Category Archives: Economy

Posted in Economy, Market Comments

Tagged Back To Work, Kastle, Kastle Barometer, Kastle Systems

Finally Taxes are Done … Rob Kaplan Federal Reserve Chair Town Hall Personal Embarrassment …

Posted on October 16, 2020 by John Kvale CFA, CFP | Leave a comment

Whew…. that was easy…. NOT!

Finally we can say goodbye to 2019 taxes … Wednesday Marked the due day for personal Federal Income Tas Extensions.

Luckily (where work and opportunity cross – neat saying heard recently) in the fall of 2019 we went through EVERY taxable portfolio and confirmed tax basis – both reported and unreported to the IRS…. never knowing what this year would bring. This exercise effectively minimized tax documents to one report per account.

Glad we are done!

A Nerd Incident with Robert Kaplan and the Dallas Federal Reserve

On Wednesday of this week, yours truly attended a Virtual Town Hall chaired by Robert Kaplan (pretty big Fan, here is a link to nine articles we have written for those interested).

In true nerd multitasking form, the Zoom meeting started, on the Cell, why not listen while jogging? Cell inserted into runners band on arm and away we go!

Expect comments on the talk, it was very good and interesting…..

Post jog, cell back off runners arm band and onto the couch as the live question and answer session had commenced.

Then this:

“Next Question is from John! “
Quick glance to the cell and an Unmute flashing button was covering my entire screen! Yikes

“John you must Unmute your device“
Twice from the moderator then twice from Robert Kaplan

With no question, the Unmute button was not going to be touched! Finally after what was likely 5 seconds, but felt like 5 awkward minutes, the moderator and Kaplan moved on!

Whew, embarrassing moment averted… or was it!

A question or two later and then this:

“Ok, that was our last question, let’s go back to John and see if we can get his question answered!“
Oh No!!!!

This time the Zoom video was shut off before the Unmute logo hit the phone screen….

Can’t make this up!

Hope you enjoyed a nerds chance encounter with Robert Kaplan and maybe even got a chuckle.

Enjoy your Friday, and your weekend …. going to be chilly for the first time in our neck of the woods…. 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.

Posted in Clients/Clients Only, Economy, FOMC, Investing/Financial Planning, John Kvale, Market Comments, Personal

Tagged Dallas Federal Reserve, FOMC, Personal Taxes, Robert Kaplan

Q 4 2020 Newsletter Video Audio Podcast Review of Year Events, Cause and Effects By John Kvale

Posted on October 5, 2020 by John Kvale CFA, CFP | Leave a comment

Click here 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

Unlike the last two Newsletters which had very little economic and market related comments, this one is all about where we have been, what has occurred and where we may be going!
J.K. Financial q 4 2020 newsletter

Let’s get going!

Thanks in advance!

Q 4 2020 Newsletter

(YouTube)

As the spread of the Covid Virus occurred, Capital Market Participants in true anticipation form, voted with their feet and sold assets across the board well ahead of the eventual lock downs.

The largely followed S&P 500 (Larger US Companies) fell over 33% along with major international markets such as the German Dax falling over 35% and US Small companies represented by the Russell 2000, falling over 40%.

The most startling item of the drop was the speed at which this drop occurred, 27 days!

Ignoring the speed of these most recent declines is a bad idea as we need only look earlier in 2018 to see ANOTHER very fast drop.

The FOMC Steps In – Lowers Rates

By Mid-March as Capital Markets continued their descent, the FOMC (Federal Open Market Committee) led by Jerome Powell, dropped the hammer on interest rates by a full 1% to zero. During normal times, .25% is the usual adjustment as can be seen by the late 2019 and early 2020, non-crisis adjustments.

FOMC Adds More Fuel

Correctly using the financial crisis of 07-09 as the play book, the FOMC took the bazooka out, and starting buying assets to flood the markets with liquidity. The current bazooka is much bigger (about 3 X) this time as can be seen by the difference in balance sheet increase of $1 Trillion in 07-09 versus the $ 3 Trillion and counting increase currently.

It Worked (Maybe Too Well), Capital Markets Took Notice

You know us to be very positive – all through the many negatives that have occurred !

You also know we will call it like we see it!

Markets have officially gone too far and are ahead of themselves, expect bumps and no extra risk taking is warranted at this time – CAREFUL!

We hope you enjoy … talk to you Next Year – 2021 !!!

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

Posted in Audio, Economy, FOMC, General Financial Planning, Interest Rates, Investing/Financial Planning, Market Comments, Newsletters, Podcast, Video

Tagged FOMC, Forward PE, Inflation, Interest Rates, JPMorgan, QE, Trimmed Mean, Valuation

Heavy Week Concludes … Month End … Family Favorite Coming … Friday …

Posted on September 25, 2020 by John Kvale CFA, CFP | Leave a comment

With two heavy posts this week, here and here and not only were they heavy, but they were about the FOMC (Federal Open Market Committee), Interest Rates, CPI (Consumer Price Index) and the Trimmed Mean Inflation measures…. Y.A.W.N for many!

Ya Ya we know you guys may not find this stuff as interesting as we do, but we like to at least let you know what we are watching and call attention to some of this so as to know what may or may not change or cause issues… thanks for the reading this week….

Month End Coming

With the afore mentioned heavy posts and month end coming along with two Video reviews shortly (Newsletter and September) we thought we could slide into the weekend as it is a Friday….

Speaking of Month End…. this brings a family favorite into view OCTOBER which means HALLOWEEEN … (over week ago of rats, pumpkins and a Crow that keeps falling of the front rail of the entry at the house already set up for the occasion) – not kidding – ok so yours truly has become fond of the warmer months along with the long days…. but occasionally the guard is let down….. the Mrs. and Myself from a few years ago ….

Hope at least got a chuckle …. Green Make Up stuck around for weeks

Next week, back to heavy … and lot’s to talk about …

Today is a Friday … Enjoy your weekend and see you 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.

Posted in Economy, FOMC, John Kvale, Market Comments, Personal

Tagged CPI, FOMC, Halloween, Trimmed Mean

The Fed, Economics, Interest Rates and Interest Rates Review Part 2 What would force the FEDs hand?

Posted on September 23, 2020 by John Kvale CFA, CFP | Leave a comment

Well covered in Part 1, here, the FOMC (Federal Open Market Committee) and Capital Markets also believe currently that interest rates will stay low for longer …. maybe we are hopeful they are both wrong (No maybe, we are!) but there is one word that we know the FOMC cannot allow to get out of control …

Inflation !

With inflation running persistently below this longer-run goal, the Committee will aim to achieve inflation moderately above 2 percent for some time so that inflation averages 2 percent over time and longer-term inflation expectations remain well anchored at 2 percent.
From FOMC statement September 16, 2020

Here is a great post from earlier on Dallas Fed calculated Trimmed Mean Inflation Measure, the FOMC’s favorite!

Triple the Bazooka – Who Let the Money Out!

During the 07-09 Great Financial Crisis, the FOMC then lead by Ben Bernanke, used the Feds balance sheet to purchase assets in order to lower rates, increase asset prices and calm markets….

This was unprecedented at the time….. Not today!

The current Bazooka is three times more ALREADY and will most certainly continue to grow in size and stimulus !

What if eventually the economy takes hold, and springs back to life –

Here is the traditional measure of inflation, Consumer Price Index from the BLS (Bureau of Labor Statistics) – again we like the afore mentioned Trimmed Mean and so does the FOMC!

Not to worry, we will be watching that 2ish % level closely…..

Inflation may occur, forcing the Feds hand at higher rates — time will tell!

Have a Great “FOMC and Interest Rates Part 2 Conclusion” Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.

A Dallas Texas based fee only

Financial Planning Total Wealth

Management firm.

Posted in Economy, FOMC, Forecast, Interest Rates, Investing/Financial Planning, Market Comments

Tagged BLS, CPI, FOMC, Inflation, Interest Rates, Trimmed Mean

The Fed, Economics, Interest Rates and Interest Rates Review Part 1

Posted on September 21, 2020 by John Kvale CFA, CFP | Leave a comment

On Friday, we gave you a preview of this post and in completing it over the weekend, it became a bit longer than expected, so we are doing a two part series.

Some of this is also in our coming Newsletter, but with more turf here, we can dig a little deeper, especially in a two part series…

Mid week last week the FOMC (Federal Open Market Committee) led by Jerome Powell and company released their estimates of where interest rates will be over the next several years.

This chart, known as the Fed Dot Plot, represents a dot for each voting member …. looks like there is a ton of group think going on as everyone is pretty much in agreement on the near term view and with a variance of only one percent in the longer term view – far right (One vote at 2% and two at 3%)

This chart from our Friends at JPMorgan includes not only the FOMC estimates but what the Capital Markets are assuming – (This estimates comes from the Futures Market and is easily ascertained)

Market estimates can and do change quickly.

Here is a blow up of the far right portion of the graph – Orange is market expectations again from the futures market and Purple is long run assumptions.

So markets think that rates will stay low and the FOMC also agrees.

Is there any reason that the FOMC would HAVE to raise rates?

Yep, one word ….

Inflation!

In Part 2 we will discuss …

Have a Great “FOMC and Interest Rates” Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.

A Dallas Texas based fee only

Financial Planning Total Wealth

Management firm.

Posted in Economy, FOMC, Forecast, Interest Rates, Investing/Financial Planning, Market Comments

Tagged FOMC, Futures, Interest Rates, JPMorgan

FOMC Speaks, Preview Analysis – Newsletter Update – Friday …

Posted on September 18, 2020 by John Kvale CFA, CFP | Leave a comment

On Wednesday September 16, 2020 the FOMC (Federal Open Market Committee) led by Jerome Powell announce their updated thoughts on the Economy and their expectations….

FOMC Preview of Rates and Economic Data

Knowing its a Friday, we are making this a Preview of a more detailed article coming next week…

Here is the FOMC expectations of where rates will be for the next few years… aka Fed Dot Plot

Lower for longer is THEIR expectations…. but there is an inflation assumption embedded here….. hmmmm

Newsletter Update – Speaks to Rates and Inflation

We speak on this very subject in our coming Newsletter – which once again is different from what we have done before….

The coming Newsletter is a review of what has happened over the year so far and actions and assumptions similar to above and what the ramifications of these decisions may be looking forward…

Given the thematic review, this Newsletter is one big flowing review and analysis…

We think you will like it!

Friday

Ahhhh…. today is a Friday heading into a much excitable College Tennis Tournament for the 15 year old in Aggie land… fingers crossed….

Enjoy your day, your weekend, and your time with friends, family and those special in your life!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.

A Dallas Texas based fee only

Financial Planning Total Wealth

Management firm.

Posted in Economy, FOMC, Interest Rates, Investing/Financial Planning, Market Comments, Retirement Planning

Tagged Dot Plot, FOMC, Interest Rates

Consumer Spending aka High Frequency Data ?? – Winners and Losers … Fantastic Chart

Posted on September 14, 2020 by John Kvale CFA, CFP | Leave a comment

The Fancy Wall Street Name for this information is High Frequency data…. just so you know, we are not really sure where that comes from or what it means in this context… we even checked Wilkipedia and it went into different directions — yaya digressing… too much Java at this writing…

Our Term – Consumer Spending – Winners and Losers

We have been tracking the TSA through put (Air Travel) with great enthusiasm our selves, here and here … Remember this fancy chart we made?

Our Friends at JPMorgan have one upped us and included some really interesting stats, including the afore mentioned TSA throughput..

For those with eyes like ours, first the tiny legend blown up –

And here is the actual chart showing the growth (with the tiny legend) – told ya it was hard to read!

The most resilient number MBA Purchase applications, were discovered and reviewed by us here and here, but this is a neat chart/update – and continues with our original thoughts that Housing will likely be insulated, greatly different from the 07-09 crisis.

Things are coming back, slowly but surely and some much faster than others!

There you have it, some really neat Consumer Winner and loser numbers!

Have a Great “High Frequency Data??” Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.

A Dallas Texas based fee only

Financial Planning Total Wealth

Management firm.

Posted in Economy, Education, Market Comments

Meet the Trimmed Mean Inflation Gauge … A Measure to Keep Watch

Posted on September 9, 2020 by John Kvale CFA, CFP | Leave a comment

With the FOMC (Federal Open Market Committee) led by Jerome Powell and company at their most recent meeting, made the following comments:

On price stability, the FOMC adjusted its strategy for achieving its longer-run inflation goal of 2 percent by noting that it “seeks to achieve inflation that averages 2 percent over time.” To this end, the revised statement states that “following periods when inflation has been running persistently below 2 percent, appropriate monetary policy will likely aim to achieve inflation moderately above 2 percent for some time.”
The updates to the strategy statement explicitly acknowledge the challenges for monetary policy posed by a persistently low interest rate environment. Here in the United States and around the world, monetary policy interest rates are more likely to be constrained by their effective lower-bound than in the past.

Let’s Decipher these Comments and Bring On the Tracking

The comments above, were understood by many/most on Wall Street to mean rates will be allowed to stay lower for longer and the 2% inflation rate is not a hard line number….

The following is the Trimmed Mean Inflation Rate completed by our very own Dallas Federal Reserve, just down the street from us!

It is basically taking the far outliers in any report out and calculating the number. This rate is one of the most watched inflation numbers by the FOMC!

Here are the actual numbers- watch that 2% number!

When rates go up, it is a headwind for Capital Markets …

Let’s keep a watchful eye on this… we are tracking you Mr. Trimmed Mean.

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.

A Dallas Texas based fee only

Financial Planning Total Wealth

Management firm.

Posted in Debt - Debt Management, Economy, FOMC, Interest Rates, Investing/Financial Planning, Market Comments

Tagged Dallas FOMC, FOMC, Interest Rates, Trimmed Mean

More Positive Data Points …. Factset Earnings … JOLTS Job Openings … PPI Producer Prices …

Posted on August 12, 2020 by John Kvale CFA, CFP | Leave a comment

As promised, last week, we have some more good data points….

Again, we feel Market Participants maybe a bit overzealous here … expect bumps …

BUT … the earnings and economic front are showing good data points…

S&P 1 Month Earnings Estimates From Our Friends at Factset

Take note of the usual guide down historically in this chart, with this months most recent, bucking the trend… Nice

JOLTS – Job Openings and Labor Turn Over – aka Jobs Available

The Jolts report is a good measure of the possible jobs available in the US Economy (Watched closely by the FOMC – Federal Open Market Committee – The FED)

What is important about this report, is the expectation was for about 4.9 million jobs and the actual came FAR ahead at 5.9 million … Nice X 2

PPI – Producer Price Index – Price of Production Items

Lastly and briefly, so as not to have you think you have fallen into an Economics class….haha

The PPI is a broad measure of domestic producer sales prices… when it’s going up, there is demand and more importantly when down, slack…

There are various ways to measure this Economic report (Core, Month over month, year over year, %) … all measurements beat their estimates handily …. Nice X 3!

There you have it… some nice market and economic numbers for your summer hump day!

Have a Great “Economics Beating Expectations” 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

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