Category Archives: Economy

Pausing for a moment to realize just how good Economically it is today …

There are always shortcomings … as a growing “Type A” country, we want more and better … Let’s pause for just a moment …

Maybe my Road Trip is making me sentimental … reflective for sure

March 2009, 823 thousand jobs were reported lost

The lowest bar on this chart was on March of 2009 (coincidentally, the bottom of the great recession stock market too– digressing)

Pause for just a moment … 823k people were fired/left the workforce, IN ONE MONTH … that’s a small town !

11-1-17 All Employees

Unemployment rate hits 4.1%

By scanning the chart above, as the bars turned up the resilient USA economy started rebuilding/hiring workers again.

Looking from a different angle, last Friday the USA unemployment rate logged a fresh great recession low of 4.1%

11-1-17 Unemployment rate 10 year trailing

Pretty good stuff!

Have a “Good” 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

Consumer Sentiment hits a new post Great Recession high

The University of Michigan Survey of Consumer Sentiment publishes one of several consumer sentiment indicators.

Consumer Sentiment

With a domestic economy that relies about 66% on consumer spending, a happy consumer is good for the economic outlook.

From Michigan Survey of Consumer Sentiment October 2017 update

10-13-17 Consumer Sentiment

Looking longer term, this is not an ALL TIME high, but still on the positive side.

10-13-17 Consumer Sentiment 50 years

Have a Positive Sentiment 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

 

 

 

Is the United States Dollar in Trouble? Nah

After a monstrous run up against almost all other currencies as the FOMC (Federal Open Market Committee- Bernanke now Yellen) began raising rates ……. as a side note and preview of our headline article in our coming Newsletter, this creates headwinds for international investments as well … we digress … recent weakness has brought out the “Chicken Little’s

This chart from 2012-2015

9-16-17 US Dollar Run up 2012-2015

Year to date 2017, the United States Dollar has dropped against other currencies as our international friends begin to pick up their economic pace. Of course this creates chicken little dramatic comments of ….”The US Dollar sky is falling”

YTD 2017 US Dollar

9-16-17 US Dollar YTD 2017

The move up from 70 to 100 (First Chart) is much greater than from 100 back to 92 (Second Chart), but lets look longer term, from a fellow blogger and former chief economist, Scott Grannis…

20170907_150433563_iOS

Not only is the US Dollar not in trouble, over the long term it is still overvalued.

US Dollar in trouble? Nah, not a worry … still overvalued by many!

Have a Great “More Normal Dollar” 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

Natural Rate Of Unemployment/Employment ?

Post great recession of 07-09, many including ourselves were not certain just what the rate of Employment or Unemployment the US economy would run at in the future.

  • It was different this time many said?
  • Technological advances and replacement would push many out of employment?
  • Aging demographics may push the rates to different/higher/lower levels?

With almost 10 years in the books since the great recession began, we now know just what did change? Not much!

Full Employment/Unemployment history

Taking a look at this chart from FRED a research tank at the St Louise Federal Reserve, while it took longer to get back to historical levels, it finally has.

Granted there can be debates on the scope of the current employment rate, but from a high level measure stick such as this, it looks normal.

This longer term fantastic chart from this research report of the San Francisco Federal Reserve, shows the same.

 

Why did it take so long to normalize?

One good question many have asked is why did it take so long to normalize again?

The great recession was just that, so GREAT, it really put dents in the economy making this one of the slowest recoveries on record.

The weakest recovery line (slowest and lowest in the chart) represents this recovery. (This chart from our friends at JPMorgan.)

JPMorgan GDP expansion chart

The good news about such a slow recovery is that is has also become one of the longest, due to just that fact, slow and gradual, and certainly not overheating!

Have a Great Full Employment 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

 

 

 

Natural Rate of Employment … Eclipse … Last day of freedom from my gang (School Starting) … Friday

Post great recession of 07-09, many including ourselves thought a new natural (higher) rate of unemployment might be in the cards.

Given a decade of history in the books since the start of the great recession, a more clear and somewhat surprising answer has occurred. Look for a detailed review next week.

Eclipse20170823_001200000_iOS

What a neat experience to see the Eclipse this week… of course with appropriate protective eyewear. Nice picture Sophia..

While not sure if it is the summer season or the magnitude of the eclipse across the country … no matter, the capital markets almost came to a screeching halt, at least in trading during the afternoon of the eclipse.

There truly are humans behind those trading machines still .. see our AI review here too for more insights.

Good bye Summer – Last day of Freedomend-of-summer-1-1235145

According to my just about fourth and seventh graders, freedom comes to a halt today, as next week starts the school year grind for them…

  • Early to bed
  • Early to rise
  • Standard schedules –
  • Homework
  • Friends and fun

Doesn’t sound all that bad … only 180 more days to go! Ouch … Oh well!

That is all next week … and today is a Friday heading into the last weekend of freedom … I Guess?? (haha) Enjoy!

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

 

Shrinking the Balance Sheet Explained, Bulking and Lowering too

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

 

 

No Increase YET, Shrinking Balance Sheet ? Huh …. Friday still from afar…

On their regularly scheduled meeting Wednesday (7-26-17), Janet Yellen chief of Federal Open Market Committee (FOMC) and committee announced unsurprisingly, no rate increase. The committee also announced they would be shrinking the balance sheet soon.

Shrinking the balance sheet? huh…

Alan Greenspan (Former, former FOMC chair Yellen-Ben Bernanke- Alan Greenspan) made it clear if you understood what he said, he did not do his job … that language continues today!

Here is a preview graph of the FOMC “Balance Sheet”…

Next week we will explain what shrinking the balance sheet means… in English..hah

Ahhh…but that is next week … today is a Friday and we are still working remotely from afar … (Technology is treating us well!)

Enjoy your Friday and your weekend!

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