PrefBlog

TXPR closed at 624.82, up 0.80% on the day. Volume today was 1.51-million, well below the median of the past 21 trading days. Today’s fine performance, following yesterday‘s bounce, regains lost ground all the way back to, um, late Monday afternoon.

CPD closed at 12.40, up 0.08% on the day. Volume was 147,220, well above the median of the past 21 trading days.

ZPR closed at 10.35 down 0.10% on the day. Volume of 444,010 was second-highest of the past 21 trading days, behind only April 7.

Five-year Canada yields were up 9bp to 2.77% today.

The furor in the comments regarding politics on PrefBlog got me interested in learning more about the National Legal and Policy Center, which is making quite a fuss at many annual meetings this year. They have a fair sized Wikipedia entry that has not attracted much controversy (according to the rate of edits), but which concentrates on their activities with political ethics.

It looks like something has changed, though, since their website homepage is dominated by notices of their annual meeting challenges to corporations, which tells you something about where their donations are coming from (or ‘what they are being paid to say’. Take your pick).

I find this explicit political targetting of corporations to be really scary, given that Florida Republicans feel that there is some hay to be made in attacking them. I like to look at the Instagram political pages to get an idea of what the lunatic fringes are talking about and the loony right is absolutely thrilled with the assault on Disney.

So anyway, I posted about their remarks at the Wells Fargo meeting because I thought it was (i) interesting enough and (ii) obscure enough and (iii) funny enough to justify the minor digression. I mean, how can one read a statement like:

At Wells Fargo, the top arranger of loans to fossil-fuel companies last year, an activist chided the bank for donating to groups fighting climate change, “which is just Marxism dressed up as environmentalism.”

without snickering?

Or maybe people were just upset I mentioned the incredibly loose fiscal policy embodied in the Progressive Conservative’s election budget. It wasn’t really all that clear.

But anyway, April’s over, after delivering a 7.9% hit (as of the close yesterday; maybe 7.2% for the month but the TXPR TRIV is not yet available) [Update: The TXPR TRIV was 1765.52 at month-end, indicating a total return of -7.04% on the month]. Very strange, considering the abundance of FixedReset (Discount) issues and the 30-odd bp increase in the Five-Year Canada rate through the period. But then, if the preferred share market wasn’t strange, it would be boring!

TXPR closed at 619.88, hitting a new 52-week low on the day, but up 1.54% on the day. Volume today was 1.86-million, a bit below the median of the past 21 trading days.

CPD closed at 12.39, hitting a new 52-week low on the day, but up 2.48% on the day. Volume was 339,580, highest of the past 21 trading days.

ZPR closed at 10.36, hitting a new 52-week low on the day, but up 2.57% on the day. Volume of 305,910 was above the median of the past 21 trading days.

Five-year Canada yields were unchanged at 2.68% today.

MAGA wars are coming to a bank near you!:

As three of the nation’s largest banks kicked off the U.S. financial industry’s annual gatherings this week, conservative speakers showed up with questions, proposals and ultimatums. They’re not matching the size of the liberal-leaning crowd — their proposals garnered the least amount of supporting votes from shareholders — but they’re trying to steer the agenda nonetheless.

At Citigroup and Bank of America, the activists argued that vows to improve diversity or pay more equitably may hurt groups of people who aren’t underrepresented. At Wells Fargo, the top arranger of loans to fossil-fuel companies last year, an activist chided the bank for donating to groups fighting climate change, “which is just Marxism dressed up as environmentalism.” He also warned it not to follow Walt Disney Co. in the sort of “woke” LGBTQ advocacy that drew a backlash from “Make America Great Again” activists and Republican politicians in Florida.

“Wells Fargo needs to take a hard look at the fix that Disney finds itself in,” the speaker, Paul Chesser, director of the conservative National Legal and Policy Center’s Corporate Integrity Project, warned the bank leaders. “Stay out of politics and properly serve all its customers and shareholders.”

There are no shortages of idiots on any side of this issue, but the MAGA clowns are most entertaining, albeit the most dangerous. The targetting of Disney by Florida’s state government due to Disney’s views on legislation, while very popular with the lunatic fringe, should send chills down anybody’s spine.

Meanwhile, in Ontario, we’re going to spend like hell and put it on the tab:

Ontario Finance Minister Peter Bethlenfalvy unveiled a pre-election budget on Thursday that pledges billions more in spending for long-term plans to expand hospitals and build highways and puts off eliminating the province’s deficit for another six years.
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The document promises an additional $10-billion for hospital expansion, and would increase spending on highways and roads by $4-billion, both over 10 years.

But it contains few other major new policies or projects, as the government has spent months announcing many of its key provisions, including an end to licence-plate fees for cars, and a pledge to cut the gas tax temporarily.
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For this fiscal year, 2022-23, the budget projects a deficit of $19.9-billion (including $1-billion in reserve funds, which would reduce the red ink if not spent). This year’s number is up from last year’s $13.5-billion deficit, which included billions the province spent battling the continuing pandemic.

TXPR closed at 610.49, hitting a new 52-week low on the day, down 1.04% on the day. Volume today was 2.65-million, above the median of the past 21 trading days.

CPD closed at 12.085, hitting a new 52-week low on the day, down 1.19% on the day. Volume was 250,830, third-highest of the past 21 trading days, behind April 7 and April 8.

ZPR closed at 10.095, hitting a new 52-week low on the day, down 1.70% on the day. Volume of 330,630 was well above the median of the past 21 trading days.

Five-year Canada yields were up 8bp to 2.68% today.

PerpetualDiscounts now yield 6.01%, equivalent to 7.81% interest at the standard equivalency factor of 1.3x. Long corporates now yield 4.63%, so the pre-tax interest-equivalent spread (in this context, the “Seniority Spread”) has exploded to 320bp from the 275bp reported April 20.

TXPR closed at 616.88, hitting a new 52-week low on the day, down 1.02% on the day. Volume today was 2.54-million, above the median of the past 21 trading days.

CPD closed at 12.23, hitting a new 52-week low on the day, down 1.29% on the day. Volume was 117,270, third-highest of the past 21 trading days, behind April 7 and April 8.

ZPR closed at 10.27, hitting a new 52-week low on the day, down 1.91% on the day. Volume of 378,350 was well above the median of the past 21 trading days.

Five-year Canada yields were down 12bp to 2.60% today.

It wasn’t much fun anywhere:

The tech-heavy Nasdaq index has now fallen 22% from its record high close last November, meeting the definition of a bear market which begins with a decline of 20% from recent highs.
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Tesla contributed more than any other stock to the S&P 500 and Nasdaq’s steep declines. Tesla slumped 12% after investors worried that chief executive Elon Musk might sell some of his stake in the electric car maker to help pay for his $44 billion deal to buy Twitter, announced on Monday.
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In Canada S&P/TSX composite index ended down 321.08 points, or 1.5%, at 20,690.81.
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The Toronto market’s technology sector fell 3.7%, while heavily-weighted financials ended 1.8% lower.

The industrials group was down 1.7%, weighed by a 7.3% decline for shares of Air Canada after the airline reported a larger-than-expected quarterly loss and said it is adding capacity to meet a rebound in spring traffic.

Energy was a bright spot, gaining 0.8% as oil prices rallied. U.S. crude oil futures settled 3.2% higher at $101.70 a barrel.

TXPR closed at 623.27, hitting a new 52-week low on the day, down 1.65% on the day. Volume today was 2.72-million, well above the median of the past 21 trading days.

CPD closed at 12.39, hitting a new 52-week low on the day, down 1.67% on the day. Volume was 114,240, third-highest of the past 21 trading days, behind April 7 and April 8.

ZPR closed at 10.47, hitting a new 52-week low on the day, down 1.23% on the day. Volume of 261,550 was above the median of the past 21 trading days.

Five-year Canada yields were down 10bp to 2.72% today.

TXPR closed at 633.74, hitting a new 52-week low on the day, down 1.12% on the day. Volume today was 1.87-million, around the median of the past 21 trading days.

CPD closed at 12.60, hitting a new 52-week low on the day, down 1.10% on the day. Volume was 103,470, at the high end of the past 21 trading days.

ZPR closed at 10.60, hitting a new 52-week low on the day, down 0.28% on the day. Volume of 396,070 was third-highest of the past 21 trading days, behind April 7 (another horrible day) and March 31.

Five-year Canada yields were down 2bp to 2.82% today.

But it was a horrible day everywhere:

Wall Street tumbled more than 2.5% on Friday, ensuring the three main benchmarks ended in negative territory for the week, as surprise earnings news and increased certainty around aggressive near-term interest rate rises took its toll on investors. The TSX, fully swept up in the action, was down more than 2% – its worst day of 2022.

It was the third straight week of losses for both the S&P 500 and the Nasdaq, while the Dow Jones posted its fourth weekly decline in a row.

For the Dow, its 2.82% drop on Friday was its biggest one-day fall since October 2020.

The S&P/TSX Composite Index ended down 464.03 points, or 2.1%, at 21,186.38, its biggest decline since last November and its lowest closing level since March 1. For the week, the index was down 3.1%.
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Canadian economic data showed the largest monthly gain in producer prices since the series began in January 1956.

Still, I consider it only a matter of time before the world wakes up and looks at the yields available. I mean, Holy Smokes, 6.97% on TRP.PR.C, based on a bid of 13.75 and GOC-5 at a constant 2.88%. Five TRP issues lead the rankings of non-insurance FixedReset (Discount) yields, with issues from BAM, FTS, PWF, GWO, IFC, MFC and CU all yielding comfortably over 6% at their bid price with the same assumption regarding five-year yields. 6% as a dividend! Add SLF to the list with an asterisk, the quote on SLF.PR.G is lousy, but at the closing price it yields well over 6%. It’s ridiculous!

The five year Canada yield shot up to 2.84% today, up about 9bp. The three-month bill is at 1.212%, which looks an awful lot to me as if the market is bracing for another 50bp hike in the policy rate at the June 1 setting.

4/20 today, but inflation wasn’t mellow!

Canada’s inflation rate hit a new three-decade high in March and blew past expectations on Bay Street, an unwelcome sign for central bankers trying to douse the acceleration.

The Consumer Price Index rose 6.7 per cent in March from a year earlier, a full percentage point higher than February’s 5.7-per-cent pace, Statistics Canada said Wednesday. Financial analysts were expecting an annual inflation rate of 6.1 per cent. It marked the highest inflation since January of 1991, when the federal goods and services tax took effect.
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Consumers were hit by steeper prices on multiple fronts. Gasoline prices rose 11.8 per cent in a single month. Groceries rose 8.7 per cent on an annual basis, the largest increase since 2009. Pasta products jumped nearly 18 per cent, butter by 16 per cent and fresh milk by 7.7 per cent.

Higher inflation has also spread to pandemic-hit sectors. The cost of restaurant food rose 5.4 per cent over the past year, up from 4.7 per cent in February. Traveller accommodation soared 24.4 per cent on a 12-month basis, while air transportation jumped 8.3 per cent in March alone.

PerpetualDiscounts now yield 5.66%, equivalent to 7.36% interest at the standard equivalency factor of 1.3x. Long corporates now yield 4.63%, so the pre-tax interest-equivalent spread (in this context, the “Seniority Spread”) has narrowed to 275bp from the 290bp reported April 13.