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Saturday, April 11, 2009

Summary: Bob Brinker's Moneytalk, April 11, 2009

Posted April 11, 2009: Bob Brinker's Moneytalk: Excerpts, Summary and Commentary: The stock market has risen for five straight weeks. This has not happened since late 2007. The Dow closed at 8083.38, up 0.8% for the week; the S&P 500 Index closed at 856.56, up 1.7% for the week; The Nasdaq gained 1.9%, closing at 1652.54..

Bob Brinker began the program today talking about the budget deficit item that was released in Washington DC on Friday.

[BUDGET DEFICIT] Brinker said: “The surging, exploding United States budget deficit with a spectacular increase in the month of March……in a 31 day period – this is really staggering – the United States increased its national debt by way of a deficit for the month by $192Billion…….Can you believe it?.........If you divide 192 by 31, you learn that we chalked up six billion one hundred nine-three dollars a day…. during the month of March, to add to our national debt, on which we pay the interest and will continue to pay the interest, seemingly, forever as a country……”

[U.S. FISCAL JOKE] Brinker said: “Now when you look at the revenues against expenditures, they are staggering…….We have a United States government right now gone wild on spending……Can’t wait for the DVD…... $321Billion in spending, but only $129Billion in revenue – tax revenue – deficit $192Billion……How long would you last if you ran your family finances that way……By the way, in the same month a year ago, we ran a deficit of $48Billion. That’s too much too……But $192Billion? That’s a joke. The United States of America has become a fiscal joke."

[GLOBAL CURRENCY] Brinker comments paraphrased: He said that when he first heard the Chinese talking about the possibility of a global currency, he could see why they would say that but wondered why should we go along with it -- but now, we are losing our power on this.....No one is doing this to us; we are doing it to ourselves -- no outside forces at play. We are spending into “oblivion," and he sees the possibility of increased interest for a global currency from other countries going forward……

[NATIONAL DEBT] Brinker said: “When people look at the fiscal train wreck in Washington, at the fiscal disaster in Washington, ladies and gentleman these numbers are hideous numbers. And the reality is, they are going to keep being this hideous. Because we are talking about racking up another $9Trillion to add to the 11Trillion, to bring our national debt to $20Trillion within the next decade. These are the numbers from the Congressional Budget Office…….”

[CURRENT FISCAL YEAR] Brinker said: “By the way, the deficit in the first six months of this fiscal year has already eclipsed any previous full year deficit…..It is going to be extremely ugly….Now we have the first six months of the new fiscal year on the books. We’ve added almost $1Trillion dollars to the national debt-- $957Billion to be exact, rounded to the nearest billion -- up from $313Billion for the same period in the prior year…….In fiscal year 2008, the deficit totaled $455Billion. In the first six months of the current fiscal year, we’ve chalked up another $957Billion. So we’ve chalked up more than twice as much national debt in the first six months of this fiscal year as we did in the prior period. Now the first four months or so of this fiscal period was under the prior administration and the last 10 weeks or so was under the new administration......"

[VIABILITY OF GDP GROWTH TRACK] Brinker said: “......These are staggering numbers. And these are numbers that raise serious questions about the long-term viability of the US Gross Domestic Product Growth Track. The long-term growth track, adjusted for inflation, is 3 to 3 ½%. Will the United States be able to sustain and maintain a 3 to 3 ½% real growth rate with these kind of deficit numbers and these kinds of interest payments due on the national debt. That’s a question that remains to be seen......."

[WHAT WILL HAPPEN WHEN THE ECONOMY COMES BACK] Brinker said: “.....And what will happen when the economy does come back, and it will come back…..What will happen with these gigantic $Trillion-plus Treasury sales to raise money to meet these deficits. Who will be the buyers and what interest rate will they want in order to make the purchases? These are all questions that are going to be answered going forward."

[THE UNITED STATES RIGHT NOW] Brinker said: “We have in the United States right now, government gone wild….. This is Moneytalk.”

[STOCK MARKET] Brinker said: “Well, I’ll tell you what. There’s a lot going on in Wall Street these days and lots to talk about. S&P 500 setting in at 856 and a fraction and Dow Industrials setting in at 8083 and a fraction…..Michael’s on the line in Washington....." [Honeybee EC: “Lots to talk about”? LOL! Bob, you’re a real card when you want to be – such hilarious entertainment!]

[GLASS STEEGAL AND UPTICK RULE] Brinker has discussed these two subjects extensively in the past and I have written about his opinions. Today, he reminded a caller that he thinks it was a mistake to revoke the Glass Steagall act, and that he would like to see the uptick rule reinstated.

[LOBBYIST] According to Brinker, they usually “get there way,” and that is why “we have the best government that money can buy.”

Caller Michael (20 minutes into hour two) said: “I just wondered, I seem to always be a little late (chuckle). I’ve listened to you for years. The last time you said to get out of stocks, I didn’t, and I got out too late. A couple of Monday’s ago when we had blue Monday, I got out then. I have a portfolio of about $500,000 and I took about 60% out of it that was all IRA money. I went into municipals and I was just wondering your thought on municipals. Can I name the municipals? [Brinker: “Sure.”] Virginia Tobacco, they were half price and I think they are rated BAA. What is the indication when instead of $1,000, it now $500, so I bought $25,000, but I’m actually getting paid on $50,000? Is that an indication that it’s ready to leave us?"

Brinker said: “Tobacco bonds are bonds that were sold by entities that tried to get the present value of future tobacco company payments that were negotiated by the Attorneys General a few years ago when they basically sold out to the tobacco companies and decided to take the money instead of working to free people from the plague of smoking and tobacco-related illness and death……..Plain and simply for money…….So now those tobacco bonds are backed by revenues of tobacco companies…..

.....Now one of the things that is very, very good for the nation that has been happening over time, but it has been very slow, is that tobacco usage has been in decline in the United States…….For two reasons, one reason is between 4 and 5 hundred thousand tobacco users die in the United States every year as a result of using tobacco, mostly through cigarette smoking………The second reason it’s in decline is because virulent anti-smoking campaigns around the country have done a decent job of beginning to reach the younger people. And it’s the younger people who they have to hook almost before they’re 20 or else they lose their chance. You pretty much have to hook somebody in their teens because once they get to be 21, they’re usually not going to do it…….

…….I’m the wrong person to ask about tobacco bonds, and I’ll tell you why. I would prohibit the sale of cigarettes today if I had the power to do so because I have personally seen the damage that they have done. I’ve lost three, THREE family members. I’ve lost three close family members to cigarette smoking……But the tobacco users have nothing to fear because I have no power in that domain. 1-800-xxx-xxxx.”

[Honeybee EC: Readers please go back and take a look at Michael's opening comments and notice that Brinker ignored them and jumped on the bond question. This is the second program that Brinker has allowed a caller to make misleading statements about his market-timing advice without correcting it or even commenting on it.

Brinker is brilliant, so he has to be aware that if a statement like that is made and he does not contradict it, many listeners will believe what the caller said about Brinker is correct. What the caller said could not possibly be correct. The last time Brinker said to sell any equities was in August 2000, and that was a total of 65%. He returned that 65% (minus a costly QQQQ trade that used part of the 65%) to the market in March 2003 – and it's been there ever since.]

TIPS and I-BONDS: Caller Ann said she had been buying Treasury Notes in the past and asked if she should be buying TIPS instead. Brinker said: “I like Treasury Inflation Protected Securities because they guarantee you that you are going to be protected against inflation over the long-term…..You have to remember if you are buying TIPS, you have to put them in a tax-privileged account because otherwise you are going to be paying taxes……Now if you want to go out and you want to buy something that has inflation protection, but it’s not a Treasury Inflation Protected Security and you can put this in a personal account, that would be an I-Bond. The problem is you are limited to a very small amount a year. You can go to [LINK] and get information on that. I-Bond are paying terrific rates right now…… the charts given the zero inflation rate. But that can change dramatically because they re-up the pay-out every six months and they use the CPI to do it.”

GINNIE MAES: A caller told Brinker he was afraid that GNMA’s were “topping out” and wanted to know where he should move his money. Brinker recommends the Vanguard GNMA Fund (VFIIX) because of the very low expense ratio. (Vanguard charges about ½ as much as Fidelity charges for same type of fund) Brinker reminded the caller that the shares of the fund are now at the top end of the range that they have been in for 20 years. Brinker says that the expected range for this fund is $9.50 to 10.50. He told the caller that if he was not prepared to handle the possibility that the fund could drop to the lower end of the range that he should go for laddered CDs.

[BRINKER’S POLITICAL OPINIONS] Brinker once again spent time bashing President Bush’s Medicare Drug Plan. A caller asked about the upcoming “Tea Party” protests that are planned around the country on April 15th. Brinker demeaned, denigrated and denounced “those people” -- saying that they just couldn’t “wait to blame the new guy.” He ended by telling the caller to “consider the source.”

[Honeybee EC: You know Mr. Brinker, "the source" you told Michael to consider comes from the same place you do -- free American citizens who care about this country. BTW: you are still selling yourself as a “financial advisor.” I think it’s a bit surprising that you are so eager to show your political bias and ignorance from behind your closely guarded bully pulpit. I suggest that if you are going to continue to use the national airwaves for political demagoguery, instead of matters-financial, that you at least show a bit of honesty and change the name of your program.

At the very least, you could take a look at your own opening monologue and see if you might find a clue there as to the REAL reason that another Tea party is being planned. Who do you think is going to pay for those TRILLIONS of DOLLARS of debt? Who do you think will suffer if the dollar is debased -- as you have indicated is possible. I guess we could all move to Nevada for starters and at least get away from paying state taxes. I understand property around Las Vegas and Henderson has dropped considerably.]

[GEORGE SOROS] In the third hour monologue, Brinker talked at length about George Soros and his short-selling. Brinker said that Soros was probably not happy about being out of the market during this latest market run-up. Brinker said: "Those of us invested in the stock market feel good, but it's been a house of pain for short-sellers."

[Honeybee EC: To Brinker's statement again about "feeling good" because he's invested in the stock market. I will remind readers that his model portfolios rode down a 57% market decline and incurred dramatic losses. According to letters I receive, people who trusted Brinker's advice over the past 15 months or so have been seriously financially damaged. Finally, this is for Mr. Brinker: "There are three classes of men: lovers of wisdom, lovers of honor, lovers of gain." __Plato

Brinker's guest-speaker today was Liaquat Ahaimded "Lord of Finance: Bankers Who Broke the World."

Brinker and his guest spent much of the interview praising John Maynard Keynes. Keynesian Theory can be put into one sentence: "Spend government money even if there isn't any."

No need to pay hard-earned money to have your own downloaded copies of Bob Brinker's Moneytalk programs which are owned by ABC. They are archived for FREE downloading at KGO810 radio [LINK] for a full 7 days after broadcast! Saturday's program is there now and will be there until next Saturday at 1pm. To download the program to your MP3 player or flash drive, just right click over the hour and use "Save Link as." KGO Moneytalk Archives Link


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