PrefBlog

There good news on photovoltaics:

A technology that would enable low-cost, high efficiency solar cells to be made from virtually any semiconductor material has been developed by researchers with the U.S. Department of Energy (DOE)’s Lawrence Berkeley National Laboratory (Berkeley Lab) and the University of California (UC) Berkeley. This technology opens the door to the use of plentiful, relatively inexpensive semiconductors, such as the promising metal oxides, sulfides and phosphides, that have been considered unsuitable for solar cells because it is so difficult to tailor their properties by chemical means.
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Photovoltaics are the ultimate source of clean, green and renewable energy but today’s technologies utilize relatively scarce and expensive semiconductors, such as large crystals of silicon, or thin films of cadmium telluride or copper indium gallium selenide, that are tricky or expensive to fabricate into devices.

“Solar technologies today face a cost-to-efficiency trade-off that has slowed widespread implementation,” Zettl says. “Our technology reduces the cost and complexity of fabricating solar cells and thereby provides what could be an important cost-effective and environmentally friendly alternative that would accelerate the usage of solar energy.”

Academic research in the States provides the skills, the patents and the profits. The research wasn’t done in Ontario because we blew the budget installing shoddy and expensive technology. Yay us.

Sorry folks – the tables will be delayed. On the bright side, I’ve just finished a major project, so things are looking up!

Update, 2012-08-24:

The SEC has passed some do-gooder rules. The first is bribe-prevention:

The Securities and Exchange Commission today adopted rules mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act requiring resource extraction issuers to disclose certain payments made to the U.S. government or foreign governments.
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The types of payments related to commercial development activities that need to be disclosed include:

• Taxes
• Royalties
• Fees (including license fees)
• Production Entitlements
• Bonuses
• Dividends
• Infrastructure Improvements

The new requirements clarify the types of taxes, fees, bonuses, and dividends that are required to be disclosed. These types of payments generally are consistent with the types of payments that the Extractive Industries Transparency Initiative suggests should be disclosed. Congress specifically referenced the EITI in defining “payment” in the law.

The second is about conflict minerals:

The Securities and Exchange Commission today adopted a rule mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act to require companies to publicly disclose their use of conflict minerals that originated in the Democratic Republic of the Congo (DRC) or an adjoining country.

The regulatory reform law directed the Commission to issue rules requiring certain companies to disclose their use of conflict minerals that include tantalum, tin, gold, or tungsten if those minerals are “necessary to the functionality or production of a product” manufactured by those companies. Companies are required to provide this disclosure on a new form to be filed with the SEC called Form SD.

Why the US is so eager to enforce laws for the benefit of other countries is quite beyond me. The Globe points out:

The SEC made a point of detailing the costs of the reforms before voting on both rules. The agency has seen prior rules successfully challenged in court based on allegations it did not adequately weigh costs and benefits.

An SEC official estimated the total industry-wide cost of implementing the new conflict minerals rule for companies would be around $3-billion to $4-billion. The annual cost could run between $206-million and $609-million.

On the resource extraction rule, the SEC pegged initial compliance costs at close to $1-billion, and said ongoing compliance costs could run between $200-million and $400-million.

But what the hell? Compliance is always good, right? and we’ve got lots of money.

But in a world in which it is considered rational to treat trading as a kiddie game, what do I know?

Knight Capital Group Inc. (KCG)’s $440 million loss from a computer malfunction this month highlights the dangers of limiting human input in decisions about canceling trades, according to two industry executives.

Regulators should have discretion to reverse transactions when the outcome puts a firm’s survival at risk, said Neal Wolkoff, former chairman and chief executive officer of the American Stock Exchange and ex-head of ELX Futures LP. They should allow “do-overs” in extreme cases, said R. Cromwell Coulson, CEO of OTC Markets Group Inc. (OTCM) in New York.

It was a mixed day for the Canadian preferred share market, with PerpetualPremiums gaining 7bp, FixedResets off 2bp and DeemedRetractibles up 17bp. Volatility was normal. Volume was low.

PerpetualDiscounts (that wonderful three-constituent index) now yield 4.97%, equivalent to 6.46% interest at the standard equivalency factor of 1.3x. Long corporates now yield about 4.4%, so the pre-tax interest-equivalent spread (in this context, the “Seniority Spread”) is now about 205bp – everything unchanged since August 15!

Time for another politically inspired shake-down of a bank? Oh, why not?

Public pension funds from Arkansas, Ohio, Oregon and Sweden will be lead plaintiffs in a group lawsuit against JPMorgan Chase & Co. (JPM) over trades made by Bruno Iksil, known as the “London Whale.”

U.S. District Judge George Daniels in Manhattan ruled today that lawsuits against the New York-based bank should be consolidated into a class action. The pension funds allege they lost as much as $52 million because of fraudulent activities by JPMorgan’s London chief investment office.

The lead plaintiffs named by Daniels are the Arkansas Teacher Retirement System, Ohio Public Employee Retirement System, School Employees Retirement System of Ohio, State Teachers Retirement System of Ohio, Oregon Public Employee Retirement Fund and the Swedish pension fund Sjunde AP-Fonden.

The best thing about public pension funds, you understand, is that they allow you to keep the wage increases out of the headline number. But the second best thing is that they give you another avenue for grandstanding shakedown attempts.

The Muddy Waters business model is gaining popularity:

A series of scathing reports by a small Toronto investment research house targeting some of India’s corporate heavyweights is riveting the country’s business community, and sparking intense scrutiny of the state of corporate governance in one of the world’s hottest economies.

Veritas Investment Research Corp. has alleged “manipulative accounting,” poor disclosure practices and other gaping flaws in transparency at major Indian real estate, communications, and infrastructure firms. In the process, the company has shone a rare light on the fragility of oversight in the Asian giant – and made some powerful enemies.
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Arun Jain, an expert on corporate governance who teaches at the elite Indian Institute of Management in Lucknow, said the hard-hitting Veritas reports raise the question of why no Indian firm is doing similar work. “Sometime the gap between who is being analyzed and who is doing the analysis is not big,” he said.

India’s business world can be a cozy one. “You know that someone you write about this week could be a potential client next week, so if you don’t have something nice to say, you just don’t do a report,” said an analyst who has worked for the Indian branches of several international firms, and who did not want to be quoted by name.

Right? Wrong? I don’t know. Indian equities are not exactly my area of specialization. But I do like to see a little mudslinging in the analytical community (provided, of course, that it’s relevant and informed mudslinging) and it’s easier when it’s a foreigner carrying the bucket.

Which is why, of course, the abortive LSE / TMX merger would have been so much better for Canadians than the Maple / TMX deal. But not for every Canadian.

It was a mildly positive day for the Canadian preferred share index, with PerpetualPremiums and DeemedRetractibles both gaining 2bp and FixedResets winning 7bp. Volume continued its recent pattern of ‘Very low, with high spots’.

The Fed is pushing on a string:

The gap between U.S. bank deposits and loans is growing at the fastest pace in two years, providing lenders with more funds to buy bonds and temper the biggest sell-off in Treasuries since 2010.

As deposits increased 3.3 percent to $8.88 trillion in the two months ended July 31, business lending rose 0.7 percent to $7.11 trillion, Federal Reserve data show. The record gap of $1.77 trillion has expanded 15 percent since May, the biggest similar-period gain since July, 2010. Banks have already bought $136.4 billion in Treasury and government agency debt this year, more than double the $62.6 billion in all of 2011, pushing their holdings to an all-time high of $1.84 trillion.
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“Every bank is looking for a way to increase their yield,” said Mike Pearce, president of Bank of The West in Grapevine, Texas, whose company has been purchasing government securities after deposits grew faster than loans in 2010 and 2011. Instead of earning the Federal Funds rate of zero to 0.25 percent on the deposits, its bond holdings are yielding about 3.25 percent, he said.

The danger here is that when the economy starts picking up and people actually start competing with the Treasury for loans, yields will skyrocket. Who remembers 1994?

It was a mixed day for the Canadian preferred share market, with PerpetualPremiums down 9bp, FixedResets off 7bp and DeemedRetractibles gaining 3bp. Volatility was minimal. Volume continued its recent pattern, with pockets of institutional activity and total lack of interest from retail.

Good news on inflation:

Canadian inflation was tamer than expected in July for both the headline and core rates, bolstering expectations the Bank of Canada will leave interest rates at near-record lows well into 2013.

Consumers paid less for clothing and fuels such as gasoline and natural gas in July compared with a year earlier, easing the annual inflation rate to 1.3 per cent from 1.5 per cent in June, Statistics Canada reported on Friday.

The consumer price index fell 0.1 per cent in the month versus a 0.4-per-cent decline in June.

The underlying core inflation rate, which excludes gasoline and seven other volatile items, softened to 1.7 per cent from 2 per cent. These items were also 0.1 per cent cheaper on a monthly basis.

It was a mixed day for the Canadian preferred share market, with PerpetualPremiums down 3bp, FixedResets gaining 10bp and DeemedRetractibles up 12bp. Volatility was minimal. Volume continued its recent pattern of rather high volume in a handful of issues, but overall well below average.

Do I detect a little reaching for yield?:

Sales of junk bonds in the U.S. have already set a record for August, even as yields at about record lows combined with a slowdown in earnings growth spark concern the market for the riskiest corporate debt has peaked.

Charter Communications Inc. (CHTR), the cable-TV provider that emerged from bankruptcy in 2009, and Energy Future Holdings Corp., the Texas power producer struggling with $36.6 billion of long-term debt, are among companies that have sold $29.6 billion of speculative-grade securities this month. That compares with an average $8.4 billion in August sales for the past five years, according to data compiled by Bloomberg.

Companies are tapping into an unprecedented $44.9 billion of cash that has poured into funds that buy junk bonds in 2012 as the fourth year of near-zero short-term interest rates prompts investors to put their money into higher-yielding assets. Issuance accelerated even as the pace of earnings at speculative-grade companies slowed in the second quarter and as U.S. unemployment held above 8 percent for the 42nd month.

It was a languidly positive day for the Canadian preferred share market, with PerpetualPremiums up 7bp, FixedResets gaining 1bp and DeemedRetractibles flat. Volatility was minimal. Volume was a little strange. There were a fair number of issues trading over 100,000 shares, but overall the number of issues trading over 10,000 shares was … well, a little better than some of the recent days, but still pretty quiet. My guess is that a few big boys are shuffling their holdings, but Joe Average has gone fishing.