| Dowdy preferred shares are looking mighty seductive
The venerable Sir John Templeton once advised investors to buy stocks at the moment of maximum pessimism. We're more or less at that point in the preferred share market right now, so get moving. The stock markets in general have been cranky lately, but preferred shares are in a class of their own. Considering how dull they normally are, the current slump is almost shocking. In fact, let's call it a bear market for preferreds. "The market peaked at the end of March, 2007, and since then we've had the worst peak-to-trough performance that I have on record - that's about 14 or 15 years," said James Hymas, president of Hymas Investment Management and one of a small group of preferred share experts in this country. "Right now, we're a whisker above that trough. If somebody sneezes, we may hit a new trough." Preferred shares issued by the big banks and blue-chip companies such as Brookfield Asset Management, George Weston and E-L Financial have fallen in price in recent months and now offer dividend yields solidly above 5 per cent and sometimes more than 6 per cent.
London shares open higher; TUI Travel gains after positive trading ...
Meanwhile, oil prices were slightly higher in Asian trade, hovering near 90 usd in a market focused on the fate of the United States economy. In late morning trade, New York's main oil futures contract, light sweet crude for delivery in March, rose 6 cents to 91.05 usd per barrel. Brent North Sea crude for March delivery rose 16 cents to 91.54 usd a barrel after settling 48 cents higher at 91.38 usd on Monday in London. Turning to the blue chips, TUI Travel gained 10-3/4 at 249-3/4 as the group said current trading has been "encouraging" with strong demand across all its markets despite fears of a consumer downturn. The group said mainstream trading had been particularly strong in the period following Christmas, with sales significantly ahead of the prior year.
FBI probes firms over risky loans
The FBI said it is investigating 14 companies for possible accounting fraud, insider trading or other violations in connection with home loans made to risky borrowers. Agency officials did not identify the companies under investigation but said the wide-ranging probe, which began in spring 2007, involves companies across the financial services industry, from mortgage lenders to investment banks that bundle home loans into securities sold to investors. The Federal Bureau of Investigation is working in conjunction with the Securities and Exchange Commission on the corporate-fraud probe, said Neil Power, chief of the FBI's economic crimes unit in Washington. As the nation's housing crisis worsens, there has been a dramatic spike in the number of mortgage fraud cases under investigation.
More than 20 Years in the Making
Analysts warned some investors would face huge write-downs on the valuation of securities guaranteed by the insurers if they lost their top credit rating..." January 21 - Financial Times (Robert Cookson and Sarah O'Connor): "Until a few months ago, 'counterparty risk' was something that only worried professional risk managers at major banks. With the world awash with cheap debt, booming asset prices and the lowest default rate in a generation, the possibility that one's trading partners would not honour their financial commitments seemed remote. But recent weeks have seen an unfamiliar item taking chunks out of banks' balance sheets - counterparty risk is back. Over the weekend, ACA, a small bond insurer, has been in frantic talks to avoid insolvency... Some are waking up to the idea that this might only be the tip of the iceberg.
Brothers’ tickets thrown out
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