protreptic
pro·trep·tic
an utterance (such as a speech) designed to instruct and
persuade from the Greek word protreptikos, which is derived from protrepein,
meaning "to turn forward" or "to urge on".
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PROTREPTIC OF THE WEEK
Roughly 21% of all SBA 7(a) loans were utilized for business acquisitions. A growing portion of those are for Employee Stock Ownership Plans (ESOP).
A SSBCI guarantee can also be used on those ESOP deals
that are too big for a 7(a) loan. Loan
amounts can go up to $20,000,000.
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Indices:
PRIME RATE= 7.75%
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SBA 504 Loan Debenture Rate for NOVEMBER
For 20 year debentures, the debenture rate is only 5.01%
but note rate is 5.08277% and the effective yield is 6.395%.
For 25 year debentures, the debenture rate is only 5.01%
but note rate is 5.06275% and the effective yield is 6.325%.
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AHEAD OF THE YIELD CURVE
The Federal Reserve no longer has confidence.
Its last protreptic on monetary policy left out any
mention of the "greater confidence" that the FOMC had been seeking in
its fight against inflation.
The statement said, "The Committee judges that the
risks to achieving its employment and inflation goals are roughly in balance”.
Previously it had stated “The Committee has gained
greater confidence that inflation is moving sustainably toward 2 percent, and
judges that the risks to achieving its employment and inflation goals are
roughly in balance.”
For inflation, the Federal Reserve looks closely at both
industrial production and capacity utilization for prospicient
prognostications.
The Federal Reserve watches this report closely to see if
production constraints are threatening to cause inflationary pressures.
Normally the Fed does not feel there are inflationary
pressures until the capacity utilization rate is about 82%.
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
2023- 78.5
What does all this mean?
I don’t know.
Last week it was reported capacity utilization moved down
to 77.1 percent in October but that drop might be an outlier.
The Boeing strike has since been settled and hurricane
effects should be more-or-less gone from the data in November.
Treasury yields turned higher Friday morning with
indications that the Federal Reserve is not looking to cut rates quickly.
The November auction of 30 year treasury bonds ended with
the high yield awarded at 4.608 percent versus 4.389 percent a month ago and
4.015 percent two months ago.
The yield on the 30-year Treasury was 4.639% on Friday,
up 5 basis points from 4.589% on Thursday.
The long end of the yield curve prognosticates
inflationary expectations and ultimately market rate expectations.
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OFF BASE
Thanksgiving is almost here. The Friday after Thanksgiving however is
NOT a federal holiday.
Many people mistakenly think it’s because banks can’t be
closed more than 3 days straight.
The Bank Holiday of 1933 shut down the American banking
system. For an entire week, Americans
would have no access to banks or banking services. They could not withdraw or
transfer their money, nor could they make deposits.
The crisis had been a long time coming. In the three
years leading up to it thousands of banks had failed as bank panics
proliferated.
The Emergency Banking Act of 1933 aimed at restoring
public confidence in the nation’s financial system after the weeklong bank
holiday. It promised to not let banks
be closed for extended periods.
When banks reopened, it was common to see long lines of
customers returning their stashed cash to their bank accounts. Within two weeks the public had redeposited
about two-thirds of this cash.
Currently there is no law requiring banks to not be
closed more than 3 days.
