Tag Archives: FOMC

Reviewing a Sept 23, 2020 Prior Post and FOMC Statement – “Inflation is the Enemy!”

Over the weekend (no jog as an early Saturday walk with dog through the local college campus garnered a huge stubbed toe from a protruding curb….cannot make this up … digressing) a long ago post about the FOMC and their main enemy entered the frontal lobe…

Our September 23, 2020 Post – Federal Reserve Enemy – Inflation

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

Posted on September 23, 2020 by John Kvale CFA, CFP | Leave a comment | Edit

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″

The original post goes on the talk about the expansion of the balance sheet and the lack of inflation at the current time.

Fast forwarding to today, the balance sheet is unwinding and there certainly are higher inflation numbers…

If the Fed sticks to it’s word, their fears may justify continued pressure to slow an already slowing economy!

Hang tight, we have your back, but bumps may be on the horizon!

Have a Great “Federal Reserve Replay” 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

Analyzing the Federal Reserve’s Balance Sheet … Interesting Analysis of MBS … Big Purchases … Big Sales

As mentioned Friday, there were a lot of words dictated, typed and researched over the weekend in preparation for the Q 4 Newsletter.

During some of the research, a stumble on to the follow chart occurred. Being totally unrelated to our Newsletter information, but very eye catching and interesting, a share was in order!

From our Friends at JPMorgan and their Market Insights Slide deck:

What is most striking to the eye, or at least our eyes, is the disproportionate amount of MBS (Mortgage Back Securities – think packs of Mortgages) the Federal Reserve purchased during this latest round of asset purchases.

This month the Federal Reserve has stated they are now pushing 97 Billion dollars of these assets back into the market, up from a prior mentioned 40 Billion monthly sale.

This may be a reason that Current Mortgage Rates are by almost any measure WAY to high, compared to their historical normal spreads between other similar assets.

Bottom line, the Federal Reserve likely over pushed rates low and they may be doing just the opposite now.

Just as eventually the sugar wears out, so will the salt of higher rates!

Have a Great “Had to Share a Neat Fed Chart” 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

August 2022 Financial Planning and Capital Market Review – YAY …. Holiday Party Location Revealed – 401k Run Rate – Wall Street Mistake to Our Advantage, Bloated Inventory – Slowdown Contra Bounces and Pivot Narrative Reminder – By John Kvale CFA, CFP

Hello and Welcome to our August 2022 … 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 audio format as well as Video!

Break In: Holiday Venue Announced –

Thanks for the tease jabs last week… deserved…haha

Dallas Museum of Art

Details to Come – Saturday Afternoon November 19th before Thanksgiving Weekend

Newbies –

We like to articulate our thoughts and review on a Monthly basis our Financial Planning Tips, Capital Markets thoughts and current events!

Hope you enjoy!

August 2022 Video

YouTube

Financial Planning Tip(s)

Check that 401k Run Rate – Are we hitting our contribution goals?

Here in this post we remind everyone now is a good time to check the run rate for your 401k contributions….

The reason now is a good time is we have time to make up any shortcomings, should they be discovered…

Bloated Inventories – Wall Street Woes = Main Street Savings

With large public companies fessing up that they have accidentally over inventoried and will be slashing prices to move said bloats….

Now may be a good time for a MANDATORY purchase….

As we mentioned in our post here, we have done some spiffing up of the office in conjunction with our new lease signing… Maybe too many people took our post to heart…. options are greatly reduced on some of our updates…yikes

Capital Market Comments

Hill Street Blues Reminder – Let’s be Careful Out there

In our post here, we highlight as a reminder that slowing/recession markets can have interesting contra bounces… but as our Hill Street Blue’s Chief always stated….

Let’s be careful out there…

Jackson Hole – No Pivot

Along with contra bounces comes a narrative that usually gets some traction…

Sure enough, this bouncing narrative was the Jerome Powell was already Pivoting to a slower hand (Economically not important as the cards have been dealt- digressing) …

Jerome Powell announced in his last weekend speech …. not only NO PIVOT but get ready for some Pain….Wow….

Care to guess when the announcement occurred?

Not to worry we are most definitely …… Being Careful Out there!

Have a Great Day, Talk to You at the End of September!

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

July 2022 Financial Planning and Capital Market Review – Back to Basics Tax Return PLANNING – Legacy Health Coverage – Feds Pickle – Yield Curve Inverts – By John Kvale CFA, CFP

Hello and Welcome to our July 2022 … 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 audio format as well as Video!

Newbies –

We like to articulate our thoughts and review on a Monthly basis our Financial Planning Tips, Capital Markets thoughts and current events!

Hope you enjoy!

July 2022 Video

YouTube

Financial Planning Tip(s)

Back to Basics Series – Income Tax PLANNING

In our final fun “Back to Basics” review we discuss Tax PLANNING….

From the post:

Coincidentally, the most important part of Tax Planning is the second word in the subject, Planning!

As we individual or corporate tax payers traverse the tax year, it’s important to take note of unusual events that may be occurring. We’re certainly not saying you have to worry about this every minute of the day, but should you have an unusual increase in income, or decrease in income, this should be thought about before the end of the year for your tax planning.

Later in the post we discuss the key items in reviewing your return as well….. in step by step format!

Legacy Health Coverages

After running into several situations of legacy health care options for long time former employees… Here in this post we outline the possibilities of bridge Health Coverage from legacy companies and how fantastic of an option this can be…

In almost every situation, the key is these plans are not easily discovered. In order to find out if you have an option, it’s best to dig out contact information from HR of your old employer and reach out to them directly.

This is an expense to your former employer, so it would be expected not to receive multiple information regarding such a plan, but if available it could greatly help in bridging the gap for Medicare should we be in the situation of needing coverage before age 65. 

Capital Market Comments

Bond Market turns Upside Down – The R Word

After the second negative GDP print … see next note of Fed’s Pickle…. the bond market really began to price in the R Word…. Here in this post we discuss the inversion of long bonds to short and their meaning…

The Fed’s Pickle

In this post, BEFORE the actual GDP announcement, we discussed the Fed’s pickle, with a hot economy (CPI inflation holding tight) BUT an economy that is slowing …..even qualifying as the R Word now – Recession!

From the BLS release after our post :

Q2 2022 (Adv)-0.9%
Q1 2022 (3rd)-1.6%

Real gross domestic product (GDP) decreased at an annual rate of 0.9 percent in the second quarter of 2022, following a decrease of 1.6 percent in the first quarter. The smaller decrease in the second quarter primarily reflected an upturn in exports and a smaller decrease in federal government spending.

The definition of recession is negative two quarters GDP….

Have a Great Day, Talk to You at the End of August!

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

Fed Raises Rates and then heads home for some R&R for over two months … Last Friday of July … Going Fast …

As expected, on Wednesday of this week the federal reserve raised rates by 75 basis points (.75%), an early leak to their favorite Wall Street Journal reporter all but absolutely solidified this decision. Note the speed of the move compared to the most recent rate increases…

Now with an open calendar of over two months the federal reserve can head for the hills and get some R&R before having to stew over the next meeting ….. and what will be likely a much more complicated decision! Recall here our note about being in a pickle!

Speaking of R&R this note comes from a cooler higher altitude climate as the family and I recharge the batteries, sharpen the saw or however that goes, and spend time together. A turnaround trip back home is a necessity for the incoming freshmen‘s mandatory sport tryouts with a quick return back to the family …. hopefully!

Today is a Friday, hope you may have some time for some R&R as well!

Talk next week…

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

Why the Fed may be in a Pickle! CPI Inflation Hot … But Economy Slowing … According to Feds Own Research

Imaging you are walking an economic tight rope (We are calling it a pickle) and had no easy way out….

FOMC (Federal Open Market Committee) led by Jerome Powell may be in a Pickle.

Too Hot But Also Too Cold

Here at the Cleveland Federal Reserve , the FOMC’s own research from one of their own showed an estimate of CPI for the most recent of 8.59%…. thing is, it came in above 9% ….

Much too hot for the FOMC’s liking!

Then you have this from ANOTHER of the Fed’s own research ….

Atlanta Federal Reserve GDP Now Cast

At the time of this chart their estimate was -2.1% … today it is -1.6% (jumps around as economic reports are released and fed into the beast/model) – predicting the R – Word!

C/O Pierce Kvale

Ok, so CPI/Inflation is too hot …. let’s slow this economy AND INFLATION down….

BUT Wait – the Economy is already slowing per my own members research!

What to do? The Pickle !

Have a Great “Glad not to be in a Pickle” 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

Bond Market Beats its Chest … Invertedly/Upside Down Yield Curve …. R – Word Predictor (Recession)

Some on Wall Street say the Bond Market is the smartest due to the fact that participants are only focused on repayment risk and time of that repayment. Compared to the Equity (Stocks) market were there are flows of capital, tons of complication with financials and mood swings by participants.

Given the Bond Markets high IQ status, when it speaks people listen….

Inverted Yield Curve as Bond Market Beats it Chest with a Warning

As a quick refresher, a normal yield curve will have lower rates for shorter terms and higher rates for longer…. simply because the longer the term the greater chance of a problem/stress/default …

Pardon my free hand, but it looks like this… the longer the time the greater the cost/interest rate

When the Bond Market turns upside down/inverts, it has a very good track record of predicting a R- Word!

Note on this long term chart, as the line drops below zero, the Bond Market is Beating its chest and inverting…. also note the grey area that follow are R-Words…

Using a shorter term chart, last week marked a strong inversion of about -.25% and closed the week off at -.20% note those are point 25% and point 20%…. far right below the line…

So it looks like the R Word is in the cards, not to worry we have been talking slowdown since December of 2021… so we are prepared….

Remember, Equity Markets are forward looking and will sniff out the recovery before it is seen…. Also, recall, headlines are the worst near the end…. Still a Ways to Go though!

Next up — Why the Fed is in a pickle and may only have an R- Word way out!

Have a Great “Inverted Yield Curve” 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

Bond Market Beats it’s Chest (Yield Curve Inversion) … Hot CPI gets a Yawn … Summer Doldrums ?

This week the bond market boldly spoke the R- word ….. it does this by inverting …. shorter yields higher than longer…. no bueno!

To top that off, a hotter than expected CPI (Consumer Price Index – blunt measure of inflation) this week garnered a big ….. YAWN…. (For the record, this was surprising to us….) ….

Could it be Summer Doldrums? Sure … actually glad to see folks get out, travel, spend time with family, relax, sharpen the saw… or however that goes… heck, this am I had less than 100 spam emails to dig through… maybe even the spammers are relaxing ..haha

It’s a Friday, so nothing heavy today…. all bets are off for next week on the analysis of this, have some great stuff ….. a lot going on right now, but let’s enjoy the weekend …maybe BE part of the Summer Doldrums – talk next week!

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

June 2022 Financial Planning and Capital Market Review – Investing KISS – Atlanta Fed GDP Nowcast – By John Kvale CFA, CFP

Hello and Welcome to our June 2022 … 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 audio format as well as Video!

Newbies –

We like to articulate our thoughts and review on a Monthly basis our Financial Planning Tips, Capital Markets thoughts and current events!

Hope you enjoy!

June 2022 Video

YouTube

Financial Planning Tip(s)

Back to Basics Series – Investing – KISS (Keep it simple silly)

In our continued fun “Back To Basics” Series here we discuss Investing our next to last in the series … and just Keeping it Simple in doing so….

From the post:

While many analysis dig so deep into investments that it makes your eyes glaze over, there are really two important parts of investing. KISS – Keep is simple silly

  • 1. Save as much as you possibly can, and s early as you can.
  • 2. Make sure your allocation above is such that during rough rainy times, a.k.a. slowdown/recession you do not eject and sell. Our human nature of fight or flight will take you out of your investment portfolio at exactly the wrong time if you are over allocated to risky investments.

Shady Used Car Offer –

In true musician like unknowing of a popular song… Our post here of a shady used car offer turned out to be a hit…

A true, made as succinct story of a mom having multiple increasing offers of her teenage seniors late model car after being told it was totaled caught a nerve….

We received comments from across the country, many of folks we do not even know, but chimed in to give their two cents worth….

Maybe slightly controversial …. for the record we try to stay away from too much drama as there is enough roaming around the airwaves, but we could just not resist this true story!

Trust but verify those used car offers!

Capital Market Comments

Atlanta Fed Predicts Slowdown – The R Word

Literally in the last week of the quarter, out pops an updated research report from the Atlanta Federal Reserve called their GDP Nowcast

After holding strong at a 1% Q2 2022 GDP estimate for some time, new data entered into their model dropped the estimate WAY down to -2.1% for their most recent estimate…. see far right green line of the graph….

If correct, this means the US is officially in a recession already!

We will talk much more on this soon, but for the record we were very surprised at much of the Wall Street Reaction to this report, most notably interest rates, which went down dramatically!

Have a Great Day, Talk to You at the End of July!

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

Q3 2022 J.K. Financial, Inc. Newsletter … Positives Graphic Theme … Video Audio Podcast Review ! By John Kvale CFA, CFP …

Welcome to our Video and Audio Podcast Review of our Q3 2022 Newsletter. For those on the road or just unable to grab the time to read, our podcast type review gives you the behind the scenes insight to our thoughts, observations and deep views of the entire Newsletter.

BREAK IN – Our new format of greater articles continues as we received many positive comments last quarter…. this quarter we run with it again, but we do have a constant theme…. Positives!

Click the Download button below, for a direct link to an electronic version (an early peek-good ole fashion paper versions are on their way to you shortly) and here for our Newsletter page

Let’s get going! We hope you enjoy!

Q 3 2022 Newsletter

(YouTube)

With just shy of 10 charts, we plucked out our favorite three and Review them here in great detail:

In the video, we go into great detail and each one and we hope you enjoy!

TSA throughput is back to almost 2019 levels without the road warrior business traveler!

Being social folks, after a large spike in eating at home (red line), the continued progression and overtake of eating out has occurred!

Lot’s of ways to look at this, but in our positive eyes, more inventory means better options, especially for new home owners!

We hope you enjoy our over the top Positives … talk to you in the fall!

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