Bob Brinker’s comments paraphrased, summarized or excerpted:
STOCK MARKET….Had a very good week. The S&P 500 Index was up almost 35 points to 1313.80, bringing calendar year 2011 returns to almost 5%. That is within 2% of its 2011 closing high. Other indexes following along.... A minor correction because of what happened in Japan, but has almost completely recovered.
OIL PRICES....The Middle East is in turmoil and instability continues.....Syria is not a major oil-producing nation. Iran is a big deal when it comes to oil.
Brinker said: "Why did the United States smoke the peace pipe with a tyrant like Maummar Gaddafi a few years ago. Well he's still a tyrant. Now he's not smoking the peace pipe. Instead we are dropping artillery over there.....This is very bad news for Israel, by the way.....The big oil is in Saudi Arabia.....And it doesn't appear likely that it will end soon in terms of middle east unrest, and that has pushed oil up to $105 a barrel, and $115 a barrel for Brent, crude that is used for most of Europe and Asia."Honey EC: I'm not sure when the United States smoked the peace pipe with Gaddafi -- anybody remember?
HOUSING INDUSTRY....is in the "dumpster."
JOBS REPORTS..... Comes out next Friday....median private payrolls forecasted to go up 222,000.....expect to lose 27,000 more government jobs and that would bring net non-farm payroll gain to 195,000....very similar to the prior month.
Brinker said: "We are seeing much better new jobs growth. Really a remarkable turn-about when you consider the 8 million jobs that were lost in the financial debacle of 2008 and the period around there."UNEMPLOYMENT RATE.....Projected to stay close to 8.9, where it is right now.
BEN BERNANKE….The Fed Chair will now have quarterly press conferences. It’s a good idea, because there is a great deal of misunderstanding and misinterpretation in the media about what the Federal Reserve is doing as they try to create an atmosphere for better jobs growth.
TREASURY RATES....exceptionally low.
NATIONAL DEBT AND DEFICIT: Brinker said: "They are fighting in Washington over minuscule spending cuts relative to the budget. I don't see anything in Washington today that would bring austerity. How are you going to get austerity out of a senate that's controlled by the Democrats? How are you going get austerity out of a White House that has been proposing trillion dollar plus annual deficits......It's not going to happen.....My opinion is that this president will not endorse an austerity program. And under the current make-up of the Senate, I don't think that they will endorse an austerity program. So I don't think it's going to happen in the foreseeable future with the current make-up of those governing bodies."
Honey EC: Brinker is clearly correct about that, but I was surprised to hear him be so candid about it.
LAS VEGAS REAL ESTATE HIT HARD: Brinker said: "I'm in Las Vegas, Nevada. And here in Las Vegas, Nevada, real estate has been his as hard as anywhere in the country. In the State of Nevada, it's estimated that 65% of the mortgages are underwater, negative equity in about 65% of the mortgages. As well as 1 out of 7 properties setting unoccupied. It's been one of the worst real estate downturns, and we're not alone, California has seen it, Phoenix has seen it, South Florida has seen it......"
Honey EC: Brinker, like most everyone else, got hit hard by the drop in value of his million dollar penthouse condo in Lake Las Vegas. Some that are adjoining or nearby him are selling for under $200,000.
CALLERS
John from Fairbanks, Alaska, told Brinker that he was moving from Alaska to Washington and asked Brinker which he would recommend -- a 15-year or a 30-year loan on a new home. Brinker said that since John qualified for a 4 1/2% loan, he would call that free money and take the 30-year "free ride." Brinker also pointed out that John was moving from one no-state tax state to another no-state tax, but that he would no longer get the nice check for oil that Alaskans get every year. Brinker said that the people in Alaska are "absolutely wonderful people. We hear from them all the time."
Keith from California asked Brinker to explain the difference between a short-term correction and a minor pullback.
Brinker replied: The generally accepted language for a correction is that the market is down over 10% but less than 20%.....I think anything in the single digits is a minor pullbacks. Some people would call it noise. That's really what we've had here.....And my forecast, as I've given it on this broadcast has been very consistent on this point......And that is, and we started saying this earlier this year, and that was that we thought that pullbacks would be in the single digit category..... So you can always see short-term corrections in a cyclical bull market, which is what I believe we are in right now.......From my point of view, it's just provided those looking for an opportunity to dollar-cost new money into the market, to do so......
......Now we've had outright buy signals on the market over the past couple of years for those sitting with some money to invest. We have had a buy signal that we gave in the beginning of July last year when the S&P was around 1030........ And we upgraded the market at the beginning of July last year to attractive for purchase and we're glad that we did it.....And then prior to that in mid-January of 2009, we went out and said that we thought the market was attractive, and it was in the low-to-mid 800's at the time, by the way. Now it's at 1313, so that's a pretty big gain from back then....And the rest is history."
Honey EC: Brinker has a SELECTIVE memory, either that or he is DELIBERATELY misleading listeners into thinking he can accurately time the stock market. His January 2009, mid-800's buy signal was BEFORE the S&P dropped into the 600's in March, 2009, and AFTER he had issued multiple buy-signals in 2008 at much higher levels, including the mid-1400's (several times), the mid-1300's and the low-1200's.
And more importantly, in March 2009, he discarded the mid-800's buy signal and said he would have to look for a new market bottom. Here's what he said in the February and March 2009 Marketimers. Note the levels of the S&P:
Marketimer, February 2009 (S&P @ 825.88) Bob Brinker wrote: "....we recommend using periods of weakness in the low-to-mid 800's S&P 500 Index price range to add to positions. Our model portfolios remain fully invested."Christopher from "Hoosierland" asked Brinker what fundamentals to look for when choosing a trading stock. Brinker said there were three things to look for: know the company, a lot of volatility and liquidity. Brinker cautioned against incurring tax bites on short-term trades, and the tendency to buy high and sell low.
Marketimer, March 2009 (S&P @696.33) Bob Brinker wrote: “Due to the fact that the November 20, 2008 S&P 500 Index closing low failed to hold during the testing process, we believe a new bottoming process will be necessary in order to put an end to the bear market.”
Anthony from Milwaukee asked: "In your model portfolios, you have several International Funds. Would they protect against hyper-inflation in the United States?"
Brinker replied: "Well they certainly provide a cushion against a falling dollar.....Which is one of the several reasons we have international holdings in our model portfolios. We actually have international holdings in model portfolio I, II, III and also active-passive portfolio......And no question about it, one of the cushions that you get with an international weighting is that if you have a weak dollar that is going to accrue to the benefit of those holdings."
Honey EC: Yes, Brinker is correct. He recommends Vanguard International Growth Fund (VWIGX) and Vanguard FTSE All-World (VFWIX) in all of his portfolios -- never more than a total of 20% international in any portfolio, and much less in the balanced portfolio.
Walt from Illinois asked: "What is your feeling about investing in silver bullion?"
Brinker replied: "I've made it very clear that I regard silver bullion as an alternate to using gold bullion for those that want to have a precious metals hedge. And I've said on this broadcast that I prefer the exchange-traded fund approach, rather than going out and buying severely marked up gold or silver coins. I think you should not be surprised if it turns out that what you've bought is only worth half of what you've paid for it if you turn around and sell it. I hope everybody heard what I just said....That's an incredible statement that I just made.....
.....But if you want to buy gold or silver, you do the exchange-traded fund. By doing that, you buy gold bullion backing the exchange-traded fund GLD for gold, or you buy silver bullion backing the exchange-traded fund SLV for silver. When I first mentioned the GLD shares on this broadcast years ago, they were trading in the 50's, believe it or not. I recommended that specifically for listeners that wanted to have a hedge on gold....I said that's the way to do it. Sometime ago, I also mentioned SLV when it was trading in the 20's for that same purpose - for those that want to have a hedge.
Honey EC: Don't be mislead. When GLD was down in the $50 range, Brinker was VERY negative on buying gold and used to go way back to the time when it was $800 an ounce and point out what a bad investment it was.
Bob Brinker quote of the day (about the 529 tax-advantaged plan): "I really don't understand congress, being so limiting in what they will allow you to put away in the education savings account......If there's anything more important to the future success of the United States in a global economy than education, I don't know what it is. And the government should be encouraging you to save for education, not discouraging you as they do with these tiny education limits."
Honey EC: Wonder why Brinker thinks that the only way for parents to save for college is on the backs of taxpayers? Wonder why Brinker never points out something that is not only possible, but often done -- young people actually WORK (Yikes! did I use that four-letter word?) their way through college or earn scholarships.
Bob Brinker's guest-speaker was John Mauldin, "End Game"
Best selling Android WI-FI Tablet at Amazon: Motorola Zoom, at $589.99:
Moneytalk on demand audio/podcasting available for FREE at KGO810 radio for up to seven days after broadcast. The program is archived in the 1-4pm time-slots. You can take it with you! I download and save all three hours, including the third hour guest-speaker, so that I can refer back to them in the future if Bob Brinker mentions something about them on the air. (Honey EC: The KGO link seems to be down right now. I will post the link as soon as it comes back up.)
Dixiegeezer took this picture in Costa Rica. Please enlarge and marvel at one of God's most amazing creature:
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69 comments:
Ms Honey suggests: "Brinker has a SELECTIVE memory, either that or he is DELIBERATELY misleading listeners into thinking he can accurately time the stock market.
I'm SHOCKED, I tell you. Just SHOCKED.
Unless Mr B bought his Lake Las Vegas property in cash his mortgage is most likely underwater, joining the almost two thirds of Nevada homes with negative equity. So he has not only lost on his real estate but also his stock portfolios during the Great Recession.
Market timing? The man couldn't time an egg.
Bob Brinker quote of the day (about the 529 tax-advantaged plan): "I really don't understand congress, being so limiting in what they will allow you to put away in the education savings account......If there's anything more important to the future success of the United States in a global economy than education, I don't know what it is. And the government should be encouraging you to save for education, not discouraging you as they do with these tiny education limits."
Honey EC: "Wonder why Brinker thinks that the only way for parents to save for college is on the backs of taxpayers?"
I think Brinker must have been talking about the Coverdale Education Account which has a limit of couple of thousand dollars or so.
The 529 has much higher limits and can be set up by anyone.
BTW, I don't think a 529 is really saving for college on the "backs of the taxpayer" anymore than a Roth IRA. Why should Roth IRAs be funded on the backs of the taxpayer?
Both are funded with after tax dollars.
Thanks for the great summary. I find I have a very hard time listening to him these days. He gives so little new, useful information compared to what the more modern folks like Kudlow or Cramer give on TV, I seldom have the patience.
Did he take any calls on inflation? He used to claim higher oil prices were deflationary and oil prices are sure higher than a year ago.
Some members of the Fed are quite worried about inflation and speaking their mind:
Fed Should Consider Curtailing Stimulus Program, Bullard Says
March 28 (Bloomberg) -- St. Louis Federal Reserve Bank President James Bullard said policy makers should review whether to curtail a plan to buy $600 billion in Treasury securities, noting that the U.S. recovery may not need that much stimulus.
“The economy is looking pretty good,” Bullard said to reporters in Marseille, France, on March 26. “It is still reasonable to review QE2 in the coming meetings, especially this April meeting, and see if we want to decide to finish the program or to stop a little bit short,” he said, referring to the second round of so-called quantitative easing.
...
“If the economy is as strong as I think it is then I think it may be reasonable to send a signal to markets that we’re going to start withdrawing our stimulus, and I’d start by pulling up a little bit short on the QE2 program,” Bullard said. “We can’t be as accommodative as we are today for too long, we’ll create a lot of inflation if we do that.”
CPI is above its 2008 level so SS recipients should get a COLA this year, but like most of us who work and pay into SS, the gain will probably be eaten up completely by higher medical insurance costs.
Table of COLAs: Social Security Cost of Living Adjustments by Year
At least most people on SS got a nice, big 5.8% raise in 2009 that you've been able to keep while most of the country took pay cuts or got no raises. It ruins my day just to think how much my own medical insurance went up since that last SS COLA of 5.8%!
Kirk asked if Brinker said anything about inflation yesterday.
The only time he discussed inflation (that I noticed) was when he gave the usual "Treasury implied inflation rate." In his opinion, he thinks this is a good indicator of future inflation. I think it's a joke, but here it is:
Brinker compares the Treasury Inflation Protected Securities versus regular Treasuries. The 10-year TIPS has a base rate of 1% and when you compare that to the 10-year Treasury yielding 3.43% you get a Treasury inflation expectation of almost 2.5% for that time frame.
Regarding the longest time frame, the 30-year TIPS is yielding 1.87% versus the 30-year Treasury Bond which is yielding 4.5% which prices in annual implied inflation rate of 2.625% over the next couple of decades.
Theoretically, these are the rates of inflation that the Treasury market implies on an annual basis over the next 10 and 30 years respectively.
There were no calls about inflation and Brinker didn't make any comparisons between the price of oil and inflation.
You are right about Brinker claiming high oil prices are deflationary. He has always said it acts as a "tax" on people.
Now out of one side of his mouth, he says the economy is growing, and out of the other side of his mouth, he says oil prices are going up. That may be why it wasn't a topic yesterday. :)
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Honey EC: I'm not sure when the United States smoked the peace pipe with Gaddafi -- anybody remember?
I didn't understand that remark either. In 2003 when the Iraq war started, Gaddafi had a nuclear weapons program. He was afraid that he would be the next one to be targeted so he negotiated a deal with the UN to terminate the program. I believe he used the Italian government as an intermediary.
We did reestablish full diplomatic relations with Libya in 2006. Maybe that is what he was talking about. The UN smoked the peace pipe with him and I guess the US went along with it. Now the UN went to war with him and the US is part of the effort.
Birdbrain said: "Unless Mr B bought his Lake Las Vegas property in cash his mortgage is most likely underwater, joining the almost two thirds of Nevada homes with negative equity. So he has not only lost on his real estate but also his stock portfolios during the Great Recession.
Birdbrain,
We know for a fact that he paid about a million for that condo in Lake Vegas. What we don't know is whether or not he eats his own cooking when it comes to his model portfolios. Portfolio I lost about 57% in 2008-2009. I have a hard time believing that he rode it all the way down like he had his subscribers do....
And I simply do not believe that he took his own advice and bought QQQ at $83 and is still to "holding for recovery," like he told his subscribers to do.
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Steve said: "Both are funded with after tax dollars."
I'll double check later today, Steve, but I think he was talking about the 529 plan.
You are correct about the Roth being funded with after-tax dollars, but I'm not sure about either the Coverdale or 529 plan. I admit I know little about either one.
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I think Brinker's comment about "smoking the peace pipe" with Gaddafi referred to 2006 when the U.S. removed Libya from the "terror" list and restored diplomatic relations with that country. The one area where the U.S. and Gaddafi cooperated was fighting Al-Qaeda since Gaddafi does not like them either.
What is odd about that relationship is the fact that I keep hearing rumors that the so called "rebel fighters" in Libya are actually Al-Qaeda. So are we now actually helping Al-Qaeda bring down Gaddafi? I hope not or we could end up with something even worse than Gaddafi.
Jeffchristie,
Thanks, that may be what Brinker was referring to.....
Yes, now after demanding that Ghaddifi step down, and dropping $200 million worth of bombs, the United States is on the hook to get rid of him or look like a foolish giant.
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Mr Pig,
I'm sorry that you were shocked. Maybe this will help. Be sure you listen to all of it. LOL!!!!!!!!!!
Pig Squeals While I Play Unfitting Music - YouTube
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That was almost as annoying as brinker's voice.
I think that's what brinker jr yells for 4 minutes after a new subscription to his fixed income rag that contains stocks. DUH.
Frankj:
I did not hear the program -- more and more, I am going with HB's summary!
Regarding the Coverdell/529 comments, he must have been talking about Coverdell because the annual amount per beneficiary went from $500 to $2000 in 2002 and that is the limit from all sources, so if you try to go that route in accumulating $$ you are limited.
The 529 plans have a limit per beneficiary, established by the individual program (state). These limits are much higher, some in excess of $300K per beneficiary, according to savingforcollege.com website.
If you live in a state that has income tax, you can get a break on the state tax if you invest your 529 $$ in-state. But if the plan is a crummy one or a high cost one, that is a consideration.
I think Bob was referring to May 15, 2006 when the U.S. removed Lybia from the list of terrorist states when they gave up their chemical weapons (tons of it now stored in TN) and Ghadaffi renounced terrorism.
Rob
Pasadena, CA
Celine Dion also has a house and granny house at Lake Las Vegas and apparently still lives there.
She was staying at Ceasars while her property was being redecorated.
Celine will stay in the sprawling 20,000-square-foot Presidential Penthouse at Caesars while a redecorating project at her Lake Las Vegas home is completed by early summer. It’s a delicious irony Celine has the same suite that President Obama had the night before his infamous speech urging corporations to be responsible and not come to Las Vegas.
http://www.lasvegasweekly.com/blogs/luxe-life/2011/feb/17/celine-dion-i-feel-wanted-and-loved-and-there-noth/
I found Brinker's conversation with his guest author John Mauldin to be quite spirited. It was as if they represented opposing economic theories. There were times when Brinker reminded me of Bill O'reilly the way he interrupted and wouldn't let Mauldin make his point. I wonder if Brinker views Mauldin as a competitor? He sells a newsletter which is Emailed weekly for a $199 annual fee.
To Rob in Pasadena. Thanks for clearing up my confusion. Bob Brinker just ask the question why did the United Stated smoke the peace pipe with Libya and didn't give any further details. You answered his question. We did it because he surrendered his WMD's. That sounds like a reasonable explanation to me.
March 28, 2011, 4:55 p.m. EDT
Chicago Fed's Evans: Not at exit point yet
(MarketWatch) -- The Federal Reserve is not at the point where a change in the stance of monetary policy is appropriate, said Charles Evans, the president of the Chicago Fed said Monday. In a speech at the University of South Carolina, Evans rejected the view that the central bank is out of touch about higher gasoline and food prices. The Fed is more sanguine about inflation than some because an outbreak of higher prices is missing a key ingredient - higher wages, Evans said. In order for price increases to be sustained, demand must keep pace, he said.
This means wages must grow. "If consumers cannot afford to pay higher prices, demand falls, putting downward pressure on prices," Evans said.
A weak labor market will continue to exert important downward influences on inflationary pressures, he said.
Three Great Lies:
#1 "The check is in the mail."
#2 "I will pull out"
#3 "There is no inflation."
BTW, I hope your mind is not in the gutter... #2 I am referring to the occupant of the White House promising to pull out of Gitmo and Iraq which won him the Nobel Peace prize.
Kirk,
I love, love, love my new Verizon Samsung Galaxy i500 Fascinate "smartphone." It's fabulous.
Did you write an article about the latest Samsung tablets compared to Apple? I was reading it earlier today and wanted to post a link to it. Now I can't find it.
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Fed Presidents Say Economy Still Needs Support From Bond Purchase Program
By Vivien Lou Chen and Steve Matthews - Mar 29, 2011 3:41 AM PT
Two Federal Reserve regional bank presidents voiced support for the completion of the central bank’s $600 billion Treasury securities-purchase program through June, saying it’s too soon to remove stimulus from the economy.
Boston Fed President Eric Rosengren said yesterday that high unemployment and low core inflation mean record monetary support is still necessary. Chicago Fed President Charles Evans said he believes data suggesting a more sustainable recovery won’t prompt an alteration in the bond-purchase program.
“It could be that $600 billion is just about the right number,” Evans told reporters before a speech in Columbia, South Carolina. “I won’t be surprised if that in fact is the decision. I still think it is a high hurdle to stop short of $600 billion. So far I haven’t seen it.”
Their remarks highlight the difference of views that has emerged since the Fed’s March 15 meeting, when policy makers kept in place the plan to buy bonds while concluding the recovery is on “a firmer footing” and the labor market is “improving gradually.”
http://www.bloomberg.com/news/2011-03-29/fed-presidents-say-economy-still-needs-support-from-bond-purchase-program.html
For cat lovers:
Kitty uses paws to beg for food
For dog lovers:
The Dog who forgot to jump
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Honeybee wrote:
> Kirk, I love, love, love my new Verizon Samsung Galaxy i500 Fascinate "smartphone." It's fabulous. Did you write an article about the latest Samsung tablets compared to Apple? I was reading it earlier today and wanted to post a link to it. Now I can't find it.
Here you go. Apple iPad2 vs Samsung Galaxy Tab
A comparison between Apple's iPad 2 with Samsung's new Galaxy Tab 10.1 and Galaxy Tab 8.9 tablet computers
I too love the smart phones. This AM was in a waiting room and could keep up on my daily market news reading from the phone. They also get your emails so you can reply if anything important comes along such as a new subscriber wanting to get my latest buy and sell targets ASAP or a current subscriber with an urgent question. Makes leaving the house far less stressful during market hours! I can see why people were addicted to their Blackberries when these were the only way to answer emails.
Kirk,
Thank you. Great article. I think it's clear that it won't be many years before the "phones" we carry with us will be as powerful and flexible as our desktops and laptops.
As you said, these phones give complete access to the internet and email. Which is great when you are on the go.
I love the "free" Kindle that came on mine and the fact that so much is available almost free for downloading. I have the entire Bible on mine and I think it cost me about $2 or $3...
I do have some privacy concerns about putting critical information on it, such as bank accounts, trading accounts etc. So have not done that, and probably won't until some kind of safeguards are built in to them.
Or maybe there are safeguards and I'm just not aware of them.
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To Frankj:
Your comments last week about reaching "waistline critical mass" and using suspenders to avoid the "shame and humiliation of the missed belt loop."
A+. I've been up and down so much over the years my belt has more holes than Brinker's golf course.
Henny Youngman joke:
I'm so fat when I have my shoes shined I have to take the guy's word for it.
"Some Fed officials, such as Charles Plosser, the president of the Philadelphia Fed, are getting nervous. “I worry about us getting behind the curve” on inflation, he said recently. What he means is that he fears the Fed will be slow to change course, and will let inflationary pressures build up before acting decisively to raise the cost of money. Read our coverage of Plosser’s views on ending QE2.
Plosser is in the minority on the Federal Open Market Committee. Most members of the committee agree with Chairman Ben Bernanke that the recent rise in commodity prices has been caused mostly by supply shortages in the face of rising global demand, not by excessive money growth. They think the recent increases will be temporary and won’t lead to higher prices for other goods and services.
The members of the Fed — even such inflation hawks as Plosser — predict that inflation will remain modest over the next few years. According to the latest economic outlook from the Fed, consumer prices are expected to rise less than 2% a year this year, next year and the year after. Read the Fed’s economic projections."
http://www.marketwatch.com/story/on-inflation-dont-believe-your-eyes-2011-03-30?siteID=mktw
Most members of the committee agree with Chairman Ben Bernanke that the recent rise in commodity prices has been caused mostly by supply shortages in the face of rising global demand, not by excessive money growth. They think the recent increases will be temporary and won’t lead to higher prices for other goods and services.
This the same group who
1: Didn't see their banks were making loans to homeowners who could not afford to repay the loans after the grace period when rates would go up.
2: Said there was no housing bubble.
3: Didn't see that their member banks were taking too much risk with derivatives
Their mistakes cost the tax payers and savers plenty. To this day, all savers from CD owners to US Treasury investors are bailing out the banks with forced, below market rate interest rates. Those rates are absurdly low. Banks don't have to compete for deposits due to the Fed printing money which means savers are paying to fix their mistakes.
And you want us to believe they are correct or not lying about future inflation?
Obviously, the gold and silver investors have a different opinion.
"And you want us to believe they are correct or not lying about future inflation?"
I doubt that the FOMC is lying about future inflation and frankly I don't care whether you believe it or not.
But the fact remains that the FOMC sets the short term interest rates and if you want to bet against them go right ahead.
They are in no hurry to raise rates as far as I can see.
Moron Detector said: "And you want us to believe they are correct or not lying about future inflation?
Obviously, the gold and silver investors have a different opinion."
Right! And so does anyone that shops for groceries, buys clothes, buys gasoline or pays for health insurance.
The majority of the FOMC is either wrong or it is part of the ongoing destruction-derby.
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Speaking of gold and silver, in the past two months, silver has been on fire. It is outpacing gold.
GLD vs SLV
I've been holding the leveraged silver ETF and looking to buy some more, but the dips are so quickly wiped out, I can't buy it fast enough. So I have just entered a GTC order for more AGQ at a price that I'm hoping it will dip down to. :)
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"Why is there such a large discrepancy between the Fed’s view of inflation and ours? In part it’s because of the way our brains work. We all have biases in the way we view the world. Our memories emphasize recent events and big changes, but we hardly recall the things that don’t change much.
In terms of inflation, we remember that gasoline and food prices have risen sharply over the past two or three months, but we forget that gas and food prices plunged in 2008.
What’s more, we don’t think at all about the fact that lots of prices — for instance, the cost of washing a load at the laundromat, or the amount of our mortgage payment, or the co-payment at the doctor’s — haven’t changed in years. Of all the things we buy, nearly three-fourths have so-called “sticky prices” that don’t change often."
Our minds are fooling us: We notice the prices that fluctuate all the time, but we ignore the much larger share of our spending that’s on sticky-priced goods and services. Over the past year, sticky prices are up about 1.2%, while flexible prices are up more than 4.5%. According to Fed economists Michael Bryan and Brent Meyer, sticky prices predict future inflation much better than flexible prices do. Read Bryan and Meyer’s research on predicting inflation."
http://www.marketwatch.com/story/on-inflation-dont-believe-your-eyes-2011-03-30?link=home_carousel
Bob Brinker, as you probably saw in the summary, is totally against buying nuemismatic coins. He said that if you want to sell them, they are worth half what you pay for them.
Now that may be true in some cases (he didn't specify), but it is not always true. Especially if you buy coins like the American Eagle Silver dollars.
In any case, I don't think people are buying them at this time to sell!!
BERNANKE SPEAKS, PRECIOUS METALS PRICES RISE
Federal Reserve Chairman Ben Bernanke does have history on his side when he says that increasing prices for food and fuel won’t “break” the cost of living for most Americans. When the Fed looks at inflation they look at two measures, one of which does not consider food and energy prices, because it provides a better picture of long-term trends. Marketwatch’s Rex Nutting points out that while consumers are biased (and only thinking of the 25% of expenses that are increasing, while ignoring the 75% of “sticky” expenses), the Fed has a credibility problem. This is simply because, frankly, no one believes them when they say that inflation is not a problem at the moment. Of course, monetary issues are hardly confined to the U.S. Portugal needs a bailout more than ever, as borrowing rates hit new euro-era highs.
Fighting in Libya continues as the rebels have been pushed back by Muammar Gaddafi’s forces. The rebels seem to need Western air strikes to stand up to government forces, whether it be to advance or even hold position. Many are also concerned about lack of food and medicines being delivered to the insurgents. China believes that Western action is making things worse, saying that “Dialogue and other peaceful means are the ultimate solution to the problems.”
At 8:06 AM (CT) the APMEX precious metals spot prices were:
* Gold - $1,428.50 (up $11.30 on the day)
* Silver - $37.72 (up $0.67)
* Platinum - $1,762.50 (up $19.90)
* Palladium - $758.00 (up $4.10)
APMEX Gold and Silver Market Report
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"Bob Brinker, as you probably saw in the summary, is totally against buying nuemismatic coins. He said that if you want to sell them, they are worth half what you pay for them."
I think Brinker is right for NUMISMATIC coins but the American Eagles are BULLION coins priced on one ounce of silver.
Sales of 1-Ounce American Silver Coins Fall, U.S. Mint Says
By Yi Tian - Mar 29, 2011 11:36 AM
Sales of 1-ounce American Eagle silver coins are heading for a three-month low, according to the U.S. Mint.
About 2.767 million coins have been sold in March, data on the Mint website showed. That would be the lowest since December and the smallest March total since 2008. Purchases also declined in February. In January, the monthly total reached 6.422 million, the highest since sales began in 1986.
Silver futures for May delivery dropped 10.1 cents, or 0.3 percent, to $36.987 an ounce on the Comex in New York today. The price touched a 31-year high of $38.18 last week as investor demand for precious metals as alternative investments surged.
To contact the reporter on this story: Yi Tian in New York at ytian8@bloomberg.net
To contact the editor responsible for this story: Patrick McKiernan at pmckiernan@bloomberg.net
Steve, you are correct that the Silver Eagle Dollar is priced on one ounce of silver. However it also contains numismatic value.
Unlike Bob Brinker, Jim Cramer is very bullish on buying physical silver:
Jim Cramer Buy Physical Siver
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Here are some fundamental reasons why silver prices are surging -- 35 of them:
"Silver has had an incredible run, up 84% in 2010 and up another 20% Y.T.D. so far in 2011. We wanted to list 35 reasons why silver prices are surging:
1. The U.S. dollar has lost 20% of its purchasing power just since 2000 and 30% since 1990. 70% of that decline has been since 1978, when the mandate for the Fed was changed to a dual mandate of both price stability and full employment. Since the Federal Reserve was created in 1913, the USD has lost 95% of its purchasing power. When you compare the appreciation in precious metals to the dollar in those same time frames, those facts alone should convince you that you need significant exposure to the sector in order to protect your wealth.
2. Central banks for decades have been selling off their reserves of silver to meet excess demand, which has kept prices artificially low. That has made mining unprofitable for so long there is a shortage of mined capacity developing over the next few years.
3. The majority of silver mined is used for consumption in industrial uses; therefore, unlike gold, most silver is consumed very quickly instead of hoarded. Silver is therefore a precious metal with a store of value quality like gold, but it is also primarily an industrial metal, which gives it an inherent useful value in growth industries like cell phones, computers and chemicals.
4. Since 1980, the above-ground available gold stores have increased 600%, while above-ground available silver stores have been reduced 90% during the same time frame.
5. The historical gold to silver ratio is approximately 15 to 1. The current gold to silver ratio is 38. In other words, it takes 38 ounces of silver to equal the value of one ounce of gold. We think the gold/silver ratio will return to approximately 20 to 1, which would, just by itself, make silver worth approximately $72.50 at today's gold price.
Read the whole article at Seeking Alpha
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Woe is me...AGQ dipped to within $2 of my GTC buy order price before shooting up $8..... Woe, woe, woe is me. :(
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What a suprise. Another silver salesman giving you 35 reasons why silver is going to the moon! LOL.
Mark Thomas's Company...
The Silver Shortage.com
The Silver Shortage.com is an email newsletter that keeps you informed about the coming silver price explosion. It provides you with market analysis, articles, updates, how to invest in physical silver and a suggested model portfolio of physical silver and mining companies exchange traded funds. It is for ...
Steve,
Was there anything he wrote that you disagree with?
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I disagree with a lot HB. Would you really pay for the advice from somebody like this...?
"I believe in my new strategy so much that on December 23, 2010 I moved 90% of my assets into ETFs Physical Shares Silver ETF (SIVR) at $29.10 and the remaining 10% in the common stock of Couer d’ALene Mining(CDE). I believe this is the best opportunity I have seen in my twenty year investment career for a potential 300% gain over the next few years with a reasonable amount of risk that I’m betting big, very big.
I will not be diversified but I feel safer than I ever have was as an investor in stocks or high yield bonds. I was so afraid that I might miss this opportunity that while researching it I became nervous the price might take off on me. Even though it is a multi-year trend, I was so excited when I entered the trade that I didn’t dollar cost average like most experienced investors suggest and I know my investment will be very volatile. I have prepared myself for the volatility and I have so much conviction I went all in and started this newsletter devoted to the subject. Like you who are reading this now when I began this journey I was not an experienced expert on precious metals or silver. However, I believe in it so much that not only am I putting all of my assets in silver, I began this website and newsletter service to help others discover what I have."
Join the dot.com crowd, the real estate flippers and the gold bugs.
Hurry, hurry, hurry.
Steve,
Somehow you have jumped to some crazy conclusion that I was selling something for that guy.
No offense, but that is just plain ridiculous.
I posted the article for informational purposes only.
Read it, don't read it, believe it, don't believe it.
Frankly my dear, I don't give a darn.
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Somehow you have jumped to some crazy conclusion that I was selling something for that guy.
Oh, not at all Scarlet.
I was just a bit worried that you were actually listening to yet another silver huckster with a surefire scheme and another newsletter.
I'm sure your mailbox is chock full of those can't fail offers each week.
It's the same useless tripe whether it's posted on the internet or it is addressed to "Dear Friend".
Steve,
Oh that's a relief. So you were just worried about me taking bad advice.
Well, I learned well from one Mr. Robert J. Brinker how dangerous that can be.
I just try to consider all opinions and make up my own mind.
I'm not recommending any blog readers buy silver.
But as I've said, I've been buying the hedged silver ETF, AGQ, and have done well on it. But I might sell it at any moment.
I often change my mind on stuff. LOL!
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It's the same useless tripe whether it's posted on the internet or it is addressed to "Dear Friend".
Or on a talk radio show on Sunday afternoons. SHARK ATTACK
I wish i could get some good junk tips in a newsletter. Maybe I can find a stock market timer that has fixed income in a stock portfolio, or visa versa. Wouldn't that be a kicker!
"I was just a bit worried that you were actually listening to yet another silver huckster with a surefire scheme and another newsletter"
Well, you and she listen to the Marketimer one who bashed Gold as it went up many times over.
Then after going up maybe 4 times, Brinker added it to his recommended list and brags about it on the radio. If Gold crashes now, Brinker will not be held accountable as it is not in the "official" portfolio.
Brinker can drop it just like he dropped that internet fund he recommended at the very top of the internet bubble after bashing internet stocks most of the way up.
At least that silver fellow says he owns the metal so he's got skin in the game. True hucksters don't own what they recommend... they are selling "the recommendations" to suckers, not their belief in the quality of what they recommend.
"At least that silver fellow says he owns the metal so he's got skin in the game."
Yep, he says he has 100% of his TOTAL ASSETS in silver. And he says he's not an expert and didnt' have time to fully research it. He did have time to start a newsletter, however. He's a real hustler alright.
"...My stock career culminated when I started a stock market newsletter business from just a computer in a bedroom and with some luck and assistance from family was able to turn it into a living. I was the happiest I had ever been in my life, being successful while doing what I loved and was most passionate about (stocks) the most. At the same time, I was making a steady living and helping other people make money too.
After actively participating in the real estate bubble in Southern and Northern California, Las Vegas and Florida, I had been warning since 2005 about the damage that was going to be unleashed on the economy when housing prices finally stopped going up.
However, I too was unprepared for the scope and full damage that would be unleashed by Wall Street by spreading the slime of toxic mortgages around the globe. I knew the recession and subsequent recovery would be way worse than most expected but I didn’t anticipate a 50% decline in stock prices, a total panic and coming close to the destruction of the entire US financial system.
My loyal newsletter clients then completely abandoned me, my business collapsed and I went through a soul searching process of what was I going to do in this post financial apocalypse world."
So now we have a former Berkshire Hathaway exec buy stock in a company then recommend to Mr Buffet that said company should be acquired.
Some things never change. As Bud Fox (Chuck Sheen) asked Gordon Gekko, "how much is enough?"
"My loyal newsletter clients then completely abandoned me, my business collapsed and I went through a soul searching process of what was I going to do in this post financial apocalypse world."
Obviously he needs a radio show to hook a new batch of suckers.
Another report on the silver market:
"Silver Set For All Time Record Quarterly Close – Gold To Silver Ratio On Way To 17 To 1 As Per 1980?
Silver Set For All Time Record Quarterly Close - Gold To Silver Ratio On Way To 17 To 1 As Per 1980?
Gold and silver have consolidated on yesterday’s gains as inflation, geopolitical and eurozone debt concerns support. Silver has risen above its 31 year record closing price of yesterday and looks set to target new record nominal intraday highs above $38.16/oz.
‘Poor man’s gold’ is set for a record nominal quarterly close which will be bullish technically and set silver up to target psychological resistance at $40/oz and then the nominal high of $50.35/oz . Silver’s record quarterly close was $32.20/oz on December 31st, 1979.
While silver is up 22 percent this year and is heading for a ninth straight quarterly advance, its fundamentals remain very sound. With gold above its nominal record of 1980, poor man’s gold continues to be seen as offering better value. To the masses in India, China and Asia, silver is the cheap alternative to gold and an attractive store of value and hedge against inflation and debasement of paper currencies.
Increasing global investment and industrial demand in the very small and finite silver bullion market is a recipe for higher prices. Thus, as we have long asserted the gold silver ratio is likely to revert to its long term average of 16 to 1.
A return to a ratio of 16 to 1 is likely due to basic supply and demand and the geological fact that there are 16 parts of silver for every one part of gold in the earth’s crust.
The fact that a huge amount of silver has been used in industrial applications and consumer items since the industrial revolution of the 19th century makes a return to the 16 to 1 ratio likely in the long term."
Read more here
Or here
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"Obviously he needs a radio show to hook a new batch of suckers."
You might be right. That's the trouble with these newsletter, they are unregulated.
At a very minimum they should be subject to the same requirements as a stock broker.
Look at what this stock, real estate and now silver expert has to say...
"Before I had even finished all my research, I had decided to move all of my assets into silver.
I have now come to the conclusion that what is occurring currently is a worldwide monetary phenomenon, not just an investment one. Precious metals about every twenty years revalue themselves upward to reflect all the prior inflation of the currency in the money supply including debt in a country.
Stocks and Bonds will do well for 15-20 years and then precious metals will for 15-20 years. That means we are about half way through the current cycle. The good news is there is still time to enter the gold and especially the silver market.
Also the second half and the most speculative phase comes at the end when the precious metals will rise exponentially. Fortunately for silver investors the total silver market is only about $40 billion available for investment, so until the price goes up 200-300%, it will be impossible for demand to be supplied. It will be one on the biggest short squeezes in history. In fact, it is impossible to estimate the magnitude of the price gains."
Steve,
Please include links to quotes that you post. I'm assuming you are still talking about the article we talked about yesterday, but want it to be clear to readers.
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Sorry HB. Yes we are still talking about that now silver expert.
He is a funny one. He says he is a "different kind of child" who remembers the silver market since he was 9 years old. LOL
"As a former stockbroker, proprietary trader, a stock market newsletter author and long-time individual investor in stocks and bonds, my instinct was always to ignore precious metals.
I’m approximately forty years old so even though while I was only nine years old at the time when the last surge in precious metals prices occurred in 1979-1980, I remember it fairly well.
Yes, I was a very different kind of child who read a lot and paid close attention to current events."
Here's the link:
http://blog.thesilvershortage.com/2011/01/06/from-stocks-to-silver.aspx
Mr Pig wrote: "I wish i could get some good junk tips in a newsletter. Maybe I can find a stock market timer that has fixed income in a stock portfolio, or visa versa. Wouldn't that be a kicker!
Well Bob Brinker sells a newsletter that has only fixed income portfolios that include stocks.
He's pretty quiet about that fact. But it successfully triggered a Mark Hulbert computer algorithm that got the newsletter ranked along side all the equity newsletters.
NOONE ever said that the new Bob Brinker, computer technician turned newsletter writer, wasn't a brilliant computer/IT expert.
BTW, I'm talking about the son of the talk show host who now presents himself on the internet as Bob Brinker.
Confusing? Deceptive? I report, you decide.
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Moron Detector said: "Obviously he needs a radio show to hook a new batch of suckers."
And there you have given the answer why a man well past Social Security retirement age still works on Sunday afternoons and does middle of the night radio guest interviews.
Bob Brinker does 1AM Guest Appearance
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Last quarter:
Gold up 1.3%
Silver up 23%
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If you respect Bill Gross' opinion about bonds, as I do, this is an alarming article by him:
Investment Outlook
William H. Gross | April 2011
Skunked
* Medicare, Medicaid and Social Security now account for 44% of total federal spending and are steadily rising.
* Previous Congresses (and Administrations) have relied on the assumption that we can grow our way out of this onerous debt burden.
* Unless entitlements are substantially reformed, the U.S. will likely default on its debt; not in conventional ways, but via inflation, currency devaluation and low to negative real interest rates.
That adorable skunk, Pepé Le Pew, is one of my wife Sue’s favorite cartoon characters. There’s something affable, even romantic about him as he seeks to woo his female companions with a French accent and promises of a skunk bungalow and bedrooms full of little Pepés in future years. It’s easy to love a skunk – but only on the silver screen, and if in real life – at a considerable distance. I think of Congress that way. Every two or six years, they dress up in full makeup, pretending to be the change, vowing to correct what hasn’t been corrected, promising discipline as opposed to profligate overspending and undertaxation, and striving to balance the budget when all others have failed. Oooh Pepé – Mon Chéri! But don’t believe them – hold your nose instead! Oh, I kid the Congress. Perhaps they don’t have black and white stripes with bushy tails. Perhaps there’s just a stink bomb that the Congressional sergeant-at-arms sets off every time they convene and the gavel falls to signify the beginning of the “people’s business.” Perhaps. But, in all cases, citizens of America – hold your noses. You ain’t smelled nothin’ yet.
I speak, of course, to the budget deficit and Washington’s inability to recognize the intractable: 75% of the budget is non-discretionary and entitlement based. Without attacking entitlements – Medicare, Medicaid and Social Security – we are smelling $1 trillion deficits as far as the nose can sniff. Once dominated by defense spending, these three categories now account for 44% of total Federal spending and are steadily rising. As Chart 1 points out, after defense and interest payments on the national debt are excluded, remaining discretionary expenses for education, infrastructure, agriculture and housing constitute at most 25% of the 2011 fiscal year federal spending budget of $4 trillion. You could eliminate it all and still wind up with a deficit of nearly $700 billion! So come on you stinkers; enough of the Pepé Le Pew romance and promises. Entitlement spending is where the money is and you need to reform it."
Read more and see his charts and a picture of Pepe
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Bob Brinker always elaborates on the implied inflation rate, as he did last Sunday.
However, he didn't mention that the implied inflation rate has risen from 1.82% to 2.46% over the past six months.
I hadn't been keeping track, but went gulp when I read the WHOLE story that Brinker didn't bother to mention:
"The difference between yields on 10-year notes and Treasury Inflation Protected Securities, a gauge of trader expectations for consumer prices over the life of the debt, has widened to 2.46 percentage points from 1.82 percentage points six months ago. The 10-year average is 2.0 percentage points."
Bil Gross echoes Buffett saying Treasuries have little value on debt-dollar
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"However, he didn't mention that the implied inflation rate has risen from 1.82% to 2.46% over the past six months."
That's why Bill Gross sold ALL of his government related bonds including TIPs.
Gross said in an interview March 11 that he eliminated government-related debt from his Total Return Fund because investors aren’t being adequately compensated for the risk of quickening inflation.
I think he is now investing in emerging market bonds.
Pimco’s record $236.9 billion Total Return Fund gained 7 percent in the past year, beating 82 percent of its competitors, according to data compiled by Bloomberg. The company is a unit of insurer Allianz SE (ALV) in Munich
Steve,
You are correct. Gross sold all Treasury holdings.
Coincidentally (?) in January, Bob Brinker also sold all of his TIPS and lowered his Vanguard Short-Term Investment Grade (VFSTX) by 10% in his Fixed-income and balanced portfolios.
He added 25% Vanguard Wellesley Income Fund to the fixed-income portfolio and 20% to model portfolio III. He also increased Vanguard High-Yield Fund (VWEHX) in his fixed-income portfolio to 25%.
He's in the process of altering the name of his fixed-income portfolio to "income portfolio" since it now contains stocks.
For the sake of honesty, ya know -- but only after the deceptiveness was pointed out here several times. :)
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ECRI says Greenspan and Bernanke are WRONG:
Mr. Greenspan’s Blind Spot
ECRI
March 31, 2011
(ECRI) - In early March, former Fed Chairman Alan Greenspan was asked to comment about ECRI's long-held criticism that the Fed is chronically behind the curve on monetary policy because its forecasting models are based on core inflation and the output gap, rather than forward-looking inflation indicators.
Mr. Greenspan agreed with our critique of both the output gap and core inflation. First, he acknowledged, “I have always been somewhat skeptical about the output gap… The bottlenecks with the system are never captured obviously by that… So it’s not an infallible indicator.” On the usefulness of core inflation, he then went on to say: “But more importantly the general presumption of core is that oil and food fluctuate, but have no trend. That is incorrect.”
Finally, he asserted that the Fed also watches forward-looking inflation expectations and could thus forecast inflation no better – but no worse – than ECRI. He went on to say, “The problem is, none of these indicators will tell you when inflation is about to take hold.”
With respect, Mr. Greenspan is wrong.
By using good cyclical indicators, you can – and we do – correctly forecast when inflation is about to take hold.
And it’s precisely because the Fed – first under Mr. Greenspan and now under Mr. Bernanke – adamantly believes that inflation turning points can’t be predicted, that the current U.S. recovery stands in danger of being snuffed out prematurely.
ECRI’s future inflation gauges – which, unlike econometric models, monitor the evolution of self-feeding cycles in inflation – are designed to do just what Mr. Greenspan says can’t be done........"
Read the remainder of the article
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From Wal-Mart CEO Bill Simon expects inflation
U.S. consumers face "serious" inflation in the months ahead for clothing, food and other products, the head of Wal-Mart's U.S. operations warned Wednesday.
...
Along with steep increases in raw material costs, John Long, a retail strategist at Kurt Salmon, says labor costs in China and fuel costs for transportation are weighing heavily on retailers. He predicts prices will start increasing at all retailers in June.
"Every single retailer has and is paying more for the items they sell, and retailers will be passing some of these costs along," Long says. "Except for fuel costs, U.S. consumers haven't seen much in the way of inflation for almost a decade, so a broad-based increase in prices will be unprecedented in recent memory."
Consumer prices — or the consumer price index — rose 0.5% in February, the most since mid-2009, largely because of surging food and gasoline prices. Core inflation, which excludes volatile food and energy costs, rose a more modest 0.2%, though that still exceeded estimates.
BTW, this is what my friend Lakshman Achuthan from ECRI sent me (and I believe three others) this morning: "With the USFIG rising to a 31-month high, underlying inflation pressures are steadily building."
I've known and worked with Lakshman and some others at ECRI for over a decade now and I believe they are far ahead of the Fed in both predicting turns in the US business cycle AND the inflation/low-inflation cycles.
Kirk,
Thanks for the update on Lakshman. If he sees inflationary pressures building, then that is reason for some concern.
We've all known there has been increasing inflation in the "real world" outside of what the Fed is telling us, or when food and energy are included.
I trust Bernanke about us much as I trusted Greenspan -- zero to none and none just left the building (to mutilate one of Bob Brinker's favorite sayings).
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* March 29, 2011
Home Prices, by Metro Area
Below, see data from the 20 metro areas Case-Shiller tracks, sortable by name, level, monthly change and year-over-year change -- just click the column headers to re-sort. The Case Shiller indices have a base value of 100 in January 2000. So a current index value of 150 translates to a 50% appreciation rate since January 2000 for a typical home located within the metro market.
See Chart: WSJ Online
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The prices on some things are going up while the prices of other things are dropping. The overall inflation rate, as represented by the entire basket of available goods and services, may be low. The problem is, the prices of the things that I already own (house, computer, TV, etc.) are going down, but the prices of things I have to buy (gasoline, food, etc.) are going up.
Investor
Latest report on wages are that they are flat so there is little inflation coming from the largest cost item in our economy; wages. This is consistent with the high unemployment as employees are just happy to have a job and are not demanding higher wages with the exception of some union agreements.
Employees are actually going backwards as inflation is greater than wage growth. This should help to keep inflation down for now especially inflation measured without food and energy.
Investor
Nice competition in the smartphone marketplace. I have the Verizon Fascinate Android and love it, but it's my first one, so can't compare.
According to this Seeking Alpha author, it looks like Android is more popular than Apple's Iphone:
"Roughly six months ago, I put up a blog post suggesting Android was going to be the dominant mobile phone operating system and that developers interested in the largest user bases ought to start developing for it in preference to iOS.
As you might expect, I got a lot of heat from Apple fanboys for that post and one of the strongest points they made was that we had not yet seen the effect of the Verizon (VZ) iPhone (AAPL) on market share numbers.
Well now we have. iPhone had a fantastic February on the back of a strong launch of the Verizon iPhone. comScore's February mobile numbers are out and here's where things stand in terms of OS market share in the US. Click to enlarge:
See Chart
It looks like the Verizon iPhone launch is helping iOS hold its own with 25% of the market. I expect (and hope) that iOS will remain a strong competitor to Android (GOOG). But as I've been saying for several years now, I believe the mobile OS market will play out very similarly to Windows (MSFT) and Macintosh, with Android in the role of Windows. And so if you want to be in front of the largest number of users, you need to be on Android."
Read more of article
Another article: Google Increases Lead in the Smartphone Market
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Samsung Fascinate™ a Galaxy S™
This phone is the worst phone I have ever had, as far as operating systems, everything Android wise is locked down and is not very developer friendly. Do not get any type of Samsung phone!
Pros
lightweight and thin
Cons
samsung is horrible on updates no android 2.2+
UnFascinate, N.J.
So what kind of phone do you recommend?
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