March 7, 2014

Last mentioned on January 31, 2013, the Litvak case has been brought to an appalling new development:

Litvak, 39, of New York, was found guilty by a federal jury today of all counts including securities fraud and making false statements as well as fraud connected to the U.S. government’s Troubled Asset Relief Program following a trial before U.S. District Judge Janet C. Hall in New Haven, Connecticut. He is scheduled to be sentenced May 30.

Prosecutors accused Litvak of defrauding investors of $2 million by misrepresenting how much sellers were asking for the securities, or what customers would pay, and keeping the difference for New York-based Jefferies. Richard Khaleel, a spokesman for Jefferies, declined to comment on the verdict.

Litvak was also accused of defrauding investors by telling some buyers that the bonds in the Jefferies inventory were being offered for sale by a third-party seller that didn’t exist. Prosecutors said the claim allowed Litvak to charge an extra commission and increase the profitability of his trades as his trading revenue declined.

Smith said the judge didn’t allow the testimony of expert witnesses who would have testified about the mortgage-backed securities markets and would have shown Litvak’s “good faith state of mind,” and also made several evidentiary rulings limiting the amount of evidence about similar behavior of other Jefferies traders and employees.

So the US is trying to make markets safe for grossly incompetent professional traders. I don’t know where this will end. Trying to pretend that negotiating 9-figure financial deals as principal is not a jungle will lead to more problems than it solves – the world needs fewer “cooperative games” and more recognition of reality:

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On the Crimean issue (I think the French and British should arrange for support from Turkey and invade again), the markets are doing a better job than the Boo-Hoo-Hoo Brigade.

Dudley reiterated that tapering is not the same as tightening:

Federal Reserve Bank of New York President William C. Dudley said he sees a “reasonably favorable” outlook for the U.S. economy, even as elevated joblessness and too-low inflation warrant a high level of stimulus for a “considerable time.”

“I would very much prefer faster economic growth and more rapid progress towards our dual mandate objectives of maximum sustainable employment and price stability,” Dudley said today in the text of remarks given at Brooklyn College in New York. “Hence, the continued need for monetary policy to remain highly accommodative to support the economic recovery to the fullest.”

Dudley said a decline in the jobless rate “significantly overstates the degree of improvement in the labor market” because much of the decrease has been caused by people dropping out of the job market. Unemployment fell to 6.7 percent in December, close to Fed’s threshold for considering an increase in the benchmark interest rate, from 7.5 percent last June.

There are stirrings of long overdue competition in US health care:

In the changing world of health care, patients are finding that the best care may be several hundred miles away.

When Travis Bumbaugh needed heart surgery, the Pennsylvania general contractor chose the cheapest option in the Lowe’s Cos. (LOW) health plan. He flew to Cleveland, to one of the top-rated heart hospitals in the nation.

By bundling all costs for the surgery under one negotiated price and offering expertise that lowers the odds of complications, the Cleveland Clinic gave Bumbaugh and his employer a better deal than the hospital close to his home. In some cases, hospitals will drop their prices as much as 40 percent to guarantee a steady stream of patients they wouldn’t have otherwise, said Terry White, president of the BridgeHealth Medical Inc., a Denver-based benefit manager.

To encourage employees, Lowe’s covers the full cost of surgery, as well as travel and lodging for the worker and a relative. The company health plan won’t cover thousands of dollars of unbundled costs at local hospitals.

It was an off day for the Canadian preferred share market, with PerpetualDiscounts off 1bp, FixedResets down 5bp and DeemedRetractibles losing 10bp. Volatility was minimal. Volume was on the high side of 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 0.2144 % 2,416.8
FixedFloater 4.60 % 3.86 % 27,376 17.67 1 0.0000 % 3,692.4
Floater 2.99 % 3.14 % 55,278 19.30 4 0.2144 % 2,609.5
OpRet 4.64 % 0.11 % 76,662 0.24 3 -0.0515 % 2,682.5
SplitShare 4.84 % 4.49 % 54,871 4.35 5 0.1041 % 3,060.9
Interest-Bearing 0.00 % 0.00 % 0 0.00 0 -0.0515 % 2,452.9
Perpetual-Premium 5.64 % -1.84 % 92,649 0.08 11 -0.0822 % 2,350.2
Perpetual-Discount 5.48 % 5.58 % 135,300 14.40 26 -0.0117 % 2,418.6
FixedReset 4.72 % 3.53 % 229,440 6.84 77 -0.0537 % 2,503.0
Deemed-Retractible 5.07 % 2.95 % 165,406 0.31 42 -0.0994 % 2,460.8
FloatingReset 2.59 % 2.60 % 198,528 7.12 5 -0.1284 % 2,441.1
Performance Highlights
Issue Index Change Notes
CIU.PR.C FixedReset -1.06 % YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2044-03-07
Maturity Price : 21.38
Evaluated at bid price : 21.38
Bid-YTW : 3.60 %
Volume Highlights
Issue Index Shares
Traded
Notes
TRP.PR.C FixedReset 169,062 RBC crossed four blocks, 49,400 shares, 49,100 shares, 40,800 and 11,100, all at 22.20.
YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2044-03-07
Maturity Price : 21.74
Evaluated at bid price : 22.21
Bid-YTW : 3.69 %
RY.PR.Z FixedReset 148,502 RBC crossed blocks of 49,900 and 50,000, both at 25.45.
YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2044-03-07
Maturity Price : 23.28
Evaluated at bid price : 25.41
Bid-YTW : 3.69 %
MFC.PR.L FixedReset 137,160 Recent new issue.
YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 24.35
Bid-YTW : 4.17 %
MFC.PR.E FixedReset 82,460 RBC crossed 36,500 at 25.35; TD crossed 40,000 at the same price.
YTW SCENARIO
Maturity Type : Call
Maturity Date : 2014-09-19
Maturity Price : 25.00
Evaluated at bid price : 25.35
Bid-YTW : 2.61 %
BNS.PR.X FixedReset 76,545 RBC crossed blocks of 25,000 and 40,000, both at 25.34.
YTW SCENARIO
Maturity Type : Call
Maturity Date : 2014-04-25
Maturity Price : 25.00
Evaluated at bid price : 25.33
Bid-YTW : 0.74 %
TD.PR.O Deemed-Retractible 53,829 TD crossed 50,000 at 25.50.
YTW SCENARIO
Maturity Type : Call
Maturity Date : 2014-04-06
Maturity Price : 25.25
Evaluated at bid price : 25.45
Bid-YTW : 0.60 %
There were 39 other index-included issues trading in excess of 10,000 shares.
Wide Spread Highlights
Issue Index Quote Data and Yield Notes
CIU.PR.A Perpetual-Discount Quote: 21.41 – 21.97
Spot Rate : 0.5600
Average : 0.4456

YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2044-03-07
Maturity Price : 21.41
Evaluated at bid price : 21.41
Bid-YTW : 5.41 %

PWF.PR.F Perpetual-Discount Quote: 24.08 – 24.35
Spot Rate : 0.2700
Average : 0.1895

YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2044-03-07
Maturity Price : 23.83
Evaluated at bid price : 24.08
Bid-YTW : 5.51 %

NA.PR.L Deemed-Retractible Quote: 25.26 – 25.47
Spot Rate : 0.2100
Average : 0.1468

YTW SCENARIO
Maturity Type : Call
Maturity Date : 2014-05-15
Maturity Price : 25.00
Evaluated at bid price : 25.26
Bid-YTW : 0.74 %

PWF.PR.A Floater Quote: 19.69 – 20.09
Spot Rate : 0.4000
Average : 0.3426

YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2044-03-07
Maturity Price : 19.69
Evaluated at bid price : 19.69
Bid-YTW : 2.68 %

GWO.PR.G Deemed-Retractible Quote: 24.05 – 24.22
Spot Rate : 0.1700
Average : 0.1160

YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-01-31
Maturity Price : 25.00
Evaluated at bid price : 24.05
Bid-YTW : 5.66 %

TD.PR.O Deemed-Retractible Quote: 25.45 – 25.61
Spot Rate : 0.1600
Average : 0.1095

YTW SCENARIO
Maturity Type : Call
Maturity Date : 2014-04-06
Maturity Price : 25.25
Evaluated at bid price : 25.45
Bid-YTW : 0.60 %

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