Monday, October 26, 2015

The SBA and poppycock


From Dutch dialect pappekak (soft dung) or poppekak (doll’s excrement). Ultimately from the Indo-European root kakka-/kaka- (to defecate)


Some poppycock from the IRS:

There is a revised Form 4506-T, Request for Transcript of Tax Return, dated 09-2015 that is available for use on IRS.GOV.  There will be an adjustment period until December 7, 2015 to start using the revised form.  Starting December 7, 2015 the Sites will be rejecting requests that are not submitted on the revised form and if the attestation box above the signature line is not checked.

SBA LIBOR Base Rate October 2015 = 3.19%
SBA Fixed Base Rate October 2015 = 4.91%
SBA 504 Loan Debenture Rate for October

The debenture rate is only 2.72% but note rate is 2.76688% and the effective yield is 4.801%.   


More poppycock keeps coming out of Washington.

The Treasury Department said Thursday it would postpone an auction of two-year notes because of worries that the debt limit impasse in Congress would prevent the sale from going through.

The move is the latest warning from the Treasury Department that the looming Nov. 3 deadline for raising the $18.1 trillion debt ceiling is already having an adverse effect on the economy.  The five year and seven bond auctions will proceed.  If for some reason the 30 year Treasury bond auction were cancelled, interest rates could actually decline.  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.  Over the past several weeks, demand for U.S. Treasuries has been strong, pulling yields to their lowest level in five months. 

Don’t believe all the poppycock about interest rates going up.

The Federal Reserve meets this week and Friday afternoon the market was pricing no real probability of a rate increase at that meeting.

Eurodollar futures settle at a three- month lending rate that has averaged about 22 basis points more than the Fed's target over the past 10 years.

Here is a summary of what the market expects for Eurodollar futures based upon the pit-traded prices at the Chicago Mercantile Exchange:

DEC15- 0.39
DEC16- 0.76
DEC17- 1.44
DEC18- 1.77
DEC19- 2.25
DEC20- 2.57

What does all this mean?

I don’t know.

Eurodollar futures currently imply a federal funds rate that really is not going to be moving up all that much any time soon.

This might be poppycock but every time the New York Mets have gone to the World Series, a recession soon follows. 
In October of 1969 the Mets went to the World Series.  A recession soon followed.   
In October of 1973 the Mets went to the World Series.  A recession soon followed.   
In October of 1986 the Mets once again went to the World Series.   The economy held its breath for as long as it could but when it finally had to gasp for air the stock market crashed. The stock market crash of 1987 was the largest one day stock market crash in history, larger than that of 1929.  The economy would soon slump into recession.
The economy recovered and the nation enjoyed the 1990 boom years.  The party ended when the Mets went to the World Series in 2000.  Soon after the 2000 World Series ended, the economy slid into recession.  That recession would end the longest economic expansion in United States history.   The second longest expansion had ended when the Mets had gone to the World Series in 1969. 
In 2006 the Mets dominated the National League winning more games than any other team.  The next year they assembled an even stronger team and appeared a certainty to be in the World Series.  They then suffered the greatest collapse in baseball history.  The economy also soon collapsed. 

The Mets are in the World Series starting Tuesday might.

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