The Europeans have a grave problem: they’re being criticized by parties they don’t regulate:
Tensions between Europe and the rest of the G20 broke wide open in Los Cabos as the president of the European Commission laid bare his frustration with the constant lecturing from outsiders, including Canada.
…
The president of the European Commission, José Manuel Barroso, reacted tersely when asked to respond to recent comments from Prime Minister Stephen Harper that Europe does not need outside help to stabilize its economy.“Frankly, we are not coming here to receive lessons in terms of democracy and in terms of how to run an economy because the European Union has a model that we may be very proud of,” Mr. Barroso said.
Maybe … maybe the EU should regulate Canadian politicians, as well as the Credit Rating Agencies! Yeah! Yeah, that would be good!
The Greek election has only shifted the focus in Europe:
Spanish bonds slid, propelling 10- year yields to more than 7 percent, after yesterday’s Greek election failed to convince investors that politicians will be able to tame Europe’s financial woes.
Italian debt also fell and German bunds rose, reversing earlier declines. Spain’s yields climbed to euro-era records as a report today showed the nation’s bad loans increased in April. The securities tumbled last week after the bloc’s fourth-largest economy requested as much as 100 billion euros ($126 billion) of aid on June 9 to support its banks. Greek bonds rose after pro- bailout parties won enough seats to control parliament.
The greenback is cementing its status as a reserve currency:
Central banks rebuilding foreign- exchange reserves at the fastest pace since 2004 are crowding out private investors seeking U.S. dollars, boosting demand even as the Federal Reserve considers printing more currency.
After falling to an all-time low of 60.5 percent in the second quarter of last year, the dollar’s share of global reserves rose 1.6 percentage points to 62.1 percent in December, the latest International Monetary Fund figures show. The buying has left the private sector with $2 trillion less than it needs, according to investment-flow data by Morgan Stanley, which sees the dollar gaining 8.2 percent in 2012, the most in seven years.
While the Fed has created more than $2 trillion under its stimulus programs since 2008, the flows signal that there may actually be a shortage of dollars to meet demand as Europe’s debt crisis deepens and the global economy slows.
The cauldron of financial turmoil bubbling over in Europe is now seeing its hot water trickle into Canada. Late Friday, rating agency Moody’s Investors Service announced the downgrade of ING Bank of Canada’s senior deposit ratings from Baa1 from A2.
This comes on the heels of the rating agency’s downgrade of ING’s parent, ING Bank NV, to C- for financial strength.
Small investors prone to panic are reminded that ING Bank Canada is a CDIC member and that:
Up to $100,000 of your savings are eligible for deposit insurance offered by CDIC. Your savings must be:
Held in…
A Eligible deposits—for example, savings, chequing and GICs of 5 years or less
+ Held at…
B Banks and other financial institutions—eligible deposits must be held at a CDIC member.
+ And held in…
C Canadian dollars—U.S. dollar and other foreign currency deposits are not eligible.
Meanwhile, in the True North Strong and Free Google reports:
We received a request from the Passport Canada office to remove a YouTube video of a Canadian citizen urinating on his passport and flushing it down the toilet. We did not comply with this request.
And we have problems even talking about trade:
Canada’s bid to join was hampered by the slow progress it made at enacting stronger prohibitions against the theft of digital intellectual property as well as its staunch protectionism for dairy and poultry producers who are shielded from foreign competition.
Another one of What-Debt’s favourite companies is going to do again what it does best:
Pension woes are back at the top of Air Canada’s concerns as the carrier seeks a new reprieve from retirement funding to avert a looming financial crisis.
Faced with a cash crunch in 2014, the country’s largest airline is preparing to ask Ottawa for another moratorium on company contributions to pensions, and to request other measures to ease the pressure.
…
The Montreal-based carrier’s pension solvency deficit stood at $2.1-billion on Jan. 1, 2011, and analysts expect the airline to report a sharply higher deficit for Jan. 1, 2012.
BBD.PR.D got whacked again today, down 1.42 to close at 14.93. Strangely, BBD.PR.B, the RatchetRate issue with which it interconverts effective August 1, was also hammered, down 0.65 to close at 14.30. The interconversion has been discussed on PrefBlog; BBD.PR.D will reset to 255% of GoC5 – which at current levels will be only a hair above 3%.
It was a mildly positive day for the Canadian preferred share market, with PerpetualPremiums winning 9bp, FixedResets up 1bp and DeemedRetractibles gaining 3bp. Volatility was muted. Volume was very low.
| 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 | -0.2201 % | 2,304.0 |
| FixedFloater | 4.46 % | 3.85 % | 22,195 | 17.59 | 1 | 0.0000 % | 3,534.7 |
| Floater | 3.16 % | 3.15 % | 72,314 | 19.37 | 3 | -0.2201 % | 2,487.7 |
| OpRet | 4.81 % | 2.46 % | 37,911 | 1.01 | 5 | 0.0465 % | 2,507.2 |
| SplitShare | 5.29 % | -5.86 % | 44,176 | 0.50 | 4 | -0.5314 % | 2,705.6 |
| Interest-Bearing | 0.00 % | 0.00 % | 0 | 0.00 | 0 | 0.0465 % | 2,292.6 |
| Perpetual-Premium | 5.42 % | 2.83 % | 89,677 | 0.57 | 27 | 0.0858 % | 2,232.5 |
| Perpetual-Discount | 5.06 % | 5.06 % | 116,856 | 15.29 | 7 | -0.3256 % | 2,440.9 |
| FixedReset | 5.05 % | 3.21 % | 205,686 | 7.86 | 71 | 0.0104 % | 2,390.6 |
| Deemed-Retractible | 5.02 % | 3.94 % | 149,832 | 2.94 | 45 | 0.0318 % | 2,304.6 |
| Performance Highlights | |||
| Issue | Index | Change | Notes |
| FBS.PR.C | SplitShare | -2.50 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2012-12-15 Maturity Price : 10.00 Evaluated at bid price : 10.54 Bid-YTW : -5.86 % |
| SLF.PR.F | FixedReset | -1.06 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2014-06-30 Maturity Price : 25.00 Evaluated at bid price : 26.06 Bid-YTW : 3.75 % |
| POW.PR.A | Perpetual-Premium | 1.02 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2012-07-18 Maturity Price : 25.00 Evaluated at bid price : 25.68 Bid-YTW : -14.66 % |
| FTS.PR.H | FixedReset | 1.12 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2042-06-18 Maturity Price : 23.52 Evaluated at bid price : 25.38 Bid-YTW : 2.63 % |
| Volume Highlights | |||
| Issue | Index | Shares Traded |
Notes |
| CU.PR.D | Perpetual-Premium | 518,880 | New issue settled today. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2042-06-18 Maturity Price : 24.64 Evaluated at bid price : 25.03 Bid-YTW : 4.90 % |
| BNS.PR.P | FixedReset | 84,381 | National crossed 82,600 at 25.57. YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 25.51 Bid-YTW : 3.19 % |
| BMO.PR.Q | FixedReset | 44,417 | TD crossed 33,000 at 25.30. YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 25.33 Bid-YTW : 2.92 % |
| FTS.PR.E | OpRet | 33,500 | TD crossed 33,000 at 26.64. YTW SCENARIO Maturity Type : Call Maturity Date : 2013-06-01 Maturity Price : 25.75 Evaluated at bid price : 26.45 Bid-YTW : 2.12 % |
| RY.PR.T | FixedReset | 33,010 | RBC crossed 25,000 at 26.75. YTW SCENARIO Maturity Type : Call Maturity Date : 2014-08-24 Maturity Price : 25.00 Evaluated at bid price : 26.73 Bid-YTW : 3.17 % |
| MFC.PR.I | FixedReset | 22,470 | Recent new issue. YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 24.79 Bid-YTW : 4.41 % |
| There were 13 other index-included issues trading in excess of 10,000 shares. | |||
| Wide Spread Highlights | ||
| Issue | Index | Quote Data and Yield Notes |
| FBS.PR.C | SplitShare | Quote: 10.54 – 10.88 Spot Rate : 0.3400 Average : 0.2084 YTW SCENARIO |
| BAM.PR.M | Perpetual-Discount | Quote: 23.11 – 23.60 Spot Rate : 0.4900 Average : 0.3610 YTW SCENARIO |
| CM.PR.D | Perpetual-Premium | Quote: 26.07 – 26.39 Spot Rate : 0.3200 Average : 0.2109 YTW SCENARIO |
| GWO.PR.J | FixedReset | Quote: 26.00 – 26.29 Spot Rate : 0.2900 Average : 0.2011 YTW SCENARIO |
| BAM.PR.G | FixedFloater | Quote: 21.30 – 21.67 Spot Rate : 0.3700 Average : 0.2855 YTW SCENARIO |
| SLF.PR.I | FixedReset | Quote: 25.10 – 25.30 Spot Rate : 0.2000 Average : 0.1258 YTW SCENARIO |