temerarious
tem-uh-RAR-ee-uhs
Presumptuously or
recklessly daring or bold.
From Latin temere
(rashly).
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TIP OF THE WEEK
The SBA might be getting a
little temerarious.
A draft of its
Standard Operating Procedures will be released soon.
Significant
changes to personal liquidity, affiliations and collateral requirements have
already been announced.
This new SOP will
take effect October 1, 2013.
_____________________________________
Indices:
PRIME RATE= 3.25%
SBA
LIBOR Base Rate June 2013 = 3.19%
SBA
Fixed Base Rate June 2013 = 4.96%
________________________________________
Debenture
Rate for June
The
debenture rate is 2.45% but note rate is 2.49% and effective yield is only
4.529%.
________________________________________________
AHEAD
OF THE YIELD CURVE
The
Federal Reserve meets this week and they won’t be
temerarious.
The
unemployment rate is at 7.6% and inflation is
falling.
Inflation
is falling?
Tuesday
the consumer price index will be released for the month of May. Last month,
Consumer prices climbed 1.1 percent in the 12 months through April, according to
a measure watched by the Fed that excludes food and fuel -- matching the
smallest increase since records began in 1960. That’s down from 1.9 percent in
the year ended April 2012.
On
Friday it was reported that capacity utilization for total industry edged down
0.1 percentage point to 77.6 percent. This is the second consecutive monthly
decline. 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.
Despite
all this, last week’s Treasury
auction of $13 billion in 30 year bonds went off at a yield of 3.355 percent,
the highest since March 2012.
What
a difference a month makes. At May’s sale of 30 year bonds, the yield was only
2.98%, the lowest yield since December.
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.
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.
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.
It will be
interesting to hear what the Federal Open Market Committee has to
say.
It would appear
that interest rates are going to remain the same, go up, or go
down.
__________________________________________
OFF
BASE
Juan
Pierre’s temerarious ways on the base paths are not hurting the Marlins. They
are hurting themselves.
They
are on pace for a 47-115 season, a level of losing topped only twice in the last
70 years. With a little bit of luck, they just might beat the Mets’ record for
futility of 120 losses.
Speaking
of luck, almost half of their losses are by one or two runs in extra innings —
none worse than a recent 11-inning game at the Philadelphia Phillies in which
John Mayberry erased a Miami lead with a 10th-inning homer and then won it with
a grand slam.
The
Marlins manufactured the go-ahead run in the 10th inning on the speed of Juan
Pierre, who drew a leadoff walk. Pierre fell behind two strikes in the count,
but he capped the nine-pitch showdown with a walk. He advanced to second on a
sacrifice bunt, and then stole third. Juan then dashed home with the decisive
run on a wild-pitch on a 2-2 slider that bounced away from the
catcher.
The
lead was short lived as Mayberry belted the game-tying home run in the
10th followed by his grand slam an inning
later.
Juan
is now 18th on the all-time stolen base list and 6th on
the all-time caught stealing bases list. He now has more stolen bases than
anyone else playing baseball right now.
It
might be a long summer for Juan and the Marlins.
The
first day of summer is Friday, June
21st.
