TXPR closed at 555.98, down 1.38% on the day. Volume today was 894,490, well below the median of the past 21 trading days.
CPD closed at 11.06, down 0.72% on the day. Volume was 152,900, second-highest of the past 21 trading days.
ZPR closed at 9.15, down 0.97% on the day. Volume was 225,260, fourth-highest of the past 21 trading days.
Five-year Canada yields plummetted to 2.92% today.
Well, it was a big day for lots of people:
The stocks of U.S. regional banks plummeted on Monday as investors reassessed how much such lenders were worth following the recent sudden collapses of Signature Bank and Silicon Valley Bank.
Rapidly falling prices led to the temporary halt in trading for roughly a dozen banks in the morning when they triggered so-called circuit breakers, which are meant in part to prevent runaway crashes.
First Republic Bank stood out as the worst mover on the day, down 60 percent. Arizona-based Western Alliance tumbled 45 percent, KeyCorp and Comerica both dropped nearly 30 percent, and Utah-based Zions Bancorp fell about 25 percent.
…
The two-year Treasury yield, which is sensitive to changes in interest rate expectations, fell 0.59 percentage points, to just above 4 percent — its biggest one-day drop since the “Black Monday” of October 1987, one of the most severe market crashes on record.
…
Investors’ expectations for where the Fed will have set interest rates by June have fallen from 5.48 percent last week to 4.57 percent on Monday.
There was this early commentary about SVB:
The collapse may have been an unforced, self-inflicted error: The bank’s management chose to sell $21 billion of bonds at a $1.8 billion loss, in large part, it appears, because many of those bonds were yielding an average of only 1.79 percent at a time when interest rates had risen drastically and the bank was starting to look like an underperformer relative to its peers. Moody’s was considering downgrading its rating. The bank’s management — with the help of Goldman Sachs, its adviser — chose to raise new equity from the venture capital firm General Atlantic and also to sell a convertible bond to the public.
It isn’t clear if the bond sale or the fund-raising, at least initially, had been made under duress. It was meant to reassure investors. But it had the opposite effect: It so surprised the market that it led the bank’s very smart client base of venture capitalists to direct their portfolio clients to withdraw their deposits en masse.
And there was this comiseration:
But S.V.B.’s depositors are not normal customers. They’re start-up founders and investors, the kinds of people who scrutinize banks’ securities filings, who pay close attention to risk and volatility and who (most importantly) talk to each other on the internet all day. Once a few people in tech raised questions about the firm’s solvency, Slack channels and Twitter feeds lit up with dire warnings from venture capitalists, and soon many people were panicking.
Would all of this have happened if S.V.B.’s clientele had been made up of restaurant owners and dog groomers, instead of tech start-up founders? Possibly. But it seems unlikely. In this case, S.V.B.’s demise seems to have been hastened by the clubby, herd-following nature of the industry it served.
But on Sunday the hammer dropped:
After receiving a recommendation from the boards of the FDIC and the Federal Reserve, and consulting with the President, Secretary Yellen approved actions enabling the FDIC to complete its resolution of Silicon Valley Bank, Santa Clara, California, in a manner that fully protects all depositors. Depositors will have access to all of their money starting Monday, March 13. No losses associated with the resolution of Silicon Valley Bank will be borne by the taxpayer.
We are also announcing a similar systemic risk exception for Signature Bank, New York, New York, which was closed today by its state chartering authority. All depositors of this institution will be made whole. As with the resolution of Silicon Valley Bank, no losses will be borne by the taxpayer.
Shareholders and certain unsecured debtholders will not be protected. Senior management has also been removed. Any losses to the Deposit Insurance Fund to support uninsured depositors will be recovered by a special assessment on banks, as required by law.
And – this is actually shocking and counterproductive – easy financing terms were announced:
The Federal Reserve is prepared to address any liquidity pressures that may arise.
The additional funding will be made available through the creation of a new Bank Term Funding Program (BTFP), offering loans of up to one year in length to banks, savings associations, credit unions, and other eligible depository institutions pledging U.S. Treasuries, agency debt and mortgage-backed securities, and other qualifying assets as collateral. These assets will be valued at par. The BTFP will be an additional source of liquidity against high-quality securities, eliminating an institution’s need to quickly sell those securities in times of stress.
Collateral taken at par, even when they’re not par and that is, in fact, the problem? This looks awfully close like lending to an insolvent bank, which is stupid, and doing so on easy terms, which is worse. Banks must be punished for using emergency funding!
Elizabeth Warren weighed in:
S.V.B. suffered from a toxic mix of risky management and weak supervision. For one, the bank relied on a concentrated group of tech companies with big deposits, driving an abnormally large ratio of uninsured deposits. This meant that weakness in a single sector of the economy could threaten the bank’s stability.
Instead of managing that risk, S.V.B. funneled these deposits into long-term bonds, making it hard for the bank to respond to a drawdown. S.V.B. apparently failed to hedge against the obvious risk of rising interest rates. This business model was great for S.V.B.’s short-term profits, which shot up by nearly 40 percent over the last three years — but now we know its cost.
S.V.B.’s collapse set off looming contagion that regulators felt forced to stanch, leading to their decision to dissolve Signature Bank. Signature had touted its F.D.I.C. insurance as it whipped up a customer base tilted toward risky cryptocurrency firms.
Had Congress and the Federal Reserve not rolled back the stricter oversight, S.V.B. and Signature would have been subject to stronger liquidity and capital requirements to withstand financial shocks. They would have been required to conduct regular stress tests to expose their vulnerabilities and shore up their businesses. But because those requirements were repealed, when an old-fashioned bank run hit S.V.B., the bank couldn’t withstand the pressure — and Signature’s collapse was close behind.
State regulators closed New York-based Signature Bank on Sunday, the third largest failure in U.S. banking history, two days after authorities shuttered Silicon Valley Bank in a collapse that stranded billions in deposits.
The Federal Deposit Insurance Corporation (FDIC) took control of Signature, which had $110.36 billion in assets and $88.59 in deposits at the end of last year, according to New York state’s Department of Financial Services.
…
Signature was a commercial bank with private client offices in New York, Connecticut, California, Nevada and North Carolina, and had nine national business lines, including commercial real estate and digital asset banking.As of September, almost a quarter of its deposits came from the cryptocurrency sector, but the bank announced in December that it would shrink its crypto-related deposits by $8 billion.
Those of an inquisitive bent might care to examine SVB’s investor relations page, particularly the 2022 Annual Financials. As I said here:
SVB had $15,160-million in unrealized losses in their HTM portfolio (page 125 of the PDF).
They had $16,004-million “Total SVBFG stockholders’ equity” (page 95 of the PDF).
HTM haa got to go!
I understand that some people feel that Historical Cost Accounting is fine, but I’ve never quite understood why. If something’s worth $1, then showing it on the books at $2 is just a lie, surely! It’s even worse when you use the concept to lie to yourself about the value of your GIC!
I do hope this issue is examined in the Fed’s review:
The Federal Reserve Board on Monday announced that Vice Chair for Supervision Michael S. Barr is leading a review of the supervision and regulation of Silicon Valley Bank, in light of its failure. The review will be publicly released by May 1.
“The events surrounding Silicon Valley Bank demand a thorough, transparent, and swift review by the Federal Reserve,” said Chair Jerome H. Powell.
“We need to have humility, and conduct a careful and thorough review of how we supervised and regulated this firm, and what we should learn from this experience,” said Vice Chair Barr.
Anyway, this had an effect on short-term rates in Canada:
Quite the change from the rates I showed from March 10! Mark Rendell comments in the Globe:
As recently as last week, markets were expecting the U.S. central bank to increase its benchmark interest rate by another percentage point in the coming months, and to hold off rate cuts until 2024. But by Monday, markets were doubting that the Fed will raise rates at all at its next meeting on March 22, and pricing in cuts by this summer.
The abrupt shift in interest rate expectations roiled global bond markets. Two-year U.S. Treasury bond yields fell by 100 basis points over the past three trading days, the swiftest drop since the 1980s. Yields on two-year Government of Canada bonds dropped 42 basis points on Monday alone. (A basis point is 1/100th of a percentage point. Bond yields and prices move in opposite directions.)
…
But following on the heels of the U.K. bond crisis last fall – which saw pension funds squeezed by a sudden shift in asset valuations – the SVB episode has heightened concerns that aggressive monetary policy tightening has left underappreciated cracks throughout the financial system.
I must point out that it wasn’t poor innocent pension funds in the UK that were squeezed by a sudden shift in asset valuations … it was ultra-dumb pension funds run by bozo-dorks who believed in the equation:
who got burnt.
Anyway, in more traditional news, the Survey of Consumer Expectations came out today:
Median one-year-ahead inflation expectations declined by 0.8 percentage point to 4.2 percent, according to the February Survey of Consumer Expectations. Three-year-ahead expectations remained at 2.7 percent, while the five-year-ahead measure increased by 0.1 percentage point to 2.6 percent. Labor market expectations improved, with unemployment expectations and perceived job loss risk decreasing and job finding expectations increasing. Expectations for voluntary job quits reached the highest level since the start of the pandemic.
And I have completely lost confidence in governance at Canaccord:
Acquiescing to a major shareholder’s demands, the Canaccord Genuity Group Inc. board members who had been evaluating an insider bid to take the independent Canadian investment bank private have quit.
Gillian Denham, Dipesh Shah, Charles Bralver and Sally Tennant have all resigned as directors of the company, Canaccord announced early Monday. The four had previously comprised a special committee evaluating a takeover bid worth $11.25 per share, or about $1.1-billion, from more than 50 members of Canaccord’s management team.
The resignations come just days after Skky Capital Corp. Ltd, which owns an 8.8-per-cent stake in Canaccord, publicly called for the special committee to be replaced. Skky, a Bermuda-based fund manager controlled by Canadian financier Gordon Flatt, said on March 7 that it had “lost confidence” in the special committee after it rejected the management group’s offer as too low.
Andrew Willis comments in the Globe:
In rough terms, there’s $500-million up for grabs in the fight for investment bank Canaccord Genuity Group CF-T -2.37%decrease
.On Monday, we found out who stands to win that half-billion-dollar prize. It will likely be claimed by Canaccord’s executives, who are attempting to take the dealer private for $1.1-billion.
The losers are the company’s shareholders, whose best hope for a sweeter takeover offer vanished over the weekend, when Canaccord’s four-member special committee and a fifth independent director resigned. The most dramatic act any board member can contemplate is quitting. To have five directors exit during a takeover is a sign of serious dissention.
I’m sure glad I’m not a shareholder. The company is run by scoundrels.
But at least the day is not devoid of cheerful news:
A trio of competition law experts are calling on federal Industry Minister François-Philippe Champagne to open up the domestic telecom market to foreign companies in order to bring down cellphone prices.
They called for sweeping changes to restrictions on foreign ownership rules as Mr. Champagne is poised to make a decision on Rogers Communications Inc.’s … $20-billion takeover offer for Shaw Communications Inc. and the federal government is updating competition laws.
Three former leaders of the Competition Bureau and Competition Tribunal – the federal agencies charged with consumer protection – said rules protecting domestic telecom companies that date back to the 1960s no longer serve the country’s interests.
“Historical restrictions on foreign-based ownership have become outdated in the current environment where Canadian consumers are demanding lower prices, akin to that paid by consumers in many other countries,” the report said.
Its authors are Calvin Goldman, former commissioner of competition, Larry Schwartz, an ex-member of the Competition Tribunal, and Richard Taylor, who was deputy commissioner of the Competition Bureau. The C.D. Howe Institute, a Toronto-based think tank, published the paper on Friday.
Yes! Start with telecom, then get cracking on banks, eggs and milk! Move it!
| 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 | -1.2972 % | 2,486.2 |
| FixedFloater | 0.00 % | 0.00 % | 0 | 0.00 | 0 | -1.2972 % | 4,768.5 |
| Floater | 9.06 % | 9.32 % | 48,935 | 9.96 | 2 | -1.2972 % | 2,748.1 |
| OpRet | 0.00 % | 0.00 % | 0 | 0.00 | 0 | 0.2031 % | 3,338.8 |
| SplitShare | 5.04 % | 6.97 % | 51,585 | 2.72 | 7 | 0.2031 % | 3,987.2 |
| Interest-Bearing | 0.00 % | 0.00 % | 0 | 0.00 | 0 | 0.2031 % | 3,111.0 |
| Perpetual-Premium | 0.00 % | 0.00 % | 0 | 0.00 | 0 | -0.2885 % | 2,737.1 |
| Perpetual-Discount | 6.23 % | 6.38 % | 64,577 | 13.31 | 35 | -0.2885 % | 2,984.6 |
| FixedReset Disc | 5.61 % | 7.35 % | 92,997 | 12.37 | 61 | -1.2244 % | 2,191.1 |
| Insurance Straight | 6.20 % | 6.30 % | 81,944 | 13.54 | 20 | -0.3898 % | 2,895.8 |
| FloatingReset | 10.00 % | 10.34 % | 36,226 | 9.34 | 2 | -0.3521 % | 2,526.7 |
| FixedReset Prem | 6.59 % | 6.41 % | 220,855 | 12.85 | 2 | -0.3942 % | 2,345.1 |
| FixedReset Bank Non | 0.00 % | 0.00 % | 0 | 0.00 | 0 | -1.2244 % | 2,239.8 |
| FixedReset Ins Non | 5.49 % | 6.86 % | 78,014 | 12.64 | 13 | -1.3371 % | 2,363.8 |
| Performance Highlights | |||
| Issue | Index | Change | Notes |
| SLF.PR.G | FixedReset Ins Non | -8.62 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-03-13 Maturity Price : 11.98 Evaluated at bid price : 11.98 Bid-YTW : 8.24 % |
| BN.PR.X | FixedReset Disc | -5.97 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-03-13 Maturity Price : 14.65 Evaluated at bid price : 14.65 Bid-YTW : 8.23 % |
| RY.PR.J | FixedReset Disc | -4.73 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-03-13 Maturity Price : 17.91 Evaluated at bid price : 17.91 Bid-YTW : 7.48 % |
| NA.PR.S | FixedReset Disc | -3.99 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-03-13 Maturity Price : 17.33 Evaluated at bid price : 17.33 Bid-YTW : 7.66 % |
| PWF.PR.T | FixedReset Disc | -3.47 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-03-13 Maturity Price : 18.10 Evaluated at bid price : 18.10 Bid-YTW : 7.36 % |
| IFC.PR.K | Perpetual-Discount | -3.26 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-03-13 Maturity Price : 21.04 Evaluated at bid price : 21.04 Bid-YTW : 6.38 % |
| TD.PF.J | FixedReset Disc | -3.25 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-03-13 Maturity Price : 21.68 Evaluated at bid price : 22.06 Bid-YTW : 6.47 % |
| MFC.PR.L | FixedReset Ins Non | -3.01 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-03-13 Maturity Price : 16.73 Evaluated at bid price : 16.73 Bid-YTW : 7.50 % |
| CM.PR.Q | FixedReset Disc | -2.90 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-03-13 Maturity Price : 18.40 Evaluated at bid price : 18.40 Bid-YTW : 7.26 % |
| FTS.PR.G | FixedReset Disc | -2.75 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-03-13 Maturity Price : 17.70 Evaluated at bid price : 17.70 Bid-YTW : 7.21 % |
| BN.PF.A | FixedReset Disc | -2.74 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-03-13 Maturity Price : 19.90 Evaluated at bid price : 19.90 Bid-YTW : 7.47 % |
| BMO.PR.S | FixedReset Disc | -2.72 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-03-13 Maturity Price : 17.51 Evaluated at bid price : 17.51 Bid-YTW : 7.45 % |
| NA.PR.E | FixedReset Disc | -2.55 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-03-13 Maturity Price : 21.05 Evaluated at bid price : 21.05 Bid-YTW : 6.64 % |
| BN.PR.R | FixedReset Disc | -2.32 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-03-13 Maturity Price : 13.92 Evaluated at bid price : 13.92 Bid-YTW : 8.70 % |
| BN.PF.G | FixedReset Disc | -2.23 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-03-13 Maturity Price : 15.37 Evaluated at bid price : 15.37 Bid-YTW : 8.86 % |
| MFC.PR.K | FixedReset Ins Non | -2.21 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-03-13 Maturity Price : 19.02 Evaluated at bid price : 19.02 Bid-YTW : 6.80 % |
| FTS.PR.K | FixedReset Disc | -2.20 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-03-13 Maturity Price : 16.00 Evaluated at bid price : 16.00 Bid-YTW : 7.77 % |
| MFC.PR.M | FixedReset Ins Non | -2.16 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-03-13 Maturity Price : 17.18 Evaluated at bid price : 17.18 Bid-YTW : 7.50 % |
| NA.PR.W | FixedReset Disc | -2.13 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-03-13 Maturity Price : 16.52 Evaluated at bid price : 16.52 Bid-YTW : 7.68 % |
| TD.PF.A | FixedReset Disc | -2.03 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-03-13 Maturity Price : 16.92 Evaluated at bid price : 16.92 Bid-YTW : 7.51 % |
| RY.PR.M | FixedReset Disc | -1.99 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-03-13 Maturity Price : 17.76 Evaluated at bid price : 17.76 Bid-YTW : 7.24 % |
| BMO.PR.E | FixedReset Disc | -1.85 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-03-13 Maturity Price : 21.25 Evaluated at bid price : 21.25 Bid-YTW : 6.64 % |
| MFC.PR.N | FixedReset Ins Non | -1.82 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-03-13 Maturity Price : 16.69 Evaluated at bid price : 16.69 Bid-YTW : 7.57 % |
| BMO.PR.T | FixedReset Disc | -1.82 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-03-13 Maturity Price : 16.73 Evaluated at bid price : 16.73 Bid-YTW : 7.60 % |
| TD.PF.B | FixedReset Disc | -1.79 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-03-13 Maturity Price : 17.03 Evaluated at bid price : 17.03 Bid-YTW : 7.55 % |
| BN.PR.T | FixedReset Disc | -1.71 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-03-13 Maturity Price : 14.35 Evaluated at bid price : 14.35 Bid-YTW : 8.62 % |
| BN.PF.F | FixedReset Disc | -1.71 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-03-13 Maturity Price : 16.71 Evaluated at bid price : 16.71 Bid-YTW : 8.56 % |
| FTS.PR.M | FixedReset Disc | -1.64 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-03-13 Maturity Price : 16.82 Evaluated at bid price : 16.82 Bid-YTW : 7.87 % |
| RY.PR.Z | FixedReset Disc | -1.63 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-03-13 Maturity Price : 17.46 Evaluated at bid price : 17.46 Bid-YTW : 7.29 % |
| GWO.PR.Y | Insurance Straight | -1.63 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-03-13 Maturity Price : 18.10 Evaluated at bid price : 18.10 Bid-YTW : 6.24 % |
| TD.PF.E | FixedReset Disc | -1.60 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-03-13 Maturity Price : 18.47 Evaluated at bid price : 18.47 Bid-YTW : 7.34 % |
| BN.PF.B | FixedReset Disc | -1.59 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-03-13 Maturity Price : 17.34 Evaluated at bid price : 17.34 Bid-YTW : 8.10 % |
| TD.PF.D | FixedReset Disc | -1.58 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-03-13 Maturity Price : 18.11 Evaluated at bid price : 18.11 Bid-YTW : 7.44 % |
| TRP.PR.B | FixedReset Disc | -1.52 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-03-13 Maturity Price : 11.00 Evaluated at bid price : 11.00 Bid-YTW : 8.64 % |
| CM.PR.O | FixedReset Disc | -1.51 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-03-13 Maturity Price : 17.58 Evaluated at bid price : 17.58 Bid-YTW : 7.35 % |
| BIP.PR.A | FixedReset Disc | -1.46 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-03-13 Maturity Price : 16.93 Evaluated at bid price : 16.93 Bid-YTW : 8.99 % |
| IFC.PR.G | FixedReset Ins Non | -1.40 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-03-13 Maturity Price : 20.42 Evaluated at bid price : 20.42 Bid-YTW : 6.86 % |
| MFC.PR.F | FixedReset Ins Non | -1.38 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-03-13 Maturity Price : 12.85 Evaluated at bid price : 12.85 Bid-YTW : 7.62 % |
| BN.PR.B | Floater | -1.38 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-03-13 Maturity Price : 12.91 Evaluated at bid price : 12.91 Bid-YTW : 9.36 % |
| CU.PR.E | Perpetual-Discount | -1.33 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-03-13 Maturity Price : 19.24 Evaluated at bid price : 19.24 Bid-YTW : 6.43 % |
| MIC.PR.A | Perpetual-Discount | -1.31 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-03-13 Maturity Price : 20.28 Evaluated at bid price : 20.28 Bid-YTW : 6.82 % |
| TRP.PR.A | FixedReset Disc | -1.28 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-03-13 Maturity Price : 13.85 Evaluated at bid price : 13.85 Bid-YTW : 8.48 % |
| RY.PR.S | FixedReset Disc | -1.27 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-03-13 Maturity Price : 20.25 Evaluated at bid price : 20.25 Bid-YTW : 6.60 % |
| BN.PR.K | Floater | -1.22 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-03-13 Maturity Price : 12.96 Evaluated at bid price : 12.96 Bid-YTW : 9.32 % |
| MFC.PR.Q | FixedReset Ins Non | -1.21 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-03-13 Maturity Price : 20.35 Evaluated at bid price : 20.35 Bid-YTW : 6.78 % |
| GWO.PR.N | FixedReset Ins Non | -1.20 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-03-13 Maturity Price : 12.30 Evaluated at bid price : 12.30 Bid-YTW : 7.66 % |
| IFC.PR.E | Insurance Straight | -1.13 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-03-13 Maturity Price : 21.01 Evaluated at bid price : 21.01 Bid-YTW : 6.33 % |
| POW.PR.G | Perpetual-Discount | -1.12 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-03-13 Maturity Price : 21.81 Evaluated at bid price : 22.05 Bid-YTW : 6.46 % |
| BIP.PR.E | FixedReset Disc | 1.20 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-03-13 Maturity Price : 21.64 Evaluated at bid price : 22.01 Bid-YTW : 6.74 % |
| IFC.PR.A | FixedReset Ins Non | 4.43 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-03-13 Maturity Price : 17.21 Evaluated at bid price : 17.21 Bid-YTW : 7.01 % |
| Volume Highlights | |||
| Issue | Index | Shares Traded |
Notes |
| TD.PF.I | FixedReset Prem | 33,050 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-03-13 Maturity Price : 23.19 Evaluated at bid price : 25.00 Bid-YTW : 6.05 % |
| NA.PR.C | FixedReset Prem | 15,456 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-03-13 Maturity Price : 23.35 Evaluated at bid price : 25.53 Bid-YTW : 6.41 % |
| MFC.PR.C | Insurance Straight | 14,300 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-03-13 Maturity Price : 18.64 Evaluated at bid price : 18.64 Bid-YTW : 6.07 % |
| TD.PF.M | FixedReset Disc | 12,796 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-03-13 Maturity Price : 23.90 Evaluated at bid price : 24.30 Bid-YTW : 6.64 % |
| TD.PF.L | FixedReset Disc | 12,500 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-03-13 Maturity Price : 23.50 Evaluated at bid price : 24.00 Bid-YTW : 6.46 % |
| SLF.PR.D | Insurance Straight | 11,115 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-03-13 Maturity Price : 18.54 Evaluated at bid price : 18.54 Bid-YTW : 6.02 % |
| There were 4 other index-included issues trading in excess of 10,000 shares. | |||
| Wide Spread Highlights | ||
| Issue | Index | Quote Data and Yield Notes |
| MFC.PR.M | FixedReset Ins Non | Quote: 17.18 – 20.45 Spot Rate : 3.2700 Average : 2.5141 YTW SCENARIO |
| MFC.PR.N | FixedReset Ins Non | Quote: 16.69 – 18.46 Spot Rate : 1.7700 Average : 1.1407 YTW SCENARIO |
| PWF.PR.G | Perpetual-Discount | Quote: 23.64 – 24.78 Spot Rate : 1.1400 Average : 0.6414 YTW SCENARIO |
| BMO.PR.T | FixedReset Disc | Quote: 16.73 – 17.95 Spot Rate : 1.2200 Average : 0.8167 YTW SCENARIO |
| SLF.PR.G | FixedReset Ins Non | Quote: 11.98 – 12.98 Spot Rate : 1.0000 Average : 0.6334 YTW SCENARIO |
| POW.PR.C | Perpetual-Discount | Quote: 23.30 – 24.40 Spot Rate : 1.1000 Average : 0.7407 YTW SCENARIO |
Congrats James on scrap-booking together an eclectic but highly readable and engaging account of the main issues of the day. I love these daily summaries, especially when you’re on a roll.
“it wasn’t poor innocent pension funds in the UK that were squeezed by a sudden shift in asset valuations … it was ultra-dumb pension funds run by bozo-dorks”
perfect
“I understand that some people feel that Historical Cost Accounting is fine, but I’ve never quite understood why. If something’s worth $1, then showing it on the books at $2 is just a lie, surely!”
Well, it cuts both ways. Bitcoin being priced ~$20,000 does not mean it is worth that much. It just means some bozo-dorks are willing to pay that much, at least on the margin. Marking bitcoin holdings as an asset at market prices is a lie too.
Interim marking of holdings surely ought to be done in a manner that works in a wealth-enhancing, best-outcome-producing manner for the entity in question. HCA/HTM has a valuable role in some situations, clearly not in SVB’s!
stusclues,
honestly have no idea what you mean when say something isn’t worth what its trading for. maybe be true for a tight float penny stock but we are talking about extraordinarily liquid securities here.
the last of svb’s equity was indeed wiped out q3 2022. while there was a footnote on the b/s, the earnings releases made ZERO mention of the $16bb that had been lost in the 3q since y/e and rates breaking above 1.5% (which is incidentally where they stood still and swelled HTM assets from 17bb to 98bb thru 2021).
how that would not be deemed a material event worth mentioning is beyond me.
but as of sep 30, 2021, this was toast and no one, management nor regulator, said boo.
as for hopes of these assets being skated onside, the fed was quite clear what path of rates were then and now
oops as of sep 30, 2022 was toast
“honestly have no idea what you mean when say something isn’t worth what its trading for”
When someone asks us what our holdings (anything really, but stocks and bonds for this discussion) are “worth”, how do we answer? Well, the generally accepted way, if liquid markets are available, is to use market pricing to calculate it. Indeed, our bank statements do just this unless we hold GICs which makes James very mad 🙂
This is called Mark-to-Market (MTM). It is highly appropriate in most cases. However, to insist that every actor in every case in every place at every time must use MTM ignores the benefits of other methods in certain circumstances.
Not everyone believes that markets are always, at all times accurate measurer’s of value. That’s why there are alternative methods of accounting. MTM has its own problems.
Two books that are highly readable that address these issues are:
Values – Mark Carney
Signals – Pippa Malmgren
These aren’t my ideas. HCA, for example, is used effectively and responsibly by many entities.
omg, we are talking about dropping 16bb on an 80bb bet in the US bond market for a regulated bank and not making mention of it.
under absolutely no scenario should htm apply in this case
we aren’t talking about every scenario, we are talking about svb and you seemingly don’t think there is an issue with the accounting or disclosure
“under absolutely no scenario should htm apply in this case”
No argument. I’ve agreed with this from the beginning.
If something’s worth $1, then showing it on the books at $2 is just a lie, surely!
True but it certainly helps you raise money for your next fund based on inflated IRRs!
[…] continue to have no faith in the governance of this company, as noted on March 13. BIS has released a Working Paper by Xiang Fang, Bryan Hardy and Karen K Lewis titled Who holds […]
[…] And, for what it’s worth, my faith in the company’s governance also continues to be dubious. […]