek to assist, and those investors who look forward to supporting them.

The full release is over 400 pages long. For those with less patience, the press release states:

Consistent with the JOBS Act, the proposed rules would among other things permit individuals to invest subject to certain thresholds, limit the amount of money a company can raise, require companies to disclose certain information about their offers, and create a regulatory framework for the intermediaries that would facilitate the crowdfunding transactions.

Under the proposed rules:

A company would be able to raise a maximum aggregate amount of $1 million through crowdfunding offerings in a 12-month period.
Investors, over the course of a 12-month period, would be permitted to invest up to:

• $2,000 or 5 percent of their annual income or net worth, whichever is greater, if both their annual income and net worth are less than $100,000.
• 10 percent of their annual income or net worth, whichever is greater, if either their annual income or net worth is equal to or more than $100,000. During the 12-month period, these investors would not be able to purchase more than $100,000 of securities through crowdfunding.

Certain companies would not be eligible to use the crowdfunding exemption. Ineligible companies include non-U.S. companies, companies that already are SEC reporting companies, certain investment companies, companies that are disqualified under the proposed disqualification rules, companies that have failed to comply with the annual reporting requirements in the proposed rules, and companies that have no specific business plan or have indicated their business plan is to engage in a merger or acquisition with an unidentified company or companies.

As mandated by Title III of the JOBS Act, securities purchased in a crowdfunding transaction could not be resold for a period of one year. Holders of these securities would not count toward the threshold that requires a company to register with the SEC under Section 12(g) of the Exchange Act.

Enforcing the limits per investor sounds like a job and a half! So fear not! There will be plenty of work for the regulators!

Interestingly, Canada Post no longer wants its debt rated by S&P:

• We are affirming our ‘AAA’ long-term issuer credit and senior unsecured debt ratings and ‘A-1+’ short-term rating on Canada Post Corp. (CPC).
• We have revised our assessment of CPC’s role with and link to the Canadian federal government to “critical” and “integral’ from “very important” and “very strong”, respectively, under our government-related entities criteria.
• Accordingly, we have revised the company’s likelihood of receiving extraordinary government support to “almost certain” from “very high”.
• We are withdrawing our ratings at CPC’s request.

I’m not quite sure what to make of that, particularly in light of Royal Mail’s IPO success:

Forget Twitter. The hottest stock offering of the year is the Royal Mail.

Shares in Britain’s 500-year-old postal service soared as high as 50 per cent over their initial offering price in the days after being listed this month, proving that a very mature business can still excite investors.

That has triggered a sense of postal envy in Ottawa. This could have been Canada Post’s big payday.
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If nothing is done to fix its broken business model Canada Post says it will be losing nearly $1-billion a year by 2020.
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None of the proposed options for fixing the post office are very palatable. They include moving all Canadians to community mailboxes, going to three-day-a week delivery from the current five, franchising more post offices, raising stamp prices and slowing mail delivery, according to a recent Conference Board of Canada report commissioned by the post office.

I don’t understand why the reporter thinks three-day-a-week delivery is unpalatable. What comes in the mail? Magazines and bills. Twice a week is fine for residential service. Maybe more often in high-volume areas, like downtown Toronto.

DBRS updated its report on Veresen, proud issuer of VSN.PR.A and VSN.PR.C:

Veresen continues to pursue its growth and diversification initiatives. In May 2013, the Company filed an application with the Federal Energy Regulatory Commission (FERC) to construct and operate an LNG export facility and related power and pipeline infrastructure at Coos Bay, Oregon (Jordan Cove Energy Project, or the Project). The estimated cost of the Project is $7.5 billion, with an expected in-service date of 2018. DBRS recognizes that the Project is significant and transformative, as it adds growth and diversification to Veresen’s business, and expects that its success will have a positive impact on the Company’s business risk profile. However, the Project is much larger than those undertaken by the Company in the past and entails significant execution risks. The underpinning of firm long-term anchor shipping contracts will be critical to financing the Project in the market, and DBRS expects the Project to be syndicated, due to its relative size and complexity. DBRS will continue to monitor the developments on the Project to assess any impact on the Company’s financial profile.

It was a mixed day for the Canadian preferred share market, with PerpetualDiscounts off 1bp, FixedResets down 6bp and DeemedRetractibles gaining 3bp. Volatility was at normal levels. Volume was high.

PerpetualDiscounts now yield 5.58%, equivalent to 7.25% interest at the standard equivalency factor of 1.3x. Long corporates now yield about 4.8%, so the pre-tax interest-equivalent spread (in this context, the “Seniority Spread”) is now about 245bp, unchanged from October 9.

Buffet is discussing regulation again following the latest round of regulatory extortion:

Warren Buffett, the billionaire chairman of Berkshire Hathaway Inc. (BRK/A), said JPMorgan Chase & Co. (JPM) Chief Executive Officer Jamie Dimon has little room to bargain as regulators probe the sale of faulty mortgage bonds.

“If you’re a financial institution and you’re threatened with criminal prosecution, you have no ability to negotiate,” Buffett told Bloomberg Television’s Betty Liu in an interview today. “Basically, you’ve got to be like a wolf that bares its throat, you know, when it gets to the end. You cannot win.”

Dimon reached a tentative $13 billion settlement to resolve civil disputes between JPMorgan and the U.S. government. The bank won’t be released from criminal liabilities, according to a person familiar with the talks who asked not to be identified because they were private. Some of the practices under the probe relate to Bear Stearns Cos. and Washington Mutual, which JPMorgan bought in 2008 as the housing bubble burst.

The delayed September jobs number was anemic:

Employers in the U.S. added fewer workers to payrolls than projected in September, indicating the world’s largest economy had little momentum leading up to the federal government shutdown.

The addition of 148,000 workers followed a revised 193,000 gain in August that was larger than initially estimated, Labor Department figures showed today in Washington. The median forecast of 93 economists surveyed by Bloomberg called for a 180,000 advance. Unemployment fell to 7.2 percent, the lowest level since November 2008.

Stocks and Treasuries climbed as the report supported expectations that the Federal Reserve won’t hurry to reduce the monthly bond purchases aimed at spurring growth and employment. Progress in the labor market depends on how quickly the economy can bounce back from the loss of business and confidence caused by the budget battles in Washington.

Mark Zelmer of OSFI gave a speech titled Simplicity and Supervision: Rules are not enough in New York today. Not very interesting; there may be some nuances about modelling that will be of interest to specialists. It will be remembered that OSFI has no expertise in critiquing models whatsoever. Tim Kiladze of the Globe claims it’s a regulatory scuffle:

Canada’s top banking watchdog is pushing back against a growing chorus of global regulators who want to simplify the way that banks calculate their capital cushions.
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Now the Basel Committee is considering proposals to monitor simple metrics such as non-performing assets to total assets, historical profit volatility and the leverage ratio. But while OSFI, the top Canadian regulator, agrees that it can be hard to compare risk models across banks, it is strongly urging its peers not to undo a good chunk of the past five years of work. “Simplifying the rule book will not change the game,” deputy superintendent Mark Zelmer said at a conference Tuesday.
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The regulator may have been keeping mum on the issue because Canada’s banks capital levels arguably don’t look as strong under the leverage ratio. Now that other major countries, like the United States, are floating ideas to surpass the Basel III minimums under the leverage ratio, OSFI is speaking up in favour of its preferred method of regulation

There is muttering about a possible Global Housing Bubble Redux:

In Germany, the Bundesbank has warned about rising prices that are “difficult to justify based on fundamental factors,” like demographics or economic expansion. The central bank observed that apartment prices in key urban centres have jumped by more than 25 per cent in the past three years – and a whopping 80 per cent in Berlin – which could spark “fears of a broad-based property price boom.”
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In China, concerted government efforts to take the air out of the bubble have largely been ineffective, as witnessed by the 9.1 per cent rise in new home prices, the biggest jump in three years. In the largest cities, the increases were in the double digits.

In Britain, which is still digging its way out of recession, average prices climbed the most in three years, as mortgage lending reached levels not seen in five years. But there was Jon Cunliffe, newly appointed deputy governor of the Bank of England, telling a parliamentary committee not to worry that the government’s popular Help to Buy mortgage loan scheme might inflate a bubble.

The problem is that so many people consider housing investment to be the sure ticket to riches – and stock market investment to be the road to ruin. Here in Canada, the feds pour fuel on the fire with there reckless expansion of CHMC insurance.

Part of the solution is to make it easier to go public, with the object of allowing people to buy pieces of local business that they recognize; that means decreasing regulation.

Of course, in some cases it’s a simple case of supply and demand:

The number of new homes sold in September in the Greater Toronto Area was up four per cent from the same month last year, but 2013 is shaping up to be the weakest year in a decade, according to industry figures.

In the first nine months of this year, there were 19,327 new homes sold in the GTA – 44 per cent below the 10-year average, according RealNet Canada figures released by the Building Industry and Land Development Association.

BILD attributes the weak sales activity to a significant reduction in the supply of land for building, which has pushed up prices.

And I don’t see much hope any time soon for decreased regulation, as extra-judicial punishments increase in popularity:

The yakuza, Japan’s organized-crime syndicates that have reaped billions from activities ranging from extortion to human trafficking, are finding their ranks decimated by authorities employing methods similar to those used to jail Al Capone: going after their money.

Japan’s Financial Services Agency delivered the latest blow, last month ordering Mizuho Financial Group Inc. (8411) to improve compliance and then demanding that top executives report by Oct. 28 what they knew and when about a consumer-credit affiliate found making loans to crime groups.
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While the gangs themselves aren’t illegal in Japan, violating the exclusion ordinances — which also require customers seeking financial and other services to attest to non-association with a criminal enterprise — could come with a fine of 500,000 yen ($5,080) or a year in jail.

It was a good day for the Canadian preferred share market, with PerpetualDiscounts up 21bp, FixedResets gaining 7bp and DeemedRetractibles winning 24bp. A fairly lengthy performance highlights table is dominated by winners. Volume was above average.

There’s an interesting battle shaping up for control of the Republican party:

A battle for control of the Republican Party has erupted as an emboldened Tea Party moved to oust senators who voted to reopen the government while business groups mobilized to defeat allies of the small-government movement.

“We are going to get engaged,” said Scott Reed, senior political strategist for the U.S. Chamber of Commerce. “The need is now more than ever to elect people who understand the free market and not silliness.” The chamber spent $35.7 million on federal elections in 2012, according to the Center for Responsive Politics, a Washington-based group that tracks campaign spending.

I remain a conservative, but I ended my involvement with the Conservative party when it became apparent that it was no longer the party of fiscal restraint and realism, but had morphed into a Junior Republican party.

Brian Milner of the Globe reminds us that, for all the talk of rising interest rates, the economy really needs stimulus rather than restraint:

The latest Canadian inflation figures inspire descriptions like benign, subdued, tepid and tame. Consumer price inflation remained steady in September at an annual rate of 1.1 per cent. The core price index, which excludes more volatile food and energy costs, also didn’t budge from the previous level of 1.3 per cent. With inflation essentially a non-factor, the conventional wisdom is that the Bank of Canada can afford to leave monetary policy untouched.
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Right now, although prices have been rising slightly in most categories (led by booze and tobacco), the inflation rate sits perilously close to the bottom end of the bank’s target range of 1 to 3 per cent, well below the mid-point of 2 per cent the bank and its counterparts in other developed countries regard as ideal. Now, 1 per cent would be welcomed in deflation-ravaged Japan, which hasn’t posted a level that high since 2008. But it ought to be setting off warning bells here.

Isn’t market timing wonderful?

Hedge-fund manager John Paulson’s PFR Gold Fund fell 16 percent in September after bullion and related stocks declined, according to a report to investors obtained by Bloomberg News.
Last month’s loss brings the 2013 decline in the $350 million fund, which invests in gold stocks and derivatives, to 62 percent, according to the report. Bullion producers fell 9.4 percent and the metal dropped 5 percent in September after a Federal Reserve policy maker said a small reduction in bond purchases may occur in October and the threat of a U.S. attack on Syria eased.

Paulson, 57, is known for making $15 billion for his investors in 2007 by betting against subprime mortgages before the housing collapse.

Towers Perrin reports:

A strong equity market drove September financial results. The benchmark asset portfolio earned almost 3% for the month, driving the Towers Watson Pension Index up 2.6% to 74.7. With this increase the index is now up almost 20% for the year.

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It was a slightly positive day for the Canadian preferred share market, with PerpetualDiscounts gaining 6bp, FixedResets up 7bp and DeemedRetractibles flat. The Performance Highlights Table is surprisingly lengthy considering the modest overall changes and is dominated by winners. Volume was above average; block trading data is not available.