{"id":9211,"date":"2009-12-31T20:23:43","date_gmt":"2010-01-01T00:23:43","guid":{"rendered":"http:\/\/www.prefblog.com\/?p=9211"},"modified":"2009-12-31T20:23:43","modified_gmt":"2010-01-01T00:23:43","slug":"december-31-2009","status":"publish","type":"post","link":"https:\/\/prefblog.com\/?p=9211","title":{"rendered":"December 31, 2009"},"content":{"rendered":"

James Hamilton of Econbrowser<\/i> has an excellent post on the Fed and the proposed term deposit facility<\/a>:<\/p>\n

We sometimes describe fiscal policy as determining the overall level of the public debt, while monetary policy determines the composition of that debt between money and interest-bearing federal obligations. By that definition, the Fed has clearly now entered the realm of implementing fiscal policy, by issuing debt directly in the form of interest-bearing reserves, reverse repos, and now term deposits.
…<\/b>
But I fear that as this marriage between fiscal and monetary policy becomes consummated, an amicable divorce is not the most likely outcome.<\/p>\n

My advice would be the sooner the Fed can return to plain vanilla central banking, the better.<\/p><\/blockquote>\n

I have heard reports that driving in the country has become a process of counting windmills … but I have my own way of counting. Say a standard wind farm<\/a> has the following specifications:<\/p>\n

The facility is expected to be completed in one year at a cost of CA$285 million, and will generate 300 GWh of wind energy a year from 43 Siemens 2.3 MW turbines.<\/p><\/blockquote>\n

So each turbine costs about $7-million bucks and generates about 7.5 GWh electricity per year. Ontario will pay 13.5 cents per kWh for on-shore wind. A profligate energy user (i.e., somebody who uses a toaster while the kitchen light is on) will pay 6.7 cents per kWh<\/a>. So the loss to Smitherman’s ex-ministry is … call it 7 cents per kWh … and remember, we have assumed that transmission and administration is free, never mind the fact that wind power needs back-up plants built, and will accrue extra costs as this back-up switches on and off.<\/p>\n

So, a loss of 7 cents per kWh on 7.5GWh annually is … um … carry three … 52.5 megacents per annum; in more familiar units, over half a million bucks. Enjoy the view! And remember – it’s not just empty-headed feel-goodism … it’s also an exciting new class of parasitic pseudo-industry creating jobs for pseudo-entrepreneurs!<\/p>\n

The US Municipal Bond Insurance market<\/a> is still trying to find its feet:<\/p>\n

Insured bonds reached a peak of 57.1% of new issuance in 2005, but as most insurers were downgraded after they unsuccessfully ventured into the hazardous territory of structured finance, that number dwindled to just 8.7% this month, according to Thomson Reuters.
…<\/b>
But responding to claims that the insurance market has a much-diminished future, Dominic Frederico, chief executive officer of Assured Guaranty Ltd., has a pretty simple reply.<\/p>\n

\u201cIf there are naysayers, I would say, ‘Okay, then: explain my third quarter,\u2019 \u201d he told investors in a conference call last month.<\/p>\n

Assured, which operates the only two legacy insurers to have made it through the recession with investment-grade ratings, saw operating earnings \u2014 excluding net-realized investment gains and losses \u2014 jump to $70 million last quarter, compared to $26 million in the third quarter of 2008.<\/p><\/blockquote>\n

Preferred shares closed the year strongly on light volume, with PerpetualDiscounts up 26bp and FixedResets gaining 13bp.<\/p>\n

PereptualDiscounts closed yielding 5.85%, equivalent to 8.19% interest at the standard equivalency factor of 1.4x. Long Corporates<\/a> closed yielding 6.0% – maybe just a hair over – so the pre-tax interest-equivalent spread (also called the Seniority Spread) is about 220bp, a slight tightening from the December 16<\/a> and November 30<\/a> figures of 225bp.<\/p>\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>\n0.3484 %<\/td>\n1,626.4<\/td>\n<\/tr>\n
FixedFloater<\/td>\n5.69 %<\/td>\n3.84 %<\/td>\n37,404<\/td>\n18.97<\/td>\n1<\/td>\n-0.4690 %<\/td>\n2,736.4<\/td>\n<\/tr>\n
Floater<\/td>\n2.41 %<\/td>\n2.82 %<\/td>\n106,796<\/td>\n20.16<\/td>\n3<\/td>\n0.3484 %<\/td>\n2,031.8<\/td>\n<\/tr>\n
OpRet<\/td>\n4.83 %<\/td>\n-1.09 %<\/td>\n115,458<\/td>\n0.09<\/td>\n15<\/td>\n0.0406 %<\/td>\n2,333.8<\/td>\n<\/tr>\n
SplitShare<\/td>\n6.40 %<\/td>\n-6.01 %<\/td>\n189,048<\/td>\n0.08<\/td>\n2<\/td>\n0.6219 %<\/td>\n2,098.6<\/td>\n<\/tr>\n
Interest-Bearing<\/td>\n0.00 %<\/td>\n0.00 %<\/td>\n0<\/td>\n0.00<\/td>\n0<\/td>\n0.0406 %<\/td>\n2,134.0<\/td>\n<\/tr>\n
Perpetual-Premium<\/td>\n5.83 %<\/td>\n5.71 %<\/td>\n73,799<\/td>\n2.30<\/td>\n7<\/td>\n0.2659 %<\/td>\n1,891.1<\/td>\n<\/tr>\n
Perpetual-Discount<\/td>\n5.79 %<\/td>\n5.85 %<\/td>\n188,197<\/td>\n14.11<\/td>\n68<\/td>\n0.2613 %<\/td>\n1,804.6<\/td>\n<\/tr>\n
FixedReset<\/td>\n5.39 %<\/td>\n3.59 %<\/td>\n312,272<\/td>\n3.85<\/td>\n41<\/td>\n0.1268 %<\/td>\n2,177.5<\/td>\n<\/tr>\n<\/table>\n\n\n\n\n\n\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
BMO.PR.K<\/td>\nPerpetual-Discount<\/td>\n-1.06 %<\/td>\nYTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2039-12-31
\nMaturity Price : 23.22
\nEvaluated at bid price : 23.40
\nBid-YTW : 5.68 %<\/td>\n<\/tr>\n
CL.PR.B<\/td>\nPerpetual-Premium<\/td>\n1.01 %<\/td>\nYTW SCENARIO
\nMaturity Type : Call
\nMaturity Date\t: 2010-01-30
\nMaturity Price : 25.25
\nEvaluated at bid price : 26.10
\nBid-YTW : -31.38 %<\/td>\n<\/tr>\n
BNS.PR.T<\/td>\nFixedReset<\/td>\n1.07 %<\/td>\nYTW SCENARIO
\nMaturity Type : Call
\nMaturity Date\t: 2014-05-25
\nMaturity Price : 25.00
\nEvaluated at bid price : 28.05
\nBid-YTW : 3.20 %<\/td>\n<\/tr>\n
BAM.PR.K<\/td>\nFloater<\/td>\n1.10 %<\/td>\nYTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2039-12-31
\nMaturity Price : 13.80
\nEvaluated at bid price : 13.80
\nBid-YTW : 2.85 %<\/td>\n<\/tr>\n
RY.PR.C<\/td>\nPerpetual-Discount<\/td>\n1.12 %<\/td>\nYTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2039-12-31
\nMaturity Price : 20.85
\nEvaluated at bid price : 20.85
\nBid-YTW : 5.59 %<\/td>\n<\/tr>\n
SLF.PR.C<\/td>\nPerpetual-Discount<\/td>\n1.27 %<\/td>\nYTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2039-12-31
\nMaturity Price : 19.10
\nEvaluated at bid price : 19.10
\nBid-YTW : 5.87 %<\/td>\n<\/tr>\n
BNS.PR.J<\/td>\nPerpetual-Discount<\/td>\n1.46 %<\/td>\nYTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2039-12-31
\nMaturity Price : 22.80
\nEvaluated at bid price : 23.86
\nBid-YTW : 5.45 %<\/td>\n<\/tr>\n
BNA.PR.C<\/td>\nSplitShare<\/td>\n1.50 %<\/td>\nYTW SCENARIO
\nMaturity Type : Hard Maturity
\nMaturity Date\t: 2019-01-10
\nMaturity Price : 25.00
\nEvaluated at bid price : 18.90
\nBid-YTW : 8.34 %<\/td>\n<\/tr>\n
SLF.PR.B<\/td>\nPerpetual-Discount<\/td>\n1.52 %<\/td>\nYTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2039-12-31
\nMaturity Price : 20.65
\nEvaluated at bid price : 20.65
\nBid-YTW : 5.85 %<\/td>\n<\/tr>\n
HSB.PR.C<\/td>\nPerpetual-Discount<\/td>\n1.83 %<\/td>\nYTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2039-12-31
\nMaturity Price : 22.11
\nEvaluated at bid price : 22.25
\nBid-YTW : 5.76 %<\/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
GWO.PR.F<\/td>\nPerpetual-Premium<\/td>\n84,426<\/td>\nRBC crossed 83,100 at 24.55.
\nYTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2039-12-31
\nMaturity Price : 24.24
\nEvaluated at bid price : 24.55
\nBid-YTW : 6.04 %<\/td>\n<\/tr>\n
CM.PR.E<\/td>\nPerpetual-Discount<\/td>\n47,540<\/td>\nRBC crossed 40,100 at 23.93.
\nYTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2039-12-31
\nMaturity Price : 23.61
\nEvaluated at bid price : 23.90
\nBid-YTW : 5.85 %<\/td>\n<\/tr>\n
BMO.PR.L<\/td>\nPerpetual-Discount<\/td>\n29,930<\/td>\nCIBC sold 15,000 to RBC at 25.15 and 10,800 to Desjardins at the same price.
\nYTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2039-12-31
\nMaturity Price : 24.82
\nEvaluated at bid price : 25.05
\nBid-YTW : 5.86 %<\/td>\n<\/tr>\n
PWF.PR.I<\/td>\nPerpetual-Discount<\/td>\n25,500<\/td>\nTD crossed 18,900 at 25.12.
\nYTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2039-12-31
\nMaturity Price : 24.75
\nEvaluated at bid price : 25.07
\nBid-YTW : 6.09 %<\/td>\n<\/tr>\n
GWO.PR.G<\/td>\nPerpetual-Discount<\/td>\n22,900<\/td>\nRBC crossed 15,000 at 21.90.
\nYTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2039-12-31
\nMaturity Price : 21.61
\nEvaluated at bid price : 21.90
\nBid-YTW : 5.96 %<\/td>\n<\/tr>\n
RY.PR.T<\/td>\nFixedReset<\/td>\n17,700<\/td>\nYTW SCENARIO
\nMaturity Type : Call
\nMaturity Date\t: 2014-09-23
\nMaturity Price : 25.00
\nEvaluated at bid price : 28.10
\nBid-YTW : 3.58 %<\/td>\n<\/tr>\n
There were 10 other index-included issues trading in excess of 10,000 shares.<\/td>\n<\/tr>\n<\/table>\n","protected":false},"excerpt":{"rendered":"

James Hamilton of Econbrowser has an excellent post on the Fed and the proposed term deposit facility: We sometimes describe fiscal policy as determining the overall level of the public debt, while monetary policy determines …<\/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-9211","post","type-post","status-publish","format-standard","hentry","category-market-action"],"_links":{"self":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/posts\/9211","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=9211"}],"version-history":[{"count":0,"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/posts\/9211\/revisions"}],"wp:attachment":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=9211"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=9211"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=9211"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}