Honey's Moneytalk summary of the first two hours:
STOCK MARKET....Today, Brinker commented that this "had been a very good year" for the stock market. Based on all the great economic news, his prediction for 2018 is looking good. This is from my November 19th Moneytalk summary:
BB said: "Not only are we seeing an increase in corporate earnings in 2017 but in addition to that, the outlook is we are going to see a handsome increase in corporate earnings in 2018 in the stock market. If nothing else, the stock market is a discounting mechanism. It discounts future developments - primarily in the economy and as it relates to corporate earnings. So investors are looking, not only at a good 2018 earnings picture, they are looking at what has the potential to be an excellent 2018 earning picture...."
==> THANKS TO dRAHME audio clip of Brinker's stock market and tax bill comments.
Honey EC: For years, Brinker has believed that anything under a 10% correction is "noise," and declines only becomes a bear market if they exceed 20%. So if we boil all that down, what he is saying is that he does not expect a bear market in 2018.
Will Brinker ever raise cash again? Right now, he is fully invested and recommending new money be added by dollar-cost-averaging. I would like to add that he has never raised cash for any correction - major or minor. Actually, he has only raised cash once before a bear market, and that was in year-2000 when he raised 65% cash. The bear that hit in 2008, he rode out fully invested.
BOND MARKET/INTEREST RATES.... Brinker did not mention it today, but this week Federal Reserve Chair Janet Yellen announced that the FOMC will raise interest rates 1/4 of 1% this month. Here's a Forbes article.
ECONOMY....Today Brinker casually slipped out the information that the annual rate of growth has been "3%+"......But he did not mention that he gave out the wrong information last month. Here is a quote from my November 19th Moneytalk summary: "The annual rate of growth for the first nine months of this year for real Gross Domestic Product......is 2.37%. For many years, we've been clicking along with an annual GDP growth rate in the low-2's, area of 2.2%...."
BRINKER'S POLITICS .....Brinker's monologue topics and the vast majority of the calls were about the tax plan that may be voted in next week, and with President Trump's signature, become law.
==> THANKS TO dRAHME audio clip of Brinker's tax bill comments. (plus more: Eric in Indiana - Employer of 70+ People, Tom In Portland)
==> THANKS TO dRAHME audio clip of Brinker's tax bill comments. (plus more: Eric in Indiana - Employer of 70+ People, Tom In Portland)
Honey EC: As some of those who have already sent comments have said, Brinker seemed very angry and biased about this new tax reform bill. Brinker put out a lot of misinformation and opinion today that could easily be shot down, but I am not going to waste my time and yours by doing it. Remember this bill is not law yet - it could change.
What Brinker did NOT say was as important as what he did say. For example: if you are an equity holder, it doesn't matter if the companies repatriating funds back to the USA use them for expansion or not. If they buy back shares and/or increase their dividends, there are a whole lot of winners.
What Brinker did NOT say was as important as what he did say. For example: if you are an equity holder, it doesn't matter if the companies repatriating funds back to the USA use them for expansion or not. If they buy back shares and/or increase their dividends, there are a whole lot of winners.
I would just caution all of you that much of what Brinker said today is not necessarily true nor unbiased. Brinker seems to be filled with what looks very much like hatred for President Trump which he gave away clearly when he attacked Sarah Huckabee Sanders.
==> THANKS TO dRAHME audio clip end of year tax loss planning. (plus more: Mark - Question about what the repatriation of monies would to do the middle class. Bridges on to unemployment and wage rates, and comments about same. Good listening
==> THANKS TO dRAHME audio clip end of year tax loss planning. (plus more: Mark - Question about what the repatriation of monies would to do the middle class. Bridges on to unemployment and wage rates, and comments about same. Good listening
FRANKJ'S MONEYTALK THIRD-HOUR SUMMARY:
Third hour, Dec. 17, 2017
There was no third hour
guest on Bob’s show today, he continued taking calls starting at about 3:15
which is the usual time a guest comes on.
It was no surprise that the tax reform bill and the effects thereof were
the subject of the calls.
The first caller of the
third hour was Mark from Texas. He teed
the ball up for Bob with a question about the repatriation of overseas profits
by US corporations. Mark wanted Bob’s
thoughts on how this could benefit the middle class. Bob repeated what he has said previously
about the tax reform legislation: it benefits
high earners, business owners and high net worth individuals (by doubling the
estate tax exemption).
He went on to pound the
table that the only things corporations would do with their repatriated profits
would be to buy back stock, do mergers and increase dividends. He repeated that they would not grant raises
to employees, having spoken to CEOs and never heard one say that’s what they’d
do with repatriated money.
Regarding stock buybacks, personally I’m not a huge
fan of them. They seem to indicate that
management doesn’t know what else to do with capital. But, they do tend to support the stock
price. On mergers, again, not a huge fan
having had a few companies I held stock in get merged out from under me, but …
I got paid a premium for the stock I held, so not all bad. As for increased dividends: what’s not to like? So the results of repatriation of profits
might not be all bad for stock holders of certain companies.
Bob went on about the
current low unemployment rate (4.1%) and the risk of doing anything to
stimulate the economy – the risk being triggering inflation and the possible
overreaction of Fed raising interest rates too far, which he said, they usually
do.
The next caller was Jerry
from Alaska who was in the dark about medical deductions on Schedule A. His concern was they were going to be
eliminated. Here’s the deal: a few years back you could deduct medical expenses
that exceeded 7.5% of your Adjusted Gross Income (AGI). Then Congress upped this percentage to
10%. I distinctly remember our favorite
tax gal, Barbara pointing this out as a sneaky way Congress raises taxes. The current tax reform legislation puts this
percentage back to 7.5% of AGI. This is
what Bob told Jerry.
Norman in Florida said he
was a first time listener and had a question about Real Estate Investment
Trusts (REITs) and the tax reform – would the legislation affect expensing of
interest expenses by REITs? Bob said
they would not be much affected.
Bob gave a similar answer
to Chris, calling from Clear Lake, Iowa asking about the health tax deduction
and how it may affect him as a sole proprietor.
“Not much affected.”
Bob went on to mention the
significance of Clear Lake – the location of Buddy Holley’s last concert before
his death in a plane crash.
Tom in Missouri was worried
that Amazon and Wal Mart would gobble up all the publicly traded companies and
then control everything. Bob said
companies are going to make strategic mergers and if the Dept. of Justice doesn’t
see any problem, they’ll continue to do so.
This led to a little discussion of just how many publicly traded
companies there are. The Wilshire 5000
is an index of all the publicly traded companies on the major exchanges. It includes 3600+ companies. The number HAS shrunk over the years.
Craig called in from
Minnesota. He’s 46, a business owner and
he wanted to know how the tax reform benefitted HIM. Bob didn’t answer directly but once again
warned against the risk of stimulating the economy too much. He
droned on about how people in government need to understand economics. If you told an economist that with annualized
GDP at 3% and unemployment at low levels you were instituting a tax policy that
would stimulate the economy --- the economist would laugh in your face.
I’ll hold off on cutting and pasting some economist
jokes.
I will say this:
does Bob want to have it both ways?
How often has he decried the anemic rate of GDP growth when it was
around 2% per year? How many guests has
he asked to comment on that anemic rate?
Answer: Lots of them. Now it has
bumped up to 3+% annualized and he is fretting that the tax plan may overheat
the economy. So should we dump the tax
reform on this account?
Of course not.
This reform is one of the major initiatives this administration ran
on. I am glad to see the administration
and one party in Congress trying to do
something to lower taxes. It is good
that the FED won’t be called on to run the economy as they were for the past 8
years.
To Craig in Minnesota: How will it benefit YOU? Ask your tax advisor. The more important question is whether it
will benefit the country overall. The
jury is out on that and will remain so until the 2018 tax revenues are tallied
up in 2019.
Was the tax legislation a hammer blow on blue states
which went for Hilary Clinton in
2016? Personally I don’t think it was
and it is simplistic to make that claim which is part of the tsunami of bad
information Bob referred to. Maybe
property owners and tax payers of state income tax will start to wonder what
exactly they’re getting out of local and state government for their money. Maybe some will move to another state as Bob
suggested might happen. Local
politicians will no doubt say that all this tax money provides excellent
services: roads, schools, social services, law enforcement.
Really? Tell
that to people in Chicago with its failing public schools, (but great teacher
pensions). Tell it to the taxpayers in
Oregon who are saddled with a public employee pension fund has been underwater
for years despite the market gains. Tell
it to the people in Connecticut – a state whose budget is going south
(figuratively speaking) while some residents are going south, literally, to
lower tax states.
The questions that need answering are what effect
will the tax reform have on the debt?
If, as a result of this reform it is actually productive, and more tax
revenue comes in, does that mean Congress will keep spending or will they try
and reduce the debt? On the other hand,
if the government collects LESS in taxes, which seems to be the immediate
effect of tax cuts, was this the intent?
Will this act as a trigger for a future Congress to get serious about
reducing spending?
We will know in the fullness of time.
Radio station:
710KNUS Denver
74 comments:
If he is not live today he will not be live for three consecutive weeks as he won't be here next week I don't think.
Where have the blog's 3 wise men been? Gabe, JC, and mad as hell.
BB mentioned that the threshold for deduction for unreimbursed medical expenses in the new tax bill is reduced to 7.5% for 2018.
It is also true that the new bill will retroactively reduce the threshold to 7.5% this year (2017).
Quote from http://docs.house.gov/billsthisweek/20171218/CRPT-115HRPT-466.pdf:
"for taxable years beginning after December 31, 2016 and ending before January 1, 2019, the threshold for deducting medical expenses shall be 7.5-percent for all taxpayers. For these years, this threshold applies for purposes of the AMT in addition to the regular tax.
Effective date.−The provision is effective for taxable years beginning after December 31, 2016"
.
This year so far, Brinker has played re-runs 14 Sundays, and we can be sure that he will be gone at least once more in December. So he no longer even averages 3 live programs per month.
2017
January 1st: Re-Runs
January 15th: Re-Runs
February 5th: Two Hours Live; Re-run calls 3rd hour
February 19th: Re-runs
March 5th: Re-Runs
April 9: Re-Runs
May 14: Re-Runs
May 28: Re-Runs
July 2: Re-Runs
July 16: Re-Runs
September 10: Re-Runs
October 22: Re-Runs
November 26: Re-Runs
December 10: Re-Runs
Biker,
=threshold for deduction for unreimbursed medical expenses in the new tax bill is reduced to 7.5% for 2018.=
What page was that on? I have seen it as both 2017,2018 & 2018,2019.
Thanks biker!
Joseph Hack: See pp. 99-100 of the summary at the end (after the first 500+ pages).
http://docs.house.gov/billsthisweek/20171218/CRPT-115HRPT-466.pdf
Brinker just went full-blown "crazy, bitter old man" as the GOP tax relief bill nears passage. Offers only criticism, no solutions. Too bad his big-government, socialist viewpoints overshadowed his intelligence. He just lost at least one longtime listener.
Bob is so positive and uplifting today; think i'll just turn off the show and wait for the blog summary. Bob loves this tax bill; too much happy talk and flattery of the President/GOP.
Bob just announced that the January edition of Marketimer will be available for download on Tuesday January 2nd... I wonder if that's an indication we'll have re-runs for the next 2 weeks...?
It's like a tax bill hate fest.
It's sounding like Brinker may be done until 2018 since he has twice mentioned that the January Marketimer will be available on Jan.2.
.
sn....You didn't get the memo that a radio talk show host AKA newsletter huckster for himself and his son - who uses the same name - is much smarter than anyone else in the world.
What a generous man! He actually restrains himself because, and I quote: "I won't name names, because I don't want to embarrass anyone more than they have embarrassed themselves."
All tax talk all the time from his own biased point of view.
.
Anonymous....I totally understand your anger. I am feeling it too.
But please give yourself an identifying handle.
.
Jim....That would not surprise me at all. However, remember he also takes either the first or second week of the new year off, too.
Haha, as already mentioned, in different words, Bobby's left-wing bias is showing through today like a floodlight -- despite his lame attempts to remain "non-partisan."
Mike, good catch.
I'm betting Bob won't be back on until at least January 14th, 2018.
What's up with the wind chimes in the background throughout the broadcast?
His claim that politicians are liars when they claim reparation will give wage earners a raise. Then he moderates by saying they may get a raise for other reasons, but not directly from the reparation. O.k. thanks for clearing that up, however, may the end result of this tax plan improve economic growth wherein one can expect an acceleration of wage rate increase? Answer: most certainly. It is estimated for every dollar given up by government will benefit the private sector wealth by $1.9. This is economic efficiency and such boosts economic growth.
I read a financial article (political bias) that claimed tax relief was just another form of QE benefit that proved to be ineffective. I don' think so. QE was cheaper money that worked to push up price of equities especially stocks and real estate. Tax reform increases the efficiency of the economy. More relief from federal influence of investments. It will work to increase profit margins and improves the benefit of risking business assets. Same for private citizens that will benefit from the tax plan. Taxpayers will enjoy more wealth to utilize within all of their downstream financial decisions as opposed to QE wealth to pay more for a house. However, QE spending is still better than allowing government to take the money in which control of efficient money spending is lost.
Also, the SALT talk that Bob lets listeners believe just a political gotcha trick. The ability to write off 100% of taxes and house cost has been a stick in the eye for years. Many believe the U.S. taxpayer should not subsidize expensive home costs. This is unfair to ask some dirt farmer in Alabama to subsidize a NYC penthouse owner. Also, the fed tax code for to long has worked to push more consumers to own expensive homes with high loans. The Realtor lobby group is all powerful in D.C.
It amazes me that on a show like this, Da Brink doesn't remind people that everyone can participate in the profits of publicly traded businesses by having an equity position in companies and many of these callers are voicing opinions that are not in their and their children's long term best interest.
Bob is such a liberal. Now he is essentially stating he wanted the Justice Department to have stepped in and block the acquisition of the then failing Whole Foods.
And his comments on airlines, sheesh. Remember when flying was essentially a mode of transportation fro the wealthy. Now look at how the wealthy travel, private Coaches, private jets, exclusive rail cars; why, so the can avoid all the plebs that have started traveling the major carriers and are now their customer base.
tfb & son
testing: I heard that dinging too. Maybe Bob was broadcasting from his deck.
To those who missed it live, MT show is now starting from the beginning on WLS-am at 6:05 Central time.
To those who missed it live, MT show is now starting from the beginning on WLS-am at 6:05 Central time.
If you want a much better, more free-market and pro-tax cut view point, listen to Larry Kudlow's Dec. 16 (Saturday) podcast. Just do a search for "Larry Kudlow radio show." He was on fire, along with the Tax Foundation guest.
Great comments so far. The wind chines are BB's attempt to obtain nirvana.
He already has critical mass, which was, back in the day, what you needed for a nuclear explosion. Remember what Emerson, Lake and Palmer sang about, "You can never come back, from a nuclear attack." Guess ol' Bob can't escape his L. of C. M.
Speaking of all this tax bill bluster, what am I missing? From what I've heard it won't affect me at all, a blue-collar worker who doesn't itemize. Just tell me if there's anything new and free I can get.
And don't get me started on airline torture. There, I said it. The fares are so cheap that everyone can fly, even nasty people with no means. That's why they reduced the legroom so drastically. The airlines feel no guilt because the price is so cheap. Got a complaint? "You ain't paying much!"
I propose they raise the fares after they give us some personal space back. Just so tired of rubbing shoulders and knees with every person taller than 5ft 4in and weighing more than 135 pounds. You know, just about everyone. With higher fares and more comfort, maybe the bus will be an alternative for some. That's why bus service is nearly dead these days. Planes hauling cattle and sheep are so damn cheap.
If Greyhound Bus Co. has a resurgence, I'll be the first new investor. By the way, there's more room on a bus than on an airliner. And they don't have an FAA ground hold for hours like they did in Atlanta today. And they can stop to let you off if you just can't stand it any longer.
So forget about live Bob for a couple months. That's just his style this time of year.
Merry and Happy to all the zany blog posters spending their milliamps to be here.
Billy, Rancho Cucamonga
I'll agree with Big Dave in that if you haven't listened to Kudlow on Saturdays, you really should give Kudlow a listen...on Saturdays.
I enjoyed the MT show today and of course the blog by Honey and Frankj, great job you two. Here are some random thoughts:
1. I also heard the bells in the background during the show today. At first I thought it was "bleed over" from another AM radio channel playing Christmas music. But then I put on my tin foil hat and figured out that it was Brinker's sinister way of mocking Honey's hand bell recital from last week post. Seriously, think about it, I may be right.
2. All you here from the liberals is how the top tax bracket is getting cut from 39% to 37%. Didn't all the other lower tax brackets also get a cut? I did not hear one mention of that on any of the media (errr propoganda) outlets I listened to today. Of course it does not fit their "agenda" to bash the plan if the low income earners are also getting a tax cut.
3. I loved the call today from the guy who threw out the fact that even though a person making a million dollars a year is getting a $26,000 tax cut under the new plan, they are still paying $370,000 in taxes (37%). Bob, check the scoreboard on that one.
4. Wouldn't it be a true statement that high earners are the ones impacted the most from only being able to deduct $10,000 of local taxes since low pay earners will never hit that threshold? And yet the liberals double talk is bashing that piece of the new tax plan saying it only benefits the rich. But that is exactly who will be impacted most from the $10,000 limit, the rich in overtaxed states. Their double talk makes no sense at all. As they accurately say, if liberals didn't have double standards, they would have no standards at all.
billy, you nailed it. Air travel is the modern day cattle drive.
"keep those dogies movin' ... Rawhide." Sound effect: the crack of a whip.
As Yogi Berra said, "Include me out."
FROM THE FWIW DEPARTMENT:
When Bobby abandoned Saturday MT (or was told he was done) some 5+(?) years ago, I had severe withdrawal symptoms. My weekend routine had included him, conditions permitting, since 1990.
So I fished around one of the internets until I found Kudlow, who was on at 4:00 on Saturdays. Great. My Saturdays returned to normal, with a reasonable facsimile to replace Bobby.
But then a few years ago Kudlow went to "all politics all the time." At least he leans to the right, but investment stuff got pushed to the side. I listen to enough political stuff during the week, I don't want it on the weekends so I quit listening to him.
Maybe I'll try him again.
I agree with essentially everything you have said or what I believe you were holding back about Bob's positions and sentiments. I think the GDP and market have gone up on the prospects of the pro-growth policies that were associated with a Trump/Republican position. To say that the tax reform that is imminent doesn't need to be implemented at this point is to dismiss the optimism that it has created. I'm pretty sure that if the bill were not to pass, the market and GDP would decline. Speaking of economists, I bet the chief, and most articulate loudmouth Larry Summers is rather upset now after just several months ago espousing that we were stuck for the foreseeable future in a sub 2% GDP.
Bob has a lot of followers who really disagree with his opinion. Why dont they just tune out instead of getting themselves upset. Bob calls a spade when he sees one. Big deal. If somenone in the average middle class gets a raise as a result of this tax legislation but winds up spending it due to inflation how is he better off ?
I still wonder if the Democrats in Congress will go home for Christmas and tell their supporters that they voted against a tax cut for them.
Kudlow is pro Trump and tax cut. He is a go to for DC politicians to understand the economic advantages to the plan. Larry said this week the tax plan has really improved as well as understanding. Politics were a bit tempered as the end run was near and they had to make a determination to be part of history. That a tax change was emanate and that they needed to fully understand the stakes. As we know the political game is just a popular way to spin some talking points to the public's fancy. A large percentage of our representatives are clueless, but stay in power by offering their constituency red meat political talking points. Within the past week the rubber hit the road as politicians had to decide.
We listen to the media interview themselves to leverage authenticity. As you know, the political game in media is a popularity game. For which the media will fan political flames to boost ratings. You would think in a free republic that media would work for truth and understanding. Problem is this is boring. Were in the age of marketing and Facebook sensitivities.
I read a report on history of stock market and how the real data of risk is maligned. That fear is all powerful force more so than greed. This was per what to expect in 2018 report. At the end they said not much to worry about, but if you have to worry read this real threat. It was a link to financial report that was loaded with political bias claiming the Constitution was at risk and the public at large is about to take over. That the outrage is at a tipping point and preparations are under way. This from a financial expert? I've said before that trade journals often are loaded with articles that attempt to push political opinion. They are the outliers opinions that stick out. Bob's is in this boat.
I did hear an analysis that claimed GNP growth of .9% would pay for the entire tax cut. Also, as other's have stated it is just a mistake to rate tax change within static environment. The theory and science of tax load is totally dynamic. Economics are all about behavior, spending, etc. Why would anyone assume nothing changes? Can you imagine a 100% tax load and no one changes behavior? That we all become rich through the government tax load and entitlements?
Moving the needle of GNP growth is extremely important to eliminate national debt and support entitlements. If you're one that thinks entitlements are the golden goose, well you better support anything that improves economy and the productive class that can make it happen. You won't find much wisdom by doubling down on political solutions. Really, a good portion of tax relief success is the withdrawal of fuel within DC control.
Oh, you can read the aforementioned article at https://fat-pitch.blogspot.com/
The blog did have an interesting post on buy and hold investing a great way except when it isn't. The common wisdom can be very cruel to your returns. They divided history of returns into 10 and 20 year segments. The lesson that really surfaces is the buy low sell high. It mainly depends on your entry point. That high Q ratio is a low return high risk position. If you do pull money out in this high zone not so bad if and only if you have the discipline to go back in when a low Q. Timing the top is impossible, but the bottom not so. Also, the very bottom is not so important as selling at the very top. This is common sense, but within such high stakes and long time periods difficult. We have historical long time periods of desert like stock market returns. A good time period of doing some else with your money. All good returns occur within a bull market that happens over time, then a quick crash, and sometimes a very long dry spell. Recessions occur seldom, but that is the guillotine threat that everyone should be attuned to. We need to be armed with financial data and assess risk within entering this thin ice. This is the time to adhere to analysis and not emotions for decision making. It won't be accurate, just a tad better than nothing, but all important. Per stock market history it is important to be in the market except for a short hectic buying selling season. We need to keep investments within corrections and that's when it is very hard to make a call. That is the zone to rely on data as the opinions pieces are just static and most always gloom and doom.
Taking the above into consideration as my current take on stock market investing, I go back to real estate. The community of small time Landlord investors that work similar within financial seasons to maximize returns. This group not interested in stock market, but they utilize low interest and price swings similarly.
I'm thinking on wisdom to utilize real estate assets similarly, but within stock market. Meaning I read of the tremendous advantage to buying low within certain time periods of markets. This appears to be key within financials. It looks to me utilizing dollar cost averaging and dividend buy back is poor advice currently. That no new money should be risked at this time and also given the info on mutual fund load not good to temporarily enter this new money. What to do with extra money? Save it and no better investment than paying down debt. It looks like everyone should own a house and work to pay off the debt especially in poor stock market investment environment. Sure the matching retirement investments opportunities should be maxed, but one should work extra hard to pay off debt during this time period. Bank you capital and within the rare opportunity presents itself do refinance. Pull out some major cash for stock market investing. Now, you should have all the traditional safe guards in place especially a low cost of living and reliable income, but this is a pretty safe bet. One that financial experts would gasp at, but the smart money would adapt. Your financial adviser may decrease your risk, but most will at a cost.
.
OPTIMISM SOARS!
STOCK MARKET ROARS
GDP FOURS?
NEW YORK (Reuters) - The New York Federal Reserve on Friday raised its estimate of U.S. gross domestic product growth for the fourth quarter of 2017 closer to 4 percent, based on revisions of prior data that suggested stronger economic activities.
.
KC said: 1. I also heard the bells in the background during the show today. At first I thought it was "bleed over" from another AM radio channel playing Christmas music. But then I put on my tin foil hat and figured out that it was Brinker's sinister way of mocking Honey's hand bell recital from last week post. Seriously, think about it, I may be right.
KC,
I am sure you are right. I forgot to send Brinker his invitation to the grand Christmas performances of my hand-bell choir - with the choral group - last weekend.
From Fear and Greed Trader's column this weekend on the tax reform:
"The financial media’s done little to effectively analyze tax reform and tends to replay comments by political partisans totally divided on whether the wealthy or the middle class will be helped or hurt. All of that is noise. There is no plan that can be devised on this topic that will be a panacea for ALL. It isn't possible.
The critics point to the proposed plan as having the possibility of not living up to what the creators of the legislation are selling. Newsflash: IF that is the case, IT IS NOT the first time it happens that way, and it won’t be the last. Can we start hearing commentary from adults now?
Speaking strictly to the impact on equity prices, the proposed 20-22% corporate tax rate is key. Corporate overseas money will be repatriated back here to the U.S. at a low tax rate. That is all one needs to know and be concerned about if they are managing their equity portfolios."
.
If you hurry, you can pick up a Bitcoin for only $18,359 - a bargain for today.
And that's thousands of percents above what it was when Brinker first advised against buying them.
CoinDesk
I'm sure you made a bundle on bitcoin, honey. So why not retire from this blog? Got ya.
.
Anonymous...I'll retire the same day Bob Brinker retires.
Have any idea when that might happen?
From the December 17, 2017 Summary
ECONOMY....Today Brinker casually slipped out the information that the annual rate of growth has been "3%+"......But he did not mention that he gave out the wrong information last month. Here is a quote from my November 19th Moneytalk summary: "The annual rate of growth for the first nine months of this year for real Gross Domestic Product......is 2.37%. For many years, we've been clicking along with an annual GDP growth rate in the low-2's, area of 2.2%...."
====
At first I thought maybe Brinker had too much eggnog, but actually he should know better than to use such imprecise language around a stat like Quarterly annualized GDP that is easily confused.
The explanation for Bob's faux pas is simple:
First re: the 2.37% number what he did was to take the 3 qtrs of annualized GDP and average them:
0.7 = 1st qtr 2017 annualized GDP
3.1 = 2nd qtr 2017 annualized GDP
3.3 = 3rd qtr 2017 annualized GDP
====
7.1
7.1/3 = 2.37 average GDP
So I agree the information is wrong because you really can't take 3 qtrs of annualized GDP and extrapolate that as an annual GDP, you actually need 4 GDP annualized quarters and if you add those up and then divide by 4 that would give you the yearly annualized. The problem obviously is we don't have the 4th Q actual GDP annualized number. Also Bob poorly described what he did to get that 2.37% number. To fix this he could have simply said the average of the 3 qtrs thus far is 2.37% but he then could not go on and compare this number to historical actual yearly GDP.
Second, re: Bob's mention of a "3%+", again the language is imprecise and is also wrong for the same reasons as previously mentioned. Since I did not listen to the entire broadcast I can only speculate that he was referencing the most recent or 3rd qtr annualized number.
To tidy this up a bit 'cause it bothered me to the point of actually doing the calculation, in order to get a 3% GDP for 2017 given the 3 qtrs in the books already as shown above you would need the 2017 4th qtr annualized GDP to come in at 4.9%.
I know the New York fed came out recently with a 4th qtr estimate of around 4% but I just caught a bit of CNBC this am and Leisman ran thru some numbers and I think I heard him say the estimate for 4th Qtr was 2.6% which would make that New York fed number an outlier. Not sure if I heard that right on the 2.6% 4th Q estimate.
Anyway hope this helps.
It is relatively easy to check the numbers given a basic definition of Quarterly annualized GDP and the formula for Annualized Return.
Quarterly annualized GDP = The change from the last quarter, annualized; put another way, the total change you would get if that rate held constant for a full year
Annualized Return = (prior qtr GDP output Value / Current Qtr GDP output Value) ^ (1 /Years) - 1
What surprised me is how small the actual (not annualized) incremental increase from qtr to qtr is see below:
1st qtr 2017 increase over 4th qtr 2016 = 0.00171 or 0.17%
2nd qtr 2017 increase over 1st qtr 2017 = 0.007646924 or 0.76%
3rd qtr 2017 increase over 2nd qtr 2017 = 0.008213044 or 0.8%
etc.
Long winded yes, boring maybe for those not fond of math and or facts, but hopefully it shows that even with Brinker you have to take what he says analyze it and if it doesn't make sense then call him on it as HB did.
smile
I'm betting that BB is praying for high GDP and inflation because it would trigger a Fed rate hike frenzy, which would validate his short-duration bond fund strategy.
Bob should be thanking HBee for keeping his name in lights. As they say, in show business all publicity is good publicity.
Maybe the bells were a tip of the cap to HBee, or maybe just Bob's cat pawing at the chimes he has hanging from his microphone (an old broadcaster's embellishment). They were a Christmas gift from Mark Hulburt.
-John the crabber, Pacific Grove
If we are going to pick apart Brinker's numbers let's get our facts straight. According to:
https://www.statista.com/statistics/188185/percent-chance-from-preceding-period-in-real-gdp-in-the-us/
and
https://www.bea.gov/newsreleases/national/gdp/2017/_images/gdp3q17_2nd_chart.png
The quarterly annualized real GDP growth rates were:
1st qtr 2017 1.2%
2nd qtr 2017 3.1%
3rd qtr 2017 3.3%
The latter number (3rd qtr) was revised upward from 3.0% to 3.3% when the second estimate was released on November 29th, and may be subject to further revision by year end. Here's the news release dated Nov 29:
https://www.bea.gov/newsreleases/national/gdp/gdpnewsrelease.htm
I see no reason to take issue with Brinker's quoted mid-November statement "The annual rate of growth for the first nine months of this year for real Gross Domestic Product......is 2.37%." At that point in time the 3rd quarter initial GDP estimate was 3.0%. (He had no way of knowing it would be later be revised to 3.3%.) With the data that existed at the time of his statement, I calculate an annualized rate of growth for the first three quarters as about (1.2+3.1+3.0)/3 = 2.43%. Close enough to 2.37 that I'm not going to argue. And what's the problem with quoting an annualized rate of growth for nine months? Seems no more of a stretch than the Bureau of Economic Analysis reporting an annualized rate of growth for each quarterly three month period.
My recollection of Bob's mention this week of a "3%+" growth rate was in the context of the last two quarters. Correct me if I am wrong.
Comprehensive summary and analysis of potential implications of the new tax reform bill:
https://www.kitces.com/blog/final-gop-tax-plan-summary-tcja-2017-individual-tax-brackets-pass-through-strategies/
Yah, these growth stats get revised. Since it is easy to calculate growth rate or extrapolate to an annual growth rate one may just as well look at the change in GNP per most recent government data. To me the best indicator is simple quarter by quarter growth percentage comparison after revisions. Annual growth a good long term measure but the annualized for example extrapolating from 1st quarter is of what value? It just adds to confusion.
Did anyone pickup on the Executive stat of regulation reduction performance? Wow, during the campaign it was for every new reg two would have to vanish. Actual data is one new for 22 eliminated. The last administration broke a record with 600 new regs that averaged $100 million cost every three days to the economy. The reduction rated $8.1 billion savings. Also, these measures do not include the secondary opportunity costs or losing future benefits to the chilling effect of would have been entrepreneurs, opportunities lost since such a nebulous calculation. I do think the enforcement per limitless power of fisticuffs and bullets is very chilling to public at large if you happen to cross some unknown line.
One example may have been the Keystone XL pipeline that was in the class of mindless political. I've read the stats and environmental impact. Now, you can get some phony results depending on assumptions, but the actual real life accounting of environmental cost was the pipeline saved lives, minimized air pollution, and minimized spills. We do need to invent better equipment and energy sources. We shouldn't attempt to shoot ourselves in the foot for some vague statement.
Trees said: "To me the best indicator is simple quarter by quarter growth percentage comparison after revisions."
Did you look at the quarter by quarter chart? To me the trailing 12 month moving-average of GDP is a better indicator. As I have said here before, there is just too much random volatility from quarter to quarter to be able to discern any trend. Any seasonal adjustments they attempt to make seem imperfect at best. See:
https://www.statista.com/statistics/188185/percent-chance-from-preceding-period-in-real-gdp-in-the-us/
FYI: North Korea (Unit 180) has/is busying itself by hacking Bitcoin exchanges.
#Cyber Risk
May 20, 2017 / 7:49 PM / 7 months ago
Exclusive: North Korea's Unit 180, the cyber warfare cell that worries the West
https://goo.gl/9ToAS9
JC
From the Kitces website that Biker mentioned:
"Of particular interest for financial advisors are a number of key provisions. The controversial rule that would have eliminated individual lot identification, and required all investors to use FIFO accounting, is out and not included in the final legislation. However, also out is the ability to deduct any miscellaneous itemized deductions subject to the 2% of AGI floor – which means all investment advisory fees will no longer be deductible starting in 2018. In addition, several popular Roth strategies will be curtailed by the repeal of recharacterizations of Roth conversions (although the backdoor Roth rules remain)."
Deductions subject to the 2% AGI rule include: unreimbursed employee expenses, job travel expenses, union dues, TAX PREP FEES, and INVESTMENT EXPENSES. That last item includes that 1% fee you might be paying to a financial advisor.
Also, the proposed rule that mandated First In First Out with regard to sale of securities is OUT of the legislation. This is good news for investors.
Biker,
You misread my post if you thought its purpose was to "pick apart Brinker's numbers".
And no 2.43% is not close enough if it does not match allowing for rounding to the 2nd decimal place since Bob did not say approximately 2.37%, he said 2.37%. Meaning either your numbers, methodology or both were not what Brinker used.
The definition I used for Quarterly annualized GDP is consistent with the primary points of my post which I broke out and enumerated below:
1) Fake news by definition when Bob takes 3 qtrs of annualized GDP and extrapolates that as "The annual rate of growth" for any period.
You actually need 4 GDP annualized quarters for the year in question and if you add those up and then divide by 4 that would give you the yearly annualized. Therein lies Bob's problem and he should know this.
2) Also fake news if Bob takes a number derived 2.37% that is not an annual number by definition and compares this number to historical actual yearly GDP as he attempted to do.
Also, Bob's use of the "3%+" figure is just flaky and wrong since it assumes a constant based on 1 or 2 qtrs. by definition where there is none. But again I did not hear this part of the program.
I heard Kevin Brady on Morning Joe this am. repeat the same error saying the economy is growing at 3%. I presume he is taking the last one or two Qtrs GDP Annualized as the GDP growth rate which I contend is wrong.
The best way IMO to look at the GDP numbers is to look at the YOY (year over year) Gross output value of goods and services which basically means wherever you are in time you compare the GDP output value to that same qtr a year ago i.e., if you are in the 3rd QTR 2017 you compare to the GDP output at 3rd Qtr 2016 that would be your annual growth rate at 3rd Qtr 2017.
real example:
GDP in billions of chained 2009 dollars
2017Q3 17,169.7
2016Q3 16,778.1
thus:
(17,169.7-16,778.1)/16,778.1 = .023339949 or 2.3%
https://www.bea.gov/national/xls/gdplev.xlsx
https://www.bea.gov/national/index.htm#gdp
As Bob stated "For many years, we've been clicking along with an annual GDP growth rate in the low-2's, area of 2.2%...."
and smile adds: and it looks like we continue at that level but you have to use the correct analysis
Quarterly Annualized GDP numbers are just flaky and are obviously misused and misinterpreted. And I repeat Bob should know better as discussed.
smile
Smile said: "Quarterly Annualized GDP numbers are just flaky and are obviously misused and misinterpreted."
On this we agree totally. I wish that year-over-year or 12-month moving average GDP numbers were also reported.
In my post of November 29, 2017 at 8:31 AM, I stated that the 12-month moving average of GDP through the third quarter of this year was revised up to 2.35%. My calculation was a crude estimate based on averaging the preceding four quarters percentage growth as reported to two-digit accuracy (one digit to the right of the decimal point).
You have done a more precise year-over-year calculation starting with raw data for GDP in chained dollars, reported to six digits. Your calculation for the year-over-year GDP growth rate through the third quarter gives 2.33%, which is in good agreement with my rough approximation.
For reference, here is a copy of my November 29 post:
===================
12-month moving-average GDP revised up to 2.35%. Definitely in a nice up-trend since the 2016 2nd quarter low.
2016 Q2 1.23%
2016 Q3 1.53%
2016 Q4 1.85%
2017 Q1 2.00%
2017 Q2 2.23%
2017 Q3 2.35%
===================
So yes, on a year-over-year basis we remain in the low-2's, but there is an up-trend apparent in the last six quarters of smoothed data.
You are welcome to take the position that it is inappropriate for Brinker to quote an annualized nine month (or six month) growth rate. I am not taking that position.
The main point of my post on December 18, 2017 at 7:53 PM was to use valid BEA data to check whether or not Brinker's number of 2.37% for the first three quarters was right or wrong. (The portion of this week's Summary that you quoted seemed to indicate that it was in error.) I found the number to be reasonably accurate.
May be good to get back to basics on GNP calcs. The link is a good review and exercise on how stat is calculated by government.
https://www.thebalance.com/what-is-the-gdp-growth-rate-3306016
to follow the example down load excel spread sheet from
https://www.bea.gov/national/index.htm it is the 3r down percent change from preceding period.
Also, good to look at the advance, second, and final figures for GNP. Every month they publish GNP quarterly growth stats. The first month of the quarter is rough figure. The second more accurate and the third is the actual final tabulation. Figures are always expressed in annual rate.
https://www.thebalance.com/u-s-gdp-current-statistics-3305731
I was listening to Dave Ramsey lecture on merits of just doing something is better, referring to investing. He called it analysis paralysis. He claimed many fail because they never achieve and feel confident within financial investments. Dave gave the example of a Teacher and Engineer couple that has $2m in retirement account and wanted advice. They didn't even know their account expense ratios.
He claims about the same savings for himself and that he never pulled money out except for one time purchase of rental property. Thirty years of packing away savings and nothing can go wrong. O.K. with that time frame. How about comparing new money and the short term earnings or security of investments within those of us in retirement? This is the zone I do think putting new money into high P/E stocks is poor return for the risk. That being the shorter duration, loads, sales charge or redemption fees and the naturally occurring higher risk with lower expected returns. Sure, we should be in the markets almost all of the time. Except when we shouldn't. Good to leave your funds fully invested until tradewinds turn to head winds.
What to do with new money? Paying off debt may be a better choice? Dave pulled money out of retirement account for income property investment. In retirement it may be better to flip that. Pull money out of real estate (refinance) for stock investment during recessionary draw downs. Timing bottoms is much easier than peaks. Interest rates will probably be at historic lows. If you have a guarantee of steady income, pretty much a low risk within an attractive season to invest. You home asset may be an excellent stash of cash. It is funny how nature has programed our fear to think in high p/e times we enjoy low risk and in low p/e times we fear losing in stock market.
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Biker...Even Brinker corrected his numbers, so let's not get too deep in the weeds with the GDP numbers.
To get the excel spread sheet for calculations- it's the 2rd down from
https://www.bea.gov/national/index.htm
Current-dollar and "real" GDP (Excel)
I originally posted 3rd down.
I think Bob said that he has not heard of a single company that said they would increase salaries because of a tax cut. I heard today that several firms said they would increase wages, give bonuses and increase their minimum wage due to the tax cut.
Honeybee said:
"...so let's not get too deep in the weeds with the GDP numbers."
Honeybee...Thank you, Thank you, Thank you!
I've noticed that recently many of the posts have been massively "sprouting" in both verbiage and complexity.
Sorry, but I never got around to earning a PhD in Global Economics. GDP is certainly important and I do follow it, but I'm quite satisfied with making great trading returns - no matter the "Economic Climate".
JC
MikeE: IMO, Bobby has a very simplistic view of things. Or more likely just a bias against the current Administration. The world is not black and white, and this (should) become more apparent the longer one lives.
If businesses have less money taken from them via taxes, they will do any number of things in response -- including offering more money to keep key people or to attract new ones.
JC! How are ya, man??
Apparently Bob Brinker did not talk to the CEOs of Boeing, Wells Fargo and AT&T. I think other announcements will "trickle down."
Now back to my search for a good 2018 tax calculator so I can do some planning. Some people are prepaying their property taxes and even their looking to prepay their tax prep fees so they can lock in these deductions before they go away.
rasputin here - Yes it looks like Bob was wrong about the worker not benefiting from a tax cut to corporations.
Sure wonder now if Bob will admit that he was misguided.
The recent GDP discussion is important going forward for at least two reasons:
1) Many here suspect that Brinker is monitoring (data mining) this site, and if that is the case I have given or more kindly "reminded" Brink of a better methodology to determine GDP growth updated to the latest quarterly GDP revisions.
I'm giving Brink the benefit of the doubt that he probably knew that averaging 3 quarters of annualized GDP rates was incorrect by definition and that he simply had to be nudged or reminded. We shall see if he is live this Sunday and he mentions the just this morning 12/21/17 revision to 3rd QTR GDP to 3.2% from 3.3%.
The excel spreadsheet I referenced in my prior post to get the quarterly YOY chained 2009 dollars quarterly gross domestic output has been revised insync with today's announcement.
2017Q3 Gross Domestic Output was revised to 17,163.9 Billion from 17,169.7 Billion
here: https://www.bea.gov/national/index.htm#gdp just click on Current-dollar and "real" GDP
What to look for: If Bob states that the latest revision brings the annual GDP growth rate YOY for the 3rd qtr to 2.299% or 2.3% consistent with recent historical annual averages in the low 2's that would be indicative.
2) The recent passage of Trump's Tax cut/reform was based partially on the notion of increased GDP growth from the low 2's to higher than 3's and that this growth would more than nullify static deficits (1 to 1.455 Trillion over 10 yrs) created by the tax cuts.
So each coming quarter those who followed the discussion can now measure the YOY Quarterly GDP growth and determine what is happening real time and ignore any fake news or misinterpretation on this subject.
This data IMO is an important tool for measuring the strength of the US economy and therefor could impact your get out/ stay in decision.
smile
Bob was articulating the point that the tax relief had no connection to wage raise. That moderating corp tax rate legislation has no provision to legally bind companies to increase wages. He was being legalistic. Within the investor community, we just desire the results. The results of the tax cut would be to increase jobs, economy, and wages. Surprisingly some companies have decided to increase worker wealth at the get-go. This is amazing.
I was reading a piece by Hans Parisis, that basically said that bond market are rigged. This was because so many investors are trained to always invest a percentage of wealth in bonds for some magical benefit. This is mindless investing. Sometimes bonds and treasuries make good sense. Sometimes equities are very safe bet. BTW we are investing and risking our wealth for returns. We need to review the risk and return to judge where to bet. We need to review actual data and not just succumb to some magical formula of bonds vs stock. I read the biggest threat or risk of retirees was not safety of investments, but running out of money such as living to long. Your need of money has much to do with making the best decision to improve odds of best return on investments. Matthew 25:14-30. Don't bury your wealth or buy gold coins.
Bluce asked:
JC! How are ya, man??
Bluce,
Doing well, thanks for asking.
Hope you are fine also!
JC
May Trump have gotten the economic reigns just in time? Were we headed for the ditch like California currently may be headed?
2016 annual GNP improvement = 1.5%
2017 Q1 = 1.2%
Q2 = 3.1%
Q3 = 3.2%
From:
https://investornews.vanguard/vanguards-take-on-the-tax-bill/
"It’s not unusual for retirement savers to convert a traditional IRA to a Roth IRA so they can pay tax on the account’s current earnings with the hope of having all future earnings grow tax-free. But some of these investors may decide to reverse this conversion for various reasons, including because the current tax cost ends up being too high or because the account fell in value. Rather than paying tax at the higher value at the time of the conversion, they opt for a recharacterization, which allows them to undo the conversion and take the converted money out of the Roth IRA and put it back into the traditional IRA.
According to Maria Bruno, Vanguard senior investment strategist, questions remain about what happens to those who make a conversion in 2017. “Under current law, you’d have until October 15, 2018, to change your mind and recharacterize a conversion you made for 2017,” Ms. Bruno said. “But it’s unclear under the new law whether retirement savers will have until the end of this year or until October 15 of next year to do a recharacterization. We hope that the IRS will provide clarifying guidance on this in the near future.”
Absent guidance from the IRS providing otherwise, Vanguard will continue to permit investors to recharacterize their 2017 conversions through October 15, 2018. Investors who choose to recharacterize after the end of December 2017 should understand that there is some risk that the IRS could ultimately disallow their recharacterization transaction, potentially resulting in adverse tax consequences to them. Because of this uncertainty, Vanguard suggests that investors who are considering a recharacterization of a 2017 conversion consult a qualified tax advisor and make a decision by the end of the 2017 calendar year."
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OUCH! Bitcoin dropped about 44% today.
HB,
Good news on bitcoin Drop.
Another 90% to go.
Takes out the speculative fervor leaving rest of mkt in better health... fear n greed
smile
.
Smile...I just find the whole thing ridiculous!
And I have misgivings about how damaging this whole crypto-currency thing is (will be).
Honey: Did you get my email about a lost post?
Honeybee,
You may want to consider rechristening "Honey's Bob Brinker Beehive Buzz."
How about "Honey's Bob Brinker Beehive Blockchain Buzz"?
People will be flooding you with kabillions of dollars!!!
-----
Long Island Iced Tea skyrockets after renaming itself Long Blockchain
https://goo.gl/c7gUF9
JC
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Bluce...Yes, I got your email just now checked. I thought I put through your post, but don't see it now.
Would you mind sending it again? Sorry.....
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