July 15, 2018, Bob Brinker's Moneytalk: Latest Advice, Summary and Commentary

July 15, 2018....Bob Brinker's Moneytalk:  LIVE SHOW today....(comments welcome)

HONEY'S MARKET REPORT:

=> The S&P 500 Index is back above 2800 - up 4.78 YTD - and is only about 3% below all time high.  The 10-year Treasury is still below 3% - 2.85. Inflation, according to the CPI-U is at 2.87% - still below where it was at the end of WWII.

STOCK MARKET...Brinker opened the program by completely ignoring the 10.1% correction that happened in February this year,  while mentioning the S&P 500 all-time-high in January.  He then pointed out that the Index is now only about 3% below the high. Then he launched into an opinionated diatribe about proposed tariffs.   

Honey EC: Since the S&P has recovered so much of its losses, Brinker may think it would make him look pretty silly if he claims any decline that happened now is a "retest" of the February lows - so better to go back to January and call it a "trading range."  

==> Thanks to dRahme AUDIO CLIP you can hear some of the opening comments. 

MARKETIMER MODEL PORTFOLIO MAJOR HOLDING.....Rick from Iowa, who is retired, asked Brinker about moving out of 100% equity model portfolios I and II into balanced (1/2 fixed income) portfolio III. 

Brinker replied: "I would have a balanced portfolio and that should be easy for you to do because you are going to find in looking at  (Marketimer) portfolios I, II, and III, that there are funds in there that are compatible with one another. I'll give you an example - the (Vanguard) total stock market index fund - we have a significant weighting (50% in I and II) of that in all three model portfolios.....So you see, you would be able to count that toward your weighting in model portfolio III. I really would feel that model portfolio, balanced portfolio would be appropriate for someone who is entering or is in retirement. I think it is appropriate and risk level at that stage of your investment cycle." 

BUDGET DEFICIT..... dRahme AUDIO CLIP: deficit, paying back national debt

NOREEN AND THOSE WHO AGREE WITH HER ARE  FOOLS, MORONS AND IDIOTS.....Noreen said she believed that the proposed changes in tariffs would help ordinary working Americans, and said that some steel mills had already opened up again, providing more jobs. 

After screaming about Harley-Davidson, Brinker said: "I believe that protectionism is for fools only......I want to be very clear on this. I don't want to be misunderstood. I think that the only people that protectionism works for the country are fools, morons and idiots. nobody else." 

Honey EC: The problem is, MISTER Brinker, President Trump is not for protectionism. He is for FAIR TRADE.  The United States has been the piggy bank for the world far too long.

==> dRahme's Audio clip: Noreen's call and Brinker's response starts at 6.5

VICKIE'S CALLS.....Honey EC: Vickie may be one of the most eloquent callers I have ever heard on Moneytalk. Brinker was furious, and told her what she said made no sense and was complete nonsense!  He added that her opinion (and those who agree with her)  was for  "losers."  If he would have allowed her to continue rebutting him, she would have made him look even more like that "loser" than she did. 

==> dRahme's Audio Clip: Vickie's call shortly after Noreen's

FRANKJ'S MONEYTALK GUEST-AUTHOR SUMMARY

Bob’s third hour guest on Sunday July 15, 2018 was Paul Tucker author of the book Unelected Power, The Quest for Legitimacy in Central Banking and the Regulatory State.  (published May 2018).  Mr. Tucker is a former governor of the Bank of England.  From Wikipedia:

“In December 2015, Tucker became chair of the Systemic Risk Council, a body set up in 2012 by former regulators and central bankers to promote financial stability.  Its first chair was Sheila Bair, former Chair of the FDIC, and its members include Paul Volcker (former Chair of the Federal Reserve) and Jean-Claude Trichet (former President of the European Central Bank).  Since Tucker became chair, the SRC has issued a statement to G20 Finance Ministers and Governors on financial reform and, among other things, intervened on various US Treasury proposals to roll back financial regulation.”

Mr. Tucker said he wrote the book because he was worried that more power has shifted from political leaders to central bankers.  Today we do not see presidents and prime ministers at the forefront, instead we see central bankers.  During our recent financial crisis Paulson, Bernanke and Geithner were in the news, trying to deal with the problems.  He contrasted this with the situation in the US during the Great Depression when Pres. Roosevelt was front and center trying to deal with the economic problems. 

Bob asked if there is a disconnect between central bank monetary policy and what the typical taxpayer/citizen knows about such policy.  Being British, the guest  was diplomatic in his answer which was:  people in the UK know more about economic policy than people in the US.  Part of the reason is more TV exposure for Britain’s central bankers, going back 15 to 20 years when the Bank of England made an effort to get its people in front of the cameras. 

There was some talk about Mario Draghi but I missed most of it because I got a phone call.

After the financial crisis here, did the Fed get any help from Congress?  This is a favorite theme of Bob’s.  Starship regulars know the answer is “No.”   Mr. Tucker agreed and suggested that Congress could have launched infrastructure projects.   He said Congress could have paid for it by raising taxes, not borrowing.   Both agreed in the political atmosphere at the time there was no way this was going to happen. 

Remember when Bear Stearns melted down in March of 2008?  Bob said this was a “gift” to the regulators and securities crowd – meaning it served as a warning of things to come, yet no one did anything for 6 months.  The guest seemed to agree and did not know why no action was taken.

Caller Bernie from Westlake Village, CA wanted to know if nationalism is dead in Europe.  The guest gave an answer that wandered around and ended with the statement that the EU is still developing.

A caller from El Paso TX asked if monetary policy is so complicated that members of Congress cannot comprehend it, so this is why they leave it to unelected experts.    

Editorial comment:  Think of the Congressmen and women in your own state.  Now decide  which one of them is the biggest dope.  Now picture that person having anything to do with monetary policy. 

Bob from North Hollywood, CA said if he has a heart problem he wants a cardiology specialist on the case, not a general practice doctor.  Likewise, the economy: keep the politicians (generalists) on the sidelines and let the specialists deal with monetary policy.  

The guest said that it is OK for politicians to delegate tasks to central bankers but they need to be specific.  For example,  part of the reforms after our financial crisis were that banks should not engage in speculative activity.  This was Congress’ wish.  The regulators ended up writing 800 pages of rules.  Overkill. 

Bob wrapped up at about 3:52. 

Honey here: Thanks Frankj….It is a little scary when unelected people and bureaucrats have so much control over our lives, because there is no way to vote them out. And worse, it's almost impossible to get them fired. 

NEXT WEEK.....==> dRahme AUDIO CLIPS: economy, inflation, treasuries, quantitative tightening-which has only just begun. 

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