July 16, 2017....Bob Brinker's Moneytalk is NOT LIVE today....(comments welcome) This is the second time Brinker has played re-runs in July.
Honey here: Last week, Brinker was live but I was on a "vacation" in the hospital. Frankj covered the show and wrote summaries of all three hours.
Here is Frankj's outstanding summary from Moneytalk last week:
Sustainability was the watchword during Bob’s opening statements today, July 9, 2017 on MoneyTalk. To him, that is the most important thing in this economy.
Wage growth for June was about 2/10ths of one percent which equates to about 2.5% per year. Inflation is running 1.4%, not high enough to warrant action by the Fed. Bob speculated there might be one more Fed rate increase in September and then they’ll announce the beginning of the normalization of their balance sheet.
The job scene looks good. Bob threw out a lot of numbers. Overall jobs are up 222,000 in June. 35,000 of these were government jobs, mostly state and local and 187,000 were in the private sector. Of the private sector jobs, 162,000 were in the service sector.
Len from Tucson is in the catbird seat with $3.6 million in cash and invested assets and another 800K in real estate. Len is 63 and his wife is 9 years younger. Should he move from his current 70/30 allocation? Bob advised yes, as all regular listeners knew he would.
Gene weighed in from Newport News, VA. He came into some money back in the 90’s and socked it away in a total market fund for his kids’ (grandkids’) college education. Now that it is needed soon, what should he do? Bob congratulated him and advised him to move $60K out of the $78K to money market and get ready to start writing checks. Interestingly, Bob did not ask, and Gene did not mention whether he used a 529 program for the money. Could be some tax ramifications.
Kyle from Pinehurst NC wanted to know “who owns your house” if everything goes belly up. If a bank holds Kyle’s mortgage and it flops, the FDIC will arrange a takeover and the new entity will own Kyle’s mortgage.
“Move to a 50-50 allocation.” That was Bob’s advice to Joe from OK who is 67 and sitting on an IRA that’s 100% in stocks. Bob pointed out the stocks have done very well but the SP 500 is within 1% of its all time high so this is a good time to re-allocate. This was the second mention of this statistic today.
Bob devoted the start of the second hour to the sorry state of affairs in Illinois. “Financial train wreck, fiscal mismanagement on steroids.” Illinois’ trifecta: years of budget deficits that prompted borrowing; public employee unions having their way with public employers for years; no reform in the way the state conducts itself.
The legislature recently increased the state personal income tax from 3.75% to 4.95%. Corporate rates went up to 7% from 5.25%. This $5 billion increase in taxes won’t make any difference when you consider the state owes $9 billion this year as a payment into the pension funds, they have $15 billion in unpaid bills, and the unfunded public pension liability is $251 billion!
Bob must have told Ravi to move callers from Illinois up to the front of the line because most of the callers in the second hour were from there.
Don called in from IL wanting to know if he should pay off a 5.375 % mortgage using money from his traditional IRA. Bob suggested he look into refinancing. Don said he’s a state retiree and as such he won’t be hit with state income tax on anything he takes out of the IRA.
The next caller was Tino who decamped from Illinois in 1987 and is now in Connecticut (the Nutmeg State), a state that is also circling the fiscal drain. Tino said when he worked in IL as a college professor, he put 8% of his salary into the pension plan. The state did not put anything in and they did not let employees take part in SocSec. Fearing what might happen, he began taking his pension at age 55, at a much reduced amount. Still it has a 3% COLA. He mentioned his pension income is taxed in CT. (It would not be taxed if he was still in IL).
I didn’t get the name of the next caller but his point was teachers in Illinois don’t teach the students properly and keeping the populace ignorant has helped create the problem. The caller brought up the term “bail out.” Bob reminded him that when New York City was close to bankruptcy, and Gerald Ford was President, he told NYC to “drop dead.”
Brad from DeKalb, IL changed employers and wanted to know if he should move his 401K money from Vanguard’s target retirement 2030 fund to Fidelity, the 401K outfit for the new employer. Bob just told him to monitor the Vanguard 2030 fund. (Brad sounded intelligent enough that he could have figured this out on his own.)
Dan in San Diego has 50% in stocks and 50% in cash equivalents, guaranteed investment funds. Should he consider his cash equivalents like bonds? Bob’s answer was “yeah, more or less.”
Larry from SC posed a complex problem for Bob: His traditional IRA has $1 million in it. If he leaves it to his son, he’ll have to begin taking RMDs and his son is in the 33% federal bracket and 5% state income tax so he’ll get hammered. Larry is in the 15% federal bracket with 7% state tax in SC (!!) so he proposes to take out enough to bump him into the 25% bracket, pay taxes on it, and plunk what’s left into a Roth-IRA. Let Sonny inherit the Roth-IRA and it will be tax free.
Bob did not jump on board this train, he advised Larry to wait and see what Washington, DC does with the personal income tax rates.
The last call of the 2nd hour came from Matt in Brookfield, IL. He praised Bob to the skies, telling him if there was a Nobel prize for humanitarianism, Bob should get it. Matt was on a cell phone I think and the connection was poor. I didn’t listen to the call.
Today’s third hour guest was Malcolm Frank, one of the 3 authors of the book, “What To Do When Machines Do Everything.” Paul Roehrig and Ben Pring are the other two authors.
Artificial Intelligence is widely used now by Amazon, Netflix, Facebook etc. Netflix tries to figure out what movies you might like based on how you rated one’s you’ve already seen. The guest said most jobs will be affected by 2030. This could mean, enhanced or done away with – that’s my interpretation because he said 12% of jobs will be negatively affected, while 75% will be “protected,” and there will be a net new creation of 13% of jobs… whatever.
What would a discussion of AI and the future be without speculation about driverless cars? The guest was optimistic about the future of driverless trucks and cars. Long haul truck drivers better watch out. 94% of vehicle accidents are the result of user error.
College training: forget Medieval English Literature and get into Computer Science, Data Science and Cyber Security.
The rest of the interview wasn’t that interesting in my opinion so I only half listened to it and found not much to summarize except the long haul truck driver who called in to tell them not so fast, there’s all kinds of stuff that can go wrong that an automated vehicle can’t deal with. Later the guest extolled the virtues of AI’s abilities to avoid hitting a deer that jumps in front of your car on wet pavement and at night in Oregon.
Not only would the software make the instant decisions needed to avoid hitting the deer, it would share the “solution” will millions of other self-driving cars.
(Share the solution, or sell the solution? Just askin’.)
Earth to programmers: remember to program in the following: When one deer (or elk) cross the road ahead of you, don’t assume you’re home free. Often, two, three or more animals will follow and sometimes they’re the ones you hit.
Honey here: Thank you so much for that great summary, Frankj!
JULY MARKETIMER COMMENTS FROM HONEY AND JIM (originally posted here):
Honeybee wrote:
As usual, I have read the July issue of Marketimer. The only thing that jumped out at me was that Bob Brinker keeps raising his S&P 500 target range projection.
This month, he has raised it to: ".....potential upside into the S*P 500 Index 2500s range going forward, as investors discount improved operating earnings prospects."
This is the first time ever that I recall him making the range a full 100 points. Usually, he will narrow it to low, mid or high....
Jim said...
Honeybee said...
And this is the only other one I can find that starts at 1pm PDT: 710KNUS Denver
Sustainability was the watchword during Bob’s opening statements today, July 9, 2017 on MoneyTalk. To him, that is the most important thing in this economy.
Wage growth for June was about 2/10ths of one percent which equates to about 2.5% per year. Inflation is running 1.4%, not high enough to warrant action by the Fed. Bob speculated there might be one more Fed rate increase in September and then they’ll announce the beginning of the normalization of their balance sheet.
The job scene looks good. Bob threw out a lot of numbers. Overall jobs are up 222,000 in June. 35,000 of these were government jobs, mostly state and local and 187,000 were in the private sector. Of the private sector jobs, 162,000 were in the service sector.
Len from Tucson is in the catbird seat with $3.6 million in cash and invested assets and another 800K in real estate. Len is 63 and his wife is 9 years younger. Should he move from his current 70/30 allocation? Bob advised yes, as all regular listeners knew he would.
Gene weighed in from Newport News, VA. He came into some money back in the 90’s and socked it away in a total market fund for his kids’ (grandkids’) college education. Now that it is needed soon, what should he do? Bob congratulated him and advised him to move $60K out of the $78K to money market and get ready to start writing checks. Interestingly, Bob did not ask, and Gene did not mention whether he used a 529 program for the money. Could be some tax ramifications.
Kyle from Pinehurst NC wanted to know “who owns your house” if everything goes belly up. If a bank holds Kyle’s mortgage and it flops, the FDIC will arrange a takeover and the new entity will own Kyle’s mortgage.
“Move to a 50-50 allocation.” That was Bob’s advice to Joe from OK who is 67 and sitting on an IRA that’s 100% in stocks. Bob pointed out the stocks have done very well but the SP 500 is within 1% of its all time high so this is a good time to re-allocate. This was the second mention of this statistic today.
Bob devoted the start of the second hour to the sorry state of affairs in Illinois. “Financial train wreck, fiscal mismanagement on steroids.” Illinois’ trifecta: years of budget deficits that prompted borrowing; public employee unions having their way with public employers for years; no reform in the way the state conducts itself.
The legislature recently increased the state personal income tax from 3.75% to 4.95%. Corporate rates went up to 7% from 5.25%. This $5 billion increase in taxes won’t make any difference when you consider the state owes $9 billion this year as a payment into the pension funds, they have $15 billion in unpaid bills, and the unfunded public pension liability is $251 billion!
Bob must have told Ravi to move callers from Illinois up to the front of the line because most of the callers in the second hour were from there.
Don called in from IL wanting to know if he should pay off a 5.375 % mortgage using money from his traditional IRA. Bob suggested he look into refinancing. Don said he’s a state retiree and as such he won’t be hit with state income tax on anything he takes out of the IRA.
The next caller was Tino who decamped from Illinois in 1987 and is now in Connecticut (the Nutmeg State), a state that is also circling the fiscal drain. Tino said when he worked in IL as a college professor, he put 8% of his salary into the pension plan. The state did not put anything in and they did not let employees take part in SocSec. Fearing what might happen, he began taking his pension at age 55, at a much reduced amount. Still it has a 3% COLA. He mentioned his pension income is taxed in CT. (It would not be taxed if he was still in IL).
I didn’t get the name of the next caller but his point was teachers in Illinois don’t teach the students properly and keeping the populace ignorant has helped create the problem. The caller brought up the term “bail out.” Bob reminded him that when New York City was close to bankruptcy, and Gerald Ford was President, he told NYC to “drop dead.”
Brad from DeKalb, IL changed employers and wanted to know if he should move his 401K money from Vanguard’s target retirement 2030 fund to Fidelity, the 401K outfit for the new employer. Bob just told him to monitor the Vanguard 2030 fund. (Brad sounded intelligent enough that he could have figured this out on his own.)
Dan in San Diego has 50% in stocks and 50% in cash equivalents, guaranteed investment funds. Should he consider his cash equivalents like bonds? Bob’s answer was “yeah, more or less.”
Larry from SC posed a complex problem for Bob: His traditional IRA has $1 million in it. If he leaves it to his son, he’ll have to begin taking RMDs and his son is in the 33% federal bracket and 5% state income tax so he’ll get hammered. Larry is in the 15% federal bracket with 7% state tax in SC (!!) so he proposes to take out enough to bump him into the 25% bracket, pay taxes on it, and plunk what’s left into a Roth-IRA. Let Sonny inherit the Roth-IRA and it will be tax free.
Bob did not jump on board this train, he advised Larry to wait and see what Washington, DC does with the personal income tax rates.
The last call of the 2nd hour came from Matt in Brookfield, IL. He praised Bob to the skies, telling him if there was a Nobel prize for humanitarianism, Bob should get it. Matt was on a cell phone I think and the connection was poor. I didn’t listen to the call.
Bob’s Third Hour Guest
Today’s third hour guest was Malcolm Frank, one of the 3 authors of the book, “What To Do When Machines Do Everything.” Paul Roehrig and Ben Pring are the other two authors.
Artificial Intelligence is widely used now by Amazon, Netflix, Facebook etc. Netflix tries to figure out what movies you might like based on how you rated one’s you’ve already seen. The guest said most jobs will be affected by 2030. This could mean, enhanced or done away with – that’s my interpretation because he said 12% of jobs will be negatively affected, while 75% will be “protected,” and there will be a net new creation of 13% of jobs… whatever.
What would a discussion of AI and the future be without speculation about driverless cars? The guest was optimistic about the future of driverless trucks and cars. Long haul truck drivers better watch out. 94% of vehicle accidents are the result of user error.
College training: forget Medieval English Literature and get into Computer Science, Data Science and Cyber Security.
The rest of the interview wasn’t that interesting in my opinion so I only half listened to it and found not much to summarize except the long haul truck driver who called in to tell them not so fast, there’s all kinds of stuff that can go wrong that an automated vehicle can’t deal with. Later the guest extolled the virtues of AI’s abilities to avoid hitting a deer that jumps in front of your car on wet pavement and at night in Oregon.
Not only would the software make the instant decisions needed to avoid hitting the deer, it would share the “solution” will millions of other self-driving cars.
(Share the solution, or sell the solution? Just askin’.)
Earth to programmers: remember to program in the following: When one deer (or elk) cross the road ahead of you, don’t assume you’re home free. Often, two, three or more animals will follow and sometimes they’re the ones you hit.
Honey here: Thank you so much for that great summary, Frankj!
JULY MARKETIMER COMMENTS FROM HONEY AND JIM (originally posted here):
Honeybee wrote:
As usual, I have read the July issue of Marketimer. The only thing that jumped out at me was that Bob Brinker keeps raising his S&P 500 target range projection.
This month, he has raised it to: ".....potential upside into the S*P 500 Index 2500s range going forward, as investors discount improved operating earnings prospects."
This is the first time ever that I recall him making the range a full 100 points. Usually, he will narrow it to low, mid or high....
Jim said...
One thing I found interesting in the July Marketimer was that Brinker suggested he might take defensive action if he anticipates a correction. I take his meaning of "correction" as something less than a 20% decline. I don't recall anytime in the past where he has moved money to cash unless he expected an actual bear market with a 20% or greater decline.
Honeybee said...
.
Jim...I found that statement very interesting too. As you said, he has never raised cash to take advantage of a correction.
And if he waits for a 20%+ decline, he certainly won't raise cash! He never "sells into weakness."
I said to the person who was visiting with me that all that sentence was for was to remind everyone that they need to be sure and renew their subscriptions and wait for him to make the "big call."
Jim...I found that statement very interesting too. As you said, he has never raised cash to take advantage of a correction.
And if he waits for a 20%+ decline, he certainly won't raise cash! He never "sells into weakness."
I said to the person who was visiting with me that all that sentence was for was to remind everyone that they need to be sure and renew their subscriptions and wait for him to make the "big call."
And this is the only other one I can find that starts at 1pm PDT: 710KNUS Denver
