Tag Archives: Rate Decision

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!

Posted on June 17, 2019 by | Leave a comment

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

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Posted in Audio, Economy, FOMC, Interest Rates, Investing/Financial Planning

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Why rates should be raised, why they may not raise them — HUH?

Posted on September 14, 2015 by | Leave a comment

Janet Yellen, head of the Federal Open Market Committee (FOMC) and her voting colleagues have the following mandates:

Maximum employment, stable prices, and moderate long-term interest rates–in the Federal Reserve Act.

Last week Donald and I went opposite directions on this weeks “Elephant in the Room” event, the FOMC rate raise conundrum.

Can the FOMC abide by their mandates and raise rates? Let’s review!

Rates are currently – ZERO!

This Thursday, September 17th, the FOMC formally announces IF they are going to raise rates or not. We think they should … it is long overdue.

Donald says they will not, I am in the camp that they do — He is “The Brain” though!

Here is why they should raise rates:

Unemployment Rate is Great !

JOLTS – Job opening report following by FOMC is screaming – NICE

Here is why they might NOT raise rates-

No signs of inflation – Their goal – 2% — currently around 1.5%, but heavily influenced by the fall in energy prices!

Stable Prices ? – Nope

9-11-15 S&P 500

 

And how about some ribbing from fellow countries — note– these are NOT part of the direct FOMC mandate — the ribbing has come anyway–

  • IMF (International Monetary Fund)- Janet Lagarde – President of IMF – “Please don’t raise rates” – Economist
  • BIS (Bank of International Settlement) – “Raising rates will crush Emerging Markets” – Telegraph of UK

I think they finally will raise. My reasoning comes from the hours of Jackson Hole interviews – All of which I listened to several times – to all board members that spoke to the media – They all (but one) seemed ready to move, this event occurred several weeks ago.

Oh — Many say markets will have a 5-10% or even 20% pullback when they begin raising –  Just like the world stopped on Y2k — Nope !

Should be interesting!

Have a great conundrum Monday!

John A. Kvale CFA, CFP

http://www.jkfinancialinc.com
http://www.street-cents.com
8222 Douglas Ave # 590
Dallas, TX 75225

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Posted in Forecast, Interest Rates, Investing/Financial Planning, Market Comments

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