May 27, 2012...Bob Brinker's Moneytalk: Summary, Excerpts and Commentary

May 27, 2012....Bob Brinker's fill-in host was on today -- Lynn Jimenez, who is business reporter for KGO810 radio. She authored a Spanish/English book geared for beginners  (I  posted quotes from her book below.)

STOCK MARKET..... Lynn said:  "We continue to get evidence the economy and the market are not one and the same....While the economy has been showing some signs of strength, the market has been retreating. Until this week, the Dow which did fall Friday, snapped its three week losing streak. It rose 85 points for the week to 12,454. Year-to-date, it's up 1.94%, not a lot. The S&P 500 lost a few points on Friday, but it too is up for the week to 1332. For the year, it's ahead 4.79%......The S&P 500's  price to earning ratio fell to 13.1 on May 18th."

Honey EC: Bob Brinker views the current stock market "consolidation" as "health-restoring," and expects it  to be "contained within the single-digit percentage range as measured from the April 2, 2012 S&P 500 closing high of 1419." His  S&P 500 Index target range is "upper-1400's to lower-1500s within the next twelve months."

Lynn said: "Trading volume is low. Those who are trading are more sensitive to Europe's debt crisis. They fear that  bank defaults there will once again freeze credit globally. And there are some signs that China's economy is slowing."

Honey EC: Bob Brinker certainly does not agree with Lynn about Europe's problems affecting the stock market: 

Brinker said this on Moneytalk last week: “Greece represents 2% of the Gross Domestic Product of the Eurozone (worldwide it’s much less)….Now there are a lot of Greek sovereign bonds held by institutions….These are already substantially marked down as a result of the terms of the second annual bailout. And frankly by now, investors have already had a lot of time to adjust their portfolios to a reasonable level of risk to such a super junk bond represented by Greece…..The Greek situation has been going on for two years…..Is this going to be something that brings down the global economy….I don’t think it is.” 

Brinker said this on May 6th: "The US market is a function of  the corporate earning power of the companies that are primarily based in the United States....The present value of today's common stocks in the United States are dependent on the future estimates of their earnings and their dividends. They are not based on who the president of France is, Stan. That would be an absurd notion to say. What you are suggesting is that the US stock market depended on who's in the president's office in France. That's ridiculous....The stability of Europe is already in doubt. This is nothing new here....Believe me, the notion that the United States stock market is going to rise or fall depending on who the president of France is -- that is not what powers the US stock market."  

Lynn said: "What's more, this week the Congressional Budget Office put numbers to what could happen if congress remains gridlocked for the rest of the year.  A nasty January surprise, a recession as the economy contracts. Why? We are going to see those mandated spending cuts that resulted from  last summer's battle over whether to honor bills racked up by the congress earlier. We are going to see  the expiration  of a number of tax cuts, including the adjustment for the Alternative Minimum Tax.....So even if the spending cuts that are planned are changed, there is one proposal to counter them and that would  decimate all non-defense spending to increase the military budget....."

Honey EC: Brinker calls this January tax hike a "Fiscal Cliff." He said this on April 29th:  "We've talked on the program about the importance of getting fiscal matters together in the USA, and it's going to be a challenge because of what is now commonly being referred to in the financial media as the "fiscal cliff....It comes to fruition when the ball comes down on New Years Eve in Time Square at the end of 2012. Because a lot taxes go up, a lot of tax breaks come to an end and a lot of spending reductions go into effect. Remember the failure of the super committee earlier this year to agree upon a new budget plan and the automatic triggers that came into play?  Those will be triggered at the beginning of next year.....Probably it will be dealt with in a lame duck manner at the end of the year."

Lynn said: "Now if things are so grim, why are stocks holding up at this level? Because the US economy is the bright spot in the global economy. We're growing, slowly, but we're growing. That's the same reason why crude oil, which  plunged below $90 a barrel for the first time in seven months this week, rose slightly on Friday."

CONSUMER SENTIMENT....Lynn said: "Consumer sentiment, as measure by the University of Michigan, is at it's highest level since October of 2007. The consumer index jumped nearly three points from April, more than expected."

JOBS....Lynn said: "Two thousand fewer Americans filed for jobless benefits last week. That's hardly a blip.  But total claims are holding at 370,000, and that's a level where hiring happens enough to bring the jobless rate lower. Employers have added one million jobs in the past five months."

Honey EC: I only listened to the first hour of the program, but Jeffchristie listened to all of it. He reports that there was nothing worth my time to report or your time to read. But if you want to hear the program, it is now available free at KSFO 560 radio. 

On a different topic, I want to report that I have purchased a used copy of Lynn Jimenez' book for about $3.50 at Amazon: ¿Se Habla Dinero? The Everyday Guide to Financial Success (English and Spanish Edition)

The entire book is written so that when you open any page, the left side is in Spanish and the right side is in English.   Each time Lynn fills in for Brinker, I will do a little book report on some of the subjects in it.  This chapter piqued my interest, it may yours too. Emphasis is mine:

Se Habla Dinero, Page 279, Chapter 22, Lynn Jimenez wrote: ".........By 2010, Hispanics working outside their countries of birth are expected to send home more than $100 billion in amounts averaging $200 to $400 a month.


Those of you sending money may not be rich, but you are dedicated to sending what you can. That's why it's important to be aware of  the total cost, security, reliability and availability of what you send. Sending money home now is a lot different than when Mrs. Vega first arrived in the United States....."

The rest of this chapter has sections titled: Cash Transfers; Money Orders: Banking or Wire Transfers; Money Transfers via Plastic.

On a lighter note,  Jeffchristie wrote:

Lynn Jimenez was the replacement host for Bob Brinker on Moneytalk today.  She also is:

A)  President of the San Francisco chapter of La Raza.

B)  Chairman of the California Democratic party.

C)  Speech writer for Debbie Wassermann Schultz.

D)  She gives speeches to people telling them how to hide assets so they can apply for student aid that they wouldn't be eligible for because of their net worth.

ANSWER: Investing in the Future: Money & School with Lynn Jimenez

In Edit: There has been some disagreement about what Lynn recommended on this video -- and what she was talking about, so I have transcribed the first few minutes of the video. 

Each can draw their own conclusions. I don't hear anything that tells me she had any moral compunction about "hiding assets."  She makes a passing reference to "fraud," but is more concerned with the reward not being worth the risk.

Near the beginning of the video, Lynn Jimenez said: "A short version of how you set up a long-term blueprint to prepare to pay for your child's education.  You may have heard that savings can hurt your chances of financial aid. That's only a little bit true these days because things have changed. On average, when you apply for financial aid, you are asked to pay based on income and assets. Savings are assets, right? But current formulas tax only about 5% of assets a year. That is, the formula assumes that  5% of your family savings are available to help out with tuition and fees every year. And that's not too bad.The size of your family matters and whether you have more than one child in college at a time matters. So all of that factors into your favor.

If you don't want savings in the family name to be considered when you apply for financial aid, you could put it into someone else's name. Someone you really trust, who's willing to pay tax on the interest as needed, who could the hold assets for your child for years. Don't do it, you know,  if you only have two years, that's fraud, but it's also a lot of work. And then someone who will give it back when it's needed for school, so you'd need a written contract. I think it's a lot of work and risk for a little benefit.  But you know, if you have a lot of savings or you want to make that a fund the whole family contributes to and then releases when it's needed, it could work. Just don't build a large account, as I said, only to transfer at the last minute. I mean, the financial records show what you've done. You know... "

Moneytalk is free on Demand and downloadable at:  KSFO 560: 1-4pm    for seven days after broadcast.

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