On Friday, the S&P 500 was down 0.3% while Toronto was up 0.4%
The great majority of stocks on our list were up.
Rate reset preferred shares were up with the Enbridge series A share up 5.1%. The Canadian Western Bank rate reset preferred share on our list was up 2.4%. A Husky Energy rate reset preferred share that I follow and that I once owned was up 11.1%. It has fallen precipitously a week or two ago on some bad news. Overall, these rate reset shares had fallen to what appeared to be obvious bargain levels and made a bit of a comeback today.
Somewhat similarly, the Boston Pizza Royalties Income Fund units were up 3.2%. These units are yielding over 9%. Given that the five year government of Canada bond pays 1.9% (indicating little fear of inflation), the 9% yield on BP would seem to be pricing in fear of a distribution cut. And that could happen given that the trailing year payout ratio is about 104%. But I see no reason to fear more than a very small distribution cut, if any. Possibly, the market fears that BP is going into a tailspin where same-store sales will fall year after year. That is a possible scenario but it does not seem likely. If the chain continues to be well managed, its same-store sales should continue to increase even just due to menu price inflation over the years. There are always possible negative scenarios such as a deep recession driving down same-store sales precipitously and causing many locations to close. But is that a reasonable expectation?
AutoCanada was up 3.8%.
Five and Ten year interest rates have declined in the past few weeks in both Canada and the U.S.. Possibly a modest decline in mortgage rates can keep the home building industry going for the sake of Melcor and Toll Brothers.