Category Archives: World Political

Capital Markets Ignore … Short Week Concludes … Friday Tennis Weekend

Capital Markets are the ultimate voting machine. Frequently they are VERY irrational, often times they act temperamental, other times they just ignore and move on.

With the recent flexing of various international military muscles and “Breaking News” headlines, Capital Markets …. and their participants, are just moving on down the road and focusing on earnings … which is really what they are supposed to do. NICE!

Short Week

With the celebration of July 4th on Tuesday, Wednesday felt like Monday, making Thursday feel like Tuesday and today …. Oh Boy … Not really sure what day it is. Friday? Yes..

Friday Tennis Weekendtennis-2042723__340

Wimbledon …. Yes it will be going on this weekend, but a more important Tennis weekend to your present party … a National Tournament in a neighboring state (Travels , all good) .. Win our go home, once again, puts the journey into next week if the former occurs…

Ahhh, that is looking into next week and this is a Friday, smack in the middle of Summer. It goes fast, enjoy, relax and spend time with those special!

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

 

 

 

 

China added to Important Index, Welcome Aboard!

Last week it was announced a group of large capitalization Chinese company stocks were allowed to be added to a very important global index, the MSCI Emerging Market index. This is great news for China and super news for those following our David Cameron talks from earlier this year.

China added to MSCI Emerging Market IndexChina hainan-105596__340

The fourth time really is a charm, as MSCI (Morgan Stanley Capital International) – most prominent and well known International Index provider – allowed a group of over 200 stocks to EVENTUALLY be added to their MSCI Emerging Market Index. The total inclusion will take several years but is a huge positive for China’s acceptance as a valid economic capital market.

Certainly China has a different social system than the USA, however, if David Cameron is only half correct in his thoughts, embracing rather than shunning China will have positive effects for decades to come.  The addition of China stocks into the MSCI Index may be the first step of many future positive ones to come.

We began a detailed review in our latest Newsletter on International and Emerging Markets but it was shoved tot he floor by our Residential Real Estate Price Movement article.  Everything happens for a reason. This recent announcement is a great addition to the facts and research we were including, look for more abbreviated information to come soon here with the full article(s) to follow in our Next Newsletter!

Have a Great “Mutually Prosperous” 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

Earnings, the key to Capital Market Growth … Let’s get an update?

The ultimate driver of Capital Markets are Earnings. Yes, we can argue about interest rates, currencies, world political and economic cycles, but all of these events are only important in how they change earnings or the growth there of “Earnings”.

Let’s take a look at early statistics from 2017!

Earnings Via our Friends at Factset

This from Factset, one of our favorite data aggregators in their regular weekly report.

  • Earnings Growth: For Q1 2017, the blended earnings growth rate for the S&P 500 is 13.6%. If 13.6% is the actual growth rate for the quarter, it will mark the highest (year-over-year) earnings growth for the index since Q3 2011 (16.7%).

Looking closely at the following chart, which is TRAILING earnings, forward looking capital market expectations can be seen. The trailing earnings are actually falling over the last few years, but the forward expectations as noted from the first bullet above are expected to climb more rapidly than the past six years.

5-12-17 Factset EPS change and Price

 

So just where are these revenues that are creating accelerating growth coming from?

5-12-17 Factset Geographic Rev chart

P/E or the Price to Earnings is the most blunt way to measure the valuation of capital markets. A high P/E might mean markets are overvalued and need to grow into their valuations, or a reversion to the mean reset to a lower level may be in the cards.

5-12-17 Factset 12 PE ratio V long term

From Factset’s estimates above, the current market P/E is about 22 with a normal of 16-17, undoubtedly higher than normal but certainly no guarantee of an imminent reversion down to lower levels.

If the growth estimates mentioned in the very first bullet come through in 2017, much of this froth may be taken out of the capital markets.

Either way, we have your back via our good friend diversification!

There you have it, a nice ‘Earnings Update” … We will be watching closely!

Have a great “Earnings 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.
www.jkfinancialinc.com
www.street-cents.com

French Vote Comments… Happy Cinco de Mayo and Friday…. Tennis Travels… Break In- Employment Report

Break In- This am a very positive employment report was released…while we never hang our hat on just one report, we do like the direction of this report and will have more details next week!

Thanks to everyone for the nice comments on the French Vote post earlier in the week. The polls, which we know have not been super accurate of the last few years, are giving Macron a huge lead over Le Pen…all other things equal, which they never are, this outcome would likely be calming to the capital markets.

Happy Cinco de Mayosombrero-2101560__340

As May gets going, we have had unusually cool weather here in the South and even a spring…. Last several years it was a very wet spring and then summer arrived leaving little feeling for spring. Enjoy your Cinco de Mayo today ! Cheers !!

Hopefully it is nice where you are as well… Today is a Friday, so enjoy the day and your weekend….and remember to spend time with those special in your life.

Speaking of special, an out of town flight for our first National qualified tennis tournament occurs later today and through the weekend…. No matter the outcome, darn good dad daughter time!

Have a GREAT 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

All you need to know about the French Election Run Off, a Two Round Election Process

Every once in a while we run into a simple comprehensive description of something complicated or confusing. Visual Capitalist continues to amaze us with this fantastic summary of the French Run Off election.

In France if there is not a majority winner in the initial election, there is a second, “Run Off” election that decides the nomination. The following summary is a great thorough comparison of the two final candidates.

Recalling our chance visit with David Cameron, here, his view was that a Le Pen win might further the fragmentation of the European Union. From the summary below, one can see why this is the case.

Time will tell!

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

 

High points of the Tax Reform Announcement due out today… Our favorite and least favorite

So we finally get through Tax Season, sunset the tax discussions until next year, and along comes an announcement that tax reform plans are due out today.

Keep in mind, no one knows for sure what the final outcome will be even after today’s announcements as approval and compromises will ensue.

Here are the high points from our perch.

Standard Deduction AdjustmentUncle Sam

An announcement for a large increase in the standard deduction is expected. If passed the net result could be tax savings for many especially those that do not itemize. In our view, this change, if approved would likely have the largest total number of filing changes. Needless to say the tax planning possibilities are huge….

Corporate Tax Changes

There is much anticipation of lowered corporate rates. US corporate tax rates according to many , are too high, a proposal for relief from higher corporate tax rates is expected.

There is also a possibility of smaller, flow through entity corporation, think S corporation income i.e. K-1 tax rate relief.

Tax Repatriation

Our favorite, and hopeful agreed upon, tax change would allow stranded income, already taxed in a foreign country, to move more freely back to the US with less tax burden.  International corporations would have greater access to foreign country stranded capital if this were to be approved.

We have heard less of this lately and hope it does not hit the cutting room floor!

Estate Tax Reform

There has been much talk of an Estate Tax reform as well. The gist is a disallowance of a step up in basis but a removal of the $5.49 million Estate tax rate.

If passed as mentioned, and the current tax laws held “as is” on capital gains, this could be a huge nightmare. We think there may be major compromises on this before actually passed. We will keep you posted on this as it develops. This is our least favorite possible reform at this point.

Have a Great “Tax Reform Announcement” 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

Blockchain Explained, a Short Primer …. Enjoy your Friday …

How about an interesting Friday word worth notice after the conclusion of regular tax season?

Not to worry, we will keep it brief now, but keep an eye out for more details.

It’s likely you will run into this sooner rather than later. So here we go!

BlockchainBlockchain.svg

Basically in it’s simplest form, Blockchain is a neat way to track all transactions as they occur and keep them moving forward on the instrument traded or event.

  • Stock Market transactions
  • Cash movement and exchanges
  • Investments
  • Loans
  • Horses … ok, maybe a stretch.. but maybe not though?

These are just a few uses.

The graphic to the right is a symbol of the initial transaction (green) and then the tracking of transactions.

It’s a Friday, and we promised a short post. Enjoy your weekend, but expect more on Blockchain from us in the future… so now you know !

Have a great 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