Welcome to our Video and Audio Podcast Review of our Q3 2021 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 – Below is a new format for our Newsletter, hoping this pulls through on your Cell Email!
With this post already set to go, I ran across this interesting chart late in the weekend and thought it worth adding- looks like others are interested in at least the Inflation answer: 2004 to current Google Trends Searches –
Blue = Inflation Searches
Red = Deflation
Yellow = Recession
Ok, back to our regularly schedule Post!
n spring of 2020 during the beginning of the countrywide lockdown‘s we had the opportunity to attend a conference that we had never chosen to do before due to logistics, cost, and length of the conference (7-10 days). John Mauldin SIC Strategic Investor Conference, after 18 years of consecutive conferences Mauldin shifted last year’s and this year’s conference to virtual and we were happy attendees.
The conference this year lasted a total of two weeks and had 45 speakers of which about 35 were Capital Market related with the other 10 being macro-economic or specific industry such as doctors.
Views: Number One From the Conference – Go Away FOMC – You Have Stayed Too Long
View number one and shared by every market related expert, the federal reserve is overstaying their welcome and should immediately stop asset purchases and begin talking about increasing rates. The main reason for these shared views are because asset levels have become inflated across almost all assets according to the experts and be continued purchases are no longer necessary given that capital markets are orderly.
Number Two – Inflation Is Coming – Via Jim Bianco
View number two shared by approximately 75% to 80% of the Capital Market Professionals were there will be some type of inflation. About half of the professionals felt like inflation would indeed be transition, which is what Jerome Powell (FOMC President) and the federal reserve are saying the other half felt like by the FED continuing to purchase assets a change from the long deflationary era of the last four decades to a longer-term inflationary era over the next several decades is ahead.
None of the pro inflation experts predicted runaway inflation that we had in the 70s but the most aggressive inflationary person that we heard was Jim Bianco of Bianco research. In one of many slides, Bianco pointed to the rise of the 10 Year Treasury, below and a belief it would continue to rise.
10 Year US Treasury Yield
Number Three – No Inflation, Back to Slow Grow – Via Lacy Hunt
View number three, shared by the remaining market experts emphatically, there will be no inflation and we will return to a slow growth environment similar to what we had coming out of the financial setback of 2007 -2009.
The most emphatic believer of this deflationary trend was Lacey Hunt who oddly enough shared the stage with the aforementioned Jim Bianco, and has been an expert in the capital markets for 40 years.
Mr. Hunt‘s main beliefs on why deflation will continue are the debt occurring by the afore mentioned FED asset purchase and ageing demographics.
So what are we do with all of this information and where does that leave us?
With such dissenting opinions it’s clear that someone will be wrong and things never work out exactly like people think, so some may be correct in a portion of their view an incorrect and another.
If Bianco is correct and inflation occurs and remains this would lead to substantial pressure on long duration assets such as the value of real estate, low earning but fast growing equities, long bonds such as the 30 year treasury and higher borrowing costs across the board. This would be a dramatic change from the last four decades and more rhyming of the late 70’s, but again not to the extreme.
If Hunt is correct, this will be a continuation of what we have seen over the prior four decades. Lower long term rates, lower borrowing costs, continued slower economic growth, lower expected earnings and continued upward pressure(tailwind) on the above mentioned longer duration assets.
The good news in monitoring each of the various forecasts we have easy to read and follow economic numbers such as the CPI and the level of interest rates, as well as federal reserve speakers talk in public venues.
In closing all of professionals believe most asset prices were elevated. High asset prices are not a direct reason for them to come down, and elevated asset prices can be grown into, like the 13-year-old growing quickly into the 15-year-old clothes. But high asset prices demand discipline and care as increased volatility is likely.
Have a Great “Inflation Deflation Tug Of War” Day!
As noted with our excited post last week, we are once again in the throws of the John Mauldin SIC – Strategic Investment Conference.
So far this years most ear catching moment has nothing to do with finance but comes from two Doctors who are repeat speakers from last year to give the group a Covid related update.
Their predictions last year (think at a time where a lot of uncertainty abounded) were spot on and almost unbelievable accuracy. So accurate they hardly needed to update their presentation.
Knowing we teased you with the headline, stay with us please … and take a quick moment to review these two Doctors backgrounds/Credibility! – Pretty Awesome stuff!
These guys are not show boaters!
So maybe not Dr. Culver’s best look … think super smart professor we have all had in our life!
Make it to 2030 and You will Likely Live Over Age 100
My mouth almost dropped when I heard these two stately Doctors utter the words above.
There is a super cool chart that the Doctors had in their slide deck, and of course it is the ONLY slide that had “Not for Reproduction” …. so in honoring their request … here is a recreated slide from their predictions.
Since 1850 average mortality has increase 2.5 years every ten years.
From 2020 to 2030 the Doctors believe we will see an increase age expectancy of 30 years, yep THIRTY!
That is the huge jump in the chart on the very far right upper expected mortality age 112 !
Much of this is due to the expected pull forward of knowledge earned from Covid and the various Vaccines.
The Doctors repeatedly mentioned that they expect a youthful elder years as well, not just extended longevity!
Recommended Life Style and Personal Health Monitoring
Here is a quick Legend for the abbreviations:
Blood Pressure
Body Mass Index
Fasting Blood Sugar
Cholesterol
No Tobacco
Stress Management – VERY INTERESTING! Newly added by the Doctors
For the record, those are not low hurdles using my own situation as an example!
Look for a more detailed review of this in the coming Newsletter!
Have a Great “Make it to 2030, live to over 100” Day!
Being probably the least fan of SNL – Saturday Night Live – in our family, it is on the calendar to attempt to stay up this weekend and watch Elon Musk host SNL. Once announced there has been some grumblings among actors, a fiery Musk Tweet and fiery Tweet response that are likely no more than showmanship, but like many I can’t wait to see the show!
Ratings increase? Bet so!
John Maulden SIC conference
Last year the John Mauldin SIC – Strategic Investor Conference – was available virtually … and once again it is this year. This conference lasts for two weeks and started this week … has close to 50 high-powered guests, with complete replays and slide decks … we are excited to present the high points of some of these speakers just as we did earlier this week with the Warren Buffett Berkshire Hathaway annual meeting and our Q 3 2020 Newsletter …
Taper Talk – Floating the Balloon ?
Local favorite Dallas Federal Reserve chair Robert Kaplan who is not a voting member of the FOMC but still remains on the board this year was the first to mention the word Taper – Well he didn’t really mention taper but mentioned the slowing of asset purchases.
No more than a few days later Treasury Secretary Janet Yellen also mentioned something with regards to asset prices and the possibility of slowing purchases.
With a rather yawning capital market response, it would not be beyond a reasonable belief that they are floating some of these out to see market responses.
Look for more comments from us on this and a very watchful eye for more speakers slowly adjusting the aircraft carrier.
Friday
Ahhhh… but today is a Friday heading into a wonderful spring weekend and a possibly very entertaining SNL skit tomorrow night!
Looking at the chart of the 10 year treasury, we can see rates have finally settled and we are hearing the volume of lenders overflow has calmed as well. While the 10 year is not an exact predictor of Mortgage Rates it is loosely correlated.
Now may be a good time to check your Mortgage Rate and consider refinancing!
Here is one of our favorite and most popular posts on the items to remember when you are getting a mortgage and especially when you refinance.
The Virtual Pivot
In true making Lemonade from Lemons fashion, not only have we been able to access the John Mauldin event, with over forty hours of speakers, but a National CFA(Chartered Financial Analyst) event and several others were completed virtually.
We have so much awesome information to share in the coming weeks…. oddly, that we would have not had access to if they had been held live!
Looking forward to sharing…. tons if info!!
Capital Market Comments – They Came Out!
The Look Through Continues
With current earnings being less than stellar, you may ask why the markets are clawing their way back?
It does appear investors are looking through the valley and attempting to price in what a recovery may look like.
The Tuesday after Memorial Day offered multiple openings across the country…. Wall Street wiped its brow as people came out!
Expect bumps, and headline shocks, both positive and negative … but that’s why we are happily conservative investors at heart!
Have a Great Day – Talk to you at the end of June!
Choosing not to attend a conference held by John Mauldin for over a decade, due to travel constraints, cost, and bad timing of the conference, this year his big conference of the year went virtual and the price dropped by a two thirds.
Not only because the above, but with a total of 42 speakers and counting, slides and transcripts along with a downloadable MP3 of each speakers talk, Lemonade from lemons occurred, and we signed up.
With over 40 hours of information, we plan on dedicating much if not all of our coming Newsletter to reviews of the speakers … the goal of the conference is to look into the future for “Economic Risks, Challenges and Opportunities in a Post Covid 19 World”
Meet Ian Bremmer AGAIN
Back in 2016 at a national conference (live, in person) we first crossed paths with Bremmer (a stand out thinker and Political Scientist) and wrote about his comments on the then coming election here.
Fast forward to today, and here are a few bullets from his virtual talk we found interesting.
Taking 10% out of the Economy now may not feel as bad as times before since we are wealthier now.
Maybe this is the crisis needed to really make some big items change.
Unilateralism, not isolation. I.e. Canada, US, Mexico will become more connected unilaterally.
Will we have a new global order? Nah, just an acceleration of what was happening anyway.
Could this be Goldilocks Economy – Yes because this Crisis could bring GEO Political institution updates –
GEO Politics are cyclical, just like Economies.
Look for more details, as mentioned above in the coming Newsletter…. but you get the gist… some good stuff!
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!
Background
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.
Inflation is Coming, No it Isn’t Deflation Is On the Way??? From John Mauldin‘s SIC – Strategic Investor Conference – Jim Bianco and Lacy Hunt
Break In : Interesting Google Trends
With this post already set to go, I ran across this interesting chart late in the weekend and thought it worth adding- looks like others are interested in at least the Inflation answer: 2004 to current Google Trends Searches –
Ok, back to our regularly schedule Post!
n spring of 2020 during the beginning of the countrywide lockdown‘s we had the opportunity to attend a conference that we had never chosen to do before due to logistics, cost, and length of the conference (7-10 days). John Mauldin SIC Strategic Investor Conference, after 18 years of consecutive conferences Mauldin shifted last year’s and this year’s conference to virtual and we were happy attendees.
The conference this year lasted a total of two weeks and had 45 speakers of which about 35 were Capital Market related with the other 10 being macro-economic or specific industry such as doctors.
Views: Number One From the Conference – Go Away FOMC – You Have Stayed Too Long
View number one and shared by every market related expert, the federal reserve is overstaying their welcome and should immediately stop asset purchases and begin talking about increasing rates. The main reason for these shared views are because asset levels have become inflated across almost all assets according to the experts and be continued purchases are no longer necessary given that capital markets are orderly.
Number Two – Inflation Is Coming – Via Jim Bianco
View number two shared by approximately 75% to 80% of the Capital Market Professionals were there will be some type of inflation. About half of the professionals felt like inflation would indeed be transition, which is what Jerome Powell (FOMC President) and the federal reserve are saying the other half felt like by the FED continuing to purchase assets a change from the long deflationary era of the last four decades to a longer-term inflationary era over the next several decades is ahead.
None of the pro inflation experts predicted runaway inflation that we had in the 70s but the most aggressive inflationary person that we heard was Jim Bianco of Bianco research. In one of many slides, Bianco pointed to the rise of the 10 Year Treasury, below and a belief it would continue to rise.
Number Three – No Inflation, Back to Slow Grow – Via Lacy Hunt
View number three, shared by the remaining market experts emphatically, there will be no inflation and we will return to a slow growth environment similar to what we had coming out of the financial setback of 2007 -2009.
The most emphatic believer of this deflationary trend was Lacey Hunt who oddly enough shared the stage with the aforementioned Jim Bianco, and has been an expert in the capital markets for 40 years.
Mr. Hunt‘s main beliefs on why deflation will continue are the debt occurring by the afore mentioned FED asset purchase and ageing demographics.
So what are we do with all of this information and where does that leave us?
With such dissenting opinions it’s clear that someone will be wrong and things never work out exactly like people think, so some may be correct in a portion of their view an incorrect and another.
If Bianco is correct and inflation occurs and remains this would lead to substantial pressure on long duration assets such as the value of real estate, low earning but fast growing equities, long bonds such as the 30 year treasury and higher borrowing costs across the board. This would be a dramatic change from the last four decades and more rhyming of the late 70’s, but again not to the extreme.
If Hunt is correct, this will be a continuation of what we have seen over the prior four decades. Lower long term rates, lower borrowing costs, continued slower economic growth, lower expected earnings and continued upward pressure(tailwind) on the above mentioned longer duration assets.
The good news in monitoring each of the various forecasts we have easy to read and follow economic numbers such as the CPI and the level of interest rates, as well as federal reserve speakers talk in public venues.
In closing all of professionals believe most asset prices were elevated. High asset prices are not a direct reason for them to come down, and elevated asset prices can be grown into, like the 13-year-old growing quickly into the 15-year-old clothes. But high asset prices demand discipline and care as increased volatility is likely.
Have a Great “Inflation Deflation Tug Of War” 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
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Posted in Economy, FOMC, Interest Rates, Investing/Financial Planning, Market Comments
Tagged Inflation, Inflation V Deflation, Jim Bianco, John Mauldin, Lacy Hunt, SIC Conference