7 Responses to “August 9, 2023”

1. paullo says:

   August 10, 2023 at 7:57 am

   Looks like volume was extremely high. Should we assume this is a result of NBI Canadian Preferred Equity Private Portfolio liquidating?

2. jiHymas says:

   August 10, 2023 at 11:51 am

   Looks like volume was extremely high. Should we assume this is a result of NBI Canadian Preferred Equity Private Portfolio liquidating?

   It might have been. Or it might have been some players adjusting their positions in the hopes of taking advantage of the fund’s anticipated selling. Or it may be completely unrelated.

   One of the things that makes us human is our knowledge of cause and effect. We love cause and effect. If A happens and then B happens, there is a natural inclination to decide that A caused B, but this is not always correct. This is the reason many conspiracy theories become popular!

   I take the view that the markets do what they want to do when they want to do it; which is one reason why the market-timing is so ill-advised.

3. fsabbagh says:

   August 10, 2023 at 1:17 pm

   I am an avid and very long time listener (over a 15 years) of the Financial Sense Newshour podcast. They had a very interesting podcast dated Aug 9 called “Book Interview: Dying of Money: Lessons …”. In it the author stated that we can expect much greater rates of inflation then what was encountered in the 1970s. If his presumptions comes true, then we can expect a continuation of rate hikes. I also assume the prices of preferred shares will continue to fall as well (unless resetting soon).

4. Nestor says:

   August 11, 2023 at 12:29 am

   some funny comments as usual…

   “…the author stated that we can expect much greater rates of inflation then what was encountered in the 1970s.”

   predictions about the future are best left to the gypsies. i’m currently in the south of europe and i saw some a few days ago, but they moved. if i see them again, i’ll try and ask them if they think inflation will be like the 70’s. they have a crystal ball

   ” If his presumptions comes true, then we can expect a continuation of rate hikes. ”

   interesting assumptions. inflation raged at nearly 20% in the 50’s after the war, but rates did not go up. Japan’s inflation rate has trended higher, but they have not raised rates. there is no guarantee that rates will rise further if inflation stays high, or goes higher. central banks have other mechanisms they can use to clamp down in the economy if needed.

   “I also assume the prices of preferred shares will continue to fall as well (unless resetting soon).”

   even more interesting assumptions. why will they fall? which ones? floaters? why should they fall? they reset every 3 months? if rates rise to 20% the typical floater will pay 30%+ as a dividend. some rate resets will pay 50% in dividends

   why should those fall? perpetuals with fixed dividends, for sure they would fall.. but the others??

   and why resets that are resetting soon? why should those hold up in value? what happens to a pref that resets this year and rates go higher for the next years? wont’ it’s value be held back?

   i’m assuming the author knows how high rates will go and for how long. correct? central banks can easily end inflation. drain liquidity and keep rates up. put the economy into a pretty severe recession. so much for a decade of inflation.

   find me an accurate crystal ball.

5. stusclues says:

   August 11, 2023 at 10:25 am

   “even more interesting assumptions. why will they fall?”

   Why indeed? The current market seems to have forgotten the concept of “spread” as it pertains to fixed resets.

6. fsabbagh says:

   August 11, 2023 at 2:51 pm

   Thanks Nestor and stusclues for your perspective. Very thoughtful comments.

7. August 16, 2023 « PrefBlog says:

   August 16, 2023 at 8:50 pm

   […] PerpetualDiscounts now yield 6.93%, equivalent to 9.01% interest at the standard equivalency factor of 1.3x. Long corporates yielded 5.17% on 2023-7-31 (see below) and since then the closing price has changed from 14.92 to 14.32, a decrease of 402bp in price, with a Duration of 12.26 (BMO doesn’t specify whether this is Macaulay or Modified Duration; I will assume Modified) which implies an increase in yield of about 33bp since 7/31 to 5.50%, so the pre-tax interest-equivalent spread (in this context, the “Seniority Spread”) has remained steady at the 350bp reported August 9. […]