Maybe we will have a return to Rae Days as well!
Ontario is prepared to miss its deficit-reduction targets to avoid deep program cuts as Premier Kathleen Wynne’s government walks away from austerity.
The shift in priorities – which will effectively see the minority Liberal administration embrace deficit spending as the best way to rev up the province’s sluggish economy – will be signalled in Finance Minister Charles Sousa’s fall economic statement on Thursday, government sources told The Globe and Mail.
Policy rates were slashed in Europe:
The European Central Bank surprised the market today by cutting interest rates to a record low as falling inflation threatened its mission of keeping prices stable in the 17-country euro zone.
Wholly unexpected by the vast majority of economists, the announcement triggered an immediate fall in the euro. My mid-afternoon central European time, it was down almost 1.5 per cent against the dollar. Commodities fell while stock indexes rose.
…
ECB president Mario Draghi said he expected a “prolonged” period of low inflation but would not define that period, insisting he would have a better picture in December, when the next inflation gauge and other economic date are due. “It’s not going to be a short, short time,” he said at the ECB’s press conference in Frankfurt.
I’ve always said – they may be in trouble, they may always be in second place to the foreign flavour of the month, but it’s hard to make money betting against America:
Specialty operations are finding new opportunities because of 3-D printers, said Patrick Hunter, senior vice president of marketplace operations for MFG.com in Atlanta. The technology allows three-dimensional designs created on computers to be sent digitally to industrial machines, which put down layers of materials ranging from plastic to metal to create parts or products.
“It’s opened the doors to smaller shops because people aren’t tied to the large mass manufacturers,” said Hunter, whose company has been matching companies with parts makers for about a dozen years.
Low volume typically means runs of products of more than 1,000, which exceeds capacity of a home workshop, and less than 5,000 to 10,000, which is usually the minimum to get work done overseas at a factory in China, he said.
More than 58 percent of small shops added new machines for so-called additive technology in 2012, the third year of gains since the recession ended, according to Wohlers Report 2013, which tracks the industrial market for industrial 3-D printing technology from Fort Collins, Colorado.
I have long criticized the standard five-year term for mortgage loans in Canada – it makes no sense to finance a long-term asset exclusively with a short-term loan, although it makes all kinds of sense for lender. The US model, for all its myriad faults, at least matches financing certainty with asset life. But in Denmark the mismatch is even worse:
Danish mortgage banks have struggled to wean borrowers off loans funded by one-year bonds as deadlines near to demonstrate they can withstand a 12-month funding market freeze. Standard & Poor’s in July told lenders they risked downgrades if they don’t cut use of the securities over the next two years. The central bank has also criticized the bonds and the risks borrowers face if interest rates rise.
One-year bonds fund about 40 percent of home loans in Denmark. Borrowers have been attracted to record-low rates thanks to AAA-rated Denmark’s status as a haven from Europe’s debt crisis. Still, households have grown more exposed to interest-rate shocks as debt burdens soar to a world-record of 310 percent of disposable incomes, according to data compiled by the Organization for Economic Cooperation and Development.
Under the government’s proposed measure, short-term bonds would convert to longer-term securities if refinancing auctions fail or interest rates climb in auctions by more than 5 percentage points. Existing bonds would be excluded from the measure, which would go into effect Jan. 1 if approved by lawmakers.
The bonds convert if the auctions fail? Have the lessons of the financial crisis been forgotten so quickly?
It was a positive day for the Canadian preferred share market, with PerpetualDiscounts flat, FixedResets winning 15bp and DeemedRetractibles gaining 9bp. Volatility was average by long term standards, very low by standards of the past six months. Volume was well above average.
| 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 | 0.0000 % | 2,518.2 |
| FixedFloater | 4.22 % | 3.49 % | 27,201 | 18.38 | 1 | 0.7603 % | 3,980.7 |
| Floater | 2.95 % | 2.97 % | 62,833 | 19.79 | 3 | 0.0000 % | 2,719.0 |
| OpRet | 4.63 % | 2.97 % | 69,206 | 0.60 | 3 | 0.0514 % | 2,637.5 |
| SplitShare | 4.74 % | 5.10 % | 68,680 | 3.94 | 6 | -0.1383 % | 2,958.8 |
| Interest-Bearing | 0.00 % | 0.00 % | 0 | 0.00 | 0 | 0.0514 % | 2,411.7 |
| Perpetual-Premium | 5.57 % | 3.22 % | 126,090 | 0.09 | 11 | -0.0647 % | 2,307.1 |
| Perpetual-Discount | 5.52 % | 5.54 % | 179,211 | 14.57 | 27 | 0.0032 % | 2,383.3 |
| FixedReset | 4.99 % | 3.55 % | 232,477 | 3.35 | 82 | 0.1526 % | 2,467.2 |
| Deemed-Retractible | 5.07 % | 3.97 % | 197,780 | 1.72 | 42 | 0.0890 % | 2,413.7 |
| FloatingReset | 2.62 % | 2.41 % | 288,613 | 4.51 | 5 | 0.0079 % | 2,456.6 |
| Performance Highlights | |||
| Issue | Index | Change | Notes |
| HSE.PR.A | FixedReset | 1.05 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2043-11-07 Maturity Price : 22.52 Evaluated at bid price : 23.01 Bid-YTW : 3.94 % |
| SLF.PR.G | FixedReset | 1.15 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 23.68 Bid-YTW : 4.01 % |
| MFC.PR.B | Deemed-Retractible | 1.38 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 22.06 Bid-YTW : 6.24 % |
| Volume Highlights | |||
| Issue | Index | Shares Traded |
Notes |
| CM.PR.K | FixedReset | 265,693 | Nesbitt crossed two blocks of 100,000 each and one of 30,000, all at 25.51 (nice tickets!); TD crossed 30,000 at the same price. YTW SCENARIO Maturity Type : Call Maturity Date : 2014-07-31 Maturity Price : 25.00 Evaluated at bid price : 25.53 Bid-YTW : 2.59 % |
| ENB.PR.T | FixedReset | 211,048 | TD crossed 205,000 at 23.90. Another nice ticket! YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2043-11-07 Maturity Price : 22.72 Evaluated at bid price : 23.95 Bid-YTW : 4.35 % |
| MFC.PR.C | Deemed-Retractible | 188,286 | RBC crossed 169,000 at 21.35. YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 21.45 Bid-YTW : 6.40 % |
| RY.PR.I | FixedReset | 128,268 | Nesbitt crossed 100,000 at 25.10; TD crossed 15,000 at the same price. YTW SCENARIO Maturity Type : Call Maturity Date : 2014-02-24 Maturity Price : 25.00 Evaluated at bid price : 25.10 Bid-YTW : 2.88 % |
| RY.PR.Y | FixedReset | 106,296 | TD crossed 99,000 at 25.95. YTW SCENARIO Maturity Type : Call Maturity Date : 2014-11-24 Maturity Price : 25.00 Evaluated at bid price : 25.97 Bid-YTW : 2.09 % |
| SLF.PR.F | FixedReset | 80,800 | TD crossed 75,000 at 25.71. YTW SCENARIO Maturity Type : Call Maturity Date : 2014-06-30 Maturity Price : 25.00 Evaluated at bid price : 25.72 Bid-YTW : 2.50 % |
| There were 48 other index-included issues trading in excess of 10,000 shares. | |||
| Wide Spread Highlights | ||
| Issue | Index | Quote Data and Yield Notes |
| RY.PR.T | FixedReset | Quote: 25.73 – 26.24 Spot Rate : 0.5100 Average : 0.3237 YTW SCENARIO |
| CIU.PR.A | Perpetual-Discount | Quote: 21.00 – 21.47 Spot Rate : 0.4700 Average : 0.2954 YTW SCENARIO |
| HSB.PR.C | Deemed-Retractible | Quote: 25.12 – 25.50 Spot Rate : 0.3800 Average : 0.2272 YTW SCENARIO |
| BAM.PR.K | Floater | Quote: 17.82 – 18.17 Spot Rate : 0.3500 Average : 0.2433 YTW SCENARIO |
| TRP.PR.C | FixedReset | Quote: 22.44 – 22.79 Spot Rate : 0.3500 Average : 0.2556 YTW SCENARIO |
| FTS.PR.H | FixedReset | Quote: 21.55 – 21.80 Spot Rate : 0.2500 Average : 0.1782 YTW SCENARIO |