The SBA and confabulate

confabulate

kuhn-FAB-yuh-layt

1. To talk informally.

2. To replace fact with fantasy to fill in gaps in memory.

From confabulari (to talk together), from con- (with) + fabulari (to talk), from fabula (tale).

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TIP OF THE WEEK 

The SBA continues to confabulate over changes to its SOP (Standard Operating Procedures).

As a result, the draft of the latest change to the SOP may not be released in a timely manner.

The effective date for the anticipated changes is also unknown at this time.

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Indices:

PRIME RATE= 3.25%
SBA LIBOR Base Rate August 2013 = 3.19%
SBA Fixed Base Rate August 2013 = 5.47%
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SBA 504 loan Debenture Rate for August 

The debenture rate is only 3.16% but note rate is 3.21% and the effective yield is a whopping  5.24%.

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AHEAD OF THE YIELD CURVE 

The confabulation over the differences between moderate and modest may soon end.

At its last meeting on monetary policy, the Federal Reserve said the economy “expanded at a MODEST pace” while a month before it had said that the economy “has been expanding at a MODERATE pace.”  What was the Federal Reserve really trying to say? 

Keep your eyes and ears open for this week’s release of the minutes from that Federal Open Market Committee meeting as they agonized whether things were modest or moderate.

FOMC Minutes is a vital piece of information that is released three weeks to the day after the conclusion of each FOMC meeting.    Though the gist of the Fed’s official views are disclosed at the end of each FOMC meeting with a public statement, we can closely scrutinize details of the Fed opinions in the minutes for better understanding.

Short term rates are at historical low levels and prior Fed minutes reiterated that they will keep rates this low until unemployment drops or inflation rises above 2.5% a year.

One of the Fed’s favorite gauges of inflationary pressure is the capacity utilization rate which measures how much plants and factories are being used.  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 week the Fed reported that capacity utilization for total industry edged down 0.1 percentage point to 77.6 percent.  That was the FIFTH consecutive monthly decline. 

Employers added only 162,000 jobs in July and job gains for May and June were revised down by a total 26,000.   May's gains were revised to 176,000 from 195,000 and June's to 188,000 from 195,000.

Here is a summary of net monthly payroll employment and this week’s interesting little table of data:

July 162,000

June 188,000

May 176,000

April 165,000

March 88,000

February 332,000

January 148,000

2012

December 155,000

November 161,000

October 137,000

September 114,000

August 142,000

July 181,000

June 45,000

May 77,000

April 68,000

March 143,000

February 240,000

January 243,000

2011

December 203,000

November 157,000

October 112,000

September 158,000

August 104,000

July 127,000

June 20,000

May 25,000

April 232,000

March 194,000

February 235,000

January 68,000

2010

December 121,000

November 93,000

October 210,000

September (41,000)

August (1,000)

July (66,000)

June (175,000)

May 431,000

April 218,000

March 230,000

February (36,000)

January (26,000)

2009

December (150,000)

November (11,000)

October (111,000)

September (215,000)

August (201,000)

July (304,000)

June (443,000)

May (322,000)

April (504,000)

March (699,000)

February (651,000)

January (655,000)

2008

December (681,000)

November (597,000)

October (423,000)

September (403,000)

August (127,000)

July (67,000)

June (100,000)

May (47,000)

April (67,000)

March (88,000)

February- (83,000)

January- (76,000)

What does all this mean?

I don’t know.

It would appear that the Federal Reserve will continue to be con-fabulous about interest rates.

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OFF BASE

We can all soon confabulate on what we did over summer.

The three day Labor Day weekend is almost here!

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

Labor Day September 2

Columbus Day October 14

Veterans Day November 11

Thanksgiving Day November 28

Christmas Day December 25