Looks like an election is in the wind:
Opposition leaders have signalled they will not support the Conservative budget, making a spring election all but inevitable.
The budget’s debt management strategy was interesting:
The government said in the debt management strategy that it released with the federal budget that it’s taking the step to ensure that it always has enough cash to pay one month of bills, which incidentally is the same requirement that will be in place for banks under the new Basel rules. The money will be stashed in interest bearing accounts and foreign exchange reserves and shouldn’t add to the deficit in a “material” way.
Irish notes slid, leading bonds of Europe’s most indebted nations lower, and the euro fell on concern the region’s leaders are struggling to fix the government-finance crisis. Oil rallied, while U.S. and European stocks retreated following a rebound in Japanese shares.
Irish 2-year note yields surged 62 basis points to 9.87 percent and rose as high as 10.18 percent, the most since Bloomberg began collecting the data in 2003. Yields on similar- maturity Portuguese and Greek debt climbed at least 26 basis points.
U.K. inflation accelerated more than economists forecast in February to the fastest pace in more than two years, adding pressure on the Bank of England to increase its benchmark interest rate.
Consumer prices rose 4.4 percent from a year earlier after a 4 percent increase in January, the Office for National Statistics said today in London. That’s the most since October 2008. The median forecast of 32 economists in a Bloomberg News survey was 4.2 percent. A separate report showed the budget deficit unexpectedly widened as government revenue fell.
But I may have been wrong about the long term effects of Credit Crunch politics on the UK financial sector:
Goldman Sachs Group Inc. (GS) employs almost as many people in London today as it did in 2007, before Lehman Brothers Holdings Inc. (LEHMQ) filed for the biggest bankruptcy in history, sparking a global recession.
Goldman Sachs isn’t alone. Royal Bank of Scotland Group Plc (RBS), recipient of the world’s biggest bank bailout, has more workers in its securities unit than four years ago. Barclays Capital, under Robert Diamond, hired 1,800 in 2010.
Investment banks in Europe’s financial capital are adding jobs, helping to bolster headcounts at law and accounting firms across London, as the rest of Britain struggles to recover from the worst economic contraction since the 1930s. Chancellor of the Exchequer George Osborne, who delivers his budget today, has little alternative except to do all he can to keep companies such as Barclays Plc (BARC) and HSBC Holdings Plc (HSBA) from leaving London.
“We want London to remain a global financial center, and one that will continue to flourish and grow because of the employment it brings,” Treasury minister Mark Hoban said at a conference in the City of London last week. “We want to see more employment in the U.K., not less and I think a blooming financial services sector can help deliver that.”
Nevertheless, DBRS is worried:
- • Some investors have expressed increasing concern about Euro zone countries suffering from high and rising debt burdens, uncertain bank recapitalization needs, low competitiveness or political instability.
- • In addition to low investor confidence, deterioration in global economic and political conditions – the Japanese nuclear crisis, popular unrest in Bahrain, energy supply disruptions in Libya – could slow Europe’s economic recovery and thereby delay fiscal adjustment and debt stabilization.
- • Greater clarity on European policies came on March 11, the first in a series of meetings through March 25, with a set of initiatives that if approved may help restore confidence and provide countries with time to implement fiscal austerity programs and return to growth.
- • However, DBRS believes that the final announcements may continue to leave doubts about Europe’s policy stance regarding debt restructuring. The unstable macroeconomic environment however increases the need for greater policy clarity.
- • DBRS would be encouraged by policies that address not only liquidity needs, but also reduce debt servicing costs. Clearer policies would further help to stabilize DBRS’s sovereign ratings in Europe.
One can’t help but wonder what will ultimately happen to Detroit:
The population in Detroit plunged 25 percent during the last decade, falling to the lowest level since 1910, according to 2010 Census figures.
The number of city residents fell to 713,777 last year, compared with 951,270 in 2000, the U.S. Census Bureau said today in Washington.
…
Detroit’s overall population has fallen steadily since 1950, when it peaked at 1.8 million.
There’s a fascinating development in workplace computer privacy law:
A judgment on Tuesday from the Ontario Court of Appeal broke new ground on an issue that is exploding into the court system – the extent to which Internet information is private and beyond the reach of the law.
The case involved a Northern Ontario high school teacher charged with possessing child pornography. The judges said that police breached his Charter rights by viewing his computer files without a warrant.
…
Toronto lawyer Scott Hutchison, a privacy expert, said that the court has given a sound answer to a vital question. “This case comes down firmly on the side of privacy and holds that employers cannot give police investigators access to a workplace computer,” he said.“This case makes it clear that the employer may own the computer, but that doesn’t give them the power to waive the employee’s privacy rights,” Mr. Hutchison added.
…
Writing on behalf of Chief Justice Warren Winkler and Mr. Justice Robert Sharpe, Madam Justice Andromache Karakatsanis said the board employee did not breach the Charter protection against unreasonable search and seizure because he was mandated to do so.However, the police search was an entirely different matter.
DBRS has released six methodological updates. Of primary interest are Life Insurance companies and P&C Insurance companies.
The Globe’s John Heinzl had a good piece titled Getting a grip on the dividend gross-up.
It was another strong day in the Canadian preferred share market, with PerpetualDiscounts up 26bp, FixedResets winning 13bp and DeemedRetractibles gaining 9bp. Volume continued to be light.
| 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 | 0.3017 % | 2,381.4 |
| FixedFloater | 0.00 % | 0.00 % | 0 | 0.00 | 0 | 0.3017 % | 3,581.6 |
| Floater | 2.53 % | 2.34 % | 45,607 | 21.40 | 4 | 0.3017 % | 2,571.3 |
| OpRet | 4.90 % | 3.60 % | 53,053 | 1.15 | 9 | 0.0302 % | 2,395.5 |
| SplitShare | 5.10 % | 3.21 % | 154,141 | 0.99 | 5 | 0.2502 % | 2,480.8 |
| Interest-Bearing | 0.00 % | 0.00 % | 0 | 0.00 | 0 | 0.0302 % | 2,190.5 |
| Perpetual-Premium | 5.74 % | 5.64 % | 138,608 | 6.21 | 10 | 0.0734 % | 2,035.2 |
| Perpetual-Discount | 5.50 % | 5.54 % | 121,417 | 14.37 | 14 | 0.2581 % | 2,125.9 |
| FixedReset | 5.16 % | 3.50 % | 241,891 | 2.95 | 57 | 0.1328 % | 2,280.5 |
| Deemed-Retractible | 5.22 % | 5.17 % | 342,129 | 8.27 | 53 | 0.0936 % | 2,084.3 |
| Performance Highlights | |||
| Issue | Index | Change | Notes |
| GWO.PR.G | Deemed-Retractible | 1.03 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 24.63 Bid-YTW : 5.40 % |
| BMO.PR.N | FixedReset | 1.17 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2014-03-27 Maturity Price : 25.00 Evaluated at bid price : 27.63 Bid-YTW : 2.99 % |
| BAM.PR.R | FixedReset | 1.19 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2041-03-22 Maturity Price : 25.40 Evaluated at bid price : 25.45 Bid-YTW : 4.89 % |
| BNS.PR.O | Deemed-Retractible | 1.43 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2017-05-26 Maturity Price : 25.00 Evaluated at bid price : 26.17 Bid-YTW : 4.90 % |
| Volume Highlights | |||
| Issue | Index | Shares Traded |
Notes |
| HSE.PR.A | FixedReset | 201,177 | Recent new issue. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2041-03-22 Maturity Price : 24.90 Evaluated at bid price : 24.95 Bid-YTW : 4.31 % |
| PWF.PR.L | Perpetual-Discount | 95,794 | RBC crossed 93,200 at 23.95. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2041-03-22 Maturity Price : 23.58 Evaluated at bid price : 23.81 Bid-YTW : 5.43 % |
| SLF.PR.B | Deemed-Retractible | 82,928 | Nesbitt crossed 50,000 at 22.95; Desjardins crossed 25,000 at the same price. YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 22.91 Bid-YTW : 5.87 % |
| PWF.PR.I | Perpetual-Premium | 53,000 | Desjardins crossed blocks of 26,300 and 25,000, both at 25.40. YTW SCENARIO Maturity Type : Call Maturity Date : 2012-05-30 Maturity Price : 25.00 Evaluated at bid price : 25.33 Bid-YTW : 5.61 % |
| NA.PR.P | FixedReset | 51,320 | Issuer bid. YTW SCENARIO Maturity Type : Call Maturity Date : 2014-03-17 Maturity Price : 25.00 Evaluated at bid price : 28.29 Bid-YTW : 2.31 % |
| PWF.PR.G | Perpetual-Premium | 50,400 | RBC crossed blocks of 36,300 and 13,700, both at 25.20. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2041-03-22 Maturity Price : 24.93 Evaluated at bid price : 25.15 Bid-YTW : 5.96 % |
| There were 25 other index-included issues trading in excess of 10,000 shares. | |||
| Wide Spread Highlights | ||
| Issue | Index | Quote Data and Yield Notes |
| CU.PR.B | Perpetual-Premium | Quote: 25.25 – 25.61 Spot Rate : 0.3600 Average : 0.2256 YTW SCENARIO |
| CM.PR.G | Deemed-Retractible | Quote: 25.40 – 25.70 Spot Rate : 0.3000 Average : 0.1893 YTW SCENARIO |
| TD.PR.G | FixedReset | Quote: 27.40 – 27.66 Spot Rate : 0.2600 Average : 0.1608 YTW SCENARIO |
| SLF.PR.A | Deemed-Retractible | Quote: 22.66 – 22.96 Spot Rate : 0.3000 Average : 0.2011 YTW SCENARIO |
| CIU.PR.B | FixedReset | Quote: 27.36 – 27.80 Spot Rate : 0.4400 Average : 0.3537 YTW SCENARIO |
| RY.PR.P | FixedReset | Quote: 27.20 – 27.54 Spot Rate : 0.3400 Average : 0.2612 YTW SCENARIO |