Category Archives: Economy

M2 Turns Negative for the First Time and that’s a Long Time!

There are tons of measuring sticks out there…. almost all of which we look at and follow, at least at one time or another…..

What grabs our attention is when the measuring sticks do unique things….or have never happened before!

M2 – aka Money Supply

According to Investopedia M2 is best described as the following:

M2 is the U.S. Federal Reserve’s estimate of the total money supply including all of the cash people have on hand plus all of the money deposited in checking accounts, savings accounts, and other short-term saving vehicles such as certificates of deposit (CDs). Retirement account balances and time deposits above $100,000 are omitted from M2.

Check out the latest reading of M2

While close in 1994, it stayed positive, for the year 2022… M2 was a negative for the year for the first time ever!

Note also as compared to 1994, the rapid draw down in 2022…

Why are we watching this?

This draw down of money in the system may put pressure on certain risky players i.e. Companies that use Junk or High Yield Debt!

Just a heads up to let you know what we are watching!

Have a Great “M2 Analysis” 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

Fourth Quarter 2022 Review, Bill(s), Rates, Bills and Sunshine – Private Policy, Annual Offerings

Dear Investor:

Bill(s)

On December 20th, 2019 the Secure Act was singed into law. On December 27th , 2022 the Secure Act 2.0, a bill long in the works and a mere 4200 pages long was signed into law. The most important item in the financial world (there were a multitude of areas addressed) as the second upping of RMD’s to age 73. Look for more information soon from us.

Rates

In December the FOMC (Federal Open Market Committee) led by Jerome Powell raised rates to over 4% after starting the year at zero.  As mentioned in our Q1 2023 Newsletter article (Maybe a Tiger can change Stripes0, on a percentage basis this would be a possible once in a lifetime speedy move.  This may also be a return to a normal interest rate policy (hopefully) with no intention of going to the zero boundary again.  See Next point.

Bills

Not getting too wordie, but US citizens “bills” or the increase in them in the form of food, travel, energy, housing just to name a few are what is creating the opportunity of the afore mentioned speed of rates or rate increases. The CPI (Consumer Price Index) measurements continue to hold at much loftier levels than anyone thought possible (somewhat due to lagging indicators) and are allowing rates to rise and likely stay higher for longer.  This is a good thing for our safe assets aka Fixed Income/Bonds thankfully as most of the headwinds are likely behind us, again see Q1 2023 Newsletter lead article and associate graphs.

Sunshine

Last year at this time we were reviewing items such as “Anatomy of a Slowdown” and “The R” Word – Recession.

Today, from our unique “Personal Reflections” portion of our Q1 2023 Newsletter :

“Future is better

Just as we pointed out over a year ago what a slowdown looks like and that it might occur, we are now ready to point out later on this year it’s very likely the clouds of higher interest rates and two feet on the economic brakes by Powell are likely to clear.”

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.

Happy Turn of the Calendar, and Best Wishes for the Start of a New Year!

Sincerely,

John A. Kvale CFA, CFP

Enclosure (2022 Report)

J.K. Financial, Inc.

PRIVACY POLICY NOTICE

Our Promise to You

As a client of J.K. Financial, Inc., you share both personal and financial information with us.  Your privacy is important to us, and we are dedicated to safeguarding your personal and financial information. 

Information Provided by Clients 

In the normal course of doing business, we typically obtain the following non-public personal information about our clients: 

  • Personal information regarding our clients’ identity such as name, address and social security number;
  • Information regarding securities transactions effected by us; and
  • Client financial information such as net-worth, assets, income, bank account information and account balances.

How We Manage and Protect Your Personal Information

We do not sell information about current or former clients to third parties, nor is it our practice to disclose such information to third parties unless requested to do so by a client or client representative or, if necessary, in order to process a transaction, service an account or as permitted by law

In order to protect your personal information, we maintain physical, electronic and procedural safeguards to protect your personal information.  Our Privacy Policy restricts the use of client information and requires that it be held in strict confidence.

Client Notifications

We are required by law to annually provide a notice describing our privacy policy.  In addition, we will inform you promptly if there are changes to our policy. 

Please do not hesitate to contact us with questions about this notice.

December 2022 Financial Planning and Capital Market Review – Secure Act 2.0 – By John Kvale CFA, CFP

Hello and Welcome to our December 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!

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!

December 2022 Video


YouTube

Financial Planning Tip(s)

Secure Act 2.0 – Passed on 12-27-22 Quietly …. Shhhhh we are working through the details

On December 27, 2022 a HUGE bill … over 4000 pages, was passed…. while not sweeping in our neck of the woods, there is one main adjustment….

RMD – Required Minimum Distributions are pushed out again to age 73! Not Kidding!

Capital Market Comments

Rate Increase – Fed Raised rates for the Holidays

In December the FOMC (Federal Open Market Committee) led by Jerome Powell raised rates, but only by .50% … but it was a raise…

Have a Great Day, Talk to You at the End of January – Happy 2023!

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

Q1 2023 J.K. Financial, Inc. Newsletter … Estate Tax Law change Heads Up …. Higher Rates for Longer from Stubborn Lagging CPI Inputs … Personal Reflection … By John Kvale CFA, CFP …

Welcome to our Video and Audio Podcast Review of our Q1 2023 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!

Q1 2023 Newsletter

(YouTube)

Personal Reflections –

Entering the 36 year in the Financial and Capital Markets world, a lesson was learned this year (see below) we want to thank everyone for their well wishes, patience and confidence as we went through a unique “Changing of the Tiger Stripes” event this year!

Higher Rates – Longer – CPI Stubbornly High

CPI Causes Tiger Stripes to Change?

Very Lagging Rent and Shelter Numbers keep pushing CPI

Estate Tax Laws Set to Change – Heads Up

At the end of 2025, putting January 1, 2026 into play, without any tax law adjustments the Estate Tax level will adjust back down to somewhere between a $7 to $8 million or $14 to $16 million for couples level. 

While Estate Tax is not a huge revenue earner for the IRS, in our opinion Estate tax is in purpose is to affect the very largest of the states think  $100 million and up. 

Additionally the IRS is having trouble completing regular federal tax returns, by some estimates some 15 to 20 thousand taxpayers are still waiting on their regular federal returns to be blessed by the IRS from 2020 to present.  Lowering the Estate Tax level to an extreme low, while may sound good in the headlines, impracticality, it will likely create a huge bottleneck and more trouble than money earned. 

Bottom Line – We are on this in advance!

Happy New Years and a Great Start to 2023!

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

REVIEW REWIND REPLAY – Shrinking the Balance Sheet Explained, Bulking and Lowering too

This post is clearly dated…. BUT it is actually what current chair Jerome Powell is doing today in addition to raising rates! Enjoy the replay review!

Last Wednesday Janet Yellen, FOMC (Federal Open Market Committee) chairperson released comments on their duty as Federal Reserve members but also introduced a term that may be new to many.

“Shrinking the Balance Sheet”

What is the Balance Sheet

Much to the happiness of all those bookkeeper, accountants, CPA’s and the like, present party included, entries must balance.  Even the US Government as huge as it is, runs by the old adage

Assets = Liabilities + Equity

A basic accounting principal, that MUST always work…

If a change is made, it must be counted somewhere else, even on the USA’s balance sheet.

Bulking up the Balance Sheet

Post “Great Recession of 07-09” FOMC members smartly embarked on a successful but unknown effort at the time, of infusing banks and capital markets with Greenbacks aka $ Dollars!

The Federal Reserve led by FOMC members, with the click of a button created money in their checking account and created a contra account for balancing purposes then went out to capital markets and bought bought bought in HUGE quantities various capital instruments, but for the most part US Bonds of all maturities.

Their goal, again unchartered territory at the time was to infuse money into the system and also lower interest rates.

By  purchasing large quantities of instruments the FOMC were putting dollars directly into the system … there were other programs as well, but for the sake of simplicity, their buys pushed money into, at the time, a much needed financial system.

The numbers of this chart are not as important as the line and dates.

img_0874

As the FOMC clicked and bought and clicked and bought again in keeping their books “Balanced” the Federal Reserve Bank Assets Grew and Grew.

Finally the Sizzle, Shrinking the Balance Sheet

Take a peek at the far right of the line in the chart… Come on now you can do it …. this is important, and you have come this far …

What do you see? It’s flat lining….

Since most of the FOMC purchases were bonds of various types, and bonds mature, that line should begin to decrease. The FOMC holds such a huge portfolio of bonds, maturity occurs almost constantly.

Until now, the FOMC has re-invested or repurchased maturing bonds with new bonds, thereby holding that line flat. Yellen and crew are now signaling they may NOT re-invest those maturing bonds, which would lead to a VERY SLOW decline in the FOMC balance sheet or a …

“Shrinking of the Balance Sheet”

These words have been carefully chosen. Eventually the FOMC may actually sell their bonds back into the capital markets, reversing the stimulus applied in the “Great Recession of 07-09” more quickly. That would not be called “Shrinking” that would be called lowering, reducing, or something similar, look for this type of cryptic rhetoric in the future …. for now, shrinking simply means letting the maturing bonds mature and NOT re-investing … Shrinking the Balance Sheet !

There you have it, this post turned longer than expected, but the background should have made for a clearer picture … if you made it this far, pat yourself on the back… You now know the current “Shrinking” step along with likely future announcements by the FOMC and committee members!

Have a Great “Deciphering Cryptic FOMC Rhetoric” Day!

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

YEAR END REPLAY – Fastest Interest Rate Increases Ever, and that’s a long time … Friends at Visual Capitalist!

Wanted to replay this post as it is unusual to have a “Never Before” Event this day and age !

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

Happy Holidays … Gentleman’s Agreement Held? Will see … Mostly Out of Office Over the Holidays … Link to TV Post …

Happy Holidays ….. Over the remaining days of the year, there is a “Gentlemen’s Agreement” to basically do no harm…. this agreement was violated in 2018 by Guess who? Non other than an aggressively increasing rates FOMC (Federal Open Market Committee)

Not sure if you caught the news on Wednesday but the afore mentioned FOMC raised rates by .50% this week…

Not sure how this plays out, but Jerome Powell (FOMC chair) may not be bringing presents….

Holidays Out of the Office

While we will have electronics… (we always have electronics) …. we are planning on being out of the office most of the Holidays …

For the safety of the streets, with all of our gangs getting out mid day, we will also be out mid day…

Oh… here is the link to Wednesdays post here on our blog….forgot Youtube embeds do not make it through email servers these days….

Happy Holidays and Seasons Greetings!

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

Heads Up for a Busy “Headlines” Week – CPI Consumer Price Index aka Inflation Measurement – FOMC Federal Open Market Committee Rate Increase Announcement …

While the Holiday Season is getting closer, Economic data must go on….

On Tuesday we get the CPI (Consumer Price Index) bluntest of instruments for Inflation report from the BLS (Bureau of Labor Statistics) ….

All about expectations versus actual, “for the moment” …. Last months was 7.7% year over year and the expectation this time is for 7.3% …

Above the 7.3% will likely lead to disappointment and below or well below a short term applause …

On Wednesday Jerome Powell and his buddies at the FOMC (Federal Open Market Committee) will in all likelihood raise rate the much expected .50% to the 4.25% – 4.50% level….

While it is not super obvious from the chart above, the longer term 10 year treasury (blue) is much lower and trending lower than the shorter term 2 year treasury …. this is an inverted yield curve….

With Powell pushing short term rates higher with a .50% increase, the interesting observation will be what the 10 year does, as the 2 year is captive to Powell’s movements, being so near in time frame!

Sorry for the heavy start to the week… we promise an easier rest of the week… but wanted to let you behind the curtains of our watch this week….

Have a Great “Busy Economics” start to the week!

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

November 2022 Financial Planning and Capital Market Review – RMD’s and Rate Review – By John Kvale CFA, CFP

Hello and Welcome to our November 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!

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!

November 2022 Video

YouTube

Financial Planning Tip(s)

RMD’s (Required Minimum Distributions) not taken can be taxed at 50%

In this reminder post (somewhat meant to frighten) we notify everyone, PLEASE do not delay in your RMD’s as the IRS is readily funded with new staff and the penalty is 50% of the amount not taken if they so desire….

Also with a continued bottle neck lack of workers …. many financial firms are on a “Best Effort” processing as of December 1! Gone are the last minute days of RMD’s act now!

Capital Market Comments

Rate Increase Discussions from “First Time in Long Time Conference”

Happily attending the first conference in over four years, the topic of interest rates came up, especially since a .75% rate increase occurred DURING the conference….

In this post, a chance meeting with Liz Ann Saunders … long time macro market strategist… we share our common thoughts on the fact the FOMC (Federal Open Market Committee) led by Powell are steadfast in their goals to slow the economy i.e. Slow consumption …. no matter what is takes…

Fort the record while short term rates are holding fast at a higher level, longer term rates have slowed their increases…. More on this as it plays out….

Have a Great Day, Talk to You at the End of December – Wow That Came Fast!

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

Bear/Slowing Market Bounces Reminder – A Historical Perspective

We have spoken before on the uniqueness of slowdown or bear markets ability to have ripping increases that soon fizzle…

While we do not now why they occur for sure, a historical perspective is they DO occur!

20 Largest One Day Gains in the NASDAQ Since 1971

We know that NASDAQ is filled with volatile companies…. but this chart making the rounds is very interesting….

The 7.4% move that many were calling the start of a new Bull Market sneaks in at 14th place of this one day moves going back to 1971- Yes, 1971!

We might even take issue to the 4 rallies not in “Bear/Slow Markets” according to this chart…. but if we do not, it is still 16 out of 20 in Bear/Slow Markets!

Have a Great “Watch the Slow/Bear Market” contra rallies!

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