Category Archives: Interest Rates

May 2023 Audio Video Review – Buffet/Munger Words of Wisdom, Debt Ceiling, – Financial Planning and Capital Market Review – By John Kvale CFA, CFP

Hello and Welcome to our May 2023 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 2023 Video –


YouTube

Financial Planning Tip(s)

Berkshire Hathaway – Buffett Munger Words to Live By

In this post Charlie Munger and Warren Buffet are discussed in great details… along with a secret to speeding the time to listen (1.75x speed)…..

Main thoughts to live by from Charlie and Warren:

  • The world is full of foolish gamblers, and they will not do as well as the patient investor.
  • If you don’t see the world the way it is, it’s like judging something through a distorted lens.
  • All I want to know is where I’m going to die, so I’ll never go there. And a related thought:
    Early on, write your desired obituary – and then behave accordingly.
  • If you don’t care whether you are rational or not, you won’t work on it. Then you will stay
    irrational and get lousy results.
  • Patience can be learned. Having a long attention span and the ability to concentrate on one
    thing for a long time is a huge advantage.
  • There is no such thing as a 100% sure thing when investing. Thus, the use of leverage is dangerous. A string of wonderful numbers times zero will always equal zero.

Particularly added this as just last week, saw a review of the meeting that completely missed several of these points in my opinion.

Capital Market Comments

Debt Ceiling Fizzle- All done until after next elections

With several comments from the field, we spoke multiple times, here and here about the Debt Ceiling, the history and the most likely outcome…

Much of our confidence on the matter comes from our contacts that we have developed over the years that try to give us a 100% straight scoop as much as possible…. They could always be wrong, but being numbers folks, we go with the odds…

They were right, once again!

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

Rates… Fastest Increase Review … Looking Forward for Effects … Newsletter Precursor …

This is an updated chart from our favorite buds Visual Capitalist

Last year we spoke of the speed of interest rate increases a lot… given the unique pace at which rates increased AND the super low level of (zero is about as low as you can go) starting point … it became a shock to the financial system….

So in all likelihood, rates are near their top for the foreseeable future….what lies ahead?

We will have more on this in the coming Newsletter but rates 500 times higher than they were just a few quarters ago AND looking to stay higher… there are major implications..

Debt/Financing costs higher =

Better safe investment returns aka Fixed Income/Bonds

More costs to debtors (lower returns for those using debt because of higher costs)

End of companies requiring very low costs to make profits

Have a Great “Fastest Rate Increase Effect” 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

First Quarter 2023 Review, Advanced Analysis Pilot, Tax Season, Interest Rate Anniversary

Dear Investor:

Putting Q1 of the year (2023) behind us, compared to last year at this time, seemed straight forward. recall last year at this time, we had just began interest rate hikes.

As the calendar turned we began searching for a similar series to last years’ “Back to Basics”, due to the popularity, comments, and sharing that occurred with this multiple series.

By luck or accident, we landed upon the antithesis like series called “Advanced Analysis” in part due to the current economic cycle and the nearing of the end.

Advanced Analysis Pilot

Our Pilot/Part 1 of the series was extremely timely and focused around M2 a broad economic measurement of money sloshing around the financial system. This is discussed in greater detail in our Q2 Newsletter at a very high level. Whether lucky, or preeminent, our observation, was to watch out for more high risk debt players in the capital markets and especially junk bonds. This fact seems to be occurring much faster than originally though.

Tax Season – Hints and Reminders

As we turn to Q2 of the year in what seems like expeditious fashion, it is tax season.  We once again call your attention to our Q2 Newsletter as there are some great last minute tips not only looking forward to this year, but also things available that may help last year’s taxes.

Interest Rate Anniversary – Most Likely Nearing an End

As mentioned in the intro, within the last two weeks we have just passed the start of the interest rate cycle, which was the fastest on a percentage basis we have ever seen The US economy and the global economy for that matter, operate much more like an aircraft carrier then a ski boat in their change of direction. The financial sector seems to be in the early innings with other parts of the economy much later in the economic game cycle. We will get through the slowdown eventually with all parts of the economy and move forward.

Have a great spring. Talk to you in the summer!

Sincerely,

John A. Kvale CFA, CFP

Enclosure (2023 Report)

March 2023 – Financial Planning and Capital Market Review – Taxes, Corrected 1099, No Form Reminder – Coco Bonds Via Advanced Analysis, FOMC Pickle Situation Resolutions – Great Content Video By John Kvale CFA, CFP

Hello and Welcome to our March 2023 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!

March 2023 Video –


YouTube

Financial Planning Tip(s)

Taxes – Corrected 1099 Down to a Trickle – Reminder

We reminded here earlier in the month and some what pounded our chest that additional Corretions would come…. well … they did, and we have notified all effected,

We left the following in from last months review due to its importance!

IRS Pointer and J.K. Financial, Inc. Important Reminder too

” … We would add, just because you did not receive a tax notice, DOES NOT mean the IRS did not and is looking for the appropriate notation on your tax return (Huge amount of time this occurs with cashing Series EE bonds) … a missing item is an easy automated paper letter audit….and as mentioned here absolutely requires a response …”

Cyber Security & Dall-E-2 (Combo Review)

We reminded once again here, about an abundance of spam and cyber threats coming through the email system…. just by chance a four hour update in person visit with pro’s on the subject was attended and they mentioned a lot of great points that we will dig deeper into soon, but interestingly the subject of AI (Artificial Intelligence) came up as a warning during our Cyber review as well…. recall we rolled out detailed comments here on the subject, with WAY more to come soon!

Capital Market Comments

Coco Pickle ? Huh – (A Second Combo post review)

In our continued and somewhat surprisingly fast accumulating Advanced Analysis Series – this time it was the CoCo Bond (it is so hard not to jump in feet first with a Cereal reference- too serious of a subject) digressing…. Tied into these explanations along with our Pilot Advanced Analysis via M2 was the FOMC (Federal Open Market Committee) decision to raise interest rates again, even with some confidence in banks concern, which we also spoke of as well… Wow all of this tied together quickly!

Have a Great Day, Talk to You at the End of April !

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

Q2 2023 J.K. Financial, Inc. Newsletter … Tax Reminders – Still time for 2022 Savings … M2 Pilot Advanced Analysis Series Review … By John Kvale CFA, CFP …

Welcome to our Video and Audio Podcast Review of our Q2 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

BREAK IN : From Parting Thoughts in the Newsletter

If you are not receiving our street-cents.com blog posts weekly Monday, Wednesday and Fri-day, please reach out and let us know. We have entered the late cycle portion of this economic slowdown and items are moving much quicker than our quarterly newsletter so we are posting frequent and very important items amongst our sometimes-humorous articles for your review and knowledge.

Let’s get going! We hope you enjoy!

Q2 2023 Newsletter

(YouTube)

Last Minute Tax Planning and Reminders

After a small top of the mind reminder that it is ok to pay taxes, we do not want to pay zero today and then pay at a much higher rate in the future, we certainly do not want to pay ANY more than we have to, we go into several reminders….

The SEP and the Spousal IRA – two things we can do now that will help last years taxes….

Important Reminder about reporting :

Just because we did not receive a tax form personally, does not mean that the IRS did not receive some type of notification of that taxable event! If you had a transaction, usually of some out of the ordinary type, that you did not receive a tax form for, we are not out of the woods and you should report it.

Lastly, comments about the possible rolling of 529 into Roth… the answer is still up in the air with additional legal clarity on this… but it cannot start until 2024 anyway!

Happy Anniversary Rate Increases

While hard to believe, the monumental rate increases (fastest of a life time in %) just started about a year ago

M2 Broad Liquidity Measure Tightens

In another – not kidding here – never seen before, M2 one of the broadest measures of liquidity, turns negative and makes our Pilot Advanced Analysis Series…

First spoken about in January, the effects are being felt through the financial system.. but not where we had expected so far….

Have a Great Finally Here Spring! Talk in the Summer!

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

Fed Week, Tough Decisions … New “Happy Bank” Back Stop Facility – The BTFP – Bank Term Funding Loan Program … Bank Headlines Continue – Reminder Thought On Late Cycle Headlines …

A while back we mentioned the FOMC – Federal Open Market Committee, lead by Jerome Powell were in a Pickle .. as at that time one of their regional banks had a research report out that GDP- Gross Domestic Production -Economic Growth indicator – was dropping fast and they were going to raise interest rates against a hot CPI = Consumer Price Index – blunt inflation gauge which would exacerbate the situation.

Fast forward to today and that Pickle is not any better…. maybe even more dill! With the afore mentioned Part 1 Advance Analysis M2 review showing dramatically dropping or the pulling of liquidity out of the system, bank fatigue has been seen and felt and here our comments on Banks being a slave to confidence for solvency.

On Wednesday of this week, March 22. 2023 the FOMC is bound by their goal of slowing that sticky inflation we are all seeing, especially at the grocery store, and best measured by the CPI … BUT, this additional rate increase will add fuel to the fire of less liquidity, AND on top of that our neighbors across the pond just raised rates .50% last week, albeit from a much lower 3.00 to 3.50% rate….currently the US rate is 4.75% …

We did say Pickle ? Right….

Enter the BTFP – Bank Term Funding Loan Program – Happy Bank Program

On March 12, 2023 the Federal Reserve Created the BTFP as another backstop for possible Bank Fatigue ..

Press Release

March 12, 2023

Federal Reserve Board announces it will make available additional funding to eligible depository institutions to help assure banks have the ability to meet the needs of all their depositors

For release at 6:15 p.m. EDT

This new program is a sort of Fed Discount Window on Steroids, meant to improve Bank confidence.

Quick History

Long ago the FED (going back in loose form to the 1920’s – the start of the Fed) started a program for Bank help during stressful times, the Fed Discount Window –

Fed Discount Window –

  • Operation of last resort for a bank
  • Overnight deposit help
  • Anonymous for two years
  • 30 day length, but historically has been lengthened to 90 days
  • Pledge of assets for security – Treasury Securities of all Maturity among other items that are held at par (even value, no gain or loss) or better

BTFP – Bank Term Funding Loan Program

All of the above but the following additions:

  • On Year in Length maximum holding period
  • Pledge of asset securities that may be less than par aka at a loss

The last bullet is the most important and lending a helpful hand from the Fed’s fastest in history rate increase…. as mentioned repeatedly, increase of rates are a headwind to Fixed income aka Bonds, especially longer term bonds….

Some Banks may be seeing a need for immediate liquidity due to loss of confidence and liquidity drain, so this new program essentially gives them liquidity to meet those demands if needed and may have negative assets due to the fast fast rate increases!

Headlines Continue

While this is being written – Sunday late morning in between Newsletter Articles, UBS a Swiss neighbor of Credit Suisse has made a much telegraphed offer to buy their friend out… no idea what the market will make of this starting tonight as overseas markets open…. but something just crossed the mind that we have mentioned many times before…. and may be applicable….

“Headlines are always the worst near the end of the Cycle!”

Have a Great “Heads Up for a Busy Week” 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

Important One Year Anniversary? … Technology Tethered Modern Day Spring Break Concludes… Newsletter Subjects and Neat Graphs but very little content YET … Friday On the Way Back Home soon!

Happy Anniversary Yesterday – Of What?

Long time followers will find this hard to believe ….. but it is true..

What was an important 1 year anniversary as of yesterday?

You’ve got this… but it is not easy…??

The FOMC (Federal Open Market Committee) commenced their FIRST rate increase one year ago, yesterday!

The important part of this is the lag affect … the US Economy is like an aircraft carrier, not a ski boat in that it changes directions SLOWLY! More on this soon… hey it is a Friday… let’s carry on! But worth thinking about …

Modern Day Spring Break

Tomorrow we head back… it was a super fun Spring Break, and in some ways work “Stuff” was even more productive…

Always glad to be available …. heck it’s never “Work” anyway!

Thanks to technology (note battery charger for cell in pic, no plug in this courtyard), the events of the last week were digested or maybe consumed is a better word… and as mentioned in the Mid-Week Wednesday post, were not completely surprising…

More to come as needed in this area!

Newsletter in Motion

The goal was to have the Newsletter complete, but the afore mentioned events took over and while much of the diagnostic graphs have been completed … the verbiage is not … hope my editor, who likes to get a head start does not see this…. oh well…

Have a Great Friday … Super Weekend and talk next week from the regular Saddle!

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

Banking is all about Confidence … Experienced Reminders and Hat Tip Advanced Analysis Part 2 the M2 Money Supply!

We will leave the drama headlines for other sources, as there are of course many that will come from the recent West Coast Bank Failure….

Being our second major Rodeo on this one, the Great Financial Crisis (aka GFC) of 07-09 the first, we are reminded of several things – This is NOT the 07-09 Crisis – Don’t go there

Here are some observations:

  • Risk happens slowly, then all at once (money moves faster than 15 years ago too!)
  • Fears may jump from one to the next during problem times- quickly
  • Events rarely repeat (lightening strike same place twice) but they sure do rhyme
  • It takes a long time for events to play out, not withstanding our first point (this is likely not over)
  • Banking is all about confidence … oddly most recently a storm in the south caused a loss of confidence in gas inventory in our neck of the woods… within hours all gas stations were out of gas! Sound Familiar?

Advanced Analysis Replay – Pat ourselves on the Back Here

Part 2 of our Advanced Analysis – Recall and Reminder – The M2 Discussion

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

Posted on January 18, 2023 by John Kvale CFA, CFP | Leave a comment

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!

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!

Closing Thoughts:

We mostly stay away from these “HOT” or maybe even Negative topics, but wanted to let you know we watch this, have spoken in advance of some of the risks, and are using past experience to help guide and monitor the situation!

Have a Great “Experience Matters” 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

Price Changes 2020 – 2022 – Consumer Related (CPI – Consumer Price Index) – Visual Capitalist

Over the weekend, with rain and overcast for the better part of 4 days… the wheels were working on the February review as well as the Newsletter….

Another nice chart popped into the email box from our Buddies at Visual Capitalist concerning Consumer Costs ….

While you may have seen some similar charts, the layout of this is terrific, as usual ….

Health and Education have run off to the races over the years….

Have a Great “Cost Increase Review” 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.