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Sunday, June 20, 2010

June 20, 2010 Bob Brinker's Moneytalk: Summary, Excerpts and Commentary

June 20, 2010...Bob Brinker hosted Moneytalk today.


"If you are a long-term listener to our broadcast, you know that I have never believed that rising energy prices alone would cause inflation. I've never believed that and the latest CONSUMER PRICE INDEX report proves that that's true.....

......Listen to these number. In the past twelve months, year-over-year, the rate of inflation for gasoline, fuel oil and energy commodities is 27%. That's right......27% in one year! So where is the all-inclusive index -- 2.0 year-over-year. Excluding food and energy, which tend to be a lot more volatile than other sectors, the core rate of inflation over the past year is 0.9%......That's one of the lowest core inflation rates in recorded history.....

.....And if you take a look at the last quarter, it's even better than that. The CPI in the last quarter has risen at an annual rate of less than 1%, including all items. And the Core Index in the past quarter has risen at an annual only 4/10th of 1%. That is why I say, I do not believe that you could be getting inflation news any better than that."

STOCK MARKET: Brinker said:
"The stock market is trading 8% below its April year-to-date high. Its April recovery high to date, which was 1217 close on the S&P. It's currently trading at 1117......The Dow is transacting at 10,450. The Nasdaq at 2310. So that's what's going on in the financial markets....."

[Honey EC: Brinker's model portfolios and his followers have ridden the market up and down since March 2003. He likes to infer that he is going to make some big whiz-bang market-timing call, but I do not believe he will ever again advise raising cash in preparation of a market decline.

Why would he? He never raised cash in 2008-2009 megabear. He simply called it an unpredictable "exogenous event" and moved on to a new cyclical/secular market-timing plan when the market finally turned. He has his bases well-covered for all pullbacks. He claims 10% can happen anytime and is to be expected. Up to 20% is simply "in the teens." And he mostly just ignores the 20%+ declines. LOL!]

INTEREST RATES: Brinker said:
"The interest rate picture remain very, very low as there is simply no reason whatsoever at this time for the Federal Reserve to raise interest rates."

[Brinker paraphrase and quotes]

* It's questionable whether or not BP will survive.

* If BP gets off with paying out only $20Billion, they are "lucky."

* BP's dividend payouts have been canceled.

* BP is doing the best it can to accomplish the "diabolical task" of taking down the Gulf of Mexico.

* Oil will continue to spill for at least several more weeks or longer -- worst case scenario, it takes out the Gulf and goes on up the East Coast.

* BP "yacht-master" CEO-Hayward appeared before Congressional panel and looked like a "deer in the headlights," while "basically stonewalling the panel members."

* Charlie Maxwell blamed BP for the debacle when he was a guest on Moneytalk last month. Brinker said: "But there are also others to blame besides BP......"the mineral and management service which is under congressional oversight in Washington for contributing to this fiasco. It's obvious that they failed to provide the regulation, supervision and follow-up that is their task."

* BP's history is sorry when it comes to accidents -- including Prudoe Bay and the disaster at Texas City that took many lives.

* It's sad that this has to smear Exxon-Mobil or Conoco-Phillips, or any other oil company that is doing the right thing. Brinker said: "And they are smeared by this, look at the moratorium on drilling. That affects everybody. That doesn't just affect BP.....So the question is, is BP a disgrace to the oil industry and a menace to society? You be the judge.....I nearly died this week when one member of Congress apologized to the CEO of BP for the fact they're being held accountable for destroying the Gulf of Mexico. I couldn't believe it, so I checked up and I saw the guy was an oil guy......

......While they work on the problem, we have to import even more oil from Canada and other big oil exporters into the United States. We have no choice. The US economy runs about 40% on the use of oil every day. That's how heavily we rely on petroleum. We have a transportation system in the United States that essentially runs on petroleum based products. We've ignored the opportunity to expand our nuclear power over the last 30 years -- being held hostage by special interests with an agenda.....

......And of course, we've ignored the shot across the bow, the act of war in 1974 by the royal family of Saudi Arabia against the United States of America. That one was the oil embargo against the US. So pardon me if I don't carry a brief for the royal family.....We have a rogue oil company on the loose here, and they have done untold damage to the Gulf of Mexico."

Caller Charlene from Ann Arbor
suggested to Brinker that instead of just beating up on BP, the Federal Government should have gone out there on day-one and helped to make sure the oil was contained. [Honey EC: Brinker began repeatedly interrupting and yelling over Charlene which made it very difficult to hear what she was trying to say.] Brinker demanded that she tell him what she would have done to halt the leaks if she had been the Federal Government on day one....

..... Charlene replied: "Well, they had skimmers. Thirteen different nations offered equipment. A lot skimmers were offered from Holland. They could have got skimmers out of Texas. They had disbursers they could have put on it. They could have burned it. I mean...." [Honey EC: Charlene kept talking, but Brinker raised his voice so much that I could not understand her.] Brinker, with raised voice, said: "Problem solved! Problem solved......"

Near the end of the exchange, Brinker accused Charlene of wanting to blame Washington for the oil spill rather than BP. She tried to deny that and explain that she was simply saying that Washington should have acted sooner and the disaster could have been mitigated.....

..... Brinker told her that he would side with Charlie Maxwell, but if she wanted to blame government she could go to the "permit desk" and find out why permits for deep-water drilling were given to BP in light of their disastrous record of safety violations. [Honey EC: It's very unpleasant to listen to a caller try to make points and Brinker talking over what he doesn't want to get out on the air because he does not agree with the caller's views.....

...... Brinker added a political diatribe about how the same people keep getting re-elected who don't know what they are doing and he included another attack on the congressmen who "apologized" to BP. Of course, Brinker must not have heard that same congressman apologize for the apology. LOL! You can't make this stuff up, but If you want to hear the call, it's about 50 minutes into the first hour. As usual, Brinker carefully avoids even intimating that the person in the White House has any responsibility whatsoever.]

Brinker told a caller that the $8000 tax credit which ended April 30th was a help to the housing market -- it was a good government program. Brinker said: "I think 5 or 6 years down the road is enough time for some improvement to show up in a lot of markets across the country. There probably are markets that have been just taken out where it will take much longer than that. But I think the typical market around the country, five years from now, I'd be inclined to think it could be in much better shape than it is today....

.....But let's put that in perspective, the housing market, real estate today is pretty much on life tell it like it is. Now we've talked about exceptions. They've had a real nice bounce in KGO country, in the the SF Bay Area -- a nice bounce there in the past year......But when you look around the country, there are a lot of housing markets right now that are sluggish is the about the best you could say about it."

"With reference to the advice to sell out of the market because the long-term capital gains rate is going to go from 15 to 20% next year, it is ridiculous. Absolutely ridiculous.....A big pile of nonsense."

Brinker opined that after all high-earners have been pumped for all the tax increases Washington can get out of them, he expects to see Washington propose a value-added tax -- which of course, will affect everyone.

Brinker's guest-speaker was Charles Geisst:

To Go is Available on Demand Totally Free at KGO810 radio for seven days after it is broadcast. Moneytalk has been canceled on all Saturdays. However, the Sunday program is archived in the 1-4pm time slots. To download and listen later, right click on each hour that you want and use "Save Link as." KGO Moneytalk Archives [Link] If you want to call KGO and complain about (or praise) Bob Brinker's Moneytalk, here are the numbers: Comments line: 415-216-1052....Listener services: 415-216-1050. Here is the KGO email address -- cut-and-paste it into your email compose window:

As promised, here are more of TFB's beautiful garden. Can you believe these are tomatoes?

Is there anything more beautiful than newly planted gardens. TFB has three types of corn here:


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