Employers added more jobs than forecast in November, underscoring Federal Reserve Chair Janet Yellen’s confidence that the U.S. economy is strong enough to withstand higher borrowing costs.
The 211,000 increase in payrolls followed a 298,000 gain in October that was bigger than previously estimated, a Labor Department report showed Friday. The median forecast called for a 200,000 advance. The jobless rate held at a more than seven-year low of 5 percent.
…
Employee pay increased at a steady pace last month. Average hourly earnings at private employers rose 0.2 percent in November after a 0.4 percent gain. Year-over-year hourly pay rose 2.3 percent after a 2.5 percent gain a month earlier.Employment in November was spurred by the biggest increase in construction hiring since January 2014. Retailers, health-care providers and leisure and hospitality companies added jobs at a healthy, but slower pace than in October.
Meanwhile in Canada:
Canada’s trade deficit unexpectedly jumped to $2.76-billion in October as exports to the crucial U.S. market dropped by the most in almost two-and-a-half years, Statistics Canada data showed on Friday.
October marked the 14th consecutive monthly trade deficit, reflecting Canadian exporters’ continuing struggles amid a sharp fall in oil prices. Analysts polled by Reuters had forecast a shortfall of $1.70-billion.
… and nothing good is forecast for oil:
OPEC’s refusal to rein in production spells extended pain for Canada’s oil patch, setting the stage for deeper cutbacks as a worldwide glut of crude keeps pressure on U.S. and global prices.
West Texas intermediate oil sank below $40 (U.S.) a barrel on Friday after the Organization of the Petroleum Exporting Countries failed to agree on production limits, effectively maintaining a Saudi Arabia-led policy of pumping record volumes to defend market share.
…
The Bank of Canada has estimated that overall capital spending in the industry will fall by 20 per cent in 2016 following a 40-per-cent drop this year.
Remember the Enbridge dropdown that was viewed so unfavourably by S&P, Moody’s and DBRS? It’s an ill wind that blows nobody any good:
Enbridge Inc. (“Enbridge” or “the Company”) (TSX:ENB) (NYSE:ENB) today announced that its Board of Directors has declared a quarterly dividend of $0.53 per common share, payable on March 1, 2016 to shareholders of record on February 16, 2016. The dividend reflects a 14 percent increase from the prior quarterly rate, marking the twenty-first consecutive year of increased dividends for the Company.
“The core of our shareholder value proposition is our reliable business model, which continues to deliver strong and predictable results and dividend growth,” said Al Monaco, President and Chief Executive Officer. “The 14 percent dividend increase reflects the confidence we have in our outlook, underpinned by the strength of our businesses, an industry leading growth program and our sound financial position. Over the last two years, we have increased our dividend by over 50 percent while maintaining strong available cash flow coverage.”
Enbridge also announced a guidance range for 2016 available cash flow from operations (“ACFFO”) per share of $3.80 to $4.50. The growth in the Company’s ACFFO per share guidance range for 2016 reflects growth from its existing businesses and the successful execution of its capital program.
Assiduous Readers will remember my post of June 26,2014, in which I advocated paying cash – always! Now we have more reason to use cash in Canada:
Users beware: The banks are spying on you! It recently emerged that deep inside a TD Canada Trust Visa cardholders agreement are embedded a couple of troubling lines giving the bank the legal right to collect data on everything a person does online.
The scope of these provisions, revealed last week by the CBC, is expansive. They basically give the bank the right to view the content of Google searches, the sort of online videos a cardholder watches, their social media activity and much, much more.
The bank can learn a lot from this information. Are you searching for legal advice on defaulting from a loan? Are you thinking of moving or getting married? Are you straight or gay? Do you prefer cats or dogs?
It was another crummy day for the Canadian preferred share market, with PerpetualDiscounts down 53bp, FixedResets off 44bp, and DeemedRetractibles losing 54bp. The Performance Highlights table is, of course, ridiculous, but at least there were a few winners today! Volume was extremely high.
For as long as the FixedReset market is so violently unsettled, I’ll keep publishing updates of the more interesting and meaningful series of FixedResets’ Implied Volatilities. This doesn’t include Enbridge because although Enbridge has a large number of issues outstanding, all of which are quite liquid, the range of Issue Reset Spreads is too small for decent conclusions. The low is 212bp (ENB.PR.H; second-lowest is ENB.PR.D at 237bp) and the high is a mere 268 for ENB.PF.G.
Remember that all rich /cheap assessments are:
» based on Implied Volatility Theory only
» are relative only to other FixedResets from the same issuer
» assume constant GOC-5 yield
» assume constant Implied Volatility
» assume constant spread
Here’s TRP:
Click for Big
TRP.PR.E, which resets 2019-10-30 at +235, is bid at 18.45 to be $1.20 rich, while TRP.PR.C, resetting 2016-1-30 at +154, is $1.08 cheap at its bid price of 12.00.
Click for Big
Most expensive is MFC.PR.N, resetting at +230bp on 2020-3-19, bid at 19.30 to be 0.62 rich, while MFC.PR.K, resetting at +222bp on 2018-9-19, is bid at 17.32 to be 1.11 cheap.
Click for Big
The cheapest issue relative to its peers is BAM.PR.R, resetting at +230bp on 2016-6-30, bid at 15.02 to be $1.26 cheap. BAM.PF.E, resetting at +255bp on 2020-3-31 is bid at 18.54 and appears to be $0.99 rich.
Click for Big
FTS.PR.K, with a spread of +205bp, and bid at 17.30, looks $0.70 expensive and resets 2019-3-1. FTS.PR.G, with a spread of +213bp and resetting 2018-9-1, is bid at 15.95 and is $1.05 cheap.
Click for Big
Investment-grade pairs predict an average three-month bill yield over the next five-odd years of -0.69%, with no outliers. There is one junk outlier below -1.50% and one above +0.50%.
Click for Big
Shall we just say that this exhibits a high level of confidence in the continued rapacity of Canadian banks?
| 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 | 4.58 % | 5.54 % | 34,691 | 17.21 | 1 | 6.5280 % | 1,695.0 |
| FixedFloater | 6.54 % | 5.77 % | 30,193 | 16.55 | 1 | 0.0689 % | 2,982.7 |
| Floater | 4.43 % | 4.48 % | 90,617 | 16.38 | 3 | 0.3761 % | 1,784.3 |
| OpRet | 4.86 % | 3.92 % | 30,588 | 0.73 | 1 | 0.0397 % | 2,737.6 |
| SplitShare | 4.76 % | 5.50 % | 127,573 | 4.31 | 5 | 0.0878 % | 3,218.2 |
| Interest-Bearing | 0.00 % | 0.00 % | 0 | 0.00 | 0 | 0.0878 % | 2,511.0 |
| Perpetual-Premium | 5.81 % | 5.81 % | 90,824 | 14.01 | 6 | -0.5065 % | 2,501.7 |
| Perpetual-Discount | 5.66 % | 5.75 % | 93,452 | 14.25 | 33 | -0.5335 % | 2,529.9 |
| FixedReset | 5.21 % | 4.95 % | 228,176 | 14.81 | 76 | -0.4448 % | 1,970.6 |
| Deemed-Retractible | 5.25 % | 5.43 % | 127,180 | 5.35 | 33 | -0.5389 % | 2,554.2 |
| FloatingReset | 2.68 % | 3.86 % | 63,057 | 5.71 | 10 | -0.7167 % | 2,152.4 |
| Performance Highlights | |||
| Issue | Index | Change | Notes |
| GWO.PR.S | Deemed-Retractible | -5.84 % | More nonsense from Nonsense Central, as the issue traded 4,100 shares in a range of 24.02-50 before closing at 23.07-24.53, 11×1. The last trade of the day, at the low, was timestamped 3:18pm. I have not checked whether this lamentable state of affairs is due to inadequate Toronto Stock Exchange reporting or inadequate Toronto Stock Exchange supervision of market-makers. YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 23.07 Bid-YTW : 6.36 % |
| IFC.PR.C | FixedReset | -4.35 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 17.60 Bid-YTW : 8.51 % |
| MFC.PR.K | FixedReset | -4.31 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 17.32 Bid-YTW : 8.23 % |
| SLF.PR.H | FixedReset | -4.26 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 16.85 Bid-YTW : 8.31 % |
| MFC.PR.H | FixedReset | -3.96 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 21.61 Bid-YTW : 6.09 % |
| CU.PR.C | FixedReset | -3.67 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2045-12-04 Maturity Price : 17.87 Evaluated at bid price : 17.87 Bid-YTW : 4.75 % |
| FTS.PR.G | FixedReset | -3.33 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2045-12-04 Maturity Price : 15.95 Evaluated at bid price : 15.95 Bid-YTW : 5.01 % |
| MFC.PR.B | Deemed-Retractible | -3.00 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 20.38 Bid-YTW : 7.49 % |
| FTS.PR.K | FixedReset | -2.75 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2045-12-04 Maturity Price : 17.30 Evaluated at bid price : 17.30 Bid-YTW : 4.57 % |
| MFC.PR.G | FixedReset | -2.74 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 20.57 Bid-YTW : 6.49 % |
| VNR.PR.A | FixedReset | -2.68 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2045-12-04 Maturity Price : 18.50 Evaluated at bid price : 18.50 Bid-YTW : 5.21 % |
| BAM.PR.X | FixedReset | -2.62 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2045-12-04 Maturity Price : 14.12 Evaluated at bid price : 14.12 Bid-YTW : 5.23 % |
| MFC.PR.I | FixedReset | -2.58 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 20.77 Bid-YTW : 6.39 % |
| ELF.PR.H | Perpetual-Discount | -2.29 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2045-12-04 Maturity Price : 23.09 Evaluated at bid price : 23.50 Bid-YTW : 5.93 % |
| TRP.PR.B | FixedReset | -2.06 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2045-12-04 Maturity Price : 11.41 Evaluated at bid price : 11.41 Bid-YTW : 4.80 % |
| SLF.PR.I | FixedReset | -2.00 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 20.12 Bid-YTW : 6.58 % |
| BMO.PR.R | FloatingReset | -1.99 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 22.61 Bid-YTW : 3.82 % |
| CU.PR.H | Perpetual-Discount | -1.96 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2045-12-04 Maturity Price : 22.69 Evaluated at bid price : 23.05 Bid-YTW : 5.72 % |
| IAG.PR.G | FixedReset | -1.90 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 20.65 Bid-YTW : 6.39 % |
| BAM.PR.T | FixedReset | -1.80 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2045-12-04 Maturity Price : 15.27 Evaluated at bid price : 15.27 Bid-YTW : 5.60 % |
| CM.PR.Q | FixedReset | -1.77 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2045-12-04 Maturity Price : 19.94 Evaluated at bid price : 19.94 Bid-YTW : 4.67 % |
| GWO.PR.Q | Deemed-Retractible | -1.66 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 22.52 Bid-YTW : 6.60 % |
| NA.PR.W | FixedReset | -1.65 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2045-12-04 Maturity Price : 17.24 Evaluated at bid price : 17.24 Bid-YTW : 4.89 % |
| FTS.PR.M | FixedReset | -1.64 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2045-12-04 Maturity Price : 18.65 Evaluated at bid price : 18.65 Bid-YTW : 4.79 % |
| MFC.PR.J | FixedReset | -1.61 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 19.53 Bid-YTW : 6.94 % |
| HSE.PR.E | FixedReset | -1.61 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2045-12-04 Maturity Price : 20.76 Evaluated at bid price : 20.76 Bid-YTW : 5.42 % |
| HSE.PR.A | FixedReset | -1.57 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2045-12-04 Maturity Price : 12.55 Evaluated at bid price : 12.55 Bid-YTW : 5.30 % |
| MFC.PR.M | FixedReset | -1.53 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 19.35 Bid-YTW : 6.98 % |
| IFC.PR.A | FixedReset | -1.45 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 15.65 Bid-YTW : 9.49 % |
| POW.PR.G | Perpetual-Discount | -1.40 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2045-12-04 Maturity Price : 24.14 Evaluated at bid price : 24.60 Bid-YTW : 5.76 % |
| GWO.PR.I | Deemed-Retractible | -1.39 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 20.50 Bid-YTW : 7.21 % |
| FTS.PR.H | FixedReset | -1.36 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2045-12-04 Maturity Price : 13.76 Evaluated at bid price : 13.76 Bid-YTW : 4.39 % |
| POW.PR.B | Perpetual-Discount | -1.36 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2045-12-04 Maturity Price : 22.98 Evaluated at bid price : 23.25 Bid-YTW : 5.83 % |
| POW.PR.D | Perpetual-Discount | -1.33 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2045-12-04 Maturity Price : 21.98 Evaluated at bid price : 22.21 Bid-YTW : 5.71 % |
| GWO.PR.P | Deemed-Retractible | -1.33 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 23.71 Bid-YTW : 6.13 % |
| NA.PR.S | FixedReset | -1.28 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2045-12-04 Maturity Price : 17.70 Evaluated at bid price : 17.70 Bid-YTW : 4.95 % |
| BAM.PF.B | FixedReset | -1.27 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2045-12-04 Maturity Price : 17.87 Evaluated at bid price : 17.87 Bid-YTW : 5.25 % |
| PWF.PR.O | Perpetual-Premium | -1.18 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2045-12-04 Maturity Price : 24.77 Evaluated at bid price : 25.06 Bid-YTW : 5.85 % |
| PWF.PR.K | Perpetual-Discount | -1.13 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2045-12-04 Maturity Price : 21.54 Evaluated at bid price : 21.80 Bid-YTW : 5.74 % |
| BNS.PR.B | FloatingReset | -1.10 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 22.45 Bid-YTW : 4.00 % |
| SLF.PR.D | Deemed-Retractible | -1.10 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 19.87 Bid-YTW : 7.59 % |
| CU.PR.G | Perpetual-Discount | -1.09 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2045-12-04 Maturity Price : 20.05 Evaluated at bid price : 20.05 Bid-YTW : 5.65 % |
| TRP.PR.H | FloatingReset | -1.06 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2045-12-04 Maturity Price : 10.26 Evaluated at bid price : 10.26 Bid-YTW : 4.21 % |
| RY.PR.H | FixedReset | -1.04 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2045-12-04 Maturity Price : 18.00 Evaluated at bid price : 18.00 Bid-YTW : 4.65 % |
| GWO.PR.R | Deemed-Retractible | -1.03 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 21.22 Bid-YTW : 7.06 % |
| TRP.PR.D | FixedReset | -1.01 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2045-12-04 Maturity Price : 17.57 Evaluated at bid price : 17.57 Bid-YTW : 4.95 % |
| BAM.PR.C | Floater | 1.33 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2045-12-04 Maturity Price : 10.70 Evaluated at bid price : 10.70 Bid-YTW : 4.48 % |
| HSE.PR.C | FixedReset | 2.69 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2045-12-04 Maturity Price : 19.85 Evaluated at bid price : 19.85 Bid-YTW : 5.24 % |
| BAM.PR.E | Ratchet | 6.53 % | Just a reversal of yesterday‘s nonsense. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2045-12-04 Maturity Price : 25.00 Evaluated at bid price : 14.85 Bid-YTW : 5.54 % |
| BAM.PF.G | FixedReset | 33.00 % | Don’t get excited! It’s just a reversal of yesterday‘s nonsense. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2045-12-04 Maturity Price : 19.75 Evaluated at bid price : 19.75 Bid-YTW : 5.09 % |
| Volume Highlights | |||
| Issue | Index | Shares Traded |
Notes |
| BAM.PR.B | Floater | 192,246 | Desjardins sold six blocks to anonymous, totalling 132,400 shares, all at 10.85. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2045-12-04 Maturity Price : 10.70 Evaluated at bid price : 10.70 Bid-YTW : 4.48 % |
| BAM.PR.K | Floater | 136,450 | TD crossed 127,200 at 10.85. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2045-12-04 Maturity Price : 10.63 Evaluated at bid price : 10.63 Bid-YTW : 4.51 % |
| BNS.PR.R | FixedReset | 102,400 | RBC crossed 50,000 at 24.80; TD crossed 25,000 at the same price. YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 24.75 Bid-YTW : 3.61 % |
| RY.PR.J | FixedReset | 83,101 | TD crossed blocks of 50,000 and 18,400, both at 19.80. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2045-12-04 Maturity Price : 19.75 Evaluated at bid price : 19.75 Bid-YTW : 4.65 % |
| BNS.PR.P | FixedReset | 70,470 | Nesbitt crossed 50,000 at 24.50. YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 24.50 Bid-YTW : 3.56 % |
| RY.PR.I | FixedReset | 50,000 | Scotia crossed blocks of 22,500 and 11,400, both at 24.35. YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 24.35 Bid-YTW : 3.72 % |
| There were 64 other index-included issues trading in excess of 10,000 shares. | |||
| Wide Spread Highlights | ||
| Issue | Index | Quote Data and Yield Notes |
| GWO.PR.S | Deemed-Retractible | Quote: 23.07 – 24.53 Spot Rate : 1.4600 Average : 0.8676 YTW SCENARIO |
| MFC.PR.K | FixedReset | Quote: 17.32 – 18.70 Spot Rate : 1.3800 Average : 0.9731 YTW SCENARIO |
| MFC.PR.B | Deemed-Retractible | Quote: 20.38 – 21.07 Spot Rate : 0.6900 Average : 0.4580 YTW SCENARIO |
| IAG.PR.G | FixedReset | Quote: 20.65 – 21.44 Spot Rate : 0.7900 Average : 0.5751 YTW SCENARIO |
| HSE.PR.A | FixedReset | Quote: 12.55 – 12.99 Spot Rate : 0.4400 Average : 0.2845 YTW SCENARIO |
| ELF.PR.H | Perpetual-Discount | Quote: 23.50 – 23.92 Spot Rate : 0.4200 Average : 0.2803 YTW SCENARIO |