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Well, it was an historic day for jobs numbers:

The nation’s economic distress came into greater focus on Friday, offering a snapshot unseen since the Great Depression.

The Labor Department said the economy shed more than 20.5 million jobs in April, sending the unemployment rate to 14.7 percent as the coronavirus pandemic took a devastating toll.

The monthly data underscores the speed and depth of the labor market’s collapse. In February, the unemployment rate was 3.5 percent, a half-century low.

And the damage has only grown since then: Millions more people have filed claims for unemployment benefits since the monthly data was collected in mid-April.
…
Indeed, last month’s job losses alone far exceed the 8.7 million in the last recession, when unemployment peaked at 10 percent in October 2009.

… and …:

Canada lost a record-setting number of jobs in April, and the unemployment rate surged to 13 per cent as companies were forced to slash payroll in response to lockdown measures aimed at curbing the spread of the novel coronavirus.

The number of employed people plunged by nearly two million last month, surpassing the record one million losses in March, Statistics Canada said on Friday. About three million people have lost their jobs over a two-month span, and hours have been significantly reduced for millions of others. The unemployment rate jumped from March’s 7.8 per cent.

Beneath the surface, the details in Friday’s report were even uglier, pointing to widespread disruptions in the labour market.

There was an apparent leak of the Canadian data:

Statistics Canada says it will investigate how sensitive information on the country’s employment numbers was distributed ahead of the official release time – a market-moving leak the federal Finance Minister’s office condemned as “unacceptable.”

The country’s national statistical agency released data on the labour force survey for April at 8:30 a.m. EDT Friday on its website. Just before 8 a.m., however, citing “a person familiar with the matter,” Bloomberg News published a story saying the country lost about two million jobs, with the unemployment rate rising to 13 per cent. The job losses were fewer than economists had expected.

“We are conducting an investigation related to this matter and will take appropriate measures,” said Jacques Fauteux, Statscan’s assistant chief statistician.

Some will be thrilled to learn that:

Financial markets on Thursday began pricing in a negative U.S. interest rate environment for the first time, as investors grappled with the economic consequences of the new coronavirus outbreak.

… and …:

Fed fund futures priced in the possibility of negative rates for the second day, starting as soon as December. That comes even as numerous Federal Reserve officials including Chair Jerome Powell have said that they don’t see an advantage to the policy.

There is nothing to suggest that negative interest rates would be a suitable option for the United States, Richmond Fed President Thomas Barkin said on Thursday.

It didn’t do the Canadian preferred share market much immediate harm!

TXPR closed at 524.70, up 0.52% on the day. Volume today was 1.82-million, and this reasonable (in the long term) number was second-lowest of the past thirty days, ahead of only May 1.

CPD closed at 10.51, up 0.19% on the day. Volume was 81,924, on the low side in the context of the past 30 trading days.

ZPR closed at 8.24, up 0.24% on the day. Volume of 130,303 was well below the average of the past 30 trading days.

Five-year Canada yields were up 2bp to 0.39% today.

And now … on to PrefLetter!

Brookfield’s got a new project going:

Brookfield Asset Management Inc. plans to spend US$5-billion to prop up retailers hit by the coronavirus pandemic, in an attempt to find investment opportunities in the retail carnage while mitigating the company’s significant exposure to malls.

Under its plan, called the Retail Revitalization Program, Brookfield will provide capital to cash-strapped retailers in exchange for a non-controlling stake in the business. That would throw a lifeline to retailers who are under immense financial stress after governments shuttered non-essential shops and malls to stop the spread of the coronavirus.

We might be seeing a bit more of this; I hope we do. The current experience is reminding us that:

• It’s good to be well capitalized, and
• It’s good to have low fixed costs

Owning your own real-estate fits nicely into these precepts, even though the B-School boys will be pleased to tell you that since real-estate is not a core competency of many retailers, it should be contracted out.

But it makes sense. And there should be more Main Street businesses where Mom ‘n’ Pop live on top of the store, even though security guarding isn’t a core competency either.

It’s also interesting to note that what is essentially an equity-for-rent swap is reminiscent of Islamic Finance.

Here’s a piece by Kristian Blickle of the New York Fed titled Pandemics Change Cities: Municipal Spending and Voter Extremism in Germany, 1918-1933:

We merge several historical data sets from Germany to show that influenza mortality in 1918-1920 is correlated with societal changes, as measured by municipal spending and city-level extremist voting, in the subsequent decade. First, influenza deaths are associated with lower per capita spending, especially on services consumed by the young. Second, influenza deaths are correlated with the share of votes received by extremist parties in 1932 and 1933. Our election results are robust to controlling for city spending, demographics, war-related population changes, city-level wages, and regional unemployment, and to instrumenting influenza mortality. We conjecture that our findings may be the consequence of long-term societal changes brought about by a pandemic.

… and a BBC piece on the Middle East:

The Middle East has many reasons to fear the coronavirus pandemic, but it has one big advantage when it comes to resisting it. Most people in the region are young.

A rough average is that at least 60% are under the age of 30. That makes them less susceptible to developing Covid-19, the illness that has killed so many people in countries with older populations.

Most governments in the region saw what was happening elsewhere and had time to impose curfews and social distancing measures.

But that is where the Middle East’s advantages end. Years of strife in the world’s least stable region have left weaknesses that the pandemic is sure to deepen.
…
Those same young people who have the best chance of resisting the virus were, before it hit, leading demonstrations against their governments.

Every country has its own grievances, but in the Arab Middle East the protests have centred on corruption, cronyism and reform. Corrupt elites are accused of siphoning off public money that should have gone into public services, not least hospitals.
…
Young people who refused orders to clear the streets for months will not be enjoying the irony that the coronavirus has forced them indoors.

When they emerge they will find the economies that failed miserably to generate jobs for them are now in even worse shape.

The result will be more anger, deepened but not created by the dangers and frustrations of this pandemic year. Leaders will have even fewer options.

So, we may be living in interesting times.

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TXPR closed at 518.14, down 0.52% on the day. Volume today was 2.08-million, third-lowest of the past thirty days, greater than only April 24 and May 1.

CPD closed at 10.36, down 0.19% on the day. Volume was 87,012, on the low side in the context of the past 30 trading days.

ZPR closed at 8.08, down 0.25% on the day. Volume of 60,799 was by far the lowest of the past 30 trading days, lower than even April 17.

Five-year Canada yields were up 3bp to 0.41% today.

The AIMCo recriminations continue:

The chief executive of Alberta’s flagship fund manager has failed to calm fears among pension clients over what they say is inappropriate risk-taking that resulted in a multibillion-dollar loss on market swings.

The Alberta Investment Management Corp., known as AIMCo, held an online meeting on Thursday to update its clients on the recent performance problems, including what it said was an unanticipated $2.1-billion loss on derivatives – financial contracts that pay off only if stock markets remain stable – due to the impact of COVID-19 on the economy. AIMCo clients include pension plans for 375,000 nurses, 4,000 police officers and other civil servants in the province.
…
An executive of one client said the group expected to be told the individuals responsible for the loss were suspended or fired. Another client said the costly investment strategy appears to be a symptom of deeper cultural problems within the organization related to risk management, and was disappointed that was not discussed during the meeting.

This is illustrative of my thesis that in-house management is the way to go. I’m not sure just how AIMCo’s client list works – are all of its clients there due to legislation or are they voluntary? Either way, they do not seem to be taking the position that they own the problem; the way that Teachers’, for instance, owns the problem if results are poor for a while. Somebody else owns the problems and they’re victims. So they are acting tough and demanding accountability, just the way they learned in business school and, I’ll bet a nickel, doing a little grandstanding to impress their beneficiaries.

The implications of this dynamic are that every portfolio manager now has a role as salesman. There will be tendency for investments not to be selected solely on the basis of how well they might be judged to help achieve portfolio objectives; the portfolio manager also has to consider how well he will be able to justify the position to clients – very few of whom will have any more investment knowledge than any regular retail client – and what the personal consequences might be if such-and-such a position goes bad. And, what’s more, future PMs will be hired with the same considerations in mind.

Nobody ever got fired for buying IBM! Ignorance is Strength! Closet-index the whole position! And so bureaucratic groupthink wins another round and your retirement funds are being managed by guys with deep voices and firm handshakes.

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Tiff Macklem is the new governor of the BoC:

Finance Minister Bill Morneau has appointed Tiff Macklem, the former senior deputy governor of the Bank of Canada, to take over the top job at the central bank as it navigates the uncertainty of a pandemic-driven recession.

Macklem is currently the dean of the Rotman School of Management in Toronto, but had spent decades with the Bank of Canada before starting that appointment.

Macklem began his career at the bank in 1984. He was widely expected to win the contest for bank governor in 2013, but was beaten out by Stephen Poloz, who was then CEO of Export Development Canada.

Poloz’s term ends June 2.

TXPR closed at 520.86, down 0.63% on the day. Volume today was 1.70-million, lowest of the past thirty days, behind second-place April 24.

CPD closed at 10.38, down 0.10% on the day. Volume was 151,520, high but not extraordinary in the context of the past 30 trading days.

ZPR closed at 8.10, down 0.37% on the day. Volume of 197,498 was low in the context of the past 30 trading days.

Five-year Canada yields were unchanged at 0.38% today.