Category Archives: Forecast

Reminder of Seemingly Odd Late Tax Statement – Form 5498 … FOMC Dot Plot Preview … Newsletter Update … Summer Friday YAY!

Just when we happily said goodbye to a very long tax season due to the various extensions provided by the IRS, in comes a seemingly odd late tax form.

Form 5498 Reminder

Form 5498 is headed to some of our mailboxes over the next two to four weeks, again due to various extensions in the IRS filing due date, here are some of the reasons why:

  • Rollover of a 401k or the like to an IRA – Most frequent
  • Contribution to an IRA
  • Contribution to a SEP

One of the most confusing parts of this form is that even though you may have made a qualified contribution for a prior year i.e. 2020, if you made that contribution in 2021, depending on the type of contribution the Form 5498 MAY show your contribution in year 2021.

Not to worry, the IRS knows there are frequently a seemingly miss match of years and accounts for this.

Here is the IRS information if you need further clarity.

FOMC Statement and Dot Plot Preview

Earlier this week the FOMC (Federal Open Market Committee) led by Jerome Powell, released their Economic analysis update along with a interview after a pre-prepared reading by Powell himself.  The release, which also included the “dot plot”, which is an anonymous estimate by all the reserve members, voting and non voting on where they think the economy, is carefully scrutinized by all in the investment community.

We will take a deeper dive next week as there were some interesting cross currents post announcement and interview .. even with summer doldrums dragging along!

Newsletter Update

We are happily putting the final touches on the Newsletter, some of which partial pieces have been reviewed here, on our Blog, but with a longer Newsletter form we go into greater detail in our subject matters that we hope you will enjoy reading as much as we enjoyed creating.

Friday

Ahhhh…. But today is a Friday, for those that have been following… the rain has left us, the steam is subsiding from an abnormally fast early summer, the heat wave is reminding us why there is a saying in Texas:

“If you don’t like the weather, just wait a few it certainly will change!”

Have a great weekend, don’t forget to spend time with those special in your life and we will talk to you next week!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.

A Dallas Texas based fee only

Financial Planning Total Wealth

Management firm.

jkfinancialinc

street-cents

Memorial Day Weekend, School’s Out, Office Hours, TSA Throughput Update WOW! , The Ark of Texas

We are happy to give honor to all those who server in the military and especially those fallen during their service. You give us the ability to live our life safe, and proudly…

Memorial Day

Thank you for your service!

Memorial Day Honored

Memorial Day is honored on Monday May 31 2021

Banks, Government offices, Capital Markets and our office will be closed as well

School Schedule – Done Tomorrow – Out of Office Friday

For the first time ever for my gang and likely for the rest of the office, all of our kids are out by tomorrow, mid day at the latest!

With a half day on Thursday heading into the honored weekend, we are planning on being out of the office on Friday and will only be very lightly tethered.

TSA Throughput Update – For Those Flyers

Earlier this week, a nice comment email from a Clemente at www.Fligence.com came through noting the work we had done on TSA Throughput….

After a few exchanged emails, she allowed us to reproduce her company TSA throughput information here with credits of course….

We encourage those interested and especially those that are starting to travel again to go to her company website as you can drill down to your specific airport for latest TSA numbers, daily and even hourly for your travel planning purposes–fligence.com

Timely for those that may be traveling via air this week … with air support personal likely still at low capacity, we are getting closer to full bookings (seems unbelievable from a year ago!)

Lighter Blue 2021 line is their Future Estimates

Ark of Texas

As mentioned frequently, we are an outside family…. actually everyone at our firm are outside people and their families too!

For those 1000 or so followers in other places of the country, there is some weird storm system that is STUCK over Texas.

No Sun….

Lot’s of Rain…

Grrrrrr…….

Lemon Aid from Lemons …. Grass is growing if it does not float away to your neighbors yard!

Have a Great Rest of the Week, and Memorial Day – Talk Next Week!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.

A Dallas Texas based fee only

Financial Planning Total Wealth

Management firm.

jkfinancialinc

street-cents

Robert Kaplan Update – Round Table State of Economy – “Sooner Rather than Later!”

One of our favorite Federal Reserve Presidents Dallas’s own Robert Kaplan had another Round Table discussion the most recent Monday night….

Those with great memories may recall my fiasco when listening to his Round Table discussions and accidentally raising my hand for a live question…. good news, avoided that this time! haha

Elephant in the Room – Inflation or Not?

While leading with stats and updates, the review order has been changed due to the very end of the discussion and importance…

Recalling from the Mauldin SIC conference of the last two weeks and and once again here we are…. Elephant topic for Kaplan – Inflation or Not?

(Have you ever been on a call or virtual visit like this and wondered who else is on? – Am I wasting my time here? Or is this a good use of the late evening? – See callers below for answer!)

Live Callers

After about four or five live callers, the moderator announce, “Our next caller is Byron Wien!” – WHAT!

Wien is an 88 year old veteran of the Capital Markets and currently Vice Chair of Blackstone the largest money manager in the US!

What is he doing listening to a Dallas Reserve President at this time of the night – he is one hour later!

In a no nonsense, direct question, Wien asks or more insists “There is inflation and it is coming faster than officials think! What are you guys going to do?”

Kaplan answers directly that he thinks tapering monthly purchases along with increasing of rates should come “Sooner Than Later!”

This statement was repeated more than any other statement and even at one juncture, Kaplan stated “I said this in March and have seen nothing to change my view!” Sooner Rather than Later!

Kaplan goes on to say ” It is better to let off the accelerator and coast and possibly tap the brakes rather than staying on the accelerator and having to jam the brakes quickly!” We Agree!

Last up from the live call ins :

Robert Sakowitz – Concerns about shipping and port trouble- his personal example of $2600 pod now costing him $8000- (Has to be passed on somewhere? right?)

Based on our research and his question, most likely a multi generational retail magnate!

Both calls were concerning inflation, with several others concerned the FED has stayed to long and their mandate has been met!

Interesting Stats from Kaplan

2 million worker age 55 and over retired since Covid, dropping a valuable portion of the workforce

1.5 million women left workforce to care for children- Wow !

Texas and the surrounding Dallas Fed Area High School Superintendents on average graduate 85% of seniors and now only 60% – creating a shortage of skilled workers –

Taper and Policy – How can FED withdraw without market disruption? SLOOOOWLY

Learned from 07-09 – Telegraph in advance and give market time to absorb

What signals will use for taper – FOMC in Dec of 2020 agree that substantial further progress (Kaplan believes this statement is key and is very open to be used and interpreted many ways)

Input supply demand imbalances – metals, food, wages, PCE of April – June – elevated levels – uncertain of how long will persist

Believe inflation run at 2% and anchored there-

11 million barrels of Oil last year, thinks can only to to 11.25 million per day- fossil fuel here for decades longer, maybe not at the same level as prior but will not go away

Great Final Question from the Moderator

What Keeps Me Up at Night? (Recall same exact question of Buffet at annual meeting and the EXACT same answer)

“No textbook for this recovery, this is unlike any other recovery we have ever had- no prior example – We must manage the risk be nimble if possible !”

There you have it… Local Dallas Fed President echoing a lot of things we have been hearing, spoken of and discussed here!

Good News – Time will Tell and it will not be a long time (quarters, not decades)

Have a Great “Kaplan Update” Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.

A Dallas Texas based fee only

Financial Planning Total Wealth

Management firm.

jkfinancialinc

street-cents

Make it to Year 2030 and You will Likely Live Over Age 100 – From Mauldin SIC Conference

As noted with our excited post last week, we are once again in the throws of the John Mauldin SIC – Strategic Investment Conference.

So far this years most ear catching moment has nothing to do with finance but comes from two Doctors who are repeat speakers from last year to give the group a Covid related update.

Their predictions last year (think at a time where a lot of uncertainty abounded) were spot on and almost unbelievable accuracy. So accurate they hardly needed to update their presentation.

Knowing we teased you with the headline, stay with us please … and take a quick moment to review these two Doctors backgrounds/Credibility! – Pretty Awesome stuff!

These guys are not show boaters!

So maybe not Dr. Culver’s best look … think super smart professor we have all had in our life!

Make it to 2030 and You will Likely Live Over Age 100

My mouth almost dropped when I heard these two stately Doctors utter the words above.

There is a super cool chart that the Doctors had in their slide deck, and of course it is the ONLY slide that had “Not for Reproduction” …. so in honoring their request … here is a recreated slide from their predictions.

Since 1850 average mortality has increase 2.5 years every ten years.

From 2020 to 2030 the Doctors believe we will see an increase age expectancy of 30 years, yep THIRTY!

That is the huge jump in the chart on the very far right upper expected mortality age 112 !

Much of this is due to the expected pull forward of knowledge earned from Covid and the various Vaccines.

The Doctors repeatedly mentioned that they expect a youthful elder years as well, not just extended longevity!

Recommended Life Style and Personal Health Monitoring

Here is a quick Legend for the abbreviations:

  • Blood Pressure
  • Body Mass Index
  • Fasting Blood Sugar
  • Cholesterol
  • No Tobacco
  • Stress Management – VERY INTERESTING! Newly added by the Doctors

For the record, those are not low hurdles using my own situation as an example!

Look for a more detailed review of this in the coming Newsletter!

Have a Great “Make it to 2030, live to over 100” Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.

A Dallas Texas based fee only

Financial Planning Total Wealth

Management firm.

jkfinancialinc

street-cents

Oracle of Omaha …. Warren Buffett Berkshire Hathaway Annual Meeting … Finally Made it Through … Thoughts

Each year for the last five (which is about when they began streaming the meetings), I am always enthusiastic about listening to the Berkshire Hathaway Annual Meeting, which prior to social distancing was more like a sporting event than a shareholder meeting.

Oh, for those that may be wondering, Berkshire Hathaway is headed by Warren Buffett age 90 (not Jimmy – being silly here) and Charlie Munger age 98. The name stems from a bankrupt textile company turned massive conglomerate filled with Insurance Companies (Geico) Railroads, and home builders (largest manufactured home builder in US) just to name a few.

Back to the meeting… Buffett honestly says (and it is true) the actual meeting is BOORING and Buffett even discourages folks to listen to the formal section, BUT there is an opening ceremony of such where Buffett has a 5-15 minute planned discussion followed by 3-3.5 hours of Q and A, most of which is known, but a few are sent in live and carefully reviewed and presented by Becky Quick of CNBC.

Finally A Way To Get Through The Meeting

So the last five years were a terrible failure as the attention span drifted before the entire meeting could be consumed…. Hey these guys are 90 and 98 and move at their own pace, but a wealth of VERY interesting opinions as well as knowledge.

This year a freak accidental trial was successful and made for a very enjoyable meeting review.

After finding a replay of the meeting on YouTube then cranking the speed up from 1x to 1.25 to 1.5 and finally landing on 1.75x normal speed, ta dah … the meeting was happily consumed with full 100% attention AND SOME NOTES!

These are in no sort of order, but basically organized as well as possible given the jumping of topics due to open questions – So here we go, hope you enjoy!

(These a not my opinions or thoughts, only a replay of Charlie and Warren’s high points)

Intro Discussion

Very Pro USA and Complimentary to Capital Creation in the USA

Brings a list of top largest 20 companies in the world, with total domination of USA

Currently have $145 Billion and only need $70 Billion – Current Asset Prices are Not Inviting to Warren and Charlie – Market is too fully priced (Sound Familiar?)

Sold Airlines to allow them to get Federal Funding

Munger Comment – His extra age seems to have loosened his muffler!

Higher State Taxes Chase some smart people away – Silly

SPACS are being created for Wall Street Not Investors and useless use of other peoples money – According to Charlie

Been and actor so long I do not know what I believe – Dogging on politicians and bad CEO’s

Buffett – More Politically PC

Low Interest Rates are causing very high asset prices

Inflationary prices are coming through the home building and other sectors, economy is red hot! Steel and scarcity of product

Furniture store red hot

More inflation going on than meets the eye- Yep

Both Admire Larry Summers convictions to Inflation concerns!

Great Closing Q & A Question:

What was greatest thing learned last year?

Munger: If you are not somewhat confused by what has happened you are not paying attention-

Buffett: Very interested in how this all works out!

Ok, so there you have it. 3.5 Hours condensed into one blog post with some high points that just by chance coincide with some of our thoughts….

Have a Great “Finally Made it Through a Berkshire Meeting” Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.

A Dallas Texas based fee only

Financial Planning Total Wealth

Management firm.

jkfinancialinc

street-cents

IMF Global GDP Estimates 2020-2022 From Visual Capitalist – Cool Three Year Global Estimate

We have noted multiple times to expect some roaring Economic Numbers, which is not a super prescient call due to easy year over year comparisons and the world actually reopening…. (Our curiosity is how this data is digested by Governments, Forecasters and Market Participants)

We ran across a neat Goldman micro time GDP chart recently, that has left our sight grrrrr, but is a quarter by quarter estimate that is fascinating…. we will likely find it eventually and present it here…

For now, we wanted to show this three year global GDP (Gross Domestic Production-Blunt Economic Growth Measurement) from the IMF (International Monetary Fund) –

The IMF, just like any organization misses in Forecasts …. it is not in stone, but this is a very interesting three year, more high level look at the globe as it reopens….

IMF – Visual Capitalist Global Three Year GDP Comparison

This chart was a slider and can be found directly at our friends from Visual Capitalist Here

Year 2020 Findings we find most interesting:

USA GDP Contracts only 3.3% Wow

Global Average the same 3.3% Contraction – Wow Wow

Year 2021 ESTIMATES

Note USA estimated Growth of 6.4% – surprising low

IMF World rebound Estimate of 6% – again, surprisingly low

Year 2022 ESTIMATES – The farther you go the harder they are!

IMF US Estimate at 3.5%

Global Estimate 4.4% –

Not really what to think of this…. both seem off to us ! Clearly a USA Laggard Estimate!

This will be marked as forecast and we can look back and see how good or bad the estimates were!

Have a Great “Multi Year Global GDP Estimate” Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.

A Dallas Texas based fee only

Financial Planning Total Wealth

Management firm.

jkfinancialinc

street-cents

Interesting Research From a Podcast – Food Price Correlation to Inflation, Assets and Other Linkage

Over the weekend while on an extended walk with the 16 year old’s dog, a new Podcast Series from Grant Williams had an interesting guest with an even more interesting theory…

The theory from the guest was that food prices and the increase and decrease there of acts as and inflationary or deflationary force on economies.

His logic was that we must all eat and if you watch food prices around the world you can see a big correlation to not only the afore mentioned economic forces but also government interaction to help offset bad side effects of these movements….

Hmmmmm….

Meet the USDA Economic Research Department

Being HUGE fans of government research sites, (no copyright problems) the USDA Economic Research Department of Agriculture is a new one on our radar…not only that, but this huge page of Interactive Graphs will be watched more closely with important ones likely finding a place here for all of our collective review….

Our favorite starting point graphs to follow … note food is third on the expenditure list … lending credence to Grants podcast guest view:

How about food price movement as it relates to Economic Cycles?

There were certainly spikes prior to these three recessions….

Here is a more detailed chart of expenditures of food at the personal level:

On the margin, food has cost less out of pocket over time.

Ya, ya we are nerds, but this is very interesting stuff to us, especially such a new and interesting Theory worth watching!

Have a Great “Watching Food Price” Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.

A Dallas Texas based fee only

Financial Planning Total Wealth

Management firm.

jkfinancialinc

street-cents

Another Robert Kaplan Townhall Update – Some Breaking Comments … Slowing Purchases this Year

Back in the fall last year, here we commented on a terrific Robert Kaplan Townhall. Good news, this time we were able to listen to this Townhall which occurred Monday January 11, 2021 without accidentally becoming a participant!

Robert Kaplan is the Dallas Federal Reserve President and is a voting member of the FOMC (Federal Open Market Committee) in 2020 – has a lot of eyes on him, especially during FOMC statements … but – see next

We like to listen to these “Quaint” discussions as more open comments and nuggets of information can be discovered and we are big fans of Kaplan as well…

Kaplan Latest Townhall Comments

Kaplan reiterated an expectation of US Economic growth – if all goes well – of 5% Wow. US Economic growth certainly has easy comparables due to a bad 2020, but a 5% growth rate is really strong and if occurs would help with our Capital Markets growing into their clothes thesis.

Biggest breaking comment, Kaplan believes the FED will at minimum speak of easing on asset purchases and again if all goes well is interested in higher rates later this year – Wow, another big news comment. Recall our concerns if rates get ahead of the Fed and they are forced to chase them down, could be strong headwinds… From our perch this is good news.

Oddly, most major Financial Firms are saying the likely stimulus coming soon will help, but when that runs out a slowing may occur …. someone is wrong !

We will be watching!

Kaplan firmly stated that continued stimulus through asset purchase AND low rates will do more harm than good if continued too long …. We agree, inflated asset prices and excessive risk taking does not work out well.

Best Question – What is Biggest Risk to Economy in 2021?

This question was by far the best and Kaplan’s comment that too slow of Vaccine rollout were both elegantly stated.

Kaplan expressed some concerns with the speed of the current rollout but expected/hoped for acceleration in short order, as we all do.

Kaplan, as a firm believer in higher education, our resident state of Texas is not at the top of the rung on this one, he mentioned several times improving the education system especially as it relates to technology will likely increase productivity in the decades to come.

There you have it, some Breaking News and some Good News!

Have a Great “Kaplan Townhall Update” Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.

A Dallas Texas based fee only

Financial Planning Total Wealth

Management firm.

jkfinancialinc

street-cents

The Fed, Economics, Interest Rates and Interest Rates Review Part 2 What would force the FEDs hand?

Well covered in Part 1, here, the FOMC (Federal Open Market Committee) and Capital Markets also believe currently that interest rates will stay low for longer …. maybe we are hopeful they are both wrong (No maybe, we are!) but there is one word that we know the FOMC cannot allow to get out of control …

Inflation !

With inflation running persistently below this longer-run goal, the Committee will aim to achieve inflation moderately above 2 percent for some time so that inflation averages 2 percent over time and longer-term inflation expectations remain well anchored at 2 percent.

From FOMC statement September 16, 2020

Here is a great post from earlier on Dallas Fed calculated Trimmed Mean Inflation Measure, the FOMC’s favorite!

Triple the Bazooka – Who Let the Money Out!

During the 07-09 Great Financial Crisis, the FOMC then lead by Ben Bernanke, used the Feds balance sheet to purchase assets in order to lower rates, increase asset prices and calm markets….

This was unprecedented at the time….. Not today!

The current Bazooka is three times more ALREADY and will most certainly continue to grow in size and stimulus !

What if eventually the economy takes hold, and springs back to life –

Here is the traditional measure of inflation, Consumer Price Index from the BLS (Bureau of Labor Statistics) – again we like the afore mentioned Trimmed Mean and so does the FOMC!

Not to worry, we will be watching that 2ish % level closely…..

Inflation may occur, forcing the Feds hand at higher rates — time will tell!

Have a Great “FOMC and Interest Rates Part 2 Conclusion” Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.

A Dallas Texas based fee only

Financial Planning Total Wealth

Management firm.

jkfinancialinc

street-cents

The Fed, Economics, Interest Rates and Interest Rates Review Part 1

On Friday, we gave you a preview of this post and in completing it over the weekend, it became a bit longer than expected, so we are doing a two part series.

Some of this is also in our coming Newsletter, but with more turf here, we can dig a little deeper, especially in a two part series…

Mid week last week the FOMC (Federal Open Market Committee) led by Jerome Powell and company released their estimates of where interest rates will be over the next several years.

This chart, known as the Fed Dot Plot, represents a dot for each voting member …. looks like there is a ton of group think going on as everyone is pretty much in agreement on the near term view and with a variance of only one percent in the longer term view – far right (One vote at 2% and two at 3%)

This chart from our Friends at JPMorgan includes not only the FOMC estimates but what the Capital Markets are assuming – (This estimates comes from the Futures Market and is easily ascertained)

Market estimates can and do change quickly.

Here is a blow up of the far right portion of the graph – Orange is market expectations again from the futures market and Purple is long run assumptions.

So markets think that rates will stay low and the FOMC also agrees.

Is there any reason that the FOMC would HAVE to raise rates?

Yep, one word ….

Inflation!

In Part 2 we will discuss …

Have a Great “FOMC and Interest Rates” Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.

A Dallas Texas based fee only

Financial Planning Total Wealth

Management firm.

jkfinancialinc

street-cents