{"id":20948,"date":"2013-01-24T23:21:12","date_gmt":"2013-01-25T03:21:12","guid":{"rendered":"http:\/\/www.prefblog.com\/?p=20948"},"modified":"2013-01-24T23:21:12","modified_gmt":"2013-01-25T03:21:12","slug":"january-24-2013","status":"publish","type":"post","link":"https:\/\/prefblog.com\/?p=20948","title":{"rendered":"January 24, 2013"},"content":{"rendered":"

I mentioned complexity of computer systems on January 22<\/a> – here’s another example<\/a>:<\/p>\n

Computer Sciences Corp. (CSC)<\/a>\u2019s performance on a failed $1 billion software project for the U.S. Air Force and the service\u2019s management of it are under investigation by the Senate Armed Services Committee.
…<\/b>
The Expeditionary Combat Support System, once described as \u201crevolutionary<\/a>\u201d by the Air Force, was canceled in November after the service determined the supply-chain management project was \u201cno longer a viable option\u201d to help meet a goal of having its financial books in shape for a federal audit by 2017.<\/p>\n

That\u2019s been a major objective of departing Defense Secretary Leon Panetta. An additional $1.1 billion would have been required to fix the system and put it in operation by 2020 — eight years after the planned date, according to the Air Force.<\/p>\n

Of nine software systems that the Pentagon is installing to improve longstanding financial management deficiencies, the Air Force program was one of at least six that were running as much as 12 years late and $6.9 billion over their original cost estimates, the Government Accountability Office reported in September 2010.<\/p><\/blockquote>\n

The trouble with large software projects is that everybody in a suit measures his self-worth according to the number of features that he is able to add on to the specifications … preferably introduced after the basic architecture has been determined.<\/p>\n

There’s more chatter of Beggar Thy Neighbor<\/a>:<\/p>\n

Yields on sovereign debt of countries from Spain to Greece have fallen since European Central Bank President Mario Draghi announced an as-yet-untapped bond-purchase plan in September last year. [George] Soros, reiterating his view that austerity is the wrong policy at this time, said the German insistence on tight fiscal and monetary policies means the euro will appreciate as other countries pursue more expansive policies, a situation that may lead to a currency war.<\/p>\n

\u201cCurrencies have been remarkably stable in the last few years,\u201d Soros said. \u201cNow there is the making of more fireworks, more volatility.\u201d<\/p>\n

Soros said at the same event last year that the German-led policies risked creating tensions that could destroy the European Union. In a speech in April, he said the Bundesbank, Germany\u2019s central bank, was taking steps to limit potential losses if the euro splintered, creating a \u201cself-fulfilling prophecy.\u201d<\/p>\n

Bundesbank President Jens Weidmann has denied taking such steps, calling the allegations \u201cridiculous.\u201d<\/p>\n

Weidmann this week criticized moves by Japan\u2019s Prime Minister Shinzo Abe to devalue the yen, saying such measures risked \u201cpoliticizing\u201d the yen\u2019s exchange rate. Soros said the extent to which Japan can push its currency lower will be limited by what the U.S. is willing to tolerate.<\/p>\n

The momentum is for the \u201ceuro to rise and yen to fall,\u201d Soros said. \u201cI generally don\u2019t know how far things go but I can see which way they are going.\u201d<\/p><\/blockquote>\n

Soros holds a special place in the hearts of all – he made a billion proving to politicians that they were being stupid.<\/p>\n

Towers Watson has published<\/a> its Pension Finance Watch \u2014 December 2012:<\/p>\n

December saw increases in long bond yields and strong equity returns, which resulted in the Towers Watson Pension Index moving up 2.1% for the month. However, results for the full year included a 50+ basis point drop in long corporate yields, which pushed up liability values and fully offset the impact of the year\u2019s strong portfolio returns. The Pension Index ended the year at 62.3, unchanged from its year-end 2011 value.
…<\/b>
Long corporate bond yields declined in 2012 while long Treasury yields remained stable. The resulting decline in credit spread — from 160 basis points to 100 basis points over the course of the year — essentially reversed the \u201cflight to quality\u201d experienced in 2011.
…<\/b>
The Towers Watson Pension Index tracks the performance of a hypothetical pension plan invested in a 60% equity\/40% fixed income portfolio. This portfolio recorded 0.9% return for December and 11.5% for the full year.
…<\/b>
Pension plan liabilities as defined for U.S. accounting purposes are typically measured based on yields available on high quality corporate bonds as of the measurement date. Using our RATE:Link methodology, which matches yields on high quality corporate bonds to projected cash flows, the benchmark discount rate was determined at 3.96%. Despite an increase of 13 basis points for December, the year-end discount rate remains down 55 basis points for the year.<\/p><\/blockquote>\n

It was another mixed day for the Canadian preferred share market, with PerpetualPremiums off 2bp, FixedResets down 9bp and DeemedRetractibles up 8bp. Volatility was muted. Volume remained 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>\n0.0524 %<\/td>\n2,527.8<\/td>\n<\/tr>\n
FixedFloater<\/td>\n4.25 %<\/td>\n3.57 %<\/td>\n27,133<\/td>\n18.23<\/td>\n1<\/td>\n0.0000 %<\/td>\n3,827.9<\/td>\n<\/tr>\n
Floater<\/td>\n2.75 %<\/td>\n2.94 %<\/td>\n72,414<\/td>\n19.87<\/td>\n4<\/td>\n0.0524 %<\/td>\n2,729.4<\/td>\n<\/tr>\n
OpRet<\/td>\n4.64 %<\/td>\n1.11 %<\/td>\n51,519<\/td>\n0.40<\/td>\n4<\/td>\n-0.0191 %<\/td>\n2,590.1<\/td>\n<\/tr>\n
SplitShare<\/td>\n4.57 %<\/td>\n4.43 %<\/td>\n43,601<\/td>\n4.30<\/td>\n2<\/td>\n0.1394 %<\/td>\n2,912.9<\/td>\n<\/tr>\n
Interest-Bearing<\/td>\n0.00 %<\/td>\n0.00 %<\/td>\n0<\/td>\n0.00<\/td>\n0<\/td>\n-0.0191 %<\/td>\n2,368.4<\/td>\n<\/tr>\n
Perpetual-Premium<\/td>\n5.25 %<\/td>\n-1.71 %<\/td>\n77,360<\/td>\n0.11<\/td>\n30<\/td>\n-0.0187 %<\/td>\n2,348.1<\/td>\n<\/tr>\n
Perpetual-Discount<\/td>\n4.85 %<\/td>\n4.88 %<\/td>\n136,973<\/td>\n15.67<\/td>\n4<\/td>\n-0.0102 %<\/td>\n2,646.3<\/td>\n<\/tr>\n
FixedReset<\/td>\n4.91 %<\/td>\n2.84 %<\/td>\n240,480<\/td>\n3.58<\/td>\n78<\/td>\n-0.0911 %<\/td>\n2,480.2<\/td>\n<\/tr>\n
Deemed-Retractible<\/td>\n4.88 %<\/td>\n1.91 %<\/td>\n127,838<\/td>\n0.33<\/td>\n45<\/td>\n0.0785 %<\/td>\n2,429.3<\/td>\n<\/tr>\n<\/table>\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>\n1.60 %<\/td>\nYTW SCENARIO
\nMaturity Type : Call
\nMaturity Date\t: 2013-02-23
\nMaturity Price : 25.50
\nEvaluated at bid price : 25.97
\nBid-YTW : -13.00 %<\/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
RY.PR.P<\/td>\nFixedReset<\/td>\n189,766<\/td>\nScotia crossed 30,000 at 25.99; RBC crossed 152,900 at 25.96.
\nYTW SCENARIO
\nMaturity Type : Call
\nMaturity Date\t: 2014-02-24
\nMaturity Price : 25.00
\nEvaluated at bid price : 25.99
\nBid-YTW : 2.07 %<\/td>\n<\/tr>\n
RY.PR.X<\/td>\nFixedReset<\/td>\n172,790<\/td>\nRBC crossed blocks of 154,400 and 10,000, both at 26.45.
\nYTW SCENARIO
\nMaturity Type : Call
\nMaturity Date\t: 2014-08-24
\nMaturity Price : 25.00
\nEvaluated at bid price : 26.50
\nBid-YTW : 2.07 %<\/td>\n<\/tr>\n
BNS.PR.Z<\/td>\nFixedReset<\/td>\n85,337<\/td>\nRBC crossed 50,000 at 24.95.
\nYTW SCENARIO
\nMaturity Type : Hard Maturity
\nMaturity Date\t: 2022-01-31
\nMaturity Price : 25.00
\nEvaluated at bid price : 24.86
\nBid-YTW : 3.19 %<\/td>\n<\/tr>\n
ENB.PR.T<\/td>\nFixedReset<\/td>\n61,940<\/td>\nYTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2043-01-24
\nMaturity Price : 23.23
\nEvaluated at bid price : 25.41
\nBid-YTW : 3.79 %<\/td>\n<\/tr>\n
BNS.PR.Y<\/td>\nFixedReset<\/td>\n57,792<\/td>\nRBC crossed 10,000 at 24.70 and bought 10,100 from Scotia at the same price.
\nYTW SCENARIO
\nMaturity Type : Hard Maturity
\nMaturity Date\t: 2022-01-31
\nMaturity Price : 25.00
\nEvaluated at bid price : 24.61
\nBid-YTW : 3.03 %<\/td>\n<\/tr>\n
GWO.PR.R<\/td>\nDeemed-Retractible<\/td>\n42,012<\/td>\nNational crossed 30,000 at 25.45.
\nYTW SCENARIO
\nMaturity Type : Hard Maturity
\nMaturity Date\t: 2022-01-31
\nMaturity Price : 25.00
\nEvaluated at bid price : 25.45
\nBid-YTW : 4.62 %<\/td>\n<\/tr>\n
There were 42 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
TRI.PR.B<\/td>\nFloater<\/td>\nQuote: 22.80 – 23.55
\nSpot Rate : 0.7500
\nAverage : 0.5075<\/p>\n

YTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2043-01-24
\nMaturity Price : 22.55
\nEvaluated at bid price : 22.80
\nBid-YTW : 2.29 %<\/td>\n<\/tr>\n

BNS.PR.J<\/td>\nDeemed-Retractible<\/td>\nQuote: 25.68 – 25.89
\nSpot Rate : 0.2100
\nAverage : 0.1307<\/p>\n

YTW SCENARIO
\nMaturity Type : Call
\nMaturity Date\t: 2013-10-29
\nMaturity Price : 25.00
\nEvaluated at bid price : 25.68
\nBid-YTW : 1.53 %<\/td>\n<\/tr>\n

PWF.PR.R<\/td>\nPerpetual-Premium<\/td>\nQuote: 26.72 – 26.94
\nSpot Rate : 0.2200
\nAverage : 0.1425<\/p>\n

YTW SCENARIO
\nMaturity Type : Call
\nMaturity Date\t: 2021-04-30
\nMaturity Price : 25.00
\nEvaluated at bid price : 26.72
\nBid-YTW : 4.51 %<\/td>\n<\/tr>\n

RY.PR.X<\/td>\nFixedReset<\/td>\nQuote: 26.50 – 26.70
\nSpot Rate : 0.2000
\nAverage : 0.1274<\/p>\n

YTW SCENARIO
\nMaturity Type : Call
\nMaturity Date\t: 2014-08-24
\nMaturity Price : 25.00
\nEvaluated at bid price : 26.50
\nBid-YTW : 2.07 %<\/td>\n<\/tr>\n

FTS.PR.J<\/td>\nPerpetual-Premium<\/td>\nQuote: 25.78 – 26.07
\nSpot Rate : 0.2900
\nAverage : 0.2236<\/p>\n

YTW SCENARIO
\nMaturity Type : Call
\nMaturity Date\t: 2021-12-01
\nMaturity Price : 25.00
\nEvaluated at bid price : 25.78
\nBid-YTW : 4.47 %<\/td>\n<\/tr>\n

GWO.PR.H<\/td>\nDeemed-Retractible<\/td>\nQuote: 25.21 – 25.43
\nSpot Rate : 0.2200
\nAverage : 0.1557<\/p>\n

YTW SCENARIO
\nMaturity Type : Call
\nMaturity Date\t: 2014-09-30
\nMaturity Price : 25.00
\nEvaluated at bid price : 25.21
\nBid-YTW : 4.56 %<\/td>\n<\/tr>\n<\/table>\n","protected":false},"excerpt":{"rendered":"

I mentioned complexity of computer systems on January 22 – here’s another example: Computer Sciences Corp. (CSC)\u2019s performance on a failed $1 billion software project for the U.S. Air Force and the service\u2019s management of …<\/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-20948","post","type-post","status-publish","format-standard","hentry","category-market-action"],"_links":{"self":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/posts\/20948","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=20948"}],"version-history":[{"count":0,"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/posts\/20948\/revisions"}],"wp:attachment":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=20948"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=20948"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=20948"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}