Tuesday, February 14, 2012

Signs of a Canadian housing bubble?

Remember Crack Shack or Mansion?  While not quite as egregious as Vancouver, residential real estate prices in Toronto have become blog worthy.

Monday, February 13, 2012

Understanding labour statistics

A wonderful summary of the differences between the two key sources of labour statistics at the Worthwhile Canadian Initiative.  U.S. and Canadian approaches are discussed.

Saturday, February 11, 2012

More on labour participation rates

I recently listened to a guest on Bloomberg Surveillance with Tom Keene and Ken Prewitt discussing how the drop in U.S. participation is nothing to be alarmed about because it is a function of baby boomer demographics.  Since the market is getting tougher and they are thinking about retirement anyway, they may have less attachment to the labour force. I looked at the Canadian data to see if this idea holds here.  The answer is no.  While overall participation rates have been dropping since the great recession, they have been on a steady up-trend for ages 55 and over.  Ten year chart below:


Thursday, February 9, 2012

Yellow Media Cuts Dividend on Preferreds

Announced today with their Q4 earnings. Risk of a pre-packaged bankruptcy (or something along those lines) that wipes out the existing common and preferred shareholders seems more likely.  Doh.

Monday, February 6, 2012

One Year in a TFSA

Jan 19, 2011: Contribute $5,000 to TFSA account.

Jan 21, 2011: Buy 245 shares of iShares DEX Long Term Bond ETF, XLB, at $20.06.  Rationale: lots of negative headlines, it's the end of the world, yields are going to fall.

May 26, 2011: Sold 245 shares of XLB at $20.70, 5.0% total return.  Rationale:  yields have dropped 26bps (measured by Bank of Canada V39056), they probably won't go up, but probably can't go any lower.  Outcome: very very very wrong.  Yields dropped another 99bps to the end of the year with XLB posting a 15.6% total return.

June 2011: Bought 250 shares of iShares DEX HYBrid Bond ETF, XHB, at average price of $20.37.  Rationale: if yields are not going down anymore, perhaps this will put pressure on credit spreads.  Outcome: wrong again.  XHB was up less than 1% from the beginning of June to the end of the year despite the fall in Government yields and having a duration of over 6 yrs as spreads widened.

Aug 8, 2011: Sold 250 shares of XHB at $20.65, 2.6% total return.

Aug 8, 2011: Bought 950 shares of SilverBirch Energy, SBE, at $5.50.  Rationale: This was a spin-out from UTS after the take over by Total. Possibly sold for non-economic reasons (i.e. just didn't fit into their strategy for buying UTS). Significant ownership and board representation by West Face Capital and The Children's Investment Fund (presumably they know what they're doing?).  This is an oil sands exploration company, seems to go along with the idea of exposing yourself to positive surprises (see The Black Swan).  Outcome: finally right.  Teck Resources makes bid for SilverBirch to develop the 50% of two projects that they do not already own.

Jan 10, 2012: Sold 950 shares of SBE at $9.65, 75.5% return.

Saturday, February 4, 2012

Good news, bad news: employment situation

Good News

Since its recession lows, the average work week has been increasing. Why is this important?  By a rough calculation, every 0.1 hrs equates to an annualized income of about $2B for the economy (0.1 hr/wk x 17mm workers x 23.5 $/hr x 52 wk/yr).

Bad News

While the unemployment rate has been trending downwards, the participation rate has been going down as well.  It looks like most of the improvement in this key headline rate has been from people dropping out of the workforce.  (The idea for this chart comes from a Brad DeLong chart).

How do you think consumers are feeling about their jobs?