Tag Archives: Interest Rates

Rates… Fastest Increase Review … Looking Forward for Effects … Newsletter Precursor …

This is an updated chart from our favorite buds Visual Capitalist

Last year we spoke of the speed of interest rate increases a lot… given the unique pace at which rates increased AND the super low level of (zero is about as low as you can go) starting point … it became a shock to the financial system….

So in all likelihood, rates are near their top for the foreseeable future….what lies ahead?

We will have more on this in the coming Newsletter but rates 500 times higher than they were just a few quarters ago AND looking to stay higher… there are major implications..

Debt/Financing costs higher =

Better safe investment returns aka Fixed Income/Bonds

More costs to debtors (lower returns for those using debt because of higher costs)

End of companies requiring very low costs to make profits

Have a Great “Fastest Rate Increase Effect” 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

Q2 2023 J.K. Financial, Inc. Newsletter … Tax Reminders – Still time for 2022 Savings … M2 Pilot Advanced Analysis Series Review … By John Kvale CFA, CFP …

Welcome to our Video and Audio Podcast Review of our Q2 2023 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 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

BREAK IN : From Parting Thoughts in the Newsletter

If you are not receiving our street-cents.com blog posts weekly Monday, Wednesday and Fri-day, please reach out and let us know. We have entered the late cycle portion of this economic slowdown and items are moving much quicker than our quarterly newsletter so we are posting frequent and very important items amongst our sometimes-humorous articles for your review and knowledge.

Let’s get going! We hope you enjoy!

Q2 2023 Newsletter

(YouTube)

Last Minute Tax Planning and Reminders

After a small top of the mind reminder that it is ok to pay taxes, we do not want to pay zero today and then pay at a much higher rate in the future, we certainly do not want to pay ANY more than we have to, we go into several reminders….

The SEP and the Spousal IRA – two things we can do now that will help last years taxes….

Important Reminder about reporting :

Just because we did not receive a tax form personally, does not mean that the IRS did not receive some type of notification of that taxable event! If you had a transaction, usually of some out of the ordinary type, that you did not receive a tax form for, we are not out of the woods and you should report it.

Lastly, comments about the possible rolling of 529 into Roth… the answer is still up in the air with additional legal clarity on this… but it cannot start until 2024 anyway!

Happy Anniversary Rate Increases

While hard to believe, the monumental rate increases (fastest of a life time in %) just started about a year ago

M2 Broad Liquidity Measure Tightens

In another – not kidding here – never seen before, M2 one of the broadest measures of liquidity, turns negative and makes our Pilot Advanced Analysis Series…

First spoken about in January, the effects are being felt through the financial system.. but not where we had expected so far….

Have a Great Finally Here Spring! Talk in the Summer!

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

Fed Week, Tough Decisions … New “Happy Bank” Back Stop Facility – The BTFP – Bank Term Funding Loan Program … Bank Headlines Continue – Reminder Thought On Late Cycle Headlines …

A while back we mentioned the FOMC – Federal Open Market Committee, lead by Jerome Powell were in a Pickle .. as at that time one of their regional banks had a research report out that GDP- Gross Domestic Production -Economic Growth indicator – was dropping fast and they were going to raise interest rates against a hot CPI = Consumer Price Index – blunt inflation gauge which would exacerbate the situation.

Fast forward to today and that Pickle is not any better…. maybe even more dill! With the afore mentioned Part 1 Advance Analysis M2 review showing dramatically dropping or the pulling of liquidity out of the system, bank fatigue has been seen and felt and here our comments on Banks being a slave to confidence for solvency.

On Wednesday of this week, March 22. 2023 the FOMC is bound by their goal of slowing that sticky inflation we are all seeing, especially at the grocery store, and best measured by the CPI … BUT, this additional rate increase will add fuel to the fire of less liquidity, AND on top of that our neighbors across the pond just raised rates .50% last week, albeit from a much lower 3.00 to 3.50% rate….currently the US rate is 4.75% …

We did say Pickle ? Right….

Enter the BTFP – Bank Term Funding Loan Program – Happy Bank Program

On March 12, 2023 the Federal Reserve Created the BTFP as another backstop for possible Bank Fatigue ..

Press Release

March 12, 2023

Federal Reserve Board announces it will make available additional funding to eligible depository institutions to help assure banks have the ability to meet the needs of all their depositors

For release at 6:15 p.m. EDT

This new program is a sort of Fed Discount Window on Steroids, meant to improve Bank confidence.

Quick History

Long ago the FED (going back in loose form to the 1920’s – the start of the Fed) started a program for Bank help during stressful times, the Fed Discount Window –

Fed Discount Window –

  • Operation of last resort for a bank
  • Overnight deposit help
  • Anonymous for two years
  • 30 day length, but historically has been lengthened to 90 days
  • Pledge of assets for security – Treasury Securities of all Maturity among other items that are held at par (even value, no gain or loss) or better

BTFP – Bank Term Funding Loan Program

All of the above but the following additions:

  • On Year in Length maximum holding period
  • Pledge of asset securities that may be less than par aka at a loss

The last bullet is the most important and lending a helpful hand from the Fed’s fastest in history rate increase…. as mentioned repeatedly, increase of rates are a headwind to Fixed income aka Bonds, especially longer term bonds….

Some Banks may be seeing a need for immediate liquidity due to loss of confidence and liquidity drain, so this new program essentially gives them liquidity to meet those demands if needed and may have negative assets due to the fast fast rate increases!

Headlines Continue

While this is being written – Sunday late morning in between Newsletter Articles, UBS a Swiss neighbor of Credit Suisse has made a much telegraphed offer to buy their friend out… no idea what the market will make of this starting tonight as overseas markets open…. but something just crossed the mind that we have mentioned many times before…. and may be applicable….

“Headlines are always the worst near the end of the Cycle!”

Have a Great “Heads Up for a Busy Week” 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

Important One Year Anniversary? … Technology Tethered Modern Day Spring Break Concludes… Newsletter Subjects and Neat Graphs but very little content YET … Friday On the Way Back Home soon!

Happy Anniversary Yesterday – Of What?

Long time followers will find this hard to believe ….. but it is true..

What was an important 1 year anniversary as of yesterday?

You’ve got this… but it is not easy…??

The FOMC (Federal Open Market Committee) commenced their FIRST rate increase one year ago, yesterday!

The important part of this is the lag affect … the US Economy is like an aircraft carrier, not a ski boat in that it changes directions SLOWLY! More on this soon… hey it is a Friday… let’s carry on! But worth thinking about …

Modern Day Spring Break

Tomorrow we head back… it was a super fun Spring Break, and in some ways work “Stuff” was even more productive…

Always glad to be available …. heck it’s never “Work” anyway!

Thanks to technology (note battery charger for cell in pic, no plug in this courtyard), the events of the last week were digested or maybe consumed is a better word… and as mentioned in the Mid-Week Wednesday post, were not completely surprising…

More to come as needed in this area!

Newsletter in Motion

The goal was to have the Newsletter complete, but the afore mentioned events took over and while much of the diagnostic graphs have been completed … the verbiage is not … hope my editor, who likes to get a head start does not see this…. oh well…

Have a Great Friday … Super Weekend and talk next week from the regular Saddle!

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

Banking is all about Confidence … Experienced Reminders and Hat Tip Advanced Analysis Part 2 the M2 Money Supply!

We will leave the drama headlines for other sources, as there are of course many that will come from the recent West Coast Bank Failure….

Being our second major Rodeo on this one, the Great Financial Crisis (aka GFC) of 07-09 the first, we are reminded of several things – This is NOT the 07-09 Crisis – Don’t go there

Here are some observations:

  • Risk happens slowly, then all at once (money moves faster than 15 years ago too!)
  • Fears may jump from one to the next during problem times- quickly
  • Events rarely repeat (lightening strike same place twice) but they sure do rhyme
  • It takes a long time for events to play out, not withstanding our first point (this is likely not over)
  • Banking is all about confidence … oddly most recently a storm in the south caused a loss of confidence in gas inventory in our neck of the woods… within hours all gas stations were out of gas! Sound Familiar?

Advanced Analysis Replay – Pat ourselves on the Back Here

Part 2 of our Advanced Analysis – Recall and Reminder – The M2 Discussion

M2 Turns Negative for the First Time and that’s a Long Time!

Posted on January 18, 2023 by John Kvale CFA, CFP | Leave a comment

There are tons of measuring sticks out there…. almost all of which we look at and follow, at least at one time or another…..

What grabs our attention is when the measuring sticks do unique things….or have never happened before!

Why are we watching this?

This draw down of money in the system may put pressure on certain risky players i.e. Companies that use Junk or High Yield Debt!

Closing Thoughts:

We mostly stay away from these “HOT” or maybe even Negative topics, but wanted to let you know we watch this, have spoken in advance of some of the risks, and are using past experience to help guide and monitor the situation!

Have a Great “Experience Matters” 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

When Good News is Bad News … Friday Payroll’s GREAT … But … This Post Jump in Front of Planned …

Had a heavy post for today planned …. about a pretty complicated event occurring in the Capital Markets…just moved it to Wednesday with a bit of travels this week and continued Capital Market movement from a Friday Economic report… wanted to move the later to the front today as it is a bit simpler, but super important as well…

Hang on, both posts this week a bit heavy, but will keep today’s short!

Hot Jobs Numbers Puts Pressure on FED, Rates (short end) and Capital Markets

When GOOD news is bad … it happens in this part of the cycle!

On Friday February 3, 2023 the BLS (Bureau of Labor Statistics) released the “Employment Report” for January 2023…. all about expectations versus actual….

Anyone extrapolating that downward sloping chart – Far Right below. would have certainly NOT EXPECTED that huge January 23 bar… anyone would include all of Wall Street and the FOMC – (Very lagging reading, likely revised, BUT much different from expectations)

New Jobs Expected 190k ACTUAL 571K — Ya ya will be revised, but for now is what Wall Street has…

The good news is from this report lots of jobs and more than expected…. Bad News… Fed may continue to be aggressive in slowing the economy… aka Higher short term rates…

Big move in the 2 Year Treasury, one of the most in sync with Fed rate moves…

Ok… all caught up from last week…be sure to have your coffee before reading Wednesday’s post!

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

December 2022 Financial Planning and Capital Market Review – Secure Act 2.0 – By John Kvale CFA, CFP

Hello and Welcome to our December 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!

December 2022 Video


YouTube

Financial Planning Tip(s)

Secure Act 2.0 – Passed on 12-27-22 Quietly …. Shhhhh we are working through the details

On December 27, 2022 a HUGE bill … over 4000 pages, was passed…. while not sweeping in our neck of the woods, there is one main adjustment….

RMD – Required Minimum Distributions are pushed out again to age 73! Not Kidding!

Capital Market Comments

Rate Increase – Fed Raised rates for the Holidays

In December the FOMC (Federal Open Market Committee) led by Jerome Powell raised rates, but only by .50% … but it was a raise…

Have a Great Day, Talk to You at the End of January – Happy 2023!

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

Q1 2023 J.K. Financial, Inc. Newsletter … Estate Tax Law change Heads Up …. Higher Rates for Longer from Stubborn Lagging CPI Inputs … Personal Reflection … By John Kvale CFA, CFP …

Welcome to our Video and Audio Podcast Review of our Q1 2023 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 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!

Q1 2023 Newsletter

(YouTube)

Personal Reflections –

Entering the 36 year in the Financial and Capital Markets world, a lesson was learned this year (see below) we want to thank everyone for their well wishes, patience and confidence as we went through a unique “Changing of the Tiger Stripes” event this year!

Higher Rates – Longer – CPI Stubbornly High

CPI Causes Tiger Stripes to Change?

Very Lagging Rent and Shelter Numbers keep pushing CPI

Estate Tax Laws Set to Change – Heads Up

At the end of 2025, putting January 1, 2026 into play, without any tax law adjustments the Estate Tax level will adjust back down to somewhere between a $7 to $8 million or $14 to $16 million for couples level. 

While Estate Tax is not a huge revenue earner for the IRS, in our opinion Estate tax is in purpose is to affect the very largest of the states think  $100 million and up. 

Additionally the IRS is having trouble completing regular federal tax returns, by some estimates some 15 to 20 thousand taxpayers are still waiting on their regular federal returns to be blessed by the IRS from 2020 to present.  Lowering the Estate Tax level to an extreme low, while may sound good in the headlines, impracticality, it will likely create a huge bottleneck and more trouble than money earned. 

Bottom Line – We are on this in advance!

Happy New Years and a Great Start to 2023!

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

How Snowflakes are Formed … Very Relevant in Our Neck of the Woods recently… Preview of more AI (Artificial Intelligence) and good ole Federal Funds Rate (Increase this week)

Ya ya … it was 100+ degrees for like 60 days this summer….those afar go ahead and giggle (many have already jabbed- tha’s cool and deserved – haha)… in the 20’s suddenly and the schools in our area were closed T-Friday — Make up Weather days here we come…. amazing how out of sorts the schedule can get with just a few snow days….digressing

How Snowflakes are formed

Of course from our buds at Visual Capitalists… thought timely for sure!

Travels Coming – Previews

With some business and pleasure travels planned – south and north soon, early work on posts are on deck… Want to talk more on AI (Artificial Intelligence) if you missed it, we spoke about it here- who knew it would be so cutting edge… not us – and our good ole friend Federal Funds Rate which were raised this week….

Ahhhhh….today is a “Thaw out Friday” and “See how much School can be forgotten in Three… no Four Days” Weekend…

Enjoy your Friday and weekend1

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

Happy Holidays … Gentleman’s Agreement Held? Will see … Mostly Out of Office Over the Holidays … Link to TV Post …

Happy Holidays ….. Over the remaining days of the year, there is a “Gentlemen’s Agreement” to basically do no harm…. this agreement was violated in 2018 by Guess who? Non other than an aggressively increasing rates FOMC (Federal Open Market Committee)

Not sure if you caught the news on Wednesday but the afore mentioned FOMC raised rates by .50% this week…

Not sure how this plays out, but Jerome Powell (FOMC chair) may not be bringing presents….

Holidays Out of the Office

While we will have electronics… (we always have electronics) …. we are planning on being out of the office most of the Holidays …

For the safety of the streets, with all of our gangs getting out mid day, we will also be out mid day…

Oh… here is the link to Wednesdays post here on our blog….forgot Youtube embeds do not make it through email servers these days….

Happy Holidays and Seasons Greetings!

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