Tuesday, April 11, 2017

The SBA and malingerer

One who feigns illness in order to avoid work.
From French malingre (sickly).


Malingerers thinking they can buy a business should note that the prices of businesses sold as a multiple of either EBITDA or SDE (seller’s discretionary earnings) continue to improve.

According to both the quarterly Pratt’s Stats Private Deal Update and the quarterly IBBA and M&A Source Pulse Survey deal multiples remained at or above 2015 and 2014 levels.

Multiples however do not come close to the 2006 peaks.

If you would like a copy of either the quarterly Pratt’s Stats Private Deal Update or the quarterly IBBA and M&A Source Pulse Survey please let me know.

SBA loans are well suited for business acquisition financing.


SBA LIBOR Base Rate April 2017 =3.98%
SBA Fixed Base Rate April 2017 = 6.13%
SBA 504 Loan Debenture Rate for March
The debenture rate is only 3.04% but note rate is 3.09% and the effective yield is 4.827%.

Not a lot of malingerers in the economy as the employment rate continued to fall and the employment participation rate held steady for the month of March.

U.S. payroll gains appeared to slow in March according to the Labor Department on Friday.  Only 98,000 new jobs were created last month.  The change in total nonfarm payroll employment for January was revised down from +238,000 to +216,000, and the change for February was revised down from +235,000 to +219,000. With these revisions, employment gains in January and February combined were 38,000 less than previously reported.

The apparent drop in March was because it was too cold outside.  Hiring tends to show large swings around weather disturbances, and the March report has two such issues to contend with: a storm during the payrolls survey week that dumped 10 to 20 inches over a large swath of the Northeast, and more-seasonal temperatures after an unusually warm February.

Right after the jobs report came out, yields for the 30-year Treasury bond fell 3.2 basis points to 2.958%.

Keep your eyes and ears open for Thursday’s auction of 30 year Treasury bonds.

Here is what the 30 year Treasury bond has been doing and this week’s interesting little table:
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
2014- 3.97
2015- 2.91
2016- 2.32

What does all this mean?

I don’t know.

Last month’s auction of the 30 year Treasury bond ended up with a 3.170 percent high yield that was the highest awarded at auction since September 2014 and 16.5 basis points above the previous month's 30-year bond auction rate.

Minutes from the Federal Reserve Open Market Committee indicated after their last meeting that most participants anticipated that gradual increases in the federal funds rate would continue.

The long end of the yield curve as reflected in the 30 year Treasury bond appear to be enervating such splenetic presentiment by being quiescent.

You don’t have to be a malingerer to take this Friday off.
It is Good Friday.  I don’t why the Federal Reserve does not recognize Good Friday as a bank holiday.
It should as its existence can be tied in some ways to Good Friday itself.  
While Good Friday isn't a federal holiday, it is a stock market and bond market holiday.  After being usually closed on Good Friday, 1907 was the final year in which the exchange was open on Good Friday.
That last one was the same year as the infamous Panic of 1907, when the total value of all Big Board stocks plunged by more than a third.   
Traders took it as a sign from God that he didn’t want the exchange open.
By November 1907, the aggregate value of all shares on the NYSE had plunged 37 percent, and at least 25 banks and 17 trust companies collapsed
The crisis ultimately prompted the creation of the Federal Reserve system.

So what is Good Friday?
The day marks the crucifixion and death of Jesus Christ.  How could that possibly be considered good?  
Many believe this name simply evolved—as language does. Originally it was called "God's Friday."
This seems a reasonable conjecture, given that "goodbye" evolved from "God be with you."


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