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!
FRANKJ'S SUMMARY OF GUEST-AUTHOR
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!
JEFFCHRISTIE'S MONEYTALK FINAL EXAM QUESTION OF THE DAY
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)