Category Archives: Clients/Clients Only

Dear Investor:

Putting Q1 of the year (2023) behind us, compared to last year at this time, seemed straight forward. recall last year at this time, we had just began interest rate hikes.

As the calendar turned we began searching for a similar series to last years’ “Back to Basics”, due to the popularity, comments, and sharing that occurred with this multiple series.

By luck or accident, we landed upon the antithesis like series called “Advanced Analysis” in part due to the current economic cycle and the nearing of the end.

Advanced Analysis Pilot

Our Pilot/Part 1 of the series was extremely timely and focused around M2 a broad economic measurement of money sloshing around the financial system. This is discussed in greater detail in our Q2 Newsletter at a very high level. Whether lucky, or preeminent, our observation, was to watch out for more high risk debt players in the capital markets and especially junk bonds. This fact seems to be occurring much faster than originally though.

Tax Season – Hints and Reminders

As we turn to Q2 of the year in what seems like expeditious fashion, it is tax season.  We once again call your attention to our Q2 Newsletter as there are some great last minute tips not only looking forward to this year, but also things available that may help last year’s taxes.

Interest Rate Anniversary – Most Likely Nearing an End

As mentioned in the intro, within the last two weeks we have just passed the start of the interest rate cycle, which was the fastest on a percentage basis we have ever seen The US economy and the global economy for that matter, operate much more like an aircraft carrier then a ski boat in their change of direction. The financial sector seems to be in the early innings with other parts of the economy much later in the economic game cycle. We will get through the slowdown eventually with all parts of the economy and move forward.

Have a great spring. Talk to you in the summer!

Sincerely,

John A. Kvale CFA, CFP

Enclosure (2023 Report)

Dear Investor:

Bill(s)

On December 20^th, 2019 the Secure Act was singed into law. On December 27^th , 2022 the Secure Act 2.0, a bill long in the works and a mere 4200 pages long was signed into law. The most important item in the financial world (there were a multitude of areas addressed) as the second upping of RMD’s to age 73. Look for more information soon from us.

Rates

In December the FOMC (Federal Open Market Committee) led by Jerome Powell raised rates to over 4% after starting the year at zero.  As mentioned in our Q1 2023 Newsletter article (Maybe a Tiger can change Stripes0, on a percentage basis this would be a possible once in a lifetime speedy move.  This may also be a return to a normal interest rate policy (hopefully) with no intention of going to the zero boundary again.  See Next point.

Bills

Not getting too wordie, but US citizens “bills” or the increase in them in the form of food, travel, energy, housing just to name a few are what is creating the opportunity of the afore mentioned speed of rates or rate increases. The CPI (Consumer Price Index) measurements continue to hold at much loftier levels than anyone thought possible (somewhat due to lagging indicators) and are allowing rates to rise and likely stay higher for longer.  This is a good thing for our safe assets aka Fixed Income/Bonds thankfully as most of the headwinds are likely behind us, again see Q1 2023 Newsletter lead article and associate graphs.

Sunshine

Last year at this time we were reviewing items such as “Anatomy of a Slowdown” and “The R” Word – Recession.

Today, from our unique “Personal Reflections” portion of our Q1 2023 Newsletter :

“Future is better

Just as we pointed out over a year ago what a slowdown looks like and that it might occur, we are now ready to point out later on this year it’s very likely the clouds of higher interest rates and two feet on the economic brakes by Powell are likely to clear.”

This is also the time we attach our Private Policy Statement for the year, along with our opportunity to offer our latest ADV filings and Client Relationship Summary (Form CRS); Requests for review will be accepted via phone, mail or email, and mailed immediately upon request.

Happy Turn of the Calendar, and Best Wishes for the Start of a New Year!

Sincerely,

John A. Kvale CFA, CFP

Enclosure (2022 Report)

J.K. Financial, Inc.

PRIVACY POLICY NOTICE

Our Promise to You

As a client of J.K. Financial, Inc., you share both personal and financial information with us.  Your privacy is important to us, and we are dedicated to safeguarding your personal and financial information. 

Information Provided by Clients 

In the normal course of doing business, we typically obtain the following non-public personal information about our clients: 

• Personal information regarding our clients’ identity such as name, address and social security number;
• Information regarding securities transactions effected by us; and
• Client financial information such as net-worth, assets, income, bank account information and account balances.

How We Manage and Protect Your Personal Information

We do not sell information about current or former clients to third parties, nor is it our practice to disclose such information to third parties unless requested to do so by a client or client representative or, if necessary, in order to process a transaction, service an account or as permitted by law

In order to protect your personal information, we maintain physical, electronic and procedural safeguards to protect your personal information.  Our Privacy Policy restricts the use of client information and requires that it be held in strict confidence.

Client Notifications

We are required by law to annually provide a notice describing our privacy policy.  In addition, we will inform you promptly if there are changes to our policy. 

Please do not hesitate to contact us with questions about this notice.

In this review, we have chosen not only to look back over the prior 90 days, like we usually do, but we also wanted to look forward as we go up to the end of 2022!

Patience is a Virtue

Jerome Powell (Chair of FOMC) and his fellow FOMC board members have continued to raise rates, much faster and much greater than many, including ourselves thought possible. Rewind back just to the beginning of the year and the federal reserve were actually pushing rates down, in a quick about face by the end of the first quarter, rates were on their way up an asset purchases by midyear had reversed and become asset runoffs. Their purpose is of course to slow inflation a.k.a. CPI (consumer price index), while with great intentions many of the inputs in the CPI index are very lagging and have likely already rolled over but have yet to feed into the actual report due to their delayed nature.

Patience is needed as mentioned in the bullet before this commentary and also greatly outlined in our Q4 2022 newsletter. In that newsletter, which you should already have in your possession, we outline the normal lengths of time that a slowdown occurs and what to expect from almost all angles. The main reason that we did this is to remind ourselves, and everyone else as well, as the last decade has garnered an unusually fast and short slowdowns and commensurate recoveries. With the FOMC on a continued rate increase, this slowdown is likely to be much more similar to prior slowdowns in both time and fatigue of the economy. Patience, we will get there.

Looking Forward but no Predictions

Using history as our guide, the fourth quarter is indeed usually one of the best. However, as mentioned above, the macro economy pulled down by the federal reserve and continued right increases may overwhelm seasonal historical blossoms and weigh down a normally sunny period on the calendar.

Contra moves in both Equity/Stock and Fixed Income/Bond

In slow downs, equity markets have an unusual tendency to slowly drip in reverse and then all the sudden make a jump forward only to slowly start dripping in reverse again.

In this economic cycle, we have a new asset class that is also participating, the Fixed Income Market. As mentioned earlier with the federal reserve and Powell on a continued increase goal interest rates on the longer end of the yield curve i.e., the 10 year (versus the very short one or two) have smartly slowly gone down only to jump backwards up again and then slowly begin their decrees again. Patience is again a virtue, a slowdown leads to lower rates eventually, even with the FOMC raising rates.  Patience really is a virtue, we will be there with you, thanks for your time and your patience

Sincerely,

John A. Kvale CFA, CFP

Enclosure (2022 Report)