Category Archives: Market Comments

November 2019 Podcast Video, Financial Planning and Capital Market Update – By John Kvale

Hello and Welcome to our November 2019 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!

November – 2019 Video

Financial Planning Tip (s) –

Email is the New Physical Address – Harder to Change

With email replacing our home address in importance, its not a surprise and only a mild inconvenience (due to the safety) to have to get a signed form in order to change our address.icons-157872__480 email address

In our descriptive post on the subject, we also predict eventually we will all likely be forced to transact most of our business in a paperless way….  Uncomfortable for many, but much better for our environment in the long term!

Why an Inheritance is Usually NOT Taxable

After running into this question numerous times we did a post here, and will also have an expanded article coming in our Q1 2020 Newsletter.inheritance

For the most part, inheritances are not taxable and in our post we go over the reasons why, and discuss techniques for being most tax efficient.

Just after this post a good follow on subject directly related to this post occurred that will go well in our “Why” Series Collection – Watch for another Inheritance Related Post and likely Newsletter Article !

 

Capital Market Comments –

When FED lowers, Recession Averted? Hmmmm

Near the end of the Quarter, as mentioned in our Fire Hydrant CEO post here, we ran into a most interesting chart (below)….

A first ever to see, the speaker points out that recessions are averted when the FED (Federal Open Market Committee – Jerome Powell the leader currently) lowers rates during an inverted yield curve… hmmmm

Not to worry, doing more research on this … oddly the speaker did not think much of Powell’s economic prowess, but spoke firmly that due to his LACK of horsepower on the Economy he may have a better chance of soft landing this slowdown…

 

img_5485

Always learning!!

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

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

Drink from a Fire Hydrant of CEO’s and Company Executives – Friday

We were happy to receive our invitation to a local gathering co-sponsored by the CFA Organization (Chartered Financial Analyst) – an organization that I was president of a few years ago and maintain contacts and membership.

Wednesday and Thursday of this week, in rapid fire form, over 100 CEO’s and C level executives from all over the country, presented their company to groups of folks for a better understanding and possible investment.img_5476

We cherish this event every year, as it gives us a great candid feel for what’s going on in the economy and we get to meet a wide variety managers in different industries…..

So here’s a quick review:

 

The energy companies that we sat in on where mellow, but longer-term positive,  and much discussion about lower debt, and future higher prices, with lots of hedging as topics. Overall the energy executives felt good long-term but we’re less certain in the very shorter term. Cautiously positive, but managing very well.

Listening to a insurance company that deals with high risk properties – high risk because they’re on one of the eastern shores that is the recipient of bad weather, tactics for maximizing revenues, without passing higher expenses on to their customers, due to inelastic customers, were the topic as well as  fingers crossed for no major bad weather.

The first days keynote speaker for lunch was fantastic:img_5467

“How Government Policy Drives Stock Market Returns” was the title of his presentation.

His conclusion, Politics affect Capital Markets but it’s not sustaining,  what truly affects Capital Markets longer term is policy. We could not agree more … when new rules are instituted, that’s when talk becomes action and you have a definitive line in the sand.

Maybe something we should all remember as we enter a Presidential Election in the coming year!

On Thursday a delightful visit with the CEO of a local steel company, her thoughts on policies, tariffs which surprisingly were somewhat muted. Tariffs did not seem to bother her, but a recession would not be welcomed. Cyclical concerns in a very cyclical industry and defense of such cycles were very well presented.

The lunch speaker of the second day was also very interesting and had two main points:

Jerome Powell and China

img_5485

This chart was interesting and may make future discussions, the gist is that when rates have been lowered while an inverted yield curve occurs, it deters the recession… the recession occurs when raising DURING the inversion ….. Hmmmmm ….first time we have heard this, but it peaked our interest….

Regarding China… In a nutshell he felt like China would agree to a multiple part Tariff contract and this was someway a necessity due to China’s current economic situation, and also most politicians stance against China and their tariffs, offering no option for relief.

In conclusion, from a very high-level, everyone was well aware that this economy is not growing extremely fast, but it’s still growing. Many shared our thoughts that we may have a soft recession but a very hard recession is likely not in the cards. Very few touch the political landscape and for the most part we’re generally positive.

Ahhhh…. a HEAVY Friday for you huh ?

Apologies, but we have a short week next week and wanted to get this to you as we know you were hanging on the edge of your chair waiting…. HAHA … kidding of course, recall this is a working Diary for us as well….

Have a Great “Executive Updated” 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

Two Neat Charts, History of Interest Rates, and Debt, for a Lighter than Normal Pre-Thanksgiving Week

In a quest for postable animated charts (coming soon – these are REALLY fun) the following two charts grabbed attention on a Pre-Thanksgiving lighter week…. from our friends at Visual Capitalist.

Next week we will bring an animation chart to your inbox – again, they are really neat!

Interest Rates Since 1350

We crow frequently about Interest Rates, as they are very important.

Stepping back to see the forest for the trees…. this chart caught our eyes…

interest-rates-history

Location of Debt

From above, we see the long history of interest rates… below is the location

Pay particular attention to the color and the legend at the bottom of the chart as it is more important than the size of debt as focused on by the chart!

world-debt-2019

We just could not pass these up!

Have a Great “History of Rates and Location” 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

Hold on … Here Come Important Valuation and Corporate Earnings Charts –

As promised, it’s always good to step back occasionally and make darn sure we are not all being Lemurs (most known for following each other without thought) and gathering together, just before we go over the cliff….

Ok, so you are about to receive a blast of charts… we will code this post Forecast so we can go back and look at the “Forecasts” later….

Is the Market (S&P 500) Expensive?

This is the trailing PE (Price Earnings Ratio) the most macro valuation measure used from our Friends at Factset !

Green dotted line represents, 5 year average, and the dark dotted line represents the 10 year average….

Answer – Not cheap, but MAYBE not as frothy as it may feel at times (present party included) – certainly have been MUCH more expensive in the past…

Remember, tariff progress may release some pent up/held on the sidelines demand!

11-9-19 Trailing 5 and 10 year Avg PE Versus Current PE

What Areas are PROJECTED to Grow in 2020

This is what analysts are PROJECTING/Forecasting (hence our coding for future review) for the year 2020!

Recent Losers are expected to be next years winners- i.e. Energy and Materials….

What happens if Tariff Agreements are not reached? Not being negative here but we must consider this could be better or worse!

11-9-19 Earnings Growth for 2020 by Sector - Forecast

Earnings Versus Market Price Movement

You hear us say all the time, Earnings are the ultimate driver of prices… and they are….

No one says this is easy…. Earnings have been flat, but markets up….

Theoretically this should not happen … UNLESS market participants expect future earnings growth as markets are forward looking.

Q 4 2019 EPS Growth Change Versus market Growth

How about the Consumer?

Recall the consumer drives over two thirds of the economy through spending in our consumer consumption economy….

A Happy Consumer = Spending Consumer

One of the many Consumer Sentiment Indicators… University of Michigan…

Steady as she goes!

9-2019 U of Michigan Sentiment 10 years

Ok … you get the point, not too bad!

We could find something really hot and really cold, but these are the biggies from a high level!

Of course we did not forget the inverted yield curve and it’s recession predictiveness … we spoke about it here, here, here and here…. more to come…

Have a Great “Lemur Checkup” 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

Good News From Interest Rates – Friday

While the FOMC (Federal Open Market Committee) led by Jerome Powell have been lowering short term rates, see notes by us here, here and here….

Until just recently, longer term rates were following short term rates down…

Good News From Interest Rates

While the FOMC does control short term rates, they have much less control of longer term rates and actually by lowering short term rates they were hoping for this….

Higher long term rates are our friend … Possible reasons:

  • Market participants way of being more positive
  • Tariff talks proceeding
  • Less fear
  • Expectation of future growth
11-7-19 Ten Year Treasury Update

10 Year Treasury Rate

If we showed a longer term chart you would see it still has a ways to go as we are only nearing 2% – half full guys… have to start somewhere…  For now, good news!

Newsletter Under WayQ 4 2019 Newsletter Banner small

We have some really neat items under way for the Q 1 2020 (yikes- did we just say that) Newsletter… we have found some great Government Public sources of information that we think you will really like – now on to pulling it all together for brevity and clarity — never thought those research paper skills would be so used – Sorry to all the English teachers that did not get full effort..yes you told me so! haha

Today is a chilly Friday and Thanksgiving is just around the corner…

Have a Great Friday and Weekend!

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

 

 

October 2019 Podcast Video, Financial Planning and Capital Market Update – By John Kvale

Hello and Welcome to our October 2019 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

D Magazines Best Wealth Managers

2019 Final Approved Dmagazine Best Wealth Manager

D Magazine Best Financial Planner – 13th Consecutive – Wow

Best_Financial_Planner 2019

Sirius Satellite Radio Co-Host

JK Sirius

 

Newbies –

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

October – 2019 Video

Financial Planning Tip (s) –

Why we want ANY seeming Important Document

In this post, due to recent fantastic $$ savings just by having access to very old documents… some almost two decades, we were reminded of how important it is for us to safely keep ANY seeming important document…. forever

Only thing is, if we do not have a soft copy… we cannot save it!

Capital Market Comments –

FED Lowers Once Again, another .25% – Likely Pause Expected

Jerome Powell Chief of the FOMC (Federal Open Market Committee) lowered rates by .25% to the 1.50% to 1.75% range, which will directly effect our overnight money, such as checking accounts and money markets… We think in part, to answer expectations… the good news is they have set future pause expectations… which we like!

Longer term rates have followed a bit, for now.

11-2-19 Fed Funds Rates

 

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

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

Three Views of the Consumer – Balance Sheet, Net Worth, Debt Service … Looking Good!

Over the weekend… doing what Financial Nerds do, after actually looking for an earnings update from Factset, but only being about 40% through the earnings season and after reviewing an almost 100 page slide deck from JPMorgan, the following consumer related charts jumped out, so we decided to share

Three Views of the Consumer

Recall that the consumer makes up over two thirds of the US GPD/Economy/Economic Growth via his/her spending… one can infer a happy consumer is a spending consumer…

These are averages across the country, so there are certainly different individual cases, but this is definitely worth a look…

Here is the Consumer latest Balance Sheet

Liabilities are most interesting to us, especially the non-mortgage liabilities…

10-25-19 Consumer Balance sheet

Consumer Debt Service is at a very low and serviceable level

The Great Recession of 07-09 has had at least the one good long term effect of keeping the consumer debt service low… not sure if fear or regulation, but still low compared to this multi-decade Chart…

Worth noting this chart variance in NOT very large… very interesting ..

10-25-19 Household Debt Service

Consumer Net Worth

Appreciation of most financial assets post Great Recession 07-09 has cleared new higher ground for the consumer, adding to confidence, happiness and freedom of spending…

Ignore the value the numbers are too big to comprehend, just take note of the higher high in the far right…

10-25-19 Household Net Worth_Page_01

These numbers being so interesting, likely have spawned a deeper dive in our next Newsletter with additional facts and national averages that may make for a great New Years Resolution Article…

Have a Great “Updated Consumer” 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