The market always knows

On a day when the TSX fell 427 points in a blaze of red, how did the six Canadian banks fare?

BMO – up 0.5%
BNS – down 1.06%
CIBC – down 0.95%
National Bank – down 4.17%
Royal Bank – down 0.97%
TD – down 1.16%

The correlation of trading in BNS, CIBC, TD and Royal is astounding. A few basis points separate today’s trading performance of the four banks.

Equally interesting is the fact that today had to be the first day so far this year where BMO turned a gain when the rest of the banking fraternity found itself stuck in the mud (see prior post “Enough with pounding the CDN banks” March 6-08). Manulife and Sunlife fared no better. In fact, since its five year intra-day low on Monday, BMO has rallied more than 10% from $38.00 to $42.10. None of the other banks, with the exception of CIBC, has come close to that type of performance.

More curious is the fact that none of the top eight financial shares were in the black today, except for BMO.

With the news out at 17:55 tonight that BMO had successfully negotiated a restructuring of its Apex and Sitka SIVs, the fact that BMO was the only large Canadian financial stock that traded up today started to make more sense.

The market always knows.

Although my wee brain can’t really parse the confusing press release, my favourite DTM business outlet reports this to be great news for all concerned. Hallelujah! Perhaps the pounding of BMO will end now for good, and the days of the 7% dividend yield will soon be a distant memory.

Congrats to everyone at 100 King Street West. Achieving what the ABCP group has yet to finalize was an important waypoint in BMO’s year.

MRM
(disclosure – we own BMO and BNS in our household)