Confidence left the capital markets with one possibly outlier economic report this month. While many have pointed to the Emerging Market Economies, looking closer we can see cross currents beginning at a different point and time.
January 2014 Video By John A. Kvale
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Break In — An All New monthly Financial planning Tip
After reviewing the HEAVY material from our most recent Q 1 2014 Newsletter and our recent monthly review video’s we have decided to insert a Financial Planning tip of the month. This tip will come from the trenches of recent questions and we hope to break up the monotony of the heavy material, we financial Nerds get so excited about. So here is our first hot tip.
The Personal Umbrella Policy
If you have any liabilities that may expose assets to bad people, you need a Personal Umbrella Policy.
An Umbrella Policy has the following characteristic:
- Most commonly added to your homeowners policy
- Inexpensive (Hundreds of dollars annually, not thousands)
- Implementing an Umbrella policy confirms other policies are appropriate (Underlying liability coverage must be in place prior to adding an Umbrella policy)
- Kicks in when trouble arises (Once other coverage is exhausted, the Umbrella begins)
For the annual price tag, the peace of mind this policy will give makes it well worth it most cases. Ok … On to our regular monthly review.
the Non-Farm Payroll Bomb
With a consensus expectation of 200,000 new hires for the month of December, a print of 74,000 was where it all started.
Recall the polar vortex we have all experienced. While the numbers are not SUPPOSED to reflect this, actions speak louder than words. This may be a one time event. Next Friday, February 7, 2014 we will get the January report, which will be very important. We will be watching closely.
INTEREST RATES ARE WORRIED
There are many sayings on Wall Street, often comparing Bond guys (can see their thoughts through interest rates) to Equity guys (can see their beliefs via Dow, S&P) most of which make fun of each other.
Interest rates are saying there is a problem. The FOMC is reeling in stimulus which should allow rates to rise, however they are falling. Bonds (bond investors) are saying we are heading into a serious slowdown. Equity markets ignored much of this until lately and then the many headlines blamed Emerging Market Currency fluctuations.
The peak in rates from this chart, directly co-insides to the above mentioned Non- Farm Payroll report. Right or wrong, it is pretty easy to see now in hindsight what started making equity markets nervous.
There is a tug – of – war going on between Bond guys (feeling scared/negative) and Equity guys (feeling a slight slow) which only time will tell who is correct.
John Kvale CFA, CFP
8222 Douglas Ave # 590
Dallas, TX 75225