profuse
pruh-fyoos, proh‐fyoos
-spending or giving freely and in large amount, often to
excess; -made or done freely and abundantly:
-abundant; in great amount.
from Latin profūsus, past participle of profundere “to
pour out or forth”;
Profuse is a word for a lot of something or even way too
much — a profuse rainfall is a serious amount of rain.
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TIP OF THE WEEK
Profuse and perhaps procellous is the DEREG regulation
effective August 1st from the Small Business Administration.
The prosaic promulgation most prominent is the provision
for variable interest rates.
Effective August 1st, the maximum variable interest rates
for all 7(a) loans is now:
$350,001 and greater:
PRIME + 3%
$250,001 - $350,000:
PRIME + 4.5%
$50,001 - $250,000:
PRIME + 6%
$50,000 or less:
PRIME + 6.5%
Most SBA 7(a) loans adjust on a calendar quarterly basis.
Prolix profligate promulgations proliferate over variable
interest rates.
Because 7(a) loans are fully amortizing over long terms,
increases in interest rates do not dramatically increase the monthly payment.
For example, a $100,000 SBA loan with a variable rate of
PRIME plus 3.00 resulting in an interest rate of 8.50% amortized over 10 years
would have a monthly payment of $1,240.
If interest rates rise another 1% resulting in a rate of
9.50% the monthly payment is now $1,293, an increase of only $53.
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Indices:
PRIME RATE= 5.50%
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SBA 504 Loan Debenture Rate for July
For 20 year debentures, the debenture rate is only 3.81%
but note rate is 3.87% and the effective yield is 5.05%.
For 25 year debentures, the debenture rate is only 3.93%
but note rate is 3.97% and the effective yield is 5.11%.
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AHEAD OF THE YIELD CURVE
The procacity over the yield curve inverting is
profligate proditomania.
The widely followed spread between 2- and 10-year
Treasury yields is negative and prognostications proliferated that this
inversion of the yield curve meant a recession was now on the way.
However, there is nothing “magical” about the “10/2”
spread.
The spread between the 3 month Treasury bill and the 10
year Treasury bond is considered an even better indicator.
The last time the 3 month Treasury bill and the 10 year
Treasury bond spread had inverted was in late May of 2019. That inversion lasted until October of
2019. As if on cue, the economy began
to slump in the spring of 2020.
At last week’s auction of the 3 month Treasury bill, the bill rate edged down from 2.520 percent
last week to 2.49 percent but remains elevated from 1.850 four weeks ago.
The recent July employment numbers reflecting that all
the jobs lost during the pandemic have now come back has now caused longer term yields to tick up
and the 3 month 10 year spread has increased positively even more.
Keep your eyes and ears open for this week’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:
2010- 4.61
2011- 2.89
2012- 2.77
2013- 3.25
2014- 3.97
2015- 2.91
2016- 2.32
2017- 3.16
2018- 3.13
2019- 2.594
2020- 1.216
2021- 1.88
2022- 2.375
So what does all this mean?
I don’t know.
At last month’s auction of 30 year Treasury bonds, the
high yield was awarded at 3.115 percent, down 7 basis points from the prior
auction rate. Lower long-term rates reflect diminished long-term inflation
expectations as the growth outlook has cooled.
On Friday’s close, the 30 year Treasury bond yield was at
3.072 percent.
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 plus years.
The December 2022 implied rate is now at 3.96% up from
3.87% just last month and up from only 0.17% in October.
The December 2023 implied rate is at 3.29% down from
3.69% a month ago.
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OFF BASE
August 10th is the anniversary of the greatest moment in
baseball history. At least when it
comes to three true outcomes.
A profusion of home runs, a strike out or a walk is known
as a three true outcome.
It’s called that because the at bat comes down to the
pitcher or the hitter.
The greatest three true outcome batter is Adam Dunn. If you add up all his home runs, walks and
strike outs it comes to 4,158, which includes 462 home runs, 1,317 walks and
2,379 strikeouts. He only had 8,328
plate appearances.
No other than Jose Lima is the epitome of a three true
outcome pitcher. He would throw a lot
a strike outs, not walk very many, but holds the all-time record for most home
runs given up in the National League in one season.
On August 10th 2004, Adam Dunn faced Jose Lima at the
Great American Ball Park .
After he successfully fought off seven pitches, Dunn
connected on one of Lima's fastballs and sent it out of the park and into the
Ohio River.
Not only was it one of the longest home runs ever hit but
it landed onto a piece of driftwood that was floating on the Kentucky side of
the Ohio River.
It is the only home run in baseball history that landed
in another state.
After Jose Lima had died of a sudden heart attack while
he slept, Vin Scully had this to say:
“Young and Old, we all will get our time and it was
Lima’s time”
Vin’s wit and wisdom still echoes.
