It’s hard to believe the final quarter of the year included an Election, multiple vaccines, the commencement of vaccine shots and near the end of the quarter, a second stimulus package for the year 2020. Wow!
Three Major Acts in a Little Over Twelve Months
If we look back just a little over twelve months, three major bills, The Secure Act, passed in late 2019, but left in the shadows by lasty years events. Then the Cares Act late first quarter 2020, followed by the Appropriations Act of 2021, which was an extension of the Cares Act. If you are not confused yet (or do not even remember some of these), congratulate yourself, most are! Not to worry, we will be reviewing all of these over the year as the much forgotten, Secure Act will have multiple planning techniques and mandates that once again may have been forgotten.
Who let the dogs out? Or Maybe Better Said, The Dogs Continued to Cheer!
Capital markets bullied by federal reserve purchases and anticipations of good news coming from a vaccine, in true Capital Market form did cheer much of the news, but not as much as many had thought, mostly because it had already been anticipated.
As we had mentioned multiple times, Capital Markets are likely well ahead of themselves currently which may make for tougher rowing in the near term, but just as clothes purchased a little too large for that growing teenager, Capital Markets with an expected economic recovery, should be able to grow into their overzealous clothes. However, with current stretched valuations, negative surprises may be met with more volatility due to the priced-to-perfection levels currently, once again making us happy we are conservative and diversified investors.
Interest Rate Watch
One thing we will be watching closely are interest rates, and their levels, as the economy begins to come back on line. The Federal Reserve is squarely focused on keeping interest rates down through their purchases. Should interest rates begin to rise or should the FED ease off (or even give speak of ease) of the pedal and interest rates rise on their own, especially quickly, this could be a headwind to Capital Markets and other assets. Not to worry, we will be watching and letting you know what we see and taking appropriate actions as needed.
In Closing
Your Fourth Quarter summary is enclosed on the front page of this report we have included our most recent investment allocation from your Investment Policy Statement. This is also the time we attach our Private Policy Statement for the year, along with our opportunity to offer our latest ADV filings and Client Relationship Summary (Form CRS); Requests for review will be accepted via phone, mail or email, and mailed immediately upon request.
Sincerely,
John A. Kvale CFA, CFP
J.K. Financial, Inc.
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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
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Posted in Economy, FOMC, Forecast, General Financial Planning, Interest Rates, Investing/Financial Planning, Market Comments
Tagged Dallas Federal Reserve, FOMC, Kaplan, Robert Kaplan, Townhall