The SBA and limpet

limpet

LIM-pit

1. Any of various low conical-shelled marine mollusks that adhere tightly to rocks.

2. One that clings stubbornly.

From Middle English lempet, from Latin lampreda (lamprey) usually explained as literally "lick-rock," from lambere "to lick" + petra "rock."

The animals attach themselves to things with their sucker-like mouths..

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TIP OF THE WEEK 

Hotel occupancy rates are back to pre-recession levels.  Smith Travel Research’s preliminary performance numbers for January reveal another strong month for the U.S. hotel industry.   Occupancy overall was up 3% to 5% while revenue per available room was up 7% to 9%.

Loans to hotels are one of the single biggest industry categories of SBA borrower.

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Indices:

PRIME RATE= 3.25%
SBA LIBOR Base Rate February 2011 = 3.26%
SBA Fixed Base Rate February 2011 = 4.72%

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504 Debenture Rate for January 

The debenture rate is 2.76% but note rate is 2.81% and effective yield is only 4.839%. 

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AHEAD OF THE YIELD CURVE 

The government had a little trouble selling $16 billion of 30 year Treasury bonds last week.  

The bid-to-cover ratio, which gauges demand by comparing total bids with the amount of securities offered, was 2.47, compared with 2.6 at the January offering and an average of 2.66 for the previous 10 sales. 

The 30 year Treasury bond yield reached 3.23 percent, the most since October 31^st.  The difference between yields on Treasuries maturing in two and 30 years, our friend the yield curve, widened to 2.94 percentage points, the most since October 28^th when the difference was 3.08 percentage points. 

Short term rates remain exceptionally low because of, as the Federal Reserve put it, “low rates of resource utilization”.

In the Federal Reserve's eyes, resource utilization is gauged by capacity utilization which measures how much plants and factories are being used. 

Keep your eyes and ears open for Wednesday's Federal Reserve report on Industrial Production and Capacity Utilization.

Here is what capacity utilization rates have done:
1997- 83.6
1998- 83.0
1999- 82.4
2000- 82.6
2001- 77.4
2002- 75.6
2003- 74.6
2004- 79.2
2005- 80.7
2006- 82.4
2007- 81.5
2008- 79.9
2009- 67.3
2010- 74.8
2011- 76.7

What does all this mean?

I don't know.

Last month capacity utilization for total industry stepped up to 78.1 percent.  This is up 10.8 percentage points from the record low set in June 2009.  It is still however 2.3 percentage points below its long term average and the pre-recession levels of 81.3% in December 2007. 

We still have a way to go before rates will start to really go up.

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OFF BASE

Valentine’s Day is Tuesday, February 14^th. 

You ever wonder how this whole crazy ritual started?

It turns out there really was a St. Valentine who was thrown in prison by Roman Emperor Claudius II.  Claudius attempted to get him to convert to Roman paganism in order to save his life. Valentine refused and tried to convert Claudius to Christianity instead. Because of this, Valentine was executed.

On the evening before Valentine was to be executed, he wrote a note - the first "valentine" card – to a lady friend.  It was a note that read "From your Valentine."

Ever since then, also sensing impeding doom if they don't, men have been compelled to do the same thing.