There are some thoughts that Keystone has missed the boat:
Delays of the Keystone XL pipeline are providing little obstacle to Western Canadian oil producers getting their crude to the U.S. Gulf Coast, with shipments set to more than double next year.
The volume of Canadian crude processed at Gulf Coast refineries could climb to more than 400,000 barrels a day in 2015 from 208,000 in August, according to Jackie Forrest, vice president of Calgary-based ARC Financial Corp. The increase comes as Enbridge Inc.’s Flanagan South and an expanded Seaway pipeline raise their capacity to ship oil by as much as 450,000 barrels a day. Canadian exports to the Gulf rose 83 percent in the past four years.
The expansion shows Canadians are finding alternative entry points into the U.S. while the Keystone saga drags on. In the latest chapter, a Democratic senator and a Republican representative are seeking votes in their chambers to set the project in motion. The two are squaring off in a runoff election for a Senate seat from Louisiana, a state where support for the project is strong.
“Keystone is kind of old news,” Sandy Fielden, director of energy analytics at Austin, Texas-based consulting company RBN Energy, said Nov. 12 in an e-mail. “Producers have moved on and are looking for new capacity from other pipelines.”
TransCanada Corp. (TRP)’s Keystone XL, which would transport Alberta’s heavy oil sands crude to refineries on the Gulf, has been held up for six years, awaiting Obama administration approval.
… so, naturally, it’s a big issue:
Republicans, emboldened by big gains in last week’s midterm elections, have chosen to make Keystone XL into the first battle of wills with a lame-duck president.
And Mr. Obama, so far, isn’t backing down.
… because we’ve got other means of transport:
It’s not uncommon to see mile-long trains of tanker cars cutting through the centre of Lac La Biche, carrying tens of thousands of barrels of crude to market, snarling traffic as they go. And it’s not about to stop. Former mayor Aurel Langevin, who ran the town from 2012 to this past spring, estimates that, a year ago, Lac La Biche averaged three oil trains a day. That figure is expected to hit about eight per day, carrying upward of 100 tankers each, in the year ahead.
This new reality for Lac La Biche, and thousands of other towns across North America, is symptomatic of the critical–and costly–transportation bottleneck that now hangs over the oil sands. The lack of options for transporting Alberta’s heavy crude south, to oil refineries on the U.S. Gulf Coast, means it is sold at a significant discount to the benchmark West Texas Intermediate.
TransCanada Corp.’s $5.5-billion Keystone XL pipeline was supposed to be a key part of the solution–until it became a symbol for the debate over whether new pipes should be built anywhere in North America.
Actively managed US equity funds have done particularly badly vs. their benchmarks this year – various reasons have been put forward:
Here are some of the most-common excuses cited for what Arthur Miller might call “Death of a Stock Picker”: the Federal Reserve’s spigot of liquidity led to tighter correlations and less dispersion among industry groups that made it difficult to identify potential outperformers. And the boom in exchange-traded funds is also credited with having a similar effect.
Tom Lee of FundStrat Global Advisors today contributed another handy excuse: blame Apple Inc. Or rather, blame yourself if you didn’t load up on Apple shares. Apple, the largest company in the world, has rallied 41 percent this year, about four times as much as the Standard & Poor’s 500 Index. Last year, the shares were only good for about a fifth of the S&P 500’s 30 percent gain.
Not owning Apple in 2014 was one of the biggest reasons managers trailed benchmarks this year, according to Lee, accounting for 81.3 basis points of an average 340 basis-point underperformance. Skipping Microsoft Corp., up 33 percent in 2014, was good for another 36.2 basis points in underperformance, according to Lee.
And while many fund managers are cursing this year’s 18 percent rally in utilities, Lee points out that the group only accounts for 3 percent of the S&P 500 so the absence of the entire industry in a fund would only be good for 25 basis points of underperformance.
The ‘higher correlation’ argument needs to be taken with a grain of salt: if we assume every stock in the universe has exactly the same return at all times, then every actively managed fund will underperform by its MER; but by no more than the MER.
AltaGas Ltd., proud issuer of ALA.PR.A, ALA.PR.E and ALA.PR.G, was confirmed at Pfd-3 by DBRS:
DBRS expects the recent improving trend in the Company’s credit metrics to continue as the full-year benefits from assets placed in service are realized. Cash flow-to-adjusted debt has improved to 11.8% in Q3 2014 (9.6% in 2012) and adjusted debt in capital structure has improved to 51.9% (60.2% in 2012). DBRS expects the Company to finance its capital expenditure program with a prudent mix of equity and debt and maintain credit metrics consistent with its current rating.
Wow, DBRS has specified some very precise expectations there!
It was another mixed day for the Canadian preferred share market, with PerpetualDiscounts up 19bp, FixedResets off 6bp and DeemedRetractibles gaining 13bp. Volatility was average. Volume was very low.
And now it’s time for my monthly PrefLetter weekend!
| 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 | -1.0131 % | 2,525.0 |
| FixedFloater | 0.00 % | 0.00 % | 0 | 0.00 | 0 | -1.0131 % | 3,997.5 |
| Floater | 2.99 % | 3.08 % | 64,951 | 19.48 | 4 | -1.0131 % | 2,684.2 |
| OpRet | 4.02 % | -0.41 % | 97,628 | 0.08 | 1 | 0.0000 % | 2,748.7 |
| SplitShare | 4.25 % | 4.02 % | 55,335 | 3.75 | 5 | -0.1912 % | 3,186.5 |
| Interest-Bearing | 0.00 % | 0.00 % | 0 | 0.00 | 0 | 0.0000 % | 2,513.4 |
| Perpetual-Premium | 5.44 % | -5.40 % | 64,909 | 0.08 | 19 | -0.0062 % | 2,483.2 |
| Perpetual-Discount | 5.15 % | 5.04 % | 105,071 | 15.33 | 16 | 0.1919 % | 2,660.6 |
| FixedReset | 4.18 % | 3.65 % | 176,660 | 4.55 | 74 | -0.0580 % | 2,585.2 |
| Deemed-Retractible | 4.96 % | -0.37 % | 95,921 | 0.13 | 41 | 0.1265 % | 2,603.1 |
| FloatingReset | 2.56 % | -0.48 % | 62,377 | 0.08 | 6 | 0.0261 % | 2,553.5 |
| Performance Highlights | |||
| Issue | Index | Change | Notes |
| BAM.PR.B | Floater | -1.21 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2044-11-14 Maturity Price : 17.16 Evaluated at bid price : 17.16 Bid-YTW : 3.08 % |
| HSE.PR.A | FixedReset | -1.18 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2044-11-14 Maturity Price : 22.26 Evaluated at bid price : 22.66 Bid-YTW : 3.72 % |
| BAM.PR.K | Floater | -1.10 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2044-11-14 Maturity Price : 17.04 Evaluated at bid price : 17.04 Bid-YTW : 3.10 % |
| GWO.PR.Q | Deemed-Retractible | 1.47 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 25.50 Bid-YTW : 5.01 % |
| FTS.PR.H | FixedReset | 1.56 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2044-11-14 Maturity Price : 20.35 Evaluated at bid price : 20.35 Bid-YTW : 3.70 % |
| Volume Highlights | |||
| Issue | Index | Shares Traded |
Notes |
| ENB.PR.F | FixedReset | 71,196 | Scotia crossed 65,000 at 24.63. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2044-11-14 Maturity Price : 23.17 Evaluated at bid price : 24.65 Bid-YTW : 4.00 % |
| BAM.PR.B | Floater | 54,649 | Nesbitt crossed 50,000 at 17.25. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2044-11-14 Maturity Price : 17.16 Evaluated at bid price : 17.16 Bid-YTW : 3.08 % |
| TRP.PR.E | FixedReset | 52,500 | TD crossed 50,000 at 25.50. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2044-11-14 Maturity Price : 23.32 Evaluated at bid price : 25.49 Bid-YTW : 3.76 % |
| NA.PR.W | FixedReset | 48,224 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2044-11-14 Maturity Price : 23.20 Evaluated at bid price : 25.16 Bid-YTW : 3.68 % |
| RY.PR.Z | FixedReset | 47,315 | National crossed 29,000 at 25.50. YTW SCENARIO Maturity Type : Call Maturity Date : 2019-05-24 Maturity Price : 25.00 Evaluated at bid price : 25.56 Bid-YTW : 3.45 % |
| ENB.PF.G | FixedReset | 35,800 | RBC crossed 10,900 at 25.11. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2044-11-14 Maturity Price : 23.13 Evaluated at bid price : 25.05 Bid-YTW : 4.14 % |
| There were 16 other index-included issues trading in excess of 10,000 shares. | |||
| Wide Spread Highlights | ||
| Issue | Index | Quote Data and Yield Notes |
| PWF.PR.A | Floater | Quote: 19.10 – 20.49 Spot Rate : 1.3900 Average : 0.8379 YTW SCENARIO |
| NEW.PR.D | SplitShare | Quote: 32.52 – 33.27 Spot Rate : 0.7500 Average : 0.6005 YTW SCENARIO |
| TD.PR.S | FixedReset | Quote: 25.40 – 25.73 Spot Rate : 0.3300 Average : 0.1914 YTW SCENARIO |
| FTS.PR.H | FixedReset | Quote: 20.35 – 20.85 Spot Rate : 0.5000 Average : 0.3780 YTW SCENARIO |
| ENB.PR.J | FixedReset | Quote: 25.06 – 25.34 Spot Rate : 0.2800 Average : 0.1736 YTW SCENARIO |
| RY.PR.L | FixedReset | Quote: 26.41 – 26.95 Spot Rate : 0.5400 Average : 0.4467 YTW SCENARIO |