Tag Archives: Jerome Powell

From the Road … FOMC Takes Action Last Night in Response to Shutdowns and Economic Slowdowns

Not wanting to bring a knife to a possible gun fight, the FOMC (Federal Open Market Committee) led by Jerome Powell announced multiple actions in response to Corona and the related shutdowns last night.

FOMC Lowers Rates, Lowers Bank Reserves and Adds Money

On Friday a coalition of private and public groups agreed to begin more testing for the Corona Virus… not surprisingly if you are able to test more, there have been more findings.

Last night the FOMC led by Jerome Powell announced multiple measures to help economic activity:

  • Lowering of Short Term Rates
  • Lowering of Bank Requirements AND encouraging Banks to lend to businesses, especially small businesses with the extra freed up reserves
  • Purchasing of Treasury and Mortgage Securities for Liquidity and lowering of rates

Friday, I mentioned multiple ways to think of the current events… given the above events, here is another example…

  1. The FOMC did all of this, it must really be bad…
  2. Not wanting to get behind, the FOMC is taking advanced actions to help stay in front of disruption and possible slowness…

Choice one is easy and likely will show up somewhere in your sights, if it has not already …. again, choice two is the positive, high road choice, and will only likely be seen here today!

Yes, events are making the Spring Break Trip hard to focus on family and friends, but in a strange way, maybe it is good to be out of the office!

Careful what you intake… drama rises to the top!

Rest assured, as you can tell, we have complete remote access…and again, we are a conservative firm by nature!

Have a Great “FOMC No Knife to Gunfight” 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

 

 

 

 

 

Interest Rates Presenting an Opportunity, Eventually … Current Freddie Mac Mortgage Rates as of Last Week

Really like to work on articles a few days, to even a few weeks (ever so often months) in advance … repeat visits to the draft make for a better post as different moods make for different views.

Well…given the speed of Capital Markets lately… a second or third look may garner a loss of possibility.

Break In: As mentioned above, things are moving quickly, yesterday early in the AM, FOMC (Federal Open Market Committee) chaired by Jerome Powell lowered interest rates by .50 or 50 basis points as an insurance policy against slowing economic conditions. This does not directly affect loan rates, but speaks to a slower economic situation, which does effect rates across the board!

More on this at a later time…. but the following is an all time inter-day low yesterday for the 10 year treasury yield…at least for the moment!

img_6213

.91% – this from the cell, such the unusual format.

Break In Again: Interestingly, after a big rally on Monday and another set for today, the treasury yield is unexpectedly staying low and not rising dramatically in yield, which is what one would expect. This actually gives loan rates time to catch up in their possible slower decline – making this exercise all the better!

Now… let’s carry on …

Fixed Rate Loans, Especially Long Dated, such as 30 Year Mortgages Need Review

Not withstanding the comments in the opener, interest rates have dropped so fast on Virus fears and possible slowing economic conditions as a result that some loans may have not completely caught up as of yet…

3-2-20 Chart of 10 year Treasury

That is an all time low- WOW!

Freddie Mac Rates

Here are the latest average mortgage rates from Freddie Mac as of last week… they are posted only weekly….

2-27-20 Freddie Mac Avg Rates

Now is a good time to review any fixed rate loans, ESPECIALLY longer dated ones… in refinancing a mortgage, here is a detailed post, the following is the most important nugget from that post…

Think 18 months cost break even – We like to have the saving from the refinance cover the cost of the refinance within 18 months – i.e. Person with $30k mortgage at 5% probably would not need to refinance to 4%, but a $3 million mortgage may be smart to refinance from 4.25% to 4% or the like, if the numbers work out.

Have a Great “Fast Moving Markets” 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

Shhh … FED Quietly Pauses … Finally

The FOMC (Federal Open Market Committee) led by Jerome Powell, quietly paused this week.

FOMC No Change

Mid-Week, the FOMC announced no change in their controlled short term interest rate.

12-16-19 Fed Funds Rate

We have been vocal about not lowering rates moving forward, to keep some gunpowder for the next recession.

After a market desired multiple small lowering of rates earlier this year, this week, the FOMC effectively did nothing, and did not disturb Capital Market Participants… finally.

They also made no future promises, again, with market blessings…

We like it!

Have a Great Friday!

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

Drink from a Fire Hydrant of CEO’s and Company Executives – Friday

We were happy to receive our invitation to a local gathering co-sponsored by the CFA Organization (Chartered Financial Analyst) – an organization that I was president of a few years ago and maintain contacts and membership.

Wednesday and Thursday of this week, in rapid fire form, over 100 CEO’s and C level executives from all over the country, presented their company to groups of folks for a better understanding and possible investment.img_5476

We cherish this event every year, as it gives us a great candid feel for what’s going on in the economy and we get to meet a wide variety managers in different industries…..

So here’s a quick review:

 

The energy companies that we sat in on where mellow, but longer-term positive,  and much discussion about lower debt, and future higher prices, with lots of hedging as topics. Overall the energy executives felt good long-term but we’re less certain in the very shorter term. Cautiously positive, but managing very well.

Listening to a insurance company that deals with high risk properties – high risk because they’re on one of the eastern shores that is the recipient of bad weather, tactics for maximizing revenues, without passing higher expenses on to their customers, due to inelastic customers, were the topic as well as  fingers crossed for no major bad weather.

The first days keynote speaker for lunch was fantastic:img_5467

“How Government Policy Drives Stock Market Returns” was the title of his presentation.

His conclusion, Politics affect Capital Markets but it’s not sustaining,  what truly affects Capital Markets longer term is policy. We could not agree more … when new rules are instituted, that’s when talk becomes action and you have a definitive line in the sand.

Maybe something we should all remember as we enter a Presidential Election in the coming year!

On Thursday a delightful visit with the CEO of a local steel company, her thoughts on policies, tariffs which surprisingly were somewhat muted. Tariffs did not seem to bother her, but a recession would not be welcomed. Cyclical concerns in a very cyclical industry and defense of such cycles were very well presented.

The lunch speaker of the second day was also very interesting and had two main points:

Jerome Powell and China

img_5485

This chart was interesting and may make future discussions, the gist is that when rates have been lowered while an inverted yield curve occurs, it deters the recession… the recession occurs when raising DURING the inversion ….. Hmmmmm ….first time we have heard this, but it peaked our interest….

Regarding China… In a nutshell he felt like China would agree to a multiple part Tariff contract and this was someway a necessity due to China’s current economic situation, and also most politicians stance against China and their tariffs, offering no option for relief.

In conclusion, from a very high-level, everyone was well aware that this economy is not growing extremely fast, but it’s still growing. Many shared our thoughts that we may have a soft recession but a very hard recession is likely not in the cards. Very few touch the political landscape and for the most part we’re generally positive.

Ahhhh…. a HEAVY Friday for you huh ?

Apologies, but we have a short week next week and wanted to get this to you as we know you were hanging on the edge of your chair waiting…. HAHA … kidding of course, recall this is a working Diary for us as well….

Have a Great “Executive Updated” 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

Good News From Interest Rates – Friday

While the FOMC (Federal Open Market Committee) led by Jerome Powell have been lowering short term rates, see notes by us here, here and here….

Until just recently, longer term rates were following short term rates down…

Good News From Interest Rates

While the FOMC does control short term rates, they have much less control of longer term rates and actually by lowering short term rates they were hoping for this….

Higher long term rates are our friend … Possible reasons:

  • Market participants way of being more positive
  • Tariff talks proceeding
  • Less fear
  • Expectation of future growth
11-7-19 Ten Year Treasury Update

10 Year Treasury Rate

If we showed a longer term chart you would see it still has a ways to go as we are only nearing 2% – half full guys… have to start somewhere…  For now, good news!

Newsletter Under WayQ 4 2019 Newsletter Banner small

We have some really neat items under way for the Q 1 2020 (yikes- did we just say that) Newsletter… we have found some great Government Public sources of information that we think you will really like – now on to pulling it all together for brevity and clarity — never thought those research paper skills would be so used – Sorry to all the English teachers that did not get full effort..yes you told me so! haha

Today is a chilly Friday and Thanksgiving is just around the corner…

Have a Great Friday and Weekend!

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 Walked the Tight Rope Perfectly – Preview of New Scammers You Need to be Aware – Friday

On Wednesday July 31, 2019 the FOMC (Federal Open Market Committee) led by Jerome Powell and attended by our own Dallas based Robert Kaplan, did something they have not done in over 10 years…. LOWER RATES.

8-1-19 FOMC FED funds rate

While we crowed ‘Not Necessary” they walked a great tight rope…

In this post announcement article…. and  somewhat funny CNBC article, over a dozen … so called “Expert” firms completely disagree in all directions on what the Fed will do next!

PERFECT!

With disagreement on what they will do next, no expectation will be ….. well … EXPECTED!

If I were a Fed official, that is exactly the way you want it … freedom to stay put, lower or raise without fussy Market Participants all weighing in on the same side of the fence.

They also stopped the winding down (selling reserves back to the market) of balance sheet reduction, which was a net tightening.

8-1-19 Total Bank Assets

So let’s say they are in neutral now and have created the freedom to drive wherever they want! Nice..

Sorry we got a bit deep on this, this week, but we felt it important and wanted to keep you in the know!

Speaking of in the know – We have collected a few new examples of scamming that we will bring to your attention next week – One so clever it’s hard to believe!

Ahhh…but it is a Friday….

Care to guess what today and next week brings?

tennis-2042723__340

Last looong, big tournament of the summer…..

Thanks goodness for a new unlimited Cell plan and neat technology … Will be in touch!

Have a GREAT Friday/Weekend Summer day(s)!

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

All Eyes on the Federal Reserve – Will they LOWER (yes you read that correctly) Rates? Audio from Local Fed President, Robert Kaplan, on how the decision is made!

Ok…so the Social Security event forced us to pull together new audio equipment – we never knew how quickly we would utilize these new tools for events such as what follows – We hope you enjoy these pertinent comments directly from the horses mouth!

Unthinkable just a few quarters ago…. Market Participants are thinking there may be a FOMC (Federal Open Market Committee) LOWERING of rates – yep lowering!

This week the FOMC will announce their decision, based on many factors as you will hear from the attached audio – what makes this weeks meeting special is the slight expectation of a lowering of rates and this meeting includes the FOMC estimates of the economy and an interview with chief Jerome Powell post announcement –

Now – what they are looking at to make the decision!

At our recent CFA (Chartered Financial Analyst) sponsored event, we were fortunate enough to have an hour with Robert Kaplan, Dallas Federal Reserve President. We were also fortunate enough to get audio of the event…

What the Fed Watches to make rate decisions20190528_170905120_iOS

According to Robert Kaplan, Audio below, he along with his fellow FOMC chiefs watch the following, just to name a few items:

Cyclical Factors – Short Term Indicators – Less important to Kaplan – I.e. CPI, Earnings, Interest Rates, Employment rates – basically all the items we read on a daily basis or are bombarded with in “Breaking News! Like format – Interestingly and very correctly from our perch, Kaplan is not a big advocate of placing much weight on these factors – see next as he mostly ignores the short term noise – Wisely in our opinion – see audio below

Structural Factors – Longer Term Trends – MORE important to Kaplan and becoming more important to the entire FOMC board due to his repeated review – I.e. Population growth/demographics, Government Debt, Corporate Debt, TECHNOLOGY INNOVATION (huge importance), World Growth – Again, totally agree – see audio below

Individual Company Response – Kaplan talks to over 30 large and small company CEO’s monthly along with continued in- person visits with companies to help determine, just what the economy is doing along with longer term Structural disrupting factors – see audio below

Group Input – With multiple chiefs from a dozen districts bringing their collective input to the table, a theme hopefully develops!

Here is the Audio in different formats for different devices – with three different types we hope at least one works on your device!

MP3:

Wave File:

OGG File:

Our Thoughts

Our bet is no lowering of rates, which may be met with disappointment (lower markets)!

Have a Great “FED Decision 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