Tag Archives: Inverted Yield Curve

September 2019 Podcast Video, Financial Planning and Capital Market Update – By John Kvale

Hello and Welcome to our September 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!

BREAK IN :

November 14th from 6:30 to 9 PM – Perot Museum – For the Evening

Newbies –

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

September – 2019 Video

Financial Planning Tip (s) –

RMD Season is here – Is your DOB between 7-1-48 to 6-30-49 ?

In this post, we reminded all of those with the unique option of deferring that first RMD an extra year on the perils of the double income from that deferral decision…..

Defer at your own risk and make sure you will not jump a tax bracket by doing so!

Mortgage Rate Update – Time to Refinance?

Mortgage rates (the drop there of – in rates) caught our attention and in this post, we reminded of eleven (just counted them – was surprised so many) items to think of when/if you should refinance – its a big decision and there are many variables,  if you didn’t catch the post and have been in your loan for a few years, be sure to take a look … another reminder will also make its way to you in the Q 4 2019 Newsletter –

30 Year US Avg Mortgage Rate

 

Capital Market Comments –

Inverted Yield Curve Update

In this post, early in the month we reviewed the definitely inverted yield curve…. and spoke to this being one of the slowest recoveries on record…. just after our post, the yield curve did normalize on positive trade talks…. Look for more details in the coming Q 4 2019 Newsletter-

9-3-19 three month less 10 year fred graph

FED Lowers Again, but only by .25%

Jerome Powell Chief of the FOMC (Federal Open Market Committee) lowered rates by .25% to the 1.75 to 2.00% range, which will directly effect our overnight money, such as checking accounts and money markets…

Their fear is the prior mentioned Tariff saber rattling causing an extended slowdown….

We prefer they save that gunpowder for a real fire, but just pouring a small bit of gasoline on the coals is ok for now!

FOMC Rate now

Have a Great Day – Talk to you at the end of October!

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
street-cents

Inverted Yield Curve Update … Current Expansion Speed Reminder … An Opportunity Created ? …

Maybe an over crow of the Inverted Yield curve … but take a look at it’s predictive nature for a recession – darkened areas are recessions:

9-3-19 three month less 10 year fred graph

In case (very likely) you are looking at this post on your cell … at the far right of the above chart, the line dips below zero – this means that that 90 day FOMC/rate is higher than the 10 year treasury – YEP that’s inverted and as far as we can see …  a predictor of a recession –

DON’T JUMP YET!

Recessions come in all forms, and by definition is two consecutive quarters of negative GDP (Gross Domestic Production) –

Remember how slow our recovery has been? This is that last 70 years of expansions, the weakly line on the lower right is our current – yea, its longer, but slower and weaker than all of the others, maybe even the “Runt” recovery compared to all the others …. from our Friends and JPMorgan as of 9-1-19!

9-1-19 last 70 Years of Expansion - JPMorgan

Can a car that is going slow, really crash hard? Hmmmm…

All of this has also created an opportunity — tease, tease, tease….

Have a Great Friday, talk to you 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

Q 3 2019 Newsletter Video Audio Podcast Review By John Kvale

Welcome to our Video and Audio Podcast Review of our Q 3 2019 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

Let’s get going!

Q 3 2019 Newsletter

Click for PDF/printable version of Newsletter

And here is your review!

Why We Write!

Here we are again:20190630_133340742_iOS

We had planned on leaving this out due to repeated appearances here in our blog and in the Newsletter – but in true “Break In” like format, as this post is completed and the video – hopefully the local wifi is strong enough for uploading … the time is spent in Austin Texas at this moment in another rain delay- the same exact place the original article was written!

Tax Talk/Review

Change Likely the New Normal

After two decades of only minor changes in the Tax Law… it was overhauled and many changes were made that were reflected in our 2018 tax returns.

This neat chart is a nice reminder of the current brackets and can be helpful in income distribution tax bracket management.
Tax Bracket Graph

Inverted Yield Curve Update

This chart featured in our Newsletter is a slightly different term comparison of the 2 year (we like the 90 day) versus the 10 year, but a wonderful historical view of inversions and recessions. We have fully inverted for over a month now and if we use this historic guide as our yardstick a recession would be in the cards mid year 2020!

JPMorgan Inverted Yield Curve History

Social Security Update3-20-19 - Invitatation to SS Info Event with Tom Clark_Page_2

We have begun a detailed review of the late spring event and it is going great. Weekly we dissect a section of Social Security Expert, Tom Clark’s presentation and give handy links to greater details and explain in bullet fashion the main points. Here is a link to the Audio on a special page here at our blog and you can also click here for a link that will pull up each complete post!

There are tons of nuances regarding Social Security, Disability, Death Benefit and Medicare decisions…we look forward to discussing many more with you as the summer weeks occur!

We hope you enjoy … talk to you near the end of 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

Inverted Yield Curve Update – Break In: Chance Visit with Robert Kaplan, Dallas Federal Reserve Chair

Break In:

After scheduling this post about 24 hours before now, yesterday an almost all day meeting with the local CFA (Chartered Financial Analysts) organization, a local deep level investment organization that found yours truly as President once upon a time, featured the key note lunch speaker of none other than … Robert Kaplan, the current Dallas Federal Reserve Chairman…

kaplan-lb

There is not a Federal Reserve Member, much less a president that does not have the Economy, interest rates, and notice of the inverted yield curve on his mind… His hour lecture was recorded… using one of the neat handy recorders from our Social Security event…. unfortunately at the time of this writing, the darn recorder would not be friendly with the laptop and share the speech….grrrr

Look for more in our coming Newsletter … and eventually the recorded conversation here … fingers crossed!

Now back to the original post!

It has been a while since we discussed the Yield curve and the inversion there of…

Look for a more detailed article in the coming Newsletter, but for now, the yield curve has inverted again, but this time with greater spread!

As a quick reminder, an inverted yield curve is when longer term rates are lower than shorter, an unusual situation as generally the longer the term the higher the rate so as to adjust/compensate for risk…

Our favorite term and the most useful in our minds is the ten year versus the 90 day yield…

Currently the 90 day treasury is yielding about 2.35% and the 10 year treasury is yielding 2.23% – yep, that’s inverted ….

Chart from St. Louis Federal Reserve

5-28-19 the 90 v 10 year

It is hard to see in this chart, and granted, it is a small inversion compared to recent times, but we are inverted and have been for the second week since mid-March, when we first inverted for five days….

Again, more in the coming Newsletter, but we are watching closely!

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

Q 2 2019 Newsletter Video Audio Podcast Review By John Kvale

Welcome to our Video and Audio Podcast Review of our Q 2 2019 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

Let’s get going!

 Q 2 2019 Newsletter

And here is your review!

Capital Market Talk

Recession and the Inverted Yield Curve

Ask any long distant runner what happens when they start out too fast and they will tell you it is not good new – The saying goes for every minute you go out too fast, you come back two minutes slower than normal…

In our main capital market article we discuss the reasons why we may have a recession by definition, but why it may not be a big deal (hopefully).

The Inverted Yield Curve (Short term interest rates higher than long term rates) and infrequent event, did occur for five days – so far – just after our Newsletter went to the publisher. The Inversion has been a good signal of recession, EVENTUALLY – some times as long as two years in advance.

They Don’t Want Your old 401k

A recent Cerulli study finds that once you leave the company, most really do not want your funds anymore. We have long suspected this.

  1. Frequently a short wait time turns into a long wait time with a different and much more general help line.
  2. Forms may be much more difficult to acquire.
  3. Paper work received, saying take it or we will distribute it and you will have taxes and penalties.
  4. Rolling over into an account that is TERRIBLY hard to get out and has hurdles to jump through, high monthly service charges as well as limited investments, if any.
  5. A general feel of everything is hard to do, once again explaining the Cerulli study results.

Are a few items we have run into over the years!

Iron Clad Trustee

General order of Trustee or other important people to execute your wishes when you are incapacitated or deceased, generally go like this:

  • Spouse
  • Sibling
  • CLOSE friend
  • Similar Aged Relative
  • Grown Children

As we can all imagine, this list can easily be very short and insufficient.

In our deep dive of the Institutional Trustee Services, we discuss the handiness of having such a great service as well as the ability to offer these services ourselves.

Choose Your Beneficiaries Carefully

In this article that fit nicely with our Trustee article we mention different types of Beneficiaries and most importantly. Make sure you confirm that your beneficiaries are correct as this will over ride you other documents, including a Will or Trust.

We hope you enjoy … talk to you 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

Why We don’t like to Move Money on Fridays – Break In – Inverted Yield Curve Update

Break In – On Friday the Yield Curve Inverted for about three hours – we have spoken at length on this subject, but want a little more time to see market participants reactions as well as Fed officials before making a current update.

As a reminder the Inversion of the Yield Curve has a strong recessionary signal some time in the future, frequently years in advance –

Friday’s inversion triggered a series of sell programs that clearly did not do their homework on the possible eventual timing of a recession.

With a Newsletter already in print – coincidentally we had much talk about recessions, and even a definition. The two hour inversion did mess our Newsletter up a bit as until Friday it had not inverted – we will update you more with clarity soon!

Back to our regularly scheduled program/post…

Why we don’t like to Move Money on Fridaysfriday-1270362__480

As a weekend nears, specifically Friday … many’s favorite day of the week, we tend to dislike the movement of funds.

The reason is two fold:

  1. If something goes wrong, the weekend can be/seems long to determine a correction
  2. Skeleton crews frequently man the ship on Friday’s- especially during the summer

Our absolute least favorite movement of funds is sending to all new instructions on a Friday – we rarely do this – and never do before a long/holiday weekend!

There are of course times that money just HAS to move on a Friday, such as the closing of a home (in an abundance of caution, we frequently send funds on Thursday) or a last minute quick fill up of cash.

Regularly scheduled deposits are fine as the calendar determines this and being on such a regimented event, trouble is less likely.

Deposits or draws as we like to call them are a different story. When we are pulling funds from another account, we see the flow of funds from our end and can easily Shepard/see problems.

In a safe over sorry posture, look for us to recommend Thursday or our favorite day, Monday, for the movement of unscheduled funds.

Have a Great “No Friday Money Movement” 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

Calls of an Inverted Yield Curve – Premature SO FAR –

This week a funny thing happened … on the yield curve that is, garnering a lot of attention. Those following our writings, here, here, and here, know we are watching for an inverted yield curve since it has a good predictive nature for recessions – a topic for another discussion. Heck, even Kent Smetters, the Wharton co-host professor mentioned the yield curve had inverted.

Inverted Yield Curve? Kinda!

Here is a good picture of a normal yield curve

 

20180424_122733810_iOS

Inversion occurs when the short term rate goes higher than the long term rate i.e. the 2 year greater than the 10 or even more clearly, the 90 day rate greater than the 10 year…

What happened this week were the 2 and 5 year yields, slightly inverting –

Does this count?

Maybe? BUT the real predictability is from the afore mentioned short and long, not short and slightly longer short…

Here is the 2 and 10’s, followed by the 90 day and 10’s

12-3-18 2 year versus 10 year daily12-3-18 90day versus 10 year constant

It may invert, and we will let you know when it happens, if it happens, but for now, in our minds ….

No inversion yet, but we are watching close!

Have a Great “Not Inverted Yet” 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