{"id":20401,"date":"2012-11-27T21:36:31","date_gmt":"2012-11-28T01:36:31","guid":{"rendered":"http:\/\/www.prefblog.com\/?p=20401"},"modified":"2012-11-27T21:36:31","modified_gmt":"2012-11-28T01:36:31","slug":"november-27-2012","status":"publish","type":"post","link":"https:\/\/prefblog.com\/?p=20401","title":{"rendered":"November 27, 2012"},"content":{"rendered":"

There is some chatter about London’s decline as a financial centre<\/a>:<\/p>\n

Investment bankers and traders at European banks should expect at least a 15 percent cut in pay this year, while U.S. lenders may leave compensation unchanged, three consultants surveyed by Bloomberg said. That\u2019s because bonus pools at European banks may be reduced by as much as half, while those at U.S. firms, which can cushion the impact of falling fees in the region with earnings from home, may fall 20 percent, they said.<\/p>\n

\u201cThe real split is coming, and we will see the quantum divide this year,\u201d said Tom Gosling, a partner at PricewaterhouseCoopers LLP in London, referring to the difference in pay between the two financial centers. \u201cU.S. regulators don\u2019t have the same obsession with pay structures that European regulators have.\u201d<\/p>\n

While lower pay for all bankers reflects what may be a temporary drop in business, cuts at European lenders probably will be structural rather than cyclical, cementing a two-tier system, said John Purcell, chief executive officer of Purcell & Co., a London search firm. They also could spur some employees to relocate, according to recruitment company Astbury Marsden. <\/p><\/blockquote>\n

It’s not clear yet, but the latest Greek bail-out might work<\/a>:<\/p>\n

European finance ministers eased the terms on emergency aid for Greece, declaring after three years of false starts that Europe has found the formula for nursing the debt-stricken country back to health.<\/p>\n

In the latest bid to keep the 17-nation euro intact, the ministers cut the rates on bailout loans, suspended interest payments for a decade, gave Greece more time to repay and engineered a Greek bond buyback. The country was also cleared to receive a 34.4 billion-euro ($44.7 billion) loan installment in December. Greek bonds rose.<\/p>\n

\u201cThis has been a very difficult deal,\u201d Luxembourg Prime Minister Jean-Claude Juncker told reporters in Brussels after chairing a 13-hour meeting that ended early today. \u201cAll initiatives decided upon today will bring Greece\u2019s public debt clearly back on a sustainable path.\u201d<\/p>\n

After 240 billion euros in loan pledges and the biggest writedown of privately held debt failed to turn Greece around, the creditor governments led by Germany proclaimed the latest fix just as they grappled with swelling financing needs in Cyprus and a potential aid request by Spain, the fourth-largest euro economy.<\/p><\/blockquote>\n

To compensate for this little bit of progress, the Europeans have gone completely nuts on Credit Rating Agencies<\/a>:<\/p>\n

Credit ratings companies face curbs on when they can assess government debt and restrictions on their ownership under draft plans agreed on by European Union officials and legislators.<\/p>\n

Lawmakers from the European Parliament and Cyprus, which holds the rotating presidency of the EU, also agreed today to allow investors to sue ratings companies if they lose money because of malpractice or gross negligence.
…<\/b>
[ EU financial services chief Michel] Barnier proposed the tougher ratings rules after warnings from nations including France and Germany that downgrades of sovereign debt had deepened the bloc\u2019s fiscal crisis. Barnier said last year that ratings companies were guilty of \u201cserious mistakes\u201d and shouldn\u2019t be allowed to \u201cincrease market volatility\u201d through ill-timed or unjustified downgrades.
…<\/b>
On sovereign debt ratings, lawmakers and officials agreed that each credit rating firm must pick three days a year when they would be allowed to give so-called unsolicited assessments of governments\u2019 creditworthiness, according to Jean-Paul Gauzes, a lawmaker involved in the talks. Ratings firms may get a chance to issue unsolicited ratings outside those dates if they could justify it to regulators.
…<\/b>
The EU also plans to block any investor from owning stakes of more than 5 percent in more than one rating company, Gauzes said in an interview after the meeting.
…<\/b>
The commission said that it will weigh further steps to regulate the credit ratings market, including the creation of a \u201cEuropean credit rating agency.\u201d Officials will report on the possible step by 2016, it said.<\/p><\/blockquote>\n

All this sounds like a really good reason for CRAs to set up shop well outside the EU.<\/p>\n

I wonder if they will declare the OECD to be illegal<\/a>?<\/p>\n

The OECD slashed its global growth forecasts on Tuesday, warning that the debt crisis in the recession-hit euro zone is the greatest threat to the world economy.<\/p>\n

In light of the dire economic outlook, the Organization for Economic Cooperation and Development urged central banks to prepare for more exceptional monetary easing if politicians fail to come up with credible answers to the debt crisis.
…<\/b>
Cutting its estimates, the OECD forecast that the euro zone economy would contract 0.4 per cent this year and another 0.1 per cent next year, only returning to growth in 2014 with a rate of 1.3 per cent.<\/p><\/blockquote>\n

Maybe that’s related to the bad press for long sovereigns<\/a>:<\/p>\n

\n

Given the overheated market, it\u2019s understandable why Michael Sabia, chief executive of the Caisse, told the Financial Times on Tuesday that he is planning to lower his institution\u2019s $58.8-billion allocation to fixed-income investments by at least $7-billion next year<\/a>. And why [Boston-based fund manager] GMO, a highly regarded money manager, told the FT it has \u201cgiven up\u201d on long-dated sovereign debt.<\/p>\n

But if big institutions are starting to pull out of fixed income investments, ordinary Canadians are continuing to pile in. As of the end of October, retail investors had poured a net $16.3-billion into bond funds so far in 2012<\/a> \u2013 almost three times as much as in the same period in 2011 \u2013 while redeeming a net $11.5-billion from equity funds, according to the Investment Funds Institute of Canada.<\/p>\n

The Caisse hasn\u2019t always been the best proxy for smart money, but GMO has. Headed by the famed investor Jeremy Grantham, it shifted its portfolios to a high cash position in late 2007<\/a>, just before the credit crisis mushroomed, and also managed to avoid being sucked in by the Internet bubble in the late 1990s.<\/p>\n

Now, GMO is holding 40 per cent of its assets in cash, according to the FT. Canadians thinking it\u2019s high time they added more bonds to their portfolios should think twice; there may be safer places to keep that money.<\/p>\n<\/blockquote>\n

Why is it so expensive to go to school in the US<\/a>?:<\/p>\n

At universities nationwide, employment of administrators jumped 60 percent from 1993 to 2009, 10 times the growth rate for tenured faculty. \u201cAdministrative bloat is clearly contributing to the overall cost of higher education,\u201d says Jay Greene, an education professor at the University of Arkansas. In a 2010 study, Greene found that from 1993 to 2007, spending on administration rose almost twice as fast as funding for research and teaching at 198 leading U.S. universities.<\/p><\/blockquote>\n

It was a negative day for the Canadian preferred share market, with PerpetualPremiums down 5bp, FixedResets losing 18bp and DeemedRetractibles off 3bp. Volatility was average, but all negative. Volume was well above average.<\/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-0.0534 %<\/td>\n2,461.2<\/td>\n<\/tr>\n
FixedFloater<\/td>\n4.20 %<\/td>\n3.55 %<\/td>\n29,155<\/td>\n18.20<\/td>\n1<\/td>\n-0.0442 %<\/td>\n3,827.9<\/td>\n<\/tr>\n
Floater<\/td>\n2.81 %<\/td>\n3.03 %<\/td>\n54,771<\/td>\n19.60<\/td>\n4<\/td>\n-0.0534 %<\/td>\n2,657.4<\/td>\n<\/tr>\n
OpRet<\/td>\n4.59 %<\/td>\n-0.40 %<\/td>\n36,707<\/td>\n0.58<\/td>\n4<\/td>\n0.1043 %<\/td>\n2,601.0<\/td>\n<\/tr>\n
SplitShare<\/td>\n5.45 %<\/td>\n4.77 %<\/td>\n61,069<\/td>\n4.45<\/td>\n3<\/td>\n-0.1191 %<\/td>\n2,853.5<\/td>\n<\/tr>\n
Interest-Bearing<\/td>\n0.00 %<\/td>\n0.00 %<\/td>\n0<\/td>\n0.00<\/td>\n0<\/td>\n0.1043 %<\/td>\n2,378.3<\/td>\n<\/tr>\n
Perpetual-Premium<\/td>\n5.26 %<\/td>\n2.29 %<\/td>\n72,619<\/td>\n0.18<\/td>\n30<\/td>\n-0.0504 %<\/td>\n2,316.7<\/td>\n<\/tr>\n
Perpetual-Discount<\/td>\n4.86 %<\/td>\n4.90 %<\/td>\n126,520<\/td>\n15.61<\/td>\n4<\/td>\n-0.6369 %<\/td>\n2,618.5<\/td>\n<\/tr>\n
FixedReset<\/td>\n5.00 %<\/td>\n2.99 %<\/td>\n205,080<\/td>\n4.18<\/td>\n75<\/td>\n-0.1813 %<\/td>\n2,446.0<\/td>\n<\/tr>\n
Deemed-Retractible<\/td>\n4.90 %<\/td>\n3.19 %<\/td>\n118,721<\/td>\n0.90<\/td>\n46<\/td>\n-0.0304 %<\/td>\n2,404.4<\/td>\n<\/tr>\n<\/table>\n\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
PWF.PR.R<\/td>\nPerpetual-Premium<\/td>\n-1.85 %<\/td>\nYTW SCENARIO
\nMaturity Type : Call
\nMaturity Date\t: 2021-04-30
\nMaturity Price : 25.00
\nEvaluated at bid price : 26.55
\nBid-YTW : 4.69 %<\/td>\n<\/tr>\n
MFC.PR.F<\/td>\nFixedReset<\/td>\n-1.41 %<\/td>\nYTW SCENARIO
\nMaturity Type : Hard Maturity
\nMaturity Date\t: 2022-01-31
\nMaturity Price : 25.00
\nEvaluated at bid price : 24.40
\nBid-YTW : 3.62 %<\/td>\n<\/tr>\n
BNS.PR.Q<\/td>\nFixedReset<\/td>\n-1.32 %<\/td>\nYTW SCENARIO
\nMaturity Type : Hard Maturity
\nMaturity Date\t: 2022-01-31
\nMaturity Price : 25.00
\nEvaluated at bid price : 24.62
\nBid-YTW : 3.48 %<\/td>\n<\/tr>\n
ELF.PR.H<\/td>\nPerpetual-Premium<\/td>\n-1.00 %<\/td>\nYTW SCENARIO
\nMaturity Type : Call
\nMaturity Date\t: 2021-04-17
\nMaturity Price : 25.00
\nEvaluated at bid price : 25.65
\nBid-YTW : 5.24 %<\/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
BAM.PF.C<\/td>\nPerpetual-Discount<\/td>\n384,725<\/td>\nNew issue settled today<\/a>.
\nYTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2042-11-27
\nMaturity Price : 24.32
\nEvaluated at bid price : 24.70
\nBid-YTW : 4.92 %<\/td>\n<\/tr>\n
MFC.PR.E<\/td>\nFixedReset<\/td>\n127,457<\/td>\nScotia sold 17,800 to Nesbitt at 26.10, then crossed 88,800 at the same price.
\nYTW SCENARIO
\nMaturity Type : Call
\nMaturity Date\t: 2014-09-19
\nMaturity Price : 25.00
\nEvaluated at bid price : 26.10
\nBid-YTW : 2.92 %<\/td>\n<\/tr>\n
NA.PR.Q<\/td>\nFixedReset<\/td>\n102,115<\/td>\nRBC crossed 29,000 at 25.82.
\nYTW SCENARIO
\nMaturity Type : Call
\nMaturity Date\t: 2017-11-15
\nMaturity Price : 25.00
\nEvaluated at bid price : 25.80
\nBid-YTW : 3.16 %<\/td>\n<\/tr>\n
BMO.PR.M<\/td>\nFixedReset<\/td>\n68,568<\/td>\nNational crossed 50,000 at 24.94.
\nYTW SCENARIO
\nMaturity Type : Hard Maturity
\nMaturity Date\t: 2022-01-31
\nMaturity Price : 25.00
\nEvaluated at bid price : 24.80
\nBid-YTW : 3.24 %<\/td>\n<\/tr>\n
ENB.PR.F<\/td>\nFixedReset<\/td>\n64,252<\/td>\nNesbitt bought 14,000 from TD at 25.25, then crossed 30,000 at the same price.
\nYTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2042-11-27
\nMaturity Price : 23.19
\nEvaluated at bid price : 25.19
\nBid-YTW : 3.71 %<\/td>\n<\/tr>\n
BMO.PR.P<\/td>\nFixedReset<\/td>\n61,241<\/td>\nScotia crossed 50,000 at 26.55.
\nYTW SCENARIO
\nMaturity Type : Call
\nMaturity Date\t: 2015-02-25
\nMaturity Price : 25.00
\nEvaluated at bid price : 26.55
\nBid-YTW : 2.57 %<\/td>\n<\/tr>\n
There were 44 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
PWF.PR.R<\/td>\nPerpetual-Premium<\/td>\nQuote: 26.55 – 27.10
\nSpot Rate : 0.5500
\nAverage : 0.3901<\/p>\n

YTW SCENARIO
\nMaturity Type : Call
\nMaturity Date\t: 2021-04-30
\nMaturity Price : 25.00
\nEvaluated at bid price : 26.55
\nBid-YTW : 4.69 %<\/td>\n<\/tr>\n

TD.PR.I<\/td>\nFixedReset<\/td>\nQuote: 26.56 – 26.88
\nSpot Rate : 0.3200
\nAverage : 0.1955<\/p>\n

YTW SCENARIO
\nMaturity Type : Call
\nMaturity Date\t: 2014-07-31
\nMaturity Price : 25.00
\nEvaluated at bid price : 26.56
\nBid-YTW : 2.72 %<\/td>\n<\/tr>\n

MFC.PR.A<\/td>\nOpRet<\/td>\nQuote: 25.56 – 25.88
\nSpot Rate : 0.3200
\nAverage : 0.2041<\/p>\n

YTW SCENARIO
\nMaturity Type : Call
\nMaturity Date\t: 2013-06-19
\nMaturity Price : 25.50
\nEvaluated at bid price : 25.56
\nBid-YTW : 3.19 %<\/td>\n<\/tr>\n

PWF.PR.O<\/td>\nPerpetual-Premium<\/td>\nQuote: 26.64 – 27.00
\nSpot Rate : 0.3600
\nAverage : 0.2533<\/p>\n

YTW SCENARIO
\nMaturity Type : Call
\nMaturity Date\t: 2014-10-31
\nMaturity Price : 26.00
\nEvaluated at bid price : 26.64
\nBid-YTW : 4.48 %<\/td>\n<\/tr>\n

CU.PR.D<\/td>\nPerpetual-Premium<\/td>\nQuote: 26.42 – 26.66
\nSpot Rate : 0.2400
\nAverage : 0.1614<\/p>\n

YTW SCENARIO
\nMaturity Type : Call
\nMaturity Date\t: 2021-09-01
\nMaturity Price : 25.00
\nEvaluated at bid price : 26.42
\nBid-YTW : 4.14 %<\/td>\n<\/tr>\n

CM.PR.E<\/td>\nPerpetual-Premium<\/td>\nQuote: 25.75 – 25.96
\nSpot Rate : 0.2100
\nAverage : 0.1320<\/p>\n

YTW SCENARIO
\nMaturity Type : Call
\nMaturity Date\t: 2012-12-27
\nMaturity Price : 25.00
\nEvaluated at bid price : 25.75
\nBid-YTW : -23.69 %<\/td>\n<\/tr>\n<\/table>\n","protected":false},"excerpt":{"rendered":"

There is some chatter about London’s decline as a financial centre: Investment bankers and traders at European banks should expect at least a 15 percent cut in pay this year, while U.S. lenders may leave …<\/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-20401","post","type-post","status-publish","format-standard","hentry","category-market-action"],"_links":{"self":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/posts\/20401","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=20401"}],"version-history":[{"count":0,"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/posts\/20401\/revisions"}],"wp:attachment":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=20401"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=20401"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=20401"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}