The Canadian economy added more jobs than expected in March and the unemployment rate remained near a record low for a fourth straight month, data on Thursday showed, a sign of economic resilience ahead of a central bank policy meeting next week.
The economy gained a net 34,700 jobs, almost entirely in the private sector, and the unemployment rate held steady at 5.0 per cent, Statistics Canada reported.
…
Thursday’s jobs figures as well as robust GDP data released last week are likely to complicate the central bank’s plans to avoid further rate moves. The average hourly wage for permanent employees rose 5.2 per cent in March on a year-over-year basis, down from 5.4 per cent in February.The bank’s next rate decision is due on Wednesday.
…
The employment gains last month were driven by the services sector, which added a net 75,500 jobs, mostly in transportation and warehousing as well as support services. Those additions more than offset the decline of 40,900 jobs in the goods sector, which was dragged down by job losses in construction as well as natural resources.
The New York Fed has updated the Global Supply Chain Pressure Index:
- Global supply chain pressures decreased again in March, falling from .28 to 1.06 standard deviations below the index’s historical average.
- There were significant downward contributions by many of the factors, with the largest negative contributions from European Area delivery times, European Area backlogs, and Taiwanese purchases.
- The GSCPI’s recent movements suggest that global supply chain conditions have largely normalized after experiencing temporary setbacks around the turn of the year.
BIS has released a working paper titled Big techs and the credit channel of monetary policy:
Focus
Big techs are lending to small and medium-sized enterprises and vendors on their e-commerce platforms, thus encroaching on financial markets. These changes in financial intermediation could affect monetary policy transmission in at least two ways. First, the business model of big techs depends on using vast amounts of data instead of collateral to solve agency problems between borrowers and lenders. By using machine learning and big data to generate credit scores, big techs can assess a company’s creditworthiness more accurately than traditional credit bureau ratings can. As a result, this may decrease the relevance of the “collateral channel” and, simultaneously, increase the responsiveness of credit to changes in firms’ business conditions. Second, the threat of reputational damage, or of being excluded from the e-commerce platform, serves as an extra-legal but highly effective means of contract enforcement for big tech firms.Contribution
We view big tech credit through the lens of a model where big techs facilitate matching on the e-commerce platform and extend loans. While bank credit is backed by collateral, big techs reinforce credit repayment by threatening to exclude borrowers from the platform. The most significant difference between big tech credit and bank credit lies in the borrowers’ cost of default. If a firm defaults on bank credit, it loses its collateral, usually real estate. In contrast, if a company defaults on big tech credit, it loses access to the e-commerce platform, thereby jeopardising future profits.Findings
We find that, first, an improvement in big techs’ matching efficiency on the e-commerce platform raises the value for firms of trading on the platform and accessing big tech credit. Higher future profits ease financing constraints and increase firms’ production, driving aggregate output closer to the efficient level. Second, the response of credit and output to a monetary policy shock depends on how sensitive the firms’ opportunity cost of default on big tech credit (ie the stream of future profits from operating on the big tech platform) is compared with the cost of defaulting on bank credit (ie the value of physical collateral). In our baseline calibration, the introduction of big tech credit mitigates the initial responses of aggregate credit and output to a monetary shock. However, it increases the persistence of the effect of monetary policy on the macroeconomy. Third, big techs’ macroeconomic efficiency gains are limited by the distortionary nature of the fees collected from their users.Abstract
We document some stylized facts on big tech credit and rationalize them through the lens of a model where big techs facilitate matching on the e-commerce platform and extend loans. The big tech reinforces credit repayment with the threat of exclusion from the platform, while bank credit is secured against collateral. Our model suggests that: (i) a rise in big techs’ matching efficiency increases the value for firms of trading on the platform and the availability of big tech credit; (ii) big tech credit mitigates the initial response of output to a monetary shock, while increasing its persistence; (iii) the efficiency gains generated by big techs are limited by the distortionary fees collected from users.
…
Our paper aims to shed some light on the effects of big techs’ entry into finance on the macroeconomy and on monetary policy transmission. We develop a model that can replicate two key empirical facts about big techs. First, using macro data for China and the US, and extending previous evidence based on Chinese micro data, we show that big tech credit does not react to changes in asset prices and local economic conditions, unlike bank credit. Second, we use local projections to shed light on the importance of the physical collateral channel relative to the network collateral channel for the transmission of monetary policy. Key drivers of the strength of these channels is the sensitivity of commercial property prices and e-commerce sales to monetary policy. We show that commercial property prices respond more strongly than e-commerce sales to a monetary policy shock, although less persistently.
…
The crucial difference between big tech credit and bank credit relates to borrowers’ opportunity cost of default. Firms that default on bank credit lose their collateral (real estate). In contrast, those that default on big tech credit lose access to big techs’ e-commerce platform, and hence their future profits. An incentive compatible contract thus limits the total amount of credit to the sum of physical and network collateral. Nominal wages are sticky, and monetary policy affects the real economy. When search frictions in the goods markets and credit frictions in the financial markets are set to zero, the model collapses to the basic New Keynesian model with sticky wages.3We obtain three sets of results. First, an expansion in big techs, as captured by an increase in matching efficiency on the commerce platform, raises the value for firms of trading in the platform and the availability of big tech credit. This in turn relaxes financing constraints and increases firms’ production, driving aggregate output closer to the efficient level. Second, the reaction of credit and output to a monetary policy shock crucially depends on the sensitivity of firms’ opportunity cost of default on big tech credit (the stream of future profits from operating on the big tech platform) compared to that of defaulting on bank credit (the value of physical collateral). In our baseline calibration, the introduction of big tech credit mitigates the initial responses of aggregate credit and output to a monetary shock, but increases the persistence of the effect of monetary policy on the macroeconomy. Third, big techs’ macroeconomic efficiency gains are limited by the distortionary nature of the fees collected from their users.
AIMCo beat its benchmarks:
Alberta Investment Management Corp. reported a 3.4-per-cent loss last year as falling values for publicly traded stocks and bonds outweighed strong returns from investments in infrastructure and renewable resources.
…
AIMCo’s 2022 returns were still 1.8-per-cent higher than its internal benchmark in spite of the loss, demonstrating how difficult it was to be an investor last year as high inflation and rapid interest-rate increases shook global markets. Like many of its peers, AIMCo suffered from a rare simultaneous dive in public equities and fixed income markets, which make up a large share of the plan’s assets.
Aimia is facing a shareholder revolt:
Mithaq Capital SPC, a family office based in Saudi Arabia that owns nearly 20 per cent of Toronto-based Aimia, announced plans Thursday to vote against the re-election of the company’s entire board of directors.
…
In a statement, Mithaq said it has lost confidence in the board and the management team, and that “it would be in the best interests of Aimia to reconstitute the board.”The reasons underlying Mithaq’s opposition “include concerns previously raised with Aimia regarding capital allocation decisions relating to acquisitions,” the statement said.
Mithaq is not planning to nominate any replacement candidates and declined to comment further on what exactly motivated it, though Aimia has recently made its two largest acquisitions since pivoting away from loyalty programs.
In January, Aimia bought Tufropes Pvt. Ltd. for $253-million. India-based Tufropes makes synthetic fibre ropes and netting for the aquaculture and maritime industries. Then last month, the company paid $332-million for Italian chemical company Giovanni Bozzetto SpA.
…
Mithaq has amassed a significant portion of its stake in Aimia very recently. While the family office holds 19.9 per cent of Aimia’s outstanding common shares, that figure was only 12.6 per cent as of Feb 1.Over the course of its transformation, Aimia’s work force has shrunk dramatically to about 20 people as of late 2020 from roughly 450. In its most recent quarter, Aimia reported a net loss of $23.3-million, which was roughly 60-per-cent wider than the $14.6-million loss the company reported during the same period a year earlier.
… and the company is fighting back:
Hours later, the company fired back, alleging what Mithaq really wanted was for Aimia to support its own investments.
“Many of the investments [Mithaq] recommended would have resulted in substantial losses to Aimia (including one target that subsequently filed for bankruptcy),” the company said in a statement released early Thursday afternoon.
Aimia also said Mithaq had “previously lobbied the company to invest in public securities, including some in which they hold an interest.” An unnamed former insider of an Amia affiliate – who the company claimed was recently terminated for allegedly misusing confidential information – lobbied alongside Mithaq for those investments, the statement said.
| 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 | -0.6160 % | 2,325.7 |
| FixedFloater | 0.00 % | 0.00 % | 0 | 0.00 | 0 | -0.6160 % | 4,460.7 |
| Floater | 9.69 % | 9.74 % | 56,991 | 9.78 | 2 | -0.6160 % | 2,570.7 |
| OpRet | 0.00 % | 0.00 % | 0 | 0.00 | 0 | 0.1223 % | 3,357.2 |
| SplitShare | 5.01 % | 7.07 % | 46,234 | 2.65 | 7 | 0.1223 % | 4,009.3 |
| Interest-Bearing | 0.00 % | 0.00 % | 0 | 0.00 | 0 | 0.1223 % | 3,128.2 |
| Perpetual-Premium | 0.00 % | 0.00 % | 0 | 0.00 | 0 | 0.1536 % | 2,762.6 |
| Perpetual-Discount | 6.18 % | 6.19 % | 55,355 | 13.61 | 34 | 0.1536 % | 3,012.4 |
| FixedReset Disc | 5.81 % | 7.52 % | 92,174 | 12.23 | 63 | -0.2347 % | 2,118.6 |
| Insurance Straight | 6.07 % | 6.11 % | 71,023 | 13.76 | 19 | 0.1264 % | 2,961.2 |
| FloatingReset | 10.29 % | 9.98 % | 26,723 | 9.58 | 2 | 0.6428 % | 2,414.7 |
| FixedReset Prem | 6.94 % | 6.42 % | 282,543 | 13.01 | 1 | 0.6362 % | 2,328.4 |
| FixedReset Bank Non | 0.00 % | 0.00 % | 0 | 0.00 | 0 | -0.2347 % | 2,165.6 |
| FixedReset Ins Non | 5.97 % | 7.17 % | 71,251 | 12.36 | 11 | 0.3032 % | 2,309.2 |
| Performance Highlights | |||
| Issue | Index | Change | Notes |
| PWF.PR.L | Perpetual-Discount | -4.97 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-04-06 Maturity Price : 19.68 Evaluated at bid price : 19.68 Bid-YTW : 6.50 % |
| BN.PF.F | FixedReset Disc | -3.37 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-04-06 Maturity Price : 15.75 Evaluated at bid price : 15.75 Bid-YTW : 9.07 % |
| BN.PR.N | Perpetual-Discount | -2.70 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-04-06 Maturity Price : 18.00 Evaluated at bid price : 18.00 Bid-YTW : 6.66 % |
| BN.PF.J | FixedReset Disc | -2.47 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-04-06 Maturity Price : 21.43 Evaluated at bid price : 21.70 Bid-YTW : 7.12 % |
| BIP.PR.E | FixedReset Disc | -2.35 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-04-06 Maturity Price : 20.80 Evaluated at bid price : 20.80 Bid-YTW : 7.27 % |
| BMO.PR.S | FixedReset Disc | -1.68 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-04-06 Maturity Price : 17.51 Evaluated at bid price : 17.51 Bid-YTW : 7.57 % |
| TRP.PR.B | FixedReset Disc | -1.40 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-04-06 Maturity Price : 10.53 Evaluated at bid price : 10.53 Bid-YTW : 9.18 % |
| PWF.PR.G | Perpetual-Discount | -1.36 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-04-06 Maturity Price : 23.01 Evaluated at bid price : 23.28 Bid-YTW : 6.34 % |
| BN.PR.B | Floater | -1.21 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-04-06 Maturity Price : 12.20 Evaluated at bid price : 12.20 Bid-YTW : 9.74 % |
| TRP.PR.F | FloatingReset | -1.20 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-04-06 Maturity Price : 14.85 Evaluated at bid price : 14.85 Bid-YTW : 10.90 % |
| BN.PF.A | FixedReset Disc | -1.09 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-04-06 Maturity Price : 18.10 Evaluated at bid price : 18.10 Bid-YTW : 8.20 % |
| SLF.PR.C | Insurance Straight | -1.05 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-04-06 Maturity Price : 18.85 Evaluated at bid price : 18.85 Bid-YTW : 5.95 % |
| RY.PR.S | FixedReset Disc | -1.04 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-04-06 Maturity Price : 19.98 Evaluated at bid price : 19.98 Bid-YTW : 6.80 % |
| BN.PF.G | FixedReset Disc | -1.02 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-04-06 Maturity Price : 14.60 Evaluated at bid price : 14.60 Bid-YTW : 9.32 % |
| MFC.PR.K | FixedReset Ins Non | 1.05 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-04-06 Maturity Price : 18.34 Evaluated at bid price : 18.34 Bid-YTW : 7.17 % |
| GWO.PR.S | Insurance Straight | 1.18 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-04-06 Maturity Price : 21.46 Evaluated at bid price : 21.46 Bid-YTW : 6.17 % |
| IFC.PR.A | FixedReset Ins Non | 1.40 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-04-06 Maturity Price : 17.39 Evaluated at bid price : 17.39 Bid-YTW : 6.89 % |
| FTS.PR.H | FixedReset Disc | 1.44 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-04-06 Maturity Price : 12.70 Evaluated at bid price : 12.70 Bid-YTW : 8.06 % |
| CU.PR.D | Perpetual-Discount | 1.52 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-04-06 Maturity Price : 20.10 Evaluated at bid price : 20.10 Bid-YTW : 6.18 % |
| BN.PF.H | FixedReset Disc | 1.89 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-04-06 Maturity Price : 21.00 Evaluated at bid price : 21.00 Bid-YTW : 8.10 % |
| IFC.PR.G | FixedReset Ins Non | 2.06 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-04-06 Maturity Price : 19.80 Evaluated at bid price : 19.80 Bid-YTW : 7.06 % |
| PWF.PR.F | Perpetual-Discount | 2.14 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-04-06 Maturity Price : 21.50 Evaluated at bid price : 21.50 Bid-YTW : 6.12 % |
| SLF.PR.J | FloatingReset | 2.55 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-04-06 Maturity Price : 14.90 Evaluated at bid price : 14.90 Bid-YTW : 9.98 % |
| CU.PR.F | Perpetual-Discount | 4.56 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-04-06 Maturity Price : 18.81 Evaluated at bid price : 18.81 Bid-YTW : 6.07 % |
| BN.PF.D | Perpetual-Discount | 6.98 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-04-06 Maturity Price : 19.01 Evaluated at bid price : 19.01 Bid-YTW : 6.50 % |
| Volume Highlights | |||
| Issue | Index | Shares Traded |
Notes |
| TD.PF.K | FixedReset Disc | 88,050 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-04-06 Maturity Price : 19.65 Evaluated at bid price : 19.65 Bid-YTW : 7.08 % |
| PWF.PR.H | Perpetual-Discount | 49,100 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-04-06 Maturity Price : 22.66 Evaluated at bid price : 22.90 Bid-YTW : 6.28 % |
| TRP.PR.D | FixedReset Disc | 41,726 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-04-06 Maturity Price : 15.45 Evaluated at bid price : 15.45 Bid-YTW : 8.57 % |
| FTS.PR.M | FixedReset Disc | 40,140 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-04-06 Maturity Price : 16.63 Evaluated at bid price : 16.63 Bid-YTW : 8.08 % |
| NA.PR.S | FixedReset Disc | 39,800 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-04-06 Maturity Price : 16.94 Evaluated at bid price : 16.94 Bid-YTW : 7.83 % |
| RY.PR.Z | FixedReset Disc | 37,333 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2053-04-06 Maturity Price : 17.20 Evaluated at bid price : 17.20 Bid-YTW : 7.52 % |
| There were 14 other index-included issues trading in excess of 10,000 shares. | |||
| Wide Spread Highlights | ||
| Issue | Index | Quote Data and Yield Notes |
| MFC.PR.Q | FixedReset Ins Non | Quote: 18.60 – 22.50 Spot Rate : 3.9000 Average : 2.2200 YTW SCENARIO |
| BN.PF.C | Perpetual-Discount | Quote: 18.82 – 20.70 Spot Rate : 1.8800 Average : 1.1675 YTW SCENARIO |
| PWF.PR.L | Perpetual-Discount | Quote: 19.68 – 21.13 Spot Rate : 1.4500 Average : 0.9146 YTW SCENARIO |
| PWF.PR.T | FixedReset Disc | Quote: 17.28 – 19.27 Spot Rate : 1.9900 Average : 1.4624 YTW SCENARIO |
| GWO.PR.I | Insurance Straight | Quote: 18.65 – 19.90 Spot Rate : 1.2500 Average : 0.8201 YTW SCENARIO |
| GWO.PR.T | Insurance Straight | Quote: 21.05 – 22.40 Spot Rate : 1.3500 Average : 0.9774 YTW SCENARIO |
BEP.PR.M resetting to 6.05% on 01 May 2023:
https://bep.brookfield.com/press-releases/bep/brookfield-renewable-announces-reset-distribution-rate-its-series-13-preferred
[…] Thanks to Assiduous Reader CanSiamCyp for bringing this to my attention! […]