Category Archives: Investing/Financial Planning

Fastest Interest Rate Increases Ever, and that’s a long time … Friends at Visual Capitalist

From our friends at Visual Capitalist

This is pressure for now, but pleasure as our income from our fixed pays out more!

When the Fixed Income market breathes, rates typically go down in a slowdown…. even with the Fed raising short term rates… actually especially when they raise short term rates…

Have a Good “Temporary Pressure Eventual Pleasure” 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

8.7% Social Security COLA, Peripheral Effects, Pension COLA Reminder, SSA Neat Fact Sheet …

Last year we penned the following … in this post

HUGE Social Security COLA … 5.9% to Be Exact, Wow…. COLA Pension Recipients Check Your Benchmark

Looks like that was just the dress rehearsal… here is this years release…

Dall – E

With much talk of Inflation costs this year, the SSA (Social Security Administration) release this week of an 8.7% COLA (Cost of Living Adjustment) was not a huge surprise..

Important Items Associated with this Adjustment

Pensions – Folks with Pensions that have COLA adjustments should also watch for a similar increase – Your benchmark and adjustment will likely differ from SSA as they use the CPI-W three month average as noted here in our pre-post last year

Pre-Retirees – Those nearing Social Security, according to this neat fact sheet,

Maximum Social Security Benefit: Worker Retiring at Full Retirement Age goes from $3,345/mo. to $3,627/mo.

New Social Security Tax Base – Those still working, understand this COLA also filters into the SSA base income tax rate, again as mentioned in the press release

“Based on that increase, the maximum amount of earnings subject to the Social Security tax (taxable maximum) will increase to $160,200 from $147,000.”

Have a Great “COLA Reminder” 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

Third Quarter 2022 Review, Patience as we look back and forward

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)

Donald “The Brain” gets asked to be “Brain Date Ambassador” (Cannot make the name up) at upcoming conference … Well done and Congrats

Newbies may not be in the know, so we will happily give a little brag to our resident “Brain”… Donald the Brain that is…

When first announced many years ago … new access to some extremely sophisticated portfolio software tools became available, after tons of due diligence … Donald was ready to take it under his wing and we were off to the races…

Word sneaked out of his use and knowledge by the developers and later he became a Beta user, The Brain was instrumental in trial runs of updates and changes in programming as well as new design directions and applications….

Total control of positions, taxes, possible tax scenarios, specific level basis control to mention a few were the platform features … in non- “Wall Street Gibberish” controlling risk in our investment portfolios and paying as few taxes as possible… is the main function of this software…

The Brain First Surprise

Here is an post from an event in 2018 — to give you a bit more granularity

The Brain Does At Again

Several years ago at an industry gathering of over 3000 folks in a western coast town, the key note speaker begins with a review of all the neat things that had happened during the year and those that were instrumental in developing these items…

32 minutes into the three day event, up pops … Guess who?

20170202_163108888_ios

A fellow professional tapped my shoulder, “Isn’t that your partner on the big screen?” “No he is at home this trip!” No, he was on the big screen talking of the use and adjustments of new portfolio tools…

The Brain as Brain Ambassador – Requested Yesterday

The inbox of Donald showed a request yesterday of being a coincidentally named “Brain Ambassador” have not gotten to the bottom of the request name yet but running with it for now….

Apparently someone still knows his knowledge of the platform!

“Would you be willing to have advisors have a Brain date at the conference and answer specific questions about the software?”

Honor and a pleasure…. yes of course he will…

Well done “Donald the Brain” autographs please….

Have a good day and Friday and enjoy your weekend…. Travels next week .. but will still be chirping here!

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

Why October can be a Bumpy Month … Halloween? No

Our content in this venue is sometimes informative (we hope), sometimes clarification of headlines, sometimes educational, sometimes humorous and self-deprivation, and in this post more of a diary for our own education and collective remembrance.

Why October can sometimes be spooky for Capital Markets?

Probably the spookiest October that many may only read about is October 1987, but long-term historians will note that while the fourth quarter is generally a good quarter for capital markets (likely not the case this year with a FOMC yielding an interest rate rocket – ok, digressing), October can be rather spooky.

Why?

Year End for Many Mutual Funds – A very large number of mutual funds in the order of North of 20% have their year-end in October. This creates unique pressures across-the-board both on stocks that have done bad and false increases on stocks that maybe have done good as mutual funds close their books down for the year. As a sidenote last month, September garnered over 10%-year end mutual fund companies.

Black Out – With the official start of earning season being early October, publicly traded companies are restricted from purchasing their own stock. As of the most recent reading approximately 30% of exchange volume was estimated to be company buy backs…. Yes, your read that correct…30% of daily volume … Wow! Once the black out commences, by law companies are no longer allowed to purchase their company stock until a certain date after their public filing. The purpose of this is of course to cut back on any perceived manipulation. This absence of a normal one third volume of trading can make for “thinner” markets and spookier.

Confession Time – The Clock has run out – Publicly traded companies, many of which are on a fiscal year (tax year ends 12/31), the final quarter becomes the quarter of confession especially If earnings are skewed much differently than what capital market participants expect. This force is a pseudo-named “Confession”, as the calendar has just run out of rope forcing the final grade for the year in some cases.

Seasonality – As mentioned above, weird things have happened in October, creating a weird feed back loop. This means, that by knowing sometimes things can get spooky in this month, market participants and thereby Capital Markets can get spooked easier!

Mix it all up and we get a witch’s Brew of spooky times in October. 

But guess what?

We have let you know in advance, and we are not calling for a Spooky month, but there is a reason this post/memoir/diary is coming out now…. Just after a few spooky huge up days in Capital Markets…

Boo… We have your back!

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

September 2022 Financial Planning and Capital Market Review , Fastest Rate Increase, Ben Hunt, DMA Reminder – By John Kvale CFA, CFP

Hello and Welcome to our September 2022 … 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!

Break In: Holiday Venue Announced –

Dallas Museum of Art

Details to Come – Saturday Afternoon November 19th before Thanksgiving Weekend

Newbies –

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

Hope you enjoy!

September 2022 Video

YouTube

Financial Planning Tip(s)

Ben Hunt on Narratives – Reminder Late Cycle Headlines are Usually the Worst

In case you missed our pre-Newsletter Post here or you missed the actual Newsletter post here, we really wanted to re-iterate our Neat Ben Hunt coverage of Narratives, especially with them being so dramatic as we near the end of the slowing cycle… hoping not to beat a dead horse…

Just a reminder once again, take heed if you find yourself being dramatically influenced suddenly… you may have hit a Narrative, accidental or purposefully….

Another super reminder

Why am I reading this, and why am I reading this now?

Capital Market Comments

Federal Reserve Marches on with Higher Rates – All about the Speed!

With a thicker line on the chart, finally, hopefully you can spy the massive speed at which this round of rate increases have occurred….

With the cover of a late entering data in the form of Owners Equivalent Rent in the CPI (Consumer Price Index) the FOMC (Federal Open Market Committee) has ripped rates higher …

Recall this is a TEMPORAY headwind to Fixed income instruments, that show up in greater magnitude due to the FOMC’s aggressiveness…

Have a Great Day, Talk to You at the End of October!

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

Q4 2022 J.K. Financial, Inc. Newsletter … Slowdown Time to Clear, Ben Hunt Narratives, Peter Zeihan Global thoughts … Video Audio Podcast Review ! By John Kvale CFA, CFP …

Welcome to our Video and Audio Podcast Review of our Q4 2022 Newsletter. For those on the road or just unable to grab the time to read, our podcast type review gives you the behind the scenes insight to our thoughts, observations and deep views of the entire Newsletter.

Click the Download button below, for a direct link to an electronic version (an early peek-good ole fashion paper versions are on their way to you shortly) and here for our Newsletter page

Let’s get going! We hope you enjoy!

Q 4 2022 Newsletter

(YouTube)

Patience – Real Slowdowns take a while to clear

Bear Markets about 20 months

Slowdowns average about 14 months

Narratives by Ben Hunt

With the news being the worst near the tail end of a slowdown, after crossing paths with Ben over five times, we thought it a great time to review some of his thoughts and research…

The Missionary Statement or Strong Direct Narrative

Ben and his partner theorized that Missionary statements once saved for Oval Office wartime speeches or the like are now used in part due to the way we consume our information by almost everyone, leading to an overload possibly of missionary or breaking news like headlines and narratives.

The possible effect of strong missionary statements or narratives, again Ben theorizes is that when there is the need for a very strong subject matter or narrative, if we are not careful we have become desensitized to things because of the possible dramatization of other headlines and narratives that it’s not taken serious. Said simply, the boy who cried wolf

“Why am I reading this, and why am I reading it now?”

Dr. Hunt mentions that they have actually had a number of news organizations and authors directly communicate with he and his partner in order to make sure or check that they are not accidentally using a narrative, which is a fantastic possible change moving forward

Peter Zeihan – Russian Ukraine Thoughts – Demographics made It Now or Never

With regards to the Russian invasion of Ukraine, Peter theorizes that this is a recapture of multiple ports of invasion that Russia has given up over the past many decades. He also mentions that because of poor demographics the Russian invasion was an absolute necessity sooner rather than later due too an aging population

Interest Rate Thoughts

“The Federal Reserve led by Jerome Powell, has long wanted to get rates up to a more normalized level”   For the record this has been a known goal in the halls of Wall Street and the Federal Reserve for that matter.

Peter goes on, “Seems to be a feeling from the Fed Officials, that if a recession is going to happen anyway, let’s get our toolkit back of a higher interest rates!”

Talk to you after the turn of the calendar !l!

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
www.street-cents.com

Reviewing a Sept 23, 2020 Prior Post and FOMC Statement – “Inflation is the Enemy!”

Over the weekend (no jog as an early Saturday walk with dog through the local college campus garnered a huge stubbed toe from a protruding curb….cannot make this up … digressing) a long ago post about the FOMC and their main enemy entered the frontal lobe…

Our September 23, 2020 Post – Federal Reserve Enemy – Inflation

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

Posted on September 23, 2020 by John Kvale CFA, CFP | Leave a comment | Edit

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″

The original post goes on the talk about the expansion of the balance sheet and the lack of inflation at the current time.

Fast forwarding to today, the balance sheet is unwinding and there certainly are higher inflation numbers…

If the Fed sticks to it’s word, their fears may justify continued pressure to slow an already slowing economy!

Hang tight, we have your back, but bumps may be on the horizon!

Have a Great “Federal Reserve Replay” 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

Ben Hunt and Narratives … Shortened Article from just completed Newsletter

This is the time of the calendar that makes for A LOT of content in writing form…. thank goodness no writers block (For the record it has occurred)

The complete article is on the way to the printer, but came out so good … thought we would preview it here in shortened form!

Ben Hunt on Narratives

Ben theorizes that words are used to shape our behavior and as such he and Rusty, his business partner have a goal to identify when such events are occurring.

This is NOT a Fact Check, and not meaning that you as the reader will disagree or agree with them, only alerting to the fact that there may be some persuasion occurring in the narrative

The Missionary Statement or Strong Direct Narrative

Ben and his partner theorized that Missionary statements once saved for Oval Office wartime speeches or the like are now used in part due to the way we consume our information by almost everyone, leading to an overload possibly of missionary or breaking news like headlines and narratives.

The possible effect of strong missionary statements or narratives, again Ben theorizes is that when there is the need for a very strong subject matter or narrative, if we are not careful we have become desensitized to things because of the possible dramatization of other headlines and narratives that it’s not taken serious.

Comments from the Grant Williams Podcast

In the Podcast Grant mentions something Ben brought to his attention that he uses to decipher his in take of information. 

“Why am I reading this, and why am I reading it now?”

The gist of this is to be curious, or maybe slightly skeptical, but not pessimistic or negative, just having front of consciousness thought that maybe there is a slant or a narrative here that’s trying to persuade.

With Headlines being dramatic and very Negative during slowdowns, most notably very near the end of the slowdown…. a timely review!

Have a Great “Watch the Narrative Headlines” Day! Watch for the Newsletter Video for an Audio/Video/Podcast review of the article if you find it interesting!

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

Why Federal Express Comments were Taken so Negative …. Tentacles …

There are bell weather companies that have enough respect, when they speak the ripple effects are great. Last week Federal Express announced very negative earnings expectations and Wall Street took note.

Why Federal Express Caused Such Waves

Long time followers know we rarely speak of individual companies, but in this case wanted to explain the cause and effects of not only Federal Express but Capital Market movement post comments as well.

Here is what happened:

  • Federal Express cut earnings expectations by almost half
  • The new CEO says he expects “Worldwide Recession”
  • Cites dramatic slowdown near the end of the quarter

With tentacles across the globe and such strong words by the CEO, fear of contagion spread into markets.

Have a Great “Fed Ex” Cause and Effects 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