May 2013 Summary of Eventful Capital Market and Economic Items: John Kvale of J.K. Financial, Inc. (Video)

Goodbye May 2013, we wanted to hit a few of the high points! The year is not slowing down so far, but with the official entrance into the summer doldrums we expect slower motion for a while.

Here is our May 2013 Capital Market and Economic summary video, by John Kvale

The 10 Year Treasury

Interest Rates from high above on a longer term do not look to bad…actually it looks very good.  As a general rule, lower rates are helpful to valuations, interest costs along with margins and long-term confidence.

10 Year Yield 1960 to Current

Yikes ! When we look at a shorter term chart, the story may be changing as rates have begun to rise somewhat faster than many may have expected. Rising rates act as a mild headwind unless they rise too fast. We will keep our eyes peeled on this matter.

10 Year Yield YTD 2013

Ben Bernanke’s Punch Bowl AKA QE Taper…not Tipper

If you are one that likes to debate…step right up. The debate is on, and it is anyone’s guess when the Fed will slow the gigantic $85 billion monthly purchases of fixed securities. For the record, the Fed has been mashing on the gas long enough now that they actually purchase more than $85 billion monthly, as prior purchased securities are maturing and have to be re-invested.

This debate is a major contributor to our prior subject, interest rates. IF and WHEN the Fed really let’s off the gas pedal, the fear is what rates will actually do….or more over, how fast and how far they will rise. Buckle up and let’s all hold on, if the Fed draws a line in the sand we may begin to see who has been swimming with no swim trunks…..not us of course!

Continued enthusiasm….Party like it’s 1999

The most surprising continued element happening this year is the huge rise in market valuations given the slow growth that is being recorded. Do not get us wrong…things are getting better in MANY aspects of the economy, but are they REALLY getting THAT MUCH better?  We do not think so, given the data we have at this time. Current market growth was 3% over the last quarter…awesome that is great…but a 10% plus move in the US capital markets is a bit extreme…in our opinion.

Have a Great Day!

John Kvale

http://www.jkfinancialinc.com