Tag Archives: tea leaf

Market Tea Leaves Harder to Read

Not too long ago, it was very popular to look at the capital markets and ask what they were telling you. As an example if a certain area of the market was rising and no one knew why, many would infer that the market was “telling us” something.

  • Interest rates go down… fear or slowdown may be around the corner
  • Commodities jump…. here comes inflation
  • Gold begins ascending .. Fear
  • Aggressive, higher valuation investments begin to move … Things are getting better
  • Copper ascends .. this is good .. World is built with copper

Fast forward to today, with more electronics and much more global trade and global participates …

Are market tea leaves readable?

Market Tea Leaves are Still Readable, but Harder

In our opinion, closer attention must be paid to the economic and fundamental factors today.  Frequently capital markets and other tea leave indicators many need to be ignored. This is especially important in the “Breaking News” .. World is coming to an end … headline driven market. We see frequent tea leave warnings, that are just not relevant today!

Patience needed

The Tea Leaves do certainly exist but may take a bit more patience to get their true meaning.  The afore mentioned electronics, and global participants can frequent and easily be caught off guard, which may lead to a false signal.

As we say frequently,  never go “All in our All out” (the subject of another discussion) great allocations, patience and analysis still work even with more subtle Tea Leaves!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.

High Yields have us concerned…A Tea Leaf?

High Yield bonds also known as junk bonds are showing stress. As a reminder high yield bonds are slightly lower in quality (higher risk) for various reasons, that pay a greater yield than that of their higher rated relatives.

In our Q 1 2013 Newsletter we spoke of the risks of High Yield bonds, along with the lack of Tea Leaves in this day of outside influences.

Recently High Yield bonds have caught our attention as they are GENERALLY very highly correlated with capital markets.

The divergence in the last several weeks has caught our eye! (Far Right of chart)

High Yield Versus SPY (Click for gigantic picture)


Apologies for the choppy picture, but this charting system produced the best overlay for showing the correlation

This may be nothing, and very well could correct in short order but it is currently giving fuel to our conservative/negative market view, as such we are watching very closely.

Have a Good Day!


8222 Douglas Ave # 590
Dallas TX 75225

Non-Farm Payrolls Blow Past Expectations – Black Clouds… ???

This morning non-farm payrolls came in at 243k versus expectations of 140k, far exceeding expectations. This surprising report has put a fire in the capital markets around the globe.

While this is only one report, most economists believe it takes about 210k to bite into the unemployment situation.

Given the Black Cloud CFA Forecast dinner post, and the dialogue I have gladly received from many of you, we now have another positive tea leaf on the table.

Thanks for all of your emails and comments, and thanks for reading our work, we greatly appreciate it!

Have a Great Day and we have another post coming shortly today to slide you lightly into your super bowl weekend !