Tag Archives: IMF

Why rates should be raised, why they may not raise them — HUH?

Janet Yellen, head of the Federal Open Market Committee (FOMC) and her voting colleagues have the following mandates:

Maximum employment, stable prices, and moderate long-term interest rates–in the Federal Reserve Act.

Last week Donald and I went opposite directions on this weeks “Elephant in the Room” event, the FOMC rate raise conundrum.

Can the FOMC abide by their mandates and raise rates? Let’s review!

Rates are currently – ZERO!

This Thursday, September 17th, the FOMC formally announces IF they are going to raise rates or not. We think they should … it is long overdue.

Donald says they will not, I am in the camp that they do — He is “The Brain” though!

Here is why they should raise rates:

Unemployment Rate is Great !

JOLTS – Job opening report following by FOMC is screaming – NICE

Here is why they might NOT raise rates-

No signs of inflation – Their goal – 2% — currently around 1.5%, but heavily influenced by the fall in energy prices!

Stable Prices ? – Nope

9-11-15 S&P 500

 

And how about some ribbing from fellow countries — note– these are NOT part of the direct FOMC mandate — the ribbing has come anyway–

  • IMF (International Monetary Fund)- Janet Lagarde – President of IMF – “Please don’t raise rates” – Economist
  • BIS (Bank of International Settlement) – “Raising rates will crush Emerging Markets” – Telegraph of UK

I think they finally will raise. My reasoning comes from the hours of Jackson Hole interviews – All of which I listened to several times – to all board members that spoke to the media – They all (but one) seemed ready to move, this event occurred several weeks ago.

Oh — Many say markets will have a 5-10% or even 20% pullback when they begin raising –  Just like the world stopped on Y2k — Nope !

Should be interesting!

Have a great conundrum Monday!

John A. Kvale CFA, CFP

http://www.jkfinancialinc.com
http://www.street-cents.com
8222 Douglas Ave # 590
Dallas, TX 75225

IMF tells USA to hold off on raising rates …. Friday … Travels … Break In: Rates Rise

Christine Lagarde, managing director of the IMF (International Monetary Fund) urged the USA NOT to raise rates until early 2016.Yellen Laguarde

Hate to be Janet Yellen, chair of the FOMC (Federal Open Market Committee):

  • Not the USA mandates
  • Want to be nice, but come on
  • Are my neighbors really telling me when to mow my yard?
  • Every move or lack of move now will be scrutinized as a response to the IMF request (yuck…it’s hard enough to make the move as it is now)

Just to name a few issues brought up by this request.

The next two weeks are full of travel. Some business and some pleasure. Later in the week, I will be out-of-state near a coast line … yes shagging tennis balls and maybe a fish or two, after business meetings!

But that is next week … Enjoy your Friday and your weekend!

BREAK IN: After a better than expected jobs report, the market is raising rates on it’s own… this is a good thing longer term…

6-4-15 10 Year Treasury

 

John A. Kvale CFA, CFP

http://www.jkfinancialinc.com
http://www.street-cents.com
8222 Douglas Ave # 590
Dallas, TX 75225

 

 

Bucking Bronco … Frothy US Capital Markets JK and IMF too ? … Next Week BUSY travel schedule

No need to go to the Rodeo, we have it in the Capital Markets. There have been worse (07-09) but to suddenly go from a calm cool breeze walk to bucking bronco has been a bit startling. That’s why we buckle up well!Bucking Bronco

Our Cover Letter  and the IMF

Mid morning Wednesday we released our Performance Report over letter, highlighting our “Frothy” markets and “Black Ice” investing climate … The International Monetary Fund (IMF) also announced that US capital markets were “Frothy”

A bucking bronco ensued.

We will let you decide who put the fear in the markets … Either way, both are in good company ! haha

Travels Next Week

On Monday, I make a delightful turn around trip out-of-state, only to again head out on Wednesday evening a different direction, again out-of-state.

With minimal travel, I really enjoy the think time, melting pot of people thrown into action and the time away from the screens.

Not to worry, I will wash my hands during the journey … Actually with a summer cold, should be interesting!

Enjoy your weekend ! Talk to you next week

John A. Kvale CFA, CFP

PS Monday is Columbus Day, lot’s of folks in the financial world off!

http://www.jkfinancialinc.com
http://www.street-cents.com
8222 Douglas Ave # 590
Dallas, TX 75225  

IMF Chair Christine Lagarde …. “Keep those rates low Chair Janet Yellen” …. Defying our Monday Request

So my plea to Chair Yellen earlier this week to stop the stimulus, was immediately countered by the IMF (International Monetary Fund) and their Chair, Chirsting Lagarde.

IMF Lowers it USA Growth Forecast

This from their recent USA directed report :

steps should be taken to approve and implement a credible medium-term fiscal consolidation plan so as to provide the flexibility for more near-term fiscal support to the economy….

And here is a chart from the IMF on their feared increase in rates:

IMF Monitary Policy chart

As mentioned in our Monday post, we disagree, of course no one at the IMF asked us. It is certainly easy to see why the FOMC’s job is not easy.

Bottom line, we think the US economy is stronger than what the IMF thinks….good news, we will find out in a few quarters….. Markets are still frothy though !!!

Have a Great Day!  Sorry for all the FED talk, but it is so topical, we had to jump in !

John A. Kvale CFA, CFP

PS If you happen to be an economic nerd like me and want to listen to the entire press conference here is the link.
PSS Here is a great interview with Bloomberg’s Tom Keene just after the press conference.
PSSS Due to a death in the family and an adjusted turn around business trip, I will be traveling the remainder of the week.
 
http://www.jkfinancialinc.com
http://www.street-cents.com
8222 Douglas Ave # 590
Dallas, TX 75225

 

 

Forecasting is Tough…Especially in the Future (Yogi)

Maybe it’s an age thing, but I find myself watching the weather with greater enthusiasm than just a few years ago. Comfort, appropriate dress, care for the kids and a occassional change of plans if a real outlier of expectations occurs. While these reasons are convenient and helpful on a personal level, on a professional level the importance grows exponentially for myself and our team both as a receiver of forecasts and a  careful verbalizing of them, such as last weeks article, which so far has been correct but has perils similar to putting our necks on the chopping block.

In this recent Economist article, they cleverly reviewed the IMF (International Monetary Fund) estimates for world GDP growth. The dark blue line is actual with the others being estimates at different time frames. It is worth mentioning, that the IMF has access to the best and brightest minds born from many of the respective domiciles, said another way, they are darn good!

The Bad News:

The total error is greater than the actual forecast in certain cases.

The Good News:

The direction of the forecast is pretty accurate.

Simplified in non-financial terminology, according to this Economist study, when the weather man calls for rain, it usually rains. The amount of rain called by the weather man….well let’s say it is not so accurate.

We try to keep this in mind both for our internally reviewed and researched forecasts and also for OUR verbalized and  espoused forecasts. It is worth doing the same, as very few forecasts are 100% accurate…..Especially in the Future.. (Thanks Yogi)

Have a Great Day!

JK

214-706-4300   http://www.jkfinancialinc.com