The SBA and bigly

bigly

big´ly

In a tumid, swelling, blustering manner; haughtily; violently.

Of uncertain origin, possibly from a dialect of Old Norse, bugge meaning big man

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TIP OF THE WEEK 

A bigly enervation of the guidance on affiliation and franchises should be in the new Standard Operating Procedures.  The intractable trichotillomania over eligibility should grow quiescent.

SBA expects that the SOP should be arrant and not frustraneous.

In other words, there is no reason to be pervicacious and oppugned to SBA loans.

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Indices:

PRIME RATE= 3.50%

SBA LIBOR Base Rate October 2016 =3.53%

SBA Fixed Base Rate October 2016 = 4.86%

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SBA 504 Loan Debenture Rate for October

The debenture rate is only 2.21% but note rate is 2.249% and the effective yield is 4.261%.

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AHEAD OF THE YIELD CURVE 

There does not appear to be splentic presentiment over a bigly recrudescence of interest rates.

There was strong demand at the last auction of 30 year Treasury bonds.  The 2.470 percent high yield was just a half of a basis point below the yield awarded at the prior auction and 29.8 basis points higher than the record low set in the July auction.  Long term bond yields continued to climb after comments by Federal Reserve Chair Janet Yellen suggested there may be benefits in letting inflation run higher than the current target of 2% in order to stimulate the economy.

Inflation has for years been dormant in the U.S., which is a key reason the Fed has held off on raising interest rates in 2016. That’s led investors to seek longer-dated debt, which offers higher yields but is more sensitive to inflation expectations. In one sign of investor complacency, the real U.S. 30-year yield -- which subtracts the level of inflation based on the core Consumer Price Index -- is hovering near the lowest level since 1980.

One of the Fed’s leading indicators on inflation is capacity utilization which measures the amount of a plant that is in use at factories, mines and utilities .  The Federal Reserve recently reported that capacity utilization for September edged up 0.1 to 75.4 percent after having dropped in August.

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- 66.9

2010- 74.8

2011- 76.7

2012- 79.0

2013- 77.8

2014- 78.8

2015- 76.5

What does all this mean?

I don’t know.

Capacity utilization at 75.4% is 4.61% below the average from 1972 to 2015 and below the pre-recession level of 80.8% in December 2007.  Several analysts have pointed to a rate between 81% and 82% as a tipping point over which inflation is spurred.  The Federal Reserve typically won’t initiate increases in interest rates until then.

The BLS reported that the seasonally adjusted CPI for all urban consumers rose 0.3% (3.6% annualized rate) in September. The CPI less food and energy rose 0.1% (1.4% annualized rate) on a seasonally adjusted basis.  According to the Federal Reserve Bank of Cleveland, the median Consumer Price Index rose 0.2% (2.1% annualized rate) in September. The 16% trimmed-mean Consumer Price Index also rose 0.2% (2.1% annualized rate) during the month. The median CPI and 16% trimmed-mean CPI are measures of core inflation calculated by the Federal Reserve Bank of Cleveland based on data released in the Bureau of Labor Statistics' (BLS) monthly CPI report.

Inflation has generally been moving up, and most of these measures are at or above the Fed's target

Keep your eyes and ears open for Friday’s preliminary estimate of third quarter Gross Domestic Product.

Impecunious concerns will motivate the Federal Reserve but they might festinate.

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OFF BASE

Is bigly really a word? 

During the presidential debate, Donald Trump used the word “bigly” several times.  It seemed like he was trying to use it as an adverb of the word big to mean great sized, not huge, but definitely large.  Like his hands or so he claims.

But that’s not the correct usage of the word (unless the Donald meant violently and boastfully) if you look at a brief history of bigly.  This adverb came into use around 1400 and stuck around for roughly 500 years. It has been used two different ways over the centuries.

The first meaning was to mean “with great force or violently or strongly.” It appeared in such fashion in the classic King Arthur tale Le Morte d’Arthur, published way back in 1485: “So roughly and so bigly that none might withstand him,” wrote Sir Thomas Malory.

The second meaning, which has been more popular in recent centuries, means “boastfully, haughtily or proudly.” Thomas Hardy put it to use in his 1874 novel Far From the Madding Crowd: “I don’t see that I deserve to be put upon and stormed out for nothing, concluded the small woman bigly.”

Sorry about my bigly use of words.