Category Archives: Political

The Smartest Guys in the Room, The Bond Markets and Participants – Part 2 of FOMC Dot Plot Update

Part 2 of our overzealous post started Monday that was a bit too long- Enjoy!

There’s an old saying that the smartest guys in the room are the Bond Market or Bond Market Participants.

Bond market participants have way less to think about than their brotherin equity market participants, Basically bond participants only think of the economy, the credit worthiness and length of their investment.

Using the USA as your proxy and with the United States being the most credit worthy bond in the world, there is one less thing bond market participants have to worry about. Taking a peek at the 10-year US treasury yield which would reflect mostly economic expectation or possibly the future growth, of course there could be outside investors rushing to the US treasury market in search of higher yields boring the matter a bit, but all other things set aside under the surface post speech bond market investors are expecting greater controlled economic growth, sooner (2 year Movement.)

Dramatic Movement in the 2 Year Treasury

In order to get a most up to date chart, we needed to use futures contracts, so bear with us, as the chart goes down the yield is rising… bond guys are pricing higher rates now!

Here is a close up of the latest few days, again on the 2 Year

Not surprisingly a bit of a come back (higher prices lower yield) in the chart after such a large move.

30 Year Movement

Same use of futures contract here…

Higher chart price is lower yield? The initial drop is in the February March 2021 time frame as the Economy began to open, but take note of the move UP – lower yields in the last few weeks!

This may seem counter intuitive, but the eventual increase in rates would thwart inflation and is being expressed by lower long term rates…

We’ve talked at length on inflation versus deflation, so will leave it alone at this time but it might be noted that’s the smartest guys in the room thank future economic growth is at least higher and longer term inflation is not their concern, at least for now!

Have a Great “FOMC – Smartest Guys In the Room 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

FOMC Updated Thoughts From Press Release, Dot Plots and Post Release Interview of Jerome Powell (Part 1 of 2)

As mentioned Friday in our preview post, Jerome Powell chair of the FOMC and the rest of the voting members released their updated public press Economic Review and analysis mid-week last week. This  release also included 30 minutes post Q and A along with a prepared discussion by Powell that lasted about 15 minutes.

Just by chance finding myself on the road for a slightly unusual 90 minute journey that occurred exactly during the time Jerome Powell was speaking, I was able to listen to the entire speech live, while I’m not sure if it was the subject matter, or a minor dental procedure the day before, no matter … I found it extremely difficult to stay awake while driving – digressing here, but if you weren’t on the edge of your seat listening to the speech and reading the press release … you’re likely in good company as we usually find this material extremely interesting – still digressing.

Jerome Powell is most open to reveal something either by accident or on purpose during the Q&A as the prepared press release and the prepared remarks have so many eyes and advisers reviewing he’s certainly to say only what we are supposed to hear.

Wall Street and much of the media outlets took much of his comments to be more Hawkish (less friendly and more likely to raise rates sooner.)  For the record, this is why we enjoy listening to these types of events ourselves, as we did not find anything more than doing what he and the rest of the FOMC had promised to do, all along.

The dot plot which as a quick reminder, is an estimate of all board members including non-voting members timing and amount of where interest rates and where they expect economy to be was also released.

The following… Shows that multiple board members are more eager to raise rates sooner than they had been in recent quarters. In our minds this is good news as we would rather the FOMC not stay too low to long encouraging reckless behavior in the form of leverage and over leverage. Also encouraging for more conservative and cash investment such as our checking accounts an increase in rate will give us collectively some income on those reserves.

The Dot Plot Thickens

6-16-21 Dot Plot

Two Members Now Expecting two increases in 2022 with five members also expecting one move for a total of seven members expecting moves in 2022!

3-17-2021

Expectation by three Members of One interest rate increase and one member expecting two moves in 2022

Again, we think higher rates sooner is a return to normal and sets us back on course for continued economic recovery… just keeping to their word!

With continued compliments for keeping my material short and to the point, a late viewing of the US Open Golf Tournament, thanks to a West Coast Venue and a desire to see what the so called Smartest Guys in the Room – Bond Guys do this week, this post is officially Part 1 … Will only be one more Part, Promise!

Have a Great “Dot Plot Analysis” 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

Department of Defense Releases UFO Statements and Video, Another Full Report Due Any Day Now

So we always talk Economics, Financial Planning, Interest rates or other Financial “STUFF” ….

We do read other subject matters … and have a funny sense of humor (some may say weird or strange, but that is ok-haha) … We wanted to bring your attention to a soon to be released report from the Department of Defense.

In a cannot make this up manner, the December 2020 Stimulus package included the mandatory release of UFO information within six months of the bill…. that would be by the end of this month…..(Ok, so we drifted back into Financial STUFF again)

No idea why or how a UFO report release founds its way into a Stimulus bill, but again cannot make this up!

One of Many Prior Releases

In doing our research we ran across a neat release that pointed us to a video that was downloadable…..

On April 27, 2020 the Department of Defense released a Navy Pilot video…

Release statement

Here is the video:

Over the last four years, there have been a dribbling of reports released. Here is a good article from Scientific American printed yesterday that takes enough sides of UFO’s, no matter your thoughts you will be supported…

Not sure why these releases are happening …

No idea why now ….

Will be very interested in reviewing the new release, which if holds on due date has to be released in the next few weeks…

Odd this was embedded into a Stimulus Bill…

Have a Great “UFO Report Release” 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

Kaplan Town Hall Review … Second Most Recent FOMC Update Meeting Last Week… Procrastination Leads to Lucky Update

As mentioned in our embarrassing post here recently The Dallas Federal Reserve had a Town Hall meeting with special guest speaker Dallas federal president reserve Robert Kaplan.

One of our favorite things to do is listen to people like Robert Kaplan in less public venues in order to try and get their candid or less guarded opinions.

This will make the 10th article talking about Kaplan and as such you may notice that we are pretty big fans.

Kaplan Town Hall Candid Comments

What was interesting about this town Hall meeting was that Kaplan for the first time since his tenure at the FOMC dissented about the federal reserves decision due the fact the the FOMC made a three pronged approach for their interest rate movement decisions.

What do we mean? In the released report from the FOMC chaired by Jerome Powell but with Robert Kaplan a voting member at the meeting they released the following unique statement

1. We intend on having interest rates lower for longer – In Kaplan’s opinion and ours, that was enough

2. We will keep interest rates lower even if inflation ticks up – this is the comment that Kaplan had an issue with and we do as well as we have written multiple times ( here here here and here ) that inflation may actually raise its head , Kaplan agreed!

3. Until a very lower rate of unemployment. is established we will also wait to raise rates

That’s just too many strings to attach to the FOMC and to especially hand over to future decisions makers!

Kaplan, during the Town Hall Event

Maybe the reason we like Kaplan so much is he seems to think very much like we do and have similar concerns. By attaching these three points together future Federal Reserve board members are being bound by a multi point limitation that could cause problems. What if one of these points gets dramatically above target but another is not thereby limiting the increase in interest rates?

Kaplan … like us, believes that there is a time in the not too distant future where interest rates will need to be raised and normalized not only for inflation limitations but also for industries that rely on higher interest rates.

Kaplan also mentioned that low interest rates for too long of a period of time may cause people to take greater risks than they otherwise would.

Lastly, Kaplan once again seeing eye to eye with our beliefs, said that low interest rates for too long of a period of time becomes not only helpful but a stimulus that is unneeded once the economy gets rolling.

Time will tell but once again we like Kaplan’s thoughts on higher interest rates potentially sooner rather than later but likely a year or so out!

Updated Thoughts From More Recent FOMC Statement

So time flew past us on getting this post to you, but in true making Lemonade out of Lemons fashion, something neat occurred….

Our Procrastination lead to a Lucky Update!

Last week, the FOMC released their latest statement here and guess what?

No strings like the prior meeting, just simple slow economy stuff and, Kaplan voted FOR the opinion… no dissenting this time.

Maybe the FOMC members have already backed down from their prior “Strings Attached” discussion!

Have a Great “Kaplan FOMC” Update!

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

Environmentally Sustainable ? Net Carbon Zero or Negative …What is it and what are Companies doing about it?

According to the United Nations (UN) World Commission on Environment and Development, environmental sustainability is about acting in a way that ensures future generations have the natural resources available to live an equal, if not better, way of life as current generations.

Here is a chart explaining, again from the UN …

Un Sustainable Chart

 

What Companies Are Embracing?

In the United States and abroad, many companies are not only embracing Environmental Sustainability but some are even vowing to reverse possible damages they may have done in the past making them Environmentally positive…

Tech Companies lead the way…but others are also following…

Microsoft committing to being carbon negative by 2030

Amazon committing to being carbon net zero by 2040

Ikea committing to being carbon negative by 2030

Apple committing to being net carbon zero by 2030

BP – yep British Pretroleum goal of carbon zero by 2050 !! Wow

Hey… will they all get there, maybe or maybe not…but what a great, good feeling, better future goal!

Have a Great “The Future is Bright and Environment is Better” 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

SPECIAL CARE ACT EDITION – PLEASE SHARE – Q 2 2020 Newsletter Video Audio Podcast Review By John Kvale

Click Here for 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 : If you don’t have a Twitter account, the time is now – many of the CARE ACT services are crashing their regular sites, as such communication is being made via Twitter … If you REALLY do not want a Twitter account, just use it as a browser, however by having an account you can subscribe to whatever entity you need to follow and you will be notified immediately as they comment.

This is also useful for following your industry organization, important company or almost anything you may need immediate notification.

 

Let’s get going!

Just so you know this was hurried with a call before and just after this video, so it was not edited as normal … but wanted to get this out to as many as possible as fast as possible… Never claimed to be a Spielberg .. haha … prompt, complete delivery of this information was very important at the moment!

Thanks in advance!

Q 2 2020 Newsletter

 

The CARE ACT –

On Friday March 27th 2020, a stimulus package was passed into law for the benefit of those being effected by the Corona Virus officially starting the clock for many programs.

The general spirit of the most important parts of the bill is getting money into the hands of consumers quickly AND attempting to incentivize employers to keep workers on the payroll!

Recovery Rebate

Checks Being Sent to Over 90% of the population

Each person to receive $1200, kids UNDER age 17 credited to parents at $500 each, no limit in headcount.

This Rebate is NOT TAXABLE!

The payout is likely to be sent out end of April or early May!

The applicable AGI phase out threshold amounts are as follows:

  • Married Joint: $150,000
  • Head of Household: $112,500
  • All Other Filers: $75,000

One time Maximum $100k IRA Distribution Available in 2020 Only

Investors affected by the Corona Virus can take a maximum of $100k of a Corona Virus impacted distribution from your IRA or Employer related plans.

  • There will be no 10% penalty for the withdrawal.
  • There will also be no 20% mandatory withholding.
  • You must take this distribution by 12-31-20.

You can repay this distribution within three years and have NO TAXES. You may stagger payback contributions over any time frame as long as you pay all of it back within three years of the day you received the distribution in order not to have taxes due on the distribution.

RMD’s (Required Minimum Distributions) Waived in 2020

All RMD’s for any and all mandatory plans are waived as of 2020.

This includes all types of RMD’s including those with the five year rule.

Next year will not mandate a doubling of the RMD.

Next years RMD will be on the higher mandated level, but again will not cause a duplicate.

One Off Charitable Deduction – Small – Available Only to Non Itemizers

Included in the new Coronal Stimulus package is a one time above the line, Charitable Donation Write off of $300.

This amount is only available to those who do not itemize.

Pandemic Unemployment Insurance Benefit

A New Pandemic Unemployment Benefit available to those effected by the Corona Virus.

This benefit is additionally available to those that may not have had access before, mainly self-employed individuals.

This new benefit is $600/week and lasts for four months.

There is also the elimination of the first week waiting period, allowing those immediate access if needed.

Student Loan Deferral

No payments required until September 30th of 2020!

No interest will accrue during the interim.

Must notify your loan provider if you are on automatic payment.

Paycheck Protection Program – AKA SBA Loan Program

Forgiveness loan that can be totally FREE to small business owners if they qualify and use the funds appropriately. If not, they will receive a possible 10 year term, 4% maximum interest rate from the Small Business Association, happily administered by qualified local banks in an attempt to speed the process of getting the loans to business owners.

The purpose of this loan is too keep your people employed!

Available for business owners of less than 500 people who were or have been adversely affected by the Corona Virus.

Must certify Good Faith that the business has been affected by the Virus. Which can include uncertainty of the future.

Must be applied for by June 30, 2020!

Repayments will not commence until at least six months and no longer than twelve months.

Loan amount is the lesser of $10 mllion or 2.5 times your average monthly payroll in 2019 – EXCLUDING AMOUNTS OVER $100K ANNUALLY

Capital Market Update –

Bonds are so good they are Bad

Given the speed of the equity stock, drop due to the ever expanding Coronavirus. Investors were caught flat-footed and in a dash for cash, sold their old faithful bond holdings which are viewed favorably again due to their safety.

Using history as our guide, not only does this correct itself, but also likely turns out to go even higher in value, which is what happens when rates go down and bonds go up.

In closing, one more bit of good news in almost all cases we will have reinvestment of income at these lower prices, taking advantage of that pricing for our own benefit.

2-26-20 VBMFX - Largest Bond Fund in World

We hope you enjoy … talk to you 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

Q 1 2020 Extended (12 Page) Newsletter Video Audio Podcast Review By John Kvale

Welcome to our Video and Audio Podcast Review of our Q 1 2020 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 Here for 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

Let’s get going!

All New Pictures, Intro and Exit Music !

Q 1 2020 Newsletter

Click for PDF/Printable Version

 

Is Inheritance Taxable ?

This, our lead financial planning article for the newsletter-  With the subject of inheritance and the taxability of it occurring multiple times in the most recent quarter, the idea for this article spawned.

After completing the initial article, a continuation article idea also occurred which made the second part of the inheritance subject matter about being separate property.

We hope you enjoyed both articles and this was our lead financial planning articles.

All about the Car

In another fun personal financial planning two – part article, long desired, but fearful of writing …this article discusses the car, should you buy or lease and how to do so. Again, a second article occurred at a chance meeting in an airplane with a former law officer watching me finish the first article on the airplane!

In doing the research for these articles we ran across a really cool car research site, and mentioned some great buying resources as well.

Recession Thwarted – Capital Market Thoughts

To ignore new evidence in our minds is silly even if it goes against the grain of what you may have been saying!

In this article we review a CFA speaker’s slide about lowering rates during a recession and his conclusion. Bottom line, we’ve not been a big fan of lowering rates during economic growth, but an inverted yield curve which is highly predictive of a coming recession, along with lowering of rates, according to the speaker and the enclosed chart leads to a thwarting of the recession.

We hope we are wrong on this one and the speaker is correct!



Reach back to last year’s taxes in savings you can do now

In this article we discuss the remaining tax savings ideas that we can do this year, that will help last year’s taxes-

  • The SEP – Simplified Employee Pension
  • HSA – for the Health Savings Account
  • IRA – An oldie but a Goodie if it’s available to you
  • Roth – While not a tax saver you can do it now for last year’s taxes
  • Itemized itemize itemize – With today’s high standard deductions you may not be able to itemize but we remind that it’s a good idea to stay in shape as it’s likely these itemize deductions may come back in the future

We hope you enjoy … talk to you in the Spring !!!

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

Q 4 2019 Newsletter Video Audio Podcast Review By John Kvale

Welcome to our Video and Audio Podcast Review of our Q 4 2019 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 Here for 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

Let’s get going!

Q 4 2019 Newsletter

Click for PDF/printable version of Newsletter

 

And here is your review!

Is it Time to Refinance?

With Mortgage rates moving lower, we discuss the major items to think of when refinancing your Mortgage.

Our most clever point is we like to have an 18 month payback for the costs when refinancing… this serves as a good barometer on when to refinance, irrespective of the size of your Mortgage.

 

30 Year US Avg Mortgage Rate

 

Tariff Talk

It’s been going on for a long time

Trade Wars AKA Tariff talks have been around for a long time. This is not our first rodeo… notice how trade has been more efficient over time!

 

us-trade-wars-history Cropped

End of Year Tax Reminders

While there are a lot of reach back tax items i.e. Things we can do next year for this years taxes… there are many that have a firm year end deadline-

  • RMD – Required Minimum Distributions
  • Company Related Retirement plans i.e. 401k
  • Charitable Donations
  • 529 and other education programs

We hope you enjoy … talk to you in ….. 2020 WOOOW !!!

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

FOMC Meeting and Interest Rate Update from Last Week

Last week, here in our preview of the meeting post, we discussed what the Federal Open Market Committee would likely review via the fortunate lunch with local Dallas Federal Reserve Chair Robert Kaplan and even had direct audio from the event.

We know it’s summer and we know many of you may be taking much needed R and R, but the FOMC meeting last week was surprisingly important.

Bottom Line: No rate lowering but rhetoric that was taken by market participants as a lowering is in the cards sooner rather than later!

Important Update Meeting Review

Jerome Powell, FOMC Chair released his decision to NOT lower rates ….

our comments….

From information gathered via the audio and economic data points available at the time, we felt strongly that the FOMC would not LOWER rates, that’s in bold because until just recently, many thought future increases may be in the cards.

However … this statement, in the FOMC press release was deemed to mean rates will be lower at the next meeting, which put wind int he sails of Capital Markets …

“The Committee continues to view sustained expansion of economic activity, strong labor market conditions, and inflation near the Committee’s symmetric 2 percent objective as the most likely outcomes, but uncertainties about this outlook have increased. In light of these uncertainties and muted inflation pressures, the Committee will closely monitor the implications of incoming information for the economic outlook and will act as appropriate to sustain the expansion, with a strong labor market and inflation near its symmetric 2 percent objective.”

Here is the joint estimate of FOMC members for  GDP (Gross Domestic Production-broadest estimate of US growth) for the remainder of the year … note an expectation of slightly slower growth for the remainder of the year and into 2020/21:

6-19-19 GDP Estimate FOMC

There is also a Dot Chart that shows where FOMC members expect rates to be over the same time period, but it was a mess and confusing…so we left it out!

Not playing Economist here, but there is a lot of room for lowering or NOT lowering as well… time will tell, but for now the general consensus for the next meeting which is at the end of July (30-31) is for a lowering of rates, at least by most Market Participants or those with a microphone  …. Call us skeptical of agreeing at this time….

Bottom Line: No rate lowering but rhetoric that was taken by market participants as a lowering is in the cards sooner rather than later!

There are some nice positives that come with these expectations… Mortgage Rates will likely continue to stay low and may even go lower!

Sorry if we got into the weeds, but we wanted to clarify the slightly blurry statement, reaction, and expectations!

Have a Great “FOMC Meeting Update” 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

Timely G-20/Tariff Meeting Chart – World GDP

It appears the Tariff talks continue to go on…

We are personally surprised as we thought much of this was posturing and there would be an agreement sooner rather than later …

This weekend at the G-20 meeting (here is a cool live China site on the matter) there is hope to finally settle the Tariff concerns…

Will see – if they do, market participants may likely sound a sigh of relief… and visa versa …

Our Friends at Visual Capitalist/How Much.com are out with a neat chart to keep the matters in perspective..

World GDP at a Glance

world-economy-gdp

Have a Great “World GDP Updated” 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