Monday, March 11, 2013

The SBA and anserine

AN-suh-ryn, -rin

1. Of or relating to a goose.

2. Stupid; silly.
From Latin anser (goose).



Have you ever heard a gaggle of geese take to the air in squadron after squadron, covering the sky with a glorious anserine calligraphy?  It sounds kind of silly or stupid.

Sequestration will chop $16.68 million from the SBA's loan-guarantee fund, according to a recent letter sent by outgoing SBA head Karen Mills.  Each dollar that the SBA uses in its loan program guarantees an average of $51 of capital for small businesses. The sequestration is expected to result in 1,928 fewer loans totaling $902 million in capital in the hands of entrepreneurs.

The SBA estimates that the nearly 2,000 loans it expected to make would have supported about 22,600 jobs.



SBA LIBOR Base Rate March 2013 = 3.20%
SBA Fixed Base Rate March 2013 = 4.63%

Debenture Rate for February

The debenture rate is 2.21% but note rate is 2.249% and effective yield is only 4.29%.


The Federal Reserve’s stimulus efforts may be paying off, as employment rose 236,000 last month.  

The change in total nonfarm payroll employment for December was revised from +196,000 to +219,000, and the change for January was revised from +157,000 to +119,000.

Over the past month, the yield curve has moved up, getting somewhat steeper in the process, as long rates moved more than short rates. 

The slope of the yield curve—the difference between the yields on short- and long-term maturity bonds—has achieved some notoriety as a simple forecaster of economic growth.

More generally, a flat curve indicates weak growth, and conversely, a steep curve indicates strong growth.

Keep your eyes and ears open for this week’s auction of 30 year Treasury bonds.

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
2013-  3.25

Wait a minute, why no numbers for 2003, 2004, and 2005?

One month after the 9/11 attacks, the Treasury 30 year bond is discontinued. When the Treasury mothballed the 30-year bond in 2001, experts speculated it was trying to drive down long-term interest rates, which had remained stubbornly high while the Federal Reserve was slashing short-term interest rates to revive the economy. When the Treasury discontinued the 30-year bond in 2001, its yield fell 35 basis points in one day. Why? A shrinking supply of the 30-year Treasury bond caused increased demand to drive rates down.

What does all this mean?

I don’t know.

At last month’s auction, Treasury 30-year bonds rose to the highest yields at an auction since May.  U.S. 30-year bonds are among the securities most sensitive to consumer prices because of their long maturity, as inflation would erode the return on the bonds’ fixed payments for their duration.

The day after the auction, the Federal Reserve will report on industrial production and capacity utilization.  The capacity utilization rate, which measures how much plants and factories are being used, is one of the Federal Reserve’s favorite gauges of the economy.  The Federal Reserve watches capacity utilization rates to see if production constraints are threatening to cause inflationary pressures. Bottlenecks or shortages often lead to inflationary pressures that would drive prices even higher.  Several analysts have pointed to a rate between 81% and 82% as a tipping point over which inflation is spurred.   The capacity utilization rate decreased in January to 79.1 percent.  

The Federal Reserve Open Market Committee will begin a two day meeting on March 19th.


”Beware the ides of March"

                -Soothsayer, Julius Caesar Act 1, scene 2

So what in the word are ides?

The word ides comes from a Latin word that means "to divide" and marked the halfway point in Roman months. "The ides", then, is simply the middle of the month.  Roman months originally began at the rise of the full moon.  In 44 BC the plot to assassinate Caesar had already begun to buzz around Rome when the soothsayer famously warned the Emperor.  The terrible forecast, therefore, may have been based more on Rome's worst kept secret than any special psychic powers on the part of the seer.  Alas, at the end of the day it didn't matter. A swaggering, over-confident Julius Caesar met his terrible fate when he ignored the advice.

The ides of March unfortunately is not a holiday.  The next federally recognized holiday is not until Memorial Day.

By then Juan Pierre may have stolen another six bases.  If he does, he will have passed Dummy Hoy on the all-time stolen base list.  "Dummy," was an American center fielder in Major League Baseball who played for several teams from 1888 to 1902, most notably the Cincinnati Reds.  He is noted for being the most accomplished deaf player in major league history.  In Hoy's time, the word "dumb" was used to describe someone who could not speak, rather than someone who was stupid; but since the ability to speak was often unfairly connected to one's intelligence, the epithets "dumb" and "dummy" became interchangeable with stupidity. Hoy himself often corrected individuals who addressed him as William, and referred to himself as Dummy. He was actually one of the most intelligent players of his time, and is sometimes credited with developing the hand signals used by umpires to this day since he could not hear what they said.

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