The world’s soundest banking system has rarely been so undervalued by investors. As of Oct. 31, the average dividend yield on the Big Five Canadian banks stood at 5.2%, way above the 3.7% yield on 10-year Canadian government bonds. It’s not often bank dividend yields exceed the 10-year government bond ...
More »
Larry MacDonald - 7 Comments »
Could we be getting close to the time when major parts of the financial system go on “holiday?” Just like the U.S. banking system had to be shut down at times during the Great Depression of the 1930s to halt the ruinous rush to withdraw deposits, could the same now ...
More »
Larry MacDonald - No Comments »
An IMF Working Paper released in September sheds some light on banking crises. In Systemic Banking Crises: A New Database, authors Luc Laeven and Fabien Valencia present a comprehensive data base on the banking crises that have occurred around the world in recent decades.
More »
Larry MacDonald - 4 Comments »
The flight to safety has gone to historic extremes, as highlighted today by the plunge in three-month U.S. treasury bill yields to levels not seen since 1941 (0.02%). That’s one sign of how serious things have become. This is a “seven-standard-deviation” event unfolding before our eyes.
More »
Larry MacDonald - No Comments »
“The risk of a full scale run on U.S. banks … is all too real,” states Nandu Narayanan in his July commentary. Narayanan has a PhD in finance from the Massachusetts Institute of Technology and is a hedge fund manager whose fund, CI Global Opportunities Fund, has gained over 75 ...
More »
Larry MacDonald - 2 Comments »
Hedge fund manager Goodwood Inc., an activist value investor, confirms forced selling in the stock market. “We believe there has been a significant amount of selling recently in some of our core names by other institutions that have been experiencing redemptions,” they note in their latest Monthly Commentary.
More »
Larry MacDonald - No Comments »
Isn’t the financial sector supposed to be in dire straits? Maybe they are, but the latest Market Insight publication from AIC Funds says 76% of their largest 25 financial stocks raised dividends in the past year, 20% had no change, and 4% had a decrease.
More »
Larry MacDonald - No Comments »
U.S. banks are finding it difficult to raise capital and avoid a drastic restriction in lending, fanning fears of systemic meltdown and a plunge into a severe economic downturn. But maybe things aren’t all that bad: the Federal Reserve’s 2% discount rate is another avenue by which the banks ...
More »
Larry MacDonald - 1 Comment »
Nandu Narayanan, chief investment officer at Trident Investment Management, argues in his latest commentary that Citigroup is the “poster child” for what has gone awry in the U.S. financial sector (Mr. Narayanan’s hedge funds are doing quite well this year). What follows is a summary of the relevant sections.
More »
Larry MacDonald - No Comments »
While the position of Canadian banks is improving vis a vis U.S. banks due to the financial crisis (as argued in my previous post), it would be not be entirely accurate to attribute the improvement solely to the more conservative practices of Canadian banks. Their balance sheets and capital ratios ...
More »
Larry MacDonald - No Comments »
