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.
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 decisions
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!
Our bet is no lowering of rates, which may be met with disappointment (lower markets)!
Mid-week, Jerome Powell current Federal Open Market Chief (FOMC) hinted that rate movement may be under review – this, the exact sentence is what Capital Market Participants applauded:
“…we will act as appropriate to sustain the expansion.”
As simple as it may sound, it’s meaning is strong. Simply put, the FOMC is aware of headwinds being caused by the tariff talks and are considering it as a factor in their estimate of the growth of the economy. Here is a link to the actual speech for those nerds like us!
Rewind to just two quarters ago when the FOMC was on record saying they planned on raising rates three more times, spurring the Holiday season Hissy Fit … Things certainly have changed –
This headline from Wall Street Journal Yesterday
But HOLD ON … this will make you scratch your head–
Robert Kaplan, Dallas Federal Reserve President – One and a half weeks ago during a lunch presentation! Take a moment to listen, it’s 1 minute and 14 seconds!
Different Audio types for differing browsers – same audio
Timely recording of the event…had no idea how pertinent it would be so quickly!
Feeling a bit like a reporter…. confused reporter, but reporter!!!
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.
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.
Today at 2:30 Eastern time, Jerome Powell, the head of the Federal Open Market Committee (FOMC) will make the decision to hold to his earlier promise of raising rates a tiny .25% and more importantly signal possible future rate increases…
The New Normal
By looking at this multi-decade chart below, it is easy to see that rates are no where near their highs…
After being low so long, the new normal may be lower – market participants seem to think/want so …
From our perch, the best outcome today would be a raise once and “check the data” statement …
We will know in a few hours- do not forget, there are skeleton crews on much of Wall Street – making for a possible sloppy response….
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!
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.