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Saturday, December 19, 2009

December 19, 2009, Bob Brinker's Moneytalk: Summary, Commentary and Excerpts

Bob Brinker hosted Moneytalk this weekend. Bob Brinker opened the program with "bi-partisan congratulations" to Senators John McCain and Maria Cantwell for their "courageous stand this week" in proposing the reinstatement of the Glass-Steagall act.

Brinker said:
"This would prohibit the commercial banks from dealing in the risky gambling arena known as investment banking. The gambling arena that took down Bear Stearns. The gambling arena took away Lehman Brothers. And the gambling arena that forced Merrill Lynch into a shotgun wedding with Bank of America. This is a wonderful idea because it would force so called too-big-to-fail bank-holding companies to return to the business of conventional banking and leave the risky business to the gamblers at the investment banks.....Now the proposed Senate legislation gives companies one year to comply. I'm okay with that. The important thing is we get it done.....

.....It does have implications. J.P. Morgan would have to give up its trading operations acquired from Bear Stearns. Bank of America would have to disengage from Merrill Lynch.....Goldman Sachs would no longer be able to be a bank holding company, which currently provides Goldman Sachs with over $20 billion in FDIC insured capital as a result of bonds insured by the FDIC......Why is that FDIC insurance provided to Goldman Sachs? There's a tough question for somebody in Washington to answer. Obviously Citigroup would have to disengage its multiple non-commercial banking affiliates.....We'll talk more on Moneytalk."

Honey EC:
In my opinion, putting all the blame for the economic meltdown on the repeal of Glass-Steagall is a bit simplistic. Brinker seems to be ignoring the whole housing sub-prime loan fiasco. What about all the loans that a few in government forced "investment banks" to give to people who clearly could not pay them back, which basically brought down Freddie and Fannie and several banks.

Last year, Brinker said that his
"Timing Model©" (which disappeared from the radar in October, 2008) missed the 2007-2008 megabear market because he could not have "forecast the banking meltdown." Well, if it was all caused by the repeal of Glass-Steagall in 1999, why wouldn't he have been aware it could happen? He was bullish throughout all of 2008 as one bank after another folded. Brinker continued to remain fully invested, advised against selling stock all the way down from S&P 1565 to S&P 677. During 2008, Brinker issued several new money buy signals.

...Saturday, Brinker made no comments whatsoever about bond market activity.

...Saturday, Brinker made no comments whatsoever.

.Saturday, Brinker made no comments whatsoever about stock market activity. There was only one caller that even mentioned the stock market. Here is the exchange:

Caller Bob in Sunnyvale
(who sounded rather elderly), who wanted to make a "wash sale" asked: "Since there isn't much volatility in the market currently, would it be best for me to wait until next year and buy during a weakness in the market, I'm going to sell for my profit this year because under the current tax law, people in the 15% tax bracket do not have to pay capital gains tax....."

Bob Brinker said to Bob:
"Let me ask you a question and your answer will answer your question. Thirty-one days after you make your sale, do you think the price of what you are selling will be higher or lower? (caller: "I'm hoping to buy lower.") I'm not asking you what you are hoping for. I'm asking you, thirty-one days after you make your sale and then you turn around and buy what you sold will the price be higher or lower......? (caller: "Well I don't know what the price would be, Bob.") Then if you make the sale....Only in the case of a loss. In the case of a profit, you can buy and sell in the same minute.....and you will pay the taxes."

Caller Bob, not easily shut down, repeated his question:
"But Bob, would I be better to wait until next year and buy during a weak and get a lower....." Brinker interrupted: "That's an easy answer. That's an easy answer and it's very easy. If the price would be lower next year, it would better to wait. If the price would be higher next year, it would not be better to wait. That one is easy, that one is easy. (caller: "Thank you, Bob, I agree with you. I was thinking....") Brinker interrupted: "You're thinking exactly right. You're thinking right down the middle. If the price is going to be higher next year when you would make the buy, that would not be a good thing to wait, but if the price is going to be lower next year when you make the buy, I would agree with you, Bob, that that would certainly be a good transaction. Now all we have to figure out is, which is it going to be. This is Moneytalk...."

Honey EC: As I said, Brinker made no comments about the stock market today, but the arrogant run-around he gave this caller (who was clearly a fan) was enough to gaggamaggot. In one his political rants, Brinker said he wouldn't name a "pundit" who was on TV because he didn't want to "embarrass him further" (the pundit had been against reinstating Glass-Steagall). Well, I hate to embarrass you further Mr. Brinker, but you need to spend some of that TV time listening to Moneytalk. Your disrespect for some callers is appalling! You were certainly not that rude with the caller who had $3/4 million and wanted help deciding whether or not to roll it into a Roth IRA.

In the December, 2009 issue of Marketimer, Brinker said: "We recommend using periods of stock market weakness for investing new money into the market......we estimate upside potential for the S&P 500 Index into next year in the 1170 to 1240 range."

BEN BERNANKE/FED....Brinker made no comments whatsoever.


Brinker said:
"Now it is true that under President Obama, the Federal top bracket is going up to at least 39.6 starting in 2011. It's also true that we have a bunch of people in Congress right now who seem to think that the only solution to the fiscal train wreck is to tax high-earners more and more.....It's been within the last few weeks that the House -- it's not law yet, but the House passed a 5.4 surtax on high earners to pay for their health care version. Carl Levin came out last month with an idea to slap a big surtax on high earners to pay for the troop expansion in
Afghanistan. There's no limit......

.....Of course there are not enough high earners out there to do all of this....Some people think they [already have killed the goose that laid the golden egg] in California. Look at their fiscal situation even with their top state bracket of 10 1/2%.....That top bracket in California -- as is the case in virtually every state tax -- it applies to capital gains. So you might do a federal capital gains tax of 15 today, but if you're a high earner in California, you might tack another 10 1/2 on to that.....

.....Where are these recommendations coming from when they're all aimed at the same very small group of people as a percentage of the population -- the high earners. And the answer is, they're like the driver who has driven the bus down into the ravine. He's so far off the road, that he has no hope of getting this thing back on the highway -- none. He's desperate. He'll do anything. Anything he can think of. That's what you're seeing here. There's no policy here. There's no strategy here. It's always the same end result --- awww, let's soak the rich. It's always the same."

Caller George in San Jose riled Brinker up a bit
by claiming that Brinker had said that there was never a budget surplus during the Clinton years.

After scolding the caller for "setting up paper tigers and knocking them over" Brinker said: "I don't appreciate your manufacturing my comments. I have never said that there was no budget surplus in the Clinton period.....I've many times pointed out we had a small period there toward the end of his second term where we did have a surplus. But in all fairness, we have to give credit to the fact that we had bi-partisan government at the time.....That's the reason we got the surplus.....

..... Now since that time, we've had a one-party, runaway freight train government. Government gone wild on spending. We've had that ever since the end of the Clinton Administration and you see what it's brought us. It's a fiasco in Washington.....
(caller mentioned the $1.3 trillion deficit)....Let me tell you something. This is just the beginning. The Congressional Budget Office is talking $20 trillion-plus within the next decade. If these people are allowed to remain in power past their current.....And I especially include congress in this, since they are the ones who appropriate all this's going to be a fiscal train wreck.....It seems to be a bi-partisan fiscal train wreck."

Honey EC:
I think Brinker deserves credit and an "E" for effort. LOL! Brinker seems desperate to spread the manure equally (that's an old farming term). He's doing his level best to ignore the fact that the National debt is up by $2 Trillion since Obama took office, and that Obama just signed another $1.1 Trillion spending bill.
WASHINGTON – President Barack Obama has signed into law a $1.1 trillion bill that increases the budgets in many areas of the government by about 10 percent, including health, law enforcement and veterans' programs.

Obama signed the bill privately at the White House on Wednesday after receiving the bill from Congress on Sunday. Read more [LINK]

FEDERAL TAX RATES... Brinker said:
"The Federal tax rates have nowhere to go but up....


* Caller Bob in San Francisco
asked about estate tax changes.

commented that under current law, anybody who dies during 2010 will pay zero federal estate tax. Brinker said: "The reason this is on the books is because the people who are running the country in Washington right now are is so incredibly incompetent. And I especially point my finger at Congress, they have responsibility for this type of legislation as well as appropriating all the money spent in this Federal Government. These people should be so ashamed. They are making the United States a laughingstock around the world......

.....It will end when you get these people out of office that don't belong in office. Right now that's the vast majority of U.S. Congress.
(Caller Bob wanted to know when it will end.)....The way this Congress operates, they're liable to pass something at 4 in the morning while the Nation sleeps. Don't be surprised. Nothing would surprise me with this group. It's way over the line at this point....

.....But they have a stealth plan. The way it works when we get into the new year, sometime in the first quarter, they'll pass a bill retroactive to January 1 for an estate tax in 2010. That's the stealth plan and that's why there's no sense of urgency. God help us all, I think would be appropriate.....

......I do feel sorry for the voting public. Because the voting public has continuously come against these Hobson Choice elections where if you vote for the one vote for the other, either way, basically you're screwed, frankly.....

....It's possible term limits will make a difference. One thing I know for sure, not having term limits is really damaging in terms of what comes out of Congress.....As far as whether we are going to get any change in the mentality of the people in Washington right now, I say no, I don't think that we will.....The United States voters, as a result of their ballots, starting nine years, they basically gave us a no checks and balances government. We've had a no checks and balances Congress for nine years. The Republicans had the run for six years. The Democrats have had the run the past three years. No checks and balances.....As a result the party in power can do basically whatever they want to do, and that is what they are doing."

Honey EC: Brinker sounded very bearish on the condition (and future) of the United States of America today -- more than I have ever heard before. I agree with much of what he said today, but I think the way he is handling the blame-game is very biased.

Brinker very seldom puts blame for anything on Obama. Since he became president, Brinker likes to generalize and blame both parties in Congress -- and frequently the "Bush Administration" gets thrown in for good measure. As Brinker has said in the past, he isn't a talk show host who will "bash" Obama. Brinker only used Obama's name a couple of times today.

In Brinker's second hour monologue, he again talked about how the repeal of Glass-Steagall caused the 2008 meltdown.

Brinker said: "It was a dreadful mistake and the entire country paid for it in 2008.....Think about it. You don't have to be a Rhodes Scholar to figure this out. We sale along for seven decades with no major financial calamity overtaking the entire system and then just a few years after the repeal of Glass-Steagall, the financial system goes into meltdown. This is not a coincidence. Without Glass-Steagall, the U.S. financial system remains at risk because there is no way to control out of control investment bankers and the damage that they can do when they're left to pursue their risky bets which all too frequently turn out to be a disaster.....

....Now I don't know where the president is on reinstatement of Glass-Steagall, but I'd sure like to find out. Should he be out front leading the charge on this proposal -- of course he should. And where's the Speaker of the House on this? And where's the Senate Majority Leader on this? Where are they? Alright, they're stuck in the snow in Washington DC.....

......I tell you I've seen enough. I've seeeeen the mountain top. And I'll tell you what, when I see these Wall Street muckity-mucks with there double-talk presentations about this issue, I've had enough. I'm totally convinced now, they're not that stupid. They have a vested interest in the repeal of Glass Steagall and that's why they're coming out with the doubletalk nonsense."

Honey EC: In my opinion, Brinker sounded a little panicked today. Some of his phrases surprised me and seemed a bit crass for Mr. Brinker, such as, "God help us" and "basically you're screwed" and "I've seeen the mountain top." But it's clear he is still spinning the whole "no checks and balances" thing (to put it kindly). Always before, he called it "checks and balances" when the President and Congress were different parties.
What is he afraid of now? He never before worked so hard to keep heat off of a president.

Brinker said he didn't know where the president stands on the reinstatement of Glass Steagall. Mr. Brinker, here is a Newsweek article titled:
"Spurning Obama, McCain and Cantwell Propose Resurrecting Glass-Steagall to break up Wall Street."

Brinker's Saturday guest speaker was Barbara Weltman, "J.K. Lasser's Your Income Tax 2010: For preparing Your 2009 Return"

Brinker's Sunday guest-speaker was Charles Gasparino, "The sellout: How Three Decades of Wall Street Greed and Government Mismanagement Destroyed the Global Financial System."

Honey's Market Report, December 18, 2009:

* Dow closed at 10, 328.89 -- a 1.4% loss for the week.
* Nasdaq Composite Index closed at 2211.69 -- a 1% gain for the week.
* S&P 500 Index closed at 1102.39; losing 0.4%, the second weekly decline.
* Gold closed at $1112.70.
* Light Crude: $73.05
* U.S. Dollar $77.77 (Marketwatch): The dollar notched a new three-month high on Friday, heading toward the biggest weekly gain since April, as hints of geopolitical troubles gave traders more reasons to reverse so-called short trades that bet the greenback will fall further.
* Treasury Bond rates, TIPS, munis [LINK],
* Key Rates, Mortgage, CD rates [LINK]
* Daily Treasury Statement [LINK]

Moneytalk programs are available free at KGO810 radio for seven days after broadcast.
You can download and save Bob Brinker's Moneytalk programs (owned by ABC) and listen whenever you choose at no cost whatsoever. To download the programs, just choose the day, then right click on the hour that you want and use "Save Link as." KGO Moneytalk Archives [Link]

On the lighter side, Bluce sent this funny cartoon for us. 8^)

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