Monday, December 10, 2018

The SBA and PROmulgate

PROM-uhl-gayt, pro-MUHL
1. To make a law, rule, etc. known by public declaration.
2. To make publicly known an idea, belief, etc.

From Latin promulgare (to make known), from pro- (forward) + mulgere (to milk, to cause to come out).


SBA is about to promulgate significant changes to its loan guarantee program which will be reflected in the new SOP 50-10-6.

Before you go procumbent with the prodigious impact of all this, SBA has decided to not be Procrustean and has extended the deadline for submitting written comments to December 18th.

Probative prodnosing does work.  Earlier this year it appeared that business meals might NOT be tax deductible anymore with the new tax law.  Concerned about the frangible impact on the restaurant industry, the AICPA asked the IRS to confirm if business meals were still deductible. The IRS in October issued guidance clarifying that taxpayers may generally continue to deduct 50% of the food and beverage expenses associated with operating their trade or business, despite changes to the meal and entertainment expense deduction under Sec. 274 made by the tax law known as the Tax Cuts and Jobs Act (TCJA),

Let me know if you would like a copy of the Proposed Rule changes on SBA loans or the recent IRS notice on the deductibility of business meals.





SBA 504 Loan Debenture Rate for November

For 20 year debentures, the debenture rate is only 3.87% but note rate is 3.93% and the effective yield is 5.591%.

For 25 year debentures, the debenture rate is only 3.47% but note rate is 3.598% and the effective yield is 5.590%.

It has been promulgated that an inverted yield curve creates splenetic presentiment of a recession.

There is some cunctation with the inversion of the yield curve and the actual allision of the economy.  Since 1978 there has been an average of 627.2 days between the first inversion and the start of the next recession.

An actual inversion was penelopized somewhat with Friday’s report on employment for November.  It was reported that total nonfarm payroll employment increased by 155,000 in November and the change in total nonfarm payroll employment for October was revised down from +250,000 to +237,000.

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

November      155,000
October       237,000
September     119,000
August        286,000
July         165,000
June         213,000
May          244,000
April       175,000
March        155,000
February    324,000
January     176,000
2017      2,110,000
2016      2,160,000
2015     2,740,000
2014     3,116,000
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 all this mean?

I don’t know.

After the jobs report, the 30-year Treasury bond climbed 4.1 basis points to 3.177% recovering from the 10 basis point plunge earlier in the week which had been its largest daily fall in over 6 months.

On Friday, the Federal Reserve will report on industrial production and capacity utilization.  Last month capacity utilization fell to 78.4% from an upwardly revised 78.5% in September.  One of the Fed’s favorite leading indicators on inflation is capacity utilization which measures the amount of a plant that is in use at factories, mines and utilities.  Several analysts have pointed to a rate between 81% and 82% as a tipping point over which inflation is spurred.

The following Monday the Treasury will auction 30 year Treasury bonds.  Last month’s auction was fairly weak, with the ratio of bids accepted to bids received for the auction was at 2.06 times, the lowest in three years.   The yield ended up at 3.421%.

The next day, the Federal Reserve concludes its meeting on monetary policy.  Minutes from their last meeting indicated Federal Reserve officials were firm that they expected to increase interest rates in December, but they were much more uncertain about the path of monetary policy in 2019.  What’s also noteworthy is the difference between the minutes of the Fed’s September and November meetings. In September, most said it might be necessary to bring the federal funds rate above the neutral level; no one made that argument in the November meeting.

Some probity from the Federal Reserve will enervate a bigly recrudescence in interest rates.


Charles Dickens promulgated Christmas as we know it with A Christmas Carol.  Before that, Christmas was a pagan ritual on the winter solstice.

As the days grew shorter and shorter and colder and colder, it seemed as if we were plunging towards eternal darkness.  On the shortest day of the year, bonfires were lit with pleas for the sun to return.  It seemed to work as the next day was slightly longer than the previous day.  Light was triumphing over darkness.

Early church officials, eager to supplant these rites with their own, chose to make Christmas celebrations correspond to these pagan rituals.  Thus, Christmas had mostly replaced pagan holidays by the Middle Ages, but holiday observances were usually far from pious. Believers might go to church, but afterward citizens would gather for rowdy festivals similar to Mardi Gras.

But Oliver Cromwell proved to be the original Grinch. A staunch Puritan, Cromwell believed that Christmas was a decadent and unchristian holiday. When he took over in 1645, he vowed to rid England of such indulgences and cancelled Christmas. In 1660 Charles II was restored to the throne by popular demand and reinstated the holiday.

The Christmas debauchery and revelry continued.  In 1828, the New York City Council had to create its first police force in response to a Christmas riot.

Charles Dickens visited the United States in 1842 and the Christmas experience here was unlike anything he had seen before.  Returning to England, Dickens wrote A Christmas Carol in only six weeks during the autumn of 1843.  Since then A Christmas Carol has never gone out of print.

Christmas would not be declared a national holiday in the United States until June 26, 1870.

Merry Christmas.

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