8 Responses to “April 6, 2022”

1. brian says:

   April 6, 2022 at 11:43 pm

   I’m wondering if part of the recent poor performance of prefs could be due to the upcoming federal budget… investors who bought in the lows of 2020 will have huge capital gains that they may want to crystallize, just in case the feds raise the capital gains tax rate on April 7

2. niagara says:

   April 7, 2022 at 5:03 am

   Perhaps that is the perception, but I believe that such a change in the cap gain inclusion rate would only apply after a certain date. Eg it would be made applicable on, say, May 1,2022. All gains/losses prior to this date would be at the current inclusion rate of 50%. So there would be no advantage to locking in a gain now. In fact, that could be a negative if your tax rate is high this year but might be less in future years, so you would want to hold off if realizing any gains.

   That said, the recent poor performance is perplexing, given prior reactions in the market to changes in bond yields. Just illiquid markets? Too much cannabis smoking? No clue. Just shut up and collect our divvys?

3. skeptical says:

   April 7, 2022 at 6:37 am

   The only thing that is holding on relatively well is the minimum rate resets. These are the rare beast that came into existence at the time of crises and supposedly protect from inflation and deflation. But they are in short supply.
   IMHO, etfs are playing their role, as they always do in a relatively illiquid market. All moves get exacerbated in either direction.
   But we must also be open to the chance that we are entering a more volatile inflation regime which could lead to a more volatile interest rate regime. Which would lead to a higher risk premium demanded by the investors for holding very long duration assets. Few will do fundamental analysis like duration and ytw that James and others on this site do. Central banks ending their bond buying means more volatility as well and the still waters of a 4.5 yield perpetuals have to now deal with the harsh weather.

4. baffled says:

   April 7, 2022 at 6:53 am

   it could be ,short term investors , are seeing the fed gov statements about multiple 0.5 rate increase and rapid tightening , and then are seeing the weakness in the share prices and are thinking they better sell quick before the price drops more

5. ratchetrick says:

   April 7, 2022 at 10:03 am

   As you guys may have already seen, the main details of the budget have been leaked, and there doesn’t appear to be anything about capital gains inclusion, or dividend tax credits! There is an interesting 3% surtax about to be levied on the banks. Not sure what specifically they’ll be taxing, but I guess charge card interest is about to be hiked from 22% to 25% lol.

6. jiHymas says:

   April 7, 2022 at 11:12 am

   the main details of the budget have been leaked

   Source?

7. ratchetrick says:

   April 7, 2022 at 11:45 am

   all over assorted media sites . . . it’s the top line story on CBC.CA . . . if you don’t like that one, here’s another: https://www.ctvnews.ca/politics/federal-budget-to-include-10b-housing-plan-8b-for-defence-1.5850968

8. April 13, 2022 « PrefBlog says:

   April 14, 2022 at 10:08 am

   […] PerpetualDiscounts now yield 5.48%, equivalent to 7.12% interest at the standard equivalency factor of 1.3x. Long corporates now yield 4.24%, so the pre-tax interest-equivalent spread (in this context, the “Seniority Spread”) has widened to 290bp from the 275bp reported April 6. […]