Sunday, November 4, 2012

November 4, 2012, Bob Brinker's Moneytalk: Summary, Excerpts and Commentary

November 4, 2012....Bob Brinker hosted Moneytalk today.....(comments welcome)

JOBS REPORT....Brinker said: "We got the jobs report on Friday. It was a good report. Private sector jobs increased by 184,000 in the month of October....There was an upward revision for the prior two months -- that brought 84,000 into the count.....The under-employment rate came down to 14.6 -- very high numbers. That includes part-time workers who would like full time and workers that have given up looking.  By the way, the only president since World War II that has been re-elected with an unemployment rate above 6%, there is only one case and that was 1984. On election day 28 years ago, the unemployment rate was 7.2. And despite that Ronald Reagan won re-election in 1984. Unemployment right now, going into election Tuesday is at 7.9%."

Brinker itemized the unemployment demographic based on education:  Bachelor's Degree or higher: 3.8%; high school diploma: 8.4%; high school drop-out: 12.2%.

Honey EC: How can Brinker call that a good report when the unemployment rate is actually up?  And as he has said many times, the added jobs are not enough to bring the unemployed numbers down. 

THE ELECTION....Brinker said: "We are going to have lots of programming today on the election that is just two days away.....It should be interesting. We'll have lots to say on the subject of the elections in our third hour with our guest, and I'll have more to say as we go forward as well. He we are less than a day and half from the opening of the polls in that little New Hampshire community so I think it's a good time for us to take that topic and put it on the table."

Honey EC: Indeed, most of the program was dedicated to politics and the election. Brinker made his predictions again that the House will remain Republican and the Senate Democrat and  "the White House is up for grabs." Personally, I'm sick of all the polling, pontificating and predicting,  so I'll  try not to torture you with very much on the subject. :)

STOCK MARKET:  Wayne in Naperville asked: "Is the outcome of the election going to affect the stock market at all?" 

Brinker replied: "Wellll, the stock market will do what the stock market will do in terms of counting the votes. Short-term response will be whatever it is."

Honey EC: That was it folks. Believe it or not. He never answered Wayne's excellent and reasonable question. Nope! That was Brinker's total stock market commentary today!  Does this show an enormous level of contempt for his listeners? I can tell you this -- he is still fully invested. His projections for the S&P 500 Index is the same as it has been most of this year -- high-1400's to low-1500's -- operating earnings at $102.

Brinker then turned to politics to finish answering Wayne: "But I'll tell you this much. I put odds.....I'm convinced now that the House of Representatives will not change hands......If the president is re-elected, I think we are going to have more of this contention that we have seen. If Mitt Romney is elected, he's going to have to deal with the probability that the Senate will not change hands. So we've had a tremendous amount of gridlock in Washington, especially the past couple of years. I think it's probably a good idea to figure on more gridlock going forward. Why? Because if Romney wins, I think he is going to deal with a majority Democrat Senate. If Obama wins, I'm certain that he's going to deal with a majority GOP House. That's a gridlock formula for sure."

Honey EC: A later caller pointed out to Brinker that Obama had all three branches of government for the first two years of his presidency -- House and Senate were both Democrat controlled. 

BRINKER'S FIXED INCOME ADVICE....Caller Mike from Chicago asked: "With your help, I've got a pretty good handle on the equity portion of my portfolio, but the fixed income side has been a challenge....I recently heard you talk to a caller about Defined Maturity Bond ETF's, and it sounded like an ideal vehicle for building a ladder.....I wonder if you could comment on the pros and cons of that vehicle."

Brinker replied: "I suppose you could put together a ladder using an instrument like that. The reason that I haven't talked much about it -- and that was a caller that brought that up........is because in my point of view in terms of an income portfolio, and it's  certainly a challenging time for an income portfolio, I think you need a lot of diversification in there. And that's what we've done in the investment letter -- in our page 7 income portfolio.  We've put a lot of diversification in there and it's paid off for us. The income portfolio is having an outstanding year and I'm very glad we've gone down that path."

Honey EC: A couple of months ago, Vanguard closed its High-yield Fund (VWEHX) to new investors. Brinker said that Metro West Total Return Fund (MWTRX) could be used as a substitute. Then in October, he sold all of his income portfolio holding in Vanguard High-Yield Fund and replaced the holding with Metro West. That move may make it easier to plot the returns of the portfolio, but I question the wisdom of making it because VWEHX has outperformed Metro over the past couple of years. 

VANGUARD GINNIE MAE FUND (VFIIX) IN A MARKET CRASH: Mike from Littleton, Colorado said: "I did some research and I've been trying to find some assets that don't correlate with the S&P primarily for avoidance of corrections, pull-backs and crashes. So I looked at a lot of ten-year chart. You know we've had two really nice crashes in ten years and pretty much a correction every year -- couple of pullbacks a year along the way. And you know what, the only thing I found that didn't correlate with crashes? Basically  Ginnie Maes. There were things that had a beta of about .5, you know, gold, gold miners. But even corporate bonds, when stocks crash, everything crashes together, except Ginnie Maes. They didn't miss a beat in '02 or '08. Am I missing anything here?"

Brinker replied: "Well, Ginnie Maes have the Treasury guarantee standing behind the mortgage portfolio and therefore there is no principal risk in terms of the re-payment of the principal or interest as long as those mortgages our outstanding. If they're prepaid, then that's the end of them. Then that money has to be re-invested at the prevailing rate.....And that's the reason that you've had that safety quotient in the Ginnie Maes."

Honey EC: Over the past months, Brinker had lowered the Ginnie Mae holdings in his income fund down to only 15%. Coincidentally, callers stopped getting on the air to ask about Ginnie Maes -- which was quite a change from the past when there was usually more than one call every Sunday. Now Brinker has raised the holding to 25%  and Walla! we suddenly have a caller AND Brinker singing Ginnie Mae praises. :) 

One thing that the caller didn't seem to notice and Brinker did not point out -- the dividends are less than half what they were in 2002 or even 2008 -- down to 2.8%.   Another important point that Brinker seems to be ignoring right now is that when interest rates turn up (something Brinker says will happen someday), Ginnie Mae Funds will get creamed! 

GETTING AWAY WITH BLOODY MURDER ON NATIONAL DEBT: Brinker said: "Uncle Sam is very happy to minimize its expense. Right now, they're getting away with, we are all getting away with bloody murder on our 16.2 trillion dollar debt because they're not paying a whole lot in interest. This won't last forever, but as long as it lasts, they are getting away with bloody murder in terms of  financing the extraordinarily high national debt."

COMEDY CALL OF THE DAY: Caller Ray from Illinois said: "You are like the Michael Jordan, and I mean this sincerely because a lot of publications from people out there that call themselves expert and I really followed for the past 19 years. And I must admit that you are the Michael Jordan when it comes to the equity market and the economy."

Brinker replied: "Ray, I appreciate that very much, but I must add to that if you really need a game-winning shot with the clock running down on the hardwood boards, you probably want somebody else to take that final shot in the basketball game. Take my advice."

Brinker's guest-speaker was pollster, John Zogby.

FrankJ pointed out Brinker's new mantra: "We operate in real time."  My question is this: Is that anywhere near "Realsville?" LOL!

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.)  

47 comments:

Anonymous said...

This may be of interest:

6) Zogby
Failed to Project Winner: 27.3% | Average Error = 3.8

As we all know, Zogby had been on record for months saying that Kerry was going to win this race. Despite his final tracking poll that put Bush ahead by one point nationally, Zogby's polling at the state level reflected his belief that Kerry was going to be the beneficiary of huge turnout - especially among the youth vote. The result is that Zogby missed three of the eleven states he polled in (FL, IA, and NM), had a relatively high error rate across the board (3.8%), and his numbers generally skewed in favor of John Kerry.

Adding insult to injury, Zogby's bizarre election day antics calling for "surprises" in Colorado and Virginia and a decisive 311 electoral vote victory for Kerry suggest he was relying on (not to mention taken in by) the badly skewed early exit poll data.

Let's be honest: Zogby's conduct this year bordered on outrageous. No other independent pollster was out making public predictions of a John Kerry or George W. Bush victory months before hand. And no other pollster decided to wait until 5:30pm Eastern time on election day to post their final numbers.

http://www.freerepublic.com/focus/f-news/1274530/posts

Zogby has always had a very strong leftist bend, just google his name and liberal of leftist so I find it no surprise that a liberal type like Brinker has him on as his preferred pollster.

tfb

Anonymous said...

Btw, I will crawl out on a limb and call this for Romney, my record is pretty good the only election I recall missing was McCain/Obama...LOL, but I got the others right going back to Reagan's second term.

tfb

John said...

Hi Honey;

Thanks for your update and comments it is always appreciated. Judging from the early voting and long lines it looks like an Obama victory here in Florida. The people waiting three and four hours long look like middle to lower income people who are sticking with the status quo. It doesn't look like Romney people from my observations here on the ground in florida. Do they have long lines for early voting in California? I guess you cant count on Bob in the clutch when it comes to the market as he said the news letter and what he can make comes first. Thanks again John

Wisc said...

Most of the early voting in my state has been overwhelmingly for Obama. I think Obama will win in a landslide and for good reason.

We don't need Romney's trickle down economics and free market ideas that got us into this mess in the first place.

Honeybee said...

Since this is the day before the national election and Bob Brinker made it his main topic yesterday, I will publish political comments to this summary -- only.

However, I will not publish cheap shots, insults or name-calling of either candidate.

So make you predictions, but leave off the name-calling.

Anonymous said...
This comment has been removed by a blog administrator.
Anonymous said...

Frankj: Before we get a landslide of political comments, I had a couple on the program. First, thanks HB for a good summary.

The "bond ladder" caller -- BB seemed to blow this guy off, but it was a legit question. BB has talked often of constructing a ladder of CDs for fixed. At least one company is now offering fixed date maturity ETFs, Guggenheim. You can construct a ladder of bond ETFs.

The caller who compared BB to Michael Jordan, that was over the top, but BB could have been more gracious, in my opinion.

Dan G said...

"Obama will be remembered in history for Obama Care just as LBJ was remember for Medicare."

And as Hoover is (wrongly, perhaps) remembered for the depression!

Anonymous said...

Honeybee,
I found your site a couple of years ago but have never commented. Thanks in large part to this site, I let my Marketimer subscription lapse recently and am amused that Bob's now bumped his GNMA percentage back up (out of inertia, I never sold mine down).

Yesterday, I heard only a portion of the Zogby hour but it was enough. The other "Anonymous" post about the 2004 election was enlightening. Also, Zogby tipped his hand when quoting approvingly Sen. John Warner, who bemoaned that he couldn't "control" how some of his supporters spent money on ads for him. That, combined with Zogby's invocation of the good old days when most Americans got news from Walter Cronkite, pointed up his distaste for our current (and, admittedly, messier) climate in which voters have access to "non-mainstream" sources of information. If he and Bob wonder why politics are so polarized, they might start by reviewing how the cultural Left has managed to politicize almost every facet of human activity. So, yes, millions of Americans feel intensely about topics whose inclusion in politics 50 years ago would have been considered bizarre. I'm a Baby Boomer and would love to return to the political climate of my childhood in which the parties disagreed primarily over defense policy, foregn relations, taxation, etc. but am not holding my breath for that occurrence. By the way, Douglas Brinkley's recent (and, apparently, largely positive)biography points out how the political views of Cronkite influenced his reporting:
http://www.nationalreview.com/articles/309626/cronkite-syndrome-conrad-black?pg=1

Anonymous said...

DanG: You're right about the first part, but on Medicare, I wonder how many people today, actually remember that LBJ and his Great Society program was responsible? And that the future costs of the program were way underestimated?

Maybe everyone's consciousness will be raised when Medicare, along with Social Security and interest on the national debt crowd out all other components of the federal budget.

Frankj

Honeybee said...

Anonymous,

So glad you found this blog a couple of years ago.

Thanks for the great comments.

The article about Cronkite is very interesting. Here is the live link:

Cronkite Syndrome

Anonymous said...

Frankj:

Toward the end of the Zogby interview, he mentioned gerrymandered Congressional districts as contributor to gridlock. This is true, IMO.

Both parties have created "safe" districts where there is little risk to the incumbent moving farther to the right or left in order to stay in office. Thus, low turnover in Congress and gridlock.

Anonymous said...

Honeybee,
Thanks for the kind words. Also, I should've included in my original post my apologies, as a native Texan, for our state inflicting LBJ on the rest of you (that's intended as a political opinion not as a "personal attack").

Anonymous said...

Sadly, I think Obama will eke out a win. Not by enthusiastic supporters driven by his excellent track record, but more by divisive rhetoric and union solidarity. I trust the House stays Republican so damage is limited. It will be a sad Wednesday.

Two things are clear about my prediction. First, the economy will sour as Obama's hardliner politics prevent tax reform, grows govt, and increases debt with more bailouts. This makes investing pretty easy. Gold and negatve coorelated assets like SDS will go up. Bonds will pay nothing. REITS will fail. Equities will fall. No brainer.

Second, if I'm wrong and Obama loses -- we have to face the fact our media was compromised. There is no way all these polls could be so wrong UNLESS they were manipulated by the govt in power.

Honeybee said...

Tom,

Thank you for the thoughtful, insightful comments.

I'm really stressed about this election -- I think our country is on the line.

birdbrain said...

Political prediction? My two cents.

I'd have to bet on an Obama re-election. The battleground state polls have been too close despite sluggish GDP growth and high unemployment figures. If Gov Romney can't win Ohio he would have to steal a WI and/or PA to finish on top. Possible but highly improbable.

Obama to win the electoral college and Romney to win the national vote.

Hope this is wrong as I would like to see a change in the White House. For my fellow Golden State voters, no on Prop 30. Starve the Sacramento beast as the legislators have not come close to cutting enough govt (union pension) spending.

Honey, thanks for the soapbox.

Bluce said...

I predict that Mr. "X" will win.

I also predict that four years from now the welfare-warfare state will be bigger than it is now. Spying on and oppression of Americans will continue.

The national debt will also be substantially higher than it is now.

Vote for Mr. "Y" !

Anonymous said...

Rush: Everything But Polls Say Romney Landslide

Radio talk show host Rush Limbaugh charged on Monday that the nation’s pollsters have failed to accurately predict the outcome of the 2012 presidential election.

“Common sense tells me this election isn't gonna be close — and it shouldn't be,” Limbaugh said on his afternoon radio program. “And yet, every poll, every single poll, has this race tied.

Read Latest Breaking News from Newsmax.com: http://www.newsmax.com/Newsfront/Limbaug....1#ixzz2BS9vJJBJ

Dan G said...

Is the market predicting a Romney victory? Beats me, but it sure is pressing higher. Go Dow...Go DDMs!

If Obama wins at least I'll be able to buy a big blue bottle to ease the pain!

Dan G said...

As Columbo would say, "Just one more thing"...the Dow's daily MACD is pretty close to turning upwards and triggering a Sy Harding seasonal buy signal.

Ok, so his seasonal sell signal last April didn't work all that well, but could he be wrong twice in a row? Well, he could. But I wouldn't bet on it. Especially the way the market has been performing lately.

Anonymous said...

i was wrong - and that is all she wrote...

tfb

Dan G said...

The market is "welcoming" 4 more years this morning with a kick in the pants!

I took a nice profit in DDM yesterday before the close because I didn't have the guts to hold over election night. That was fortunate, since if I had held, I'd be spilling my guts all over Wall Street this morning!

Sometimes it's better to be lucky than good. This is one of those times!

Dan G said...

A wild, wild day on Wall Street, yet there doesn't seem to be much interest in it.

I think it has sunk enough now for at least a quick "scalp" trade, so I'm in for 300 DDMs...for better or worse, for richer or poorer, in sickness...

- Dan G

Dan G said...

Well, the market is remaining stubbornly lower, so I got out with a measly $50 profit. Not worth all the sweat and tears!

Time for lunch!

Anonymous said...

Dan-- how much commission on the two trades (in and out)? Just curious..

Honeybee said...

TFB,

We are facing a fiscal cliff in less than two months.

We have had five years of trillion dollar deficit.

We have a 16.2 trillion dollar national debt.

Obamacare will add trillions more.

But don't worry. The rich people will pay for all that and cover for the 47% who pay no income tax and/or suck at the public trough.

As you said, "that's all she wrote."

Dan G said...

"Dan-- how much commission on the two trades (in and out)? Just curious.."

$5 in and $5 out at E*trade...regardless of size.

Anonymous said...

HB, you said on another board that California now has the highest income and sales tax in the nation.

I don't think that's true. Do you have a link to support this?

CPA

Honeybee said...

Why are you stalking me "on another board?" Did I invite anyone HERE to do that? I don't think so.

And I have no intention of backing up on this bloog what I say at another site.

If you want to ask that question on that board, I will consider answering you.

Mike M2 said...

Wonderful -the problem is the investing public was indoctrinated with the " buy and hold -I'm in it for the long term philosophy" so the S&P 500 is back to levels first hit in 1999 -2000. Most people were fully invested going to the fall 2008 crisis so for many it is a recovery of losses not new paper wealth. Furthermore, the primary factor in the stock averages " recovery" was monetary inflation- a decline in the value of the US $. The federal reserve continues its policy of fostering bubbles - the Nasdaq/ dotcom bubble of the late 90s followed by the housing bubble now the bond market bubble. the trouble with bubble is they NEVER end well. bubbles distort the demand and output structure of the economy causing a misallocation of resources. The price of gold hit a low of $252 /oz now $1714/oz a near seven fold return.

Anonymous said...

Has any one followed the US House and Senate members to know how they are trading? Are these insiders selling or buying, in cash or equity?

Drive-by poster:)

Anonymous said...

Drive-by anonymous poster:

You could try looking here. This is a good site for reporting on financial issues related to the best government money can buy.

Two reports were published in 2004 and 2011, for the Senate and House, respectively, by Ziobrowski, et al. They are available here. I am not aware of any regs requiring our elected officials to disclose in real time.

http://www.opensecrets.org/resources/learn/pf.php

-- Frankj

Anonymous said...

rasputin here: Any guesses what Brinker's take will be this Sunday?

Honeybee said...

Hi Ras!

I was wondering the same thing. Brinker was sure quiet about the stock market last Sunday.

Now with these big drops, will he actually talk about what he thinks is going on -- and let callers ask about it?

We shall know in the fullness of time. :)

Bluce said...

Honey wrote: "We shall know in the fullness of time."

Heh, if he shows up for work.

Erikson said...

Brinker always says don't chase the market up and don't sell into weakness.

I guess that's why he just buys and holds.

What do you people really want him to say about the market?

Dan G said...

Honey wrote: "We shall know in the fullness of time."

I think we already know! Doncha think?

Anonymous said...

If you don't like Brinker, don't listen & stop complaining. GET a life.

Anonymous said...

Frankj:

We shall know in the fullness of time, because MoneyTalk operates in real time.

Seriously, I think there will be a lecture on gridlock and the fiscal cliff. What would be more interesting for inquiring minds, IMO, is a discussion or even speculation on who the sellers were, post election. Hedgies? Mutual funds, Big Fish, Minnows?

Honeybee said...

Pillsbury,

I might say the same to you. If you don't like this blog, stop reading it and get a life.

Pig said...


I might say the same to you. If you don't like this blog, stop reading it and get a life.


Go ahead and say it. NOONE likes Pillhead anyway, NOOBODY at all.

Bluce said...

Not even his mother??

Taxtime said...

...With the passage of the first voter- backed statewide tax increase in eight years, Californians sent a clear signal they are tired of failing schools, gridlocked roads and the deterioration over the past decade of the state’s reputation as a standard bearer...

Read more: http://www.sfgate.com/business/bloomberg....p#ixzz2BvknTiX4

Honeybee said...

Taxtime,

You missed your calling. You should have been a stand up comedian if you think another tax increase will go to any of the things you itemized.

Taxtime said...

...California voters made more history on election day, giving Democrats what appeared to be gains in Assembly and Senate races that would provide a two-thirds majority in both chambers. That’s enough to let them pass most legislation, including tax measures, without Republican cooperation. The last time the state’s legislature was controlled with a supermajority of the same party was in 1933....

Read more: http://www.sfgate.com/business/bloomberg....p#ixzz2BwEDmDIP

Honeybee said...

Yes, Taxtime.

Things are so wonderful here in California, the newly arrived and dead voters wanted more of it.

Dan G said...

I expect them to pass a huge tax increase for registered Republicans and a huge tax cut for registered Democrats. Hey, why not? They control everything now!

I think it's time Atlas shrugged!