Hello and Welcome to our January 2019 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 format as well as Video!
Newbies – We like to articulate our thoughts and review on a Monthly basis our Financial Planning Tips, Capital Markets and current events!
January – 2019 Video
Financial Planning Tip (s) –
Get and Earlier than normal start on those Taxes
Here in this post, we remind everyone that due to the new tax laws, it will be a good idea to get your tax information to your professional as soon as possible.
If your using tax software, be sure to do the recommended updates as we feel certain there will be necessary updates to the tables along the way.
Corrected 1099’s are the usual, with only a few last year, we will give everyone the green light once we get our first round of corrected tax forms – but again go ahead and get started with your taxes!
Stunning Findings about your old employer 401k
We had long suspected as much, but in this post we review a Cerulli study that interviewed over 800 401k providers, only to find out that less than 30% really want your funds once you leave.
We have experienced less than stellar service over the years with former employees 401k plans – leading to our long suspicion of these findings.
Make Pension Changes/Decisions Carefully
While our favorite commencement benefit for pensions (100% jt survivor) is fairly straight forward, the simplicity ends there.
In this post, we review recent trends in buy outs and what to watch for, as well as the many scenarios we have experienced that are not always in our best interest.
Capital Market Comments –
Good News – Recovery without a Re-test – So far
What a different a month makes – WOW! We literally have gone from the sky is falling to sunshine!
In our summary post in December, we mentioned that fast moving slumps, such as the one we had, frequently do not last long….
Here, earlier in the month we also mentioned that we fully expected some type of retest of those lows before we gained our footing.
We still do expect some type of re-test, but as of this date we have had the following positives that have added to the markets better mood:
Federal Reserve (FOMC) have turned very cautious about raising rates further (We are happily surprised at their yielding, and even more surprised at market participants joy)
Tariff talks are making progress – Interestingly, China has seen a slow down in their economy making for slightly more urgent talks – with a little compromise and statesmanship a resolve looks more likely – again a positive for capital markets.
Earnings are still cranking along – For the prior 4-6 quarters, earnings were red hot and hitting on all cylinders, so hot, they were not sustainable. Companies are still reporting good earnings, just not the Red Hot, overheated earnings from prior quarters – this is good news as it avails the FOMC to not have to raise rates to slow the economy –
All in all a Win- Win!
Have a Great Day – Talk to you at the end of February!
Welcome to our Video and Audio Podcast Review of our Q 4 2018 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.
Click Here for 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
Just a few days into the final Quarter of 2018, market participants became grumpy and continued their coal ways all the way through the end of the year – a seasonally strong historic period of time.
In our main capital market article we discuss the reasons why – no one knows for certain, and discuss the speed of the decline along with what the future may hold..
Updated Personal Theft Story
After having three credit cards stolen which we spoke of here, an interview with a detective brought to light some amazing stories of theft
Never give gift cards as a payment –
Don’t fall for fake blackmail –
Have a safe word for fake kidnappers or other similar scams
Meet Jennifer Hill “Jen” Our New Operations Manager
In a more in-depth article that expands on her background, Jennifer “Jen” Hill has our formal introduction along with several fun pictures including a Charlie’s Angels and a D Magazine Wealth Managers Picture from our honored award of D Magazine’s Best Wealth Managers.
Hello and Welcome to our December 2018 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 format as well as Video!
Newbies – We like to articulate our thoughts and review on a Monthly basis our Financial Planning Tips, Capital Markets and current events!
December – 2018 Video
Financial Planning Tip (s) –
Staying Invisible on the Internet
With concerns of our personal information being constantly delivered/sold to others, we found this really neat chart, here in our post as a great guide on staying invisible on the internet.
The chart is HUGE, noting the many ways we are being tracked this day and age… lots of neat, stop tracking me techniques included…
Capital Market Comments –
Good News – Such Fast Movements May Not Last as Long
One time when being fast may be to our benefit …
Markets that throw a quick hissy fit frequently get their feet under themselves …
Using the Great Recession of 07-09 as a guide (below) – BTW we DO NOT think this is what we are experiencing… it took years for the drop to occur, not days…
We may be experiencing a slow motion 87, 91 or 99 like drop, which were faster, briefer, caused by outside worry and forces, but certainly concerning at the time!
Let’ all buckle up and be thankful we NEVER drive fast – time will tell!
Have a Great Day – Talk to you at the end of January!
Hello and Welcome to our November 2018 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 format as well as Video!
Newbies – We like to articulate our thoughts and review on a Monthly basis our Financial Planning Tips, Capital Markets and current events!
November – 2018 Video
Financial Planning Tip (s) –
Clump – Maximizing the new standard deduction
With a $12k individual standard deduction and double that for joint filers it takes work to maximize the standard deduction threshold… Add the fact that SALT State and Local Tax deductions are now limited to $10k annually, clumping expenses into one year as mentioned here in our post and visually below may be the only way to get above the standard deductions for many …
Capital Market Comments –
Powell Signals a Slower Rate Increase
Current FOMC (Federal Open Market Committee) chairman Jerome Powell signaled the rate increases may be closer to over than just was stated just a month earlier… where a December increase, which is still almost certain, but three additional increases were promised in 2019 – not any more.
Given the long/lower rates of the last decade, it is not a surprise that the new normal may be lower –
Market Participants cheered this statement!
Have a Great Day – Talk to you at the end of December!
In addition to the above Unemployment level, average hourly earnings were also released and they were up 3.1% year over year — breathing a much needed pay increase to many ….
The bad news for many is that they believe these good numbers will give the Federal Open Market Committee (FOMC) ammunition for continued rate increases.
Currently FOMC members are on record saying they will raise rates in December and three more times next year (2019).
The worry is an eventual inverted yield curve – which we have mentioned many times is a very good precursor to a recession!
By looking at this chart, we are far from an inverted yield curve at this time- leading us to believe this “Good News = Bad News” may be very unwarranted…
Finally our conclusion to what we have all been waiting for …. The Predictive Value of our discussion …
So we know the FOMC fiddles with rates…
The FOMC Federal Open Market Committee raising the totally controlled short end … recall, they do not totally control the longer end… capital market participants do!
This following Chart is our sizzle….
This is the difference of the 2 year yield and the 10 year yield for about 5-6 decades…
When the 2 year yield is BELOW the 10 year yield the line is plotted above zero … think 1% less 3%, would give you a data point of 2 on this chart….
When the short end of the curve is ABOVE the long end — totally backwards to all logic, the plot on the graph would be BELOW zero… areas which we have circled in red…
Grey area are recessions …. just behind the inversions —
Take a moment and check this chart out…
Here is an easier to see chart from 1999 to present–
Why don’t they stop raising?
They cannot, it is their mandate – keep inflation under control …. raising rates is their main control mechanism.
Also, it is beyond their control as investors actually pile into the long end of the curve dropping it’s rate while the FOMC raises, in anticipation of the next recession…
Creating the Inverted Yield Curve!
In Never go all in or All out fashion, if the curve inverts we do not pack up our things and leave …. BUT caution is definitely advised.
There will be excuses …
it’s different this time …
rates are un-natural …
rates are low …
Maybe- worth heeding with a track record shown above….
As we near our fantastic conclusion to our multiple part series on Interest rates (next post is the last) lets quickly review where we came from.
In our First Post here, we spoke of the basic yield curve and how it logically moves from lower left to higher right high to account for risk …. Recall if a buddy borrows $100 bucks and promises to pay it back tomorrow its a lot less risky than if he promises to pay it back next year… and you would rightly charge him more for the delayed time… The Basic Yield Curve!
In our Second Post here, we spoke of movement of the yield curve … basically a parallel shift upward in better economic times and a parallel shift lower during slower economic times – all other things being equal, which they of course never are…
In our Third Post here, we discussed the players and assets that might sit along the yield curve, attempting to make for a more REAL world example(s)
Today … Well, let’s get to it
Where the Federal Reserve (FOMC) Fiddles on the Yield Curve
For all practical purposes the FOMC/Federal Reserve can completely control the short end of the curve as shown on our graph… Special shout out to the 13 year old tennis player working with the new Apple Pencil (neat subject for another time)- for the updated colored graphs…. yea this is our weekend workings during rain on tennis days..haha
Post GREAT Recession of 2007-2009 the FOMC not only lowered their totally controlled short end of the yield curve – but took the unusual action of using government money to purchase assets of the longer term in order to push longer term rates down as well …
Blue is the normal yield curve – Green is the greatly lowered yield curve we have of late most recently been experiencing ….. Yea the short rate was essentially at ZERO – about what all of our checking accounts have been earning until just recently
Here is the lowering of rates graph:
It is essential that the FOMC eventually normalize the yield curve back to the original lower left upper right as keeping it unnaturally low for too long will likely lead to an overheating of the economy, not to mention over use of risk via leverage/loans …
Here is the Raising or Normalizing Graph we are currently experiencing:
Next up our conclusion, and most importantly it’s predictive behavior over the last six decades….
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.
January 2019 Podcast Video, Financial Planning and Capital Market Update – By John Kvale
Hello and Welcome to our January 2019 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 format as well as Video!
Newbies – We like to articulate our thoughts and review on a Monthly basis our Financial Planning Tips, Capital Markets and current events!
January – 2019 Video
Financial Planning Tip (s) –
Get and Earlier than normal start on those Taxes
Here in this post, we remind everyone that due to the new tax laws, it will be a good idea to get your tax information to your professional as soon as possible.
If your using tax software, be sure to do the recommended updates as we feel certain there will be necessary updates to the tables along the way.
Corrected 1099’s are the usual, with only a few last year, we will give everyone the green light once we get our first round of corrected tax forms – but again go ahead and get started with your taxes!
Stunning Findings about your old employer 401k
We had long suspected as much, but in this post we review a Cerulli study that interviewed over 800 401k providers, only to find out that less than 30% really want your funds once you leave.
We have experienced less than stellar service over the years with former employees 401k plans – leading to our long suspicion of these findings.
Make Pension Changes/Decisions Carefully
While our favorite commencement benefit for pensions (100% jt survivor) is fairly straight forward, the simplicity ends there.
In this post, we review recent trends in buy outs and what to watch for, as well as the many scenarios we have experienced that are not always in our best interest.
Capital Market Comments –
Good News – Recovery without a Re-test – So far
What a different a month makes – WOW! We literally have gone from the sky is falling to sunshine!
In our summary post in December, we mentioned that fast moving slumps, such as the one we had, frequently do not last long….
Here, earlier in the month we also mentioned that we fully expected some type of retest of those lows before we gained our footing.
We still do expect some type of re-test, but as of this date we have had the following positives that have added to the markets better mood:
All in all a Win- Win!
Have a Great Day – Talk to you at the end of February!
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
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Posted in Economy, FOMC, General Financial Planning, Interest Rates, Investing/Financial Planning, Market Comments, Monthly Review, Podcast, Retirement Planning, Tax Related, Video
Tagged 401k, Fed Funds Rate, FOMC, Jerome Powell, Pension, Pension Buy out, Pension Lump Sum, Tariff