Ever Wondered How Much Paper Money is in Circulation?

Ok.. so School is out, but we enjoy continued learning.

With several friends and kids making trips to Various Federal Reserve Banks over the last year, this chart was too interesting to pass up… From our friends at Visual Capitalist..

how-many-dollar-bills-are-in-circulation

Have a Great “Circulating Money” 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

 

Three Economic Charts that should make Us all Feel Good – 3.8% Unemployment Rate

Post great recession, the Unemployment rate went into double digits … +10% …. Many including us thought the new natural level of unemployment may be near 6% – prior to the great recession most believed 4% would be the all time low…

3.8% Unemployment Rate

The regular monthly Employment report from the Bureau of Labor Statistics reported last Friday, June 1 that the Unemployment rate hit 3.8% — Yes 3.8%!

Wow….

 

6-3-18 Unemployment Rate Fred

Naysayers would say this will put pressure on wages, pushing up the CPI – Consumer Price Index – indirectly forcing the FOMC (Federal Open Market Committee) to raise rates fast — possible inducing an inverted yield curve…. leading to a recession… got that… sorry for the long domino effect– but this is how Wall Street thinks… perception can become reality… Let’s check the CPI …

6-3-18 CPI St Louis Fred

The CPI looks fine and has not moved up too much.  Here is a possible reason why…

Jolts – Job Opening and Labor Turnover Survey

5-8-18 JOLTS Fred

Essentially this is a relatively new statistic that many follow included the FOMC, that shows what the US Economy is producing in the form of jobs…. an increase in this chart means more jobs are available…

More Employment, but more Jobs… No Inflation —

Nice…

Have a Great “Lower Unemployment” 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

May 2018 Podcast Video, Financial Planning and Capital Market Update – By John Kvale

Hello and Welcome to our May 2018 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 format.

May 2018 Video

Financial Planning Tip (s) –

Social Security Website and Items to check while you are perusing

In our Social Security related post here, we discuss the tons of new options for use as well as the fantastic updates the Social Security Administration has done with their website.

img_1043-1

The most important item to check if you are not already drawing Social Security is your credits… which can be done on this site… recall there is a possible time sunset of loosing your benefits if you do not have the Social Security Office notified, leading to a possible lower benefit.

New Tax Table and Rates – Personal

Here are the new tax tables… if they look complicated, well it is because they ARE !

Marginal-Tax-Rates-Chart-for-2018-1

Expect much more on this throughout the coming months as we dig DEEP into the actual rates and the planning techniques necessary to optimize our tax liability …. One Important five letter word…. CLUMP – more later on this!

Capital Market Comments

Interest Rate Yield Curve – Rates – Inverted Yield Curve

Bottom line, at its most basic level the yield curve should go upward and outward just as our home made chart below (the starting point for our discussion.)

20180424_122733630_iOS

When it does completely the opposite or inverts, as seen below… a recession is just around the corner for as long as the eye can see!

2s 10s Spread W Recession sfredgraph

Expect a complete detailed video over the summer on this phenomenon … along with another review in the coming Newsletter… It can be boring info, not to worry … we will liven it up!

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.
www.jkfinancialinc.com
www.street-cents.com

Interest Rates Part FIVE/Final – The FOMC Overshoot, a Recession Predictor – The Inverted Yield Curve

Finally our conclusion to what we have all been waiting for …. The Predictive Value of our discussion …

So we know the FOMC fiddles with rates…

The FOMC Federal Open Market Committee raising the totally controlled short end … recall, they do not totally control the longer end… capital market participants do!

 

FOMC Raises Rates

This following Chart is our sizzle….

This is the difference of the 2 year yield and the 10 year yield for about 5-6 decades…

When the 2 year yield is BELOW the 10 year  yield the line is plotted above zero … think 1% less 3%, would give you a data point of 2 on this chart….

When the short end of the curve is ABOVE the long end — totally backwards to all logic, the plot on the graph would be BELOW zero… areas which we have circled in red…

Grey area are recessions …. just behind the inversions —

Take a moment and check this chart out…

2s 10s Spread W Recession sfredgraph

Here is an easier to see chart from 1999 to present–

2s 10s spread 99 to present - fredgraph

Why don’t they stop raising?

They cannot, it is their mandate – keep inflation under control …. raising rates is their main control mechanism.

Also, it is beyond their control as investors actually pile into the long end of the curve dropping it’s rate while the FOMC raises, in anticipation of the next recession…

Creating the Inverted Yield Curve!

In Never go all in or All out fashion, if the curve inverts we do not pack up our things and leave …. BUT  caution is definitely advised.

There will be excuses …

  • it’s different this time …
  • rates are un-natural …
  • rates are low …

Maybe- worth heeding with a track record shown above….

We will keep you posted!

Hope you enjoyed the Series … Quick links – Part 1, Part 2, Part 3, Part 4

Have a Great “Not Inverted Yield Curve” 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

Memorial Day Weekend … Office Hours … Good Bye Elementary School … Pools

Today is a Friday and a very special shout out to all of those of Military Family, both current and past.

You make our lives what it is today ..

THANK YOU !

Frequently your blood sweat and tears may seem lost in the world we live in, but that is not true at all .. We all owe you many thanks…

Memorial Day Hours

In honor of our Military Hero’s, Capital Markets will be closed on Monday along with most other public and government offices and our office as well …. Expect light trading today as many have made an early exit for the Unofficial start of summer….

Graduation- School’s Out … Kinda?Pierce Graduates

This will be two years in a row due to a new school being built, the younger brother gets out a FULL week before his older sister does … He’s in the pool and she has to take finals… Life is not fair is all we can say….

With his completion we are officially out of Elementary!

Two middle schoolers – 8th and 5th graders… up next

Speaking of Pools … for a family without a pool … the opening of Pools is a big deal… even better if school is out … oops, salt in wound…

Next week the Super Conclusion to our Interest Rate Series…. But that is next week… you know the drill!

Have a GREAT “Thanks to Veterans for their Service” Friday and Memorial Day 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

Interest Rates Part FOUR — How the FOMC Fiddles with Rates — Federal Reserve Rate Control

As we near our fantastic conclusion to our multiple part series on Interest rates (next post is the last) lets quickly review where we came from.

In our First Post here, we spoke of the basic yield curve and how it logically moves from lower left to higher right high to account for risk …. Recall if a buddy borrows $100 bucks and promises to pay it back tomorrow its a lot less risky than if he promises to pay it back next year… and you would rightly charge him more for the delayed time… The Basic Yield Curve!

In our Second Post here, we spoke of movement of the yield curve … basically a parallel shift upward in better economic times and a parallel shift lower during slower economic times – all other things being equal, which they of course never are…

In our Third Post here, we discussed the players and assets that might sit along the yield curve, attempting to make for a more REAL world example(s)

Today … Well, let’s get to it

Where the Federal Reserve (FOMC) Fiddles on the Yield Curve

For all practical purposes  the FOMC/Federal Reserve can completely control the short end of the curve as shown on our graph… Special shout out to the 13 year old tennis player working with the new Apple Pencil (neat subject for another time)- for the updated colored graphs…. yea this is our weekend workings during rain on tennis days..haha

Post GREAT Recession of 2007-2009 the FOMC not only lowered their totally controlled short end of the yield curve – but took the unusual action of using government money to purchase assets of the longer term in order to push longer term rates down as well …

Blue is the normal yield curve – Green is the greatly lowered yield curve we have of late most recently been experiencing ….. Yea the short rate was essentially at ZERO – about what all of our checking accounts have been earning until just recently

Here is the lowering of rates graph:

FOMC Lowers Rates and buys longer to lower

 

It is essential that the FOMC eventually normalize the yield curve back to the original lower left upper right as keeping it unnaturally low for too long will likely lead to an overheating of the economy, not to mention over use of risk via leverage/loans …

Here is the Raising or Normalizing Graph we are currently experiencing:

FOMC Raises Rates

Next up our conclusion, and most importantly it’s predictive behavior over the last six decades….

Have a Great “Rising 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.
www.jkfinancialinc.com
www.street-cents.com

 

New 2018 Total Tax Rate Table – The big Enchilada – Trust Tax Rates – Basically Same

Partially a product of our two day seminar last week and in part from our commencement of planning for our 2018 tax planning, we wanted to present the following chart for our collective reference.

It is busy due to a fair amount of old tax laws remaining in place.

2018 Total Tax Table

Marginal-Tax-Rates-Chart-for-2018-1

Trust Tax Rates Basically the Same

Trust and Estate Kiddie Tax Rates

Be sure to funnel excess income overages from Trusts out of the Trust into a lower tax bracket if at all possible.

This is a fantastic starting place for our 2018 Tax Planning discussions.

Have a Great “2018 Tax Rate” 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