Category Archives: Economy

Signs of a less aggressive FOMC/Jerome Powell ? …  First time in a long time less happy to see the longest daylight day of the year pass …   Summer Friday heading into Fourth of July …

Mid this week FOMC chair Jerome Powell in front of a legislative public speaking event, for the first time mentioned that the FOMC could not decrease oil prices and food prices via faster interest rate hikes.

OK, we may take issue with this slightly because if they beat demand down enough, it will most certainly put headwinds to higher prices of both of these assets. However more importantly, this was possibly the first sign of a less aggressive FOMC, again shared by Jerome Powell.

Instantaneously capital markets took notice of the comments with a much happier tone as did interest rates with an extremely happier tone as well…

Interestingly, and speaking out loud to everyone our thoughts, just two weeks ago, a much harsher tone was voiced by Powell …given that fact, it’s way too soon to say the FOMC has taken their foot off the brake a little bit ….. Heck we still have a lot of economic data to get through for the next few quarters… some of which may be very hot and could have the federal reserve reverse course once again… but maybe it is a start..

We will be watching, but wanted to let you know a possible interesting breadcrumb that occurred this week.

Hot Hot Hot

With an unusually, extremely, hot summer shaping up here in the south, breaking hundred degree days by the week, we wave goodbye to the longest day of the year with less sorrow this year and a  bit of trepidation on what August … the seasonally hottest month of the year may bring.

Kvale front yard, watered daily !

Still better than ice and snow that no one here, present party included, knows how to drive on!

Today is a Friday, getting near Fourth of July midpoint of the year, enjoy your day and your weekend, and if you’re near us, stay hydrated and be careful out there!

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

CPI (Consumer Price Index) – Inflation Measure Holds High — FOMC (Federal Open Market Committee) Green Light for Continued Tightening …

Last Friday, June 10, 2022 the BLS (Bureau Of Labor Statistics) released their monthly data on the CPI (Consumer Price Index – Great Analysis Link Here) Most blunt measure of inflation — Ok lots of abbreviations but stick with us for the main takeaways…

For the record we called a possible top here, and while the increase of the CPI was only .4% than the prior month, it was NOT a deceleration YET…

Bottom Line Result

Cutting to the chase for those with little time – This hotter report will give the FOMC (Federal Open Market Committee) led by Jerome Powell a green light for further tightening faster – creating a faster slowing of the economy…

Quick FOMC Fed Funds Analysis – The Rate Increase Measure

(Take note once again, the first rate hikes on far left of chart took three years…. the next rate hike cycle ..one in middle right, took almost FOUR years… this one MAY be literally months… again this fits our thesis of headwinds came fast and are behind us (Look Forward not Back)– had to put that plug in while we were on the topic…)

CPI Analysis – What’s the Hold Up

With Owners Equivalent Rent/shelter being a very large portion of the CPI component…. its fast turn around is holding the CPI Up along with food inflation as well….

Note that far right movement up….

Oh and oil prices moving higher did not help either…..

Bottom line, continued FOMC rate increases, faster slowing of the economy, eventually… lower interest rates faster …..

Sorry for the heavy Monday, but wanted to get it out there to you guys as it helps us clarify as well!

Have a Great ” Sticky CPI Explained” 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

Worlds Biggest Wind Turbines … From our Friends at Visual Capitalist …

With Oil prices moving north… noted especially after being away from the local streets for a few days… the following neat graphic from our Friends at Visual Capitalist sent this to our inbox last week…

Neat facts from the article:

Here are four of the biggest wind turbine models on the market right now, the companies that are making them, and where the prototypes are being installed:

ModelCompanyNameplate capacity (MW)LocationHeight (m)Blade Length (m)Rotor Diameter (m)
MySE 16.0-242MingYang Smart Energy16 MW🇨🇳264118242
SG 14-236 DDSiemens Gamesa14 MW🇩🇰Site Specific115236
Haliade-XGeneral Electric14 MW🇳🇱260107220
V236-15.0Vestas15 MW🇩🇰280116236

Have a Great “Wind Turbine” 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

May 2022 Financial Planning and Capital Market Review – By John Kvale CFA, CFP

Hello and Welcome to our May 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!

May 2022 Video

YouTube

Financial Planning Tip(s)

Back to Basics Series – Estate Planning – No Fears of Fancy Terminology

In our continued fun “Back To Basics” Series here we discuss Estate Planning…

From the post:

Rather than go into the complexities of all of the documents, keeping with our “Back to Basics” theme, we are going to go into what you need to think about to easily complete all of your Estate Documents. Don’t worry about the fancy legal and financial terms, if you can answer the following few questions, your Estate Documents can be easily completed …

The hardest part of doing an Estate Plan is just starting…. Go ahead and read this post if you have been procrastinating its not hare once you start!

Lump Sum Offer Reminder

After running into an unusual offer from a Pension Buy Out, we reminded ourselves these generally come in Waves….

In this Pension Buy Out Reminder post we discuss the most important items…

Trust But Verify, offers can be wildly in accurate!

Capital Market Comments

Look Forward, Not Back

In this early month post here, we discuss Jerome Powell’s 180 turn from stimulus to brake and in particular as it relates to interest rates…

Then again in a similar post an update on Interest Rates….

While counter intuitive, as the FOMC/Jerome Powell raise interest rates, historically interest rates eventually fall as the Brake action kicks in and slows the economy

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.

jkfinancialinc

street-cents

Update on Interest Rates … Have they Peaked? A Review of the 10 Year Treasury …

The extra speedy move of interest rates upward have put pressure on “Safe” assets, notably bonds or fixed income.

As reviewed here in great detail and with a special video on the subject, as rates rise, headwinds are created, BUT the opposite is true…. rates stabilize or even lower, big tailwinds…

Have Rates Peaked ?

Using the 10 year treasury as our marker for this review, after peaking 3.15% a few weeks ago, rates have come in and are now around 2.76% …. Progress and stability!

Here is a zoomed in chart….

Just like the change from Winter to Spring to Summer, it rarely occurs in a straight line…. remember also this longer term rate (10 years) is a measure of economic growth and will not be directly effected by the Federal Reserve overnight rate increases (thats our checking accounts)…

Have a Great “Interest Rate Watch” 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

Thoughts from Barry Habib, Housing and Mortgage expert, from this year‘s 2022 Mauldin SIC Investor Conference…

For those of you with a memory like an elephant, congratulations, you may recall that we have delightfully attended the Mauldin Strategic Investor Conference (SIC) virtually during lockdown for the past two years. As a side note, a conference that we had never attended before due to the duration and the timing … very near tax time!

Good news, once again this year the conference was virtual and we are happy to attend.

While there were 40+ speakers, more to come on others, we found the following expert and presentation very interesting, if not somewhat controversial.

Barry Habib, Mortgage and Residential Housing Expert

You may recognize Barry as he is a regular speaker on many of the financial channels among other and was a presenter at this year’s SIC conference.

Cutting to the chase, Barry expects a recession later this year or early 2023 and as such expects mortgage rates in particular to drop precipitously from their current 5 1/2% rate along with all rates of other asset types.

These expectations, (forecasts), are certainly more economic and financial market related, as such we will make note as predictions and check back sometimes next year.

Now, to Barry’s wheelhouse, what we are all interested in, the expectation of housing appreciation or depreciation!

Understanding that Barry comes from a residential and mortgage background, so let’s be transparent that there may be some innate biases, but his expectations are for mid to low single-digit housing appreciation for this year 2022.

This flies in the face of many forecasters due to the aforementioned slow down or R- word recession and more importantly the heightened interest rates of Mortgages currently.

In Barry’s defense, lack of supply and his expectations of a sharp reversal in mortgage rates will lend itself to this continued growth.

Heck if housing prices hold their values we would consider Barry’s prediction a win.

There will certainly be pockets of strength and weakness across the country…

We will be watching as it’s very easy to monitor and will let you know!

Barry …thanks very much for a fantastic presentation and for the information duly noted…

Have a Great “Housing Analysis and Forecast” 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

Capital Market thoughts, looking forward not back … FOMC chaired by Jerome Powell gave, now taking away, for the moment

We don’t want to get too heavy and pound you with market thoughts, we know you’re getting enough of that from the “Market in Turmoil” like headlines, but we did want to give some explanations and let you know we are watching carefully as we have been on notice since December for a possible slowdown.

Look forward, not back

Economic reports such as today’s CPI (consumer price index) report is very much rearview looking, as such it’s sometime easy to forget that what’s most important is looking forward to what is going to happen next rather than backwards to what has happened. Yes it is much harder, and you do not know exactly what is going to happen … but you sure do not drive a vehicle looking continually in the rear view mirror – some humor on a dry subject… stay with me!

This is even more evident at the recent quick rise in interest rates, creating the headwinds to bonds. As noted here and again here in our posts (the second with even a special video) it’s highly likely and the probability is most that the headwinds for our fixed income investments are behind us. Once again looking forward, a slow down usually garners lower interest rates, exactly opposite to our slightly current and mostly rearview looking higher rates.

FOMC chaired by Powell gave and now takes

Over the past 18 months to two years the FOMC (Federal Open Market Committee) headed by Jerome Powell have taken very aggressive measures to stimulate the economy. Much of a stimulation, once the book is written may have over stimulated not only the economy but various asset prices. Their goal at this time is to slow inflation thereby doing a complete turnaround from their prior stance and taking away stimulus. This most likely will continue until they see evidence of slower inflation or lower employment. 

Higher rates are their main instrument of choice:

The FOMC waits for the reports such as the CPI to confirm their decisions, making for a lag in decision making and possibly longer decision-making, but they will eventually get there….

Finally, capital markets are certainly looking forward hence the sluggishness as they begin to price in a slowdown in full force. Eventually it’s very likely the FOMC will begin to see these clues as well!

Have a Great “Forward Looking” 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

Several Weeks of Consecutive Short Road Trips Finally … FOMC Raises Rates … Spring Friday Crazy Southern Weather

Happily, the schedule shows several road trips in the next few weeks making for a fast May …. Nothing air related, but a nice drive in all different directions in a return to normal…. as also mentioned in our Three Positives Happy Post here mid week….

FED Increases Rates – Jerome Powell

Mid Week, as expected the FOMC (Federal Open Market Committee) led by Jerome Powell increased the Fed Funds Rates (think our checking accounts) by 1/2 Percent or in Wall Street Speak, 50 basis points… We will talk more about this soon, but wanted to let the Capital Market Dust Settle before diving in….

Friday in the South – Heated Weekend

With near 1000 followers … many from all over the country of friends and clients we like to toss you the rollercoaster ride of deep South Texas weather every once in a while … a high 40 degree mid week start of the day to only top out at 60 this week, was a cool spell …. this weekend Donald the Brain hits 100 in his neck of the woods and we are expecting mid 90’s…

That is ok the cold, rain and ice are gone… Lot’s of water, sunscreen, shade and no extended time in the first round of heat….

Have a Great Friday and super Weekend- Talk next 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

Three POSITIVE Data Points … Back to Normal Readings…

Enough of all the slowing talk and R – Word discussion…. it’s coming and we all know it…. BUT

Let’s have some fun and look at some very positive data points

TSA Throughput Update

Wow, back to almost normal… this is 2019 versus 2021 … looks like we are hitting the skies…

Guess what, this is without a lot of business travelers…

Way to go Families, you are doing your thing…

Newbies, here are 10 prior reviews for your perusal … none look as good as this one- YAY

Indeed Job Openings

After multiple reviews here upon getting copyright authority, this most recent is looking awesome….

Major metropolitan areas, not only almost doubling in job openings post lockdown, but looking at the lack of steeping of the curve (far right) job fills are on the rise as well!

Marine Traffic – C/O Marine Traffic.com

Almost went with the Flight Aware map, but since we already know TSA Throughput is rocking from our first noted graph, let’s go to the waters….

This is screened for Cargo Vessels (stuff) and Tankers (Oil and the like) ONLY….

Supply chain bottlenecks, look out … there is relief on the horizon….

There you have it, some very good positives to go with for your hump day viewing….

Have a Great “Positives” 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 2022 Financial Planning and Capital Market Review – By John Kvale CFA, CFP

Hello and Welcome to our April 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!

April 2022 Video

YouTube

Financial Planning Tip(s)

Back to Basics Series – Educational Funding

In our continued fun “Back To Basics” Series here we discuss Educational Funding…

Here is one very important item to remember from the post:

Did you notice we put Retirement Planning BEFORE Education planning? Do you recall in Part 3 in Debt Planning we said one of the few good debts are educational related debts ….We of course are not advocating Student debt/loans… but they are available in abundance and again not a bad debt. There are not retirement planning loans…. just saying!

Proxy Vote Reminder

In this post we remind you to please reach out if you have fallen off the list for us to proxy vote for you!

If you are getting those pesky Proxy Notices (some can be small books- oh the trees that are destroyed- digressing) reach out to us, we not only vote the Proxies for you, but we get one single notice for everyone, and Jen has done an excellent job in getting a great deal of those electronically…. Did we say how Green this is?

Capital Market Comments

The Slowdown is Here

We first started speaking of the slowdown in our Q 1 2022 Newsletter here in our “Anatomy of a Slowdown” main aricle actually released in December of 2021….

And then again, here in our Q 2 2022 Newsletter ….

Then again here, here, here, here, and again here.… among a few other times…

Last week the BEA “Officially Released” a negative GDP print as noted here in our post and in this chart….

Never get the timing exactly, but we are not surprised and have been waiving the flag here in our talks and are prepared!

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.

jkfinancialinc

street-cents