Category Archives: Market Comments

All Eyes on the Federal Reserve – Will they LOWER (yes you read that correctly) Rates? Audio from Local Fed President, Robert Kaplan, on how the decision is made!

Ok…so the Social Security event forced us to pull together new audio equipment – we never knew how quickly we would utilize these new tools for events such as what follows – We hope you enjoy these pertinent comments directly from the horses mouth!

Unthinkable just a few quarters ago…. Market Participants are thinking there may be a FOMC (Federal Open Market Committee) LOWERING of rates – yep lowering!

This week the FOMC will announce their decision, based on many factors as you will hear from the attached audio – what makes this weeks meeting special is the slight expectation of a lowering of rates and this meeting includes the FOMC estimates of the economy and an interview with chief Jerome Powell post announcement –

Now – what they are looking at to make the decision!

At our recent CFA (Chartered Financial Analyst) sponsored event, we were fortunate enough to have an hour with Robert Kaplan, Dallas Federal Reserve President. We were also fortunate enough to get audio of the event…

What the Fed Watches to make rate decisions20190528_170905120_iOS

According to Robert Kaplan, Audio below, he along with his fellow FOMC chiefs watch the following, just to name a few items:

Cyclical Factors – Short Term Indicators – Less important to Kaplan – I.e. CPI, Earnings, Interest Rates, Employment rates – basically all the items we read on a daily basis or are bombarded with in “Breaking News! Like format – Interestingly and very correctly from our perch, Kaplan is not a big advocate of placing much weight on these factors – see next as he mostly ignores the short term noise – Wisely in our opinion – see audio below

Structural Factors – Longer Term Trends – MORE important to Kaplan and becoming more important to the entire FOMC board due to his repeated review – I.e. Population growth/demographics, Government Debt, Corporate Debt, TECHNOLOGY INNOVATION (huge importance), World Growth – Again, totally agree – see audio below

Individual Company Response – Kaplan talks to over 30 large and small company CEO’s monthly along with continued in- person visits with companies to help determine, just what the economy is doing along with longer term Structural disrupting factors – see audio below

Group Input – With multiple chiefs from a dozen districts bringing their collective input to the table, a theme hopefully develops!

Here is the Audio in different formats for different devices – with three different types we hope at least one works on your device!

MP3:

Wave File:

OGG File:

Our Thoughts

Our bet is no lowering of rates, which may be met with disappointment (lower markets)!

Have a Great “FED Decision Week” 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

Fed Speak Spurs Markets: Accidental Reporting – Great Audio Totally Contrary to Reports … Friday

Mid-week, Jerome Powell current Federal Open Market Chief (FOMC) hinted that rate movement may be under review – this, the exact sentence is what Capital Market Participants applauded:

“…we will act as appropriate to sustain the expansion.”

As simple as it may sound, it’s meaning is strong. Simply put, the FOMC is aware of headwinds being caused by the tariff talks and are considering it as a factor in their estimate of the growth of the economy. Here is a link to the actual speech for those nerds like us!

Rewind to just two quarters ago when the FOMC was on record saying they planned on raising rates three more times, spurring the Holiday season Hissy Fit … Things certainly have changed – 

This headline from Wall Street Journal Yesterday 20190606_184120000_iOS

afternoon!

But HOLD ON … this will make you scratch your head–

Robert Kaplan, Dallas Federal Reserve President – One and a half weeks ago during a lunch presentation! Take a moment to listen, it’s 1 minute and 14 seconds!

Different Audio types for differing browsers – same audio

 

20190528_170905120_iOS

Timely recording of the event…had no idea how pertinent it would be so quickly!

Feeling a bit like a reporter…. confused reporter, but reporter!!!

Have a Great Friday and Super 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

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

Hello and Welcome to our May 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 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!

May – 2019 Video

Financial Planning Tip (s) –

Why Reading the Fine Print is Still Important

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Here in this post we discussed the need to keep an eye out for tricksters as the still find their ways into our lives…. this post was created after stumbling on to an offer of 99% annul charges on what looked like a request for a donation to a charity… can’t make this up.. even took the blurry (bad photographer) picture for proof…

 

Sharpening the Saw – Personal Income Tax Bracket Review

In our Sharpening the Saw post here, we posted from a local conference we were attending and grabbed our favorite Tax Chart as a reminder of the new tax law changes.

This chart, which is also making an appearance in the Q 3 Newsletter is a great review/update on the new tax brackets, especially those who are retired:

Tax Bracket Chart

 

Capital Market Comments –

Yield Curve Inversion is back, as we had a brief few days in March, but as of the end of May we had a much more distinct inversion with the 10 year at 2.15% and the 90 day near 2.40%-

The following chart is from our own trading system and is the 10 year yield less the 19 week yield or the equivalent 90 day yield… the black line marks the zero point – anything below the zero is inversion !

6-2-19 10 year versus 13 weeks Rate - Thinkpipes

It’s inverted now for sure…. Again, LOT’s more to come!

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

Inverted Yield Curve Update – Break In: Chance Visit with Robert Kaplan, Dallas Federal Reserve Chair

Break In:

After scheduling this post about 24 hours before now, yesterday an almost all day meeting with the local CFA (Chartered Financial Analysts) organization, a local deep level investment organization that found yours truly as President once upon a time, featured the key note lunch speaker of none other than … Robert Kaplan, the current Dallas Federal Reserve Chairman…

kaplan-lb

There is not a Federal Reserve Member, much less a president that does not have the Economy, interest rates, and notice of the inverted yield curve on his mind… His hour lecture was recorded… using one of the neat handy recorders from our Social Security event…. unfortunately at the time of this writing, the darn recorder would not be friendly with the laptop and share the speech….grrrr

Look for more in our coming Newsletter … and eventually the recorded conversation here … fingers crossed!

Now back to the original post!

It has been a while since we discussed the Yield curve and the inversion there of…

Look for a more detailed article in the coming Newsletter, but for now, the yield curve has inverted again, but this time with greater spread!

As a quick reminder, an inverted yield curve is when longer term rates are lower than shorter, an unusual situation as generally the longer the term the higher the rate so as to adjust/compensate for risk…

Our favorite term and the most useful in our minds is the ten year versus the 90 day yield…

Currently the 90 day treasury is yielding about 2.35% and the 10 year treasury is yielding 2.23% – yep, that’s inverted ….

Chart from St. Louis Federal Reserve

5-28-19 the 90 v 10 year

It is hard to see in this chart, and granted, it is a small inversion compared to recent times, but we are inverted and have been for the second week since mid-March, when we first inverted for five days….

Again, more in the coming Newsletter, but we are watching closely!

Have a Great “Inverted Yield Curve 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

Earnings Matter, ultimately the most, let’s take a peek at how they are doing

With earnings being the ultimate driver of Capital Markets it’s always good to stick our heads down into the weeds occasionally to see how corporate managers are navigating the waters.

Our favorite go-to source for this information is from our friends at Factset, a research arm that does terrific tracking …

Here are a few charts with our notes:

This following is an estimate of Earnings for the remainder of 2019 and for the year 2020 – notice expectations are positive year over year 2018 to 2019 but not much growth is expected from the analyst community – Tariff agreement would likely change this expectation quickly…

img_1243-e1557890593225.png

Next up, how the change in estimates has occurred in real time – take note of the drop near the end of the year 2018 – while it looks like a larger than normal drop, and we prefer it increasing, it is only about a 5% total expected drop but again still a year over year increase as seen from the prior chart.

img_1242-e1557890631119.png

Lastly, we had to throw one of our favorite charts in from our friends at JPMorgan – the lagging blue line, that actually looks out of place, is the current market expansion rate – note how slow this expansion (2007-current) has been. We find this very interesting as even the 2001 expansion was at a much faster pace than our current. Could we be entering an extended period of slower, but more stable growth? This would also speak to lessened concerns of inflation and lowered expectations moving forward…

img_1244.png

Overall, lets give corporate managers an A to almost A+, especially those dealing with overseas trading partners of any kind.

Have a Great “Update Earnings” 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

Sometimes Market Movements Make Sense – but not always

The Hissy fit that Capital Markets threw in late 2018 were puzzling, if not weird, at best.

Oddly, there are more times than not puzzling or strange market movement that the so called “Pundits” can reason why things occur, but really “Only the Shadow Knows!”

The recent market movement, although very small in context, makes sense.

Smart Market?

Over the weekend, it appears that talks broke down on the China trade deals, and Tariff threats have made the headlines again…

This is fast news and can change in a nano-second, so knee jerk reactions are NOT needed or worthy! 

This time, the market pause makes sense as increased concerns over the Tariff talks may cause slow downs in certain areas…

Here is a very short term chart that speaks to what makes some sense AT THE MOMENT!

5-7-19 SP 500

Will it turn into something more? Maybe, or Maybe not, but it does make some sense, IN THE VERY SHORT TERM!

Longer term, just a speed bump in the Parking Lot of Investing!

Have a Great “Sensible Market” 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

 

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

Hello and Welcome to our April 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 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!

April – 2019 Video

Financial Planning Tip (s) –

Source of Funds Entrance Into Capital Markets

Here in this post we discussed the possible ways to most comfortably enter new capital into the Capital Markets.

Super Safe sources of capital may be best suited for an entrance over time, while funds coming from the Capital Markets, may go directly back into the Capital Markets, especially if risk reduction is also part of the allocation.

Over a 5 – 10 year time frame it does not matter, but why twist an ankle in the short term!

Social Security Event – Questions

Wow – all of these great questions were sent to us for our Event this month…. all were answered, if not directly, indirectly.  We look forward to sharing actual audio (Tom speaks very fast and covered a lot of ground) from the event in a multi-part post series over the summer months! DCIM100GOPRO

 

  1. Last time we spoke you were VERY certain Social Security would be there for all of us upon retirement – With all of the changes, do you still feel this way?
  2. Can you explain the divorced verses divorced and remarried benefits?
  3. Have you ever heard of someone being offered a lump sum of retroactive Social Security benefits?
  4. November of 2015 ushered in new laws and changes, are there any neat techniques that survived?
  5. Can you explain non US citizen spousal benefits?
  6. We have been told many of the benefit statements are not always accurate, understating the actual eventual benefit, has this been your experience?
  7. How much can I earn and not receive penalties if I retire before my full retirement age?
  8. The Full Retirement Age keeps being pushed out, will this continue? Is there a schedule?
  9. How long do I have to report my Social Security earnings if they were not reported by an employer?
  10. For many years I did not draw on an ex-spouses earnings by accident – using only my earnings benefit, can I request some sort of look back to get my full benefits?
  11. If want to change my Social Security election decision after I made it and have been drawing benefits, Can I do that?
  12. Do I have to take Social Security Benefits ? What if I do not want to?
  13. Is it better to sign up in person or use the website, or does it matter?
  14. My wife is not a US citizen, does that affect her spousal benefits?
  15. Will Social Security always be there in your opinion?
  16. What percent of people take benefits early, at full retirement age and as late as possible?
  17. I am 65 and working with a good healthcare plan. I wasn’t going to sign up for Medicare until after I retire. However I am told a Medicare Part F; a supplemental plan eliminating deductibles, will not be available after 2019; Should I enroll and sign up for Part F?
  18. I was married for more than 10 years to a high income earner, if I get remarried to my new spouse who is not a high income earner, will I give up benefits?
  19. Have you seen any of the on-line Social Security Optimization Programs? If so, any you like better than others? (From JK)
  20. What are your thoughts about an income based phase out of Social Security in the future? Much like the penalty for W-2 income and having started early Social Benefits ? (From JK)

Capital Market Comments –

Happy Again

After throwing a Hissy Fit near the end of 2018, “Everybody Is Happy” again !

This is a total index chart, note that it has not reached new highs yet, however many other indexes have.

Let’s not forget that we DID have an inverted yield curve which is a great predictor of a pending recession …. only the Shadow knows when! We have our eyes peeled!

4-29-19 Vanguard Total World Index Fund

 

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

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