September 30, 2012, Bob Brinker hosted Moneytalk....(comments welcome)
BRINKER'S ADVICE IN A CYCLICAL BEAR MARKET....Caller Rich in California said: "My wife and I are both retired and thanks to you we reside in the Land of Critical Mass and I have a question for you regarding your model portfolio III. We're currently taking somewhat less than a 4% withdrawal rate from that portfolio. If we go from a cyclical bull market to a cyclical bear market, and the decision is made to go to cash, what would be an appropriate withdrawal strategy."
Brinker replied: "Well I certainly like the idea of minimizing the withdrawal if you have other income. But I'm comfortable with a 4% withdrawal rate in such a situation. Cyclical bear markets don't last forever. If you get into a really long cyclical bear market, it doesn't come anywhere close to lasting forever. So the reality is, I don't see any reason -- especially, look what's happened this year in that portfolio. That portfolio, in the first nine months of this year has already generated double digit returns.....You're looking at an outstanding year. So you're certainly in a position to, I think, maintain a 4% withdrawal rate even if you do enter a cyclical bear market."
Honey EC: So if you read Brinker's response to Rich carefully, it will tell you what I have been saying for years now. Brinker will never again advise raising cash -- EVEN IN A CYCLICAL BEAR MARKET. (Brinker defines a bear market as a decline of 20% or more.) That must have surprised Rich somewhat because, like lots of subscribers, he believes that Brinker will raise cash and get him out of the stock market ahead of the next cyclical bear market.
Honey continues editorializing :) Nope, he won't. It's all a myth. He has remained fully invested since March 2003 in spite of the name of his newsletter. And in spite of the mystique that he established for himself in January 2000 when he raised 65% cash. The only other time that Brinker has raised cash was in January 1988 to January 1991. But it cost him dearly to go to 100% cash because the market shot up and by the time he got back to fully invested, he had missed out on a ton of gains. See the full history here: Asset Allocation History
OKAY TO WITHDRAW 4% OVER TIME FROM MODEL PORTFOLIO III.....Brinker said: "We have spoken on the broadcast about the balanced model III portfolio in the investment letter. Where we certainly feel comfortable with a withdrawal rate in the area of 4% against the interest and dividends and capital appreciation over time in that portfolio.....But you are going to have volatility and fluctuation in that portfolio."
Honey EC: Be aware that right now Marketimer model portfolio III is not balanced as listeners might assume Brinker means. It is close to 70% stock mutual funds and only about 30% in fixed income funds. It contains a very volatile holding in Akre Focus Fund (AKREX) and a couple of international funds (VFWIX and VWIGX). It also contains Brinker's usual picks -- Vanguard's Total Stock Market Fund, Dividend Growth Fund. On the fixed income side: Vanguard Ginnie Mae Fund and Short-Term Investment Grade Bond Fund. Also 20% in the hybrid, Wellesley Income Fund. A total of 8 holdings.
WHEN WILL INTEREST RATES RISE: Andy from NY wanted to know when to expect interest rates to go up. Brinker replied: "I'm not looking for much movement in the near term in interest rates....What we have right now is Federal Reserve policy that is designed to hold rates at a minimal level....short-term close to zero percent.....Everything that we've been hearing from Ben Bernanke is consistent with this policy continuing for the foreseeable future."
DURATION FORMULA FOR INTEREST RATES... Caller Jay from Illinois asked Brinker if he would explain the formula for calculating how interest rate changes affect different durations. He also asked Brinker if he would put the formula on his website. Brinker told him no because he almost always explains this to his subscribers in his "investment letter."
Honey EC: I understand why Brinker wouldn't want to clutter up the nice Marketimer website that his son keeps so will positioned to sell newsletters, cups, golf shirts, T-shirts, sweatshirts, bumper stickers and binder stickers -- all with the Marketimer logo on them. Gee, where else can you pay $25 bucks for a light cotton T-shirt and give him free advertising too? Step right up ladies and gentlemen! It's a bargain. LOL!!!
HERE'S THE DURATION FORMULA: If you had a duration of 4, an interest rate increase of 1% would give you a depreciation of 4%.
GROSS DOMESTIC PRODUCT: Brinker comments: We are looking at a slow growth economy. Because of the drought in the mid-west -- one of the most severe in decades -- we saw a downward revision of GDP in the second quarter to 1.3%. That brings the annual growth rate for the first half of this year at 1.7%.
IS IT SAFE TO HAVE ALL INVESTMENTS WITH ONE COMPANY: Caller John from Alaska asked if doing this was risky. Brinker replied: "I'm just giving you a personal opinion here. I don't have a problem with that. If you're talking about the Vanguard's of the world, the Fidelity's of the world, the T.Rowe Prices' of the world, the very well known investment companies that have been in business for decades."
Honey EC: How interesting that Brinker now includes T. Rowe Price but still refuses to include Charles Schwab (Brinker used Schwab exclusively for his BJ Group clients until he sold it). Could it possibly be because on September 11, 2012, he added a 15% weighting of T. Rowe Price New Horizons Fund (PRNHX) to portfolio I, and a 10% weighting to portfolio II and that fund can only be bought directly from T. Rowe Price. It's closed at Vanguard, Schwab and Fidelity.
BOB BRINKER'S COMPLIMENTARY ISSUE OF MARKETIMER: According to one of the blog readers, if you request a back issue, you will get November 2011 issue.
CONGRESS A NATIONAL DISGRACE....Brinker comments: I can't believe what I just saw. I speak about the audacity of congress to declare another vacation....Congress took most of the summer off....They came back for a very short period of time in September....Now they are back on vacation.....I include running for re-election vacation time because they're not working on the nation's business....The vast majority of the dysfunctional government are automatically returned to office year after year....These guys and gals in congress defy belief. They are, through their negligence in governing, they are a national disgrace.
CALIFORNIA IS IN TROUBLE.....Brinker said: "How many realize that under current law, the top bracket in California in January is 61% if the new Jerry Brown tax increase passes in November?....Spending is completely out of control in California. You've read about the bankruptcies in Vallejo, Stockton, Mammoth Lake, San Bernardino. Who knows where it will end. In too many cases, the so-called governing body of those domiciles over-promised to the public work force and now they can't deliver. And if you're lined up for one of those big, fat pensions in one of those places that can't afford it, don't count on getting that pension. Because if the taxpayers refuse to pay or move out of town, you're not going to get it.....The taxpayers, in many cases, are saying, I'm not going to take it anymore."
Honey EC: Brinker is only counting federal taxes. To that 61%, you have to add sales tax close to 10%, property tax, phone tax, gas tax, and dozens of other ways they pick our pockets in California.
FRANCE.....Brinker comments: The new Socialist president wanted higher taxes....There top bracket is now 75%....Why stop there? Why not make it 100%.
EUROPE: Brinker spent much of his monologue time talking about the European Union and what is going on over there. Not worth my time to cover it or you time to read about it.
POLITICS: Brinker also spent a lot of time pretty much repeating his political views again. In my opinion, the only subjects he covered that will directly affect investors is the fiscal cliff and the Keystone Pipeline.
FISCAL CLIFF....Brinker comments: It's not a joke even though Leno and Letterman are making it one. They have left the taxpayers a gigantic black hole only three months away.
PRESIDENT'S REFUSAL OF KEYSTONE PIPELINE IS INSANITY.....Brinker said: "Something that I just cannot get past is the refusal of our president to approve the Keystone Pipeline so we can bring more of that Canadian oil down into the USA. Does the United States have a better friend in the world than Canada. The only country that is even close is Britain....And this country because of the delay in the approval of the Keystone Pipeline, which is the no-brainer of all time, is now placing Canada in the position where they are looking onto building a pipeline to British Columbia and selling the oil to Asia. Why? So we can import more oil from the unstable mid-east? Ladies and gentleman, this stuff is crazy......This is the definition of INSANITY! Give it a name!"
AMERICAN GREED AND BERNIE MADDOFF: Brinker mentioned that the TV program, "American Greed" did a show on Bernie Maddoff. I made a point of watching it last week because mentioned it was coming on last week. The one thing I learned was that Maddoff was put in a cushy prison and lives a lot better than many on the outside -- and he's actually a celebrity. Bernie Behind Bars
BEST QUOTE OF THE DAY: Brinker said: "If you give your money to a scam artist, Katy Bar the Door."
Jeffchristie's Moneytalk Final Exam Question:
Bob Brinker is often critical of congress for taking too much time off. In the first nine months of 2012 there have been 39 Moneytalk broadcasts. Bob Brinker has missed how many of them?
A) 4
B) 8
C) 9
d) 12
Answer: Bob Brinker's fill-in weeks for 2012
January 1, 2012: Bob Brinker
January 8, 2012: Lynn Jimenez
February 12, 2012: Lynn Jimenez
March 11, 2012: Lynn Jimenez
May 27, 2012: Lynn Jimenez
June 10, 2012: Neale Godfrey
July 8, 2012: Neale Godfrey
August 12, 2012: Neale Godfrey
September 2, 2012 Lynn Jimenez
(He has been absent 23% of the time so for this year.)
San Francisco, Ca. KSFO 560: 1-4pm (KSFO archives Moneytalk Free on Demand for seven days after broadcast. You can download and listen on the go.)
Brinker's guest-speaker was Jeffrey Frieden: Lost Decades: The Making of America's Debt Crisis and the Long Recovery
Sunday, September 30, 2012
Thursday, September 27, 2012
September 27, 2012, Bob Brinker's Guest: Charlie Maxwell
September 27, 2012....I have a treat for you. Usually, David Korn says that Bob Brinker's guest-speakers are not worth covering, but he did a great review of Charlie Maxwell who was on Moneytalk last Sunday. Posted with David's permission. David Korn wrote the following including editorial comments (EC):
MONEYTALK GUEST CHARLES MAXWELL
Introduction: Bob had on one of his favorite guests, Charlie Maxwell, Senior Energy Analyst for Weedon & Co. Charlie was educated at Princeton and then Oxford. He has been working in the oil industry since the 1950s. In the 1960s he became an analyst on Wall Street and has been rated the #1 energy and oil analyst on many occasions. Bob heaped heavy praise on Charlie as the best of the best in terms of energy analysts and mandatory listening for Moneytalk trekkies. I summarized the interview below.
Brinker/Maxwell: Bob asked Charlie his thoughts on the politics of oil. Charlie said the politics of oil play out all around the world. It is very important as we move toward the peak production years of the oil business that we understand this is not just a geological situation but also a political situation. Charlie added that our older fields are now beginning to run out of the gas pressures that drive oil. Oil does not produce itself. It is produced by the pressure of gas supplies behind it which is critical to how fast the oil flows and how long it continues to flow before the gas supplies become so weak that it no longer can force out the oil. "Peak oil" means the emerging fields we find each year are equal to the loss of volume from the old fields that are being depleted. When will this peak oil occur and how will it impact all of us? Experience would teach us that this leads to competition for oil supplies which we have begun to see as the Chinese are going around the world purchasing fields in anticipation of this coming peak oil. It also implies that prices will be higher and higher down the road. We may have to be content with flat supplies for a few years and then beyond peak oil, diminishing supplies which would put pressure on other energy sources. Peak Oil will likely come first among the great fuels we use and will put terrible pricing pressure on oil itself and spread that pricing pressure to other fuels.
EC: Charlie is on record stating that agrees with the viewpoint of the renown Shell geologist, Dr. Marion King Hubbert, who predicted that the world oil production would reach a peak and then rapidly decline. Hubbert said the amount of oil given to our planet when it was formed is finite. When an individual field has produced 50% of its oil, you cannot force it to produce more oil on a daily basis. Charlie thinks the we are not far away from when more countries have declining production versus those that have rising production.
Maxwell: Over the last decade, we have been using oil and producing it for that use at the rate of about 27 billion barrels per year but now we have been making available new oil of about 12 billion barrels per year. That is a juxtaposition of the two numbers that count for us and it obviously doesn't make sense and shows we must be using up our surplus barrels that we found in the past. And that is exactly what is happening. Charlie says he thinks in the next 7-10 years we will reach Peak Oil.
EC: Charlie said he gets his data from the U.S. Energy Information Administration at this url:
http://www.eia.gov/
Brinker/Maxwell: Talk to us about the Middle East. Charlie says the supplies to the Middle East are critical to our lifestyle. About 20% of the oil passes through the Strait of Hormuz. If Israel decides to bomb Iran (which is a matter of consistent debate right now), the Iranians have said they will block the Strait of Hormuz. It would take about 30-40 days before the effect of that would be felt because it takes the tankers that long to get around, but the consequences would be dramatic and would probably set a world wide recession or depression into place if it was not curtailed. Charlie says he has heard that Iran will haul out old tankers and put them in the strait and sink them. The tankers would then project off the ocean floor to engage the bottom of the tankers and stop them from passing. Charlie says he hopes the US military could stop that but who knows.
EC: The Strait of Hormuz is the only sea passage to the open ocean for large areas of the Persian Gulf. According to the U.S. Energy Information Administration an average of about 15 tankers carrying about 17 million barrels of crude oil pass through every day. This represents 40% of the world's seaborne oil shipments and 20% of all world oil shipments. It is important!
http://en.wikipedia.org/wiki/Aphrodite_gas_field
Brinker/Maxwell: Charlie discussed the incredible finds of trillions of cubic feet of gas about 50 miles off of the Israeli coast and then a similar find nearby. Charlie talked about how the area is in the eastern Mediterranean in contested waters claimed by Israel, the Republic of Cyprus and Turkey.
EC: Read the story, "Israel's Offshore Gas Reserves Bonanza or Security Threat" at this url:
http://oilprice.com/Energy/Natural-Gas/Israels-Offshore-Gas-Reserves-Bonanza-or-Security-Threat.html
Brinker/Maxwell: Bob said he is angry the President has not approved the Keystone Pipeline and asked what Charlie thought. Charlie said we have a vast reserve of oil in Canada, larger than the oil in Saudi Arabia. We are in the process of connecting those reserves in Canada and into the United States to our refining centers in the South so we can process this crude and get the gasoline, diesel and heating oil consumers need. Charlie said we need this pipeline to get the oil, especially as fall back position so we can get that oil down quickly in the event of a serious Middle East conflict. Charlie said we are already taking all the oil we can from Canada. We are big buyers of Canadian oil and want more, but we need the pipelines to get more. We can use all of the oil Canada produces and if we don't, Canada will sell the oil to other countries.
Caller: When do you think oil will actually be gone from the earth? Charlie says it is a controversial question. Charlie pointed out that Exxon says we won¹t have peak oil, just higher and higher prices. Charlie says we will probably have some supplies over the next 1000 to 2000 years. There will always be new finds of oil. The problem is we use more than we find. Charlie says he thinks Peak Oil will come around 2019-2020. Charlie says he had forecast earlier, but the great recession delayed that.
Caller: Do you think we could see an Israel strike on Iran soon and see a disruption in oil? Charlie says he doesn¹t think anything will happen on that front until after the elections. If President Obama is reelected, he will have to pick up this argument with Israel and address whether the sanctions will work by bringing down the regime or does there need to be a surgical strike by Americans or Israel. The big problem is we don¹t have a way of ridding ourselves of this we can only delay it. Iran has dug in so deep that many of our bombs will fall on the top layer, but not impact the work going on underground which will only be modestly be impacted by our bombs. But there will be collateral damage if we send bombs and then we will be held to task by the rest of the world if we nuked the Iranians. We will probably remain dependent on sanctions which are beginning to hurt the Iranians.
Caller: Is the coal industry going to come back and if so when? Charlie
pointed out that there has been a great technological revolution in the natural gas industry which is producing so much natural gas that the price of natural gas has come down so far it has hurt the coal industry. However, Charlie thinks that by 2014 the price of natural gas will move higher and that coal will enjoy a rebound.
Brinker/Maxwell: Bob asked Charlie to comment on nuclear energy. Charlie said that the Fukushima Daiichi nuclear disaster in Japan have put a huge dent in the growth of nuclear power. Charlie said many nuclear plants in the world that are located near an ocean (which many are due to the cooling needs) but now countries fear that a tsunamis, particularly over the Pacific oceans, could produce a similar incident. Spain, Italy, Germany, Switzerland, Japan and a few other countries have said no more new nuclear plants for the time being. This means that we are going to have reduced power coming from nuclear energy as a percentage of total energy output in the coming generation.
EC: I always enjoy it when Charlie Maxwell is on the show. He is a real class act. Charles Maxwell's bio is at this link:
http://www.weedenco.com/research/charles-maxwell.php
MONEYTALK GUEST CHARLES MAXWELL
Introduction: Bob had on one of his favorite guests, Charlie Maxwell, Senior Energy Analyst for Weedon & Co. Charlie was educated at Princeton and then Oxford. He has been working in the oil industry since the 1950s. In the 1960s he became an analyst on Wall Street and has been rated the #1 energy and oil analyst on many occasions. Bob heaped heavy praise on Charlie as the best of the best in terms of energy analysts and mandatory listening for Moneytalk trekkies. I summarized the interview below.
Brinker/Maxwell: Bob asked Charlie his thoughts on the politics of oil. Charlie said the politics of oil play out all around the world. It is very important as we move toward the peak production years of the oil business that we understand this is not just a geological situation but also a political situation. Charlie added that our older fields are now beginning to run out of the gas pressures that drive oil. Oil does not produce itself. It is produced by the pressure of gas supplies behind it which is critical to how fast the oil flows and how long it continues to flow before the gas supplies become so weak that it no longer can force out the oil. "Peak oil" means the emerging fields we find each year are equal to the loss of volume from the old fields that are being depleted. When will this peak oil occur and how will it impact all of us? Experience would teach us that this leads to competition for oil supplies which we have begun to see as the Chinese are going around the world purchasing fields in anticipation of this coming peak oil. It also implies that prices will be higher and higher down the road. We may have to be content with flat supplies for a few years and then beyond peak oil, diminishing supplies which would put pressure on other energy sources. Peak Oil will likely come first among the great fuels we use and will put terrible pricing pressure on oil itself and spread that pricing pressure to other fuels.
EC: Charlie is on record stating that agrees with the viewpoint of the renown Shell geologist, Dr. Marion King Hubbert, who predicted that the world oil production would reach a peak and then rapidly decline. Hubbert said the amount of oil given to our planet when it was formed is finite. When an individual field has produced 50% of its oil, you cannot force it to produce more oil on a daily basis. Charlie thinks the we are not far away from when more countries have declining production versus those that have rising production.
Maxwell: Over the last decade, we have been using oil and producing it for that use at the rate of about 27 billion barrels per year but now we have been making available new oil of about 12 billion barrels per year. That is a juxtaposition of the two numbers that count for us and it obviously doesn't make sense and shows we must be using up our surplus barrels that we found in the past. And that is exactly what is happening. Charlie says he thinks in the next 7-10 years we will reach Peak Oil.
EC: Charlie said he gets his data from the U.S. Energy Information Administration at this url:
http://www.eia.gov/
Brinker/Maxwell: Talk to us about the Middle East. Charlie says the supplies to the Middle East are critical to our lifestyle. About 20% of the oil passes through the Strait of Hormuz. If Israel decides to bomb Iran (which is a matter of consistent debate right now), the Iranians have said they will block the Strait of Hormuz. It would take about 30-40 days before the effect of that would be felt because it takes the tankers that long to get around, but the consequences would be dramatic and would probably set a world wide recession or depression into place if it was not curtailed. Charlie says he has heard that Iran will haul out old tankers and put them in the strait and sink them. The tankers would then project off the ocean floor to engage the bottom of the tankers and stop them from passing. Charlie says he hopes the US military could stop that but who knows.
EC: The Strait of Hormuz is the only sea passage to the open ocean for large areas of the Persian Gulf. According to the U.S. Energy Information Administration an average of about 15 tankers carrying about 17 million barrels of crude oil pass through every day. This represents 40% of the world's seaborne oil shipments and 20% of all world oil shipments. It is important!
http://en.wikipedia.org/wiki/Aphrodite_gas_field
Brinker/Maxwell: Charlie discussed the incredible finds of trillions of cubic feet of gas about 50 miles off of the Israeli coast and then a similar find nearby. Charlie talked about how the area is in the eastern Mediterranean in contested waters claimed by Israel, the Republic of Cyprus and Turkey.
EC: Read the story, "Israel's Offshore Gas Reserves Bonanza or Security Threat" at this url:
http://oilprice.com/Energy/Natural-Gas/Israels-Offshore-Gas-Reserves-Bonanza-or-Security-Threat.html
Brinker/Maxwell: Bob said he is angry the President has not approved the Keystone Pipeline and asked what Charlie thought. Charlie said we have a vast reserve of oil in Canada, larger than the oil in Saudi Arabia. We are in the process of connecting those reserves in Canada and into the United States to our refining centers in the South so we can process this crude and get the gasoline, diesel and heating oil consumers need. Charlie said we need this pipeline to get the oil, especially as fall back position so we can get that oil down quickly in the event of a serious Middle East conflict. Charlie said we are already taking all the oil we can from Canada. We are big buyers of Canadian oil and want more, but we need the pipelines to get more. We can use all of the oil Canada produces and if we don't, Canada will sell the oil to other countries.
Caller: When do you think oil will actually be gone from the earth? Charlie says it is a controversial question. Charlie pointed out that Exxon says we won¹t have peak oil, just higher and higher prices. Charlie says we will probably have some supplies over the next 1000 to 2000 years. There will always be new finds of oil. The problem is we use more than we find. Charlie says he thinks Peak Oil will come around 2019-2020. Charlie says he had forecast earlier, but the great recession delayed that.
Caller: Do you think we could see an Israel strike on Iran soon and see a disruption in oil? Charlie says he doesn¹t think anything will happen on that front until after the elections. If President Obama is reelected, he will have to pick up this argument with Israel and address whether the sanctions will work by bringing down the regime or does there need to be a surgical strike by Americans or Israel. The big problem is we don¹t have a way of ridding ourselves of this we can only delay it. Iran has dug in so deep that many of our bombs will fall on the top layer, but not impact the work going on underground which will only be modestly be impacted by our bombs. But there will be collateral damage if we send bombs and then we will be held to task by the rest of the world if we nuked the Iranians. We will probably remain dependent on sanctions which are beginning to hurt the Iranians.
Caller: Is the coal industry going to come back and if so when? Charlie
pointed out that there has been a great technological revolution in the natural gas industry which is producing so much natural gas that the price of natural gas has come down so far it has hurt the coal industry. However, Charlie thinks that by 2014 the price of natural gas will move higher and that coal will enjoy a rebound.
Brinker/Maxwell: Bob asked Charlie to comment on nuclear energy. Charlie said that the Fukushima Daiichi nuclear disaster in Japan have put a huge dent in the growth of nuclear power. Charlie said many nuclear plants in the world that are located near an ocean (which many are due to the cooling needs) but now countries fear that a tsunamis, particularly over the Pacific oceans, could produce a similar incident. Spain, Italy, Germany, Switzerland, Japan and a few other countries have said no more new nuclear plants for the time being. This means that we are going to have reduced power coming from nuclear energy as a percentage of total energy output in the coming generation.
EC: I always enjoy it when Charlie Maxwell is on the show. He is a real class act. Charles Maxwell's bio is at this link:
http://www.weedenco.com/research/charles-maxwell.php
David Korn's Stock Market Commentary, Interpretation of Moneytalk (Bob Brinker Host), Financial Education, Helpful Links, Guest Editorials, and Special Alert E-Mail Service. Copyright David Korn, L.L.C. 2012Honey here: David Korn writes a newsletter with a weekly summary of Bob Brinker's Moneytalk included. You can get a complimentary issue of it and also The Retirement Advisor that David and Kirk Lindstrom publish together at this LINK
Sunday, September 23, 2012
September 23, 2012, Bob Brinker's Moneytalk: Summary, Excerpts and Commentary
September 23, 2012....Bob Brinker hosted Moneytalk today.....(comments welcome)
STOCK MARKET: Caller Terry from Chicago said: "Hi Bob. If the Fed continues to be as accommodative as they claim they are going to be, and congress is able to get their acts together so we don't go off the fiscal cliff, and assuming that the unemployment rate doesn't get much worse than it is, wouldn't you anticipate that the stock market would continue to go up?"
Brinker replied: "Well, there's a lot of variables out there, some you just named. I certainly think with reference to the first one though, Terry, that everybody already knows it. You have to be careful when you are evaluating things that everybody already knows because there is no surprise element attached. I'm not sure there's much of a surprise element attached to the second item you mentioned either -- the fiscal cliff....The Federal Reserve has been very accommodative going back to 2008-2009...and they remain so. But I think that just about every investor on the planet is aware that the Federal Reserve is in accommodative mode."
FISCAL CLIFF SWORD OF DAMOCLES: Brinker continued answering Terry: "As far as the fiscal cliff is concerned. I think they have to resolve it in a way that will not produce the $600 billion fiscal bombshell that is hanging over the future budgeting like a Sword of Damocles...They have they have to address after the election....I think we will muddle through the fiscal cliff. What that means is they'll come up with a pack of Band-aids after the election....probably a patch on the alternative minimum tax....almost 20% of the fiscal cliff....I think they will reduce any spending cuts....And there's no question in my mind that they will keep the tax rates as they are for those making under $200,000 or $250,000 for couples....Whether they keep the rates down on high-earners, that's a totally separate question. There's a big difference of opinion on that."
Honey EC: Did Brinker avoid answering Terry's stock market question? Sure seemed like it, but he adds more about stocks later. However, at no time today did Brinker actually make any commitment about how he sees the market going forward. He didn't sound bearish, but his "variables" comments tell me that he sure doesn't want to be on record making bullish predictions either.
STOCK MARKET SELL-OFF AHEAD? Curt in San Rafael said: "If President Obama gets re-elected in November, and the stock significantly increasing over the years, do you see a sell-off in the month of December?"
Brinker replied: "Well, we are going to have to wait until we get further down the line to answer that question. I certainly don't have forecast changes that I would make months in advance. In other words, I operate in real time so that whenever things change, they change. Doesn't matter who the president is, I can tell you that. The biggest mistake that I have seen investors make is to allow politics to interfere with their investment decisions."
Honey EC: That is hilarious for Brinker to claim he doesn't make forecasts in advance and always works in real time. He often predicts what level the S&P will be at by "this year" or "next year."
WILL THIS CYCLICAL BULL STOCK MARKET EXCEED OLD HIGHS? Tom from Albuquerque asked Brinker for the "macro" outlook. "Are we in a cyclical bull run in a secular bear market?"
Brinker replied: "I believe we are in a cyclical bull market. I believe that cyclical bull market began in the spring of 2009 and has continued to this point." (Tom asked if this bull market could exceed old highs by any "substantial amount.") Brinker continued: "That remains to be seen. We certainly aren't there yet....What we have right now is an economy that is growing slowly and corporate earnings are growing very slowly now. And investors are taking all of this into consideration and determining what valuation they are going to place on the market. We have a lot of variables out there right now....Certainly we've had a very attractive stock market for the last three and half years or so. It's done very well in this cyclical trend that we've been in. I think all of those things are true."
Honey EC: I wondered why Brinker ignored half of Tom's question -- the part about the "secular bear." Brinker's latest view is that a secular bear market began in January 2000.
ABOUT PREFERRED STOCKS....Brinker said: "A straight preferred pays usually pays a higher dividend than the common shares and that dividend is subject to the financial health of the company.....The board of directors votes on each dividend....If the company goes south...they can easily leave that dividend on the sidelines....Another factor that comes into play is the overall interest rate background. As a general rule, in a period of rising interest rates, preferred stock investors view that as a negative because their dividend is fixed.....It's not like a common stock where the dividend can be raised over time as the company does better....Interest rates decline, that's viewed as a positive because that yield is fixed."
INTEREST RATES CAN CHANGE ANY TIME....Brinker said: "I think it's a movable feast. I hear the Fed Chair talk about not raising rates until 2015. It was 2014....I take this with a grain of salt because I think it's a movable feast.....Each time they meet, they re-evaluate the current situation. They take a look and decide, hey, should we change things.....They could change it any time that the fundamentals change."
HOUSING MARKET: The Case-Schiller Housing Index will come out for the month of July on Tuesday. Brinker expects it to show a year-over-year increase in real estate values in the largest markets of about 1%. Last month the increase was 1/2 of 1%. Stability is coming into the housing market.
GROSS DOMESTIC PRODUCT: On Thursday the final revision for the second quarter -- estimate to stay at 1.7%...Annual growth for the year stands at 1.85%.
REAL ESTATE IRAS: Dave from the Hawkeye state asked Brinker about Real Estate IRAs. Brinker recommended checking with a CPA because when you put real estate into an IRA, you have to be careful not to get any personal benefit from it prior to taking it out of the IRA. Brinker called it "kind of a minefield." Here's more information about Investing Your IRA in Real Estate.
FDIC.GOV: Brinker recommended this website as a great resource to answer any FDIC Insurance questions. He recommends that all money be kept under FDIC protection.
BRINKER FAILS TO TELL THE TRUTH ABOUT HIS NEWSLETTER: Caller Tom from Pennsylvania said: "Hi Bob. I'm a long time subscriber to your Marketimer and your Fixed Income Advisor. I'm sixty year. I sometimes get confused when checking model portfolios, it's a little different one to the other....Should I try to combo both of them, or should I follow one over the other?"
Brinker replied: "Here's the deal. Anybody that is in or approaching their retirement years would certainly be looking at model portfolio III. That's the last of the model portfolios listed on page eight of the investment letter every month, and that is the balanced portfolio.....Separate from that Tom, we have subscribers who really don't want to take much risk in the stock market, and that's why we have the income portfolio on page 7.....The bottom line is your risk tolerance, that's the key."
Caller Tom followed up: "Okay, Bob. The reason I was asking was because when you get two newsletters, when you do model portfolio III on the two of them, there is some differences between the recommended ratios, ummm.
Brinker cut in and replied: "Oh there would be Tom. Here's why. The Marketimer investment letter, which is my investment letter, that investment letter focuses a great deal of attention on equity investing. Alright? So it would be that way. Whereas, the Brinker Fixed Income Advisor, that investment letter focuses primarily on fixed income investing. Now there are some other things in there, but it's primarily fixed income investing that is the focus of the Fixed Income Advisor."
Honey EC: So Tom buys two newsletters believing that they are both Brinker's. He is paying $185 plus $150 = $335 per year under a false premise. Twice, Tom made it clear he thought both newsletters were Brinker's, so Tom is being deceived into paying for a newsletter he thinks is written by Brinker, but it's actually his son who writes it and collects the money.
When one does not tell the whole truth, is that the same as lying? When a man who calls himself America's Most Trusted Financial Advisor fails to tell the whole truth, what does that make him? You can hear this call for yourself about 10 minutes into the second hour.
GREECE....Brinker said: "Greece is now known as a bailout nation....It can only survive with bailout money.....It's a problem nation because over 57% of Greeks in a poll are saying that the country should not keep its pledges made in exchange for the bailout...Now that's a problem because if these voters overthrow the current administration.....then this whole thing could unravel....And as I've said before, the day could come when Greece would no longer be a member of the 17 nation Euro currency block. We certainly cannot rule that out."
POLITICS: Brinker spent quite a bit of time on his usual political hobby horses. I don't think it's worth my time to cover because it was mostly repetitious from past weeks.
BRINKER BRAGS ABOUT HIS PORTFOLIOS BACK TO EVEN FROM 2007.... Brinker said: "I was just looking over the weekend at our model portfolio values on page 8 for model portfolios I, II and III. All three of those portfolios are currently at all-time-record valuations. They are at the highest valuation that they have ever achieved even though the stock at its highest level of valuation. The S&P 500 right now is 1460 level, actually 100 points below its all-time-high of several years ago."
Honey EC: The S&P 500 reached its all-time-record high in October 2007 at 1565. At that time, Brinker was predicting it would reach the mid-1600s by 2008. He kept all of his model portfolios fully invested for the entire megabear market of 2008 to March 2009. Portfolio I dropped as much as 57%.
Now he's excited that model portfolio I is back to the same level it was FIVE YEARS AGO. What he didn't tell you is that model portfolio I is now only $66 above its all-time-high. LOL! And he didn't mention that if you have been subscribing to Marketimer over that same five years, it would have cost you $1,110.00 Let's take a look.
This is the October 2007 closing high of Marketimer model portfolio I:
This is the Marketimer model portfolio I numbers from August 30, 2012:
FUNNY CALL OF THE DAY: Caller C.R. from Missouri bragged that he had bought Euros back when they were 77 cents. Brinker hit the poor guy across the face with a wet noodle when he told him that the Euro had never sold as low as 77 cents. As the "Boy Named Sue" asked, "What could he say, what COULD he say?" Poor C.R. humbling admitted he might have his numbers wrong. :)
Jeffchristie's Moneytalk Final Exam Question:
Bob Brinker often says Iowa callers are calling from the Hawkeye state. Iowa got this nickname from:
A) Hawkeye Pierce from MASH.
B) The Marvel comics superhero Hawkeye.
C) Chief Blackhawk.
D) The Grumman E-2 aircraft known as the Hawkeye.
Answer: Iowa Hawkeye State
Brinker's guest-speaker was Charlie Maxwell. You can read a summary of Maxwell's last Moneytalk appearance HERE.
If time allows, I will do a summary of the Maxwell interview later this week. If you missed it, you can download it here: San Francisco, Ca. KSFO 560: 1-4pm (KSFO archives Moneytalk Free on Demand for seven days after broadcast. You can download and listen on the go.)
STOCK MARKET: Caller Terry from Chicago said: "Hi Bob. If the Fed continues to be as accommodative as they claim they are going to be, and congress is able to get their acts together so we don't go off the fiscal cliff, and assuming that the unemployment rate doesn't get much worse than it is, wouldn't you anticipate that the stock market would continue to go up?"
Brinker replied: "Well, there's a lot of variables out there, some you just named. I certainly think with reference to the first one though, Terry, that everybody already knows it. You have to be careful when you are evaluating things that everybody already knows because there is no surprise element attached. I'm not sure there's much of a surprise element attached to the second item you mentioned either -- the fiscal cliff....The Federal Reserve has been very accommodative going back to 2008-2009...and they remain so. But I think that just about every investor on the planet is aware that the Federal Reserve is in accommodative mode."
FISCAL CLIFF SWORD OF DAMOCLES: Brinker continued answering Terry: "As far as the fiscal cliff is concerned. I think they have to resolve it in a way that will not produce the $600 billion fiscal bombshell that is hanging over the future budgeting like a Sword of Damocles...They have they have to address after the election....I think we will muddle through the fiscal cliff. What that means is they'll come up with a pack of Band-aids after the election....probably a patch on the alternative minimum tax....almost 20% of the fiscal cliff....I think they will reduce any spending cuts....And there's no question in my mind that they will keep the tax rates as they are for those making under $200,000 or $250,000 for couples....Whether they keep the rates down on high-earners, that's a totally separate question. There's a big difference of opinion on that."
Honey EC: Did Brinker avoid answering Terry's stock market question? Sure seemed like it, but he adds more about stocks later. However, at no time today did Brinker actually make any commitment about how he sees the market going forward. He didn't sound bearish, but his "variables" comments tell me that he sure doesn't want to be on record making bullish predictions either.
STOCK MARKET SELL-OFF AHEAD? Curt in San Rafael said: "If President Obama gets re-elected in November, and the stock significantly increasing over the years, do you see a sell-off in the month of December?"
Brinker replied: "Well, we are going to have to wait until we get further down the line to answer that question. I certainly don't have forecast changes that I would make months in advance. In other words, I operate in real time so that whenever things change, they change. Doesn't matter who the president is, I can tell you that. The biggest mistake that I have seen investors make is to allow politics to interfere with their investment decisions."
Honey EC: That is hilarious for Brinker to claim he doesn't make forecasts in advance and always works in real time. He often predicts what level the S&P will be at by "this year" or "next year."
WILL THIS CYCLICAL BULL STOCK MARKET EXCEED OLD HIGHS? Tom from Albuquerque asked Brinker for the "macro" outlook. "Are we in a cyclical bull run in a secular bear market?"
Brinker replied: "I believe we are in a cyclical bull market. I believe that cyclical bull market began in the spring of 2009 and has continued to this point." (Tom asked if this bull market could exceed old highs by any "substantial amount.") Brinker continued: "That remains to be seen. We certainly aren't there yet....What we have right now is an economy that is growing slowly and corporate earnings are growing very slowly now. And investors are taking all of this into consideration and determining what valuation they are going to place on the market. We have a lot of variables out there right now....Certainly we've had a very attractive stock market for the last three and half years or so. It's done very well in this cyclical trend that we've been in. I think all of those things are true."
Honey EC: I wondered why Brinker ignored half of Tom's question -- the part about the "secular bear." Brinker's latest view is that a secular bear market began in January 2000.
ABOUT PREFERRED STOCKS....Brinker said: "A straight preferred pays usually pays a higher dividend than the common shares and that dividend is subject to the financial health of the company.....The board of directors votes on each dividend....If the company goes south...they can easily leave that dividend on the sidelines....Another factor that comes into play is the overall interest rate background. As a general rule, in a period of rising interest rates, preferred stock investors view that as a negative because their dividend is fixed.....It's not like a common stock where the dividend can be raised over time as the company does better....Interest rates decline, that's viewed as a positive because that yield is fixed."
INTEREST RATES CAN CHANGE ANY TIME....Brinker said: "I think it's a movable feast. I hear the Fed Chair talk about not raising rates until 2015. It was 2014....I take this with a grain of salt because I think it's a movable feast.....Each time they meet, they re-evaluate the current situation. They take a look and decide, hey, should we change things.....They could change it any time that the fundamentals change."
HOUSING MARKET: The Case-Schiller Housing Index will come out for the month of July on Tuesday. Brinker expects it to show a year-over-year increase in real estate values in the largest markets of about 1%. Last month the increase was 1/2 of 1%. Stability is coming into the housing market.
GROSS DOMESTIC PRODUCT: On Thursday the final revision for the second quarter -- estimate to stay at 1.7%...Annual growth for the year stands at 1.85%.
REAL ESTATE IRAS: Dave from the Hawkeye state asked Brinker about Real Estate IRAs. Brinker recommended checking with a CPA because when you put real estate into an IRA, you have to be careful not to get any personal benefit from it prior to taking it out of the IRA. Brinker called it "kind of a minefield." Here's more information about Investing Your IRA in Real Estate.
FDIC.GOV: Brinker recommended this website as a great resource to answer any FDIC Insurance questions. He recommends that all money be kept under FDIC protection.
BRINKER FAILS TO TELL THE TRUTH ABOUT HIS NEWSLETTER: Caller Tom from Pennsylvania said: "Hi Bob. I'm a long time subscriber to your Marketimer and your Fixed Income Advisor. I'm sixty year. I sometimes get confused when checking model portfolios, it's a little different one to the other....Should I try to combo both of them, or should I follow one over the other?"
Brinker replied: "Here's the deal. Anybody that is in or approaching their retirement years would certainly be looking at model portfolio III. That's the last of the model portfolios listed on page eight of the investment letter every month, and that is the balanced portfolio.....Separate from that Tom, we have subscribers who really don't want to take much risk in the stock market, and that's why we have the income portfolio on page 7.....The bottom line is your risk tolerance, that's the key."
Caller Tom followed up: "Okay, Bob. The reason I was asking was because when you get two newsletters, when you do model portfolio III on the two of them, there is some differences between the recommended ratios, ummm.
Brinker cut in and replied: "Oh there would be Tom. Here's why. The Marketimer investment letter, which is my investment letter, that investment letter focuses a great deal of attention on equity investing. Alright? So it would be that way. Whereas, the Brinker Fixed Income Advisor, that investment letter focuses primarily on fixed income investing. Now there are some other things in there, but it's primarily fixed income investing that is the focus of the Fixed Income Advisor."
Honey EC: So Tom buys two newsletters believing that they are both Brinker's. He is paying $185 plus $150 = $335 per year under a false premise. Twice, Tom made it clear he thought both newsletters were Brinker's, so Tom is being deceived into paying for a newsletter he thinks is written by Brinker, but it's actually his son who writes it and collects the money.
When one does not tell the whole truth, is that the same as lying? When a man who calls himself America's Most Trusted Financial Advisor fails to tell the whole truth, what does that make him? You can hear this call for yourself about 10 minutes into the second hour.
GREECE....Brinker said: "Greece is now known as a bailout nation....It can only survive with bailout money.....It's a problem nation because over 57% of Greeks in a poll are saying that the country should not keep its pledges made in exchange for the bailout...Now that's a problem because if these voters overthrow the current administration.....then this whole thing could unravel....And as I've said before, the day could come when Greece would no longer be a member of the 17 nation Euro currency block. We certainly cannot rule that out."
POLITICS: Brinker spent quite a bit of time on his usual political hobby horses. I don't think it's worth my time to cover because it was mostly repetitious from past weeks.
BRINKER BRAGS ABOUT HIS PORTFOLIOS BACK TO EVEN FROM 2007.... Brinker said: "I was just looking over the weekend at our model portfolio values on page 8 for model portfolios I, II and III. All three of those portfolios are currently at all-time-record valuations. They are at the highest valuation that they have ever achieved even though the stock at its highest level of valuation. The S&P 500 right now is 1460 level, actually 100 points below its all-time-high of several years ago."
Honey EC: The S&P 500 reached its all-time-record high in October 2007 at 1565. At that time, Brinker was predicting it would reach the mid-1600s by 2008. He kept all of his model portfolios fully invested for the entire megabear market of 2008 to March 2009. Portfolio I dropped as much as 57%.
Now he's excited that model portfolio I is back to the same level it was FIVE YEARS AGO. What he didn't tell you is that model portfolio I is now only $66 above its all-time-high. LOL! And he didn't mention that if you have been subscribing to Marketimer over that same five years, it would have cost you $1,110.00 Let's take a look.
This is the October 2007 closing high of Marketimer model portfolio I:
This is the Marketimer model portfolio I numbers from August 30, 2012:
FUNNY CALL OF THE DAY: Caller C.R. from Missouri bragged that he had bought Euros back when they were 77 cents. Brinker hit the poor guy across the face with a wet noodle when he told him that the Euro had never sold as low as 77 cents. As the "Boy Named Sue" asked, "What could he say, what COULD he say?" Poor C.R. humbling admitted he might have his numbers wrong. :)
Jeffchristie's Moneytalk Final Exam Question:
Bob Brinker often says Iowa callers are calling from the Hawkeye state. Iowa got this nickname from:
A) Hawkeye Pierce from MASH.
B) The Marvel comics superhero Hawkeye.
C) Chief Blackhawk.
D) The Grumman E-2 aircraft known as the Hawkeye.
Answer: Iowa Hawkeye State
Brinker's guest-speaker was Charlie Maxwell. You can read a summary of Maxwell's last Moneytalk appearance HERE.
If time allows, I will do a summary of the Maxwell interview later this week. If you missed it, you can download it here: San Francisco, Ca. KSFO 560: 1-4pm (KSFO archives Moneytalk Free on Demand for seven days after broadcast. You can download and listen on the go.)
Sunday, September 16, 2012
September 16, 2012, Bob Brinker's Moneytalk: Summary, Excerpts and Commentary
September 16, 2012....Bob Brinker hosted Moneytalk today.
STOCK MARKET....Brinker said: "The individual investor is making out like a bandit. The S&P has ridden up into the mid-1400s. We have a double digit gain on the books. Investors are doing great....."
LOVE, ERRR..POLITICS HAD NOTHING TO DO WITH IT.... Brinker said: "Politics hasn't played much of a part in this....Anybody that has made investment decisions based on politics, what are they doing? They are sitting around earning next to nothing. I don't think you can make investment decisions solely on politics....Don't ever let your politics skew your investment approach.....And remember the S&P 500 hasn't gone up because of who's in the White House. The S&P 500 doesn't care who's in the White House. Index has gone up because corporate earnings have gone up.....And that's the key, with low inflation, low interest rates, rising corporate earnings. That's what's given you this great stock market run. And to those Moneytalk listeners who've been fully invested during this run, congratulations to you."
Honey EC: Brinker's Marketimer model portfolios are fully invested, as they have been for over nine years. As usual, he is recommending dollar-cost-averaging "on weakness" for new money. Brinker said he "wouldn't be surprised" to see Marketimer's projected 1.5% to 2.5% real growth forecast "remain intact through next year," but would adjust if the economic outlook changes.
ETFS ARE MUTUAL FUNDS....Brinker said: "An ETF is a mutual fund. Why people try to separate them, I don't know."
Honey EC: There has been a lot of comparisons done between ETFs and mutual funds. Here is a Seeking Alpha author who does an analysis.
WILL THEY PATCH THE AMT? Brinker said: "I'm going to make a guess on this because I have no way of knowing. My guess is that they will try to patch it. Now whether it passes, I can't tell you because we have a dysfunctional congress....I think there will be an attempt to put a patch on the Alternative Minimum Tax again this year, and then it will come up for a vote."
QE3 and VANGUARD GINNIE MAE FUND (VFIIX)....Caller Rob from Portland asked Brinker how QE3 would affect Ginnie Mae Funds. Brinker replied: "Ginnie Maes are mortgages. This is a program to mortgage securities. Ginnie Maes are the highest quality mortgage securities of all.....The bottom line is if the Fed is in there buying $10 billion a week, roughly, of mortgage securities, that creates demand for existing mortgage securities. And if you own them, you like people buying them.....So this is a positive for mortgage securities, including Ginnie Maes."
QE3 IS OPEN-ENDED PURCHASE OF MORTGAGE BACKED SECURITIES....Brinker said: "The big news of the week came Thursday when the Federal Reserve announced it will expand its holdings of long-term mortgage back securities with open-ended purchases on a monthly basis and an indefinite term of $40 billion a month. This is being called QE3, the third round of Quantative Easing, but the difference this time, it's open ended. It's going to remain in force until it's changed.....The Federal Reserve is interested in creating jobs and providing liquidity, but also supporting the housing market with low mortgage rates....
HOUSING MARKET....Brinker said: "Long-term rates are now down under 4%. This is one of the reasons we have been seeing a better tone in the housing market."
FED CREATE NEW JOBS? Brinker said: "The Fed chair says quote, 'we are looking for ongoing sustained improvement in the labor market. There's not a specific number we have in mind, but what we've seen in the past six months is not it.' unquote. Unemployment has been above 8% since February of 2009, and the Fed Chair has called this a 'great concern.' The Fed will continue to hold rates near the zero level, and they state now they'll do it at least through the middle of 2015. But we all know that that is a movable feast....If the economy should pick up steam and cause inflation worries, the Fed would be forced to take another look at that. But right now, they are taking an aggressive stand with regard to monetary policy....."
Honey EC: At the risk of sounding sarcastic, when did the Federal Reserve take over the whole United States economy, including creating jobs and managing the housing market? That's a lot of power in the hands of an un-elected group of people with one man at the top. What happened to free markets?
ACTUAL JOBS GROWTH....Brinker continued: "The focus on jobs growth is understandable. Net jobs growth in August 96,000 -- July 141,000. So while congress twiddles and diddles and blathers, the Federal Reserve is taking action."
FED ACTION TO SPUR ECONOMIC GROWTH.....Brinker continued: "In fact the Fed said, quote, 'The committee is concerned that without further policy accommodation, economic growth might not be strong enough to generate sustained improvement in labor market conditions.'"
WHAT TO EXPECT FOR UNEMPLOYMENT....Brinker continued: "And by the way, they are not expecting unemployment to get down into the 6 to 6.8% range until 2015. Which gives you some idea what the Fed is looking for in terms of the unemployment situation."
POLITICIANS SHOULD STAY OUT OF MONETARY POLICY....Brinker said: "We need the politicians to stay out of the serious business of monetary policy.....In this country, we have already given the politicians in Washington full responsibility to manage the nation's fiscal affairs.....Congress appropriates all the money....Now we all know what's happened. They've turned the fiscal situation into a national train wreck. Now imagine the gall of these same politicians who want to interfere with monetary policy which they basically know nothing about."
LET ME KISS YOUR RING, BEN.... Brinker continued: "So we can be grateful that we have an outstanding Federal Reserve Chairman in Ben Bernanke. And all the credit goes to those who have appointed him....and that starts with George W. Bush. The finest appointment of the Bush Administration and the original appointment several years ago. Because of Bernanke's work on the Federal Reserve, that's a major reason that we have seen some growth in the economy in recent years..... I think he's one of finest chairs that we've ever had....I think he's elevated himself in the past three years to rank right up there with Paul Volcker."
BEN COULD HAVE TAKEN EASY WAY OUT....Brinker continued: "Ben Bernanke could have take the easy way out this week. He could have waited until the December Federal Open Market Committee meeting after the election to announce QE3. It would have been easy to do. Unlike many in Washington who dither and blather incessantly while they ignore the problems and do nothing about them. Bernanke announce QE3 just seven weeks before the general election because he thinks the economy needs further action. He knows congress is a do-nothing congress. If Bernanke have waited until December, he would have avoided all of the political grandstanding going on out there.....The reality is Bernanke, who was appointed by George W. Bush.....there's no evidence that he favors either political party. Never has been......By the way, Bernanke said the Federal Reserve did not take into account the upcoming presidential election when it made its meeting decision....."
Honey EC: In all of Brinker's enthusiasm above, he completely disputes what he said last week. Last week, as it shows in my September 9th summary, he said QE3 would likely do very little for the economy. And he said that if Bernanke waited until December to do more easing that would indicate a political move. Now Brinker is all excited about how Bernanke will single-handedly save the economy, housing market and create jobs -- and how waiting to December would have been the "easy way."
WHEN WILL QE3 END? Caller Mike from Littleton, Colorado (Home of Marketimer and BB Jr's newsletter) asked when Bernanke might start and then stop buying mortgage bonds. Brinker replied: "He's going to start buying bonds this month......He's been very specific about stopping it. He says he will stop it when he sees the economy where he wants to see it.....and the employment conditions sufficient to curtail the program....As it stands right now, the program has no end date.....He has been ordered by the United States Congress, his mandate includes low inflation, we have that, and maximize employment. We don't have that."
EXACTLY WHAT WILL THE FED BE BUYING? Brinker said: "He hasn't told us exactly which ones (Fannies, Freddies, Ginnies) he will buy, but we do know he will buy Mortgage Backed Securities for now with this new money.....Remember there is already a program in force where he is buying Treasuries. That's at a rate of $45 billion a month, and that one expires at year end."
ECONOMIC GROWTH AFFECTED BY DEFICIT....Brinker said: "There are many powerful forces that enter into the course of the economy, not the least of which is our $16 trillion dollar deficit. Because eventually, that could lead to a huge interest cost. It's not right now because of the low rates."
Honey EC: Brinker misspoke. He meant the $16 trillion national debt. The yearly deficit is over a $trillion.
FISCAL CLIFF TAX WOULD BE BIGGEST IN WORLD HISTORY....Brinker said: "We've talked about the fiscal cliff becuase it's a big deal, and getting closer and closer. If it were to happen on New Year's Day, it would be by far, the largest tax increase in the history of the world. In fact, it would be so big, about a $500 billion dollar tax increase, that there wouldn't even be a close second in the history of the world. That's because there are so many taxes scheduled to go up. All of the tax breaks, all of the tax brackets are scheduled to rise in January. Everybody that pays taxes will be paying a higher percentage of their income."
Honey EC: Brinker again reviews all of the scheduled increases in the second hour opening monologue. You can listen or download the program at KSFO -- see the link below.
CHANCES OF TAXES GOING UP FOR ANYONE BUT HIGH EARNERS IS SLIM AND NONE...Joey from Texas whose income was $85,000, asked if he should make some portfolio changes based on the upcoming fiscal cliff. Brinker replied: "You are not subject to the new 90 points Medicare payroll tax, which is uncapped. You also are not subject to the new Medicare tax on capital gains, dividends and rents and royalties and passive income because you need to make over $250,000 to be subject to that.....The only thing you have to worry about in terms of income would be if all of the tax rates goes up and no deal is made to keep them down for everybody but the high-earners. And I would say that the chances of that happening are slim and none.....I would defer to next year if you can, and I'll tell you why. It looks like your rate will be the same."
BRINKER'S MOST SURPRISING QUOTE OF THE DAY: "Next time around they (Democrats) might look to Hilary Clinton if she's available and willing....She would be a strong candidate for president, in my opinion."
POLITICS....Honey sez: Even though Brinker got on his soapbox about how politics have nothing to do with the stock market or investing, he devoted a lion's share of today's program to talking politics. I won't waste my time and bore you by covering his views again. He still claims to be non-partisan. I flat out don't believe him. If he believes that, he's either delusional or using his "money talk" program to demagogue. Or a third possibility is that he simply wants to sell newsletters rather than actually give investing advice on the broadcast, so he's just filling time while callers praise him for critical mass. Oh, and there's one more possibility -- that is, he's retired on the job. :)
Jeffchristie's Moneytalk Final Exam Question:
Which one of the following best describes Bob Brinker's feelings toward Ben Bernanke?
A) Bob agrees with the state senator who called him a traitor.
B) Bob is upset that Ben Bernanke has refused to be a guest on Moneytalk. Bob thinks he doesn't want to appear because he is afraid of his tough questions.
C) Bob thinks Bernanke is one of the best Fed chairman and the best appointment George W Bush made.
D) Bob Brinker feels he is smarter than Ben Bernanke because his SAT score was much higher than Bernanke's.
(Answer: "C")
Brinker's guest-speaker today was Jason Kelly: The New Tycoons: Inside the Trillion Dollar Private Equity Industry That Owns Everything (Bloomberg)
STOCK MARKET....Brinker said: "The individual investor is making out like a bandit. The S&P has ridden up into the mid-1400s. We have a double digit gain on the books. Investors are doing great....."
LOVE, ERRR..POLITICS HAD NOTHING TO DO WITH IT.... Brinker said: "Politics hasn't played much of a part in this....Anybody that has made investment decisions based on politics, what are they doing? They are sitting around earning next to nothing. I don't think you can make investment decisions solely on politics....Don't ever let your politics skew your investment approach.....And remember the S&P 500 hasn't gone up because of who's in the White House. The S&P 500 doesn't care who's in the White House. Index has gone up because corporate earnings have gone up.....And that's the key, with low inflation, low interest rates, rising corporate earnings. That's what's given you this great stock market run. And to those Moneytalk listeners who've been fully invested during this run, congratulations to you."
Honey EC: Brinker's Marketimer model portfolios are fully invested, as they have been for over nine years. As usual, he is recommending dollar-cost-averaging "on weakness" for new money. Brinker said he "wouldn't be surprised" to see Marketimer's projected 1.5% to 2.5% real growth forecast "remain intact through next year," but would adjust if the economic outlook changes.
ETFS ARE MUTUAL FUNDS....Brinker said: "An ETF is a mutual fund. Why people try to separate them, I don't know."
Honey EC: There has been a lot of comparisons done between ETFs and mutual funds. Here is a Seeking Alpha author who does an analysis.
WILL THEY PATCH THE AMT? Brinker said: "I'm going to make a guess on this because I have no way of knowing. My guess is that they will try to patch it. Now whether it passes, I can't tell you because we have a dysfunctional congress....I think there will be an attempt to put a patch on the Alternative Minimum Tax again this year, and then it will come up for a vote."
QE3 and VANGUARD GINNIE MAE FUND (VFIIX)....Caller Rob from Portland asked Brinker how QE3 would affect Ginnie Mae Funds. Brinker replied: "Ginnie Maes are mortgages. This is a program to mortgage securities. Ginnie Maes are the highest quality mortgage securities of all.....The bottom line is if the Fed is in there buying $10 billion a week, roughly, of mortgage securities, that creates demand for existing mortgage securities. And if you own them, you like people buying them.....So this is a positive for mortgage securities, including Ginnie Maes."
QE3 IS OPEN-ENDED PURCHASE OF MORTGAGE BACKED SECURITIES....Brinker said: "The big news of the week came Thursday when the Federal Reserve announced it will expand its holdings of long-term mortgage back securities with open-ended purchases on a monthly basis and an indefinite term of $40 billion a month. This is being called QE3, the third round of Quantative Easing, but the difference this time, it's open ended. It's going to remain in force until it's changed.....The Federal Reserve is interested in creating jobs and providing liquidity, but also supporting the housing market with low mortgage rates....
HOUSING MARKET....Brinker said: "Long-term rates are now down under 4%. This is one of the reasons we have been seeing a better tone in the housing market."
FED CREATE NEW JOBS? Brinker said: "The Fed chair says quote, 'we are looking for ongoing sustained improvement in the labor market. There's not a specific number we have in mind, but what we've seen in the past six months is not it.' unquote. Unemployment has been above 8% since February of 2009, and the Fed Chair has called this a 'great concern.' The Fed will continue to hold rates near the zero level, and they state now they'll do it at least through the middle of 2015. But we all know that that is a movable feast....If the economy should pick up steam and cause inflation worries, the Fed would be forced to take another look at that. But right now, they are taking an aggressive stand with regard to monetary policy....."
Honey EC: At the risk of sounding sarcastic, when did the Federal Reserve take over the whole United States economy, including creating jobs and managing the housing market? That's a lot of power in the hands of an un-elected group of people with one man at the top. What happened to free markets?
ACTUAL JOBS GROWTH....Brinker continued: "The focus on jobs growth is understandable. Net jobs growth in August 96,000 -- July 141,000. So while congress twiddles and diddles and blathers, the Federal Reserve is taking action."
FED ACTION TO SPUR ECONOMIC GROWTH.....Brinker continued: "In fact the Fed said, quote, 'The committee is concerned that without further policy accommodation, economic growth might not be strong enough to generate sustained improvement in labor market conditions.'"
WHAT TO EXPECT FOR UNEMPLOYMENT....Brinker continued: "And by the way, they are not expecting unemployment to get down into the 6 to 6.8% range until 2015. Which gives you some idea what the Fed is looking for in terms of the unemployment situation."
POLITICIANS SHOULD STAY OUT OF MONETARY POLICY....Brinker said: "We need the politicians to stay out of the serious business of monetary policy.....In this country, we have already given the politicians in Washington full responsibility to manage the nation's fiscal affairs.....Congress appropriates all the money....Now we all know what's happened. They've turned the fiscal situation into a national train wreck. Now imagine the gall of these same politicians who want to interfere with monetary policy which they basically know nothing about."
LET ME KISS YOUR RING, BEN.... Brinker continued: "So we can be grateful that we have an outstanding Federal Reserve Chairman in Ben Bernanke. And all the credit goes to those who have appointed him....and that starts with George W. Bush. The finest appointment of the Bush Administration and the original appointment several years ago. Because of Bernanke's work on the Federal Reserve, that's a major reason that we have seen some growth in the economy in recent years..... I think he's one of finest chairs that we've ever had....I think he's elevated himself in the past three years to rank right up there with Paul Volcker."
BEN COULD HAVE TAKEN EASY WAY OUT....Brinker continued: "Ben Bernanke could have take the easy way out this week. He could have waited until the December Federal Open Market Committee meeting after the election to announce QE3. It would have been easy to do. Unlike many in Washington who dither and blather incessantly while they ignore the problems and do nothing about them. Bernanke announce QE3 just seven weeks before the general election because he thinks the economy needs further action. He knows congress is a do-nothing congress. If Bernanke have waited until December, he would have avoided all of the political grandstanding going on out there.....The reality is Bernanke, who was appointed by George W. Bush.....there's no evidence that he favors either political party. Never has been......By the way, Bernanke said the Federal Reserve did not take into account the upcoming presidential election when it made its meeting decision....."
Honey EC: In all of Brinker's enthusiasm above, he completely disputes what he said last week. Last week, as it shows in my September 9th summary, he said QE3 would likely do very little for the economy. And he said that if Bernanke waited until December to do more easing that would indicate a political move. Now Brinker is all excited about how Bernanke will single-handedly save the economy, housing market and create jobs -- and how waiting to December would have been the "easy way."
WHEN WILL QE3 END? Caller Mike from Littleton, Colorado (Home of Marketimer and BB Jr's newsletter) asked when Bernanke might start and then stop buying mortgage bonds. Brinker replied: "He's going to start buying bonds this month......He's been very specific about stopping it. He says he will stop it when he sees the economy where he wants to see it.....and the employment conditions sufficient to curtail the program....As it stands right now, the program has no end date.....He has been ordered by the United States Congress, his mandate includes low inflation, we have that, and maximize employment. We don't have that."
EXACTLY WHAT WILL THE FED BE BUYING? Brinker said: "He hasn't told us exactly which ones (Fannies, Freddies, Ginnies) he will buy, but we do know he will buy Mortgage Backed Securities for now with this new money.....Remember there is already a program in force where he is buying Treasuries. That's at a rate of $45 billion a month, and that one expires at year end."
ECONOMIC GROWTH AFFECTED BY DEFICIT....Brinker said: "There are many powerful forces that enter into the course of the economy, not the least of which is our $16 trillion dollar deficit. Because eventually, that could lead to a huge interest cost. It's not right now because of the low rates."
Honey EC: Brinker misspoke. He meant the $16 trillion national debt. The yearly deficit is over a $trillion.
FISCAL CLIFF TAX WOULD BE BIGGEST IN WORLD HISTORY....Brinker said: "We've talked about the fiscal cliff becuase it's a big deal, and getting closer and closer. If it were to happen on New Year's Day, it would be by far, the largest tax increase in the history of the world. In fact, it would be so big, about a $500 billion dollar tax increase, that there wouldn't even be a close second in the history of the world. That's because there are so many taxes scheduled to go up. All of the tax breaks, all of the tax brackets are scheduled to rise in January. Everybody that pays taxes will be paying a higher percentage of their income."
Honey EC: Brinker again reviews all of the scheduled increases in the second hour opening monologue. You can listen or download the program at KSFO -- see the link below.
CHANCES OF TAXES GOING UP FOR ANYONE BUT HIGH EARNERS IS SLIM AND NONE...Joey from Texas whose income was $85,000, asked if he should make some portfolio changes based on the upcoming fiscal cliff. Brinker replied: "You are not subject to the new 90 points Medicare payroll tax, which is uncapped. You also are not subject to the new Medicare tax on capital gains, dividends and rents and royalties and passive income because you need to make over $250,000 to be subject to that.....The only thing you have to worry about in terms of income would be if all of the tax rates goes up and no deal is made to keep them down for everybody but the high-earners. And I would say that the chances of that happening are slim and none.....I would defer to next year if you can, and I'll tell you why. It looks like your rate will be the same."
BRINKER'S MOST SURPRISING QUOTE OF THE DAY: "Next time around they (Democrats) might look to Hilary Clinton if she's available and willing....She would be a strong candidate for president, in my opinion."
POLITICS....Honey sez: Even though Brinker got on his soapbox about how politics have nothing to do with the stock market or investing, he devoted a lion's share of today's program to talking politics. I won't waste my time and bore you by covering his views again. He still claims to be non-partisan. I flat out don't believe him. If he believes that, he's either delusional or using his "money talk" program to demagogue. Or a third possibility is that he simply wants to sell newsletters rather than actually give investing advice on the broadcast, so he's just filling time while callers praise him for critical mass. Oh, and there's one more possibility -- that is, he's retired on the job. :)
Jeffchristie's Moneytalk Final Exam Question:
Which one of the following best describes Bob Brinker's feelings toward Ben Bernanke?
A) Bob agrees with the state senator who called him a traitor.
B) Bob is upset that Ben Bernanke has refused to be a guest on Moneytalk. Bob thinks he doesn't want to appear because he is afraid of his tough questions.
C) Bob thinks Bernanke is one of the best Fed chairman and the best appointment George W Bush made.
D) Bob Brinker feels he is smarter than Ben Bernanke because his SAT score was much higher than Bernanke's.
(Answer: "C")
Brinker's guest-speaker today was Jason Kelly: The New Tycoons: Inside the Trillion Dollar Private Equity Industry That Owns Everything (Bloomberg)
San Francisco, Ca. KSFO 560: 1-4pm (KSFO archives Moneytalk Free on Demand for seven days after broadcast. You can download and listen on the go.)
Thursday, September 13, 2012
September 13, 2012....T. Rowe Price New Horizons Fund Closed at Schwab, Fidelity and Vanguard
September 13. 2012....Bob Brinker's latest Marketimer mutual fund recommendation has become quite controversial based on some of the mail and comments that I have received.
For some strange reason, Brinker added T. Rowe Price New Horizon Fund (PRNHX) to his two equity model portfolios in spite of the fact that it cannot be purchased at Schwab, Fidelity and Vanguard.
Brinker recommended the Price Fund to replace Meridan Growth Fund (MERDX). He said that Meridian Fund has been a good performer but its founder, Richard Aster, Jr. passed away earlier this year, so he was "more comfortable" with the Price Fund..
I investigated and found that T. Rowe Price New Horizon Fund can be purchased directly from T. Rowe Price
Why would Brinker recommend a fund that cannot be purchased from Vanguard, Schwab or Fidelity? Here are some comments from people who have tried to buy this fund:
Chuck said...
This fund IS CLOSED to new investors...at least it is at Schwab.
This fund is closed to new investors. Only accounts which currently have a position in this fund may place a buy order at this time.
Jim said...
This fund is closed at Schwab and Fidelity. Here is the reason I believe:
I think this fund is closed to new investors at Schwab and Fidelity because T. Rowe Price wants to closely monitor the inflows into this fund. This is a small-cap fund so size can become an issue fast. By making it only available directly through T. Rowe Price they can closely monitor who gets in and also allow more shares to be available for customers who have accounts directly with T. Rowe Price.
While this has been a fine fund, IMO Bob Brinker should have chosen another fund which is smaller in size. T.Rowe Price could close this at any time, and then he must find a replacement. I think anyone considering this fund should act fast.
bobs victim said...Tried to buy new horizons via my vanguard account. IT IS CLOSED. Bob is getting very sloppy or careless. I don't think I will renew my newsletter come March 2013.
bobs victim said...
Here's a follow-up that's left me more than a little disappointed. I spoke to a T Rowe Price rep.and they told me that customers who use Vanguard or Fidelity cannot access the New Horizons fund. It is not like they are just temporarily closed to new investors but this has gone on for some time. They also told me that they were getting a lot of calls and complaints based on the Marketimer newsletter. I called the Marketimer office and (they) were doing damage control sounding like they were caught flat footed. It makes me wonder whether Bob is even engaged at this point. This seems very sloppy and indicates poor attention to detail. These are not traits that make for good money management.
For some strange reason, Brinker added T. Rowe Price New Horizon Fund (PRNHX) to his two equity model portfolios in spite of the fact that it cannot be purchased at Schwab, Fidelity and Vanguard.
Brinker recommended the Price Fund to replace Meridan Growth Fund (MERDX). He said that Meridian Fund has been a good performer but its founder, Richard Aster, Jr. passed away earlier this year, so he was "more comfortable" with the Price Fund..
I investigated and found that T. Rowe Price New Horizon Fund can be purchased directly from T. Rowe Price
Why would Brinker recommend a fund that cannot be purchased from Vanguard, Schwab or Fidelity? Here are some comments from people who have tried to buy this fund:
Chuck said...
This fund IS CLOSED to new investors...at least it is at Schwab.
This fund is closed to new investors. Only accounts which currently have a position in this fund may place a buy order at this time.
I think this fund is closed to new investors at Schwab and Fidelity because T. Rowe Price wants to closely monitor the inflows into this fund. This is a small-cap fund so size can become an issue fast. By making it only available directly through T. Rowe Price they can closely monitor who gets in and also allow more shares to be available for customers who have accounts directly with T. Rowe Price.
While this has been a fine fund, IMO Bob Brinker should have chosen another fund which is smaller in size. T.Rowe Price could close this at any time, and then he must find a replacement. I think anyone considering this fund should act fast.
bobs victim said...
Sunday, September 9, 2012
September 9, 2012, Bob Brinker's Moneytalk: Summary, Excerpts and Commentary
September 9, 2012....Bob Brinker hosted Moneytalk today. (comments welcome)
Caller John has a million dollar portfolio that has been invested in Marketimer model portfolio III and he's now on the edge of critical mass. He is inheriting another $600,000 and wanted advice about how to put it in the market.
Brinker replied: "John, the first thing to understand is that a one million dollar portfolio is different from a 1.6 million dollar portfolio. You may decide with a million dollar portfolio that you are very comfortable with a balanced portfolio, but with a 1.6 million dollar portfolio that you want to change your allocations.....You have the right to pause and reconsider... and think about where the markets are."
FIXED INCOME MARKET....Brinker continued: "Think about where the markets are today. In the fixed income market, you're looking at near historical lows on just about all the rates right now.....You have to consider the risks that are inherent in the fixed income market.....and what changes might be brought about if somewhere down the road, rates were to normalize. That hasn't happened yet. We have a slow-growth economy."
STOCK MARKET.....Brinker continued: "And then you look at the equity market. We are at the highest level now in over 4 1/2 years....We are close to the levels of the end of 2007. We are basically at the levels of January 2008. You have to look at that and consider that this market has more than doubled in the last 3 1/2 years.....Take all that into consideration...You have every right to then say, I want to take a look at this asset allocation -- it's been great for you -- you've had the balanced portfolio."
Honey EC: If John had his million dollar portfolio invested in Marketimer model portfolio III back at the closing highs Brinker mentioned, he lost well over a quarter of the NAV from October 2007 to March 2009. Ouch! It's back now, but it's five years later.
MARKETIMER BALANCED MODEL PORTFOLIO III.....Brinker continued: "I'm happy to report to you, we're having a really good year in our balanced portfolio.....We take a relatively low level of risk in that portfolio....That's worked for you....God bless you....The reality is, you're looking to the future as you should be."
Honey EC: Be aware that portfolio III is not evenly balanced right now. It is about 67% equities.
ASSET ALLOCATION AT THIS TIME....Brinker continued: "These are the questions I'd be asking. What do I want to do in a fixed income market like this? What do I want to do in a stock market that's had a run like this? Do I want to maintain the same asset allocation that's worked for me up to now? I mean, you've benefited from everything that could possibly go right. You've had fixed income securities, rates have come down to historical levels....Of course in model III, you're in quality fixed income....You've had equity exposure.....that portfolio has also done nicely.....How do you reconcile the fact that you're now coming into money.....This has been a de facto melt up in the stock market...."
MARKETIMER FULLY INVESTED....Brinker continued: "I'm very happy to say that our Marketimer subscribers have been fully invested in this move. Let me tell you, there have been a lot of skeptics out there predicting recessions, scaring people out of the market....You should feel very good that you have been making money....For information on my investment letter, Bob Brinker's Marketimer, go to Bob Brinker.com and request a complimentary back issue."
Honey EC: Brinker bragging about his portfolios (and subscribers) being fully invested for this market "melt-up" would be funny if it wasn't so absurd. His portfolios, and subscribers have been fully invested since March 2003 -- including the 2008 market "melt-down."
Obviously, Brinker is dangling a juicy carrot for those who actually believe he can or will be able to call the top in the market. In my opinion, he can't and won't even try.
UNEMPLOYMENT/JOBS REPORT....New jobs for August came in at net 96,000....The reported unemployment rate at 8.11. Brinker said: "The main reason it went down was because of people leaving the work force. Millions have left the work force because unable to find a job.....The underemployed rate remains elevated at 14.7%....That's a big number....It includes those who are looking for full-time work but can only find part-time....and those who are long-term unemployed.....Unemployment has been a real problem and remains a real problem because the economy has not been growing fast enough to create the necessary level of jobs growth to (a) absorb all new entrants into the labor force and (b) absorb those in the unemployment pool....You know it peaked at 10.1, so it has come down.....
FED'S MANDATES AND CONGRESSIONAL COWBOYS.....Brinker continues: "The Federal Reserve would like to see it at 5 1/2 to 6% so they could at least believe that they have lived up to their congressional mandate to keep employment as high as possible consistent with stable prices.....The reason they have not been able to achieve that, we have not seen enough economic growth. It is absorb to throw all of this on the back of Ben Bernanke....Definitely the most transparent Federal Chair of all time....He has said he does not have the power to solve the problem of the fiscal cliff or all the problems facing congress.....Congress is going to have to cowboy up and do what's right. They are not willing to do it right now because they are too busy running for re-election...."
WHEN WILL THE NEXT RECESSION HIT? Caller Mike from Denver, pointing out that December 2007 was the start of the last recession (which was five years ago) said that since we have 4 to 6 year business cycles, when does Brinker expects the next recession to begin.
Brinker replied: "That's the 64 dollar question.....The reality is that we know a couple of things. In terms of the economy, there are two tools that can be used to help the economy. One is fiscal policy....Those who are waiting around for another fiscal stimulus package, don't hold your breath because I don't think the votes are there for another stimulus package.....There's tremendous stimulus coming from the over spending by the government. The government is still spending more than a trillion dollars a year than it brings in.....As far monetary is concerned. It amazes me the way that people will latch on to the possibility of QE3, which may happen down the road...if the economy continues its below trend track and unemployment stays as high as its been....But what are people expecting out of QE3....QE1 was helpful, but QE2 and Operation Twist was only marginally helpful, not major help...."I don't see where another round would dramatically help the growth rate."
WILL THE FEDERAL RESERVE DO QE3?....Brinker said: "It will be interesting to see what the Federal Open Market Committee decides...They have a two-day meeting coming up....Ben Bernanke has been very vocal....This is what he said, "The daunting economic challenges economic challenges that confront the US.....He said something else that was notable. He said, 'The stagnation of the labor market is a grave concern.' He also went on to say 'unemployment will wreak structural damage on our economy that could last for years.' Now the question is, do we have structural unemployment. Now that is a big deal because you can have structural unemployment for several different and it's likely to be a continuing problem. And is that contributing to the high unemployment rate? We shall find out in the fullness of time.....There are many jobs out there that are not filled because the employees with the necessary skill set are not available....Then we have geography....There are construction jobs available in places like North Dakota. Will those Arizona, California going to relocate....probably not."
POLITICAL CONVENTIONS AND FISCAL CLIFF: Brinker said: "One of the things that was notably absent from the political conventions was discussion of the fiscal cliff....You'd think they'd talk about the 800 pound gorilla in the middle of the room, but they didn't so I will.....This looks like at least until after the election, it will not even be addressed.....I was kind of amazed that we saw both conventions go by and so little was said about the fiscal cliff....I think they are embarrassed. Both parties are embarrassed by the creation of the fiscal cliff which has been manufactured by politicians to begin with. They are totally embarrassed on both sides of the aisle by the situation they have created where business owners today don't know what the tax rate will be in less than four months."
Honey EC: Brinker went over all of the upcoming taxes that will kick in on January 1st if nothing is done. I've covered all of this before. I was a bit surprised that Brinker listened to all of both conventions. Since I didn't, I could not say with certainty that no one discussed the fiscal cliff.
EUROPEAN SOVEREIGN DEBT....Bob Brinker said: "We have the story of super Mario, Mario Draghi, the European Central Bank Chief....." Brinker talked at length about Draghi. Here is the text of Draghi's speech after the bank held interest rates on Thursday and outlined its new bond-buying program.
BEN BERNANKE A TRAITOR? Jack from San Diego asked Brinker if the Fed could do anything to impact the upcoming election. He said that he had a list of all the threats that Republicans are making against Bernanke.
Brinker replied: "I have that list because I heard the comments by the South Carolina state senator recently who accused the Fed Chair of being a traitor to the United States. I've heard all this pap.....The bottom line is will politics play a role in the upcoming Fed meeting.....If they eventually do implement another round of quantitative easing, but if they don't do it at this upcoming FOMC meeting in a few days, then I think it will be fair to have said that was a politically motivated decision.....I really don't expect another round of QE to have a dramatic impact on the economy....Since QE2 did very little to help the economy, why expect anything different in the future."
Honey EC: Later in the second hour, this same subject came up. Brinker went into what could be classified as a complete rage. He literally screamed that Ben Bernanke was not a traitor and that calling him a traitor is "pretty sick, sick, sick." Brinker said it was the other way round -- that those calling Bernanke a traitor were the real traitors.
I think this may be the most angry that I have ever heard Brinker sound. He claims that Bernanke has "no brief for Obama." Well, I'm wondering what is Brinker's "brief" for Bernanke. After reading this article, I find it hard to agree with Brinker that Bernanke has no "brief for Obama." Romney Affirms He Wouldn't Reappoint Bernanke as Fed Chair
Check out this article and video: Bernanke Called Traitor
Jeffchristie's Moneytalk Final Exam Question:
Bob Brinker's nickname for the president of the European central bank was inspired by which of the following Nintendo characters?
A) Donkey Kong.
B) Pokemon.
C) Super Mario.
D) Slippy toad.
Answer: Mario SMBW
Brinker's guest-speaker today was Deepa Seetharaman, automotive correspondent for Thompson-Reuters. See video clip
San Francisco, Ca. KSFO 560: 1-4pm (KSFO archives Moneytalk Free on Demand for seven days after broadcast. You can download and listen on the go.)