Take that! How long will it be before official Chinese pronouncements include the phrase ‘Helicopter Ben’?
China’s banking regulation chief joined Hong Kong’s leader in blaming the Federal Reserve’s interest-rate policy for fueling speculative capital flows that may spur asset-price inflation.
“The continuous depreciation in the dollar, and the U.S. government’s indication that, in order to resume growth and maintain public confidence, it basically won’t raise interest rates for the coming 12 to 18 months, has led to massive dollar arbitrage speculation,” Liu Mingkang, chairman of the China Banking Regulatory Commission, said in Beijing yesterday.
…
“I’m scared and leaders should look out,” [Chief Executive of Hong Kong Donald] Tsang said in Singapore Nov. 13. “America is doing exactly what Japan did last time,” he said, adding that Japan’s zero interest rate policy contributed to the 1997 Asian financial crisis and U.S. mortgage meltdown.
Bernanke himself points out that bubbles are a little easier to spot in hindsight:
Federal Reserve Chairman Ben S. Bernanke said it’s “not obvious” that asset prices in the U.S. are out of line with underlying values after a 64 percent jump in the Standard & Poor’s 500 Index from its March low.
“It is inherently extraordinarily difficult to know whether an asset’s price is in line with its fundamental value,” he said today in response to audience questions after a speech in New York. “It’s not obvious to me in any case that there’s any large misalignments currently in the U.S. financial system.”
…
“The best approach here if at all possible is to use supervisory and regulatory methods to restrain undue risk-taking and to make sure the system is resilient in case an asset-price bubble bursts in the future,” Bernanke said.
His prescription is entirely sensible and will therefore be ignored.
DBRS has published an amusing letter to the SEC:
The Commission initially put these proposals out for comment last year. With very few exceptions, the proposals elicited an overwhelmingly negative response from the public commenters, including DBRS. The Commission recently adopted the few proposed rule changes that the public found unobjectionable. However, instead of heeding the cogent arguments the commenters put forth regarding the rest of the proposals, the Commission has asked for more comments, hoping this time to elicit a different response.
…
Footnote: For example, with regard to the proposed elimination of NRSRO references from Regulation M, the Commission says, “In light of the uniform opposition in the comment letters and the Commission’s remaining concern regarding the undue influence of NRSRO ratings, the Commission is seeking additional comment.” Re-proposing Release, at 6, 74 Fed. Reg. at 52375.
No word yet on the DFN / DFN.PR.A Rights Issue. Maybe tomorrow.
The preferred share market continued its rally today, with PerpetualDiscounts up 8bp and FixedResets gaining 17bp. Not much price volatility, volume was lukewarm.
| 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 | 0.8437 % | 1,498.8 |
| FixedFloater | 5.97 % | 4.09 % | 43,737 | 18.69 | 1 | 0.8864 % | 2,608.9 |
| Floater | 2.60 % | 3.05 % | 94,019 | 19.56 | 3 | 0.8437 % | 1,872.4 |
| OpRet | 4.81 % | -4.83 % | 120,693 | 0.09 | 14 | -0.0628 % | 2,304.8 |
| SplitShare | 6.34 % | 6.37 % | 340,439 | 3.88 | 2 | 0.0875 % | 2,085.8 |
| Interest-Bearing | 0.00 % | 0.00 % | 0 | 0.00 | 0 | -0.0628 % | 2,107.5 |
| Perpetual-Premium | 5.90 % | 5.57 % | 126,100 | 1.14 | 4 | 0.2990 % | 1,863.0 |
| Perpetual-Discount | 5.89 % | 5.95 % | 183,829 | 13.98 | 70 | 0.0769 % | 1,762.1 |
| FixedReset | 5.48 % | 3.97 % | 393,460 | 3.94 | 41 | 0.1655 % | 2,131.7 |
| Performance Highlights | |||
| Issue | Index | Change | Notes |
| MFC.PR.C | Perpetual-Discount | -1.61 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-11-16 Maturity Price : 18.93 Evaluated at bid price : 18.93 Bid-YTW : 5.95 % |
| IGM.PR.A | OpRet | -1.26 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2009-12-16 Maturity Price : 26.00 Evaluated at bid price : 26.61 Bid-YTW : -13.64 % |
| MFC.PR.E | FixedReset | 1.02 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2014-10-19 Maturity Price : 25.00 Evaluated at bid price : 26.77 Bid-YTW : 3.93 % |
| SLF.PR.C | Perpetual-Discount | 1.11 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-11-16 Maturity Price : 19.11 Evaluated at bid price : 19.11 Bid-YTW : 5.92 % |
| BAM.PR.K | Floater | 1.43 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-11-16 Maturity Price : 12.80 Evaluated at bid price : 12.80 Bid-YTW : 3.10 % |
| BAM.PR.B | Floater | 1.48 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-11-16 Maturity Price : 13.01 Evaluated at bid price : 13.01 Bid-YTW : 3.05 % |
| Volume Highlights | |||
| Issue | Index | Shares Traded |
Notes |
| PWF.PR.M | FixedReset | 269,711 | Nesbitt crossed 230,000 at 27.00; RBC crossed 35,800 at the same price. YTW SCENARIO Maturity Type : Call Maturity Date : 2014-03-02 Maturity Price : 25.00 Evaluated at bid price : 26.95 Bid-YTW : 4.08 % |
| IGM.PR.A | OpRet | 146,619 | TD crossed 131,400 at 26.60. YTW SCENARIO Maturity Type : Call Maturity Date : 2009-12-16 Maturity Price : 26.00 Evaluated at bid price : 26.61 Bid-YTW : -13.64 % |
| GWO.PR.J | FixedReset | 56,250 | RBC crossed 50,000 at 27.05. YTW SCENARIO Maturity Type : Call Maturity Date : 2014-01-30 Maturity Price : 25.00 Evaluated at bid price : 26.99 Bid-YTW : 4.15 % |
| TRP.PR.A | FixedReset | 53,329 | YTW SCENARIO Maturity Type : Call Maturity Date : 2015-01-30 Maturity Price : 25.00 Evaluated at bid price : 25.50 Bid-YTW : 4.31 % |
| CM.PR.J | Perpetual-Discount | 40,610 | RBC crossed 20,000 at 19.15. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-11-16 Maturity Price : 19.12 Evaluated at bid price : 19.12 Bid-YTW : 5.94 % |
| BAM.PR.M | Perpetual-Discount | 38,858 | Desjardins crossed 31,900 at 17.86. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-11-16 Maturity Price : 17.77 Evaluated at bid price : 17.77 Bid-YTW : 6.81 % |
| There were 30 other index-included issues trading in excess of 10,000 shares. | |||