STOCK MARKET....Brinker did not discuss market action this week. The Dow, S&P and Nasdaq all ended up on a four day week - still recovering from the 10% correction. The S&P is at 2747.30 again and the Dow is at 25,309.99 - perhaps on it's way to $26K again.
BRINKER EXPLAINS STOCK MARKET TUMBLE......"Tailwind for inflation is the declining dollar, which has been dropping for over a years... We pay more for imports when the dollar drops. Key ingredient to Fed policy is inflation. Beginning February 2nd, the market tumbled because of possible wage increase and inflation fears."
Honey EC: Don't expect Brinker to sing the market's praise for awhile if it keeps going up rather than dropping down and retesting those lows. According to his February 12th bulletin, he's looking for a retest in order to put out another buy-signal. In the meantime, if you have new money, he recommends dollar-cost-average.
HOW TO DO A CD LADDER RIGHT NOW....In response to caller Don from Chicago, Brinker explained how to do a CD ladder:
Brinker said: "I would have four steps on the ladder....I would have a three-month CD maturity. I would have a six-month maturity, also a nine-month, also a twelve month. What you would be able to do then, is as interest rates increase, as they already have been increasing, then you can take advantage of higher rates as each of the ladder steps matures......
BB continued.....For example, when the three month matures, you can roll that over at that time into a one year CD - because your others in three months will be three, six and nine months.....In that way, you are able to take advantage of an increase in the short term rates, which the Fed is committed to. As long as the economy is growing, you can be assured that the Federal Reserve is going to be on watch against inflation. And they are fully aware that we are at full employment and that we already have a tight labor market. And we already have signs of wage pressure that showed up in the January labor report which came out on February 2nd and drove the market bonkers at that time."
HEADWINDS FOR REITS AND OTHER INTEREST PAYING INVESTMENT.....In response to Clark from Baton Rouge, Brinker said: "It's competition for the money. In other words - yield competition. As rates go up, there is more competition from the bond market. Because you can buy bonds, even Treasury bonds and get higher yields. And those higher yields compete with the higher yields on REITS, and that's the reason it's a headwind.
CRITCAL MASS.....Brinker commented that "Critical Mass equates to "Financial freedom."
FOMC MEETS MARCH 20 AND 21st.....Brinker expects a rate increase at that time. We have had five already, but if we have 6 more, the Federal Funds rate will get close to 3%....That means higher money market and CD rates. New Fed Chair Jerome Powell goes to Capitol Hill first time in March....and may have to answer questions about Quantitative Tightening.
NO INFLATION SURPRISES PLEASE....BB said: "What you don't want to see is any surprises on the inflation front. If there is one thing that can upset the bond market really fast, it's surprises on the inflation front......The Federal Reserve would have to respond by quickening the pace of their rate hikes and their tightening. So the one thing you do not want to see is any surprises on the inflation front. Now we had a small surprise on February 2nd when the supervisory and employee wage increase numbers came in at 3.9%. .....Totally unexpected, and we saw what happened after that......" With 2% inflation, purchasing power is cut in half in 36 years.
NATIONAL DEBT AND DEFICIT and BRINKER'S ONE-SIDED WEEKLY POLITICAL HIT-JOB..... ==> dRahme Audio Clip
Honey EC: I am willing to post the audio of Brinker's political musings but I won't spend time typing them out.
BRINKER'S GOTCHA CALL TODAY
SWISS CHANCELOR, MEXICAN PESOS AND SWISS FRANCS....Caller Cornelius from Sioux Falls, South Dakota, told Brinker that his Credit Union offered to pay him 18% on a money market deposit, if it was made in Mexican Pesos. When Cornelius withdrew his money, he was given Swiss Francs and made more money than he expected.
==> Thanks to dRahme: audio clip of the call ...Honey EC: No laughing aloud allowed. :)
FRANKJ'S MONEYTALK GUEST SPEAKER SUMMARY
Well, Bob had another in a
long line of futurists on the show today, February 25, 2018. Andrew McAfee co-author of a 2014 book, The
Second Machine Age and co-author of the 2017 book, Machine, Platform, Crowd: Harnessing Our Digital Future. Andrew is a principal research scientist at
MIT’s Sloan School. His co-author on
both books is Erik Brynjolfsson.
There was slight puckering
at the beginning of the interview when Bob greeted the guest and was met with
silence. Bob handled it as the broadcast
professional he is, while Ravi scrambled to get Andrew on the line.
Here’s what we learned
before the half-hour break:
·
Amazing
technology does not benefit everyone equally.
·
There are
winners, stars and superstars in the tech galaxy.
·
He does not see
the creation of tech superstars (super rich) as a problem.
·
Both skill and
luck play a role: he doesn’t know any
successful tech stars who didn’t enjoy some luck.
·
The development
of artificial intelligence is progressing faster than experts predicted it
would.
·
The second book
mentioned above, discusses “the hardest things to accept about ourselves,” one
of which is overconfidence bias.
·
Bob said
“robots don’t get sick, don’t ask for raises, and don’t talk back.” The guest said there is a difference between
robots doing automated tasks that involve physical repetition and robots taking
over the cognitive tasks of humans.
After the break Bob brought
up the notion of a guaranteed income or Universal Basic Income as the guest
called it. The guest said we have a
problem with job quality, not job quantity.
Three million truck drivers in the US are not going to lose their jobs
anytime soon. He is in favor of
expanding the Earned Income Tax Credit program instead of just handing money
out to everyone. (The EITC program gives
money to people who work.) The guest
said he does not believe UBI is appropriate for today’s world.
Caller Bob from Naperville,
IL had a question but I was distracted.
John from Avon, CT asked
about the potential for self-awareness by the machines. The guest is not worried, and neither am I,
having watched the Terminator series of movies where the humans manage to get
by on their wits and with a little help from “Ahhnold.”
Eric from Bend, OR wanted
to know when medical doctors are going to be replaced by AI. The guest said doctoring won’t go away. Diagnosing, working with medical peers,
patient communications are all things that have to be done, human to
human. AI however can help a lot with
diagnosis which is a form of pattern recognition, something humans are good at
but machines can help with.
The US education system is
doing a great job of educating young people …. for the work environment that
existed 70 years ago. It encourages
obedience and orderly behavior. (Has he been in a high school lately?) Schooling today needs to emphasize creativity
and the ability to work in groups.
James from Springfield
wanted to know what computer language a millennial should learn. The guest didn’t know. Then he had a question about which
cryptocurrency someone should invest in.
The guest said he thinks these currencies are dangerous right now. Bob agreed pointing out that those who paid
$19,000 for one bitcoin are not happy right now.
A caller listening on KNUS
asked if computers are leading us to dehumanization. The guest said in so many words, only if we
let them. He said phones and screens are
a temptation that we need to rise above.
Parents need to step in on behalf of children. He said, often, when we are using a phone or
screen, we are actually interacting with another human, but it is no substitute
for a face-to-face interaction with someone.
Bob wrapped up at the usual
time, about 3:52.
I am convinced that these futurists, as I’ll call
them, are on so frequently for a couple reasons. One is that Bob really enjoys this topic
because the future may guide us toward successful areas for investments. A second reason is that these futurist
guests, for the most part, are “safe” guests who aren’t going to challenge
Bob’s views on the markets, investments, etc.
Honey EC: Note to all who listened to Moneytalk. I was told that at the very end of the show, as Brinker was signing off, he said something that indicated that he had been told that the Pesos-call was a joke. Did anyone hear it? If so, please let us know what was said. Thanks...
