• TSX -91.48tumbling from its highest level in more than 5 months as commodity shares turned lower and Chrysler's bankruptcy filing weighed on the market's mood.
• DOW -17.61
• Dollar +.69c to 83.82USD
• Oil +$..15 to $51.12US per barrel
• Gold -9.10 to $890.70USD per ounce
• Canadian 5 yr bond yields +.00bps to 2.01- Four weeks ago it was 1.82. http://www.financialpost.com/markets/market_data/money-yields-can_us.html
*The yield, the rate of return on your bond, can be read through a yield curve, which is the pattern of yields on bonds. This increase in bond yield (and the decrease in spread) is something to watch. If the bond yield continues to go up, the spread will continue to shrink and this could be a trigger for interest rates to rise.
Canada splits with U.S. on accounting rules
Eoin Callan, Financial Post
Canada is splitting with the United States and aligning with Europe over how much discretion to give banks when they value distressed assets on their books.
The decision was confirmed Thursday by the Canadian Accounting Standards Board and marks a decisive shift by the country to align with international rules rather than move in lockstep with the U.S. sector.
The stance was affirmed despite an intensive lobbying effort by Bay Street to level the playing field with U.S. banks, to which Washington granted extra leeway in April.
Chief executives of the country's largest banks had sought political intervention from the highest level and made direct personal appeals to Jim Flaherty, the Finance Minister.
They asked Mr. Flaherty to use his influence during private one-on-one conversations with the Finance Minister, said people familiar with the discussions.
Ottawa subsequently brought pressure to bear on standard-setters, according to a person familiar with the matter.
But those efforts fell short in the face of appeals from the accounting industry and advocates for financial analysts and investors not to copy the unilateral action taken by Washington.
The Canadian body did, however, make a significant concession to Bay Street that lobbyists cheered as a victory.
After previously insisting it would avoid a piecemeal approach to setting rules about how companies' handle their books, the Canadian Accounting Standards Board Thursday said it had "decided to revise its standards on impairment of debt instruments."
The changes will allow banks more flexibility when valuing financial assets classified as "held-to-maturity" or "loans and receivables".
The body said the fresh rules would be circulated for comment and would "narrow the differences with new U.S. requirements".
The board said the rules brought Canada into line with the approach of the London-based International Accounting Standards Board.
The alignment with international rules was welcomed by the Canadian Advocacy Council (CAC), which represents financial analysts and investor interests.
Blair Carey, an analyst with the CAC, said that the "most important thing in the big picture" was that Canada was still moving towards global rules rather than "U.S. methods."
But he said the interference from Ottawa was "unwelcome and problematic".
Brad Smith, a financial analyst at Blackmont Capital, said: "Changing anything like this on the fly is always dangerous."
He added the compromise could ultimately undermine confidence in the Canadian financial system.
"Any moves towards a subjective, influence-driven way of doing things tells you the system is still broken," he said.
Vincent Papa, senior policy analyst at the Chartered Financial Analysts Institute, said the precise wording arrived at by rule-setters would leave auditors vulnerable to pressure to acquiesce to the demands of chief financial officers at banks seeking to avoid costly writedowns.
Canadian banks have recorded about $20-billion in losses on financial assets during the course of the credit crisis but avoided the heavier writedowns booked by foreign peers
Friday, May 1, 2009
Thursday, April 30, 2009
Financial Update for April 30, 2009
Indexes power ahead
• TSX +68.28
• DOW +168.28 In New York, stocks rallied after the Federal Reserve held interest rates steady, as expected, but issued a slightly more upbeat economic outlook.
• Dollar +1.15c to 83.18USD
• Oil +$.1.05 to $50.97US per barrel
• Gold +6.90 to $900.50USD per ounce
• Canadian 5 yr bond yields +.04bps to 2.01- Four weeks ago it was 1.73.
http://www.financialpost.com/markets/market_data/money-yields-can_us.html
The bond yield was up again, and this time over the 2.00 mark. Four weeks ago it was 1.73. So the spread is down to 1.77%. This may be the time to watch these yields and spreads very closely.
*The yield, which is the rate of return on your bond, can be read through a yield curve, which is the pattern of yields on bonds. This increase in bond yield (and the decrease in spread) is something to watch over the next week or so. If the bond yield continues to go up, the spread will continue to shrink and this could be a trigger for interest rates to rise (with all lenders).
In its statement, the the US Federal bank gave a more upbeat take on the economy than it has recently, although the tone remained cautious. The Fed said that "although the economic outlook has improved modestly since the March meeting, partly reflecting some easing of financial market conditions, economic activity is likely to remain weak for a time."
The statement also said the pace of contraction appears to be somewhat slower, a belief that has helped lift stocks over the last two months
A reading on first-quarter gross domestic product showed the U.S. economy shrank at an annualized rate of 6.1%, much steeper than the 4.7% decline analysts expected, but still narrower than the 6.3% drop in the fourth quarter.
• TSX +68.28
• DOW +168.28 In New York, stocks rallied after the Federal Reserve held interest rates steady, as expected, but issued a slightly more upbeat economic outlook.
• Dollar +1.15c to 83.18USD
• Oil +$.1.05 to $50.97US per barrel
• Gold +6.90 to $900.50USD per ounce
• Canadian 5 yr bond yields +.04bps to 2.01- Four weeks ago it was 1.73.
http://www.financialpost.com/markets/market_data/money-yields-can_us.html
The bond yield was up again, and this time over the 2.00 mark. Four weeks ago it was 1.73. So the spread is down to 1.77%. This may be the time to watch these yields and spreads very closely.
*The yield, which is the rate of return on your bond, can be read through a yield curve, which is the pattern of yields on bonds. This increase in bond yield (and the decrease in spread) is something to watch over the next week or so. If the bond yield continues to go up, the spread will continue to shrink and this could be a trigger for interest rates to rise (with all lenders).
In its statement, the the US Federal bank gave a more upbeat take on the economy than it has recently, although the tone remained cautious. The Fed said that "although the economic outlook has improved modestly since the March meeting, partly reflecting some easing of financial market conditions, economic activity is likely to remain weak for a time."
The statement also said the pace of contraction appears to be somewhat slower, a belief that has helped lift stocks over the last two months
A reading on first-quarter gross domestic product showed the U.S. economy shrank at an annualized rate of 6.1%, much steeper than the 4.7% decline analysts expected, but still narrower than the 6.3% drop in the fourth quarter.
Wednesday, April 29, 2009
Financial Update for April 29, 2009
Stock markets close lower amid bullish consumer sentiment data, banking worries
We started quite negative this morning based on the swine flu and the news down in the States that Citigroup and Bank of America may need some more cash. Then the confidence numbers came out and they were much better than expected and people started to rally around those," said Lex Kerkovius, senior research analyst at McLean and Partners Wealth Management Ltd., in Calgary, Alberta.
• TSX -46.77
• DOW -8.05
• Dollar -.07c to 81.93USD
• Oil -$.22to $49.92US per barrel partly because of worries the flu outbreak could cut back on air travel, lowering demand.
• Gold -14.60 to $893.60USD per ounce
• Canadian 5 yr bond yields +.04bps to 1.97. Four weeks ago it was 1.74.
. http://www.financialpost.com/markets/market_data/money-yields-can_us.htm
*The yield, which is the rate of return on your bond, can be read through a yield curve, which is the pattern of yields on bonds. This increase in bond yield (and the decrease in spread) is something to watch over the next week or so. If the bond yield continues to go up, the spread will continue to shrink and this could be a trigger for interest rates to rise (with all lenders).
U.S. housing bottoming says analyst
Financial Post by David Pett
US housing is at the bottom according to a recent Lombard Street Research daily note. Some crumbs of good news may offer hope the housing market is finally bottoming, but this is the hardly the meal investors might be looking for. Investors should wait for clearer signs of recovery before considering investing in U.S. homebuilders.
Signs of recovery for US housing presented by Gabriel Stein at Lombard Street don't amount to much. New home sales for March were less negative than for February, for example, which these days seem to be as good as a rise. The encouraging interpretation is that new home sales might have actually bottomed when looking at the three month trend. Since supply of new homes is so low, the lowest since 2002, at some point, inventories will clear, and "residential housing will pick up again" says Stein.
The only problem with this thesis is that delinquency rates are in a clear rising trend, according to a recent report from Zelman & Associates and will continue to add to the supply of existing homes. Modification of mortgages is only "scratching the surface" with only 4.4% of delinquent mortgages modified in January 2009 according to Zelman; therefore, the quarterly foreclosure rate is not expected to decline until the fourth quarter of 2010.
Finally, two different house price measures offer conflicting signals. The Federal Housing Finance Administration's price index rose in January and February, but data today for the S&P Case/Shiller index for March shows an uninterrupted decline.
Homebuilder stocks have nearly doubled from March lows suggesting that the fire is finally out for this industry, but the data suggests there are still burning embers suggesting investors might get burned.
We started quite negative this morning based on the swine flu and the news down in the States that Citigroup and Bank of America may need some more cash. Then the confidence numbers came out and they were much better than expected and people started to rally around those," said Lex Kerkovius, senior research analyst at McLean and Partners Wealth Management Ltd., in Calgary, Alberta.
• TSX -46.77
• DOW -8.05
• Dollar -.07c to 81.93USD
• Oil -$.22to $49.92US per barrel partly because of worries the flu outbreak could cut back on air travel, lowering demand.
• Gold -14.60 to $893.60USD per ounce
• Canadian 5 yr bond yields +.04bps to 1.97. Four weeks ago it was 1.74.
. http://www.financialpost.com/markets/market_data/money-yields-can_us.htm
*The yield, which is the rate of return on your bond, can be read through a yield curve, which is the pattern of yields on bonds. This increase in bond yield (and the decrease in spread) is something to watch over the next week or so. If the bond yield continues to go up, the spread will continue to shrink and this could be a trigger for interest rates to rise (with all lenders).
U.S. housing bottoming says analyst
Financial Post by David Pett
US housing is at the bottom according to a recent Lombard Street Research daily note. Some crumbs of good news may offer hope the housing market is finally bottoming, but this is the hardly the meal investors might be looking for. Investors should wait for clearer signs of recovery before considering investing in U.S. homebuilders.
Signs of recovery for US housing presented by Gabriel Stein at Lombard Street don't amount to much. New home sales for March were less negative than for February, for example, which these days seem to be as good as a rise. The encouraging interpretation is that new home sales might have actually bottomed when looking at the three month trend. Since supply of new homes is so low, the lowest since 2002, at some point, inventories will clear, and "residential housing will pick up again" says Stein.
The only problem with this thesis is that delinquency rates are in a clear rising trend, according to a recent report from Zelman & Associates and will continue to add to the supply of existing homes. Modification of mortgages is only "scratching the surface" with only 4.4% of delinquent mortgages modified in January 2009 according to Zelman; therefore, the quarterly foreclosure rate is not expected to decline until the fourth quarter of 2010.
Finally, two different house price measures offer conflicting signals. The Federal Housing Finance Administration's price index rose in January and February, but data today for the S&P Case/Shiller index for March shows an uninterrupted decline.
Homebuilder stocks have nearly doubled from March lows suggesting that the fire is finally out for this industry, but the data suggests there are still burning embers suggesting investors might get burned.
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