March 25, 2018, Bob Brinker's Moneytalk: Stocks, Bonds, Economy and Investing

March 25, 2018....Bob Brinker hosted Moneytalk live today....(comments welcome)

STOCKS...At least twice today, Brinker commented that the stock market dropped 1150 points Thursday and Friday because of the proposed tariffs. 

Honey EC: Brinker gave no indication that he was unduly concerned about the stock market being back in correction territory again. He is still fully invested, and as of Sunday evening, has not issued any kind of special bulletin. 

TARIFFS, RONALD REAGAN....dRahme Audio Clip: Pie in the Face; Tariffs

MARKETIMER MODEL PORTFOLIO III (BALANCED).....Caller Steve, who is a new subscriber asked about bond duration in the Portfolio III.

Brinker replied:  "For the uninitiated, Steve - I want everyone to be on the same page - you are referring to page 8 of the Marketimer investment letter where we publish three of our model portfolios. You are referring to the model portfolio III, which we define as a balanced portfolio which invests in the stock market and also invests in fixed income securities."

BRINKER RECOMMENDS VANGUARD PRIME MONEY MARKET FUND (VMMXX).....Caller Steve asked if Brinker would recommend a Vanguard Fund with a duration of 2 to 3 years.

Brinker replied: "I recommend you  stay away from the extended duration.  (Here are) a  couple of things you could do.  They have a really attractive Prime Money Market Fund at Vanguard.....That fund has a current yield  of 1.58. That's a really attractive yield for a fund that has essentially zero duration.....You could also look at a ladder of fully FDIC-insured Certificates of Deposit.....I would use a three, six, nine, twelve month horizon on the ladder, and roll it as the CDs come due.....I cannot extend my duration recommendation based the outlook on the interest rate market as we see it."

Honey EC: It was nice of Brinker to tell the audience about the Vanguard Prime Money Market Fund that he added (20%) to his model portfolio III (balanced)  in exchange for (20%)  MetroWest Unconstrained Bond Fund. In the off-the-record income portfolio, he exchanged 35% of the MetroWest Unconstrained Bond Fund for 35% of the Vanguard Prime Money Market Fund. Those exchanges were made as of February 12, 2018.

VANGUARD GINNIE MAE FUND (VFIIX)....Caller Mike from Seattle said he has owned GNMAs and reminded Brinker that years ago, he used to talk about them every week.

(Honey EC: That is certainly true. Brinker used to brag almost every week about owning them, and he always pointed out that they could "fluctuate in NAV price" but those who own them for income shouldn't worry about price fluctuation - to expect them to bounce between $9.50 and $10.50.) 

BRINKER ON GINNIE MAES.... Brinker said to Mike from Seattle: "We sold out of our Ginnie Maes back in the day. Ginnie Maes are not doing well. Even the fund that I think that is probably the most correctly situated in terms of its expense ratio and management - the Vanguard GNMA Fund - is not doing well. The Fund has a current yield of 2 7/8% but a duration of 4.8 years. That duration is hurting the share price. The share price has been in decline and this year has a total return of negative 1.5%." 

Honey EC: Brinker didn't lie about selling the GNMAs, but he did not tell the truth. It's doubtful that he will ever tell the truth about when he sold them. He said "back in the day," Actually, it was five years ago, and in the interim, the Vanguard Ginnie Mae Fund has done very well for those who held it.  He sold VFIIIX  July 8, 2012 at $10.37....It has been as high as $11.20 over the past five years, and never below $10.00. Is now a good time to sell it at $10.24? Probably.....

Honey EC:  Brinker's deep dive into low-duration, which was years too early, cost his portfolios "hugely" in performance, so in January 2015, Brinker sold both portfolio holdings in FFRHX and replaced them with Doubleline Total Return Bond Fund (DLTNX).  As the years went on, Brinker continued to make changes to his bond fund holdings - adding more high yield bond risk. As of now Marketimer porfolios have  only three fixed income holdings: DLSNX; OSTIX and VMMXX

RATE HIKES THIS WEEK AND IN THE FUTURE....dRahme Audio Clip: The FOMC; Jobs - Need Trained Workers,  Education

INFLATION....Brinker discussed with the guest that there was almost no visible inflation,  but the Fed raised rates this week. 

THE WEEK AHEAD IN THE CANYONS OF WALL STREET.... dRahme Audio Clip: The Week Ahead

FRANKJ'S MONEYTALK GUEST SUMMARY

Bob plugged the third hour interview at least three times during the first two hours of the show.  Coy as always, he did not reveal who the guest was until the start of the interview.  It was a Wall Street veteran, Edward Yardeni, President of Yardeni Research.   The occasion was the release of a book:  “Predicting the Markets.”

As to why he wrote the book the guest said it was in response to “a 40 year itch.”  He elaborated a bit that it was partly autobiographical.   Sounds interesting.   Dr. Yardeni is known for “the Fed model.”   You can read about it in various places on the web.  It is not clear whether he developed it, or simply named it.   From Investopedia:  “This model suggests that returns on 10-year Treasury notes should be similar to the S&P 500 earnings yield. Differences in these returns identify an overpriced or underpriced securities market.”

Not surprisingly, Bob led off with a question about the recent tariffs initiated by the Trump administration.  The guest was a welcome contrast to the one of a few weeks ago who went ballistic over the tariff question.  Dr. Yardeni said most economists would agree that globalization was good and free trade is a worthy goal.  But, there has been unfair trade and the administration has now come down hard on China.   A recent report, 215 pages in length, lists the unfair practices.  He said President Trump may save globalization from itself by taking some of the angst and anxiety out of the topic.   I interpret this to mean that the tariffs and adjustments made behind the scenes won’t mean the end of globalization, they’ll nudge things in a more fair direction for the US.  

Some bullet quotes:

·         Countries exempted from the steel and aluminum tariffs did so because they caved.

·         President Trump is “showing us the art of the deal” by making bold public statements, etc., while negotiations proceed. 

·         The guest “would not be surprised if Pres. Trump gets what he wants.”

·         “He wants to get away from multi-lateral negotiations which take too long, and get to bi-lateral  (country to country) negotiations.”

·         He complimented President Trump for “checking off the things he said he’d do while campaigning.”  These included doing something about trade and getting tax reform passed.

As to Jerome Powell, the new Fed head:  Dr. Yardeni likes him.  He’s a lawyer by training, not an economist.  He sees him as pragmatic.   Money talk regulars expected Bob to ask what’s happening with the 10 year Treasury rates which are at 2.875%.  The guest said part of the reason they continue at this low amount has to do with Europe holding rates down.   He does not think equity investors will run for the exits if the 10 year hits 3 to 3.5%.  Indeed,  if it does it is a signal that the economy is doing well. 

After the break Bob let some callers in.  First up was Rob from KKOB in Albuquerque, NM who asked if we’re headed for an inverted yield curve.   (As a certain popular radio personality would say:  “for those of you in Rio Linda that means are we headed into a recession?”)   The guest’s short answer:  no, he does not see this developing.   Bob and the guest gnawed on this a bit and the guest said that 2% inflation justifies a 2 – 2.5% fed funds rate which justifies a 3 – 3.5% 10 year Treasury.  

The Fed believes that monetary policy drives inflation.  Too much money and you get inflation so the antidote is to tighten by raising interest rates.  The guest said that hasn’t been the case for the last 8 years – that is, loose purse strings haven’t triggered inflation.  He said our population is aging and older societies are not as inflation prone.  (Less consumption.) 

Jim from IL, who we believe is a repeat caller, but a good one,  asked a question that stumped the guest.  When he visited China he found regular stuff like toothpaste to cost about the same as in the US.  When he went to buy shoes, he found they were a lot more expensive.  In contrast, he has had Chinese friends come here who want to hit the mall,  buy a suitcase and start filling it with stuff that is more expensive back home.    What’s the deal?  As noted the guest didn’t have a solid answer but speculated that the less expensive but still good quality products get exported to the US and this is what Jim’s Chinese friends might be after.  

Tom, listening on KKOH in Reno started off by complimenting Bob for the best guest so far this year.  I don’t know what his question was, I was distracted by 3 deer wandering through the front yard.   The guest said it was unusual to cut taxes in a good performing economy, thus risking overheating the economy.   He mentioned Larry Kudlow, recently named as top economic advisor to President Trump.  He said they know each other and expressed some admiration for Mr. Kudlow.  

Dr. Yardeni is a fiscal conservative.  He would like to see more restraint, not the kind of thing we witnessed this past week with the passage of a 2200 page spending bill filled with all kinds of stuff.  We’ve been getting away with deficit spending and increasing debt for a long time now without the higher interest we’ll have to pay on the debt if inflation kicks up.  If it does, we’ll be in trouble.  

On the market, he thinks it will go higher after we get through these tariff issues.

The take away:  don’t let politics get in the way of making money with your investments.  Stick to the facts.  Be long term.  You can make money in bonds …. If you bought them at the right price, otherwise you’re going to suffer.  

In signing off, Bob echoed Dr. Yardeni’s comments saying for 32 years on the program he’s said not to let politics get in the way of investing. 

 BEST MONEYTALK GUEST EVER! EDWARD YARDENI..,...dRahme Audio Clip

Brinker's guest-author was Edward Yardeni:



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March 18, 2018, Bob Brinker's Moneytalk: Stocks, Bonds, Economy and Investing

March 18, 2018....Bob Brinker hosted  Moneytalk live today....(comments welcome)

STOCKS....The only time that Brinker mentioned the stock market today was when he said to only invest what you are comfortable with - and can still sleep well at night.  

Honey EC: It is beginning to  look like - barring any new exogenous events - that Brinker missed the bottom of the 10% correction. That would be a total non-event, except that he  sent out a "special bulletin" on February 12th saying that he was looking for an opportunity to issue a new "buying-opportunity."  For that, he was looking for a re-test of the lows, and to continue to "dollar-cost-average on weakness."  

However, in the March issue of Marketimer, Brinker wrote:  "It remains to be seen whether the correction activity that commenced in late January will eventually lead to a confirmed buying opportunity, including the process of successfully testing the area of the initial lows. It is important to note that the timeline for a correction and retest can vary from several weeks to several months."

Honey here: Does anyone buy that?

==> EDIT: dRahme Audio Clip: FOMC Meeting; Rate Hikes; SSA; Price Indexes

VANGUARD AND FIDELITY....WHY NOT SCHWAB?   Several times again today,  Brinker recommended Vanguard and Fidelity's total stock market funds.   He talked about the low expense fees and how great the funds are for long term objectives. He never once included Schwab. One has to wonder why not, because every time he is asked on the air, he states that "Chuck" is his friend and has been on Moneytalk as a guest. 

BRT (blog research team) member, Robert,  did some research  this afternoon and found that not only do Schwab's index funds charge lower fees, they perform better. I cannot get his graphic to post, but here is the data: 

Robert wrote:  "Here’s the performance of the Schwab Total Stock Market Index Fund, SWTSX, compared to the Vanguard Total Stock Mkt Idx Inv, VTSMX......

Note that the Schwab fund has beaten the Vanguard fund in EVERY time period from one day to 15 years. That’s pretty amazing. Since the Schwab fund has an expense ratio of 0.03% and the Vanguard fund has an expense ratio of 0.15%, the Schwab fund has a big advantage which is seen in the total returns.

That makes it even more surprising that Brinker recommends Vanguard and Fidelity but doesn’t mention Schwab......Vanguard’s Admiral share class has an expense ratio of .04%, so it’s very close, but you have to invest $10,000 to get that." 

FOMC WILL RAISE INTEREST RATES IN JUNE, SEPTEMBER AND MAYBE DECEMBER....BB said that he rates the chances of a rate increase of 0.25% next Wednesday at 100%.   He expects at least two more this year, and maybe one more in December....In order to get to 3% on Federal Funds rates, we need 3 more hikes next year - if the economy continues to grow. 

INFLATION: CPI VS PCE....Brinker commented that the correct index to use for inflation is the one that the Federal Reserve uses - the Personal Consumption Expenditures Index - not the CPI.  The CPI is used to calculate Social Security cost of living increases and that causes the increases to be much too high.

SOCIAL SECURITY COLA'S-ARE ALL THE IDIOTS IN WASHINGTON, BOB?  Brinker said:  "They are overpaying Social Security recipients......But there is a lot of idiocy in government as you have learned over your lifetime. This is one more example of the idiocy in the federal government.....This is what we have to work with. We have to go with what we have. And if Washington is populated with idiots, well, it is what it is."

==> EDIT: dRahme Audio Clip: Housing; Retail Sales

SAVINGS....BB comments:  Everyone should begin saving at least 10% of their income early on or they may end up dependent on Social Security. 

BANKRATE. COM ARTICLE....BB FALSELY  claimed that a "Bankrate article" said that "trickle down wasn't working.    Here is the article:  Despite an Improving Economy, 20% of Americans Aren't Saving Any Money    BB then went on to make a quote or two from the article without giving credit. I will quote it and also give credit. The following are excerpts from Bankrate.com:

"A rising tide isn’t lifting all boats. The unemployment rate rests at a post-recession low, stocks flirt with all-time highs and paychecks are perking up in recent months thanks to a slight increase in wages and the implementation of the GOP tax bill. Consumers are as confident as they’ve been in two decades.....

....And yet, one-fifth of Americans are adding nothing to their savings, according to a Bankrate survey. Why not? Among respondents, 2 in 5 cite life’s high expenses, while another 1 in 6 blame their crummy job. 

WHAT'S KEEPING PEOPLE FROM SAVING: Among respondents, 20 percent said they aren’t saving anything or don’t have an income. Another 47 percent are saving 1 to 10 percent, and 27 percent are saving 11 percent of their income or more.

Expenses are the biggest obstacle, with 39 percent of the respondents citing this as the main reason they’re not saving. Sixteen percent said their job isn’t good enough, while an equal amount said the main reason they aren’t saving more is because they haven’t gotten around to it. 

ECOMOMIC NEWS:  Employers added 313,000 to payrolls in February, keeping the unemployment rate at recent low of 4.1 percent, while more people returned to the labor force."

Despite a dramatic two-week plunge six weeks ago, the S&P 500 index is up 4.1 percent so far in 2018, after gaining 21 percent last year, pushing 401(k) balances to record levels. Home prices are skyrocketing, while consumer confidence is at the highest point since 2000. 

In fact, the stock market fell off at the end of January because investors were so worried that rising wages would lead to much higher inflation levels. (Wage growth was more modest in February.)

Meanwhile, the personal savings rate has trended downward over the past two years, while credit card balances have jumped to all-time highs. A separate Bankrate survey found that 39 percent of Americans wouldn’t pay for a $1,000 unexpected expense from their savings account.

The average American has less than $5,000 in a financial account, a quarter to a fifth of what you should have, and those aged 55 to 64 who have retirement savings only carry $120,000 – which won’t last long in the absence of paychecks." 

Honey EC: As you can see from reading those excerpts, Brinker's PHONY conclusion about that article either shows immense ignorance or wild-eyed need to LIE in order to discredit President Trump and the GOP congress. 

TWO THINGS THAT WERE NOT SAID TODAY:

==>   No mention that Larry Kudlow, who in the past has substituted for Brinker on Moneytalk, has been chosen by President Trump to be the next White House Economics Advisor. It's been many years since Kudlow was on Moneytalk (maybe some old-timers will remember how long), but he was always everyone's favorite replacement for Brinker. 

==>  Not a single word about letting the guest  last week speak about the President with hateful and vicious name-calling that one would only expect from a mentally-ill person. 

FRANKJ'S MONEYTALK GUEST-AUTHOR SUMMARY

Bob’s third hour guest this Sunday March 18, 2018 came to us from across the pond.  Jonathan Haskel, author of “Capitalism Without Capital: The rise of the intangible economy.” The guest is a Professor of Economics at the Imperial College in London.  Stian Westlake is a co-author on the book.  

We learned a new term today, “Big Bananas,” synonymous “a big deal” used by the guest to describe the importance of the rise in investments in intangibles.   Intangible assets are things like branding, software, apps, marketing and design.  The authors estimate that for every dollar US companies invest in “tangibles” they invest $1.15 in intangibles.  

Some companies find it easy to take the intangible route.  Uber was given as an example.  Set up an app, engage some freelancers to drive and they’re on their way.  Compare that to a traditional taxi company that has to acquire its own vehicles, etc. etc.   Amazon did much the same, stealing a march on traditional malls. 

Bob asked whether it was important to be first in the intangible world.  He seemed to think it was important but the guest was gracious and said he disagreed but didn’t want to contradict Bob on his own show.   Bob was all peaches and cream, saying “that’s what it’s all about,” (disagreement).

Bob asked what I will start calling “the college question,” namely, what course of study would you advise a young person to take in college?  The guest hedged around and mentioned a few majors, non-technical ones, and concluded by saying that in the intangible economy, people need skills in coordinating groups within the company.   To be successful at this you need to be a people person.

MoneyTalk “trekkies” knew what was coming next.  Bob asked the guest to describe the higher education system in the UK.  This was a precursor to Bob making a comparison to the same in the US.  

·         The UK admissions are merit based.

·         High school exams are administered nationally

·         It is hard to squeeze into the top schools.

·         Students get generous support from the government.

·         They have a very long time period to pay the loans back with forgiving terms.

Frankly, these characteristics don’t sound all that different from how it is in the US.  Maybe the difference is how “generous support” is defined.   Bob pointed out that there were many in the US who want to attend college but are unable to because of a lack of funds.  

There followed a little discussion about the neighborhood disruptions caused by AirBnB another example of an “intangible” company.   

After the half-hour break there was some navel contemplation that I didn’t pay much attention to.  Then Bob got back a topic he sometimes brings up with guests:  Guaranteed Minimum Income (aka Universal Basic Income).  The guest was very clear that he doubted it would happen in Europe because it is “very, very expensive.”   

Bob asked where is the world headed with so much debt and borrowing?  The guest said economists believe “as long as we get the growth to pay it back …”  

Bob said the thought here in the US is to just pay the interest, no one is thinking about paying it (the debt) down.  

The growth rate of the US economy is another subject Bob often asks guests about.  “Why has the US had a low growth rate for so long?”  The guest said the answer to that has eluded most economists, then he went on to speculate on the difficulty in measuring GDP today, when intangibles are part of the economy.  A second reason he offered was that when an economy is adapting to new drivers, it could cause a pause in growth.  Bob said bean counters are missing “free stuff” like apps.  

Bob guided the guest to make a comment on the two traditional drivers of economic growth:  population growth and productivity growth.  The guest only commented on Europe’s situation:  growth in population has been held down …. then he mentioned immigration.   Yeah, immigration in Europe is a double edged sword.  

There were no calls during today’s third hour.  If you dozed off during the interview you are excused, it certainly did not have the fireworks of the one two weeks ago.  

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March 11, 2018, Bob Brinker's Moneytalk: Review Fixed Income Advice

March 11, 2018.....Bob Brinker  was NOT LIVE on Moneytalk today....(comments welcome)

Bob Brinker's Fixed Income Advice

Brinker's bond/fixed income holdings in Marketimer are now down to two bond mutual funds and one money market fund in both his fixed income portfolio and balanced model portfolio III.

Brinker recommends Vanguard Prime Money Market, but has said on Moneytalk that he has no problem with Schwab or Fidelity Money Market Funds.

In 2013 Brinker made changes that lowered the duration of his bond fund holdings significantly. This has caused a lot of lost opportunity costs for his followers - that fact has been documented on this blog over the past three years.

As history shows, the interest rate increases that he expected to be imminent in 2013 only began to appear last year, and so far, have been very small.

However, the economy began to roar back in 2017 and will likely continue. So Brinker has once again lowered the duration in his bond holdings by actually selling one of his bond fund holdings on February 12th and moving that money into Vanguard Prime Money Market Fund. 

This move brings his fixed income portfolio to 35% cash (money market) and two bond funds (OSTIX and DLSNX).  And at the same time, brings the fixed income portion of the balanced model portfolio III to 20% cash and the same two bond funds.  

So to more easily understand Brinker's balance fund that he recommends so highly and so often on Moneytalk - especially to retirees - here is how it breaks down: 

If you are setting it up and making the purchases, you would aim for  50% in stocks and 50% in fixed income. In addition to the 2% in money market, you would have 10% in OSTIX and 20% in DLSNX. 

The stock 50% would be largely in the fund that Brinker is always touting, the Vanguard Total Stock Market Fund. The other holdings are so tiny that they hardly seem worth the trouble - especially since the Akre Fund takes you outside of Vanguard for a puny 5%.

(To sum up: Brinker is still fully invested in the equity portfolios and holdings. He recommends dollar-cost-averaging new money into the market.) 

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March 4, 2018, Bob Brinker's Moneytalk, Stocks, Bonds, Economy and Investing

March 4, 2018....Bob Brinker hosted Moneytalk live today....(comments welcome)

IN EDIT: BRINKER GOES FULL ON POLITICAL HATE SPEECH ON MONEYTALK.  Thanks to dRahme for providing this audio (Tuesday) ==> dRahme Audio Clip: Laurence Kotlikoff  and Bob Brinker.  (See Frankj's summary of hour three below.)

STOCK MARKET.....Brinker said: "We live in volatile times. We've had volatile markets now for several weeks. Volatility can help you understand your tolerance for risk. Obviously there is a lot of volatility with the possibility that a trade war could be on the way......"  

The only other reference to the stock market that Brinker made today was to repeat his long-time advice to those in or near retirement - he recommends an asset allocation of 50% stock and 50% bonds/fixed income.  dRahme's Audio Clip = Market volatility and tariffs. 

Honey EC: It looks like the market has re-trenched about half of the 10% correction decline. According to Brinker's February 12th special bulletin, he's "waiting" for it to retest the lows. If it does, he plans to go from dollar-cost-averaging on weakness to an all-in buy-signal. He has his followers fully invested, so this would theoretically be for any new "windfall-money" that some lucky people may have. 

==>dRahme: Audio Clip... Risks to Market/Vegas "World of Outlaws" Sprint Car Racing

MARKETIMER'S THREE MODEL PORTFOLIOS.....Several of today's callers said they were in Marketimer model portfolios.  Don't be confused by all the "jabberfesting" about them. It's very simple. Brinker has only three model portfolios. Portfolio I and II are 100% equity, with the lion's share in Vanguard Total Stock Market. Portfolio III that you often hear him call the "balanced" portfolio is about 50% stocks and 50% bonds. That is the one he recommends for retirees. 

For years, he has an "active/passive" portfolio that is simply 80% Vanguard Total Stock Market and 20% in a Vanguard "all-world" mutual fund. Additionally, he has a fixed income portfolio that I have discussed several times in the past. 

BOND MARKET...Brinker expects headwinds against longer-dated bonds if rates go up. He says that the duration of Marketimer bonds is less than one year in his model portfolio III and fixed income portfolio.

FOMC AND EXPECTED RATE HIKES....BB expect the next Federal Reserve rate hike of 0.25% at the March 21st meeting. ==> dRahme Audio clip:  Risks to Market - FOMC and Expected Rate Hikes. 

PROPOSED TARIFFS....BB spent a lot of the program talking about President Trump's proposed tariffs on steel and aluminum.  To his credit, Brinker did say that so far it's just a "jabberfest" - that nothing has really been done yet.  (see the audio clips above for more information.) 

EXCHANGING METROWEST UNCONSTRAINED BOND FUND FOR VANGUARD PRIME MONEY MARKET.....Caller John from Chicago said he had followed Brinker's advice to sell bond mutual fund MWCRX,  and needed some help deciding whether to put that cash into a CD ladder or a bond ladder.  BB said either would be fine.

Honey EC: Brinker did not mention that John seemed to be ignoring that along with the sale of MWCRX,  he had advised putting that cash into Vanguard Prime Money Market Fund.

BITCOINS.... BB told caller Sean from Jackson that buying Bitcoins is sheer speculation. 

VTI vs SCHB.....BB continuously recommend VTI as an ETF equivalent to the Vanguard Total Stock Market mutual fund that he includes in his model portfolios (VTSMX). 

Honey EC: Even though Brinker sang the praises of "Chuck Schwab" today, he never points out that the Schwab total stock market ETF (SCHB) has lower expense charges than Vanguard. 

==> dRahme Audio Clip:  The Week Ahead 

FRANKJ'S MONEYTALK GUEST-SUMMARY:

On Sunday March 4, 2018 Bob’s guest was Professor Lawrence Kotlikoff, an economics professor at Boston University.  The professor ran as a write-in candidate for President of the United States in the November 8, 2016 election.   

Bob and the guest spent virtually the entire time talking about the steel and aluminum tariff announcement made by President Trump last week.   To say that he disagrees with the administration would be the understatement of a lifetime. 

Referring to the President he said, “we need to get him out of there” a few times and he called for impeachment no less than four times in the interview.   He also mentioned the 20^th century dictators Hitler and Mussolini – indirectly comparing President Trump to them. 

At the beginning of the interview, Bob asked for his reaction to the tariff announcement.  The guest said “the President’s point of view has no real connection to the facts.”   He pointed out we only produce 5% of the steel consumed worldwide.  He mentioned clothing and furniture as two manufactured products that have given way to imports.   The tariff issue can put us into a long trade war, he said.  He went on to mention an article he just wrote for Forbes and said the title was something like “Can a Trade War Lead to Impeachment”? 

Bob waved a red flag at the guest, citing a tweet from the President, “Trade wars are good and easy to win.”   This prompted the guest to say the President is mentally ill and he’s making reckless and dangerous statements.  He referred to the possibility of countries putting tariffs on Boeing Aircraft produced here.   Bob brought up Wilbur Ross’ (Sec. of Commerce) and the Campbell’s soup can – it was apparently mentioned by a caller but I did not hear the call.  The guest made some disparaging comments about Mr. Ross.

The World Trade Organization is the proper place to lodge complaints about dumping of products and unfair trade.  The guest made this point a few times.  He speculated that these unilateral tariffs could lead to our expulsion.   Before the break, Bob said that China has been stealing intellectual property for quite a while but no one seems too concerned about it. 

After the break Bob asked the professor to comment on what happened after the 1930 Smoot-Hawley tariffs were put in place.  In the next 3 years both imports and exports declined about 60%.  Eventually, tariffs were slapped on 20,000 different products.  The depression was made worse by these retaliatory tariffs.  He predicted the financial fallout from the current tariffs will drive stocks down and interest rates up.  Protectionism might have sounded good as a campaign promise but it was “stupid.” 

Regarding steel production, Stan calling from Chicago said we overproduced here and China dumped steel.   The guest’s answer was “take it to the WTO.”  

 The guest said several times, he was concerned about how the tariff pronouncement was carried out.  He definitely did not like it that President Trump took action  – he would prefer it be handed off to the WTO.  

Bob, calling from Louisiana, said we are saddled with environmental costs that other countries don’t put on their industries.  We need to maintain a core of manufacturing skills including tool and die making.   (Bluce – weigh in!)  The guest brushed off the notion that we have overly restrictive environmental regs.   The guest said we cannot destroy the planet and let sea levels rise by three feet.  Then he segued into the recent Nor’easter storm that hit the Atlantic seaboard and mentioned the tidal flooding in Boston.   In wrapping up his answer to Bob in Louisiana he referred to the President as a “wild man,” and said, “let’s get rid of him – impeach him.”  This was the fourth time he called for impeachment.

The final caller was Karen from Albuquerque whose question had something to do with digital currency and “how soon will we begin using the hyperledger?”   I don’t think the professor had the first clue what the hyperledger is but he did a good job of faking it, talking about street vendors in China finding ways to accept payment without actually taking cash. 

Bob wrapped up at 3:52.   At the sign off, the guest thanked Bob and said “Anytime, I’m all yours.”   Jeez.  

Honey here: Thanks Frank....Many of Brinker's listeners were very upset by the all out political attacks by the guest-speaker. I recommend that all read the comments that came in during the program. 

Kotlikoff:  You have offended Jewish people (and all Americans who died in WWII) when you compared our Constitutionally elected, President Donald Trump, to Hitler - as well as Mussolini and Stalin. AND I NOTICE YOU DIDN'T FORGET TO INSULT TRMP VOTERS.   I shudder to think that you are "teaching" young students. 

Note to Bob Brinker:  Just a word to the wise  - this could cost you money. There have been many who are much "bigger" than you that have gone down in disgrace when people turn away because of the undeserved and vicious attacks on President Trump. 

==> dRahme Audio Clip of Kotlikoff and Brinker saying  President Trump the same Hitler, Mussolini, Stalin and Putin. 

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