Sunday, November 25, 2012

The SBA and sequacious



Unthinkingly following others.

From Latin sequax (inclined to follow), from sequi (to follow).



SBA loans posted the second largest dollar volume ever in fiscal year 2012.  That amount was surpassed only by fiscal year 2011, which was heavily boosted by the loan incentives under the Small Business Jobs Act of 2010.  The totals for fiscal year 2012 include $15.15 billion SBA 7(a) loans. 

Leading the charge were nearly 1,300 new lenders turning to SBA lending.


7(a) Indices:

RIME RATE= 3.25%
SBA LIBOR Base Rate November 2012 = 3.21%
SBA Fixed Base Rate November 2012 = 4.51%

504 Debenture Rate for November

The debenture rate is 2.09% but note rate is 2.12771% and effective yield is only 4.171%.



After sequacious voters re-elected Obama, sequacious investors panicked.

The money flowed into the relative safety of U.S. treasuries.   At an auction the day after the election, Treasury 30-year bond yields fell to a two-month low.   The yield on the current 30-year bond dropped six basis points to 2.77 percent.  The bid-to-cover ratio, which gauges demand by comparing total bids with the amount of bonds offered, was 2.77, versus an average of 2.59 for the past 10 sales.

Ever since Lyndon B. Johnson defeated Barry Goldwater for the presidency in 1964, yields on long term Treasuries have dropped about 40 basis points in the first month when a Democrat wins, and risen 19 after a Republican victory.

Here is what the 30 year bond has been doing:

2001- 5.49
2002- 5.43
2003- ND
2004- ND
2005- ND
2006- 4.91
2007- 4.84
2008- 4.18
2009- 3.89
2010- 4.61
2011- 2.89
2012- 2.77

What does all this mean?

I don’t know.

Long term interest rates are being held down by Operation Twist.  Under Operation Twist, the Federal Reserve swaps about $45 billion each month of short-term debt and buys the same amount of longer-term Treasuries. 

The Fed by the end of December will have largely exhausted its supply of short-term debt.

Once the Fed runs out of short-term debt, it will have to decide if it wants to make outright purchases of longer term Treasuries.  The new bond buying would further expand the Fed’s balance sheet, which has more than TRIPLED to $2.88 trillion, from less than $900 billion in early 2008.

Keep your eyes and ears open for the Federal Open Market Committee’s last scheduled meeting of the year, December 11th through the 12th.



Lemmings must be sequacious, right?

The little furry guys plunging off a cliff seem to be the animal kingdom’s living embodiment of being sequacious.    Except that lemmings don’t actually run off cliffs committing mass suicide.   

They’re pushed. 

The 1958 Disney film White Wilderness, which won an Academy Award for Documentary Feature, staged footage with lemmings jumping to certain death.  These were faked scenes of mass migration.  A Canadian Broadcasting Corporation documentary, Cruel Camera, found the lemmings used for White Wilderness did not jump off the cliff, but were in fact launched off the cliff using a turntable.

1 comment:

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