Wednesday, July 18, 2018

July 18, 2018: Honey's Moneytalk Communique to Bob Brinker Not Heard on Air

July 18, 2018: Bob Brinker likes to get Communiques if they sing his praises. How about one that has some criticism?

Last Sunday during and after Moneytalk, the comments from listeners began pouring in to this Blog. Here are some of the best:

==> From Terry Steinbridge:

Bob is live and really mad at the world today it seems to me. He should just tell everyone how badly he dislikes Trump, and how mad he is at people who like him. Trump and everyone who supports him are "fools and losers" and other insults. The same "fools and losers" who thought Trump might create GDP growth and see the tax cuts result in wage increases.

Bob also harps on the deficit growing because of the tax cuts. He fails to mention that revenues to the government are up by many, many billions

==> From Jim:

Brinker is sure showing his Globalist colors today, calling those who favor protectionism idiots and morons. I guess I'm an idiot then because I think we should look out for #1. He said how low the unemployment rate is but if more people started looking for work again it would be much higher. That statistic is skewed. Brinker didn't want to let the caller make his point about NATO defense spending by saying that's politics. I'm sure the caller wanted to draw a parallel between NATO defense spending and trade. It may be politics but it's also financial too, just like trade that Brinker always talks about.

==> From MK:

Regarding Bob's comment about tariffs: If fools, morons and idiots are the only ones who are in favor of tariffs (or other protectionist trade policies) then at worst we are on a level playing field with other countries since other countries (particularly China) readily employ tariffs and other protectionist trade policies in their dealings with us.

I also suspect that Bob equates protectionism with isolationism.

I also suspect that China has more to lose in a trade war than do we since the balance of trade is currently in their favor. However in China the people really have no say in whether or how aggressively their government would conduct a trade war. They can't vote Xi out of office for making their lives miserable. In the USA on the other hand if we decide we don't have the intestinal fortitude to endure a little hardship in order to strengthen ourselves, we can vote our leaders out of office and elect an appeaser who will bow down to foreign powers.

==> From Tom Logue:

I am wondering if is a secure website. Bob states that all websites are now suspect in this digital age. Has he had his own checked? Has he paid for an hour’s time with a cyber security professional or penetration tester to evaluate it?

He also somehow conflates cyber security with free elections. The voters are free to look at any information and determine for themselves its credibility. Each political party for security reasons can elect NOT to use digital media connected to the Internet to store their sensitive information. Or decide NOT to use email for sensitive communications. They don’t have to store emails on personal servers. Eric Snowden showed us the folly in assuming security can be backfired onto the IPv4 network of protocols.

==> From TFB:

Da Brink has a liberal economics background. By that I mean people like Da Brink likely never actually read the primary source materials that macro economics is often predicated upon. What they learned was the Cliff note versions. By that I mean they learned a narrow subset of economic theory that seemed to model the economy of past times and seemed relevant at the time.

I have made this point before, but for those who never read it before: Free Trade is often credited to David Ricardo. It is sort of a Columbus discovered America thing. Ricardo essentially popularized the collective theory of economic theorist before him and added his own organization and insight. Hence he is credited with origination. 

What is significant about Ricardo’s work is the entire theory of free trade. It covers comparative advantage and absolute advantage. What people were taught in college is free trade under the auspice of comparative advantage NOT absolute advantage. And what happened is, over time, by standing down on trade issues as the U.S. has up until Trump, comparative advantage economics morphed into free trade with nations who held an absolute advantage with predictable results.

Hence Da Brinks animist. You think you have an economics education only you find out what you were taught and believed does not have salient predictive power in the world around you. The issue is, you only learned part of the theory.

==> From Seattle Doc:

Wow! I've long written Bob Brinker off as irrelevant with a subpar return newsletter. His newsletter has been basically the same month after month. He is too lazy to offer opinions about why he recommends certain funds, their strategies, or what sets them apart. So, BB doesn't earn any of my time or money.

I followed your link this week and was shocked by his dialogue. The guy has turned into a mean old man. His treatment of callers that don't praise him is terrible and embarrassing. I wonder if his personality has been affected by his age and rather than addressing caller's concerns he talks over them and cuts them off. I never met the guy or listen anymore. When I played the cut for my wife she said he's the type of guy that tells Junior someone coming into his house and stealing his underwear while he sleeps. Mean Bob can you tell us what you had for dinner last night?

Disclaimer: no medical diagnosis is implied or assumed. I’m not that kind of doc anyways. As always this is just my humble opinion.

==> From Bluce:

Regarding Frank's guest summary on the front page, Honey wrote: Honey here: Thanks Frankj….It is a little scary when unelected people and bureaucrats have so much control over our lives, because there is no way to vote them out. And worse, it's almost impossible to get them fired.

It seems this practice is also seen running wild in the "justice" system.

Back to basics: The Constitution grants "specific, enumerated powers" to the government.

The Bill of Rights (the first ten amendments) were included because some of the framers worried that liberties could be infringed upon because they weren't mentioned in the Constitution -- which was, and is not -- the point of the Constitution. But they made their case and won the argument, and as we see now, they were absolutely right. Too bad a piece of paper doesn't stop "the devoted advocates of power."

So to make clear that the purpose of the Constitution was to grant specific, enumerated powers to the federal government -- and not to list specific rights of the people -- the Bill of Rights was included.

They knew they could not possibly list all natural rights held by "the people," so the Ninth Amendment says: The enumeration in the Constitution, of certain rights, shall not be construed to deny or disparage others retained by the people.

And the Tenth Amendment: The powers not delegated to the United States by the Constitution, nor prohibited by it to the states, are reserved to the states respectively, or to the people.

So the question: Where in the Constitution is the power granted to the federal government to set the price of money, resulting in the endless manipulation of the economy by government bureaucrats?

Here is the key: If free markets (as in the price of money) are regulated, then they are no longer free and fall under the idea of "central planning," a massively failed idea that never works in the long run, as the history of socialism and other authoritarian regulated economies show.

Freedom -- if it can be retained -- always works.

==> From Stinky:

About your communique -  Dissent is clearly not tolerated in Brinkerland.

==> From Trees:

From what I've read on HB, Bobbies market timer is unreliable and to date doesn't work. Nor does anyone else have a reliable market timer. However, I do like his VTI choice for a general stock fund, but that is common knowledge. His other portfolios? My guess not really worthy of the monthly entrance fee. Has anyone concluded Bob's portfolios are unique and above average? A hidden gem that continues over time to beat the markets?

Bob does have a huge political bias. This will always spill over into investment advice. Not good to mix the two. There is so much of this going on currently. Notice how the partisan financial experts are willing to risk your money for their politics. It is very common. This is a big reason why investment advisors are a poor choice. I want to see their portfolio. What are they risking their wealth on?.....

From J. Wales:

The housing markets are on fire nearly everywhere. I don't think a down turn is immenent. The fed is normalizing rates as they call it. BBs fear of bond fund duration is probably prudent but he was about 3-4 years early ringing the alarm. No value added that I can see. Its wellesley a CD ladder & Ibonds for me.

==> From Daddy Paul:

Honey thanks for your blog. I want to know what Bob says but can't stand to listen to him anymore.

==> From Irwin in Skokie:

Brinkers opinions, contentions and tariffs op-eds make for a better show. Rather hear some debate than the rich callers worried if their 5 million will last IRWIN in Skokie 

==> From Frankj:

Irwin, I think the millionaire callers are a stealth advertisement for his newsletter insofar as they mention they have been a subscriber.

==> From Birdbrain:

After reading Schwab's "What Happened to the Bond Bear Market?" this may be a good time to revisit Mr B's low duration bond recommendation. It has been close to five years (Honey will correct) since the old standby Vanguard GNMA was pushed aside in favor of Double Line Low Duration Bond due to Cap'n Starship's fear of impending rising interest rates.

So, with figures from Morningstar, let us view the annualized five year returns of said funds, shall we?

Growth of $10000:

VFIIX 11280
DLSNX 10866

Only over the last year and a half the price of Vanguard GNMA has declined 5.6% from 10.85 to its current 10.24 NAV. Granted, the Fed may raise rates two more times this year and beyond. Eventually this switch may prove profitable but I suspect nowhere near the magnitude the host imagined at the outset.

I guess you could say that as of now, Mr B's love of low duration has suffered from (ahem) premature infatuation.

==> From Ken Branson:

I've detected a conspiracy.

For the first time, the radio host's screener-producer-shill allowed well-grounded callers to present and debate a little. Apparently, the host was not ready for that.

So why the change? Is the network time slot more valuable to the media company as a paid infomercial for vitamins? Are they trying to gracefully convince the old man to quit?

Seems the host is flipping the bird to many fans of the current President. Fair enough. He has that forum, and can retire comfortably at a moment's notice.

But I think the host's sourness toward the chief executive might be personal.

I can imagine a moment in time when both were traversing "the Canyons of Wall Street" and the host was inadvertently shoved into a deep freezing slush puddle in January near the corner of Wall and Broad as Trump Sr. and Jr. hustled past in the brisk winter wind.

The host might still have the scars on his shin and his water-logged wingtips to prove it. He's kept them in a cold tub of ice-water all these years to preserve the evidence, in case it goes to trial.

Pure irony that Mr. Host's greatest claim to fame is as a NYC financier but he can't stand another of the same who has done it better than him.

Honey here:  Here's the link to  all of these and other interesting comments about last Sunday's Moneytalk. 

Sunday, July 15, 2018

July 15, 2018, Bob Brinker's Moneytalk: Latest Advice, Summary and Commentary

July 15, 2018....Bob Brinker's Moneytalk:  LIVE SHOW today....(comments welcome)

=> The S&P 500 Index is back above 2800 - up 4.78 YTD - and is only about 3% below all time high.  The 10-year Treasury is still below 3% - 2.85. Inflation, according to the CPI-U is at 2.87% - still below where it was at the end of WWII.

STOCK MARKET...Brinker opened the program by completely ignoring the 10.1% correction that happened in February this year,  while mentioning the S&P 500 all-time-high in January.  He then pointed out that the Index is now only about 3% below the high. Then he launched into an opinionated diatribe about proposed tariffs.   

Honey EC: Since the S&P has recovered so much of its losses, Brinker may think it would make him look pretty silly if he claims any decline that happened now is a "retest" of the February lows - so better to go back to January and call it a "trading range."  

==> Thanks to dRahme AUDIO CLIP you can hear some of the opening comments. 

MARKETIMER MODEL PORTFOLIO MAJOR HOLDING.....Rick from Iowa, who is retired, asked Brinker about moving out of 100% equity model portfolios I and II into balanced (1/2 fixed income) portfolio III. 

Brinker replied: "I would have a balanced portfolio and that should be easy for you to do because you are going to find in looking at  (Marketimer) portfolios I, II, and III, that there are funds in there that are compatible with one another. I'll give you an example - the (Vanguard) total stock market index fund - we have a significant weighting (50% in I and II) of that in all three model portfolios.....So you see, you would be able to count that toward your weighting in model portfolio III. I really would feel that model portfolio, balanced portfolio would be appropriate for someone who is entering or is in retirement. I think it is appropriate and risk level at that stage of your investment cycle." 

BUDGET DEFICIT..... dRahme AUDIO CLIP: deficit, paying back national debt

NOREEN AND THOSE WHO AGREE WITH HER ARE  FOOLS, MORONS AND IDIOTS.....Noreen said she believed that the proposed changes in tariffs would help ordinary working Americans, and said that some steel mills had already opened up again, providing more jobs. 

After screaming about Harley-Davidson, Brinker said: "I believe that protectionism is for fools only......I want to be very clear on this. I don't want to be misunderstood. I think that the only people that protectionism works for the country are fools, morons and idiots. nobody else." 

Honey EC: The problem is, MISTER Brinker, President Trump is not for protectionism. He is for FAIR TRADE.  The United States has been the piggy bank for the world far too long.

==> dRahme's Audio clip: Noreen's call and Brinker's response starts at 6.5

VICKIE'S CALLS.....Honey EC: Vickie may be one of the most eloquent callers I have ever heard on Moneytalk. Brinker was furious, and told her what she said made no sense and was complete nonsense!  He added that her opinion (and those who agree with her)  was for  "losers."  If he would have allowed her to continue rebutting him, she would have made him look even more like that "loser" than she did. 

==> dRahme's Audio Clip: Vickie's call shortly after Noreen's


Bob’s third hour guest on Sunday July 15, 2018 was Paul Tucker author of the book Unelected Power, The Quest for Legitimacy in Central Banking and the Regulatory State.  (published May 2018).  Mr. Tucker is a former governor of the Bank of England.  From Wikipedia:
“In December 2015, Tucker became chair of the Systemic Risk Council, a body set up in 2012 by former regulators and central bankers to promote financial stability.  Its first chair was Sheila Bair, former Chair of the FDIC, and its members include Paul Volcker (former Chair of the Federal Reserve) and Jean-Claude Trichet (former President of the European Central Bank).  Since Tucker became chair, the SRC has issued a statement to G20 Finance Ministers and Governors on financial reform and, among other things, intervened on various US Treasury proposals to roll back financial regulation.”
Mr. Tucker said he wrote the book because he was worried that more power has shifted from political leaders to central bankers.  Today we do not see presidents and prime ministers at the forefront, instead we see central bankers.  During our recent financial crisis Paulson, Bernanke and Geithner were in the news, trying to deal with the problems.  He contrasted this with the situation in the US during the Great Depression when Pres. Roosevelt was front and center trying to deal with the economic problems. 
Bob asked if there is a disconnect between central bank monetary policy and what the typical taxpayer/citizen knows about such policy.  Being British, the guest  was diplomatic in his answer which was:  people in the UK know more about economic policy than people in the US.  Part of the reason is more TV exposure for Britain’s central bankers, going back 15 to 20 years when the Bank of England made an effort to get its people in front of the cameras. 
There was some talk about Mario Draghi but I missed most of it because I got a phone call.
After the financial crisis here, did the Fed get any help from Congress?  This is a favorite theme of Bob’s.  Starship regulars know the answer is “No.”   Mr. Tucker agreed and suggested that Congress could have launched infrastructure projects.   He said Congress could have paid for it by raising taxes, not borrowing.   Both agreed in the political atmosphere at the time there was no way this was going to happen. 
Remember when Bear Stearns melted down in March of 2008?  Bob said this was a “gift” to the regulators and securities crowd – meaning it served as a warning of things to come, yet no one did anything for 6 months.  The guest seemed to agree and did not know why no action was taken.
Caller Bernie from Westlake Village, CA wanted to know if nationalism is dead in Europe.  The guest gave an answer that wandered around and ended with the statement that the EU is still developing.
A caller from El Paso TX asked if monetary policy is so complicated that members of Congress cannot comprehend it, so this is why they leave it to unelected experts.    
Editorial comment:  Think of the Congressmen and women in your own state.  Now decide  which one of them is the biggest dope.  Now picture that person having anything to do with monetary policy. 
Bob from North Hollywood, CA said if he has a heart problem he wants a cardiology specialist on the case, not a general practice doctor.  Likewise, the economy: keep the politicians (generalists) on the sidelines and let the specialists deal with monetary policy.  
The guest said that it is OK for politicians to delegate tasks to central bankers but they need to be specific.  For example,  part of the reforms after our financial crisis were that banks should not engage in speculative activity.  This was Congress’ wish.  The regulators ended up writing 800 pages of rules.  Overkill. 
Bob wrapped up at about 3:52. 
Honey here: Thanks Frankj….It is a little scary when unelected people and bureaucrats have so much control over our lives, because there is no way to vote them out. And worse, it's almost impossible to get them fired. 

NEXT WEEK.....==> dRahme AUDIO CLIPS: economy, inflation, treasuries, quantitative tightening-which has only just begun. 

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