Tag Archives: BLS

Capital Market thoughts, looking forward not back … FOMC chaired by Jerome Powell gave, now taking away, for the moment

We don’t want to get too heavy and pound you with market thoughts, we know you’re getting enough of that from the “Market in Turmoil” like headlines, but we did want to give some explanations and let you know we are watching carefully as we have been on notice since December for a possible slowdown.

Look forward, not back

Economic reports such as today’s CPI (consumer price index) report is very much rearview looking, as such it’s sometime easy to forget that what’s most important is looking forward to what is going to happen next rather than backwards to what has happened. Yes it is much harder, and you do not know exactly what is going to happen … but you sure do not drive a vehicle looking continually in the rear view mirror – some humor on a dry subject… stay with me!

This is even more evident at the recent quick rise in interest rates, creating the headwinds to bonds. As noted here and again here in our posts (the second with even a special video) it’s highly likely and the probability is most that the headwinds for our fixed income investments are behind us. Once again looking forward, a slow down usually garners lower interest rates, exactly opposite to our slightly current and mostly rearview looking higher rates.

FOMC chaired by Powell gave and now takes

Over the past 18 months to two years the FOMC (Federal Open Market Committee) headed by Jerome Powell have taken very aggressive measures to stimulate the economy. Much of a stimulation, once the book is written may have over stimulated not only the economy but various asset prices. Their goal at this time is to slow inflation thereby doing a complete turnaround from their prior stance and taking away stimulus. This most likely will continue until they see evidence of slower inflation or lower employment. 

Higher rates are their main instrument of choice:

The FOMC waits for the reports such as the CPI to confirm their decisions, making for a lag in decision making and possibly longer decision-making, but they will eventually get there….

Finally, capital markets are certainly looking forward hence the sluggishness as they begin to price in a slowdown in full force. Eventually it’s very likely the FOMC will begin to see these clues as well!

Have a Great “Forward Looking” 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

CPI – Consumer Price Index Survey Weights – C/O Another New Fantastic Research Service … Pew Research Organization

With a tremendous amount of attention being paid to the Bureau of Labor Statistics CPI Report (Consumer Price Index), we set off as part of our research to find an easy explanation of the breakdown of the index.

As a reminder the CPI index is a measure of inflation, hence the increase rhetoric not only in the public domain, but here as well, as we have spoken about it multiple times via analysis.

Back to the analysis, we found tons of information about the make up of the aforementioned CPI index, and a 100 plus items that make it up, but oddly it took us some time to find the true easy breakdown in larger macro elements of the CPI index.

Great news, a new approved non-copyright use from a fantastic new research service called Pew Research has been discovered. With approval from their public relations folks, we are happy to finally show you this wonderful graph that breaks the CPI index down into very easy and visually friendly context.

We will be referring back to this graph frequently, as some of our future commentary will be about this CPI index, and what it may look like in the future and what it means from a Federal Reserve/FOMC standpoint.

Have a Great “CPI Index Simplified” 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

Hot Jobs Report Puts Fire Under FOMC … Markets Take Notice

Last Friday, January 4, 2022 the BLS (Bureau of Labor Statistics) released the most recent Employment report for January.

With the report actually quadrupling employment hire expectations and large revisions upward to several prior reports, the FOMC (Federal Open Market Committee) is all but forced to begin raising rates soon!

BREAK IN – Interesting Weekend Research Findings – In two different areas of the financial world, this last weekend of researching this post a reminder that HUGE population adjustments occurred in this report. Here is an accidental finding from the St Louis research site showing the effects of the revisions in 2021…

From the report:

Total nonfarm payroll employment rose by 467,000 in January, and the unemployment
rate was little changed at 4.0 percent, the U.S. Bureau of Labor Statistics reported
today. Employment growth continued in leisure and hospitality, in professional and
business services, in retail trade, and in transportation and warehousing.

Hot Report Puts FOMC on Go For Raising Rates

This HOT report, of 467k gains in employment, with expectations less than half of this number surprised market participants and the FOMC (Federal Open Market Committee) too, most certainly.

Adds in employment continue to help the Unemployment rate, once again giving the FOMC a green light of urgency to raise interest rates.

Market participant digestion of the rate raises will be interesting. Recall just a month or so ago, FOMC officials saw only one raise in 2022.

Also, recall our review of a large conference on March 24 of 2021 — yes 2021 almost one year ago…

Views: Number One From the Conference – Go Away FOMC – You Have Stayed Too Long

View number one and shared by every market related expert, the federal reserve is overstaying their welcome and should immediately stop asset purchases and begin talking about increasing rates. The main reason for these shared views are because asset levels have become inflated across almost all assets according to the experts and be continued purchases are no longer necessary given that capital markets are orderly.

Has the FOMC waited too long?

Next up, interest rates front run the FOMC!

Have a Great “Hot Unemployment Report 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

Updated Comments on CPI (Consumer Price Index) aka Inflation … Is it Still Accelerating or Not?

Last week the FOMC (Federal Open Market Committee) led by chair Jerome Powell at a regularly scheduled meeting and post meeting Video Interview, aggressively commented that they are going to wind down the monthly purchase of fixed instruments and plan on raising short term interest rates to thwart the inflationary pressures, mainly the backward looking CPI (Consumer Price Index) readings reported by the BLS (Bureau of Labor Statics) …. On a side note, ever notice how darn many acronyms are used in Economics….OK digressing…

We can debate the source of the inflationary pressures, supply chain, wages, oil or other matters…

On that note, here is the link to the BLS weighting of the CPI, it is a measly 320 lines long…. complicated to say the least…

But there are possible signs of a slowing already…

Certainly cannot see it in the year over year data below….

But the monthly change in CPI looks a little different…

Not making a call, just an observation… We will be watching!

Have a Great “CPI 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

CPI (Consumer Price Index) Prints 6.8% Year over Year Increase, Quick Analysis on Likely Peak … Friday

About three hours ago, the BLS (Bureau of Labor Statistics) released their November 2021 report on CPI (Consumer Price Index) one of the broadest measures of Inflation…

If you have noticed your grocery basket smaller and more expensive, this is why….

This report has a ton of factors in it, as can be seen at the top of the chart from the BLS report, below….

The year over year print was 6.8% increase!

A very large portion of the CPI is Energy…

Have you noticed a LOWER bill to fill your tank lately?

The BLS report is lagging, below is a current Oil price, which is over 10% LOWER currently… hence the cheaper refills…

Very likely peak in CPI as measured by the BLS, next month which will be released in early January, we will take a peak and keep you updated…

Ok, another slightly heavy Friday, BUT the FOMC is watching this very closely and making decisions based on this increase, which may be peaking/lagging already…. Let’s stay tuned!

Have a Great “Friday CPI 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

JOLTS – Job Openings and Labor Turnover – Continued Openings – Very Tight Hiring Currently

Back in May of this year, we first took note (for this Economic Cycle) of the JOLTS data , a measure of Job Openings in the US Economy….At that time an all time high had been hit as measured by this chart again back from May 2021!

As an interesting side note, take notice of the yellow shaded area- this is the NBER Recession tracking (National Bureau of Economic Research) date of a recession… in May of 2021 we were still waiting for the NBER to state if the recession was over and the exact length…. NOT A GOOD measurement for investment as this was way old news even back in May of 2021! Ok digressing a little but thought it worth it…

JOLT Release as of August 13, 2021

Back in May we noted :

  • Tons of Jobs Available
  • Job Seekers Market
  • Tough on Employers
  • Could lead to higher wages (Inflation?)

Here is last weeks reading…

Another 20% higher print…extrapolating our comments above, 20% harder on all points!

Note once again the yellow bar is gone and the tiny little recession call made by the NBER- again certainly NOT a timing issue i.e. If you wait for them to tell you the recession is over you will likely be left in the dust!

For all those hiring …. patience, this will like cure its self much like our Lumber clearing post here…. but not in as fast of time….

Looking for a job, you are in the drivers seat… remember, burn no bridges it’s a VERY small world, but you are in a great place… enjoy and best of luck!

Have a Great “Jolts” 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

Continued Improvement in the US Economy … Monthly BLS Employment Report .. Unemployment Rate, Interest Rate Reaction

On Friday, August 6, 2021 the BLS (Bureau of Labor Statistics) released the prior monthly (July 2021) employment related report. It is worth noting these are preliminary and will be adjusted in future months, but usually major adjustments are not in the picture….

Bottom Line:

943k hires in the month of July … NICE

5.4% Unemployment Rate as of July …Getting there (lower is better of course)

10 Year Treasuries Took note

BLS Unemployment Report for July 2021

The following Chart from the BLS may look unenthusiastic at first glance….. but hold on!

With the DRAMATIC volatility from the past year, the longer term chart does not give a true recent view…. Let’s look a little closer …. Much Better!

In much the same vein as above, the year view of the Unemployment rate does not look like a big deal as can be seen by the next chart!

On second thought, again with a closer view….. NICE! (We want a downward trending chart when measuring Unemployment)

10 Year Treasuries Wake Up

A measure of future expected growth, after some wrong sided players (shorting the 10 year in expectation of much higher rates faster) blew up pushing yields possibly incorrectly lower….

From Business Insider here

A hedge fund reportedly lost $1.5 billion in a bond market short-squeeze as bets on rising rates turned sour

These Good Economic Numbers put yields on the move higher (far right of chart)!

Continued improvement would likely force the FOMC to slow asset purchases…. as discussed here much desired by many !

Have a Great “Good Economic News” and analysis Monday!


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

JOLTS – Job Opening Measurement ALL TIME Highs – Great News for Job Seekers, Tough News for Employers

Over the last two weeks during the Mauldin SIC conference (which we are still digesting), multiple speakers mentioned the Jolts Index -Job Openings Labor Turnover – A Bureau of Labor Statistic (BLS) that measures job openings.

Back in August of 2020, here we first took note of the movement in the Index as it made a turn at the bottom of this chart and actually surprised to the upside.

JOLTS Index Today

Fast forward to today and noting what the Mauldin speakers featured, this Index is at an ALL TIME high!

Key Takeaways

  • Tons of Jobs Available
  • Job Seekers Market
  • Tough on Employers
  • Could lead to higher wages (Inflation?)

Have a Great “JOLTS 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

Get Ready for Some Possibly Very Positive Macro Economic Reports …. The Year Over Year Comparison

In some ways it seems like an eternity…. in others it seems like a weird dream …. and in others it seems like only yesterday we started with a shutdown of the US Economy to thwart the spread of Covid….

Fast forward to today and we are almost exactly one year to the day when direct Economic Effects began ….

Get Ready For Some Crazy Macro Reports

Many, but not all Economic reports are Year over Year comparisons…

Imagine as we compare reports to an almost shut down economy, especially just in the very near term… to a much more robust, but of course not at full capacity Economy?

Here is the GDP from Fred (Federal Reserve St. Louis) – A rather slower moving Economic Measurement

Today, the United States Bureau of Labor Statistics Reported the most recent CPI number… here

This is February 2020 to February 2021 – likely to look much different next month!

Over the next few quarters many Economic numbers may have some really jaw dropping changes… just be aware it is likely better to use month over month comparisons if possible for a better measure.

We bet we will all see some pretty interesting Headline Reported numbers though!

Have a Great “Crazy Economic Report Watch” 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

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

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.

jkfinancialinc

street-cents