{"id":3766,"date":"2008-11-03T23:26:59","date_gmt":"2008-11-04T03:26:59","guid":{"rendered":"http:\/\/www.prefblog.com\/?p=3766"},"modified":"2008-11-03T23:26:59","modified_gmt":"2008-11-04T03:26:59","slug":"november-3-2008","status":"publish","type":"post","link":"https:\/\/prefblog.com\/?p=3766","title":{"rendered":"November 3, 2008"},"content":{"rendered":"

Assiduous Readers will remember that the Fed’s balance sheet has been swollen<\/a> as it has borrowed from Treasury and lent to … various third parties. The fact that Treasuries are being sold to finance the lending makes the various programmes monetarily neutral and therefore, to a first approximation, non-inflationary (inflation may still result if the process generates false signals regarding use of capital funds, but that’s a second order effect). Today the butcher’s bill came in<\/a>:<\/p>\n

The U.S. Treasury predicted it would borrow this quarter more than three times the amount initially forecast as weaker economic growth and the costs of a new bank rescue package swell the budget deficit.<\/p>\n

Borrowing needs will rise to $550 billion in the three months to Dec. 31, compared with the $142 billion predicted in July, the Treasury said in a statement in Washington. That would be more than double the largest ever — a record $244 billion in new marketable debt in the first three months of this year.<\/p><\/blockquote>\n

I am an enthusiastic supporter of the Fed’s actions, but this is illustrative of the need for fiscal restraint in good times – which has been sorely lacking. At some point – as has happened in Taiwan with insurers and agency paper, as mentioned October 28<\/a> – the rest of the world will decide it has quite enough US paper, thank you very much, and then we’re all in trouble.<\/p>\n

Econbrowser<\/i>‘s (admittedly partisan) Menzie Chinn provides a comparison<\/a> of the McCain and Obama tax ‘n’ stimulus plans:<\/p>\n

<\/div>\n

Dr. Chinn also provides a link to the Committee for a Responsible Federal Budget’s Guide to Stimulus Proposals: The 2008 Presidential Election<\/i><\/a>. I confess I have not investigated campaign or third-party reactions to this analysis – but it makes for good reading!<\/p>\n

He also performs calculations based on analyses of the Tax Policy Centre<\/a>:<\/p>\n

<\/div>\n

I have added a bonus spreadsheet to the post regarding my essay on CPD<\/a>.<\/p>\n

A very strong day for PerpetualDiscounts, but volume returned to normal levels.<\/p>\n

\n\n\n\n\n\n\n\n\n\n\n\n\n
Note that these indices are experimental; the absolute and relative daily values are expected to change in the final version. In this version, index values are based at 1,000.0 on 2006-6-30.
The Fixed-Reset<\/i> index was added effective 2008-9-5 at that day’s closing value of 1,119.4 for the Fixed-Floater<\/i> index.<\/strong><\/td>\n<\/tr>\n
Index<\/td>\nMean Current Yield (at bid)<\/td>\nMean YTW<\/td>\nMean Average Trading Value<\/td>\nMean Mod Dur (YTW)<\/td>\nIssues<\/td>\nDay’s Perf.<\/td>\nIndex Value<\/td>\n<\/tr>\n
Ratchet<\/td>\nN\/A<\/td>\nN\/A<\/td>\nN\/A<\/td>\nN\/A<\/td>\n0<\/td>\nN\/A<\/td>\nN\/A<\/td>\n<\/tr>\n
Fixed-Floater<\/td>\n5.45%<\/td>\n5.54%<\/td>\n71,455<\/td>\n14.92<\/td>\n6<\/td>\n+0.4997%<\/td>\n959.1<\/td>\n<\/tr>\n
Floater<\/td>\n6.74%<\/td>\n6.84%<\/td>\n48,590<\/td>\n12.70<\/td>\n2<\/td>\n+0.9284%<\/td>\n516.2<\/td>\n<\/tr>\n
Op. Retract<\/td>\n5.28%<\/td>\n6.11%<\/td>\n129,514<\/td>\n4.00<\/td>\n15<\/td>\n+0.5423%<\/td>\n999.9<\/td>\n<\/tr>\n
Split-Share<\/td>\n6.31%<\/td>\n10.79%<\/td>\n58,350<\/td>\n3.96<\/td>\n12<\/td>\n+0.1262%<\/td>\n932.8<\/td>\n<\/tr>\n
Interest Bearing<\/td>\n8.13%<\/td>\n14.97%<\/td>\n61,714<\/td>\n3.26<\/td>\n3<\/td>\n-3.4615%<\/td>\n871.8<\/td>\n<\/tr>\n
Perpetual-Premium<\/td>\nN\/A<\/td>\nN\/A<\/td>\nN\/A<\/td>\nN\/A<\/td>\nN\/A<\/td>\nN\/A<\/td>\nN\/A<\/td>\n<\/tr>\n
Perpetual-Discount<\/td>\n6.77%<\/td>\n6.83%<\/td>\n178,900<\/td>\n12.80<\/td>\n71<\/td>\n+1.0859%<\/td>\n805.1<\/td>\n<\/tr>\n
Fixed-Reset<\/td>\n5.35%<\/td>\n5.13%<\/td>\n906,342<\/td>\n15.13<\/td>\n11<\/td>\n+0.5319%<\/td>\n1,077.6<\/td>\n<\/tr>\n<\/table>\n<\/div>\n
\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n
Major Price Changes<\/strong><\/td>\n<\/tr>\n
Issue<\/td>\nIndex<\/td>\nChange<\/td>\nNotes<\/td>\n<\/tr>\n
FIG.PR.A<\/td>\nInterestBearing<\/td>\n-7.4074%<\/td>\nAsset coverage of 1.3+:1 based on Capital Unit NAV of 4.88<\/a> and 0.71 Capital Units per Preferred<\/a>. Now with a pre-tax bid-YTW of 12.41% based on a bid of 7.5 and a hardMaturity 2014-12-31 at 10.00. Closing quote of 7.50-12, 5×1. Day’s range of 7.44-24.<\/td>\n<\/tr>\n
BNA.PR.A<\/td>\nSplitShare<\/td>\n-6.8519%<\/td>\nAsset coverage of just under 2.8:1 as of September 30 according to the company<\/a>. Coverage now of 2.1+:1 based on BAM.A at 21.96 and 2.4 BAM.A held per preferred<\/a>. Now with a pre-tax bid-YTW of 19.84% based on a bid of 20.12 and a hardMaturity 2010-9-30 at 25.00. Compare with BNA.PR.B (10.12% to 2016-3-25) and BNA.PR.C (14.16% to 2019-1-10). Closing quote 20.12-70, 1×1. Day’s range 20.06-22.00.<\/td>\n<\/tr>\n
BAM.PR.K<\/td>\nFloater<\/td>\n-6.6790%<\/td>\n <\/td>\n<\/tr>\n
PWF.PR.F<\/td>\nPerpetualDiscount<\/td>\n-3.1683%<\/td>\nNow with a pre-tax bid-YTW of 6.77% based on a bid of 19.56 and a limitMaturity<\/a>. Closing quote 19.56-97, 14X1. Day’s range 20.00-06.<\/td>\n<\/tr>\n
MFC.PR.C<\/td>\nPerpetualDiscount<\/td>\n+3.0534%<\/td>\nNow with a pre-tax bid-YTW of 6.83% based on a bid of 16.76 and a limitMaturity. Closing Quote 16.76-25, 7×2. Day’s range of 16.50-75.<\/td>\n<\/tr>\n
GWO.PR.I<\/td>\nPerpetualDiscount<\/td>\n+3.2719%<\/td>\nNow with a pre-tax bid-YTW of 6.58% based on a bid of 17.36 and a limitMaturity. Closing Quote 17.36-55, 4×1. Day’s range of 17.31-74.<\/td>\n<\/tr>\n
BNS.PR.O<\/td>\nPerpetualDiscount<\/td>\n+3.4722%<\/td>\nNow with a pre-tax bid-YTW of 6.31% based on a bid of 22.35 and a limitMaturity. Closing Quote 22.35-89, 10×5. Day’s range of 22.00-90.<\/td>\n<\/tr>\n
PWF.PR.E<\/td>\nPerpetualDiscount<\/td>\n+4.0099%<\/td>\nNow with a pre-tax bid-YTW of 6.60% based on a bid of 21.01 and a limitMaturity. Closing Quote 21.01-49, 2×1. Day’s range of 20.41-21.50.<\/td>\n<\/tr>\n
HSB.PR.C<\/td>\nPerpetualDiscount<\/td>\n+4.0099%<\/td>\nNow with a pre-tax bid-YTW of 6.60% based on a bid of 21.01 and a limitMaturity. Closing Quote 18.73-99, 22X7. Day’s range of 18.49-99.<\/td>\n<\/tr>\n
GWO.PR.H<\/td>\nPerpetualDiscount<\/td>\n+4.1152%<\/td>\nNow with a pre-tax bid-YTW of 6.96% based on a bid of 17.71 and a limitMaturity. Closing Quote 17.71-69, 11×2. Day’s range of 17.24-18.69.<\/td>\n<\/tr>\n
TD.PR.Y<\/td>\nFixedReset<\/td>\n+4.3497%<\/td>\n <\/td>\n<\/tr>\n
BNA.PR.B<\/td>\nSplitShare<\/td>\n+4.7726<\/td>\nSee BNA.PR.A, above. Closing quote of 18.66-20.55 (!) 13×7. Day’s range of 18.50-49<\/td>\n<\/tr>\n
W.PR.J<\/td>\nPerpetualDiscount<\/td>\n+4.7953%<\/td>\nNow with a pre-tax bid-YTW of 7.92% based on a bid of 17.92 and a limitMaturity. Closing Quote 17.92-24, 3×1. Day’s range of 17.68-96.<\/td>\n<\/tr>\n
RY.PR.A<\/td>\nPerpetualDiscount<\/td>\n+5.2016%<\/td>\nNow with a pre-tax bid-YTW of 6.20% based on a bid of 18.00 and a limitMaturity. Closing Quote 18.00-18, 6×20. Day’s range of 17.15-18.50.<\/td>\n<\/tr>\n
W.PR.H<\/td>\nPerpetualDiscount<\/td>\n+5.5882%<\/td>\nNow with a pre-tax bid-YTW of 7.77% based on a bid of 17.95 and a limitMaturity. Closing Quote 17.95-73, 1×1. Day’s range of 17.75-50.<\/td>\n<\/tr>\n
LBS.PR.A<\/td>\nSplitShare<\/td>\n+5.5901%<\/td>\nAsset coverage of 1.7+:1 as of October 30 according to Brompton Group<\/a>. Now with a pre-tax bid-YTW of 9.14% based on a bid of 8.50 and a hardMaturity 2013-11-29 at 10.00. Closing quote of 8.50-00, 2×1. Day’s range of 8.12-00.<\/td>\n<\/tr>\n
BAM.PR.B<\/td>\nFloater<\/td>\n+8.0808%<\/td>\n <\/td>\n<\/tr>\n<\/table>\n<\/div>\n
\n\n\n\n\n\n\n\n\n
Volume Highlights<\/strong><\/td>\n<\/tr>\n
Issue<\/td>\nIndex<\/td>\nVolume<\/td>\nNotes<\/td>\n<\/tr>\n
RY.PR.L<\/td>\nFixedReset<\/td>\n418,820<\/td>\nNational Bank crossed 175,000 at 24.70 and RBC bought three blocks of 10,000 each, from anonymous (24.74), Dundee (24.75) and CIBC (24.75). New issue, settled today<\/a>.<\/td>\n<\/tr>\n
GWO.PR.G<\/td>\nPerpetualDiscount<\/td>\n75,725<\/td>\nNesbitt crossed 70,000 at 19.10. Now with a pre-tax bid-YTW of 6.82% based on a bid of 19.36 and a limitMaturity.<\/td>\n<\/tr>\n
TD.PR.O<\/td>\nPerpetualDiscount<\/td>\n25,370<\/td>\nNow with a pre-tax bid-YTW of 6.65% based on a bid of 18.39 and a limitMaturity.<\/td>\n<\/tr>\n
RY.PR.G<\/td>\nPerpetualDiscount<\/td>\n20,332<\/td>\nNow with a pre-tax bid-YTW of 6.33% based on a bid of 17.85 and a limitMaturity.<\/td>\n<\/tr>\n
RY.PR.D<\/td>\nPerpetualDiscount<\/td>\n17,500<\/td>\nNow with a pre-tax bid-YTW of 6.41% based on a bid of 17.61 and a limitMaturity.<\/td>\n<\/tr>\n<\/table>\n<\/div>\n

There were eighteen other index-included $25-pv-equivalent issues trading over 10,000 shares today.<\/p>\n","protected":false},"excerpt":{"rendered":"

Assiduous Readers will remember that the Fed’s balance sheet has been swollen as it has borrowed from Treasury and lent to … various third parties. The fact that Treasuries are being sold to finance the …<\/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-3766","post","type-post","status-publish","format-standard","hentry","category-market-action"],"_links":{"self":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/posts\/3766","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=3766"}],"version-history":[{"count":0,"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/posts\/3766\/revisions"}],"wp:attachment":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=3766"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=3766"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=3766"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}