Sunday, June 25, 2017

June 25, 2017, Bob Brinker's Moneytalk: Stocks, Bonds, Economy and Investing

June 25, 2017....Bob Brinker (mostly) hosted Moneytalk live today....(comments welcome)

Brinker was at the helm for the Flight of the Starship Moneytalk for Multi-Millionaires today.
  • Caller Adam from Albuquerque: $3.4+ million 
  • Caller Dan from Ontario, CA: $2.8+ million
  • Caller George from Virginia Beach, CA: $2.3+ million
  • Caller Bernie from Westlake Village, CA: $4 million (and gets a cool $120,000 a year County pension - but looking for a way to avoid CA taxes). 
INVESTING BASICS...Brinker's opening 20-minute monologue covered the basics of investing that is usually played for re-run programs. The sound quality then changed at 20 minutes after the hour, so I believe that Brinker actually started the live broadcast at that time.

STOCKS....No mention of the stock market today.....Brinker seems to be avoiding talking about the amazing stock market gains that have happened since the new president was sworn in.  That is quite different from all the raving he was doing last year over the rally from  2009.   After the Mega-bear market of 2008-2009,  his fully invested Marketimer portfolios rode down  the S&P 500 Index over 50% to a low of 676.....

BRINKER'S MARKETIMER STOCK MARKET PROJECTION NOW:  As of the June issue, Brinker's S&P 500 Index projection "going forward," is the "into the upper 2400s range." 

HOW MUCH INTERNATIONAL STOCK......Caller Joe in Wyoming asked Brinker if 40% international stocks was an "unusually high" percentage to own.
Brinker replied: I think it's a large number given the fact that a large percentage of corporate revenue is earned overseas in terms of the S& 500.  If you take a look a that Index, you have close to 40% of the revenues come from overseas and that would translate roughly into the same percentage of profits....For that reason, I think 40% is a really high percentage for international.....We use 20% at this time in the investment letter (Marketimer)......
BONDS/INTEREST RATES.....Caller Joe in Wyoming then moved on to "bond side," asking about duration.
Brinker replied:  "Our duration in the investment letter (Marketimer) right now is about 1 1/2 years.  And the reason is, I don't think it makes any sense long term to have a 10-year Treasury yielding under 2 1/4, in a situation where the economy is growing 2%. And where inflation is another 2% - that's the long-term target of the Fed....That's a 4% GDP nominal growth rate......then I don't think it makes any sense to have a 2 1/4 10-year Treasury, so I don't have any interest in those intermediate and long-term bonds, and we are keeping our duration short. So short that our average duration is just 1 1/2 years in our income portfolio.
HOW MANY WAYS ARE THERE TO SCAM AN AUDIENCE FOR MONEY.....Caller Joe in Wyoming ended with this.  He said: I've been listening to you since you first came on the radio in the late 80s......And I've had your newsletters close to 20 years for the Marketimer and maybe over 10 years for the Fixed Income, and I've been buying your suggestions from both of those and creating a mix.....
(Brinker interrupted and moved back to Joe's original question)  "......I don't think I'd want to have 40% equity rating percentage-wise international when I already that about 40% of U.S. Companies earned their money overseas.....For me, that would be redundant......Now the caller in Laramie mentioned Brinker Fixed Income Advisor. For information you can go to Brinker AdvisorXXXX.....or call 800-660-xxxxx. It's as simple as that....Jerry is with us in Napa, California." 
Honey here: In my opinion, an honest man would have stated clearly that he was only a consultant for the Brinker Advisor. It  is written by, published and edited by his son (a jr. Bob Brinker) and his son's wife, Lisa. 

FRANKJ'S MONEYTALK GUEST-AUTHOR SUMMARY: 

Bob’s guest this 25th of June 2017 was journalist Jack Ewing whose book is "Faster, Harder, Farther: The Volkswagon Scandal“  Mr. Ewing was calling in from Portugal. He writes for the New York Times and Business Week and has covered this scandal for a while now from his perch in Germany. The connection was good but the guest’s volume was low. Bob asked him to speak up at one point, which helped marginally.

Back in 2007, VW decided they wanted to become the worldwide sales leader and to do that they’d have to sell a lot more cars in the US. They opted for a “clean” approach: their cars would be advertised as low in pollution. It worked in Europe, why not the US? It turns out there was a fly in the ointment: the diesel engines which were touted for their high miles per gallon, could not meet the US pollution requirements.

What to do?

Program a software fix to run the engine so that pollution levels meet the US standards when the vehicle is being tested. The software detected when the car was “on rollers,” i.e. not on the road. Back out on the road, the software went back to “normal” conditions, which resulted in better mileage and higher nitrogen oxide emissions. The guest said the emissions could be up to 40 times the legal limit. This agreed with a Car and Driver article I looked at, which pointed out that the emissions did not always run 40X, it varied by the type of driving one was doing.

What went wrong?

Things were going swimmingly until 2014 when a group of grad students at the University of West Virginia got a modest grant of $70,000 to test the VW diesel vehicles on the road. Whoops! They found the nitrogen oxide emissions were higher when on the road than when in the lab. The findings were reported in 2014, without any accusations. But that was enough. Regulators, particularly in California pounced.

What corporate culture led to this cheating?

The guest pointed out that VW is not especially shareholder friendly. A big chunk is owned by the Porsche family and another chunk by the German state of Lower Saxony. He implied that employees understood the objective (increased sales) and did what it took to get there … cheat on the emission system. The result has been that the CEO resigned. Other members of the “C-suite” claim no knowledge of the cheating, but people in the next layer down did know of it.

Investigators are nosing around VW in Germany but the guest mentioned that Germany doesn’t have an extensive record of jailing white collar criminals. As far as extradition to the US if charges are filed, Germany does not extradite its own citizens. One employee, Oliver Schmidt, a VW engineer made the mistake of flying into Miami and was taken into custody.

Three callers weighed in: Bridget in NY state and Vena in Lake Tahoe, CA. Bridget’s husband has terminal lung cancer, but never smoked. Vena’s brother died from lung cancer and never smoked. Both wondered if there could be a link to the nitrogen oxide emissions. The guest was diplomatic in his answer. It is hard to isolate among different factors what led to the cancer.

William, calling from Charleston, SC started to point out that the pollution from these VWs had to be “miniscule” compared to what a truck puts out. Bob shut William down quickly and Mr. Ewing corrected the record: the VWs put out more pollution than a long haul diesel engine truck.

What is the result for VW?

Instead of boosting sales, the scandal cut into sales in both Europe and the US. They’ve lost the “green” image they hoped for. People in Germany are disappointed that a German firm would cheat like this. A few believe it is a plot by the US to suppress VWs sales. The author said VW faces suits in the US, Australia and other countries.

This article from April 2017 discusses fines and penalties for the company.

nbcnews_business/autos/judge-approves-largest-fine-u-s-history-volkswagen

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39 comments:

Chris in ATL said...

I'm not sure Bob is live today. He gave out the number, but the intro has no discussion of topical events (so far).

Honeybee said...

.
Chris...I was just starting to wonder....

MikeE said...

I believe he is live as he talked about summer just starting, which was June 24.

Chris in ATL said...

The audio changed at the end of the intro, so I think he may have used a repeated introduction before switching to live. We'll see soon!

Honeybee said...

.
I'm not in the studio, so can't swear to it, but I believe that opening 20 minute monologue was pre-recorded and Brinker showed up live after 20 minutes.

Anonymous said...

Brinker also mentioned the current very high temp. in Las Vegas, so if he is not live, he increased his level of deception to a record high.

Anonymous said...

He's now talking the implications of Amazon's recent proposed buyout of Whole Foods.

Thus HE's LIVE!

Honeybee said...

.
Anonymous....I appreciate you repeating what I have posted more than once.

But add a handle or your comments won't be published.

Anonymous said...

Was it just me, or did Bob run a sleight of hand on Bernie, the California county employee contemplating the purchase of a fourth property? First, Bob made him describe his pension, took a break, then cleared the table quickly by telling Bernie that his real estate scenario might precipitate a cash crunch, a $10,000 monthly pension be damned. Easy as one, two, three!

Jerrod Clarkson said...


Honeybee said...
"I'm not in the studio, so can't swear to it, but I believe that opening 20 minute monologue was pre-recorded and Brinker showed up live after 20 minutes."


Honeybee, thanks for clarifying that. If you said you WERE in the studio I believe all of your followers would be concerned - Extremely concerned in fact!

JC

Billy said...

I wish the guest would speak up. Every time my AC kicks in I can't hear him. I'm getting crotchety in my old age,
Billy

gabe said...

After listening to Bob sing the praises of Jeff Bezos and Amazon and its purchase of Whole Foods I believe that Amazon's serious consideration of entering the Drug Prescription space in the come year or two will far exceed its apparent future success in the food business. As a shareholder, I look forward to Amazon entering the pharmacy space and its positive impact on its stock share price.

Believe me, the $10,000 monthly retirement pension check Bernie receives from the Golden State is not unusual. California was also very kind to me as well.

Gabe

Dr. D said...

I thought I heard that fortunate pension recipient complaining that the $120 K really didn't go that far in CA. Boo Hoo ..Boo Hoo. Ya had me, then ya lost me.. ;-(

Honeybee said...

.
Yep, Doc....that is exactly what he had the nerve to say as he figured out whether or not to buy another $million home - this one in Nevada so he could live there six months and 1 day per year and avoid high California taxes. And make more money by making it into a Air BNB the other six months.

California taxes that are killing most taxpayers who are not sucking at the public trough.

Mad as HELL ! said...

Gabe,

Please don't forget to thank Honeybee and me each month when you receive those CA pension checks.

I can't speak for Honeybee, but if my hourly/daily/weekly/monthly/yearly "contributions" to the CA Grabfest grow any larger, it will likely put me in the "food insecure" category.

Hell, maybe I would be better off on welfare. I should probably check into that.

I'll just tell them I'm a political activist and an oppressed Trump-resisting LBGTQ muslim illegal alien who is dead broke and starving. Yeah - I betcha they would fork over $100K a year (or more) in various welfare programs. Best of all, no taxes on that!

The only downside is that the $3 million mansion they give me would have to be located in a sanctuary city. But hey, I have coping skills - I could try to adjust.

Anonymous said...

Bob was late to the party. The darn traffic in Henderson between his restroom and his in-home studio is brutal. Or maybe he just had to find out if his wager on the NASCAR race at Sonoma would reap a bonus based upon the new points format for that race.

The Sonoma road course is notoriously impossible to pass another car on. It's a narrow cart path, with uphills and hurry downs that any rational Sherpa would advise against. And with 33 highly-motivated speed freaks taking the green flag, it resembles typical Bay Area traffic at 5 pm, with similar results. In short, "Fugget about it."

The race was usually won by the first car to run in the lead shortly after the start of the race, with everyone driving like sheep in a herd, going to pit road together for gas and tires, and ultimately crashing into each other profusely during the last 10 laps in order to create ANY magic luck for a shot at the lead.

It was traditionally a real yawner for the teams and the fans, so the promoters had to think up a segmented race-within-a-race points format to give everyone even remotely involved some reason to pay attention.

Obviously, Bob wanted to watch the live action on FS1 to see if his huge parlay wagers would beam him into the land of critical bankroll on the Strip.

I hope he scored. Maybe he'll buy drinks for a change.
Scali

burt said...

Honeybee the masteress of great summaries (who needs to listen to Brinker, just read the summaries), you used the term, "pre-recorded."
Is anything recorded not "pre?" Reminds me of the term, "recorded earlier" as if anything would be recorded later.

Unknown said...

Did you read Larry Kudlow on buying and holding equities vs bonds. Bonds are over priced and this economist expects U.S. to do good with the expected tax overhaul. Earnings are good, yet being held offshore. I do think most are in agreement upon tax overhaul. There will be a political price to pay as usual, but most non partisans are tired of the usual political mantra. The CIC seems to make good decisions and pretty good at selling the goods within the common man sensibilities. I do think the health care will make it as well. The recent message of U.S. becoming a net exporter of energy is great news. The international community will pump more within U.S. stocks. Our economy will grow and so will stocks.

Larry K is a buy and hold investor per experience and likes ETFs. Nice to hold 30% out of market, mostly within cash for the eventual bargain to self insure. My input not LKs. I read, some believe bonds will not behave as expected if we have a major stock correction since they are over priced?

Diesel engines have major drawbacks upon NOx emissions and worse yet for human health. The particulates PM 2.5 can go through lungs to blood. This foreign matter triggers auto immune disease and the usual heart disease conditions, even cancers. This is rated the biggest health risk public. Diesel produces the majority of this pollution. Some cities have considered a restriction of diesels. Battery car is very clean for cities. Natural gas is our premiere carbon fuel with hardly any emissions other than CO2. Biofuel, especially ethanol, is rising in the ranks for low emission. The fuel has low and steadily lower carbon, renewable, and high efficiency capability. The fuel can produce more torque than diesel fuel. The fuel doesn't require the diesel cycle either, so engine would be cheaper. Some may not know the cellulosic and catalytic technology really has come to age. No big break through, but a stream of steady improvements. Biofuel will steadily be nipping at the heels of petrol and work to keep their margins down.

Combustion engineers are inventing lean burn technology that will greatly reduce emissions and improve average Mpg in the future. I don't think this applies to diesel? Fuel supply is currently evaluating blended fuel to maximize ability to engineer engine efficiency and lower emissions. Alcohols will play a big part. They are testing hydrogen within the mix as a small percentage acts like a catalyst for improvement.

I do remember Mercedes parent company claiming that they had plans in process to achieve the number one auto manufacturer slot. Maybe that was before the Germans bet the farm on wind energy?

gabe said...
This comment has been removed by a blog administrator.
Jerrod Clarkson said...

burt:

Re: pre-recorded vs. recorded


I'm going to vote with Honeybee regarding this, as her wording is precise and not subject to any misunderstanding (as her recaps and editorials always are).

pre-recorded: Recorded (sound and/or video) in advance

recorded: Recorded (sound and/or video) in advance OR recorded (sound and/or video) in real time.

JC

JayCeezy said...

...zzzz...zzzz...did someone say...LARRY KUDLOW?!?!!! *gently returns to restful slumber*

Jim said...

Probably Brinker does not want to mention how much the market has risen since the Trump election because Brinker turned out to be wrong. Before the election Brinker said he thought Trump was going to start a trade war and put all kinds of tariffs on imports that would destroy the economy. He kept mentioning Smoot-Hawley and the Great Depression. He's been silent ever since.

I'm guessing Brinker loves getting call from Multi-Millionaires, especially when they say they have been following Brinker's advice for years. It makes the host look good. Much better than someone calling and saying "Bob, I followed your QQQ advice and had to delay my retirement."

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Anonymous said...

During an initial visit to this blog, I'd read that BB had become a resident of the beautiful Lake Las Vegas area. He references it frequently on his radio show. In fact, I admire the lake every time we fly into Las Vegas and land on runway 25L because the Lake is just outside the right-side window during approach. It's a beautiful place.

As happened to everyone everywhere, the market value of those properties took a significant nosedive during the financial meltdown of '08-'09, such that the Ritz Carlton hotel resort "anchor property" at Lake Las Vegas closed it's doors, probably from lack of prosperity rather than too much.

But the only reason I know this is because I later worked with a guy at a blue-collar job who'd supported his son during culinary college, and the son worked as a chef at the R-C LLV. So when the resort closed and his son moved to another R-C property, it became an interesting topic over lunch in the breakroom.

I'm not saying this is 7 degrees removed from Kevin Bacon or anything, but it makes the big picture of life more compelling.

Oh, by the way, the co-worker's son moved to a far superior Ritz Carlton property and is loving life, as they say.
Sandy, Post TX

Unknown said...

I would like to know why the U.S. stock market offerings are shrinking? A modern trend continues, in which an increasing percentage of private companies. What is going on? It appears that really good financials attract adequate investors through the private tap. No need to go the extra mile with public funding.

I have worked with wealthy private companies and have picked up that managing public companies has big downside. Companies like influential competent deep pocket investors that contribute to bottom line. May over sight at the federal level and troublesome investors not worth the hassle?

What can be done to reverse this trend? What have we invented within our financial markets to disincentivize public investment. Hostile buyouts/takeovers as companies just have to much cash laying about? Overzealous regs that kill the golden goose? Unintended consequences of stock manipulation or just loss of control of good management per the need to impress fickle investors?

Have you read that S&P 500 is international stock as large international corporations do 40% of their business within foreign markets. Also, the best financial minds out their claim the U.S. is the safest surest market to be in given our open competitive capitalist trading and ability to invent superior solutions. Meaning were not stuck in the past as much as competing countries with socialism fancies of central control. So, review the breaking trends that will shake up economies and make your bet. Energy sector. Which country has the most innovative businesses with high resources. Which country has the most competent CIC that know how to manage and exert power with the bonus of handling corrosive press corruption. Does our country appear to be undergoing a purge within business as usual DC corruption. Do we have a CIC that fears not to take risk in attempt to improve the country. How about the foundations of investing within a country with high defense capability that makes our country a very hardened target for evil. Everything we read looks impressive for a much larger economy. Robots, self driving vehicles, car planes, alternative energy, transportation,biological solutions, alternative education, and extremely ingenious corporations. Everything I read convinces me, that at the present time within U.S. history we're poised to become a much more robust economy. I guess one needn't do much, other than simply keeping and investing within S&P 500. Like I posted before, savings are more lucrative return on investment. To that end pushing the savings to S&P index should make one a genius investor over time.

Honeybee said...

.
Hi everyone! This question came in via email. Would the BRT and all Brinker experts here, please give this person a hand?


"Good morning. I a new listener to Bob Brinker's Money Talk and have been trying to find some information. I'd like to get Bob's opinion on debt in retirement. Specifically, would he recommend me selling not needed mutual funds and use this money to pay down outstanding home mortgage (4.25% APR). How about pulling money out of a small Roth IRA I've had for years in mutual funds? I am retired and have a monthly cash flow that is more than sufficient to meet all of our monthly costs. The mortgage interest annual expense is higher than the additional tax would be for loosing the interest deduction and even after paying the capital gains tax on what would be pulled out.

I was hoping that you might recall a time when Bob discussed this area or have the ability to search your blog for this topic. I looked on the blog and could not find a way to search. I have also googled and am unable to find a way to pose this question to Bob.

Any help you could provide would be greatly appreciated.

MK said...

I could swear I remember BB back in the day (say 15 ya?) saying to pay off the mortgage. This is back when he was pushing Treasury Direct (and I thank him for cluing me in on that one) and was saying how paying off your mortgage is the best guaranteed ROR there is. But I could be confusing him BB with somebody else.

Anonymous said...

To Mr. Email,
Bob would simply say, "You make a good case. You answered your own question."

Or he might say, "If it helps you sleep at night." Or, "It's a personal decision."

Either way, when it's a tough call that could go either way, he defers to the caller's wishes.

He's a lover, not a fighter. As Dennis Rodman would say, "He don't want war."
-Chili, Alpine CA

Moe Howard said...

Hey Mortgage guy,

How many years left on your mortgage? Since you have a 4.25% loan, I suspect it taken a while ago. Since you have a good cash flow, you are probably over thinking this.

frankj said...

Yeah, pay it off if things are as you've described. Hate to see the Roth-IRA get used to do it but pulling money out of there is tax free.

Mad as HELL ! said...

Honeybee,

Are you aware that there are three tax/fee thefts of CA citizens going forth this year?

1. $0.02 per gallon CA tax per gallon courtesy of our "esteemed wife cheater / house cleaner $#%&ing" gubner. I guess he wasn't kidding when he said "I'll be back!"

2. Crazy Jerry's $0.12 per gallon CA tax per gallon beginning November this year and continuing in perpetuity (inflation-adjusted upward annually).

3. Crazy Jerry's massive increase in car registration fees effective this year.

It is estimated that the above 3 items will cost taxpayers about $400 additional per year for the average car owner.

Of course all of this money will go to road repair as promised, right? HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA HA !!!

In addition Honeybee, have you ever computed how much we pay for the tens-of-thousands (maybe hundreds of thousands) of CA gubmint employee cars supplied free of charge - with all expenses paid (including registration, insurance, gas, maintenance, etc. and are frequently taken home and used for personal use? It is impossible to compute! NO ONE KNOWS HOW MUCH ALL OF THIS COSTS! Of course these "public servants" will ALSO be rewarded with MASSIVE six and seven figure pensions when they retire.

WOW! I am MAD as HELL ! about this!

Honeybee said...

.
Mad as Hell....yes I am aware of those things and I want to know when the hell we are going to be rid of Commie Brown?

Of course, we could get Gavin Newsom.

Mad as HELL ! said...

Honeybee,

Sad to say, but at this point Newsom seems to be "the anointed one." I would say that he is politically situated about 40 miles to the left of Bernie Sanders and about 50 miles to the left of Brown. That pie stinks no matter how ya slice it.

In short, if Newsom is Gov. it will beabsolutely catastrophic for the state.

Unknown said...

Mortgage payoff email- Brinker wouldn't offer this advice, so if you only want Brinker advice the following is not your cup of tea.

Although you have adequate cash flow, more is better as it provides and improves your opportunity investment capital reserve. Also, the improved cash flow will naturally increase your financial foundation (more ability to weather storm). For example, paying off your mortgage will make it possible to maximize a line of credit or to apply a future mortgage to pull equity out of home upon a stock market correction for investing opportunity. You could work with bank to set this up in advance. Since you have good cash flow this will be very low risk with very high opportunity benefit. So, paying off mortgage should bump up your cash flow, improve your return, and increase opportunity capital. Always a good thing.

Your mortgage payoff could be visualised as a bond. A 4-1/4% tax free bond. That puts the value into better perspective. Also, this type of "bond" investment will have a tremendous advantage of improving cash flow. Your home is already an inflation hedge, that's good.

Interest rates may go up or may stagnate. Most believe the fed will quickly curtail inflation per cost of money adjustment. They do this because the nation has so much debt load our government would go bankrupt with high interest rates. So, inflation can be very dangerous to government expenditures. The fed reserve can nip inflation quickly and proactively. They will do so per the fear. This does put them between a rock and a hard place. They want the economy to enlarge to make the debt ratio smaller, yet can't afford to.

Thank the politicians whom spent the future generations wealth to gain popularity for this precarious situation. This is the Illinois phenomenon of free money for constituents political garbage. One might say the Hugo Chavas way. We don't want to end up like Illinois nor Venezuela, so the fed is threading the needle and most expect 2% economic growth in spite of Thrumps actions to improve.

DK Amarillo said...

Mad as Hell - The super-rich Tesla owners in Cal will not have the to pay the gasoline tax, only the registration fees. That is fair - put extra tax on Cal sinners - those who drink, smoke, or pollute. Probably add marijuana to the Cal sins and tax it to death too.

Taxing cow farts was another nice tax signed into law by Brown in 9/2016:
"The state's Air Resources Board can also now regulate bovine flatulence, as long as there are practical ways to reduce the cows' belching and breaking wind."
http://www.foxnews.com/science/2016/09/20/cow-farts-can-now-be-regulated-in-california.html

Mad as HELL ! said...

Yeah, that bill was dreamed up by California Senator Ricardo Lara (aka Cow-Fart Lara).

He wanted to make it mandatory to put a diaper on cows. Not sure if that made it into the final legislation, but I would not be surprised if it did.

I think (most of) our state legislators should be required to wear diapers. Heck, maybe they do!

/ AD / said...

1. Market sentiment from CNN is neutral: 49 out of 100

http://money.cnn.com/data/fear-and-greed/

2. Shiller PE ratio around 30

http://www.multpl.com/shiller-pe/





Anonymous said...

Hmm is anyone else encountering problems with the pictures on this blog loading?
I'm trying to figure out if its a problem on my end or if it's
the blog. Any feed-back would be greatly appreciated.

Honeybee said...

Whoever you are besides anonymous....No problem here.

Sorry you are having trouble. Maybe someone else can offer advice.