Richard W Fisher, President and Chief Executive Officer of the Federal Reserve Bank of Dallas, gave a speech titled Connecting the dots – Texas employment growth; a dissenting vote; and the ugly truth (with reference to P G Wodehouse):
I voted against that commitment-cum-signal. In the press’ reporting of my dissenting vote and those of the other two members of the FOMC who voted against that commitment – Mr. Kocherlakota, my counterpart from the Minneapolis Fed, and Mr. Plosser, my counterpart from Philadelphia – there was substantial speculation as to the reasons for our dissent. I will let my other two colleagues speak for themselves; I can only speak for myself.
…
The trimmed mean analysis we do at the Dallas Fed focuses on the price movements of personal consumption expenditures. It is an analysis that tracks the price movements of 178 items that people actually buy, such as beer, haircuts, shoe repair, food and energy prices. In June, the trimmed mean came in at an annualized rate of 1.3 percent, versus 2.1 percent for the first five months of the year. The 12-month rate was 1.5 percent.My concern is not with immediate inflationary pressures.
…
My concern is with the transmission mechanism for activating the use of the liquidity we have created, which remains on the sidelines of the economy. I posit that nonmonetary factors, not monetary policy, are retarding the willingness and ability of job creators to put to work the liquidity that we have provided.I have spoken to this many times in public. Those with the capacity to hire American workers – small businesses as well as large, publicly traded or private – are immobilized. Not because they lack entrepreneurial zeal or do not wish to grow; not because they can’t access cheap and available credit. Rather, they simply cannot budget or manage for the uncertainty of fiscal and regulatory policy. In an environment where they are already uncertain of potential growth in demand for their goods and services and have yet to see a significant pickup in top-line revenue, there is palpable angst surrounding the cost of doing business. According to my business contacts, the opera buffa of the debt ceiling negotiations compounded this uncertainty, leaving business decisionmakers frozen in their tracks.
…
Based on past behavior of fiscal policy makers, businesses understandably regard the debt ceiling agreement and the political outcome of negotiations between Congress and the president with the suspicion akin to how the British humorist P.G. Wodehouse regarded his aunts: “It is no use telling me there are bad aunts and good aunts,” he wrote. “At the core they are all alike. Sooner or later, out pops the cloven hoof.”
Holy smokes, here’s a sign of the times:
Gold reached a new milestone in its role as an investment and haven, with the leading exchange- traded fund that tracks bullion surpassing its equities counterpart as the biggest ETF by market value.
You can call it what you like – me, I call it a contrarian indicator.
It was a positive day for the Canadian preferred share market, with PerpetualDiscounts winning 14bp, FixedResets up 4bp and DeemedRetractibles gaining 3bp. Volatility was good. Volume was absolutely pathetic.
| 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 | -0.0809 % | 2,140.5 |
| FixedFloater | 0.00 % | 0.00 % | 0 | 0.00 | 0 | -0.0809 % | 3,219.3 |
| Floater | 2.83 % | 2.57 % | 28,528 | 20.88 | 4 | -0.0809 % | 2,311.1 |
| OpRet | 4.89 % | 1.78 % | 56,431 | 0.59 | 9 | -0.2022 % | 2,439.7 |
| SplitShare | 5.42 % | 1.38 % | 58,045 | 0.52 | 4 | 0.6112 % | 2,473.5 |
| Interest-Bearing | 0.00 % | 0.00 % | 0 | 0.00 | 0 | -0.2022 % | 2,230.9 |
| Perpetual-Premium | 5.68 % | 4.91 % | 131,207 | 2.01 | 14 | 0.0749 % | 2,101.4 |
| Perpetual-Discount | 5.37 % | 5.46 % | 103,725 | 14.64 | 16 | 0.1393 % | 2,225.5 |
| FixedReset | 5.14 % | 3.16 % | 213,178 | 2.72 | 60 | 0.0398 % | 2,318.2 |
| Deemed-Retractible | 5.07 % | 4.70 % | 263,194 | 7.95 | 46 | 0.0292 % | 2,182.4 |
| Performance Highlights | |||
| Issue | Index | Change | Notes |
| BAM.PR.T | FixedReset | -2.56 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2041-08-22 Maturity Price : 22.75 Evaluated at bid price : 24.02 Bid-YTW : 4.12 % |
| TRI.PR.B | Floater | -1.80 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2041-08-22 Maturity Price : 21.54 Evaluated at bid price : 21.80 Bid-YTW : 2.40 % |
| BAM.PR.X | FixedReset | -1.56 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2041-08-22 Maturity Price : 22.74 Evaluated at bid price : 24.02 Bid-YTW : 3.75 % |
| PWF.PR.A | Floater | 1.13 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2041-08-22 Maturity Price : 20.50 Evaluated at bid price : 20.50 Bid-YTW : 2.57 % |
| FTS.PR.F | Perpetual-Discount | 1.14 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2041-08-22 Maturity Price : 24.49 Evaluated at bid price : 24.78 Bid-YTW : 4.95 % |
| BNA.PR.E | SplitShare | 2.26 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2017-12-10 Maturity Price : 25.00 Evaluated at bid price : 22.62 Bid-YTW : 6.73 % |
| CIU.PR.C | FixedReset | 4.75 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2041-08-22 Maturity Price : 23.23 Evaluated at bid price : 25.15 Bid-YTW : 2.86 % |
| Volume Highlights | |||
| Issue | Index | Shares Traded |
Notes |
| NA.PR.M | Deemed-Retractible | 53,880 | RBC crossed 50,000 at 26.50. YTW SCENARIO Maturity Type : Call Maturity Date : 2016-05-15 Maturity Price : 25.25 Evaluated at bid price : 26.30 Bid-YTW : 5.00 % |
| RY.PR.E | Deemed-Retractible | 53,710 | TD crossed 40,000 at 24.71. YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 24.70 Bid-YTW : 4.67 % |
| IFC.PR.C | FixedReset | 41,520 | Recent new issue. YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 24.91 Bid-YTW : 4.23 % |
| BNS.PR.X | FixedReset | 27,125 | TD crossed 25,000 at 27.15. YTW SCENARIO Maturity Type : Call Maturity Date : 2014-04-25 Maturity Price : 25.00 Evaluated at bid price : 27.10 Bid-YTW : 3.13 % |
| ENB.PR.A | Perpetual-Premium | 26,185 | YTW SCENARIO Maturity Type : Call Maturity Date : 2011-09-21 Maturity Price : 25.00 Evaluated at bid price : 25.39 Bid-YTW : -14.62 % |
| BNS.PR.P | FixedReset | 24,575 | YTW SCENARIO Maturity Type : Call Maturity Date : 2013-04-25 Maturity Price : 25.00 Evaluated at bid price : 25.82 Bid-YTW : 3.19 % |
| There were 16 other index-included issues trading in excess of 10,000 shares. | |||
| Wide Spread Highlights | ||
| Issue | Index | Quote Data and Yield Notes |
| IAG.PR.C | FixedReset | Quote: 26.76 – 27.30 Spot Rate : 0.5400 Average : 0.3350 YTW SCENARIO |
| IAG.PR.F | Deemed-Retractible | Quote: 25.86 – 26.45 Spot Rate : 0.5900 Average : 0.4276 YTW SCENARIO |
| TRI.PR.B | Floater | Quote: 21.80 – 22.50 Spot Rate : 0.7000 Average : 0.5615 YTW SCENARIO |
| BAM.PR.X | FixedReset | Quote: 24.02 – 24.39 Spot Rate : 0.3700 Average : 0.2681 YTW SCENARIO |
| ELF.PR.F | Perpetual-Discount | Quote: 22.51 – 22.99 Spot Rate : 0.4800 Average : 0.3785 YTW SCENARIO |
| NA.PR.P | FixedReset | Quote: 27.35 – 27.64 Spot Rate : 0.2900 Average : 0.2034 YTW SCENARIO |