STOCK MARKET....Bob Brinker said: The stock market gained close to 1% this week as the Federal Reserve kept rates unchanged. The Dow closed at 18,261....And the S&P 500 Index closing at 2164.....just about 1% below the all-time-high of 2190 from a few weeks ago.
IN EDIT: Thanks to dRahme, here is the audio clip from Brinker's opening monologue: http://www.ddgnevada.com/BB-09-25-2016-01.mp3
COVERED CALLS.....BB said: I really don't see any reason why there would be any problem writing covered calls on an IRA account.....This is not the answer to everybody's problem, but in his case (Bruce/Nevada), he's worried about the market....For example if he had SPY in his account, he'd find no problem in writing covered calls. He's still own the SPYDERS but he'd be getting some income along the way. If they were to rise tremendously along the way, then they would be called away. But that is less likely with a broad market index than it is with an individual stock.....Now the nice thing about writing covered calls in an IRA account, for those who have reason to do so - such as reducing their overall level of risk, as well as the overall upside, you are getting that nice premium income coming in a tax-privileged account. So you are not getting hit with taxes right now....And that's a big deal. Obviously, if you are doing covered calls in a personal account, the tax rules apply.
FED NOT RAISING INTEREST RATES THIS WEEK....BB comments: Fed met this week and left rates the same....They said that economic activity has improved versus the first half of this year - which was soft. They said job gains have been solid....They observed that inflation has remained below the FOMC long-term objective of 2%.....There are two more meetings this year, and one of them is off the table for a rate change - and that is the meeting on November 1 and 2 - six day prior to the election.....There is no way that the Fed will raise rates six days before an election. There is another meeting in December, and depending on economic data being positive, nobody should be surprised to see a 0.25% rate increase announced at the mid-December meeting.
JOBS...BB comments: Unemployment rate remains at 4.9%....In 2016 monthly new jobs averaged 180,000, but last year monthly new jobs averaged 230,000 - a pretty significant decline.....but considered a good number.
IN EDIT. Here are the actual jobs numbers. BB alluded to the "average" but is so reluctant to put negative economic info out there:
The U.S. economy added 151,000 jobs in August. That was a weak follow-through to the 275,000 jobs added in July. That signals a lackluster economy. It's not much higher than the 150,000 new jobs the economy needs to keep growing.The weak report means it's unlikely the Fed will raise interest rates at its next FOMC meeting. A mediocre economy can also influence the 2016 Presidential campaign. It doesn't favor the incumbent's party. That weakens Hillary Clinton's chances of becoming the next President.
LIFE INSURANCE...BB: It's definitely not an investment. If you need life insurance, buy term insurance.
VERY IMPORTANT FINANCIAL PLANNING FOR BEGINNERS....BB advises some important decisions that can make big lifetime financial differences:
- (a) pay yourself first (save minimum of 10% out of each paycheck and put in investment account
- (b) take advantage of employer matching programs
- (c) Maximize tax-privileged programs; control expenses in portfolios
- (d) Pay off credit cards each month. Credit card interest amounts to usury.
POLITICS ON MONEYTALK
GRIDLOCK......BB commented that he expects gridlock after the election no matter who wins the presidency or Senate. He expects the House to remain Republican - blaming it on gerrymandering. (huh?) He stated that Wall Street likes gridlock, and that the Presidency is over-rated and is certainly not the most powerful position because congress holds the purse-strings. The most powerful person is the Federal Reserve Chair. Brinker said, "Unfortunately one of the candidates will win."
DEBATE ON MONDAY..... Brinker said: "The Super Bowl of debates....This should set all the records for viewership and listenership on Monday night. No word yet on whether Gennifer Flowers will make an appearance. She was said to be invited by The Donald, but then The Donald said maybe not. Gennifer says she'd like to be there. We shall see. In any case, it should be a huuge audience."
Honey EC: Note to Bob...It's best not to get your news about Donald Trump from "what is said." It's best to go directly to his website, Twitter or Facebook. That way, you can get your remarks about him correct.
FRANKJ'S MONEYTALK GUEST-AUTHOR SUMMARY
Bob’s third hour guest this September 25, 2016 was Robert England, author of “Black Box Casino, How Wall Street’s Risky Shadow Banking Crashed Global Finance.
Most of the discussion was based on Mr. England’s recent article on Millennials, link below.
The first thing to do is once again, define what a millennials is. You can find many definitions via Google, but I’ll use the one mentioned in the interview: people born between 1983 and 2000. At 83 million, they are the largest generational grouping in the country, even bigger than Baby Boomers.
· They get married later and have children later in life than previous generations.
· They prefer to live in urban areas because that’s where the jobs are and they don’t want to commute.
· The median income is lower than it was 10 years ago.
· They buy homes with a median price of $187K but rarely put down 20%, instead putting down as little as 3.5%.
· What do they need? They need policies from the government that will spur economic growth.
· 45% of them have insufficient credit scores or credit histories.
· If they get their credit straightened out, they’ll boost the real estate market, if not for home purchases, then creating demand for rental units.
· More millennial women are getting college degrees than millennial men. Could marriage rates be affected? Yes, if they want a husband with the equivalent education. (Given a choice, I think a lot of women would be happy with a guy who knows how to FIX STUFF around the house.)
The guest said he does not support the FHA policy of offering 3.5% down payment loans. It is not a sound policy for the long run.
Student debt is holding some millennials back with reduced spending potential. More are staying home with Mom and Dad: right now we have the largest number of people under 35 years old living at home since the 1880’s.
Bob asked about economic policies of the two presidential candidates. The guest said millennials would “zoom ahead” with pro-growth policies. Bob asked about gridlock, but the guest was not as convinced there would be gridlock as Bob seems to be… regardless of who is in the White House.
Millennial women are getting more college degrees than millennial men. The guest said this means they may stay single longer.
Bob asked “where is the growth going to come from?” The guest that there were 2 areas, but he only got to mention one before Bob interrupted. Mr. England said we need to stop the deluge of regulations, particularly those which force small banks out of business because they are the sources of loans for small business.
Mr. Brinker butted in with a mention of Wells Fargo and Mylan having been hauled in front of Congress. He was correct in the sense that behavior these outfits doesn’t make the case for LESS regulation. The guest said people see government as a failure and not working.
Bob sees no chance of massive fiscal stimulus. Mr. England thinks there are areas of agreement: reducing corporate income tax rates and repatriating money stashed overseas. Mr. England thinks Congress would support these policies if there is leadership in the White House.
There were only two callers. The first one, from Carson City sounded like he was talking from inside a metal tube, but what I heard was that regulations are about to push him out of the health care provider business.
Mike from Missouri got in a little dig at Bob, on the topic of lower corporate income tax rates, he asked, “Isn’t Trump doing that?” Bob made a quick recovery saying it is a no brainer.
As to the book “Black Box Casino,” the guest said the takeaway is a breakdown of discipline and that government had a bigger role in allowing or pushing the creation of “no doc” mortgages. “Don’t blame it all on greed,” he said.
Bob wrapped up at 3:51 pm.
Honey here: Thanks Frankj.....It sure sounded to me like Brinker was trying to lead Robert English into finding fault with Donald Trump and was disappointed because, just the opposite, he was espousing many of Trump's positions and plans. Don't expect him back any time soon. LOL!
Bob Brinker said that the office of President of the United States is:
B. Very important.
JEFFCHRISTIE'S MONEYTALK FINAL EXAM QUESTION
Bob Brinker said that the office of President of the United States is:
B. Very important.
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