The SBA and PROscribe

Proscribe

pro-SKRYB

 

1. To forbid something, especially by law.

2. To denounce, condemn, or exile someone.

 

From Latin proscribere (to publish in writing, to name someone as outlawed), from pro- (front) + scribere (write).

 

Proscribe has a meaning essentially the opposite of that of prescribe.

 

Prescribe is generally the more common of the two words, and anyone who uses the formal verb proscribe in their regular discourse is usually keen to the distinction. Keeping them separate, therefore, is often more difficult for the reader or listener (especially since they sound alike when spoken quickly). Context will usually tell you if an action is being ordered (prescribed) or prohibited (proscribed).

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TIP OF THE WEEK

 

The phrase supply chain has been proscribed.

 

Lake Superior State University released its 2022 banished words list as a result of misuse, overuse, and uselessness.   Included on that list was supply chain.  Supply chain issues have become the scapegoat of everything.  The adverse result: overuse ad nauseam.

 

Trucks move roughly 72.5% of the nation's freight by weight.   The truck tonnage index is an index that measures the gross tonnage of freight which is transported by motor carriers in the United States for a given month.  The Federal Reserve Bank of St. Louis maintains a chart of the truck tonnage index on their website.  In March 2018, the truck tonnage index read at 112.5. A year later the index reached 116.7. It continued to rise until August 2019 before dipping in 2020. In April 2020 it had dropped to 106.9.  The US Truck Tonnage Index is at a current level of 113.40.  This is a change of 1.98% from one year ago.

 

The trucking industry is one of the most fragmented ones in the U.S.   There are almost 4 million class 8 trucks in operation.   According to the U.S. Department of Transportation, as of February 2021, the number of for-hire carriers on file with the Federal Motor Carrier Safety Administration totaled 996,894.  97.4% operate fewer than 20 trucks.

 

Truckers are well suited for SBA financial assistance.  Loan proceeds can be used for truck and trailer purchases, or for the refinance of existing debt.   A SBA loan can typically provide an amortization up to the useful life of the asset.   Working capital can also be provided as well as real estate financing for warehouse and storage facilities.

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Indices:

PRIME RATE= 3.25%

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SBA 504 Loan Debenture Rate for January

For 20 year debentures, the debenture rate is only 1.84% but note rate is 1.87% and the effective yield is 3.07%.

For 25 year debentures, the debenture rate is only 2.04% but note rate is 2.068% and the effective yield is 3.216%.

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AHEAD OF THE YIELD CURVE

 

The Federal Reserve continues to promulgate that "Supply and demand imbalances related to the pandemic and the reopening of the economy have continued to contribute to elevated levels of inflation".

 

At least they did not use the phrase supply chain.

 

This statement from their last meeting on monetary policy left out the "some sectors" mentioned last time. The Fed Open Market Committee is acknowledging that inflation is more broad-based.

 

They mentioned that “Job gains have been solid in recent months”.

 

For all of 2021, the economy added a record 6.4 million jobs.  So far, the U.S. has recouped 18.8 million, or 84%, of the 22.4 million jobs lost early in the pandemic, leaving it 3.6 million jobs shy of its pre-crisis level.

 

Here are the latest jobs numbers from the Bureau of Labor Statistics.

 

December 199,000

November 249,000

October     648,000

September 312,000

August    483,000

July     1,053,000

June       962,000

May        614,000

April      269,000

March      916,000

February  468,000

January    233,000

2020    -9,370,000

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.

 

Keep your eyes and ears open for this week’s auction of the 30 year Treasury bond.

 

At last month’s auction of 30 year treasury bonds the high yield was awarded at 1.895 percent,  down 4.5 basis points from last month's auction rate and the lowest awarded since January.

 

Since then the 30 year treasury bond yield has increased to 2.109%.

 

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.   The December 2022 implied rate is now at 1.18%, up from only 0.17% in October.

 

The Federal Reserve’s next meeting on monetary policy is January 25 and 26.

 

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OFF BASE

 

The Federal Reserve has proscribed banks from being open on the following days:

 

Birthday of Martin Luther King, Jr. January 17 

Washington's Birthday February 21 

Memorial Day May 30

Juneteenth      June 19

Independence Day July 4

Labor Day September 5

Columbus Day October 10

Veterans Day November 11

Thanksgiving Day November 24

Christmas Day December 25