{"id":21298,"date":"2013-03-06T23:07:23","date_gmt":"2013-03-07T03:07:23","guid":{"rendered":"http:\/\/www.prefblog.com\/?p=21298"},"modified":"2013-03-06T23:07:23","modified_gmt":"2013-03-07T03:07:23","slug":"march-6-2013","status":"publish","type":"post","link":"https:\/\/prefblog.com\/?p=21298","title":{"rendered":"March 6, 2013"},"content":{"rendered":"

The Bank of Canada statement<\/a> held no surprises:<\/p>\n

Canada\u2019s economy grew by 0.6 per cent at annual rates in the fourth quarter of 2012, with solid growth across most domestic components of GDP offset by a sharp reduction in the pace of inventory investment. The Bank expects growth in Canada to pick up through 2013, supported by modest growth in household spending combined with a recovery in exports and solid business investment. With a more constructive evolution of imbalances in the household sector, residential investment is expected to decline further from historically high levels. The Bank expects trend growth in household credit to moderate further, with the debt-to-income ratio stabilizing near current levels. Despite the expected recovery in exports, they are likely to remain below their pre-recession peak until the second half of 2014 owing to restrained foreign demand and ongoing competitiveness challenges, including the persistent strength of the Canadian dollar.<\/p>\n

Total CPI inflation has been somewhat more subdued than projected in the January MPR as a result of weaker core inflation and lower mortgage interest costs, which were only partially offset by higher gasoline prices. Low core inflation reflects muted price pressures across a wide range of goods and services, consistent with material excess capacity in the economy. Core and total CPI inflation are expected to remain low in the near term before rising gradually to reach 2 per cent over the projection horizon as the economy returns to full capacity and inflation expectations remain well-anchored.<\/p>\n

Reflecting all of these factors, the Bank has decided to maintain the target for the overnight rate at 1 per cent. With continued slack in the Canadian economy, the muted outlook for inflation, and the more constructive evolution of imbalances in the household sector, the considerable monetary policy stimulus currently in place will likely remain appropriate for a period of time, after which some modest withdrawal will likely be required, consistent with achieving the 2 per cent inflation target.<\/p><\/blockquote>\n

The Financial Post points out<\/a>:<\/p>\n

In their statement, policymakers said that given the \u201ccontinued slack in the Canadian economy, the muted outlook for inflation, and the more constructive evolution of imbalances in the household sector, the considerable monetary stimulus currently in place will likely remain appropriate for a period of time, after which some modest withdrawal will likely be required.\u201d<\/p>\n

That replaces the phrase \u201cthe timing of any such withdrawal is less imminent than previously anticipated,\u201d which has accompanied recent rate announcements.<\/p><\/blockquote>\n

ETFs are a marvellous way for liquidity seeking investors to invest in illiquid markets. But friction works both ways<\/a>:<\/p>\n

Exchange traded funds have transformed the gold market. Since the first fund was launched nearly a decade ago, the products have become so successful in offering a simple way for investors to buy physical gold that they have acquired the nickname \u201cthe people\u2019s central bank.\u201d<\/p>\n

But what happens when the people\u2019s central bank decides to sell?<\/p>\n

That is the question now haunting the bullion market. Since the start of January, gold ETFs have dumped 140 tonnes of gold. February saw the largest monthly outflow of gold from ETFs on record.<\/p>\n

The sell-off is partly a reflection of broader negative sentiment towards gold, as investors become more confident in the global economy and put their money into riskier assets such as equities. Prices have slid 12 per cent since October to less than $1,580 (U.S.) an ounce, and are down 18 per cent from their record nominal high in 2011.<\/p><\/blockquote>\n

This taxonomy of sales traders<\/a> made me laugh:<\/p>\n

5.) Low Man \u2013If I sneezed he\u2019d say \u201cbless you,\u201d if I was tired and hung over he\u2019d worry he\u2019d done something wrong. He worked extremely hard, but the problem was he didn\u2019t get a lot of respect from his own desk.<\/p>\n

6.) The Man \u2013 He\u2019d answer the phone \u201c250k up \u2013 what do you want to do?\u201d Management loved him\u2014he was the busiest guy on Wall Street. All you had to do was ask him. He\u2019d get business done and wears his firm\u2019s crest on his sleeve. He worked for one of the white-shoe investment banks and had gone to one of the best schools. He wound up as an equity sales trader because he wasn\u2019t smart enough to do something more difficult, but he always spun it that it was his choice to trade.<\/p>\n

7.) Family Man \u2013 He\u2019d been passed over for several promotions, and was often caught off the desk calling his wife to discuss the twins\u2019 science project. He\u2019d accepted the ceiling in his career; Family Man was honest, calm and genuinely cared about doing the right thing. He tended to whisper.<\/p>\n

8.) Script Man \u2013 Every morning he\u2019d call at the exact time using the exact voice from the day before. Early in his career he\u2019d been confused about the business, so he decided to keep it simple. He never cracked a joke in his entire career<\/p><\/blockquote>\n

This characterization of entrepreneurs<\/a> was interesting:<\/p>\n

Some of the common characteristics that \u201cturn out to be accurate predictors of entrepreneurial success\u201d go back to when they were teenagers, said the release about the study, which looked at longitudinal data of more than 12,000 men and women.<\/p>\n

Among them: the entrepreneurs had high IQs, came from stable families, had parents earning higher than average salaries, and they showed greater self-esteem, the release said.<\/p>\n

But they also \u201cexhibited aggressive behaviour and got in trouble as teenagers,\u201d said one of the researchers, Ross Levine, a professor at the Haas School of Business at the University of California at Berkeley, in the release about the study, which he carried out with Yona Rubinstein of the London School of Economics and Political Science.<\/p>\n

\u201cThis is the person who wasn\u2019t afraid to break the rules, take things by force or even be involved in minor drugs.\u201d<\/p><\/blockquote>\n

I mentioned BNS.PR.Y<\/s> BNS.PR.P yesterday<\/a> with reference to its imminent Exchange Date and the lack of guidance in the bank’s earnings release. The Financial Post has more<\/a>:<\/p>\n

John Nagel, head of the preferred share trading group at Desjardins Securities the firm that help design the rate reset pref, is also waiting anxiously, though he believes BNS should call the deal. “Half the people I have spoken to think they will call the issue; the other half think BNS will leave it out there because the rate [for the bank] is reasonable.”<\/p>\n

If BNS doesn’t redeem, Nagel argues for investors there is better value in opting for the floating rate prefs, both from an initial absolute yield and the expectation that rates will rise over the next five years.<\/p><\/blockquote>\n

Nagel does have a point about floating rate: three month bills are averaging 0.96%<\/a> while five-year Canadas are currently at 1.31%<\/a> – it won’t take much of a nudge for the bills to average more than 1.31% over the next five years. Nagel has been previously quoted<\/a> as favouring the Floating Rate option.<\/p>\n

It was a mixed day for the Canadian preferred share market, with PerpetualPremiumgs gaining 3bp, FixedResets off 5bp and DeemedRetractibles down 7bp. Volatility was minor. Volume was quite high.<\/p>\n

PerpetualDiscounts now yield 4.87%, equivalent to 6.33% interest at the standard conversion factor of 1.3x. Long corporates<\/a> now yield about 4.25%, so the pre-tax interest equivalent spread (in this context, the “Seniority Spread”) is now about 210bp, unchanged from February 27<\/a>.<\/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-0.2035 %<\/td>\n2,607.5<\/td>\n<\/tr>\n
FixedFloater<\/td>\n4.09 %<\/td>\n3.42 %<\/td>\n27,054<\/td>\n18.44<\/td>\n1<\/td>\n-0.8529 %<\/td>\n3,980.2<\/td>\n<\/tr>\n
Floater<\/td>\n2.55 %<\/td>\n2.86 %<\/td>\n90,821<\/td>\n20.01<\/td>\n5<\/td>\n-0.2035 %<\/td>\n2,815.4<\/td>\n<\/tr>\n
OpRet<\/td>\n4.80 %<\/td>\n2.48 %<\/td>\n47,285<\/td>\n0.31<\/td>\n5<\/td>\n-0.0155 %<\/td>\n2,596.3<\/td>\n<\/tr>\n
SplitShare<\/td>\n4.59 %<\/td>\n4.59 %<\/td>\n53,191<\/td>\n4.24<\/td>\n2<\/td>\n0.2803 %<\/td>\n2,934.0<\/td>\n<\/tr>\n
Interest-Bearing<\/td>\n0.00 %<\/td>\n0.00 %<\/td>\n0<\/td>\n0.00<\/td>\n0<\/td>\n-0.0155 %<\/td>\n2,374.1<\/td>\n<\/tr>\n
Perpetual-Premium<\/td>\n5.21 %<\/td>\n1.29 %<\/td>\n89,789<\/td>\n0.15<\/td>\n31<\/td>\n0.0275 %<\/td>\n2,356.5<\/td>\n<\/tr>\n
Perpetual-Discount<\/td>\n4.82 %<\/td>\n4.87 %<\/td>\n136,618<\/td>\n15.63<\/td>\n4<\/td>\n0.1114 %<\/td>\n2,656.0<\/td>\n<\/tr>\n
FixedReset<\/td>\n4.90 %<\/td>\n2.72 %<\/td>\n286,016<\/td>\n3.54<\/td>\n80<\/td>\n-0.0524 %<\/td>\n2,504.6<\/td>\n<\/tr>\n
Deemed-Retractible<\/td>\n4.86 %<\/td>\n1.72 %<\/td>\n139,379<\/td>\n0.22<\/td>\n44<\/td>\n-0.0722 %<\/td>\n2,445.8<\/td>\n<\/tr>\n<\/table>\n\n\n\n\n\n
Performance Highlights<\/strong><\/td>\n<\/tr>\n
Issue<\/td>\nIndex<\/td>\nChange<\/td>\nNotes<\/td>\n<\/tr>\n
MFC.PR.F<\/td>\nFixedReset<\/td>\n-1.84 %<\/td>\nYTW SCENARIO
\nMaturity Type : Hard Maturity
\nMaturity Date\t: 2022-01-31
\nMaturity Price : 25.00
\nEvaluated at bid price : 25.02
\nBid-YTW : 3.20 %<\/td>\n<\/tr>\n
PWF.PR.A<\/td>\nFloater<\/td>\n-1.08 %<\/td>\nYTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2043-03-06
\nMaturity Price : 23.48
\nEvaluated at bid price : 23.75
\nBid-YTW : 2.19 %<\/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
TRP.PR.D<\/td>\nFixedReset<\/td>\n130,521<\/td>\nRecent new issue<\/a>.
\nYTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2043-03-06
\nMaturity Price : 23.24
\nEvaluated at bid price : 25.45
\nBid-YTW : 3.49 %<\/td>\n<\/tr>\n
BAM.PR.G<\/td>\nFixedFloater<\/td>\n102,140<\/td>\nNesbitt crossed 100,000 at 23.25.
\nYTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2043-03-06
\nMaturity Price : 23.43
\nEvaluated at bid price : 23.25
\nBid-YTW : 3.42 %<\/td>\n<\/tr>\n
RY.PR.T<\/td>\nFixedReset<\/td>\n92,183<\/td>\nCIBC sold 50,000 to TD and 28,700 to Desjardins, both at 26.50.
\nYTW SCENARIO
\nMaturity Type : Call
\nMaturity Date\t: 2014-08-24
\nMaturity Price : 25.00
\nEvaluated at bid price : 26.50
\nBid-YTW : 2.24 %<\/td>\n<\/tr>\n
CM.PR.L<\/td>\nFixedReset<\/td>\n88,244<\/td>\nRBC bought blocks of 10,000 and 25,000 from TD and blocks of 10,000 and 12,700 from CIBC, all at 26.49.
\nYTW SCENARIO
\nMaturity Type : Call
\nMaturity Date\t: 2014-04-30
\nMaturity Price : 25.00
\nEvaluated at bid price : 26.49
\nBid-YTW : 1.81 %<\/td>\n<\/tr>\n
BAM.PR.K<\/td>\nFloater<\/td>\n78,025<\/td>\nScotia crossed blocks of 48,200 and 25,000, both at 18.40.
\nYTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2043-03-06
\nMaturity Price : 18.39
\nEvaluated at bid price : 18.39
\nBid-YTW : 2.88 %<\/td>\n<\/tr>\n
BNS.PR.T<\/td>\nFixedReset<\/td>\n71,540<\/td>\nRBC bought 33,700 from CIBC at 26.30.
\nYTW SCENARIO
\nMaturity Type : Call
\nMaturity Date\t: 2014-04-25
\nMaturity Price : 25.00
\nEvaluated at bid price : 26.30
\nBid-YTW : 2.12 %<\/td>\n<\/tr>\n
There were 53 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
MFC.PR.H<\/td>\nFixedReset<\/td>\nQuote: 26.55 – 27.00
\nSpot Rate : 0.4500
\nAverage : 0.2730<\/p>\n

YTW SCENARIO
\nMaturity Type : Call
\nMaturity Date\t: 2017-03-19
\nMaturity Price : 25.00
\nEvaluated at bid price : 26.55
\nBid-YTW : 2.93 %<\/td>\n<\/tr>\n

MFC.PR.F<\/td>\nFixedReset<\/td>\nQuote: 25.02 – 25.38
\nSpot Rate : 0.3600
\nAverage : 0.2170<\/p>\n

YTW SCENARIO
\nMaturity Type : Hard Maturity
\nMaturity Date\t: 2022-01-31
\nMaturity Price : 25.00
\nEvaluated at bid price : 25.02
\nBid-YTW : 3.20 %<\/td>\n<\/tr>\n

HSB.PR.D<\/td>\nDeemed-Retractible<\/td>\nQuote: 25.79 – 26.07
\nSpot Rate : 0.2800
\nAverage : 0.1738<\/p>\n

YTW SCENARIO
\nMaturity Type : Call
\nMaturity Date\t: 2013-04-05
\nMaturity Price : 25.50
\nEvaluated at bid price : 25.79
\nBid-YTW : 1.72 %<\/td>\n<\/tr>\n

W.PR.J<\/td>\nPerpetual-Premium<\/td>\nQuote: 25.59 – 25.94
\nSpot Rate : 0.3500
\nAverage : 0.2549<\/p>\n

YTW SCENARIO
\nMaturity Type : Call
\nMaturity Date\t: 2013-04-05
\nMaturity Price : 25.00
\nEvaluated at bid price : 25.59
\nBid-YTW : -13.11 %<\/td>\n<\/tr>\n

NA.PR.N<\/td>\nFixedReset<\/td>\nQuote: 25.21 – 25.50
\nSpot Rate : 0.2900
\nAverage : 0.2002<\/p>\n

YTW SCENARIO
\nMaturity Type : Hard Maturity
\nMaturity Date\t: 2022-01-31
\nMaturity Price : 25.00
\nEvaluated at bid price : 25.21
\nBid-YTW : 3.29 %<\/td>\n<\/tr>\n

RY.PR.I<\/td>\nFixedReset<\/td>\nQuote: 25.51 – 25.74
\nSpot Rate : 0.2300
\nAverage : 0.1430<\/p>\n

YTW SCENARIO
\nMaturity Type : Call
\nMaturity Date\t: 2014-02-24
\nMaturity Price : 25.00
\nEvaluated at bid price : 25.51
\nBid-YTW : 3.03 %<\/td>\n<\/tr>\n<\/table>\n","protected":false},"excerpt":{"rendered":"

The Bank of Canada statement held no surprises: Canada\u2019s economy grew by 0.6 per cent at annual rates in the fourth quarter of 2012, with solid growth across most domestic components of GDP offset by …<\/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-21298","post","type-post","status-publish","format-standard","hentry","category-market-action"],"_links":{"self":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/posts\/21298","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=21298"}],"version-history":[{"count":0,"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/posts\/21298\/revisions"}],"wp:attachment":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=21298"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=21298"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=21298"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}