perspicuous
(puhr-SPIK-yoo-uhs)
Clearly expressed;
easy to understand.
From Latin
perspicuus (transparent), from perspicere (to see through), from per- (through)
+ -spicere, combining form of specere (to look).
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TIP OF THE WEEK
Let me be perspicuous
here:
In just over three
weeks (October 1st), ALL FEES on SBA 7(a) loans of $150,000 or less
go to ZERO.
No guarantee fee
or on-going lender fee.
_____________________________________
Indices:
PRIME RATE= 3.25%
SBA
LIBOR Base Rate September 2013 = 3.18%
SBA
Fixed Base Rate September 2013 = 5.62%
________________________________________
SBA
504 loan Debenture Rate for August
The debenture rate
is only 3.16% but note rate is 3.21% and the effective yield is a whopping
5.24%.
________________________________________________
AHEAD
OF THE YIELD CURVE
The
Federal Reserve has been anything but perspicuous.
At
its last meeting on monetary policy, the Federal Reserve said the economy
“expanded at a MODEST pace” while a month before it had said that the economy
“has been expanding at a MODERATE pace.” What was the Federal Reserve really
trying to say?
A
look at the minutes from that Federal Open Market Committee meeting as they
agonized whether things were modest or moderate didn’t
help.
Last
week, the Federal Reserve released its “Beige Book” which stated that “national
economic activity continued to expand at a modest to moderate
pace.”
What
is the Beige Book? It is published eight times per year. Each Federal Reserve
Bank gathers anecdotal information on current economic conditions in its
District through reports from Bank and Branch directors and interviews with key
business contacts, economists, market experts, and other sources. Nobody
contacted me.
The
Beige Book is not a secret codename. The reason for its name is simply the
color of its cover.
When
the report was first published in 1970, it was called the Red Book because that
was the color of its cover. In 1983, the report was made available to the
public. Fearing confusion and comparison with Chairman Mao’s “Little Red Book”
the cover color was changed and its name became the Beige
Book.
In
preparing for the meetings, FOMC members also receive the "green book,"
containing the FRB staff forecasts of the U.S.
economy. This is coupled with the "blue book," which presents the board staff's
analysis of monetary policy alternatives. Only the beige book is available to
the public, and it is released approximately two weeks before each FOMC
meeting.
At
the next Fed meeting, employment will be a major topic of
conversation.
Only
169,000 jobs were added in August. The government also revised down its
estimated job growth for June and July by a combined 74,000 jobs, meaning the
net gain from the job’s report is under 100,000 jobs. That does not even keep
up with population growth.
Treasury
yields tumbled after the jobs announcement.
Thirty-year
bond yields fell three basis points to 3.85
percent.
Keep
your eyes and ears open for this week’s auction of 30 year Treasury bonds.
Last
month’s $16 billion auction of the securities drew a yield of 3.652 percent.
That compared with 3.66 percent at a previous auction in July, which was the
highest in almost two years. The June auction had drawn a yield of 3.35% while
the May auction saw a yield of only 2.98%.
Here
is what the 30 year Treasury bond has been doing and this week’s interesting
little table:
2001-
5.49
2002-
5.43
2003-
ND
2004-
ND
2005-
ND
2006-
4.91
2007-
4.84
2008-
4.18
2009-
3.89
2010-
4.61
2011-
2.89
2012-
2.77
2013-
3.25
Wait
a minute, why no numbers for 2003, 2004, and 2005?
One
month after the 9/11 attacks, the Treasury 30 year bond is discontinued. When
the Treasury mothballed the 30-year bond in 2001, experts speculated it was
trying to drive down long-term interest rates, which had remained stubbornly
high while the Federal Reserve was slashing short-term interest rates to revive
the economy. When the Treasury discontinued the 30-year bond in 2001, its yield
fell 35 basis points in one day. Why? A shrinking supply of the 30-year Treasury
bond caused increased demand to drive rates down.
The
bid-to-cover ratio, which gauges demand by comparing total bids with the amount
of securities offered, was 2.11, the least since August 2011 and compared with
an average of 2.55 for the past 10 sales. This measure of demand at the U.S.
Treasury Department’s debt auctions has fallen this year to the lowest level
since 2009 as a drop in bond prices generates the biggest losses on government
securities in four years. Investors have bid $2.87 for each $1 of the $1.257
trillion of notes and bonds sold by the Treasury this year, compared with a
record high $3.15 of bids last year. It’s the first decline in demand at the
auctions since 2008, when the U.S. government increased note and
bond offerings 59 percent to $922 billion as the recession and the financial
crisis deepened.
What does all this
mean?
I don’t
know.
It
would appear that the Federal Reserve can be perspicuous about short term
interest rates next week.
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OFF
BASE
The
perspicuous narration of a ballgame by Vin Scully is one of the joys of summer.
He
said something the other night that at first didn’t sound so perspicuous. With
a full count, he said that the “string was out.”
Back
in the good old days, before plastic ball/strike counters were invented, the
umpires used two pieces of string to count balls and strikes. The string to
count strikes had two knots in it, and was held in the right hand. The ball
string had three knots, in the left hand.
After
each pitch, as appropriate, the umpire played out one knot. The umpire could
quickly determine the count by looking at the visible knots in each
hand.
So,
with a 3-2 count, all the knots were played out, and the "string was
out".
