Category Archives: Economy

Who brought the Grinch to a usually Happy December Markets – Three Possible Items

As we have mentioned here and here, November and December are historically the best times for markets, with the latter having pole position.

While no one knows for certain, and we are watching a ton of different indicators, here are three items of note, worth reviewing.

Before we begin, earnings – one of the most important part of capital markets future, are still positive and this year looks to be one of the best on record!

Three Grinch items to review

Inversion Watch – 10 year treasury yield

We have spoken tons of time about the inverted yield curve and a major part of that curve as well as the inversion, is the current rate of the 10 year yield. This chart shows the recent movement of the 10 year yield moving down – this could be expectations of a slower future economy/growth OR it could be just some big money buying bonds – either way, a Grinch twinge to the capital markets.

12-11-18 Ten Year Treasury

Technical testing of markets

Oddly, even as we mention in this post the Grinch – in reality the capital market participants are taking their sweet time to test and re-test their levels – ignoring the happy months of November and December – Whatever makes you happy guys!

12-11-18 SP 500

Is Sentiment Grinchy? – Worth Watching

With 2/3rds of GDP (Gross Domestic Product) being consumer spending, consumer confidence is one of the most important parts of the economy – No Grinch here!

Capital Markets have forecasted many more bad times than have occurred – but in so doing they have also accurately forecasted “Bad Times!”  –  For now, we are doing our “No Grinch” dance, but watching closely and respecting all!

Have a Great “No Grinch” 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

Fire Hydrant Volume of Company and CEO Meetings – Southwest Ideas Conference – 70 Publicly Traded Companies

Once a year, luckily we are invited to a local event that includes over 70 – yes it has grown to 70 publicly traded company visits and presentations…

Annual Southwest Ideas Conference

Through two close friends, one who organizes the event and the other who owns the company that organizes the event, we are invited, luckily, once again to the Southwest Ideas Conference here in Dallas –Southwest Ideas Investor Conference

This year’s event includes over 70 publicly traded companies of various size, location and industry –

We love this event as it gives us a chance to not only meet C – level executives of these companies up close and personal, but to also hear their outlooks, economic forecasts, insights, and general feelings of what is going on in their various industries….

We look forward to the rapid fire, multi-meeting all day event and look forward to bringing you any interesting updates that we may stumble upon…

Have a Great “Fire Hydrant C Level Visits” 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

Great Economic News – Why Some are Frowning?

On Friday, the Bureau Of Labor Statistics (BLS) released their regularly monthly employment report – this is the first report in some time where ….

“Good News is Bad News?” 

Here is why some believe this!

Good Economic News  = Bad News?

Last Friday, November 2, 2018 the BLS released their regular monthly employment report that showed terrific economic numbers.

A fantastic, total 3.7% unemployment rate.

11-2-18 BLS Emp Report

In addition to the above Unemployment level, average hourly earnings were also released and they were up 3.1% year over year — breathing a much needed pay increase to many ….

The bad news for many is that they believe these good numbers will give the Federal Open Market Committee (FOMC) ammunition for continued rate increases.

Currently FOMC members are on record saying they will raise rates in December and three more times next year (2019).

The worry is an eventual inverted yield curve – which we have mentioned many times is a very good precursor to a recession!

11-2-18 90 daty v 10 year fredgraph

By looking at this chart, we are far from an inverted yield curve at this time- leading us to believe this “Good News = Bad News” may be very unwarranted…

Now you know the rest of the story !

Have a Great “Good News is GOOD News” 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

Three Economic Charts that should make Us all Feel Good – 3.8% Unemployment Rate

Post great recession, the Unemployment rate went into double digits … +10% …. Many including us thought the new natural level of unemployment may be near 6% – prior to the great recession most believed 4% would be the all time low…

3.8% Unemployment Rate

The regular monthly Employment report from the Bureau of Labor Statistics reported last Friday, June 1 that the Unemployment rate hit 3.8% — Yes 3.8%!

Wow….

 

6-3-18 Unemployment Rate Fred

Naysayers would say this will put pressure on wages, pushing up the CPI – Consumer Price Index – indirectly forcing the FOMC (Federal Open Market Committee) to raise rates fast — possible inducing an inverted yield curve…. leading to a recession… got that… sorry for the long domino effect– but this is how Wall Street thinks… perception can become reality… Let’s check the CPI …

6-3-18 CPI St Louis Fred

The CPI looks fine and has not moved up too much.  Here is a possible reason why…

Jolts – Job Opening and Labor Turnover Survey

5-8-18 JOLTS Fred

Essentially this is a relatively new statistic that many follow included the FOMC, that shows what the US Economy is producing in the form of jobs…. an increase in this chart means more jobs are available…

More Employment, but more Jobs… No Inflation —

Nice…

Have a Great “Lower Unemployment” 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

Test and Re-Test ? Where Oh where are Capital Markets going? This likely will take some time …. Weeks for sure and likely Months? … We will need Patience!

After a long lethargic flat-lined Capital Market of 2017, things have finally changed, and we need to begin to get used to more normal Capital Markets.

What follows are details of what the Capital Markets have done over the last few days (yes only days) …  what we should expect moving forward, along with a review of similar historical movement. Given a future that Rhymes with the past, the most important point we want to get across is this —

What we want everyone to understand is it is highly likely we do not just bounce right back and go to highs again quickly, so let’s have patience and set our expectations for an extended Capital Market search for the most appropriate level.

Ok, so you have the most likely scenario, here is why.

Current Capital Market Review

Suddenly the Capital Markets cared about something — and were WAY ahead of themselves, so they began going down!

We thought they might stop at our fancy trend line from our early post on this subject.

2-3-18-spx-w-trendlines-and-jk-notes.jpg

Nope …. participants pushed on past the trend line.

2-12-18 SPX Trendline

Participants decided the 200 Moving Day Average was where they should stop …

 

2-13-18 SPX hits 200 MDA

So we have a stopping spot, what happens next may be best seen by looking at the past for a possible rhyming future.

2016 Rhyme

The first drop was about 24 trading days followed by another 20-25 day test in a few months.

Start to finish about six months with a move all the way back to even before a second drop.

2-11-18 2016 SPX -010% Moves

2012 Rhyme

With two hiccups during this 2012  time frame, again our weekly charts show a 2-4 months of capital market footing discovery ….

2-11-18 2012 SPX Draw downs 10%

 

Let’s settle in for more normal, but what feels like “Rockier” times, which will likely be with us for a while.

  • Economy is Good
  • Global recovery is beginning
  • Interest Rates are Rising but at a reasonable rate
  • Consumers are feeling good

Patience will reward us!

Happy “Patience” Valentine’s 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

Let’s Pace Ourselves … Whoa Market Whoa … Points Versus Percent Reminder

Most of our Posts are a work in progress for 3-5 business days prior (at least, many take months) till the actual post. We started our theme of Too fast of a Pace way before the Capital Markets started pulling back the reins. We left the title on this post as an odd coincidence of good timing!

One quick note before we start.

Points Versus Percentage

It has been a LOONG time since we have had a meaningful pause in the capital markets.

While we watch all indexes but not the Dow Jones as much, we do understand that this index is one of the most watched. “The Market” in most circles means the Dow Jones .. such the reminder.

As the Dow Jones Index has risen over the last few years, a percentage move has become a greater number of Points.

Today a 2% move is around 500 Dow Points. At the lows of the great recession of 07-09 a 500 point move would have been near an 8% move … just a friendly reminder to keep things in perspective.

Whoa Baby Whoa

Don’t get us wrong, we like growth, but just like starting a long distance race too fast, this year started too fast … proving even too much of a good thing, is still too much !

2-2-18 SPX w JK Notes and Trendlines

The first white trend line is a high double digit (~20%) annual growth line … unsustainable in itself over a longer period. The second “Super Aggressive is an approximate 40% annual rate, only to be out done by the third trend line which is over a 60% annual clip. This last line is 3x an aggressive pace … clearly unsustainable!

It would not surprise us to rest a while … a much needed rest that is.

Oh, we have plenty of excuses (rates, hot economic numbers, Fed Reserve talk) but we think the unsustainable pace was the key

Have a Great “Paced” 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

 

 

 

 

January 2018 Podcast Video, Financial Planning and Capital Market Update- By John Kvale

Hello and Welcome to our January 2018 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.

January 2018 Video

Financial Planning Tip (s) –

Fraud Reminderthief

Two and 1/2 issues in one week… No one was harmed, but it was a great reminder, they are out there!

As we mentioned in our post just prior to this one, the Grand Enchilada of Tax Forms enters the mail and electronic systems this week. These most popular forms are due by the end of January and fraudsters are taking notice.

Keep your eyes and ears out for anything suspicious!

Vault Saves Day Twice

Here in our real life experience post, we ended up needing the Vault to help save time and a HUGE hassle at a far distant Tennis Tournament. Who would have thought they would be so strict in identification at a Tennis Tournament?

Here is a neat reminder of what might do into your very own Personal Vault:

Legal Documents □ Wills □ Deeds □ Revocable & Irrevocable Trusts □Power of Attorney □ Codicils (Supplements made to a Will) □Living Wills/Health Directives □Prenuptial Agreements □ Buy/Sell Agreements □ Contracts Social Security and/or Veteran’s Administration Info Insurance Policies (Life, LTD, Disability, Medical, Car, Property) Medical Records Bank & Investment Statements □Pensions, IRAs, passport-2642170__340Annuities etc. □Investment Accounts □Stock Options/Certificates Liabilities □List of Credit Cards with contact information □ Mortgages □Loans Taxes □Tax Returns □ W-2 Forms Identification □ Birth Certificates □ Drivers Licenses □Passports Family □ Adoption Papers □ Marriage License □Pictures □ Audio Files □ Video Clips Property □Titles to Homes, Autos, Boats, etc. □ Warranties Employment Benefits

Capital Market Comments

Interest Rates

10 Year Treasury touches 2.70% – Where to next?

After floundering in the low 2% range, it appears interest rates may be on the rise. This is just in time as the FOMC (Federal Open Market Committee) are set to raise short term rates several times this year and the one thing we DO NOT WANT is an inverted yield curve (more on this another time).

We have argued higher rates are helpful as long as they move gradually.

So far so good!

1-29-18 10 Year Treasury

Have a Great 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