propugnaculum
praw-puhg-NAK-yuh-luhm
A fortress; defense; protection.
From Latin propugnaculum (bulwark), from propugnare (to
fight in defense of something), from pro- (toward) + pugnare (to fight), from
pugnus (fist).
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TIP OF THE WEEK
Propugnaculums proliferate in protean ways with SBA 7(a)
loans. Almost $400,000,000 in SBA 7(a)
loans were approved in just the one week period ending December 4th. About half those loans were to existing
businesses and about 22 percent were for business acquisitions. The rest were to new businesses.
Don’t go procumbent however with the not so propitious
promulgation regarding the tax issues for payments made by the SBA for existing
7(a) borrowers that prompted procellous proditomania. Lenders are required to issue forms
1099-MISC.
In addition, The U.S. Treasury Department and Internal
Revenue Service had also released guidance on the Paycheck Propugnaculum
Program (PPP) that since businesses are not taxed on the proceeds of a forgiven
PPP loan, the expenses are not deductible.
If a business reasonably believes that a PPP loan will be
forgiven in the future, expenses related to the loan are not deductible,
whether the business has filed for forgiveness or not.
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Indices:
PRIME RATE= 3.25%
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SBA 504 Loan Debenture Rate for December For 20 year
debentures, the debenture rate is only 1.11% but note rate is 1.13% and the
effective yield is 2.427%.
For 25 year debentures, the debenture rate is only 1.21%
but note rate is 1.228% and the effective yield is 2.471%.
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AHEAD OF THE YIELD CURVE
The prodigious and promethean propugnaculums attempted by
the government may have been profligate.
Initial jobless claims soared with a 137,000 increase,
reaching 853,000 in the week ended December 5.
No larger increase had been recorded since the week ended
March 28, when the impact of the pandemic on claims was at its highest.
There was a clear slowdown in hiring activity as
reflected in the jobs report for November.
For what it is worth, Here is a summary of net payroll
employment and this week’s interesting little table of data:
November 245,000
October 610,000
September 711,000
August 1,489,000
July
1,761,000
June 4,791,000
May 2,725,000
April
-20,700,000
March
-1,400,000
February 275,000
January 214,000
2019 2,108,000
2018 2,679,000
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.
Last week’s Treasury sale of 30 year bonds was very
strong.
The incredibly spiking US national debt has soared by
$3.75 trillion since March 1, powered by stimulus and bailouts, and by $4.2
trillion over the past 12 months, to $27.3 trillion.
Despite this, the 30 year auction saw a high yield of
only 1.665% which is 1.5 basis points below last month’s auction rate.
It is a propitious time for prospicient borrowers.
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OFF BASE
What is the propugnaculum for these times?
We might want to remember the following from John Barry’s
“The Great Influenza”:
“The 1918 virus, like all influenza viruses, like all
viruses that form mutant swarms, mutated rapidly. There is a mathematical concept called
reversion to the mean; this states simply that an extreme event is likely to be
followed by a less extreme event. This is not a law, only a probability. The 1918 virus stood at an extreme; any mutations
were more likely to make it less lethal than more lethal. In general, that is
what happened. Just as it seemed that
the virus would bring civilization to its knees, as it would do what the
plagues of the Middle Ages had done, would remake the world, the virus mutated
toward its mean, toward the behavior of
most influenza viruses. As time went on,
it became less lethal.”
If the past is indeed prologue, that’s one prognosis.
Monday, December 21st is the darkest and longest night of
the year- the Winter Solstice. After
that the days begin to get longer and the hope and promise of Spring
approaches.
