Sunday, October 15, 2017

October 15, 2017, Bob Brinker's Moneytalk: Stocks, Bonds, Economy and Investing

October 15, 2017....Bob Brinker was live on Moneytalk  today.....(comments welcome)

STOCKS....Brinker did not mention the stock market and certainly did not report that it has risen over 25% since President Donald Trump was elected.

However, in the latest Marketimer, he is still fully invested.  Page 3: Paragraph 4; Brinker wrote:  "Applying this (17 to 18 times operating earning for the S&P 500 Index) to our 2018 estimate provides the potential for the index to challenge the 2600 level going forward."

BONDS....BB did not talk about bond funds today, but his advice to buy only short-duration funds is the same.

GOLD AND PRECIOUS METALS NOT FOR BRINKER.....Caller Gregory from Clovis asked about owning up to 10 of gold to guard against a declining dollar and inflation.  BB replied: It depends if you want to speculate on precious metals. It's not my preference. I'd rather invest in things that have value, pay dividends, grow their earnings - doesn't apply to gold bullion. It's purely speculation and will depend on if you think there is somebody out there that will pay more for it than you."

Honey EC: Several years back, Brinker added the ETF for gold (GLD) to his Marketimer list of "recommended issues."  He never said how much he recommended or why he recommended it. A couple of years later, GLD disappeared from Marketimer. There was never any reason given, but it was probably because gold had been dropping.

INFLATION BACK, TONE-DEAF IF YOU SAY OTHERWISE.....BB said: "I would disagree with those who are telling you that there is no inflation. I think they are wrong. The year-over-year increase in wages stands at considerably over 2%.....That's inflation. The Consumer Price Index, which just took a bump because of rising energy prices recently. That certainly has moving at a little over 2% on a year-over-year basis.......So those who say there is no inflation. I think they are tone-deaf."

ECONOMY.....BB commented...."We've been stuck in 2 to 21/4 GDP growth for years."

Honey EC: Is it possible that BB missed the latest adjusted numbers - or did he ignore them:  GDP, the value of everything produced in America, was revised up to an annualized growth rate of 3.1% from 3%. It was the fastest rate since the first quarter of 2015.

FED CHAIR JANET YELLEN.....BB commented that a new appointment at the beginning  of February. No one knows if it will be Yellen - or if she would accept.

FOMC  MUST STAY AHEAD OF THE CURVE OR LEAD US INTO RECESSION .....BB said: "If we  were to have a Fed Chair that for political reasons, held rates down lower than they should be - what that would do is create a situation where the Fed would get behind the curve on interest rates. And if that were to happen, you could get into a situation that could lead to recession."

SOCIAL SECURITY PENSION INCREASE.... BB said that beginning in 2018, there will be a 2% increase. For example, if you receive $1000 per month, it will be increased to $1020 per month.

MULTI-MILLIONAIRE'S CALLER CLUB:

1: Linda (no location given) at age 52, having put her children through college and one of them through law school, wanted to know if her $3.1 Million and $1500 a month pension (at 52) - $3000 at age 60 - would be enough to retire.  Brinker thought she could retire and "buy back some of her time." He sang her praises about how well she had done.

Honey EC: Brinker gave a lot of kudos to Linda for having so much money at such a young age. My question to Brinker is: How do you know? You don't know anything at all about how she came by so much money.

2:  Mike from New Jersey, with $3 million net worth called for his wife who was offered lump sum payout of $42,000 at age 48 or a monthly payment at age 65.  Brinker made the comment that either way, the money was not important because of his net worth, but seemed to think that taking the lump sum was the better way to go.

ADDED IN EDIT     The following comments written pen-name, "Smile" 

"Million dollar calls are a little annoying simply because of what is not said. Usually the multimillionaire caller starts by saying been listening and subscribing for years...

The annoyance is based on this intro. The facts usually beg the question of where all the money came from, Bob does not ask the relevant question because he already has his advert. plug from the caller stating long time listener and subscriber.

Bob dares not ask a single question because instead of credit going to him under presumption of caller statement long time L&S... we might find out that maybe the man or woman calling in have huge salaries and or stock options which are outside of norm and attributable to the wealth described in the call or might we find out that they started with 10 million and now only have two or three.

better for Bob to be silent and let naive listeners think that his rag is by default responsible for the success of the caller rather than outside the norm events having nothing to do with da Brink...

these multi million dollar callers are annoying... for what is not said and asked even though it is part of the interest of the call... and in my mind I think the answer to why Brink does not inquire has been asked and answered.


Still annoying though.
Smile

October 16, 2017 at 3:15 PMDelete

TAX-REFORM TALK...BB and many of his callers SPECULATED  about possible upcoming tax changes. BB summed it up with this statement: "There are no concrete numbers."

HONEY EC1....TAX-REFORM COMMENTS SENT BY JEFFCHRISTIE:  It's best not to make any tax plans until changes actually become law - saves a lot of useless speculation.....And remember that what President Trump intends and what Congress presents to him, may not be exactly the same.  

Honey EC2: It seems to me that Brinker is using this tax speculation   issue to open up the phones to allow President Trump to be trashed.  I think that "Trees" sent some excellent comments:

Trees has left a new comment on your post "October 15, 2017, Bob Brinker's Moneytalk: Stocks,...":

Bob was quite the Drama Queen again with proposals on IRS rule change. Like what we have now is the optimum.

Our tax system is a mess, why can't he start there with the discussion? Germany and France are proposing lowering their tax rates. We have the highest corp tax in world. Shouldn't a money talk guy know more about the caustic effect of our screwed up IRS tax system to economy? He should alert listenership to this. Also, he smearing the tax overhaul as the proposals and political actions are dishonest without accurate final numbers. Really? Like Obama health overhaul met all these benchmarks.

We have to raise revenue to pay for tax cuts? What is he talking about? It is a economic game of tax revenue not offsetting pluses and minuses upon an accounting leger. That is a completely bogus idea he spins. How about the rich are getting a tax break? O.k. but that is a nonsensical statement. Tax revenue is not based on tax rate. It is based on overall tax package effects. One example, a lower tax rate often dispels power of income tax avoidance concerns and positioned investors decision making upon hard reality. Meaning no artificial government regulation pollution to distort decision making. This will present a more efficient economy. 


RULE 72 (t)....BB explained this  method of taking money out early from tax-sheltered accounts.


FRANKJ'S MONEYTALK GUEST-AUTHOR SUMMARY

Today’s guest on this 15th day of October 2017 was Robert L. Dilenschneider, founder and principal of the The Dilenschneider Group a Connecticut-based consulting firm.  You can read about his outfit here:  https://www.dilenschneider.com/

He has published his 55th trend report titled, A Time of Turmoil:  At Home and Abroad, All Order is Challenged.    This was a pretty interesting guest interview.  Bob threw a lot of questions at the guest and he had ready answers.    (Editorial comments in italics, as usual). 
We start with population trends:  By 2020, millennials will make up 50% of the work force.   This will change how we (they) work.  Technology will become even more important in the workplace.   In that same vein, fertility rates are trending down in the US, Europe, Russia and Japan.  This is a big deal because we need to do more than just replace ourselves we need population growth to expand the economy and produce tax dollars.  India will have 2 billion people in 15-20 years.  Africa’s population will surge in 10-15 years.  A contributing factor is the lack of readily available contraception.   

Self driving cars:  What would a future trends interview be without a swerve into this topic?   The guest was firm in his belief that this would be the future for cars and trucks.  He pointed out that 10 years ago not much of the US was digitally mapped.  Now, there is not much that ISN’T digitally mapped.  
Bob said on any freeway there are people who are going above the speed limit.  He gently challenged the guest asking him if this crowd would be OK in a self-driving car limited to going the speed limit?  The guest said he didn’t think they’d have any choice about how fast the car went and an “orderly” procession on the highway would be better.

Education:  Asian countries spend more time working with young people.  He’s optimistic though about our prospects.  The cost of a college education is “off the charts.”  He cited his own experience at Notre Dame (and put in a plug for them) with his $500 tuition per semester there, back when.  Investments in buildings, technology, etc. have driven costs up at a rate that far outstrips inflation.   Tenure is a problem, colleges cannot move ineffective faculty out of the picture. 
Caller John from West Chicago said spending (by colleges) is the result of money thrown at them.  The guest agreed and pointed out that the larger institutions have raised lots of money and the small, private liberal arts schools are struggling to keep their doors open.  He said we’ll see closures in this sector in the next four years. 

Cybersecurity:  Hacking is “off the charts.”  Everyone’s data and accounts are at risk.  We need something equivalent to the Manhattan Project to shore up digital security in this country and protect ourselves from hackers in Russia, the Middle East, China and Europe.  The lack of cooperation between tech companies and our law enforcement agencies is “shocking.”   (We all probably still remember the big stink Apple created with their unwillingness to help the FBI get into a domestic terrorist’s cell phone – the San Bernardino  murderer.)  The guest said they have an obligation to come forward and help out.

International relations:  “New boss same as the old boss.”  The crowd running things in China is little different from those in charge at the time of Tiananmen Square, 1989 --  remember the picture of the guy in the slacks and white shirt standing in front of a tank?   If the bosses don’t want something to happen it won’t.  They’ll limit access to the Internet to keep a lid on things.  China has a big problem with so many people there still in poverty.  
Tom from Carson City, NV said Chinese people are buying up land and businesses in the US.  The guest pointed out that China’s foreign expansion includes putting tens of thousands of Chinese into a foreign country as workers in some Chinese enterprise.  

Almost as an afterthought, the guest mentioned the on-going border war between China and India which is virtually unreported here.   (Well let’s see …. If you were an editor of a major media outlet and you had to choose between a story on Harvey W. shuffling around in a bathrobe and a war between the two largest (in population) countries in the world … oh never mind.)
Will we see a third political party?   Mr. Dilenschneider says yes, no question.  The Democrats don’t have a leader so a third party could come from that side.  Or, John Kasich of Ohio could emerge from the GOP.  He thinks President Trump will go the distance – not just 4 years, but 8.  If the tax bill goes through, there will be economic growth here.

The economy:  We’re growing slowly but passage of the tax bill and repatriation of corporate money from overseas will be a huge boost to the economy.  On the downside, on Wall Street, places where you can accomplish trades have decreased.  This could be a problem.    He thinks low interest rates will need to continue, given all the areas that need to be rebuilt:  Florida,  Texas, Puerto Rico (and California although not mentioned.)
 .....and right here at 3:50 is when my audio connection to KKOH Reno cut off for no apparent reason so I was not able to listen to the rest of this very interesting interview.  By the time I got back in at 3:54 it was over.

One thing I liked in particular about this guest is he didn’t equivocate with any of his answers.
Honey here: Thank you very much, FrankJ.  Interesting guest - and a fabulous summary! 

I see that the guest said "there are still opportunities in gold." Earlier in the program, Brinker did a long speech on how buying gold is speculation.

Brinker's guest-author was Robert Dilenschnieder:  "Power and Influence: The Rules Have Changed"


Radio Station 
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Sunday, October 8, 2017

October 8, 2017, Bob Brinker's Moneytalk, Stock, Bonds, Economy and Investing

October 8, 2017....Bob  Brinker hosted Moneytalk live today....(comments welcome)

STOCKS....Brinker did not talk about the stock market's  amazing run up. 

Honey EC: Brinker has made no change in his fully invested market outlook.

=> Thanks to dRahme: audio clip of jobs report

COLOMBUS DAY HOLIDAY..... Monday, the banks are closed and the markets are open.

WILSHIRE 5000 NOT 5000 STOCKS.... Caller Gary from Texas asked Brinker why there were only about 3600 stocks in the Wilshire 5000. BB replied that the name is just that, a name, and that they may have started with 5000 stocks, but have since weeded out all of the penny stocks.

BONDS.....Brinker did not discuss the bond market today.

Honey EC: Brinker made no changes in his recommendation to keep duration of bond fund short - 1 to 2 years.

ECONOMY....Brinker did not talk about the economy....

QUANTITATIVE TIGHTENING.....BB mentioned his guest-author from last week, Alan Blinder.  Brinker and Blinder talked about Quantitative Tightening last week in depth. (Please see my summary, and Frankj's summary of Blinder's Moneytalk interview.) 

BITCOIN.... Brinker had two calls today about Bitcoin, and he pointed out that he has covered this before. He stated that he believes it is speculative, and drug dealers love it.

NATIONAL DEBT....BB stated that the $20 trillion National Debt was no longer talked about in Washington DC.

Honey EC: As my Moneytalk summaries will show to anyone who wants to research them over the eight years of the Obama administration, Brinker was virtually silent all of those years as the National Debt DOUBLED. Yes, that's right - it doubled over all the prior administrations.

TERM LIFE INSURANCE VS WHOLE OR UNIVERSAL LIFE
....BB stated categorically that the only way to go was to buy Term Life Insurance. Caller Colin from Missouri disagreed with Brinker 100% and gave several very good reasons why Term Life Insurance is NOT the only way to go for everyone. Colin's most important point was that life does not always follow what is planned, so with Term Life Insurance, one could end up with no investments in later years.

Honey EC: Brinker does not like to be disagreed with, and was quite rude to Colin. He tried to make up for it by "praising" his call later in the program. Far too little and too late. Colin was a perfect gentleman and a superior caller.

=> Thanks to dRahme: audio clip of Colin's life insurance call (scroll 3 minutes in)

POLITICS AND TAXES....Honey EC: Brinker did a massive hit job on President Donald Trump today. The only thing that Brinker did not do was use the president's name. Clearly, Brinker gets his talking points from MSNBC, CNN, WASHINGTON POST and the NYTIMES. I will not dignify a mere radio talk show host who flies under the banner of "Moneytalk" and "non-partisanship" by spending time repeating his leftist talking points. I agree with Jim:

Jim has left a new comment on your post "October 8, 2017, Bob Brinker's Moneytalk, Stocks, ...":
Brinker's political views were irritating today. He was basically telling the President to stop being a populist and get in bed with the GOP Establishment if he wants legislation passed. He seemed to take the side of Corker and McCain and against the President. I'd like to ask Brinker if he thinks it's proper for politicians to vote NO on legislation that may be beneficial to the country just because they have a personal vendetta against the President. I think a politician who no longer cares about the country and votes NO simply to be spiteful should not be serving.

He also opened the show once again by emphasizing the value of a college education. From a purely financial point of view I cannot dispute what he said, but doesn't Brinker ever think about how college students minds are poisoned by liberal college professors? While a college education can reward a person financially it can harm them in their political way of thinking. Bernie Sanders was popular with college students. Why would college students be attracted to an old guy like Bernie? He probably reminded them of their college professors who spouted the same kind of nonsense. So going to college does have negatives on a persons life as well Bob.

Frankj's Moneytalk Guest-Author Summary:
Scott Galloway, author of  “The Four: The Hidden DNA of Amazon, Apple, Facebook, and Google,” was Bob’s guest today, October 8, 2017.  Mr. Galloway is a professor at the New York University’s Stern School of Business.   
The author researched and wrote about these companies out of admiration for them as well as some of the issues raised by their success.  Despite mention of these four firms in the title, most of the interview concerned Amazon. 


“Amazon fulfills a need to hunt and gather …”  The guest went on to give his interpretation of how men shop differently from women.  Whatever.  What was more interesting was his explanation of “tedious, low-consideration, non-joyous shopping.”  This is the routine shopping we don’t look forward to but is a necessary part of life.  He said Amazon is very good at fulfilling this need, and with artificial intelligence and analysis of shopping habits we could reach the point where groceries are automatically delivered to homes. 
The purchase of Whole Foods (or Whole Wallet as Bob Brinker and my mother-in-law call it) is a game changer.  Despite the fact that Whole Foods was about 9% the size of Kroger, the biggest grocery chain in the US, Kroger’s stock dropped about one-third in the days after Amazon announced they were acquiring Whole Foods.   The acquisition turned 550 WF stores, into potential Amazon warehouses – and these stores in close proximity to a very sizable percentage of the US population.   The guest characterized the Amazon/WF combination as getting a Mercedes for the price of a Toyota. 


Does this mean the end of shopping malls?  
The higher end malls will probably be OK.  Some re-engineering may be required.  Malls in lower income area may not be OK.   We have more retail square footage then we really need, he cited some comparisons between the US and Canada and Europe.   The demise of malls and traditional stores is exaggerated right now because about 80% of purchases still take place at brick and mortar locations.
Bob asked what parts of the market would an investor avoid if they didn’t want to get “Krogered” (my term) by Amazon.  The guest was hesitant to be very specific but he pointed out the recent decline in UPS and Fed Ex shares with Amazon hinting about getting into the delivery business.   He said any sector where Amazon could be viewed as a competitor could have a setback, citing Walgreens’ and CVS as pharmacy/retail that could take a hit if Amazon gets into the pharma business. 


He quoted Mickey Drexler the former CEO of J Crew as saying, “How can you compete with any company that doesn’t care about profits?” 
Indeed.  Amazon is successful enough to be able to borrow at very favorable rates of interest.  


All this talk about their success led to mention of anti-trust activities.  The guest said the Justice Dept. only looks at about 3 anti-trust actions per year whereas in the 1980s they looked at about 20 per year.   He thinks any anti-trust actions against Amazon will come from the European Union.
Google has 90% of the search market so they may not be immune from anti-trust.


Facebook:  the recent scrutiny over Russians using FB to influence the 2016 election is warranted, said the guest.   It was “frightening that it (FB) was weaponized by Russia.”  The average age of FB employees is only 28 so they have no historical perspective.   Whether they realize it or not, they are a media company, not just some social platform for posting selfies.  Zuckerberg has to insure that FB never gets used in that way again.
Caller Sam from St. Louis brought up the issue of low pay and no benefits for Amazon drivers.  The guest was not ready to assess the equity of wages but he did point out that the tech business has two strata of employees, the creative, innovative group who are paid handsomely and the worker bees who are not necessarily paid that well.  He said we need more CEO like Henry Ford was and fewer like Jack Welch. 


Ike from Davis, CA wanted to know how you define the middle-class.  Mr. Galloway said you look at household income and group households by quintiles.  The middle class is in the middle three quintiles, i.e., between the bottom 20% of household income and the top 20% of household income.  He said the percentage in these three quintiles has shrunk recently and is now between 51% - 55%.
Finally, the guest used the work “gestalt” several times so I decided to look it up.   It’s a noun that means “something that is made of many parts and yet is somehow more than or different from the combination of its parts.”   It came up in the discussion of Amazon.  


By the way, Bob frequently mentions the exchange traded fund VTI which is Vanguard’s total US stock market ETF, weighing in at about $86 billion in assets.   Apple comprises 3% of this fund, Facebook A shares, 1.59% and Amazon 1.55%.   If you own any diversified, large cap fund, managed or passive, it is likely you own these companies, as well as Google. 
Honey here: Thank you, Frankj, that turned out to be a very interesting interview.

=> Thanks to dRahme: audio clip, what's up in the Canyons of Wall Street next week, and FOMC.