Provoke
prəˈvoʊk
to call forth (a feeling, an action, etc.) to stir up
purposely to provide the needed stimulus for
from Latin provocare ‘challenge’, from pro- ‘forth’ + vocare ‘to call’.
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TIP OF THE WEEK
This might provoke SBA lenders and borrowers
Effective October 1st, the guarantee fee for SBA 7(a)
loans are:
-loans of $500,000 or less: 0.00%:
-loans of $500,001 to $700,000: 0.55% of the guaranteed
portion.
-loans of $700,001 to $1,000,000: 1.05% of the guaranteed
portion.
-loans $1,000,001 to $5,000,000: 3.5% of the guaranteed
portion up to $1,000,000, plus 3.75% of the guaranteed portion over $1,000,000.
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Indices:
PRIME RATE= 5.50%
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SBA 504 Loan Debenture Rate for September
For 20 year debentures, the debenture rate is only 4.10%
but note rate is 4.16% and the effective yield is 5.343%.
For 25 year debentures, the debenture rate is only 4.26%
but note rate is 4.30% and the effective yield is 5.44%.
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AHEAD OF THE YIELD CURVE
Will the Federal Reserve provoke protervity?
The procacity over the Federal Open Market Committee
meeting this week is profligate proditomania.
It is all but certain that the fed funds rate will be
increased. The only question is by how
much.
That will depend on where they think we are at with
inflation.
Last week it was widely reported that the consumer price
index was up over 8% from a year ago.
Of course it is up because prices had dropped during the
depths of the procellous pandemic.
Keep in mind that the CPI is based on prices of food,
clothing, shelter, fuels, transportation, doctors’ and dentists’ services,
drugs, and other goods and services that people buy for day-to-day living.
The index measures price change from a designed reference
date. The reference base is 1982-84 and equals 100.
Here is what the index has done over the last year:
2021-08-01
273.092
2021-09-01 274.214
2021-10-01
276.590
2021-11-01
278.524
2021-12-01
280.126
2022-01-01
281.933
2022-02-01
284.182
2022-03-01
287.708
2022-04-01
288.663
2022-05-01
291.474
2022-06-01
295.328
2022-07-01
295.271
2022-08-01
295.620
It appears that price increases have gone procumbent over
the last three months.
One of the Federal Reserve’s preferred measures of
inflation is the capacity utilization rate.
Here is what capacity utilization has been doing and this
week interesting little table of data:
2007- 81.5
2008- 79.9
2009- 66.9
2010- 74.8
2011- 76.7
2012- 79.0
2013- 77.8
2014- 78.8
2015- 76.5
2016- 75.4
2017- 76.2
2018- 78.5
2019- 79.7
2020- 74.5
2021- 76.4
2022- 80.0
What does all this mean?
I don’t know.
Normally the Fed is concerned about inflationary
pressures when the capacity utilization rate is about 82%.
Capacity utilization declined 0.2 percentage point in
August to 80.0 percent.
The overall reading was pulled down by a decline in
utilities output.
Utilities capacity usage fell to 72.8 percent in August
from 74.7 percent in July. Capacity
use for manufacturing was unchanged.
Cooler weather in August relative to July eased demand
for utilities and electricity for air conditioning. Electricity output fell 2.9
percent
At last week’s auction of 30 year Treasury bonds, the
high yield was awarded at 3.511 percent, up from 3.106 percent at last month’s
auction.
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 4.454% up from
3.96% just last month and up from only 0.17% in October.
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OFF BASE
The fall equinox arrives on Thursday, September 22, 2022.
The word “equinox” comes from Latin aequus, meaning
“equal,” and nox, ”night.” On the equinox, day and night are roughly equal in
length.
After the autumnal equinox, days become shorter than
nights as the Sun continues to rise later and nightfall arrives earlier. This
ends with the winter solstice, after which days start to grow longer once
again.
