Tag Archives: Rates

Rates Rise and No One Blinked, Report Cover Letter

The once dreaded and feared interest rate raise seems to have run its course from a fear standpoint. Just a few quarters ago when Ben Bernanke was the Federal Open Market Committee (FOMC) chairperson, the whisper of a long-awaited rate hike lead to market calamity and many to believe rates would be permanently artificially low.

Near the end of this most recent quarter, current FOMC chair Janet Yellen raised rates to the 1% level, a level not seen in almost a decade and without much capital market trepidation. Longer term the short-term interest rate controlled by the FOMC may not go all the way back to the higher levels once seen historically, however a 2-3% rate would still be stimulating from our perch. It is possible the gradual move higher will extend this current economic expansion.

Speaking of rates, in our Q3 2017 Quarterly Newsletter we do a complete deep dive on interest rates, among many other items, that may have changed Residential Housing Prices movement for the foreseeable future. While so many argue of reasons for Housing volatility, the answers are less vivid than many may think.

Continued optimism from company executives seems to have given them confidence to expand their businesses dropping the unemployment rate to levels many thought not possible via hiring’s of workers. It is possible an employed consumer is a happy consumer who is also a consumer who spends more. With consumer spending making up over two thirds of Gross Domestic Production (GDP) this bodes well for domestic and world growth, as long as it continues.

Given low but rising interest rates (finally) a happy higher price valued Home Owner (again full details in the Newsletter), a happily employed consumer, it is no wonder many assets and most capital assets, especially the US markets are priced to perfection (high compared to historical values). The fantastic news is that our overseas counterpart capital markets are not priced as high and it looks like investors are finally beginning to warm to their markets. Our good friend diversification keeps us exposed to these markets as the possibly reawakening occurs. Look for more on this on our street-cents.com blog.

Summer doldrums?

Maybe, but we always keep our guards up as risk can happen fast, even if the less tenured folks are at the wheel of the capital markets.

Have a Great Summer!

John A. Kvale CFA, CFP

Q 2 2017 Cover Letter

Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.
www.jkfinancialinc.com
www.street-cents.com

 

June 2017 Podcast Video, Financial Planning Tax Review and Earnings Update- By John Kvale

Here is our June 2017 Monthly review.

Hard to believe we are ALREADY at the half way point of 2017 … A little early due to the Holiday schedule.

Here we go!

June 2017 Video

 

Financial Planning Tip-

Safely Hand Off VERY Important Documents

Vault Add View W Arrows for private and Full View

With a few services still showing too much confidential information such as social, bank and date of birth, in our post here we reminded everyone of how to easily hand-off that VERY confidential document.

Also as a reminder, one of our projects over the latter part of the summer will be a set of 1 minute videos on how to use the New Total Vault and feature such as this one … Looking forward to completing them !

Capital Market Comments

Rates are Rising

Libor 1 month 6-27-17

This chart shows does a great job of showing the rate increases as they have occurred. So far, market participants are taking the rate increases in stride.

We continue to believe higher/more normal rates are a good thing!

Happy Mid-Year point!

Let the 100 degree days begin !

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
www.street-cents.com,

Forecasts from Canadian Economist Derek Burleton … Trump Policy, US Economy, Rates, US Dollar and Oil Prices

Earlier this month at our “Out West” conference where “The Brain” crashed the party in  32 minutes, we had the opportunity to listen to famed Canadian economist, Derek Burleton.

We greatly enjoy hearing from stately folks outside the borders of the US for several reasons …

  • What exactly do people in their geographic area think of the situation?
  • Receiving differing media reports may lead to a totally different and valuable views.
  • Countries with TOTALLY different governments may have clarity that we may take for granted.

Derek Burleton Forecasts20170202_211041438_ios

Trump policies will likely not make major changes to the economy. Burleton likens economies to air craft carriers that are very hard to turn and only slightly changed by policy.

Given the above fact, in the short term, Burleton thinks the capital markets could be due for disappointment, as the markets may be pricing in too much optimism currently.

Rates will rise twice in 2017 and again in 2018. Interestingly the fed has said three times this year and recently are saying even more lately….

US Dollar and Oil are both at near term (12 month) highs.

We like the forecasts as a vote of calmness and reasonable expectations. Thanks Derek… we will be watching as this unfolds.

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
www.street-cents.com

Janet/FOMC Pause on Rates, Markets Cheer

Not surprisingly, Janet Yellen and the gang at the FOMC (Federal Open Market Committee) hit the pause button last week on an interest rate increase.

No Rate Increase

Basically the FOMC is signaling no rate increase before the election. As strong of a conviction (huge review) that we have for a rate increase, we are fine with a delay given the coming election (first debate tonight.)

Capital Markets Pleased

Treasury Yields (rates) Down Bonds Up, Equities Up, Utilities (rate sensitive) Up

9-23-16-10-year-yield9-23-16-sp-5009-23-16-utilities

We were slightly surprised by the overzealous capital market reactions!

Have a Great Day!

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
www.street-cents.com

Q 3 2016 Newsletter and Video Released !

As Brexit likely stalls our main theme of the Newsletter… we think we are correct in our analysis.

Here are a few of the topics in the newsletter….

  • Eventual higher interest rates will help, not hurt our economy.
  • Rates have been raised during elections years.
  • Trivia Crack is our App of the Quarter
  • What we are doing for the Summer! – Client favorite
  • Complete – all encompassing list of needed documents for Wills, Estate Planning and Trusts

But wait there is more….

A Video review too — Yep

 

Hope you enjoyed our silly introduction humor!

Have a great day!

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
www.street-cents.com

 

Hot Hot Economic Number — Friday

A super hot employment number today — Economist expected 180k and 271k for the month were actually reported, puts a rate hike in December on the table — we think !

10-2015 Econoday Employment report

 

Ahhh … but today is a Friday ! Have a great weekend !

John A. Kvale CFA, CFP

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

 

 

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

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