Sunday, October 4, 2015

October 4, 2015, Bob Brinker's Moneytalk: Stocks, Bonds, Economic and Investing Summary

October 4, 2015....Bob Brinker hosted Moneytalk live today. (comments welcome)

STOCK MARKET....Bob Brinker did not discuss the stock market, but he has made no changes.  He is still fully invested and recommends dollar-cost-averaging money into the stock market. He recommends a balanced approach for those in or near retirement.

Honey EC: On prior programs (you can read through my previous show summaries and find his stock market commentary fairly easily) he has discussed the "correction bottoming process" that he believes is playing out.  In the latest Marketimer, there were no changes to this outlook. The closing low for the S&P 500 Index was 1867.61 on August 25th. It's clear that he would consider anything in that area an outright buying opportunity.  

SHORT-TERM TRADING IS A "TICKET TO POOR HOUSE".... Brinker told caller Peter from Hartford  (who was doing well as a trader until zigged when he should have zagged) that he never recommends short-term trading, that it is a "ticket to the poor house."

JOBS REPORT DECENT....Brinker comments: On Wednesday, there was a report that we had a 200,000 increase in employment for the month of September – and this followed a 186,000 figure for the prior month.  That was a decent report, and actually it was very close to the consensus estimate for that report.  Certainly there have been job losses in the energy sector where the fracking companies have been up against it because of what's happening to energy prices… They are certainly feeling that in North Dakota.  And certainly we've had pressure on manufacturing jobs because of the strong dollar… The strong dollar is a big-time headwind on manufacturing jobs…

WHY DOES FED BLUSTER ABOUT RAISING RATES WHEN ECONOMY IS SLOW AND NON-INFLATIONARY...Brinker comments: When you consider the backdrop of Federal Reserve policy and all this talk about raising rates - and you have to ask yourself why on earth would you want to raise interest rates at a time when the economy is growing slowly.  Now I realize second-quarter real GDP grew at an annual rate of 3.9%.  But that's not the whole story because the first quarter was 0.6% annual, and the first half average at 2 1/4% annual – and that's low to moderate growth – it's noninflationary growth, that's what it is.…  There is no justification for rate increases based on the economic data.

FEDERAL RESERVE CONTRADICTING ITSELF IS NERVE-RACKING....Brinker continued: And we've been told a quadrillion times that the Fed is data dependent… Two things happen if your data dependent.  The first thing that happens is that you make policy based on incoming data, you don't forecast what the data will be – you wait for the data.…  The second thing that happens… Is that you don't go around handing out dates when you're going to raise rates because you don't have those dates – you can't get those dates because you don't have the data.  It's getting a little nerve-racking.  The Federal Reserve talking about rate hikes, when in fact they don't know… And in fact this latest data was quite valuable and telling them it's not time to increase rates.  And that qualifies as a no-brainer…

JOBS SHOW SLOW ECONOMIC GROWTH....Brinker continued: If you take these figures, job gains have averaged 167,000 month for the last three months.  Compare that to 2014 when job gains for the year 260,000.  Look at the difference in those numbers… That qualifies as slower economic growth. …  Are these numbers that would justify increasing interest rates?  Absolutely not!

SOME SAY JOBS REPORTS DON'T MATCH REAL WORLD JOB MARKET.... Caller Lisa from Chicago (third caller in first hour) stated that the jobs market was much worse than reports indicated. Brinker denied that there is any problem with the reported numbers, and said Lisa was "drowning in misinformation." 

BOND MARKET....Brinker recommends very short-duration bond funds, as he has since 2013.

Honey EC: Yes, the Fed contradicts itself when it says it's data-dependent and then goes on to predict when it will raise rates. But what about our guy, Bob Brinker? Isn't he contradicting himself when he has been preaching very short-term duration bond funds for almost 2 years now in anticipation of rates going up while preaching that NOT raising rates is a "no-brainer"? 

Today, there were two ads for the "Brinker Fixed Income Advisor." Bob Brinker is a listed as a "consultant," even though it is edited and published by his son (same name) and linguist, daughter-in-law, Lisa.  In Bob Jr's latest newsletter, he sold more of his short-duration funds and OSTIX, (which is also in Marketimer).  Bob Jr replaced them with  Loomis-Sayles bond Fund (LSBRX) which has a duration of 4.45 years (thank you ETF1-Robert). So Bob Jr has increased his portfolio holdings to a much longer duration than Brinker recommends on the air.  

This matters because many listeners and Marketimer subscribers do not know that the Advisor belongs to Bob Jr,  instead of Brinker.  If you listen to the ads, there is no way to know it doesn't belong to the host of the show.  And if you send for a sample copy, you will see that the newsletter only uses the name "Brinker Advisory Services" - and the same address as Marketimer in Littleton, Colorado. 

KEEP YOUR 3% IBONDS....Seems like every week, there is a caller who "on Brinker's recommendation" bought I-Bonds years ago. Brinker always praises them and tells them to hang on to them.

POLITICS...Brinker comments: We have the games being played in Washington again where despite the interim extension, we now face a December 11 deadline… For Congress to reach a long-term agreement to finance the government.  So we will have another round of budget chicken coming up with a deadline of December 11 – just two weeks before the Christmas day holiday.  Another manufactured crisis in the most dysfunctional city in the world – politically – Washington DC.

"KIND AND PATIENT"  BOB BRINKER.....There were lots of callers today who were long-time listeners and sang Brinker's praise.  Elizabeth in San Mateo called Brinker "patient, kind, and classy." 

BOB BRINKER POLITICAL CREED - BELIEVE IT OR NOT....Brinker said:  "I don't work for either political party.  I don't get up in the morning and print out the talking points of either political party.  I'm a registered independent.  I make all my voting decisions based on the issues, not on the talking points of a specific political party.  I think that is the right way to go.  But there are those out there, and some of them are on the radio.....that basically are selling a political party point of view on one side or the other.  So therefore, you pretty much know where they're going to be on most of the issues because they are selling the talking points of a given political party.  Whether it's one party or the other… They are all doing the same thing.…  I have no interest in that.  I have no dog in that hunt whatsoever, and no interest in going there at all.  We take it issue by issue.  We tell it like it is.  I always share with my Moneytalk listeners what I think.  Sometimes they like it, sometimes they don't, it is what it is."

Honey EC: I laughed so hard, I choked on my diet orange soda. :) Thanks for clearing that up, Bob!


Bob’s third hour guest on October 4, 2015 was Benjamin Cohen, professor at UC Santa Barbara and author of the book: Currency Power: Understanding Monetary Rivalry

Will the Yuan (China’s currency) become a recognized reserve currency?

The guest is skeptical that it ever will because China lacks some basics that international investors look for: broad and deep financial markets, an openness to foreign investments, central control of the economy and a poor record of honoring private property rights.

Is the economic data coming out of China credible?

No. China said their goal for 2015 was 7% growth in GDP, and gee whiz, the first and second quarters came in right on 7%! Observers believe that 4 – 5% growth is more accurate and they’re looking for indirect ways to estimate China’s growth: electricity consumption, port traffic and rail traffic.

The rest of the interview concerned the US dollar. Our currency remains strong because our economy is doing well compared to other major countries. Japan just slipped back into recession. Brazil and Russia are in recession. The Euro zone countries are struggling with puny growth. The US has those characteristics lacking in China that make our currency desirable: a strong economy, liquidity, a strong military, respect for property rights and contract enforcement. After the 2008 meltdown overseas money poured INTO the US because we were seen as a safe haven – even though we caused the problem.

So why do people constantly bash the dollar?

The guest explained that with regard to foreign countries, our liabilities exceed the assets invested here by over $5 Trillion. As long as we can service that debt, things should be OK. He does not agree with Standard & Poor’s downgrade of US debt. He said that signified a concern of default and that will not happen.

Exporters in the US are hurt by a strong dollar and this has led to a decline in manufacturing output. They’ll protect their overseas market share by taking a hit if necessary, on the exchange rate.

What about the Fed, have they added a stealth mandate… international stability?

The guests answer should be of interest to anyone holding emerging market debt or equities. The Fed realizes that when they raise interest rates it will cause an outflow of investment from emerging market countries. He said there has already been an outflow but this will become more serious is the Fed raises too much, too soon.

The “take away” from the book?

As a nation we need to do what’s possible to limit debt growth and end the dysfunction in Washington, DC.

Honey here: Thanks Frank! It's amazing how much educational material and information you can pack into short summaries!


Bob Brinker called the current effort by congress to pass a comprehensive spending bill:

A) Budget roulette.

B) Budget suicide.

C) Budget bingo.

D) Budget chicken,


Honey here: Thanks Jeff. Your answer is great!  It looks like Brinker never has seen a cause important enough to take a stand on...And as he said, government workers get paid, no matter what.....

Los Angeles. KABC 790. Moneytalk plays two hours later in the evening. They podcast and ARCHIVE podcasts.
                                                 (summary posted at 6:35pm PDT)

Sunday, September 27, 2015

September 27, 2015, Bob Brinker's Moneytalk: Stocks, Bonds, Economic and Investing Summary

September 27, 2015...Bob Brinker hosted Moneytalk live today.... (comments welcome)

STOCK AND BOND TALK DRIED UP TODAY....Bob Brinker mentioned the stock market today when he told a caller that it is better to have the stock portion of investment portfolio in personal accounts because of the favorable capital gains treatment, and fixed income in tax-sheltered accounts - when possible.  He also said that those near or in retirement should used a balanced approach to asset allocation

Honey EC: The October issue of Marketimer will be available next Thursday. So far, Brinker has not made any new buy-signals, and still recommends using times of market weakness to dollar-cost-average new money in. If you are a Brinker follower, you have all of your money fully invested, as he does. 

CURRENT CORRECTION STATS....(H/T to A.D.) The S&P 500 is now down -6.2% for the year and -9.36% off its all-time high. The most it's been down in this correction is 14.5% 

BIOTECH/DRUG COMPANIES TAKEN TO THE WOODSHED.....BB comments: It was a rough week for drug stocks, especially biotechnology stocks.  Biotechnology stocks this week were taken to the woodshed.  The NASDAQ biotechnology Index, this week, fell 13% for the week.  That is its worst weekly performance in four years.  It all got underway when the leading candidate for the Democrat presidential nomination put out a tweet – this seems to becoming increasingly frequent way for candidates to campaign… She put up this tweet suggesting that there may be price gouging in the market for prescription drugs.  We would have to say that's an understatement… I mean look at the reality.  Healthcare shares in general in the S&P 500 this week declined almost 6%.  That was the biggest decline of any S&P 500 group this week…

SCREWED UP HEALTHCARE SYSTEM IN U.S......BB continued: We all know that the healthcare system in the United States is totally screwed up – there's nothing new there, we know that.…  The problem is, it's worse than you think.  I know there was a lot of media coverage this week about this punk that acquired that drug Daraprim and then he decided to increase the price from $13.50 per tablet to $750 per tablet.  That's in the area of a 5000% increase.  But this is only the tip of the iceberg when it comes to drug price gouging gone wild.  Drug price gouging is the face of pure greed gone wild enough Pharma industry.

Honey EC: Most of the second hour was spent on this subject and Brinker gave several examples of drug price gouging and he is for government intervention. However, not everyone agrees with Brinker on this. For example, Billy sent these comments:
"Bob got out of his field of expertise today and showed his profound ignorance. His comments about the drug companies were similar to the lady who disbelieved the inflation figures. You can't argue with a fanatic. While he was talking I looked up some REAL prices. Bob said Lipitor was $40 per 20 mg pill. UHC charges about $9 and generics cost less than a dollar. Much of the increase in drug prices is a result of the insurance companies upcharging medicare through their drug supply subsidiaries. Exact example: one of the most commonly prescribed drugs in the US is charged to medicare by Optum at $117/90. I bought the identical drug in Costco on Friday for $12.58, showing that it's better to make 2 million sales at $105 profit per sale, than 100 sales at $7500 profit per sale - and you won't attract the attention of Bob.

Bob doesn't seem to understand that a huge profit on a drug will attract competitors (That's the way a free market works - duh)or that a company could use the profit for research on NEW drugs. I could go on!

What a waste of 3 hours.

POLITICS RULED TODAY.....Honey EC: I usually avoid reporting on Brinker's political pontifications because I do not believe you listen to him for political commentary, and I try to keep my own political opinions to myself as much as possible. But today, most of the program was political in nature, so I will give a brief overview of the people that Brinker bashed with real enthusiasm: 
  • Slammed the Republicans for celebrating John Boehnor's resignation.
  • Slammed the Tea Party, saying  that there are now two Republican Parties so nothing is getting done. 
  • Sang decades-long bromide that Congress is "dysfunctional," 
  • Slammed Dick Cheney and Rudy Giuliani for various reasons and preached about how they didn't serve but cheer  military involvement.
  • Declared Investor's Business Daily "not credible" because it is "business friendly."

FEDERAL RESERVE IS GOING WEIRD ON US....Bob Brinker comments: Janet Yellen this week on Thursday, was in new England… On the campus of the University of Massachusetts in Amherst.  She gave an interesting speech but it was really kind of weird.  And let me tell you why I say that.  We've been hearing from Mdm. Chair Yellen… About the fact that the Federal Reserve is data dependent when it comes to monetary policy decisions.....They've relentlessly stayed focused on this theme, telling people: we are data dependent - we are going to do what the data tells us to do….  It's very easy to accept that at face value…. But what you are saying when you say you are data dependent is that you don't really know what you're going to do – it depends on the incoming data – that will tell you what you're going to do.…

FEDERAL RESERVE TALKS OUT OF BOTH SIDES OF ITS MOUTH....BB continued: We keep hearing members of the Federal Reserve, including Chair Yellen, make these comments like:  well I think we will raise rates this year - I expect we will raise rates this year.…  To me, this is a position that is totally contradictory.…  Because if you are data dependent, you don't know where you are going with your decisions.  It depends on the incoming data.  Therefore, you cannot say we are going to raise them this year or whatever, because you don't know.

SAME DATA STILL APPLIES THAT THE FED USED TO MAKE EARLIER DECISION....BB continued: We just saw this at the September meeting – we just went through this. We can conclude that the three same conditions that precluded a rate hike at the September meeting earlier this month are present today, September 27… (1) Strong dollar (2) nearly invisible inflation - close to zero and (3) global uncertainty.…  Nothing has changed.…  And that's okay.

FED CONTRADICTING ITSELF IS NOT OKAY...BB continued: But what is not okay for them is for them to contradict their policy.…They don't help anybody, and they certainly don't help their own credibility when they start running around talking about, yeah now we are going to raise rates at the next meeting or later this year.  Hey, there are only two meetings left guys.

Last week, I wrote this:  
DON'T BELIEVE YOUR LYING EYES.....Honey here: Caller Wanda in the second hour, vigorously pointed out how there have been big increases in the cost of food. In my opinion she was absolutely correct.   Brinker fell back on that old bromide, and asked her if she thought they were just making up the numbers.....
TODAY BRINKER TALKED ABOUT POOR WANDA....BB comments: If you are unwilling to find common ground on issues then there's nowhere to go.…  I'll give you an analogy of something that happened on this program which will give you an example of getting up against a stone wall where there is nowhere to go – there's no conversation to be held.  We had a caller last week who called in and said eggs were up 13%, some other stuff was up 9%, and she quoted various food items that were up very large numbers.  And therefore, she said that these numbers that we get from the government are bogus – they have no meaning, they are worthless - that inflation is far higher than the government tells us.  Well I don't believe that.  But she does.  So therefore there is really nothing further to talk about.  You could agree to disagree, but it doesn't go anywhere, does it.  And she is not the only person in the country, because we've had other callers over the years.  

WANDA IS NOT ALONE IN NOT BELIEVING GOVERNMENT INFLATION NUMBERS....BB continued: There are people out there that believe inflation is far higher than the government tells us because after all the government tells us today that year-over-year inflation is close to zero.  In both polls – the Consumer Price Index poll and the Personal Consumption Expenditure Index… There are people out there that don't believe that – they think they know that inflation is much higher.  Well they are entitled to their view – it's a free country.  But it's not the basis of a conversation, and I certainly don't believe they are correct.  I believe we have the numbers that we have, and we do the best we can with those numbers.


Freya Williams, author of Green Giants: How Smart Companies Turn Sustainability into Billion-Dollar Businesses was Bob’s third hour guest today, September 27, 2015.

Bob promoted the topic of the interview earlier in the show, something he rarely does. He said it would be about the VW problems that have come to light. If anyone is unaware of what transpired, VW recently admitted to having figured out how to make the emissions control system on its diesel vehicles cheat during emissions tests to make it appear that their exhaust met specs.

Bob termed the VW cheating as a corporate disaster. The guest gave a long answer (they all tended to be long) saying that it went in the opposite direction of where many companies are headed, i.e., toward sustainability. She is a VW owner and has only owned VW’s because of their safety and gas mileage, but she is not a diesel owner. Later in the interview she said she would probably not buy another VW.

How high up in the organization did knowledge of this cheating go, Bob asked. She said that it is often the CEO who touts a sustainability strategy for a business, but she did not know in the case of VW how high up the ladder it went.

The guest spent a lot of time talking about Tesla, the all electric car. She wants one but can’t afford one at the moment. (Price range $70K to $105K depending on configuration for the Tesla S model). People buy Teslas because they’re not only “greener,” they are “better.” You can look at monthly sales figures for electric cars here, if interested:

Chipotle is another company that went for the sustainable brass ring. They resolved to serve better quality ingredients and simply charge more for their food. They are now 4 times bigger than Burger King in revenue.

Bob quoted Milton Friedman that “doing good cannot be good business.” The guest said she’s not a fan of Friedman and went on to mention “new purpose,” “social purpose,” and “companies with a purpose.” Unilever is an example of a company with a purpose. She said it is doing better than one of its competitors, Proctor and Gamble.

Caller Randy from Nevada asked her a question about lithium, a component of electric car batteries. She didn’t know anything about it but pledged to investigate it.

Keith from Rochester doesn’t own a VW and thinks people are overreacting to the whole cheating thing. He said it took good technology to have figured this out. Bob intervened and buffered Keith’s statement with a question that the guest answered by agreeing that what VW did was “clever technology” but “people don’t like being lied to.”

At a couple times in the interview she made it clear that she is a believer in global warming and she said she was thrilled that Pope Francis talked about climate change during his recent trip to the US.

Bob wrapped up at 3:53 pm.


Janet Yellen gave a speech last week at the university of Massachusetts that Bob Brinker said was:

A) Really great.

B) Really boring.

C) Really kind of weird.

D) Really comical.


Honey here: Yikes, Jeff..was she really that weird? :) 

Los Angeles. KABC 790. Moneytalk plays two hours later in the evening. They podcast and ARCHIVE podcasts.

Monday edit: After today's stock market, it's time for a breath of beauty. Blog reader sent this wonderful fall-color photo from New Hampshire:

                                             (summary posted at 7:13pm PDT)