Tag Archives: CFA Energy Speakers

Update on Interest Rates … Have they Peaked? A Review of the 10 Year Treasury …

The extra speedy move of interest rates upward have put pressure on “Safe” assets, notably bonds or fixed income.

As reviewed here in great detail and with a special video on the subject, as rates rise, headwinds are created, BUT the opposite is true…. rates stabilize or even lower, big tailwinds…

Have Rates Peaked ?

Using the 10 year treasury as our marker for this review, after peaking 3.15% a few weeks ago, rates have come in and are now around 2.76% …. Progress and stability!

Here is a zoomed in chart….

Just like the change from Winter to Spring to Summer, it rarely occurs in a straight line…. remember also this longer term rate (10 years) is a measure of economic growth and will not be directly effected by the Federal Reserve overnight rate increases (thats our checking accounts)…

Have a Great “Interest Rate 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

40% Return, We Don’t Think So; Libya? …Maybe

Through 2-21-11 the S & p 500 was up 6.8% for the year 2011! If we annualized (continue to compound at that rate) that return it would have been more than a 40% return for 2011, which is highly unlikely.

As we had mentioned in our very timely last Poltergeist post “They’re Back”  investor sentiment had grown overly positive, and many investors were pushing the capital markets higher.

So where are we now?

We would argue the capital markets were due for a pullback and feel strongly a reason was necessary. However, it is always smart to take a moment to view the current concerns and not just hang our hat on “The Market Needed a Pullback.”

In a very interesting, dual high-profile Energy Sector CFA speaking  event last night, I was able to garner the most likely concerns of current market participants. (The media was not present at this event, as such I will withhold the names of the speakers to honor their anonymity requests.)

Bear with me as this is truly a Domino chain of concerns:

  1. Egypt is a rational non-violent country, Libya is not – Watch for the spread of violence i.e. Nigeria, Saudia Arabia  ect..(Recall this chain of events started a short time ago and has spread very quickly.)
  2. Oil prices are rising on the spread fear, not Libya’s current situation.
  3. Too high oil prices will stop the global recovery (This is the key concern!) 

So there you have it, we were due for a pullback, and now we have a reason. As we said in our last post, “….do not let your guard down or take unnecessary risks, capital markets can turn from friend to foe rather quickly this day and age.”

Have a Great Day!

JK