Tag Archives: Richard Fisher

Richard Fisher, FORMER Dallas Federal Reserve Chairman issues a warning

Long the admirer of Richard Fisher, FORMER (retired this month) Dallas Federal Reserve Chairman and noted Hawk (believes rates should rise) …. Regularly speaks his mind, especially after he is no longer bound by the constraints of his employment.

3-18-15 Fisher Santelli

It’s seven minutes, so if you do not have time, here is the gist, which we strongly agree:

  • Investors are too dependent on the FOMC … Low rates !
  • The Capital market are priced to perfection and could be do for a strong pullback
  • The US is doing good and progressing…albeit slowly

Just as consumer confidence is soaring … more on this later … overconfidence may occur with market participants … not us of course!

Have a Great safe day !

John A. Kvale CFA, CFP

8222 Douglas Ave # 590
Dallas, TX 75225


The Economic Recovery Problem in One Simple Graph

While listening to a recent Richard Fisher interview I was reminded of the main problem of this current sloooow economic recovery. The US Economy is certainly growing, bu it has not grown at its fullest potential and continues to plod along at a slow pace.

Fisher’s comments were from a worried stance. Being a Hawk (non advocate for additional help from the FOMC) his fear is once the economy gets going, it may take off too fast. Maybe he is correct, but for now, we could only be so lucky.

M2: The Velocity of Money

This from FRED (St. Louis Federal Reserve Research):

The velocity of money is the frequency at which one unit of currency is used to purchase domestically- produced goods and services within a given time period. In other words, it is the number of times one dollar is spent to buy goods and services per unit of time. If the velocity of money is increasing, then more transactions are occurring between individuals in an economy.

In non-fancy terms, M2 is money in motion. The FOMC has been pushing money into the banking system for some time. Let’s see if it is helping speed up M2?


To be fair, in order for M2 to accelerate, there must be demand for loans, and other money movement by the businesses and citizens of the US. So far, as you can tell, Fisher’s worries are unwarranted. A spike or even blip upward would be nice!

Have a Great Day!

John A. Kvale CFA, CFP

8222 Douglas Ave # 590
Dallas, TX 75225

Another Echo of our Newsletter Thoughts … “Beer Goggles, Monetary Camels, The Eye of the Needle….”

As you may know by now we favor much of Richard Fisher’s thoughts.  The current Dallas Federal Reserve Chair, and a new voting member of the FOMC in just a few days, Fisher’s recent speech grabbed our attention. Here and here we visit a few of his topics from prior events, but his latest speech rhymed with our thoughts, and had a funny headline for such a stiff position.

“Beer Goggles, Monetary Camels, The Eye of the Needle…”

In this speech to the National Association of Corporate Directors, Richard Fisher echoes many of our thoughts. Feel free to click on either of the links for the complete speech, but it is rather long, so we will cut to the echoes below for your time-saving:

CEO Dallas Federal Reserve

CEO Dallas Federal Reserve

  • Share  buybacks financed by debt issuance that after tax treatment and inflation incur  minimal, and in some cases negative, cost; ( Ditto in our Earnings update in the newsletter, buybacks increase earnings growth more that headline numbers seem)
  • Stock  market metrics such as price-to-sales ratios and market capitalization as a  percentage of gross domestic product at eye-popping levels (We use PE ratio, but same thought…I cut out 1999 comparison from Fisher so as not to scare/alarm … again taking the high road for now)
  • In  the bond market, investment-grade yield spreads over “risk free” government  bonds becoming abnormally tight (We have warned against high yield, repeatedly…this is a similar thought)
  • I want to make clear that I am  not among those who think we are presently in a “bubble” mode for stocks or  bonds or most other assets (We said the EXACT same thing, not a bubble,  but frothy and not cheap)
  • Were a stock market correction to ensue while I have the  vote, I would not flinch from supporting continued reductions in the size of  our asset purchases as long as the real economy is growing, cyclical  unemployment is declining and demand-driven deflation remains a small tail risk;  I would vote for continued reductions in our asset purchases (This we agree with and have mentioned many times, understanding this could be a tad of gasoline on a negative thinking market)

There you have it, another similar thinking person to our thoughts. We usually stray from the crowd and this time we are not in the crowd, but there are a few notables that share our thoughts.

Have a Great Day !

John A. Kvale CFA, CFP

PS This is why we like NOT reading anything from our favorite sources before formulating our year estimates and postulation.

8222 Douglas Ave # 590
Dallas, TX 75225

Long Weekend … Earnings Haves and Have Nots … PS Save the Date: May 1, 2014

Monday, being Martin Luther King honored holiday, banks, government offices, capital markets, and our offices will be closed.  Feel free to email if you have a question as we always remained electronically tethered.

Short Holiday Season Earnings

With a December 2013 several day deep freeze across most of the US and  a 30% shorter season due to the calendar, it appears from earnings reports so far Santa was not able to make it to much of the country (financial nerd attempted humor.)Earnings Season

The “Have’s and Have Not’s” of earning season are currently blurry but beginning to take form in a more dramatic fashion than past holiday seasons. We are closely watching for possible continued contagion and will keep you posted.

NEXT WEEK brings a neat Richard Fisher speech review (another echo of our thoughts) along with other fun reviews of our thoughts and maybe Davos Switzerland update (2014 World Economic Forum meeting), but that is next week. Enjoy your Friday and your long weekend if applicable.

Thanks for reading and following our works !

John Kvale CFA, CFP and the J.K. Financial, Inc. Team

P.S. Shhh ….. We have a VERY special save the date speaker announcement we are putting the finishing touches on (Social Security and Medicare EXPERT! One of our top topics for clients) Pencil your calendar for Thursday Evening May 1, 2014 ! More to come.

8222 Douglas Ave # 590
Dallas, TX 75225

October 2013 End of Quarter Capital Market Review (Video..)

October whisked by quickly from our perch, as they seem to be doing lately, especially this time of the year. Looking back, there were major events for review, so here we go:

John Kvale October 2013 Review Video

Government Shut Down … Boy who cried Wolf

Fortunately or unfortunately, depending on your optimism, we have had enough political saber-rattling lately that a government shut down hardly fazed the capital markets.  Markets continue to ride the wave of government stimulus with very little pause. As we have mentioned there are no steals in the US Capital Markets today, however earnings can grow into their valuations … eventually!

Oct 2013 Hourly Chart Worden Brothers

This is an Hourly October Chart

Economic Reports, The Great Disconnect

We are not certain how much the government shut down affected the economic data as well as consumer sentiment, no matter the economic data is pointing to a slowing across the board. This is being viewed positively by the Capital Markets as a continuance of the stimulus. Bad news is good, so to speak.

Note the continued fall off in hiring near the tail end of this chart. Caution is advised, not fear yet, but not a time to be extremely bold … we are watching closely.

10-28-13 Econoday Payroll Graph

Oddly enough, Consumer sentiment was/has been more affected by the Government shut down than the afore-mentioned capital markets. Again, caution, not fear, but this could lead to shorter lines for the holiday season. Consumers make up almost 2/3rds of  GDP, such the reason for follow.

10-28-13 Econoday Consumer Sentiment

Richard Fisher Event

With leprechaun luck of attending an event with current Dallas Federal Reserve Chairman, Richard Fisher, we enjoyed his more Hawkish views which are similar to ours. Hawks tend to favor less stimulus. Much of the event was focused on the government shut down, which as we all know is … “yawn” ….old news now, but his quote of “Do not test markets” sticks in our minds. Again, more on this in our next newsletter but a lasting impression was left.

CEO Dallas Federal Reserve

CEO Dallas Federal Reserve

Next Up, November … Thanks for reading/viewing … Watch out Turkeys!

Have a Great Day!

John Kvale CFA, CFP

8222 Douglas Ave # 590
Dallas, TX 75225

Items you should know from a Lengthy Visit with Dallas Federal Reserve President Richard Fisher and a handy FOMC Cheat Sheet…

Last night I had the opportunity to attend an event featuring Richard Fisher,  President of the Dallas Federal Reserve. The event was associated with a current Texas Monthly article (free access) that is very interesting, definitely worth a read.

An underlying concerning tone (Differing from ours)

While much of the discussion that follows is very much in line with our thinking, President Fisher was very concerned with the possibility of a default or technical default on our debts/bonds. We have shrugged this off mostly up to this point. Due to Fisher’s adamant concerns this has risen on our radar from unthinkable to possible outcomes if it occurs.  We do not want to be naïve, and it appears to be taking longer than we would have thought to get an agreement, however, if the President of the Dallas Federal Reserve Bank is this worried about a default, we will make it more of a consideration. Don’t jump……he himself does not think it will happen, but does consider it a higher possibility than us.

President Dallas Federal Reserve

President Dallas Federal Reserve

Markets are Manic DO NOT TEST THEM

President Fisher echoed our fear of markets’ throwing a tantrum to get the Washington politics moving, and mentioned for the second time in such venue  a book called Extraordinary Popular Delusions, (similar to the emperor has no clothes) such the inclusion here and new edition to my reading list.

Cutting to the chase …. here is a direct quote “Markets are manic and can change on a dime, DO NOT TEST THEM!” We agree 100% Richard, hope Washington is listening.

We have done all we can do

“We….the FOMC… have provided the Fuel for the Economy, now someone must push on the gas.” Fisher speaking of lowering rates both directly and artificially via QE purchases of debt. “Legally we can only buy treasury and mortgage-backed debt owned by the government….THANK GOD”  This was another quote that stood out in our mind that we totally agree with.

“We are painting ourselves in a corner”

“I believe we have reached a tipping point with a $4 trillion balance sheet……I am not totally convinced QE is helping anymore….” President Fisher went on to say he adamantly supports a slow withdrawal of QE and while not a voting member of the FOMC at the last meeting, voiced his concern.

“…. The pitch is right down the middle of the plate …”

Honestly, we cannot make this stuff up, Fisher quoted the above and said markets were prepared and had priced the taper in, take the opportunity to taper, do not change your mind. We like this as this is EXACTLY what we said after the announcement in the U-Turn post here.

FOMC Cheat Sheet

This post was originally just the following cheat sheet, as I had no idea if the Fisher event was a fund-raiser, private, or public event. With excitement I have added a few of his comments and will save more for the next newsletter, but wanted to go ahead and include this legend cheat sheet for the FOMC…sorry about the length of this post, remember it’s an electronic diary too.

There is no telling how many times we will review this between now and January…and even later. For your reference too.

Recall Dovish represents a more accommodative stance which would lead to more stimuli and an extension of help from the FOMC.

Hawkish (present party included) less accommodative, less stimulus, less favorable for extended Quantitative Easing.

FOMC Cheat sheet

Click Chart for Giant View

Fed Cheat Sheet

Source: Credit Suisse and Zero Hedge

Have a Great Day,

John Kvale

8222 Douglas Ave # 590
Dallas, TX 75225

An Evening with Richard Fisher, President and CEO of The Dallas Federal Reserve

Last night, I had the opportunity to listen to Richard Fisher, current CEO and President of the Dallas Federal Reserve and FOMC voting member in a CFA related event.

CEO Dallas Federal Reserve

Mr. Fisher’s comments were on record (reporters in attendance) unlike many prior events, and as such I am delightfully bringing you some of the more impactful comments, from my perspective.

Mr. Fisher began his speech by speaking of many of the statistics regarding the Dallas Federal Reserve bank, which I will conclude with in this post. Due to space limitations, and many readers possible short attention spans, due to time constraints, I will begin with his most interesting comments, again from my perspective.

Most of his more insightful comments came during the questions period, which I am prioritizing from my perspective.

A question from an Forex trader (foreign currency) concerning China becoming the dominant currency?  Mr. Fisher replied, from his point of view that in no way would the Chinese currency become the dominant currency in the near future, and he backed this comment with an interesting statistic that 80% of all Forex transactions involve the US, along with 37% being the Euro. Mr. Fisher did mention that the US became the dominant currency in a mere 20 years, leaving the door open for change.

A question was asked if the US markets have become “junkies“, needing more easing to sustain themselves. Mr. Fisher answered adamantly “There will be no more Quantitative Easing”.  Mr. Fisher did not vote on the latest easing initiative, however he stands firm with his fellow governors that it was a good idea, but adamantly said there will be no more easing! In an interesting follow-up to this comment, which we very much agree with, he stated that market participants are manic-depressive, being on one end of the happy/sad spectrum at all times, and nothing in between.  Admitting that there was in deed a slowdown, which was an answer to a contagion question of Greece, Spain etc, but stating he felt “nothing even remotely close” to what we have been through over the last terrible recession.  We agree!

An interesting and important statement came from the following unrelated question “Should the Fed have a dual mandate?” (Currently the Fed has a mandate of stability AND employment, which is very unique to most reserve banks across the globe.) Mr. Fisher answered, in his opinion, “NO”, but that is the Fed’s current marching orders. He went on to mention that the Fed may, and will, if necessary take back (read–stop inflation) funds from the system if necessary to slow overheating, even if unemployment is still at a higher than comfortable level. This is an extremely important point in my mind and should serve as a warning shot over our bow for future reference.

In an interesting openness of how the Fed Policy meetings run currently (we have written on this before, some time ago, but felt it worth updating) Mr. Fisher gave the following three round analysis of how a Fed Meeting works.

  • Round 1. All Fed Governor’s state what is going on in their district and have an unlimited time to discuss their district’s situation.
  • Round 2. An all in visit on “What we should do?” about the current situation.
  • Round 3. A detailed discussion on “What we should say?” which is reviewed and discussed to an every word detail. Followed up by preperation for Chairman Bernanke’s new media interview, which we have mentioned before.  Mr. Fisher added a funny comment that Chairman Bernanke has a photographic memory, which himself and several others discovered as their prior comments had been repeated by Mr. Bernanke and questioned why the current change.

If you are still with me, you know this short, timely, post, has run much longer than I expected, so I will save further comments for a short follow-up article, (much to Kathy, our Newsletter editor’s dismay), in our soon to print Third Quarter 2011 Newsletter. Sorry for the long post, but I hope you enjoyed the insights as much as I did his visit.

Have A Terrific Day!


What Happens in Vegas comes to Dallas and a Meeting with Richard Fisher

Today Donald starts a full and long multiple days of research related meetings in Las Vegas. This trip represents our annual pilgrimage to our favorite research provider, Applied Finance Group, which is the core for much of our research.  For these meetings, what happens in Vegas, comes back to Dallas, so we look forward to sharing updates and thoughts that are discovered from the conference.

On Monday June 13th, 2011 in the evening, I have the opportunity to visit with Dallas Federal Reserve Chair Richard Fisher in a CFA related event. What is unique about this discussion is the ability to bring back to you some of the comments. I have seen Mr. Fisher several times prior, but due to his position, I have been required not to share any of his comments.

While I am certainly not a major media reporter,  many of which may be at the event, I am looking forward to bringing you my view of his comments next week.

Until then, we are most certainly due to have our last stroll past our famous but possibly unknown money person soon, so keep a watch out.

Have a Good Day!