News Tidbits

14-Oct-2011 | Reggie | Asia Banks Bonds Canadian Investing Commodities

 

Canadian banks managed to escape the debt crisis of 2008 without much trouble thanks to their safe balance sheets and relatively high capitalization ratio.  That safety is paying off 3 years later as banks in Europe are once again struggling with high debt levels.  In order to raise capital, Euro banks are unloading assets and Canadian banks are in great shape to snap those up.  So far RBC has grabbed up some assets from Dutch bank Dexia and will probably get more.

 

Inflation in China is down slightly from their highs which came as a bit of a relief to Chinese authorities who have been struggling hard to get rising prices under control.  Over the past year, China has constantly raised interest rates and bank reserve rates in an effort to get inflation under control and it finally seems to be working.  Food prices are still up significantly which means that there likely won’t be any rate decreases in the near term future.

 

Bill Gross: “This year is a stinker.” This comment was made by the world’s biggest bond manager in his October newsletter.  He attributes the poor performance to investors moving into US government bonds as European debt issues continued.  The PIMCO bond fund was positioned to perform best in a scenario of about 2% global growth.

 

Oil price rise over $3.00 thanks to strong economic data released today.  The price increase is being mainly attributed to strong US consumer spending, increased bank lending in China, and the G20 meeting where the European debt issues continue to

 

Occupy Wall Street continues in New York and spreads throughout the world.  The protesters that have been basing their operations out of Zuccotti park will be allowed to continue to camp out in the park thanks to the Canadian real estate trust, Brookfield Asset Management.  Brookfield owns and controls the park in downtown New York.  The movement has gained more momentum as folks and businesses continue to make the endorsement and activists spring up in different cities throughout the globe.  The Canadian Auto Workers union is one of the latest to give their encouragement to the movement.

 

This blog has been prepared by the Retire First Team. The blog expresses the opinions of the writers and not necessarily those of Retire First Ltd. Statistic and factual data are from sources Retire First believes to be reliable but their accuracy can not be guaranteed. This blog is furnished on the basis and understanding that Retire First is under no liability whatsoever in respect thereof. It is for informational purposes only and is not be construed as an offer or solicitation for the sale or purchase of securities. Retire First Ltd. And its officers, directors, employees and their family may from time to time invest in the securities discussed in this blog. This blog is intended for individuals where Retire First Ltd is registered as a dealer in securities.

Retire First is a member of the Canadian Investors Protection Fund.

Commission, trailing commissions, management fees and expense all may be associated with mutual funds. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. A recommendation of any of the mentioned investments would only be made after a personal review of individual portfolio. Third Party research has been used in formulating the writer's opinions.

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Would you buy a negative interest bond?

27-Oct-2010 | kate | Economy Uncategorized US Markets USA

The U.S. government has for the first time, sold 5 year TIPS with a negative rate of return. How is this possible? Investors paid $105.50 for bonds that will mature at $100, effectively, paying the government for lending them money. The -0.55% TIPS means that they will be paying you 0.55% less than the Consumer Price Index rate of increase between now and 2015. So why in the world would an investor do this?

Investors, who bought the $10 billion dollar’s worth of the negative interest bonds, are still hoping to make money on the bonds by banking on inflation. If the US government pumps more money into the economy, hoping to reinvigorate the US economy, the inflation rate would move along with it, increasing the value of the negative rate bonds.

The treasury inflation protected securities; TIPS are paying a yield of -0.55%, which means that people are buying them as protection against inflation. When inflation rises (to which many analyst believe the Feds will raise it 2%), the principal will rise along with it.

Of the $10 billion dollars TIPS sold yesterday, 47% of the bonds bought, were bought by foreign buyers.

This blog has been prepared by the Retire First Team. The blog expresses the opinions of the writers and not necessarily those of Retire First Ltd. Statistic and factual data are from sources Retire First believes to be reliable but their accuracy can not be guaranteed. This blog is furnished on the basis and understanding that Retire First is under no liability whatsoever in respect thereof. It is for informational purposes only and is not be construed as an offer or solicitation for the sale or purchase of securities. Retire First Ltd. And its officers, directors, employees and their family may from time to time invest in the securities discussed in this blog. This blog is intended for individuals where Retire First Ltd is registered as a dealer in securities.

Retire First is a member of the Canadian Investors Protection Fund.

Commission, trailing commissions, management fees and expense all may be associated with mutual funds. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. A recommendation of any of the mentioned investments would only be made after a personal review of individual portfolio. Third Party research has been used in formulating the writer's opinions.

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2009 RRSP Season Concludes; Quick look at fixed-income ideas

03-Mar-2010 | Reggie | Bonds Canadian Investing Retirement Planning

After a terrible year last year, the 2010 RRSP season ended very strong with many wading back into the market that scared many away last year.  Last year’s RRSP season was right in the midst of the stock market upheaval that saw years of returns decimated in just a few short days.  The stock market’s bottom last year actually occurred in March.  The world was awash with uncertainty as to future job prospects and left investors wanting to keep savings readily available.

Many believe that the caution gained last year will linger on for a while longer as investors are still sensitive to riskier investments.  Surprisingly, the high level of contributions and extra caution still wasn’t enough for the Alberta bond issue to sell out.  At a rate of 3.3% locked in over 5 years, the rate was totally uncompetitive, but from data gained last week it looked like the target of $100 million would not have been reached.

In the corporate world, companies with a debt rating nearly as good as the Alberta (AAA) are showing up with some pretty competitive rates that should be enough to lure most investors away from the locked in Provincial offering.  Take a look at these for example:

As of March 2, 2010                   Maturity            Yield

General Electric Capital AA+      11/02/2015        3.63%

Rabobank Nederland      AAA     05/02/2015        3.32%

Royal Bank of Canada    AAAe    10/11/2014        2.90%

Sun Life Financial          A          31/03/2014        3.74%

Bank of Nova Scotia       A+        27/09/2013        2.74%

This blog has been prepared by the Retire First Team. The blog expresses the opinions of the writers and not necessarily those of Retire First Ltd. Statistic and factual data are from sources Retire First believes to be reliable but their accuracy can not be guaranteed. This blog is furnished on the basis and understanding that Retire First is under no liability whatsoever in respect thereof. It is for informational purposes only and is not be construed as an offer or solicitation for the sale or purchase of securities. Retire First Ltd. And its officers, directors, employees and their family may from time to time invest in the securities discussed in this blog. This blog is intended for individuals where Retire First Ltd is registered as a dealer in securities.

Retire First is a member of the Canadian Investors Protection Fund.

Commission, trailing commissions, management fees and expense all may be associated with mutual funds. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. A recommendation of any of the mentioned investments would only be made after a personal review of individual portfolio. Third Party research has been used in formulating the writer's opinions.

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