Sunday, September 25, 2016

September 25, 2016, Bob Brinker's Stock, Bond, Economy and Investing Summary

September 25, 2016....From the Palatial, but Never Outrageously Ostentateous, Flight Deck, Bob Brinker hosted the Starship Moneytalk live today....(comments welcome)

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.
BORROWING FROM 401k....BB: Not  my favorite thing to take money out of tax-sheltered account to do other things with it.

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.

Quick facts:

· 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! 

JEFFCHRISTIE'S MONEYTALK FINAL EXAM QUESTION

Bob Brinker said that the office of President of the United States is:

A. Meaningless.
B. Very important.
C. Irrelevant.
D. Overrated.

Radio Stations:
710KNUS Denver
WNTK  
KION 1460  Monterey 

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

Sunday, September 18, 2016

September 18, 2016, Bob Brinker's Stock, Bond, Economy and Investing Summary

September 18, 2016....After a two week vacation, Bob Brinker hosted Moneytalk live today.....(comments welcome)

STOCK MARKET.....Brinker did not discuss the market today, but he told caller Tom from Illinois that he was comfortable with him investing in Marketimer model portfolio III with his retirement money. Portfolio III is balanced 50 - 50 stock mutual funds and fixed income mutual funds. The stock portion is (mostly) fairly conservative mutual funds: (AKREX; VDIGX; VFWIX; VTSMX).

Honey EC: Brinker is still fully invested and no changes are expected. 

TWO BUY-SIGNAL BRAGFESTS.....BB hearkened back 16 years to the year 2000 and bragged about his 65% sell signal. (That was the last time he has ever raised cash from Marketimer portfolios. He's been fully invested since March 2003.)  

==> He also reminded listeners once again about his buy-signal in February 2016. (He had raised no cash from Marketimer portofolios to take advantage of it, so it was for new money only.)

FEDERAL RESERVE PJ PARTY NEXT WEEK....BB said there is "no certainty of an interest rate increase next week. 

Honey EC: Brinker has eased his stance from 3 weeks ago when he was absolutely certain the FOMC would not raise rates before the election. Hmmmmm....
Thanks to dRahme, here are the audio excerpts from Brinker's Fed-talk in hour two
CROOKED DEALINGS AT WELLS FARGO FINED $185 MILLION....BB said he thinks banks should be trustworthy, but always be sure that you have FDIC coverage on all deposits. Read more about it here:  Wells Fargo Fined $185 Million For Opening Accounts Without Customers' Knowledge

WHAT THE NEW PRESIDENT WILL TRY TO DO TO YOUR WALLET....Brinker opened the show today talking about the proposed tax plans of both presidential candidates. Some of his points:

==> The last time there was major tax reform was in 1986 under President Ronald Reagan.
==> Brinker much prefers that there be zero capital gains tax.
==> There is no federal estate tax on the first  $5,450,000 (double for married couple) in 2016.

POLITICS - GET THE FACTS, NOT OPINION....The first caller asked a misleading question about Trump's tax plan. She was under the impression that Trump would raise taxes. Brinker went along with her.  Just the opposite is true. Brinker corrected this error after a break:
Brinker said: To add some more color to the tax outlook from the two major candidates. With reference to the Donald - actually on the capital gains side, this would be a reduction of  the long-term federal capital gains rate, which right now is 23.8%.   The reason that the Donald would reduce the long-term capital gains tax rate is because he's going to eliminate the health care law, and he's going to eliminate the 3.8% tax add-on as a result the health care law. Therefore, we would have a new top rate of 20%....In addition to that, there would be no change in the holding period. I mentioned the Clinton proposal is to extend the holding period for long-term qualification. 
 Here is Donald Trump's - or as Brinker calls him, "The Donald." 

Here is Hillary Clinton's - or as Brinker calls her, "Clinton." 
Thanks to dRahme, here are the audio of Brinker's tax-talk excerpts in hour one
 FRANKJ'S MONEYTALK GUEST AUTHOR SUMMARY

Bob’s third hour guest today, September 18, 2016 was Chris Zook, author of the book  Founder's Mentality: How to Overcome the Predictable Crises of Growth   Mr. Zook is with Bain & Co. 

Editorial comments in italics, as usual. 

The book addresses why some companies “age” prematurely and why others carry on successfully. Mr. Zook’s research revealed that companies where the founder is still involved returned 3.1 times the value to shareholders as did other companies.

“Ok, take Apple, Google and Facebook out of the data and then what is it?

It was still 3 times the value.

Eighty-five percent (85%) of business leaders he spoke to said the barriers to growth are internal. How do you overcome this?

The guest cited 3 elements of successful leadership. The “insurgency of ideas.” I took this to mean an appreciation and encouragement of creative thinking. Next, he said a leader needs to be obsessed with the product and have a love for detail. Steve Jobs was cited here. But Ray Kroc, the founder of today’s McDonalds was as obsessive about the product, based on what I’ve read about him. Finally, the successful leader needs to take responsibility when things go wrong. (John G. Stumpf, CEO of Wells Fargo, are you listening?) 
IBM was cited as a company that tried to keep a minimum number of layers between top management and the customers.

Dell Computer boss Michael Dell got tired of the short term demands made on his public company and took it private. Employee satisfaction increased.

Howard Schulz came back to Starbucks and found they had opened stores in bad locations and with bad layouts. He shut them down.

The late Dave Thomas, founder of Wendy’s retired but then came back, not as CEO but as a quality chief. He would inspect behind the counter at stores, looking for signs of slippage in quality. A dirty bucket in the back indicated a dirty floor.

Home Depot ran into trouble when it became a matter of “finding yourself,” vs. doing it yourself.

Franchising is a great way for the founder of a company to keep the entrepreneurial spirit alive. The guest mentioned Domino’s Pizza as an example – they’re going gangbusters in India. Enterprise rental cars was mentioned as the #1 hirer of college grads. They put them in charge of a location and see what they can do.

Successful companies reward the “doers” not the “thinkers.”

Caller Carl from Chicago weighed in. I think he’s been on before. Anyway, he called mainly to give a speech, part of which was the change in executive compensation methods resulting in a distraction from the original mission of the company. Mr. Zook agreed. Earlier he had cited the transition of the leadership in a company: the inspired founder(s) give way to managerial types who are replaced by custodians of the firm, who yield to bureaucrats.

What’s the takeaway? Study founders and their behavior because they are role models for leadership. The US is a country of “founders,” we should support people who want to become founders.

Honey here: Thanks, FrankJ.....Interesting subject and great summary. It's interesting how so many firms lose the founders vision when they get too big or when the founder dies - and to know there are some exceptions. Personally, I would say that Disney is definitely NOT on that list of exceptions - just my opinion. 

JEFFCHRISTIE'S MONEYTALK FINAL EXAM QUESTION:

Which song did Bob want the fed to adopt?

A) Twist and shout.
B) Heartbreak Hotel.
C) You talk too much.


Honey here: Thanks Jeffchristie....I know a few people that might benefit from that song. :)

Radio Stations:
710KNUS Denver
WNTK  
KION 1460  Monterey 

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