Proscenium
pro-SEE-nee-uhm
The part of the stage that is in front of the curtain.
From Latin proscenium, from Greek proskenion, from pro-
(before) + skene (scene).
“Pay no attention to that man behind the curtain”
-Wizard of Oz after Toto pulls back the curtain
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TIP OF THE WEEK
If you pull back the curtain on the changes in the new
SBA SOP 50-10-8, SBA is concerned about the adequacy of equity injections for
business acquisitions.
Added language makes it clear that “search funding” is
not eligible for the 7(a) Loan Program.
A search fund is an investment vehicle through which an
entrepreneur raises funds from investors in order to acquire a company in which
the entrepreneur wishes to take an active, day-to-day leadership role.
SBA will consider any investment subject to an agreement
to repay equity or make distributions to recover an investor’s investment prior
to release of the guaranty (e.g., certain types of redeemable preferred stock)
to be debt and not equity.
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Indices:
PRIME RATE= 7.50%
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SBA 504 Loan Debenture Rate for August
For 20 year debentures, the debenture rate is only 4.91%
but note rate is 4.98186% and the effective yield is 6.255%.
For 25 year debentures, the debenture rate is only 4.96%
but note rate is 5.01254% and the effective yield is 6.237%.
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AHEAD OF THE YIELD CURVE
The curtain does not need to be pulled back on revisions
to economic data.
Revisions for May and June jobs were larger than
normal. With these revisions,
employment in May and June combined is 258,000 lower than previously reported.
Revisions are part of the normal process used to gauge
job gains and losses in the U.S.
The confidence interval for preliminary estimates from
the payroll surveys is +/-136,000 at a confidence level of 90%, according to
the Employment Situation technical notes. A confidence interval shows the range
of values that are expected for the survey’s results to fall between if the
survey were repeated many times. This
is another way of saying it’s highly likely that the actual number of jobs
gained or lost would be within 136,000 jobs of the preliminary estimate.
For example, the July estimate of 73,000 jobs gained came
with a +/- 136,000 confidence interval. This suggests the true value is likely
between 63,000 jobs lost and 209,000 jobs gained.
Final revisions for June are scheduled for release with
the Sept. 5 Employment Situation report.
The average revision from preliminary to final since 2023 is a
relatively modest reduction of 32,000 jobs.
Revisions to the Federal Reserve’s release on capacity
utilization are insignificant.
The preliminary estimate for June’s capacity utilization
was 77.6 but was revised to 77.7.
In July, capacity utilization moved down to 77.5 percent.
A decline in utilities output, plus a contraction in
mining activity, fueled the contraction.
Within manufacturing, durable goods output increased 0.3
percent and nondurable goods production fell 0.4 percent in July.
Here is what capacity utilization has been doing and this
week's 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
2024- 76.8
What does all this mean?
I don’t know.
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%.
Minutes from the Federal Reserve’s last meeting on
monetary policy noted that the Committee might face difficult tradeoffs if
elevated inflation proved to be more persistent while the outlook for the labor
market weakened.
Probabilism proliferates with profligate
prognostications.
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OFF BASE
The Federal Reserve might face difficult tradeoffs?
Sounds like probabilism. Probabilism, from Latin probare, to test,
approve, is a theory that certainty is impossible especially in the sciences
and that probability suffices to govern belief and action
How to deal with probabilism?
In his 1936 essay “The Crack-Up,” F. Scott Fitzgerald
writes that “the test of a first-rate intelligence is the ability to hold two
opposed ideas in the mind at the same time, and still retain the ability to
function.”
Here is something that is certain. A three day weekend approaches.
The Federal Reserve has proscribed banks from being open
on the following days:
Labor Day September 2
Columbus Day October 14
Veterans Day November 11
Thanksgiving Day November 28
Christmas Day December 25
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