Monday, March 25, 2013

The SBA and filipendulous



Hanging by a thread.

From Latin filum (thread) + pendere (to hang).

The filipendulous fate of SBA lending got a reprieve as Congress passed a continuing resolution that funds the government through September 30th.

Passing this continuing resolution avoids the threat of a government shutdown after March 27, the date on which the previous continuing current resolution expires.

The sequester cuts remain in place, but the SBA fared better than most agencies, because Congress had previously increased the subsidy it needs to guarantee loans.

So they went two steps forward and only one back.


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

Debenture Rate for March

The debenture rate is 2.23% but note rate is 2.259% and effective yield is only 4.30%.


So how filipendulous is this economy?

The Federal Reserve recently met on monetary policy and left unchanged its statement that it plans to hold its target interest rate near zero as long as unemployment remains above 6.5 percent and inflation is projected to be no more than 2.5 percent.  They went on to say that recent data suggest “a return to moderate economic growth following a pause late last year.”  The pause late last year?

The Department of Commerce originally said gross domestic product dropped 0.1 percent in the fourth quarter of 2012.   A month later, with their second revision said that gross domestic product grew at a 0.1 percent annual rate.

Now keep your eyes and ears open for this week’s third and final estimate of fourth quarter gross domestic product.  

Here is what GDP has been doing and this week’s interesting little table of data:

4th quarter 2012:             0.1%
3rd quarter 2012:             3.1%
2nd quarter 2012:          1.3%
1st quarter 2012:            2.0%
4th quarter 2011:            4.1%
3rd quarter 2011:           1.30%
2nd quarter 2011:           1.30%
1st quarter 2011:             0.4%
4th quarter 2010:           3.1%
3rd quarter 2010:           2.6%
2nd quarter 2010:          1.7%
1st quarter 2010:            3.7%
4th quarter 2009:           5.6%
3rd quarter 2009:          2.2%
2nd quarter 2009:          (0.7)%
1st quarter 2009:            (6.4)%

What does this mean?

I don’t know.

The pause in fourth quarter gross domestic product and revisions to its numbers are being driven by changes in inventories.   Stockpiles grew at a revised $12 billion annual pace, down from a $20 billion rate estimated last month.   Slow inventory buildup shaved 1.55 percentage points off annualized growth during the quarter.

Depleted inventories may signal a first-quarter pickup in production.

The bond market seems to echo that sentiment.  The Treasury Department recently sold $13 billion in 30-year debt at a yield of 3.248%, the highest in a year.   These higher long term rates make the slope of the yield curve steeper and signal stronger growth ahead.

That does not sound so filipendulous. 

Our next three day weekend is not until Memorial Day.   That sure seems like a long ways off.

According to the Federal Reserve, here are the remaining holidays for 2013:

Memorial Day May 27
Independence Day July 4
Labor Day September 2
Columbus Day October 14
Veterans Day November 11
Thanksgiving Day November 28
Christmas Day December 25 

Obviously a holiday needs to be inserted somewhere between now and the end of May.   

How about Good Friday?  It’s a holiday for the stock market.   So why not for everyone else?   The day marks the crucifixion and death of Jesus Christ.  How could that possibly be considered good?  It might be a derivation of "Gute Freitag" which is Germanic in origin and literally means "holy" Friday.

There’s something for anyone filipendulous to hang onto.

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