Bernanke used his Monetary Policy Report to clarify his ‘tapering’ comments:
I emphasize that, because our asset purchases depend on economic and financial developments, they are by no means on a preset course. On the one hand, if economic conditions were to improve faster than expected, and inflation appeared to be rising decisively back toward our objective, the pace of asset purchases could be reduced somewhat more quickly. On the other hand, if the outlook for employment were to become relatively less favorable, if inflation did not appear to be moving back toward 2 percent, or if financial conditions–which have tightened recently–were judged to be insufficiently accommodative to allow us to attain our mandated objectives, the current pace of purchases could be maintained for longer. Indeed, if needed, the Committee would be prepared to employ all of its tools, including an increase the pace of purchases for a time, to promote a return to maximum employment in a context of price stability.
Industrial Alliance is buying a conglomerator:
Consistent with its strategy to beef up its asset management arm, insurer Industrial Alliance is scooping up Jovian Capital, a holding company that owns stakes in a number of small asset managers, for $94-million. The deal adds roughly $7-billion of assets to the insurer’s existing $45-billion portfolio.
…
At first glance, Jovian may seem like a bit of an odd choice. The company hasn’t produced positive cash flow in the past few years, and it posted a $7.5-million loss from continuing operations in 2012.
Plus, last year some shareholders were outraged after Jovian’s management team cut themselves a $12-million compensation cheque amidst the weak performance. Shareholders wanted this cash for themselves.
Jovian is the sponsor of Jov Leon Frazer Preferred Equity fund, which has struggled since inception.
The Bank of Canada is maintaining the overnight rate at 1%:
Inflation has been low in recent months and is expected to remain subdued in the near term. The weakness in core inflation reflects persistent material excess capacity, heightened competitive pressures on retailers, relatively subdued wage increases, and some temporary sector-specific factors. Total CPI inflation has also been restrained by declining mortgage interest costs. As the economy gradually returns to full capacity and with inflation expectations well-anchored, both core and total CPI inflation are expected to return to 2 per cent around mid-2015.
Against this backdrop, the Bank has decided to maintain the target for the overnight rate at 1 per cent. As long as there is significant slack in the Canadian economy, the inflation outlook remains muted, and imbalances in the household sector continue to evolve constructively, the considerable monetary policy stimulus currently in place will remain appropriate. Over time, as the normalization of these conditions unfolds, a gradual normalization of policy interest rates can also be expected, consistent with achieving the 2 per cent inflation target.
TransAlta is taking drastic action:
TransAlta Corp., the worst-performing power generation stock in North America the past year, is betting a spinoff of its wind and hydroelectric power plants will increase the company’s value and help reverse two years of losses.
Canada’s largest publicly traded electricity generator gained 9.7 percent since the company said on June 26 it plans an initial public offering of some renewable energy assets. TransAlta has expanded its wind and hydro power capacity to about 25 percent from 15 percent in 2008 with developments in eastern Canada and parts of the U.S., even as power prices in its main markets of Alberta and Washington State declined.
“Investors are willing to pay more for renewables,” Jeremy Rosenfield, an analyst at Dejardins Capital Markets in Montreal, said by phone July 4.
The spinoff could help boost TransAlta’s shares to C$15.50 from C$14.54 at 4:05 p.m. in Toronto today, said Benjamin Pham, a BMO Capital Markets analyst, in a June 27 note. TransAlta’s renewable portfolio has been undervalued for years, he said.
“The structure of the spinoff is designed to permit TransAlta to retain control of its renewable energy fleet while unlocking value to the benefit of shareholders and to accelerate development and acquisition opportunities,” he said.
TransAlta is expected to raise C$200 million ($190 million) to C$250 million in the IPO when it closes in August, the company said in a statement. It will retain an 80 percent to 85 percent stake in the unit.
It hasn’t done their preferreds much good – TA.PR.D, TA.PR.F and TA.PR.H got whacked today. I have no idea why.
It looks like Parakeet Poluz has been given his script:
Stephen Poloz has spelled out what he expects to see from the economy before the Bank of Canada hikes interest rates, and the timeline appears to be a long one.
The new central bank governor sees holding the benchmark overnight rate at its current low level as long as there is significant excess capacity in the economy, the outlook for inflation remains muted, and households continue to get a better handle on their personal debts.
Also, the Conservatives have to get re-elected. That’s very important.
Interesting piece on the decline of the work ethic:
“Absenteeism is often explained around levels in workplace stress,” says Wolfgang Lehmann, a professor of sociology at the University of Western Ontario.
He partly attributes the rise in absenteeism, which has increased from 8 days lost per worker in 2000 to 9.3 days in 2011, to the stressful impact of layoffs, as well as the strain of caring for both children and elderly parents.
But that’s only part of a complex web of factors, and while it might seem obvious that sunny skies tempt workers to shirk their duties, it’s just another small piece of a puzzle that includes an employee’s gender, education level, and personal happiness.
…
Regardless of occupation or demographics, two factors that drive absenteeism are good benefits and bad management, according to Howard Seiden, an expert on workplace absenteeism at the University of Toronto.
“It’s not just a gender thing, or an age thing – it’s an unhappiness thing,” Dr. Seiden says. “People who aren’t happy and don’t like their jobs look for reasons not to come to work.”
It was another mixed day for the Canadian preferred share market, with PerpetualDiscounts up 23bp, FixedResets off 4bp and DeemedRetractibles down 9bp. Volatility was average – CU issues did well. Volume was high.
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 |
0.0647 % |
2,583.0 |
FixedFloater |
4.19 % |
3.48 % |
39,412 |
18.44 |
1 |
0.1769 % |
3,959.1 |
Floater |
2.72 % |
2.91 % |
89,085 |
19.96 |
4 |
0.0647 % |
2,788.9 |
OpRet |
4.59 % |
0.89 % |
73,082 |
0.69 |
3 |
0.4097 % |
2,628.1 |
SplitShare |
4.66 % |
4.40 % |
61,243 |
3.93 |
6 |
0.0860 % |
2,973.5 |
Interest-Bearing |
0.00 % |
0.00 % |
0 |
0.00 |
0 |
0.4097 % |
2,403.1 |
Perpetual-Premium |
5.60 % |
4.45 % |
99,746 |
0.77 |
12 |
-0.1417 % |
2,290.3 |
Perpetual-Discount |
5.31 % |
5.30 % |
138,701 |
14.84 |
26 |
0.2278 % |
2,423.5 |
FixedReset |
4.96 % |
3.52 % |
237,115 |
3.62 |
83 |
-0.0357 % |
2,482.3 |
Deemed-Retractible |
5.04 % |
4.48 % |
189,468 |
6.90 |
43 |
-0.0852 % |
2,391.6 |
Performance Highlights |
Issue |
Index |
Change |
Notes |
ELF.PR.H |
Perpetual-Premium |
-1.19 % |
YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2043-07-17
Maturity Price : 24.49
Evaluated at bid price : 24.90
Bid-YTW : 5.54 % |
TRP.PR.B |
FixedReset |
-1.10 % |
YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2043-07-17
Maturity Price : 22.94
Evaluated at bid price : 23.29
Bid-YTW : 3.31 % |
CU.PR.F |
Perpetual-Discount |
1.71 % |
YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2043-07-17
Maturity Price : 22.86
Evaluated at bid price : 23.25
Bid-YTW : 4.88 % |
CIU.PR.A |
Perpetual-Discount |
1.73 % |
YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2043-07-17
Maturity Price : 22.61
Evaluated at bid price : 22.91
Bid-YTW : 5.07 % |
CU.PR.G |
Perpetual-Discount |
2.00 % |
YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2043-07-17
Maturity Price : 23.05
Evaluated at bid price : 23.46
Bid-YTW : 4.85 % |
Volume Highlights |
Issue |
Index |
Shares Traded |
Notes |
BAM.PR.R |
FixedReset |
203,755 |
Added to TXPR.
YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2043-07-17
Maturity Price : 23.71
Evaluated at bid price : 26.05
Bid-YTW : 3.92 % |
BNS.PR.P |
FixedReset |
176,332 |
It’s Strong Pair, BNS.PR.A, was added to TXPR, but it’s difficult to rationalize causation.
YTW SCENARIO
Maturity Type : Call
Maturity Date : 2018-04-25
Maturity Price : 25.00
Evaluated at bid price : 24.64
Bid-YTW : 3.66 % |
BAM.PR.M |
Perpetual-Discount |
111,870 |
Added to TXPR.
YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2043-07-17
Maturity Price : 22.08
Evaluated at bid price : 22.08
Bid-YTW : 5.43 % |
SLF.PR.I |
FixedReset |
82,590 |
Scotia crossed blocks of 36,000 and 25,000, both at 25.65.
YTW SCENARIO
Maturity Type : Call
Maturity Date : 2016-12-31
Maturity Price : 25.00
Evaluated at bid price : 25.62
Bid-YTW : 3.56 % |
TD.PR.P |
Deemed-Retractible |
81,378 |
Added to TXPR.
YTW SCENARIO
Maturity Type : Call
Maturity Date : 2013-08-16
Maturity Price : 26.00
Evaluated at bid price : 26.06
Bid-YTW : -0.12 % |
CM.PR.M |
FixedReset |
76,209 |
Added to TXPR.
YTW SCENARIO
Maturity Type : Call
Maturity Date : 2014-07-31
Maturity Price : 25.00
Evaluated at bid price : 26.04
Bid-YTW : 2.22 % |
There were 56 other index-included issues trading in excess of 10,000 shares. |
Wide Spread Highlights |
Issue |
Index |
Quote Data and Yield Notes |
TRI.PR.B |
Floater |
Quote: 23.50 – 24.50
Spot Rate : 1.0000
Average : 0.6312
YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2043-07-17
Maturity Price : 23.20
Evaluated at bid price : 23.50
Bid-YTW : 2.21 % |
GWO.PR.R |
Deemed-Retractible |
Quote: 23.97 – 24.28
Spot Rate : 0.3100
Average : 0.1881
YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 23.97
Bid-YTW : 5.34 % |
BNS.PR.O |
Deemed-Retractible |
Quote: 25.76 – 26.14
Spot Rate : 0.3800
Average : 0.2752
YTW SCENARIO
Maturity Type : Call
Maturity Date : 2017-04-26
Maturity Price : 25.00
Evaluated at bid price : 25.76
Bid-YTW : 4.67 % |
FTS.PR.E |
OpRet |
Quote: 25.90 – 26.30
Spot Rate : 0.4000
Average : 0.3241
YTW SCENARIO
Maturity Type : Call
Maturity Date : 2014-06-01
Maturity Price : 25.50
Evaluated at bid price : 25.90
Bid-YTW : 3.71 % |
CIU.PR.C |
FixedReset |
Quote: 24.36 – 24.87
Spot Rate : 0.5100
Average : 0.4409
YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2043-07-17
Maturity Price : 23.15
Evaluated at bid price : 24.36
Bid-YTW : 3.20 % |
IAG.PR.F |
Deemed-Retractible |
Quote: 25.80 – 26.09
Spot Rate : 0.2900
Average : 0.2288
YTW SCENARIO
Maturity Type : Call
Maturity Date : 2019-03-31
Maturity Price : 25.00
Evaluated at bid price : 25.80
Bid-YTW : 5.34 % |
TD.PR.S / TD.PR.T Conversion Results Announced
July 23rd, 2013TD Bank has announced:
TD.PR.S will reset at 3.371%. I had recommended conversion into the FloatingResets.
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