As mentioned in our embarrassing post here recently The Dallas Federal Reserve had a Town Hall meeting with special guest speaker Dallas federal president reserve Robert Kaplan.
One of our favorite things to do is listen to people like Robert Kaplan in less public venues in order to try and get their candid or less guarded opinions.
This will make the 10th article talking about Kaplan and as such you may notice that we are pretty big fans.
Kaplan Town Hall Candid Comments
What was interesting about this town Hall meeting was that Kaplan for the first time since his tenure at the FOMC dissented about the federal reserves decision due the fact the the FOMC made a three pronged approach for their interest rate movement decisions.
What do we mean? In the released report from the FOMC chaired by Jerome Powell but with Robert Kaplan a voting member at the meeting they released the following unique statement
1. We intend on having interest rates lower for longer – In Kaplan’s opinion and ours, that was enough
2. We will keep interest rates lower even if inflation ticks up – this is the comment that Kaplan had an issue with and we do as well as we have written multiple times ( here here here and here ) that inflation may actually raise its head , Kaplan agreed!
3. Until a very lower rate of unemployment. is established we will also wait to raise rates
That’s just too many strings to attach to the FOMC and to especially hand over to future decisions makers!
Kaplan, during the Town Hall Event
Maybe the reason we like Kaplan so much is he seems to think very much like we do and have similar concerns. By attaching these three points together future Federal Reserve board members are being bound by a multi point limitation that could cause problems. What if one of these points gets dramatically above target but another is not thereby limiting the increase in interest rates?
Kaplan … like us, believes that there is a time in the not too distant future where interest rates will need to be raised and normalized not only for inflation limitations but also for industries that rely on higher interest rates.
Kaplan also mentioned that low interest rates for too long of a period of time may cause people to take greater risks than they otherwise would.
Lastly, Kaplan once again seeing eye to eye with our beliefs, said that low interest rates for too long of a period of time becomes not only helpful but a stimulus that is unneeded once the economy gets rolling.
Time will tell but once again we like Kaplan’s thoughts on higher interest rates potentially sooner rather than later but likely a year or so out!
Updated Thoughts From More Recent FOMC Statement
So time flew past us on getting this post to you, but in true making Lemonade out of Lemons fashion, something neat occurred….
Our Procrastination lead to a Lucky Update!
Last week, the FOMC released their latest statement here and guess what?
No strings like the prior meeting, just simple slow economy stuff and, Kaplan voted FOR the opinion… no dissenting this time.
Maybe the FOMC members have already backed down from their prior “Strings Attached” discussion!
Have a Great “Kaplan FOMC” Update!
John A. Kvale CFA, CFP
Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.
$treet-¢ents 
Another Robert Kaplan Townhall Update – Some Breaking Comments … Slowing Purchases this Year
Back in the fall last year, here we commented on a terrific Robert Kaplan Townhall. Good news, this time we were able to listen to this Townhall which occurred Monday January 11, 2021 without accidentally becoming a participant!
Robert Kaplan is the Dallas Federal Reserve President and is a voting member of the FOMC (Federal Open Market Committee) in 2020 – has a lot of eyes on him, especially during FOMC statements … but – see next
We like to listen to these “Quaint” discussions as more open comments and nuggets of information can be discovered and we are big fans of Kaplan as well…
Kaplan Latest Townhall Comments
Kaplan reiterated an expectation of US Economic growth – if all goes well – of 5% Wow. US Economic growth certainly has easy comparables due to a bad 2020, but a 5% growth rate is really strong and if occurs would help with our Capital Markets growing into their clothes thesis.
Biggest breaking comment, Kaplan believes the FED will at minimum speak of easing on asset purchases and again if all goes well is interested in higher rates later this year – Wow, another big news comment. Recall our concerns if rates get ahead of the Fed and they are forced to chase them down, could be strong headwinds… From our perch this is good news.
Oddly, most major Financial Firms are saying the likely stimulus coming soon will help, but when that runs out a slowing may occur …. someone is wrong !
We will be watching!
Kaplan firmly stated that continued stimulus through asset purchase AND low rates will do more harm than good if continued too long …. We agree, inflated asset prices and excessive risk taking does not work out well.
Best Question – What is Biggest Risk to Economy in 2021?
This question was by far the best and Kaplan’s comment that too slow of Vaccine rollout were both elegantly stated.
Kaplan expressed some concerns with the speed of the current rollout but expected/hoped for acceleration in short order, as we all do.
Kaplan, as a firm believer in higher education, our resident state of Texas is not at the top of the rung on this one, he mentioned several times improving the education system especially as it relates to technology will likely increase productivity in the decades to come.
There you have it, some Breaking News and some Good News!
Have a Great “Kaplan Townhall 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
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Posted in Economy, FOMC, Forecast, General Financial Planning, Interest Rates, Investing/Financial Planning, Market Comments
Tagged Dallas Federal Reserve, FOMC, Kaplan, Robert Kaplan, Townhall