Monday, April 15, 2013

The SBA and inosculate



To join or unite.

From Latin in- (within) + osculare (to provide with a mouth), from osculum (little mouth), from os (mouth).



The President and Congress will hopefully inosculate over the budget when it comes to the Small Business Administration.

President Obama's FY 2014 budget for the SBA decreases by $109 million from the 2012 enacted level, due primarily to the decreased estimated subsidy cost of its 7(a) Business Loan Guarantee Program.  

For the 7(a) program, the return to a zero subsidy rate removes the need to seek appropriations.  It also reduces lender fees.

This will provide $17.5 billion in 7(a) loan guarantees.

Last year SBA approved $15.1 billion in SBA 7(a) loans.


SBA LIBOR Base Rate April 2013 = 3.20%
SBA Fixed Base Rate April 2013 = 4.67%

Debenture Rate for March

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


Last week’s auction of 30 year Treasury bonds drew a yield of 2.998 percent.

That’s a significant drop in yield compared to the 3.248 percent at March’s 30 year bond sale.  That rate had been the highest in a year.

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.

This flattening of the yield curve may be signaling weaker growth.  

Keep your eyes and ears open for the Federal Reserve’s 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
2012- 79.0

What does all this mean?

I don't know.

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.

Last month’s Fed report showed that capacity utilization was at 79.6 percent.

79.6 percent is only 0.6 percentage points below its long-run (1972--2012) average.
For some inexplicable reason, Monday, April 15th is not a federal holiday.

It’s Patriots’ Day which is a state holiday in Massachusetts, Maine and a school holiday in Wisconsin.  Patriots’ Day commemorates the anniversary of the Battles of Lexington and Concord, the first battles of the American Revolutionary War.

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

As if that’s not enough of a compelling reason for today to be a national holiday, it’s also Jackie Robinson Day- honoring the day Jackie Robinson made his major league debut.  April 15 was Opening Day in 1947, Robinson's first season in the Major Leagues.

Considered “the father of modern base-stealing’, Jackie accumulated 197 stolen bases, including 19 steals of home.   Jackie’s most famous steal of home plate was in the first game of the 1955 World Series against the Yankees.   After Jackie swipes the run, Yogi Berra rips his mask off and starts screaming at the umpire.

Surprisingly, Rickey Henderson, who stole 1406 bases, only stole home four times in his career. Lou Brock, who stole 938 bases, never stole home.

As far as I can tell, Juan Pierre with 592 stolen bases has never stolen home plate.   

Juan attempted his first steal of the season last week and was thrown out at second.  He has now been caught stealing 198 times.  That puts him sixth on the all time caught stealing stolen base list.

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