Monday, July 28, 2014

The SBA and hebetate

To make dull or obtuse.
From Latin hebetare (to make blunt), from hebes (blunt).

Nobody is being hebetated by what it takes to get a SBA loan.

Another $1,832,552,300 in SBA 7(a) loans were approved in the month of June.

This makes it the sixth straight month of improving SBA 7(a) loan volume.

The year to date total is $13,303,696,406; a 6.5% increase over the same period last year.

Keep in mind that the correlation coefficient between SBA 7(a) loan approvals and our economy's Gross Domestic Product is a statistically significant 0.86.

SBA LIBOR Base Rate July 2014 = 3.16%
SBA Fixed Base Rate July 2014 = 5.32%

SBA 504 Loan Debenture Rate for July  
The debenture rate is only 2.87% but note rate is 2.92% and the effective yield is 4.952%.

We are often hebetated by the Federal Reserve when they meet on monetary policy to determine interest rates.

As they wrap up their meeting this week, the initial estimate on second quarter Gross Domestic Product will be released.  First quarter GDP had contracted sharply thanks to last winter’s government shutdown that turned off the SBA 7(a) loan spigot.  Now that SBA loan volume has recovered, second quarter GDP should also have recovered.

Also keep your eyes and ears open for Friday’s report on jobs for July.

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

June                288,000
May                 224,000
April          304,000
March        203,000
February      222,000
January     144,000
2013     2,074,000
2012     2,193,000
2011      2,103,000
2010     1,022,000
2009     -5,052,000
2008     -3,617,000
2007    1,115,000
2006     2,071,000
2005     2,484,000
2004     2,019,000

What does this mean?

I don’t know.

Through the first half of 2014, the economy has added 1,385,000 payroll jobs - up from 1,221,000 added during the same period in 2013 - even with the severe weather early this year.  In June, the year-over-year change was 2.495 million jobs, and it appears the pace of hiring is increasing.  Right now it looks possible that 2014 will be the best year since 1999 for both total nonfarm and private sector employment growth.

Does that mean interest rates are about to really start going up?


The 30-year bond Treasury bond yield on Friday fell 6 basis points to 3.238% while the 5-year note yield fell 2.5 basis points to 1.675%.. 
The difference, or spread, between them shrank to 1.56 percentage points, its least since February 2009.

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.  Long-term yields are reflecting forecasts for slower growth.

The bond market does not seem to think interest rates are going up anytime soon.

Despite the hebetating from the Federal Reserve, Fed officials are still inclined to keep interest rates low for an extended period also.

Hebetation often sets in during the dog days of summer.
Dog days? What is a dog day? Is it so hot that dogs just lay around panting?
The term "dog days" has nothing to do with dogs. It dates back to Roman times, when it was believed that Sirius, the Dog Star, added its heat to that of the sun creating exceptionally high temperatures. The Romans called the period dies caniculares, or "days of the dog." The name Sirius seems to come from an ancient Greek word for "scorching" or "sparkling." Sirius is the brightest star visible from either of Earth's hemispheres. It's prominent in the evening during the northern hemisphere winter. But its appearance in the summer has also been noticed for many thousands of years. Each northern hemisphere summer, after being behind the sun for awhile, the Dog Star reappears before dawn. Early Greeks and Romans blamed Sirius for the heat in July and August. This is the time of year when Sirius comes up either with the sun or shortly before the sun each day. It travels across the sky with the sun during the daylight hours. The ancients believed that the double whammy of the sun and Sirius actually caused the hot weather.

As Yogi Berra once said, “It ain't the heat; it's the humility."

1 comment:

  1. Payday Loans Over 12 Months are particularly preferred when the borrower immediately and want to pay back the loan in easy installments. These loans are your helpful source of cash without any credit checks needs money.