March 1, 2019, Quick Update: Peanut Convertible Debentures Power Rankings

Hi. This is the 40th update of the Peanut Power Rankings, which takes into account data current to March 1, 2019.  Thank you for continuing to read and support the Canadian Convertible Debentures Project.       
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For a summary of the rankings of our entire convertible debenture coverage universe including the quantitative model prices of, and notes on each issue we follow, click on the table below to view it larger.

For background information on the Peanut Power Rankings, please see our FAQs by clicking here.

Important: Like everything else on this website, content here is provided as information and opinions only and not intended to be a provision of investment advice or a recommendation of any investment action in any form. There is no guarantee, warranty, representation, or other assurance whatsoever on any of the information provided.  Information and opinions reflect our views as of the date provided, but may change without notice.  Investments made in convertible debentures are exposed to the risk of financial losses, and as with all disseminated information concerning investments, it is highly recommended that an individual consult with a qualified investment professional before making any investment decisions.



Public Service Message: A New Convertible Debentures List

Throughout the last year or so, we've received numerous inquiries about the Financial Post's convertible debentures list, which has unfortunately vanished without a trace from the newspaper's website.  To make matters worse, the basic list that used to be published on the TSX website appears as if it hasn't been updated since last fall.

So where does that leave us convertible debenture investors?

Well, in an attempt to address this absence for the convertible debentures community, we decided to go to work and came up with the Peanut Convertible Debentures Big Board, which you can access here.  No, it's not a complete list of Canadian convertible debentures, but it is a bigger list than the one we have for the Peanut Power Rankings, and hopefully at least some of you out there will find it useful. 


Market Commentary - Quick Points (March 1, 2019)

• The cold weather was a downer in February, but at least the stock market was up? Canadian equities, as measured by the S&P/TSX Composite Index added another 3.15% during the month, and is now up an eye-popping 12.13% in the first two months of the year.  
• Bond yields remained low.  Both 5-year and 10-year Canadas ended February a few basis points lower than in January. 
• Not surprisingly, a higher stock market and lower bond yields meant another positive month for our favourite asset class, Canadian convertible debentures.  As measured by our homegrown Peanut Convertible Debentures Index™, Canadian convertible debentures tacked on an additional 2.25% in February, bringing the year-to-date return of the index to 4.28%.  That's excellent, but obviously it's unreasonable to expect such heady returns every month.
• Alas, there remains plenty of risks in the system, even if the market seems impervious to them right now. 
• Let's start with the weak economic data.  Canadian Q4 GDP growth was an anemic 0.1%, and a technical recession (generally defined as two consecutive quarters of negative GDP growth) in the near to medium-term is possible.  NAFTA 2.0 (or USMCA or CUSMA or whatever they're calling it) remains unratified, and it appears both Canada and Mexico are willing to hold out on ratifying to push the 'murcians to drop their ridiculous steel and aluminum tariffs which were placed on false national security grounds. 
• Meanwhile, in Ottawa, the SNC-Lavalin scandal just keeps growing.  Former Attorney-General Jody Wilson-Raybould deserves props for putting ethics over politics.  As for our embattled Prime Minister, some unsolicited advice: dig up, Justin. 
• Of course, south of the border, next to nobody in the ruling Republican Party (note I said ruling and not governing) is putting ethics over politics, as further evidenced by Michael Cohen's bombshell testimony in front the House Oversight and Reform Committee earlier in the week.  Important quote from Cohen while referring to the Republican members of the Committee: "I did the same thing you are now doing for 10 years.  I protected Mr. Trump for 10 years ... and I can only warn (that) people that follow Mr. Trump as I did, blindly, are going to suffer the same consequences."  Here is some additional reading for those interested.
• How American voters respond in 2020 will be significant in determining whether the current administration will just be an ugly, four-year blight in the history of their republic, or if they are to continue down the path of a backwards banana republic.
• Meanwhile, the US economy continues to serve up a menu of mixed results.  Here, the China-US trade talks loom large: if you're looking for something that can single-handedly plunge the world into recession if things go sideways, this is it.  Although murmurings seem to indicate that progress is being made, a healthy dose of skepticism is prudent.  If it took this US administration two years (and counting, because it isn't ratified yet) to negotiate a deal with allies such as Canada and Mexico, is it realistic to believe that they can do it in a matter of months with a rival such as China? Well, maybe, if they completely buckle so they can claim political "victory". 
• Bottom-line: we think the Fed remains on pause until we get further clarity on the China-US trade talks.  If the news is good, then I'd expect one more hike in the summer.   But if not, I think anything is on the table - even an interest rate cut, which would've been unthinkable just six months ago.
• Given the sharp rebound in equity markets since Christmas, I think the market is due for a bit of a consolidation period here going forward.  That's just a guess, of course, but for the average convertible debenture investor out there, we continue to hold steady on our previous view: stay diversified, emphasize higher quality issues, and remain focused on the long-term. We live in surreal times, and it's best to stick to tried-and-true long-term strategies.

Picture of the Day


Surreal.  Jeff Koon's impressive "Puppy", a giant flower topiary sculpture, outside of the Guggenheim Museum Bilbao in Bilbao, Basque Country, Spain. Copyright © 2008 Felix Choo / dingobear photography.  Photo available for licensing at Alamy Images. Photo may not be reproduced without permission. 

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