Tag Archives: US Dollar

September 2017 Podcast Video, Financial Planning and Capital Market Update- By John Kvale

Here is our August 2017 Monthly review. If you are too busy to read, feel free to listen as we describe our post and thoughts in friendly podcast format.

Enjoy!

September 2017 Video

 

Financial Planning Tip(s)-

Equifax breach

One of our most popular posts this month was here on the Equifax Breach.

Update, it appears the site Equifax set up, after entering some of our individual information to see if our privacy was compromised, defaults to yes for everyone.

The good news was this breach occurred months ago and if we have not had problems yet, at least the aggressive hackers are not using our information.

As mentioned in our post, it is not a matter or if, but when our personal information we be divulged. We need to all act accordingly and protect ourselves to prevent the eventual problems a loss of our information may create.

Real Estate Wire Fraud Issuesfraud-2695269_960_720

Briefly, this important  post about Real Estate Wire Fraud is worth noting again. While after the fact, this type of fraud looks easy to detect, in the throws of what is a stressful time (buying a new home or the like) fraudsters are taking advantage of our vulnerabilities.

If there are any last minute changes to your closing, BE SURE to contact the receiving party to confirm they are legitimate.

Capital Market Comments

United States Dollar Talk

With a few “Sky is Falling” US Dollar headlines, we addressed these concerns front and center in this Post and also in our coming newsletter with the chart below from our fellow blogger and former economist  Scott Grannis and Bloomberg.

20170907_150433563_iOS

Not only is the Unites States Dollar not undervalued, its still too strong using recent history as a guide!

See you at the end of October.

Happy Fall Season!

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

Is the United States Dollar in Trouble? Nah

After a monstrous run up against almost all other currencies as the FOMC (Federal Open Market Committee- Bernanke now Yellen) began raising rates ……. as a side note and preview of our headline article in our coming Newsletter, this creates headwinds for international investments as well … we digress … recent weakness has brought out the “Chicken Little’s

This chart from 2012-2015

9-16-17 US Dollar Run up 2012-2015

Year to date 2017, the United States Dollar has dropped against other currencies as our international friends begin to pick up their economic pace. Of course this creates chicken little dramatic comments of ….”The US Dollar sky is falling”

YTD 2017 US Dollar

9-16-17 US Dollar YTD 2017

The move up from 70 to 100 (First Chart) is much greater than from 100 back to 92 (Second Chart), but lets look longer term, from a fellow blogger and former chief economist, Scott Grannis…

20170907_150433563_iOS

Not only is the US Dollar not in trouble, over the long term it is still overvalued.

US Dollar in trouble? Nah, not a worry … still overvalued by many!

Have a Great “More Normal Dollar” 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

March 2015 Financial Planning Tax Tip, Capital Market and Economic Review (Video)

Welcome to our monthly Economic, Capital Market, and Financial Planning tip of the month.

This months Financial Planning Tip of the month, like last months, may save you valuable tax dollars!

Once again a special thanks to all of  YOU … the best clients and friends as your experiences have again given us the subject matter for our Financial Planning Tip of the Month.

For those new to our writings, we touch on the most pertinent Financial “stuff” along with a video of my mug that has even more specialized details of the latest month as well as this post.

Ok…let’s go!

VIDEO

You Tube Direct Link   or   Vimeo Direct Link

 

Another special Tax saving Financial Planning Tip:

If you think your taxes in retirement, like most, will be lower than during your earnings years, forget the Roth!

A deductible IRA and a Roth have the same exact outcome if taxes are the same before and after retirement. Same

  • Statistically, most have lower taxes during retirement
  • If you can fund both do so, but if it is either or, the odds favor the deduction up front

 

US Markets On a road to nowhere

US Capital markets rightly were stuck in the mud in the first quarter .. essentially going nowhere. Earnings over the next year are slated to be flat, making expectations for the capital markets to do the same.

3-31-15 SPX

Overseas Rocking … BUT

We have been crowing about overseas markets for some time … We were right, but not rewarded … yet!!!

The tremendous strength in the US Dollar had muted foreign market returns. This works itself out over time, so not to worry, the reward will come!

 

Dax V US Euro ytd q 1 2015

If you want to travel overseas, now is the time… US Dollar strength equals nice exchange rates!

John A. Kvale CFA, CFP

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

Unintended Consequences of the Artificially Lower Rates … US Dollar Rally

Over the last several years the Federal Reserve (now along with other countries) has embarked on a program (QE- Quantitative Easing) to buy fixed income assets in order to lower interest rates. The US is the first to begin unwinding this QE, and there are a few consequences, the culprits now, US Dollar and Currencies.

Currencies move back and forth, the issue is not movement, but the magnitude of the movement, and the speed at which it has occurred.

The first QE side affects are now showing their teeth.

US Dollar Rally Continues

Today the FOMC (Federal Open Market Committee) ends a two-day meeting and will give hints about increasing interest rates. One of the items they may address is the increase in the dollar versus …. basically the world !

3-17-15 US Dollar

The Bad News: This makes anything in international dollars lower in value …. Very hard for international companies to compete (in the short-term.)

The Good News: Great time to travel overseas … More importantly, this is most likely temporary and will eventually normalize (flatten or go the other way.)

Bottom Line: Headwinds for international markets and foreign companies … For now! (Many investors have begun to chase/all in on this trend … wrong… let it self correct!)

Have a Great Day!

John A. Kvale CFA, CFP

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

 

September 2014 Review: Monthly Financial Planning Tip, Capital Market and Economic Overview

Welcome to our monthly Economic, Capital Market, and “hot off the presses” Financial Planning tip of the month. Once again a special thanks to all of  YOU … the best clients and friends as your experiences have again given us the subject matter for our Financial Planning Tip of the Month.

For those new to our writings, we touch on the most pertinent Economic and Financial “stuff” along with a video of my mug that has even more specialized details of the latest month as well as this post.

Let’s get going !

PSSST …. Hope you like our neat new intro to the video too!

 

VIDEO

You Tube Direct Link   or   Vimeo Direct Link

Itemize special items on Your Homeowners Insurance

  • Jewelry
  • Paintings/Art
  • Rugs
  • Any special/unusual valuable items

If you have anything out of the ordinary, check with your homeowners carrier to see if it needs to be itemized. Not to worry, in most cases the premium will not rise much if any, BUT if you forget to itemize and theft, destruction or a loss in incurred, you will be sorry.

Most carriers only ask you let them know you have something that needs itemized … if they do not know, they will most likely only pay a more normal relative fair market value of the item, possible far below the true value.

Ok, so you didn’t see our writings before the loss. It’s not all bad news, would you believe, you can deduct personal losses from your taxes ? Yep

Here is the IRS ruling, just be aware, there are certain hurdles you must jump … all worth jumping to help offset the pain of our loss with a tax deduction!

Too Strong US Dollar … huh ?

Don’t look now, but those claiming the end of the US Dollar as the world reserve currency have to think twice.

Why the strength?

  1. Russia/Ukraine conflict
  2. Broad weakness across the world EX USA
  3. More other countries currency falling than US strength

Chart of the US Dollar against a broad basket of world currencies

US Dollar Basket 9-30-14

Positives:

  • Oil: denominated in US $,  downward pressure on price
  • Imports less expensive
  • Good time to travel abroad

Negatives

  • VERY tough on exports(ers), less price competitive
  • Headwind for all non US countries
  • Tough for foreigners to buy, travel or spend here in US

It is not the TOTAL appreciation of the US currency, but the speed at which it happened … J.K. Financial, Inc.

 Average  Hourly Earnings

Today’s Top Economic Indicator

Avg Hourly Wage Growth

I am beginning to think this is one of the Holy Grail charts of our slow recovery. This recovery has been so slow to feel any pressure on wages, consumers are beginning to feel tapped out.

Consumer Confidence Drops Unexpectedly

Consumer Confidence 9-30-14

Because wages have not increased with inflation pressures, consumers are taking a pay cut. Consumer confidence is a driver of our economy.

Higher Consumer Confidence = Higher Spending (GDP 70% consumer) = Higher GDP

Keeping careful watch!

Have a Great Day!

John A. Kvale CFA, CFP
www.jkfinancialinc.com
www.street-cents.com
8222 Douglas Ave # 590
Dallas, TX 75225
 

U.S Dollar, Down and Out, or Not to Worry? (Final in a Series)

If you agree, as we do, that current prevailing rates are a major factor in the value of a currency against its world peers, then as we stated in our first post,  U.S. Dollar, Down and Out, or Not to Worry? (Part Two of A Series) different country mandates will have a major effect on the value of the currency. As countries begin to raise rates, again in our opinion, all other factors being equal the value of the currency will begin to rise against its peers, U.S. Dollar, Down and Out, or Not to Worry? (Part One of A Series)

Timing, most certainly will be different for different countries.  Using the U.S. as an example, the recession has been hard and the government’s mandate may lead it to keep rates lower, longer, in order to stimulate growth, having an unintended consequence of the U.S. currency losing value against other countries as they raise their rates earlier in the economic cycle, see Australia’s surprise rate increase, and note the currency change http://www.marketwatch.com/story/australia-surprises-with-025-point-rate-increase-2009-10-05.

In a final  “crisis related” thought, since we have a nice immediate historical review, the U.S., a large, well populated, growing country, that has established its self as a very strong World power.  On a side note, see chart below, the currency of safety during the crisis; note how the U.S. Dollar rose extremely during a time of crisis, again in our opinion, showing it is the safe haven for today. 

11-09 US Currency

But what about longer term?

As Emerging and Developing countries gain footing in the world economy, and as the U.S. continues to age, it is not too hard to imagine a time where the U.S. will not be as dominate of a power as it is today.  Power, for trading partners, lies with consumption and growth; therefore indirectly their currency.  As the World gets smaller, and countries more equal, many currency safe havens and anchors may exist, for now, the U.S. Dollar seems to be acting in a more normal “prevailing interest rate” manner, again in our opinion.

Have a Good Day!

JK

U.S. Dollar, Down and Out, or Not to Worry? (Part Two of A Series)

As a continuation of our first part series, U.S. Dollar, Down and Out, or Not to Worry? (Part One of A Series) we will expand on interest rates and their direct effect.

Given the fact that, using our Bank of England example, certain governments have different objectives that others, (U.S.) Let’s take a look at the possible direct effects, again in our opinion.

The U.S. Government is attempting to stimulate our economy by holding rates low. without much consideration to the level of the U.S. dollar against other foreign currencies.  This helps the ailing housing market and also helps the financial centers, banks, become more profitable. Low interest rates help home owners refinance and purchase homes at a much more affordable monthly payment. Low interest rates are very profitable for financial centers as they loan at much higher rates than they borrow or lend at, thereby putting the wind at their back for profits.

The unintended consequence of lower rates, again in our opinion,  is a lower U.S. dollar.  Currency investors rush to borrow from lower rate countries, extracting cash, and lend or invest funds in the higher interest rate currency, also known as the “carry trade.”

Our belief is there is an approximate finite pool of currency investors, and as disparity between country rates exist, the lower interest rate country currency will be pushed down, and the higher currency interest rate moved up, all other factors being equal.

Next up, in our last part, longer term patterns.

JK