Wednesday was a positive day in the markets with the S&P 500 rising 1.55% but Toronto as up only 0.1%
The U.S. FED seemed to give something of an “all clear” signal indicating that it sees less need to continue raising interest rates.
WSP Global was up 4.8% after releasing highlights of its three year strategic plan by which is plans to become the premier professional consultancy in its industry in the next three years. As our report indicates this company has been extremely aggressive in growing through acquisitions.
BHP (the BBL ADR) was up 3.1% in New York.
Amazon.com Inc. was up a hefty 4.8% (REALLY hefty when you consider its total market value of $817 billion.)
If indeed we are at or near the end of the cycle of higher interest rates, and with the 5 year Canada bond yield at 1.82%, and the 3 month T-bill rate at 1.63% it seems to me that the market yield on various stocks and preferred shares could start to come down. That would push their prices up. Looking at TD direct they offer 1.6% on a TD deposit account and 3.0% on a 5 year GIC. In comparison to that, the ability to get say 6.0% for five years on Canadian Western Bank’s new rate reset issue CWB.PR.D might be attractive to some investors. You are not guaranteed at all that it will be worth $25 in five years but with a spread of 4.0%% over the five year bond upon reset it is basically guaranteed to be paying at least 4.05% (that’s if the 5 year Canada goes to zero) and it seems very unlikely it would reset at less than 5% and it could be a lot more. Of course we don’t know what inflation will be. But if someone wanted fixed income this might have a place in a portfolio. One thing investors have learned about rate reset preferred shares however; they are not a substitute for cash or investments that are guaranteed to mature at a certain price.