Ok, so the reminiscing is still going on. In our Q1 2017 Newsletter, coming to a mailbox near you soon, we take time to reflect on what a zany year it was… from all angles… As a preview, but not to steal the thunder, here are a few of the points !
Slow Start:
Talk about out of the starting gates bad. World capital markets finally tugged the large company US markets down, taking the S&P 500 down 15% and oil to under $30 a barrel in mid-February.
Brexit:
Surely Britain would stay in the European Union, the polls were showing as high as a 90% probability that they would. As the votes were tallied, something strange occurred as the Brits did in fact vote to leave the EU.
US Election:
The polls would once again miss big as the election results rolled in and a surprise candidate was nominated president.
Federal Reserve Raises Rates:
Mid December marked the day the FOMC (Federal Open Market Committee) raised rates from .25% to .50%. Markets yawned, even as the FOMC signaled they expected three more rate increases during 2017. It has been a race to see who moved to the back of the papers faster, Tony Romo or the FOMC!
Shortest Day of the Year
With an outdoor family that spends a lot of time on the Tennis courts…..as well as other outdoor activities, today’s shortest light day of the year comes with as much cheer as the Holidays!
We are at the half way point of the year. In this review of the year so far and preview of the remainder, we look longer than our regular month for sentimental and digital diary reasons!
Here is our June 2016, Extended view – Economic and Capital Market Review, with a great financial planning tip, and of course our Video for your viewing and listening pleasure.
After discovering we DID NOT have a comprehensive high level Estate Planning article, a two-part series was happily created – for the record more articles similar to this are expected due to their popularity and handy reference ability:
ESTATE PLANNING DOCS
Will – Document that directs non-beneficiary directed assets (Ex ..house, property, cash and regular investment assets) and may create trusts for minors, names a Custodian, Executor and may also create trusts and Trustees for estate tax minimization and other uses (see final statement in article below on Trusts.)
Power of Attorney– Financial document that appoints someone other than you to make most financial decisions in your absence. .
Healthcare Power of Attorney – Document that appoints someone to make important healthcare decisions if you are unable.
HIPPA – Allows your appointed person to receive medical information on your behalf.
Living Will- Cease and Decease – DNR – These titles are one in the same and are frequently confusing. This document allows medical professionals to NOT mandate all possible care, should you become deceased mentally, but not in body function.
Estate Planning Docs Part Two – Trusts
TRUSTS – ALL TYPE REVIEW
Revocable Trust – By far the most common and most commonly misunderstood Trust of the bunch. Revocable means it can be changed at the grantors request.
Testamentary Trust – Trust that is usually embedded in a Will and is created upon the grantors death.
Irrevocable Trust – The Hulk of Trusts. Being Irrevocable, once established and funded, this Trust is a beast. Estate tax, liability, inheritance are just a few items that can be addressed with an Irrevocable Trust.
QTIP Trust : Qualified Terminal Interest Trust – Most common set up by Grantor to give direction to assets beyond the spouse.
Credit Shelter/A:B Trust – Type of trust that is used to help minimize Estate taxes by maximizing the first person in a married couples Estate tax exemption upon death commonly resides in a Will.
GST or Generation Skipping Trust – This handy estate planning trust gives relief to Grantors by jumping a generation and essentially skipping the Grantors children and passing to the grandchildren.
ILIT : Irrevocable Life Insurance Trust – This trust is very useful in getting life insurance proceeds out of a Grantors estate.
With the British vote to exit the European Union, the Federal Open Market Committee (FOMC) lead by chair Janet Yellen will be hard pressed to raise rates. The only reason we can see higher rates sooner rather than later now would be some (multiple reports needed) major inflationary factors that feed through to the economic reports- While big advocates of higher rates and our research shows rates have been raised during an election year, it’s likely off the table for the remainder of the year.
Brexit changes US Presidential Election
Brexit may also change the US Presidential election as the polls of the British were so far from accurate, we expect many to have less confidence in our current US Presidential polls.
Capital Markets Update
New all time high?
With the afore-mentioned rate increase off the table and possible international perceived disruption due to Brexit – US capital markets may be the recipient of fresh capital from global corners of the world.
New highs (S&P 500) would not surprise us at this time and the odds are now better than not from our perch. Minor expansion in Bunny like fashion (explanation to come upon occurrence) looks possible, of course twists and turns have been the norm lately.
Earnings are the ultimate driver of equity prices, and US capital markets are currently frothy if not overpriced. We think they can get more overpriced due to the above concerns.
Think of the irony …. a British vote to exit the European Union occurred just a few days ago… Monday, July 4th, 2016 – a holiday for the USA – a holiday based on the USA being independent from Britain …. Worked pretty well … The same for Britain?
Office Hours
Today we are skeletons after noon, and Monday the office will be closed with Cathy and Donald out of town early next week on an extended holiday weekend.
I will be here manning the ship on Tuesday ! Talk to you next week !
Capital moves quickly in today’s world. Trade with countries and companies around the world is efficient and prompt. With such movement a co-dependence can occur. If one country catches a cold it can effect others.
First British Vote since 1975 – To Stay or leave the European Union
David Cameron, current British Prime Minister promised a vote for the British people on the possibility of leaving the European Union. Here is a terrific BBC summary of the entire event and great background. Cameron desires staying in the EU.
Given the afore mentioned co-dependence, capital market fluctuations will likely occur as the polls drift back and forth on the vote. Currently the vote is seen as being VERY CLOSE!
We have no position either way, however as countries become larger and more independent, it does not surprise us on a desire for such vote.
Buckle up as the vote is Thursday June 23rd, and may make for interesting headlines along with violent moves by trigger happy traders who may be standing in for their elders who are in the Hamptons !
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investments may be appropriate for you, please consult your financial advisor prior to investing!
Background
The is the vocal portion of J.K. Financial, Inc. a Dallas Texas Based Fee Only Total Wealth Financial Planning Firm. Founded by John Kvale, a Dallas Texas Fee only Financial Planner and Total Wealth Manager.
More Reflections from 2016…Shortest Light Day of the Year
Ok, so the reminiscing is still going on. In our Q1 2017 Newsletter, coming to a mailbox near you soon, we take time to reflect on what a zany year it was… from all angles… As a preview, but not to steal the thunder, here are a few of the points !
Slow Start:
Talk about out of the starting gates bad. World capital markets finally tugged the large company US markets down, taking the S&P 500 down 15% and oil to under $30 a barrel in mid-February.
Brexit:
Surely Britain would stay in the European Union, the polls were showing as high as a 90% probability that they would. As the votes were tallied, something strange occurred as the Brits did in fact vote to leave the EU.
US Election:
The polls would once again miss big as the election results rolled in and a surprise candidate was nominated president.
Federal Reserve Raises Rates:
Mid December marked the day the FOMC (Federal Open Market Committee) raised rates from .25% to .50%. Markets yawned, even as the FOMC signaled they expected three more rate increases during 2017. It has been a race to see who moved to the back of the papers faster, Tony Romo or the FOMC!
Shortest Day of the Year
With an outdoor family that spends a lot of time on the Tennis courts…..as well as other outdoor activities, today’s shortest light day of the year comes with as much cheer as the Holidays!
Have a Great “Reminiscent-Shortest Light” 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
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Posted in Economy, Interest Rates, Investing/Financial Planning, Market Comments, Newsletters
Tagged Brexit, FOMC, Interest Rates, Us Election