{"id":20371,"date":"2012-11-24T00:58:07","date_gmt":"2012-11-24T04:58:07","guid":{"rendered":"http:\/\/www.prefblog.com\/?p=20371"},"modified":"2012-11-24T00:58:07","modified_gmt":"2012-11-24T04:58:07","slug":"november-23-2012","status":"publish","type":"post","link":"https:\/\/prefblog.com\/?p=20371","title":{"rendered":"November 23, 2012"},"content":{"rendered":"

Richard W. Fisher gave a rather provocative speech last week titled The State of the West (With Reference to George Shultz, Eisenhower, Buzz Lightyear, George Strait, the San Francisco Fed and Adam and Eve) <\/a>:<\/p>\n

I\u2019ll just say this: Our Congress\u2014past and present\u2014has behaved disgracefully in discharging its fiscal duty. Its members have not shown themselves to be true born leaders.
…<\/b>
The jig is up. Our fiscal authorities have mortgaged the material assets of our grandchildren to the nth degree. We are at risk of losing our political heritage of reaching across the aisle to work for the common good. In the minds of many, our government\u2019s fiscal misfeasance threatens the world\u2019s respect for America as the beacon of democracy.<\/p>\n

Only the Congress of the United States can now save us from fiscal perdition. The Federal Reserve cannot. The Federal Reserve has been carrying the ball for the fiscal authorities by holding down interest rates in an attempt to stoke the recovery while the fiscal authorities wrestle themselves off the mat. But there are limits to what a monetary authority can do. For the central bank also plays a fiduciary role for the American people and, given our franchise as the globe\u2019s premier reserve currency, the world. We dare not become the central bank counterpart to Congress by adopting a Buzz Lightyear approach of \u201cTo infinity and beyond!\u201d by endlessly purchasing U.S. Treasuries and agency debt so as to encumber future generations of central bankers with Hobson\u2019s choices when it comes to undoing what seems contemporarily appropriate.<\/p>\n

So my only comment today regarding the recent federal elections is this: Pray that the president and the Congress will at last tackle the fiscal imbroglio they and their predecessors created and only they can undo.<\/p><\/blockquote>\n

This speech has been energetically attacked<\/a> by Tim Duy<\/a>, but only on the basis of timing:<\/p>\n

\n

What is it about fiscal policy that brings out the crazy?  Because it all seems pretty simple.  Joe Weisenthal hits the nail on the head<\/a>:<\/p>\n

\n

The U.S. recovery has been remarkable on a comparative basis precisely for one reason: Because despite all of the rhetoric, the U.S. has completely avoided the austerity madness that's gripped much of the world.\n<\/p>\n<\/blockquote>\n

Weisenthal points us to Ryan Avent<\/a> and Josh Lehner<\/a>, both showing in different ways the better post-recession outcomes experienced by the US compared to other economies.  Paul Krugman<\/a> extends the argument by comparing the divergent path of Eurozone and US unemployment rates.  The key difference in policy – the US pursued a more aggressive fiscal policy and didn't pull back too quickly.  I don't think you can emphasize this point enough.   <\/p>\n

Which brings us to the fiscal cliff (or slope, which is more accurate and avoids creating the false impression that all is lost come January 1).  The tax increases and spending cuts in place promise to repeat the mistakes of the UK and the Eurozone by pivoting too fast and too hard into the realm of fiscal austerity.  A solution to the fiscal cliff means smoothing the path to fiscal consolidation (optimally, with no austerity in the near term, but I don't see that as an outcome).<\/p><\/blockquote>\n

What I want to see from the politicians is sufficient changes to put the US into a structural surplus. Note the word “structural” – it does not mean diving off the fiscal cliff, although according to the Congressional Budget Office<\/a>, even giving full effect to the fiscal cliff does not lead to a structural surplus; there is a projected deficit every year through 2022, the end of their horizon. Thus, while I would not like to see a sudden dive of the fiscal cliff, I feel that a path must be taken that goes beyond those projected measures (or equivalent) over the medium term.<\/p>\n

\"\"<\/a>
Click for Big<\/i><\/div>\n

It was a mixed day for the Canadian preferred share market, with PerpetualPremiums up 12bp, FixedResets gaining 5bp and DeemedRetractibles off 1bp. Volatility continued to be low. FixedResets dominated a day of relatively low volume, perhaps influenced by a move towards the new FixedReset ETF<\/a>, ZPR, which now claims<\/a> to have $5.2-million under management and traded slightly under 40,000 shares today (at about $15 each, or a total of $0.6-million).<\/p>\n\n\n\n\n\n\n\n\n\n\n\n\n\n
HIMIPref™ Preferred Indices
These values reflect the December 2008 revision of the HIMIPref™ Indices<\/strong>
Values are provisional and are finalized monthly<\/td>\n<\/tr>\n
Index<\/td>\nMean
Current
Yield
(at bid)<\/td>\n		Median
YTW<\/td>\n		Median
Average
Trading
Value<\/td>\n		Median
Mod Dur
(YTW)<\/td>\n		Issues<\/td>\nDay’s Perf.<\/td>\nIndex Value<\/td>\n<\/tr>\n
Ratchet<\/td>\n0.00 %<\/td>\n0.00 %<\/td>\n0<\/td>\n0.00<\/td>\n0<\/td>\n-0.1867 %<\/td>\n2,462.1<\/td>\n<\/tr>\n
FixedFloater<\/td>\n4.20 %<\/td>\n3.54 %<\/td>\n28,397<\/td>\n18.21<\/td>\n1<\/td>\n-0.3965 %<\/td>\n3,829.6<\/td>\n<\/tr>\n
Floater<\/td>\n2.81 %<\/td>\n3.02 %<\/td>\n55,764<\/td>\n19.63<\/td>\n4<\/td>\n-0.1867 %<\/td>\n2,658.5<\/td>\n<\/tr>\n
OpRet<\/td>\n4.60 %<\/td>\n0.13 %<\/td>\n36,268<\/td>\n0.59<\/td>\n4<\/td>\n0.0570 %<\/td>\n2,595.3<\/td>\n<\/tr>\n
SplitShare<\/td>\n5.43 %<\/td>\n4.75 %<\/td>\n61,490<\/td>\n4.46<\/td>\n3<\/td>\n0.0396 %<\/td>\n2,864.1<\/td>\n<\/tr>\n
Interest-Bearing<\/td>\n0.00 %<\/td>\n0.00 %<\/td>\n0<\/td>\n0.00<\/td>\n0<\/td>\n0.0570 %<\/td>\n2,373.2<\/td>\n<\/tr>\n
Perpetual-Premium<\/td>\n5.25 %<\/td>\n2.66 %<\/td>\n72,007<\/td>\n0.87<\/td>\n30<\/td>\n0.1235 %<\/td>\n2,319.6<\/td>\n<\/tr>\n
Perpetual-Discount<\/td>\n4.83 %<\/td>\n4.88 %<\/td>\n98,028<\/td>\n15.63<\/td>\n3<\/td>\n0.2312 %<\/td>\n2,631.7<\/td>\n<\/tr>\n
FixedReset<\/td>\n4.98 %<\/td>\n2.99 %<\/td>\n200,308<\/td>\n4.19<\/td>\n75<\/td>\n0.0458 %<\/td>\n2,452.3<\/td>\n<\/tr>\n
Deemed-Retractible<\/td>\n4.90 %<\/td>\n2.58 %<\/td>\n124,076<\/td>\n0.74<\/td>\n46<\/td>\n-0.0084 %<\/td>\n2,405.7<\/td>\n<\/tr>\n<\/table>\n\n\n\n\n\n\n
Performance Highlights<\/strong><\/td>\n<\/tr>\n
Issue<\/td>\nIndex<\/td>\nChange<\/td>\nNotes<\/td>\n<\/tr>\n
HSB.PR.D<\/td>\nDeemed-Retractible<\/td>\n-1.19 %<\/td>\nYTW SCENARIO
\nMaturity Type : Call
\nMaturity Date\t: 2012-12-31
\nMaturity Price : 25.50
\nEvaluated at bid price : 25.80
\nBid-YTW : 0.59 %<\/td>\n<\/tr>\n
ELF.PR.H<\/td>\nPerpetual-Premium<\/td>\n1.09 %<\/td>\nYTW SCENARIO
\nMaturity Type : Call
\nMaturity Date\t: 2021-04-17
\nMaturity Price : 25.00
\nEvaluated at bid price : 25.89
\nBid-YTW : 5.09 %<\/td>\n<\/tr>\n
GWO.PR.N<\/td>\nFixedReset<\/td>\n1.29 %<\/td>\nYTW SCENARIO
\nMaturity Type : Hard Maturity
\nMaturity Date\t: 2022-01-31
\nMaturity Price : 25.00
\nEvaluated at bid price : 24.43
\nBid-YTW : 3.33 %<\/td>\n<\/tr>\n<\/table>\n\n\n\n\n\n\n\n\n\n\n
Volume Highlights<\/strong><\/td>\n<\/tr>\n
Issue<\/td>\nIndex<\/td>\nShares
Traded<\/td>\n		Notes<\/td>\n<\/tr>\n
BNS.PR.P<\/td>\nFixedReset<\/td>\n348,735<\/td>\nRBC crossed 218,700 at 25.10; Nesbitt crossed 100,000 at the same price.
\nYTW SCENARIO
\nMaturity Type : Hard Maturity
\nMaturity Date\t: 2022-01-31
\nMaturity Price : 25.00
\nEvaluated at bid price : 25.09
\nBid-YTW : 3.42 %<\/td>\n<\/tr>\n
GWO.PR.N<\/td>\nFixedReset<\/td>\n127,325<\/td>\nTD crossed 122,500 at 24.35.
\nYTW SCENARIO
\nMaturity Type : Hard Maturity
\nMaturity Date\t: 2022-01-31
\nMaturity Price : 25.00
\nEvaluated at bid price : 24.43
\nBid-YTW : 3.33 %<\/td>\n<\/tr>\n
BNS.PR.R<\/td>\nFixedReset<\/td>\n118,200<\/td>\nRBC crossed blocks of 86,700 and 30,000, both at 25.25.
\nYTW SCENARIO
\nMaturity Type : Hard Maturity
\nMaturity Date\t: 2022-01-31
\nMaturity Price : 25.00
\nEvaluated at bid price : 25.23
\nBid-YTW : 3.35 %<\/td>\n<\/tr>\n
TRP.PR.A<\/td>\nFixedReset<\/td>\n106,602<\/td>\nNesbitt crossed 96,800 at 25.60.
\nYTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2042-11-23
\nMaturity Price : 23.78
\nEvaluated at bid price : 25.68
\nBid-YTW : 3.14 %<\/td>\n<\/tr>\n
BMO.PR.M<\/td>\nFixedReset<\/td>\n92,537<\/td>\nDesjardins crossed 11,000 at 24.97; Scotia crossed 28,700 at the same price. Desjardins bought 10,000 from TD at 24.95.
\nYTW SCENARIO
\nMaturity Type : Hard Maturity
\nMaturity Date\t: 2022-01-31
\nMaturity Price : 25.00
\nEvaluated at bid price : 24.94
\nBid-YTW : 3.13 %<\/td>\n<\/tr>\n
GWO.PR.J<\/td>\nFixedReset<\/td>\n73,676<\/td>\nTD crossed 55,700 at 26.20.
\nYTW SCENARIO
\nMaturity Type : Call
\nMaturity Date\t: 2013-12-31
\nMaturity Price : 25.00
\nEvaluated at bid price : 26.25
\nBid-YTW : 2.21 %<\/td>\n<\/tr>\n
There were 23 other index-included issues trading in excess of 10,000 shares.<\/td>\n<\/tr>\n<\/table>\n\n\n\n\n\n\n\n\n\n
Wide Spread Highlights<\/strong><\/td>\n<\/tr>\n
Issue<\/td>\nIndex<\/td>\nQuote Data and Yield Notes<\/td>\n<\/tr>\n
BNA.PR.E<\/td>\nSplitShare<\/td>\nQuote: 25.10 – 25.50
\nSpot Rate : 0.4000
\nAverage : 0.2636<\/p>\n

YTW SCENARIO
\nMaturity Type : Hard Maturity
\nMaturity Date\t: 2017-12-10
\nMaturity Price : 25.00
\nEvaluated at bid price : 25.10
\nBid-YTW : 4.75 %<\/td>\n<\/tr>\n

PWF.PR.R<\/td>\nPerpetual-Premium<\/td>\nQuote: 27.10 – 27.44
\nSpot Rate : 0.3400
\nAverage : 0.2091<\/p>\n

YTW SCENARIO
\nMaturity Type : Call
\nMaturity Date\t: 2017-04-30
\nMaturity Price : 26.00
\nEvaluated at bid price : 27.10
\nBid-YTW : 4.34 %<\/td>\n<\/tr>\n

MFC.PR.B<\/td>\nDeemed-Retractible<\/td>\nQuote: 24.31 – 24.56
\nSpot Rate : 0.2500
\nAverage : 0.1647<\/p>\n

YTW SCENARIO
\nMaturity Type : Hard Maturity
\nMaturity Date\t: 2022-01-31
\nMaturity Price : 25.00
\nEvaluated at bid price : 24.31
\nBid-YTW : 5.01 %<\/td>\n<\/tr>\n

TCA.PR.Y<\/td>\nPerpetual-Premium<\/td>\nQuote: 52.01 – 52.50
\nSpot Rate : 0.4900
\nAverage : 0.4055<\/p>\n

YTW SCENARIO
\nMaturity Type : Call
\nMaturity Date\t: 2014-03-05
\nMaturity Price : 50.00
\nEvaluated at bid price : 52.01
\nBid-YTW : 2.66 %<\/td>\n<\/tr>\n

RY.PR.I<\/td>\nFixedReset<\/td>\nQuote: 25.27 – 25.49
\nSpot Rate : 0.2200
\nAverage : 0.1357<\/p>\n

YTW SCENARIO
\nMaturity Type : Hard Maturity
\nMaturity Date\t: 2022-01-31
\nMaturity Price : 25.00
\nEvaluated at bid price : 25.27
\nBid-YTW : 3.34 %<\/td>\n<\/tr>\n

MFC.PR.C<\/td>\nDeemed-Retractible<\/td>\nQuote: 24.00 – 24.24
\nSpot Rate : 0.2400
\nAverage : 0.1750<\/p>\n

YTW SCENARIO
\nMaturity Type : Hard Maturity
\nMaturity Date\t: 2022-01-31
\nMaturity Price : 25.00
\nEvaluated at bid price : 24.00
\nBid-YTW : 5.03 %<\/td>\n<\/tr>\n<\/table>\n","protected":false},"excerpt":{"rendered":"

Richard W. Fisher gave a rather provocative speech last week titled The State of the West (With Reference to George Shultz, Eisenhower, Buzz Lightyear, George Strait, the San Francisco Fed and Adam and Eve) : …<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[15],"tags":[],"class_list":["post-20371","post","type-post","status-publish","format-standard","hentry","category-market-action"],"_links":{"self":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/posts\/20371","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=20371"}],"version-history":[{"count":0,"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/posts\/20371\/revisions"}],"wp:attachment":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=20371"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=20371"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=20371"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}