Prodromuses
PROH-druh-muhss
-A precursor or harbinger; also a warning event.
-An introductory or preliminary book or treatise.
-(medicine) An early sign or symptom (or set of signs and
symptoms) warning of the onset of a disease.
New Latin, from Greek prodromos precursor
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TIP OF THE WEEK
A prodromuses, in the context of an introductory
treatise, for SBA Standard Operating Procedures can be found in the
Informational Notices that coincide with the release of the SOP. Those two notices 5000-852522 and
5000-848663 total 12 pages and nicely summarize the changes to the new SOP that
totals 430 pages.
Unlike SBA guarantees, the guidance for SSBCI guarantees
does not require a prodromuses as the SBLGP Policy Manual is only 22 pages.
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Indices:
PRIME RATE= 8.50%
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SBA 504 Loan Debenture Rate for February
For 20 year debentures, the debenture rate is only 5.11%
but note rate is 5.18370% and the effective yield is 6.496%.
For 25 year debentures, the debenture rate is only 5.07%
but note rate is 5.12312% and the effective yield is 6.385%.
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AHEAD OF THE YIELD CURVE
A produmuses, in the context of a harbinger or precursor
can be the capacity utilization rate.
The Federal Reserve looks closely at both industrial
production and capacity utilization for prospicient prognostications.
The industrial sector, together with construction,
accounts for the bulk of the variation in national output over the course of
the business cycle.
The capacity utilization rate provides an estimate of how
much factory capacity is in use.
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%.
Keeps your eyes and ears open for this week’s release on
industrial production and capacity utilization.
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
Last month, it was reported that capacity utilization was
unchanged in December at 78.6 percent
What does all this mean?
I don’t know.
At its last meeting on monetary policy, the Federal
Reserve said that they would not be reducing interest rates any time soon.
In its statement the paragraph regarding the US banking
system is completely excised.
Clearly the Fed feel the troubles in the banking industry
of last March and the potential problems with liquidity are no longer a big
risk.
The statement offered a strong warning that the FOMC is
not yet ready to declare victory in achieving price stability.
There was new language in the statement that said “The
Committee judges that the risks to achieving its employment and inflation goals
are moving into better balance. The economic outlook is uncertain, and the
Committee remains highly attentive to inflation risks."
Last week’s auction of 30 year treasury bonds saw the
high yield awarded at 4.360 percent versus 4.229 percent a month ago.
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OFF BASE
Today, February 12th is Abraham Lincoln’s birthday. It is also Charles Darwin’s birthday as
well as the Monday after the Super Bowl.
It is not however a holiday. We only celebrate Washington’s birthday.
This upcoming three day weekend is officially referred as
Washington’s Birthday.
The effort to rename the holiday Presidents Day, intended
to honor the birthdays of both Washington and Lincoln, failed in Congressional
committee.
The bill, which was then signed into law on June 28,
1968, specified that the Federal holiday would retain the name Washington’s
Birthday.
The Uniform Monday Holiday Act of January 1, 1971,
established its observance on the third Monday in February.
Enjoy the long weekend as the next holiday is not until
Memorial Day.
