Category Archives: Debt – Debt Management

Meet the Trimmed Mean Inflation Gauge … A Measure to Keep Watch

With the FOMC (Federal Open Market Committee) led by Jerome Powell and company at their most recent meeting, made the following comments:

On price stability, the FOMC adjusted its strategy for achieving its longer-run inflation goal of 2 percent by noting that it “seeks to achieve inflation that averages 2 percent over time.” To this end, the revised statement states that “following periods when inflation has been running persistently below 2 percent, appropriate monetary policy will likely aim to achieve inflation moderately above 2 percent for some time.”

The updates to the strategy statement explicitly acknowledge the challenges for monetary policy posed by a persistently low interest rate environment. Here in the United States and around the world, monetary policy interest rates are more likely to be constrained by their effective lower-bound than in the past.

Let’s Decipher these Comments and Bring On the Tracking

The comments above, were understood by many/most on Wall Street to mean rates will be allowed to stay lower for longer and the 2% inflation rate is not a hard line number….

The following is the Trimmed Mean Inflation Rate completed by our very own Dallas Federal Reserve, just down the street from us!

It is basically taking the far outliers in any report out and calculating the number. This rate is one of the most watched inflation numbers by the FOMC!

Here are the actual numbers- watch that 2% number!

When rates go up, it is a headwind for Capital Markets …

Let’s keep a watchful eye on this… we are tracking you Mr. Trimmed Mean.

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

NY Federal Reserve Tweet : Total Consumer Debt DOWN in Q 2 2020 …What? … Deep Dive into the Consumer Balance Sheet

Mid-Week last week, a NY Federal Reserve Research tweet lead to the following report….

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Q 2 2020 Consumer Debt DECREASE?

Not believing the headline…. How could there have been a DECREASE ?

A deeper dive into the report was due!

In prior writings/research this report has been a staple of a resource so familiarity in the set up made the review easier…

In fact, Q 2 2020 shows a decrease in total consumer debt!

Notice the rise up to the great slowdown of 2007-2009 and then a pull in the wings for about five years, until early 2014?

Did it take five years to regain confidence?

Certainly, this could be just a blip, as one quarter does not a trend make.

If it does continue down, as it did during the post 09 peak, we should be able to infer there is a great belt tightening ability across the board for the consumer….

Q2 2020 total Debt

The following chart, also from the same report shows a drop in delinquency status, predominantly in the 120 day range … this may be a result of some of the forbearance ability due to the stimulus packages, but logically that should hit the shorter term, in our opinion.

Q2 2020 Total Delenquency Status

Lastly, digging even deeper, the drop by loan type is showing the most movement in the shorter term and most evil credit card balance, followed by the less evil Auto Loan….

Q 2 2020 Total Account By Loan account

Could we really be turning Lemons into Lemonade ?

Hope So!

Have a Great “Puzzling but Hopeful Consumer Debt” 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

July 2020 Podcast Video, Financial Planning and Capital Market Update – By John Kvale …

Hello and Welcome to our June 2020 Financial Planning and Capital Market Update!

If you are too busy to read, feel free to listen as we describe our post and thoughts in friendly podcast audio format as well as Video!

Newbies –

We like to articulate our thoughts and review on a Monthly basis our Financial Planning Tips, Capital Markets and current events!

Hope you enjoy!

July – 2020 Video (YouTube)

 

Financial Planning Tip  –

Careful Use of Credit Cards to Maximize Perkscredit card

We carefully spoke on the use of Credit Cards and maximizing their points and incentives due to repeated inquiries about the topic, in this post.

Credit Cards can be very dangerous and the card companies want us to carry balances … so PLEASE BE CARFUL!

Vaccine Update – It’s Looking GoodVaccine

In this post we pointed to an excellent Bloomberg Tracker that is showing multiple Phase III drugs about to hit the testing.

Phase III is the last one before mass production… making for a very fast track of multiple possible cures for Covid.

This is also market friendly as well.

Capital Market Comments

The Look Through Continues – Expect Bumps

Not trying to sound like a broken record, but in April we proclaimed that smart market participants may likely look through the valley and over the hill to eventual earnings.

As a reminder, we were really on an island as very few were positive at that time.

They did, and continue to do so … with a bit too much rose colored glasses in our opinion…

We continue to expect bumps as there are tons of unknowns and a negative narrative can take over quickly…

Not letting our guards down!

7-31-20 YTD Large International and Small

Have a Great July Update!

Talk to you at the end of August!

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

Ways to Maximize Offers through VERY CAREFUL Use of Credit Cards … Be Careful!

Recently, we have been asked multiple times about which credit card is best to use? 

Before we begin. we want to remind everyone that credit card debt is a no-no, it is one of the most expensive … it is not tax-deductible, and if you’re not careful can really create problems. So, if you have ever been behind or had high credit card debt please continue doing what you are doing right now and certainly do not open a credit card to try and use some of the techniques that follow.  

Now if you have made it through our scathing lecture above and are trying to maximize the benefits of credit card use here are a few helpful hints. 

Ways to Maximize Company offers through  VERY CAREFUL use of Credit Cards credit card

Determine what type of credit card would give you the most benefit. You may be in a situation where you frequently use a certain airline, hotel, or other type of service – usually travel or leisure related. Determine what bank or credit card company has the best benefits for you with regards to your frequented usage and only use that card in order maximize your status within that organization. i.e. American Airlines, Marriott Rewards. 

Again please do not open a credit card if you’ve had trouble in the past or currently have credit card debt-do not change anything you are doing we do not like credit card debt. 

 If you are in a situation where none of these apply and still want to try and maximize your benefit, look to a company that may give you a rebate … usually in the neighborhood of .5% to 1.5% on all of your purchases, as this may be a better option especially if you have a high volume of transactions.  

In closing this is not a green light to use your credit card recklessly, but if you were wondering what may be the way to maximize your benefits … stack it up all in one with one carrier and you would likely get the best status and benefits.  

As a side note we do not like having tons of credit cards and a debit card is fine to use as well (but may be harder to get refunded $ if stolen).  We find maximizing status by using a focused strategy the best! 

Have a Great “Careful Maximizing those Benefits” 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

 

   

Home Builder Optimism Builds …. Interesting Time Comparative and Updated Average Mortgage Rates

Last week, the NAHB (National Association of Home Builders) released their monthly survey of Home builder’s expectations …. Market participants expected a reading of 60 ….

The actual reading was 72 !

Wow…. our chart is a month delayed due to copyright restrictions, but you can easily see the almost complete bounce back…

7-16-20 NAHB Homebuilders index 5 years

While we are reviewing Home Builders sentiment…. here is a longer term chart worth reviewing….

Note these guys were WELL ahead of the pending slowdown of 07-09 …

They began getting cold feet in 2006 !

This slowdown is likely not going to show force in the residential asset area.

7-16-20 NAHB Homebuilders index 20 years

Oh…. all time low Mortgage Rates are also helping!

7-17-20 Fixerd 30 year mortgage rate average

Here is a link to thorough thoughts for Refinancing!

Have a Great “Stable Residential Assets” 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

Don’t Fight the Fed Brings New Meaning … Where the Stimulus Funds are Being Parked

During the Great Recession of 07-09, the FOMC (Federal Open Market Committee) led by then chairman Ben Bernanke, began an unprecedented (at the time), pushing of money into the financial system. Take a peek at the 2008-2009 move upwards in the graph below.

Fast forward to present, and the sequel (usually more dramatic) …. is well, MORE DRAMATIC…. take a look at the horsepower the FOMC is throwing at our current situation…. makes 08-09 look like a mini me version.

Bazooka is fitting!

 

img_1384

Interestingly, these funds are finding their way, conservatively into deposits in institutions, which can be seen by the next chart…. oddly, a non banking crisis as compared to the great recession which was definitely a financial crisis has more worried… hence the parking of money into low interest savings rates.

Will be watching to see if this continues or begins to trickle out into the economy … would be very stimulative if it does!

img_1383

Speaking of the FOMC, they have a meeting today, any major changes in their posture would likely be market moving.

Have a Great ” FOMC has a Bazooka” 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

 

 

 

 

May 2020 Podcast Video, Financial Planning and Capital Market Update – By John Kvale

Hello and Welcome to our May 2020 Financial Planning and Capital Market Update!

If you are too busy to read, feel free to listen as we describe our post and thoughts in friendly podcast audio format as well as Video!

Newbies –

We like to articulate our thoughts and review on a Monthly basis our Financial Planning Tips, Capital Markets and current events!

Hope you enjoy!

May – 2020 Video (YouTube)

 

Financial Planning Tip  –

Mortgage Rates

Looking at the chart of the 10 year treasury, we can see rates have finally settled and we are hearing the volume of lenders overflow has calmed as well. While the 10 year is not an exact predictor of Mortgage Rates it is loosely correlated.

Now may be a good time to check your Mortgage Rate and consider refinancing!

Here is one of our favorite and most popular posts on the items to remember when you are getting a mortgage and especially when you refinance.

5-29-20 10 year us treasury

The Virtual Pivot

In true making Lemonade from Lemons fashion, not only have we been able to access the John Mauldin event, with over forty hours of speakers, but a National CFA(Chartered Financial Analyst) event and several others were completed virtually.

We have so much awesome information to share in the coming weeks…. oddly, that we would have not had access to if they had been held live!

Looking forward to sharing…. tons if info!!

Capital Market Comments – They Came Out!

The Look Through Continues

With current earnings being less than stellar, you may ask why the markets are clawing their way back?

It does appear investors are looking through the valley and attempting to price in what a recovery may look like.

The Tuesday after Memorial Day offered multiple openings across the country…. Wall Street wiped its brow as people came out!

Expect bumps, and headline shocks, both positive and negative … but that’s why we are happily conservative investors at heart!

5-29-20 YTD SP 500 Small Cap International

Have a Great Day – Talk to you at the end of June!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.
www.jkfinancialinc.com
street-cents

Mortgage Rates Reach ALL TIME LOW According to Freddie Mac … Get Ready, but Wait (days, not weeks) to Pull the Trigger …

As the experience notches in the belt gain in quantity, we have learned the follies of attempting to PREDICT or FORECAST events …. luckily we gave a soft “heads up” that rates MAY be in our corner due to the Corona Virus, and help with longer term Mortgage and other longer term fixed interest rate loans ….

Freddie Mac Reports Lowest Mortgage Rates EVER

According to Freddie Mac….

“The average 30-year fixed-rate mortgage hit a record 3.29 percent this week, the lowest level in its nearly 50-year history. ” 3-5-20

img_1354

Here is the deal…. rates fell AGAIN in the most recent week due to fears of Economic slowdown from the Corona Virus…. but maybe TOO FAST for Mortgage and other longer termed Fixed Rate loans to adjust … On Friday, after the above rates were calculated, the 10 year Treasury, our guidepost for rates, dropped another 22 Basis Points or almost another 1/4 point ….. 

Far right, the 10 year treasury yield fell like a rock as fear stoked investment from across the globe…. yesterday for the first time it took a breather as bonds fell and rates rose…no matter, these are Low Low Low rates!

3-10-20 Ten year treasury

Reach out to your bank, Mortgage Broker, or other refinancing officer, and get your documents in order … begin the qualification process but WAIT (days, not weeks) just a bit and check with your loan professional before locking that rate as it is likely the recent drop in rates has not yet dripped through the loan system…. hopefully better loan rates may be in our very near future…

Here is your friendly reminder on Refinancing or not:

“Think 18 months cost break even – We like to have the saving from the refinance cover the cost of the refinance within 18 months – i.e. Person with $30k mortgage at 5% probably would not need to refinance to 4%, but a $3 million mortgage may be smart to refinance from 4.25% to 4% or the like, if the numbers work out.”

Here is the complete Post which contains 11 items to remember when refinancing!

Take advantage of what cards we are dealt!

Have a Great “All Time Low 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

Interest Rates Presenting an Opportunity, Eventually … Current Freddie Mac Mortgage Rates as of Last Week

Really like to work on articles a few days, to even a few weeks (ever so often months) in advance … repeat visits to the draft make for a better post as different moods make for different views.

Well…given the speed of Capital Markets lately… a second or third look may garner a loss of possibility.

Break In: As mentioned above, things are moving quickly, yesterday early in the AM, FOMC (Federal Open Market Committee) chaired by Jerome Powell lowered interest rates by .50 or 50 basis points as an insurance policy against slowing economic conditions. This does not directly affect loan rates, but speaks to a slower economic situation, which does effect rates across the board!

More on this at a later time…. but the following is an all time inter-day low yesterday for the 10 year treasury yield…at least for the moment!

img_6213

.91% – this from the cell, such the unusual format.

Break In Again: Interestingly, after a big rally on Monday and another set for today, the treasury yield is unexpectedly staying low and not rising dramatically in yield, which is what one would expect. This actually gives loan rates time to catch up in their possible slower decline – making this exercise all the better!

Now… let’s carry on …

Fixed Rate Loans, Especially Long Dated, such as 30 Year Mortgages Need Review

Not withstanding the comments in the opener, interest rates have dropped so fast on Virus fears and possible slowing economic conditions as a result that some loans may have not completely caught up as of yet…

3-2-20 Chart of 10 year Treasury

That is an all time low- WOW!

Freddie Mac Rates

Here are the latest average mortgage rates from Freddie Mac as of last week… they are posted only weekly….

2-27-20 Freddie Mac Avg Rates

Now is a good time to review any fixed rate loans, ESPECIALLY longer dated ones… in refinancing a mortgage, here is a detailed post, the following is the most important nugget from that post…

Think 18 months cost break even – We like to have the saving from the refinance cover the cost of the refinance within 18 months – i.e. Person with $30k mortgage at 5% probably would not need to refinance to 4%, but a $3 million mortgage may be smart to refinance from 4.25% to 4% or the like, if the numbers work out.

Have a Great “Fast Moving Markets” 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

Should you Buy or Lease that Next Car?

Long desired but fearful of repercussions of writing this article, we finally had the courage to jump in. Opinions on this subject are sometimes very strong (maybe even divisive!) on either side of the fence.

In doing research for this we came across a very handy internet site, www.usedfirst.com. While you may only be interested in buying a new car or leasing, one of the most important items is the residual value, especially in leasing. As the following neat graph shows from the site, there are dramatic differences in the decay value of cars. In our opinion, worthy of at least a few minutes research, especially if you are open to different makes and models.

 

Depreciation Comparison Studies

Those that are interested in buying a used car, the handy site will also target an expected BEST year to buy the car, as shown in the next very high end auto, with a steep depreciation schedule.

Benz Depreciation chart

The Case For Leasing

Leasing a car is by far the least expensive from a out of pocket standpoint (minimum monthly payment) way to get into a NEW Car.

In certain cases there is a great desire to drive a vehicle that is no more than two or three years old, in this case leasing is likely your best decision. Continued safety is certainly a big point for the new car ownership.

The Case For New Car

If you are one that must have a new car, but are willing to keep it for an extended period of time,  purchasing a new car is likely your best option.

A favorite place to buy a new car which we have had good experience is a membership program such as Costco or Sam’s or any other type of membership that gives you some sort of unique advantage or barrier for the general public. Always check the prices using your friendly Internet as there is tons of information out there to get the price range of the vehicle you want.

The Case for a Used Car

With a normal depreciation of between 15% and 30% per year (there are exceptions, but on the average these numbers are correct), our favorite “new car to you” purchase recommendation is buying a one or two-year-young automobile with low mileage, and keeping it until it will drive no more. Most cases this will save you a great deal of money-there are exceptions be sure, we recently ran onto a situation where a later year brand new car was within striking distance of a used car because the new models were coming out. In this case it made sense not to opt for a one-year-old car and just buy a late year new car. But on the margin, the statistics above are true.

Have a Great “Lease or Buy Car Informed” 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