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Is the gold rally over? · The Financial Exchange Show

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  Speaker 1: and Mark Fandetti.
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  Speaker 2: I believe that's us. Mark.
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  Speaker 3: Well, I hope so, because I blocked off the next
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  Speaker 3: two hours.
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  Speaker 4: Well, even if you didn't, we've got your AI likeness
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  Speaker 4: in studio with us. It's Chuck Zada, Mark Fandetai and
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  Speaker 4: we are here too tell you about what's going on
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  Speaker 4: in markets and in the economy. Today we kick things
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  Speaker 4: off with a piece from Barons titled American corporations are
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  Speaker 4: crushing it. This stock rally isn't just about tech, and
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  Speaker 4: to cut to the chase in this piece, data from
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  Speaker 4: LSG show that I expected year over year Q three
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  Speaker 4: earnings growth for MAG seven tech Titans is fourteen percent,
• 1:53
  Speaker 4: but performance is broadening out with an estimated growth of
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  Speaker 4: seven point eight percent for the other s and P
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  Speaker 4: five hundred company. These a much narrower gap than in
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  Speaker 4: recent quarters.
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  Speaker 3: Your thoughts mark a crushing it seems a little overly enthusiastic.
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  Speaker 3: It's solid. I'm talking about the eight and a half
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  Speaker 3: is percent growth. From this source and from earnings data
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  Speaker 3: provider fact set, they estimate similar year over year earnings
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  Speaker 3: growth for the period ending September thirtieth. Stocks are up
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  Speaker 3: twice that though, so one way to interpret stocks being
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  Speaker 3: up twice. What earnings are up? Is that the willingness
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  Speaker 3: of investors to pay for future earnings is it? The
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  Speaker 3: sale has gone up faster than earnings themselves. Said differently,
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  Speaker 3: price to earnings ratios, and I'm using the trailing twelve
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  Speaker 3: months pe price to earnings, and that's just what it
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  Speaker 3: sounds like. It's a fraction. You can use other metrics
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  Speaker 3: to come to the same conclusion. Investors are presumably pleased
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  Speaker 3: with these results, but they're future assumptions are even more heady.
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  Speaker 3: So if those aren't met, you know, it could be
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  Speaker 3: a problem for equities. But I guess we should celebrate
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  Speaker 3: a year of reasonably solid earnings growth.
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  Speaker 5: Yeah.
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  Speaker 4: I haven't done the the numbers myself on this, but
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  Speaker 4: I'd be interested in seeing. So this separates you know,
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  Speaker 4: MAG seven from the rest of the S and P five.
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  Speaker 2: That was helpful. I'm doing that, Yeah it is. But okay,
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  Speaker 2: like what happens if I.
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  Speaker 4: Include you know, broad Common here, which is not MAG
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  Speaker 4: seven but is a huge contributor to earnings growth, both
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  Speaker 4: because of its size in the S and P five
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  Speaker 4: hundred now and the area that it represents, which is
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  Speaker 4: ai adjacent you know, what happens if we include Oracle,
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  Speaker 4: which has been you know, a darling over the course
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  Speaker 4: of this year as well, What what happens if that
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  Speaker 4: gets you know, kind of included in that bucket there.
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  Speaker 4: So I think that the message that I do think
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  Speaker 4: is is out.
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  Speaker 2: There is Look, the overall picture.
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  Speaker 4: For the other four hundred and ninety three companies in
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  Speaker 4: the S and P five hundred is not bad by
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  Speaker 4: any means.
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  Speaker 2: It simply is. I think the best way to describe it.
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  Speaker 4: Is in line with historical norms, which like, if you
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  Speaker 4: look at earnings growth in the S and P five
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  Speaker 4: hundred historically generally averages around seven percent a year. Oh yeah,
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  Speaker 4: and if you're within a couple you know, percentage point
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  Speaker 4: or so of that. Yeah, there's there's nothing that is
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  Speaker 4: a huge issue on that front. And the US economy,
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  Speaker 4: despite a number of questions this year, has remained incredibly
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  Speaker 4: resilient to this point and continues to show corporate profit
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  Speaker 4: growth that is, I think, quite honestly in excess of
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  Speaker 4: where a lot of people thought it would be at
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  Speaker 4: this point. If you ask them, you know, in Q
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  Speaker 4: one or early Q two, Hey, what do you think
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  Speaker 4: is gonna happen with earnings this year. I think a
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  Speaker 4: lot of people would have said, yeah, they're gonna get
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  Speaker 4: you know, worse and challenge because of tariffs and this
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  Speaker 4: and that. Some of that's mitigated by the fact that
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  Speaker 4: the worst case tariffs were pulled off the table, but
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  Speaker 4: companies have done a really good job of trying to
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  Speaker 4: navigate them as well to this point. Now, this is
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  Speaker 4: the place where you get to the question of, you know,
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  Speaker 4: our corporate earnings the US economy, and the answer is
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  Speaker 4: obviously no, because we do talk about quite often. Hey,
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  Speaker 4: even though corporate earnings look pretty good right now, household
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  Speaker 4: earnings there's some questions about, you know, kind of where
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  Speaker 4: that pictures going for, in particular the bottom fifty percent
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  Speaker 4: of incomes in households. So I think that you know,
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  Speaker 4: you can you can kind of have both these things
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  Speaker 4: happening at the same time. Where you say, look, households
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  Speaker 4: are struggling because job creation is weak, Inflation is still
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  Speaker 4: running around three percent, and it's kind of hard for
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  Speaker 4: households in.
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  Speaker 2: A lot of cases to get by with that situation.
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  Speaker 4: But companies are doing well because part of the reason
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  Speaker 4: that inflation is at three percent is that they're able
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  Speaker 4: to raise prices a little bit in order to make
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  Speaker 4: maintain margins, and demand is still really strong in the aggregate.
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  Speaker 4: I know we've talked about, you know, housing being slow
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  Speaker 4: and in a couple areas that have slowed down, like restaurants,
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  Speaker 4: but aggregate demand continues to just hum along, and so
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  Speaker 4: these two things can be reconciled, I think, especially when
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  Speaker 4: you put in place the third thing that we've talked
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  Speaker 4: about a lot, which is hey, a lot more spending
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  Speaker 4: is being driven by the wealthy, and that's more asset
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  Speaker 4: based spending, and if portfolios are up as they are
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  Speaker 4: this year, that's not really going to be impacted.
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  Speaker 1: Yeah.
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  Speaker 3: I think there's a tendency. I certainly fall into this
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  Speaker 3: trap of looking at the performance of the stock market,
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  Speaker 3: and although it is although company, which is driven in
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  Speaker 3: turn by company earnings as well as investor expectations for
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  Speaker 3: future earnning. So there's that pe multiple so called expansion
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  Speaker 3: component that we talked about earlier to stock market performance.
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  Speaker 3: But you can be fooled by a strong stock market.
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  Speaker 3: You can be a full to the extent that you
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  Speaker 3: infer that that means everything that the gains from economic
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  Speaker 3: growth are being reasonably widely are broadly distributed. They clearly aren't.
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  Speaker 3: And I don't know what to make of Mark zandi
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  Speaker 3: statistic that the top ten percent of the income distribution
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  Speaker 3: accounted for about half of total spending in the second quarter,
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  Speaker 3: a number that has been climbing relentlessly going back nearly
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  Speaker 3: for decades.
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  Speaker 4: It's it's not good societally, No, we know that, you know,
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  Speaker 4: and look, it's the big thing. In the United States
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  Speaker 4: and pretty much in any successful country anywhere, you never
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  Speaker 4: have a situation where the top ten percent of earners
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  Speaker 4: are spending like ten to twenty percent of you know,
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  Speaker 4: all spending in the US historically, Like if you go
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  Speaker 4: back and look at the historical data that they've pulled
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  Speaker 4: on this, it's typically somewhere in the mid thirty is
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  Speaker 4: kind of where that concentration is. The top ten percent
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  Speaker 4: you know, spent you know, thirty five to thirty eight
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  Speaker 4: percent of all consumer spending. That's even like if you
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  Speaker 4: look back at you know, times where we've said, hey,
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  Speaker 4: this is a good economy and people are able to
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  Speaker 4: you know, you know, find their way economically, you still
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  Speaker 4: had you know, a skewed spending by that that top
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  Speaker 4: ten percent I think the issues that we have right
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  Speaker 4: now are twofold, you could even say threefold quite honestly,
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  Speaker 4: with with how things are setting up. The first is
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  Speaker 4: it's it's very clear that you get to a certain
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  Speaker 4: point and it's just like, hey, so many people just
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  Speaker 4: feel economically left behind because they're not in control of
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  Speaker 4: their economic destiny, which dovetails into the second piece that
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  Speaker 4: I hear a lot from people in their twenties. I
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  Speaker 4: try to make an effort to talk to, you know,
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  Speaker 4: people in their in their twenties a decent amount about
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  Speaker 4: this stuff, because you know, you think about it, and
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  Speaker 4: it's been twenty years since since I was you know,
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  Speaker 4: someone young, you know, coming out of college basically, and
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  Speaker 4: the like, the world is different now.
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  Speaker 2: I know.
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  Speaker 4: We always like to project kind of our past experiences
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  Speaker 4: and like, well, why can't you just do like what
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  Speaker 4: I did when I was younger? Man, When I was younger,
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  Speaker 4: it was a different world, Like the iPhone had barely
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  Speaker 4: just come out, Like it was not the same world.
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  Speaker 4: So the people that are twenty three today are living
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  Speaker 4: in a different world.
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  Speaker 2: Than I was at that time.
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  Speaker 4: And I realized that, and you talk to people at
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  Speaker 4: that age and it's not just hey, I'm not making much,
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  Speaker 4: but the path to being able to make it feels
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  Speaker 4: narrower to them. I don't know if it actually is
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  Speaker 4: or is not. I don't know if there's less upward
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  Speaker 4: mobility today than there used to be, but it feels
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  Speaker 4: like it to them and to a lot of their friends.
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  Speaker 2: I don't know if it's.
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  Speaker 4: True or not, but I know that it feels that way.
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  Speaker 4: And the other piece that then, like doveta that kind
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  Speaker 4: of the third piece that I pull together there is
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  Speaker 4: there's also this looming thread of AI that everyone talks about,
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  Speaker 4: and so I think a lot of young people are
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  Speaker 4: also feeling, hey, if I don't make my money now,
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  Speaker 4: I'm not gonna have a chance to because AI is
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  Speaker 4: gonna just take out everything from a job perspective. And
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  Speaker 4: this is partly why I think a lot of people
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  Speaker 4: in their twenties are doing these financially reckless things like
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  Speaker 4: you know, running up you know, big gambling debts and
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  Speaker 4: prediction markets and all all this stuff that we look
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  Speaker 4: at and we're like, hey, that's not that's not safe,
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  Speaker 4: and they're like, yeah, you know what's not safe. Not
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  Speaker 4: being able to pay my rent is kind of the
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  Speaker 4: message that they give me.
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  Speaker 2: It's interesting, so.
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  Speaker 4: I don't either, but I realize that it's going on
• 10:41
  Speaker 4: and it's happening. I'm not saying it's good, bad, or
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  Speaker 4: you know, new Trum'm just saying that it's happening, and
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  Speaker 4: it doesn't feel like it's a healthy place for us
• 10:52
  Speaker 4: to be. Let's take a quick break here. When we
• 10:54
  Speaker 4: come back, let's talk a little bit about what we
• 10:57
  Speaker 4: are seeing in guild.
• 10:59
  Speaker 2: Right after this.
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• 12:02
  Speaker 4: Gold has been the the focus of investors over the
• 12:06
  Speaker 4: last couple of months since late August. Gold Well, gold
• 12:11
  Speaker 4: didn't decide to do anything. It's not scenty, and it
• 12:13
  Speaker 4: doesn't wake up and say, oh gee, I'm a gold rock.
• 12:15
  Speaker 4: Let me go do some stuff today.
• 12:17
  Speaker 2: And why it sounds probably you think it would sound
• 12:20
  Speaker 2: like that.
• 12:20
  Speaker 3: I sluggish? Sluggish, Yeah, sort of slug because it did move,
• 12:26
  Speaker 3: is it?
• 12:26
  Speaker 5: Well?
• 12:26
  Speaker 2: Is picture more like the enz from ward to the rings,
• 12:30
  Speaker 2: like oh, I'm gold, I need to go.
• 12:34
  Speaker 3: Yeah.
• 12:34
  Speaker 4: I think it's a little bit more peppy than that.
• 12:37
  Speaker 4: You know, I don't know, but I'm picturing it kind
• 12:41
  Speaker 4: of like look, you and I are both Italian. I'm
• 12:43
  Speaker 4: picturing it kind of like a gold chain, you.
• 12:44
  Speaker 3: Know, like thinking of the Italian horn.
• 12:48
  Speaker 2: I'm going there, badass, I'm going there with it. You know.
• 12:51
  Speaker 2: It's like, Hey, I'm a little bit of gold. You
• 12:53
  Speaker 2: want some of me? Yeah, of course you do.
• 12:56
  Speaker 4: So in any case, gold went on just a an absolute,
• 13:00
  Speaker 4: a torrid rally up you know, almost thirty five percent
• 13:03
  Speaker 4: from late August through late last week, and it has
• 13:09
  Speaker 4: now promptly fallen on its face in the last couple
• 13:11
  Speaker 4: trading days, down you know, eight nine percent from that high.
• 13:17
  Speaker 4: And so investors, you know, are kind of looking just like, okay,
• 13:20
  Speaker 4: like what comes next? Like where does this go? And
• 13:24
  Speaker 4: the answer is, look, I have no idea exactly what
• 13:27
  Speaker 4: gold is going to do over the next week, month,
• 13:30
  Speaker 4: or you know, a couple months. But what I can
• 13:31
  Speaker 4: tell you is historically I talk to people about this
• 13:35
  Speaker 4: a lot. Investors want to hold gold the way they
• 13:39
  Speaker 4: should hold stocks, and they want to hold stocks the
• 13:42
  Speaker 4: way they should hold gold.
• 13:43
  Speaker 2: What I mean by that.
• 13:44
  Speaker 4: Is, if you look at the long term track record
• 13:46
  Speaker 4: of stocks, basically the conventional wisdom, and what the data
• 13:51
  Speaker 4: shows you is, yeah, you don't really know where US
• 13:54
  Speaker 4: equities are gonna go in any day, week, month, or year.
• 13:57
  Speaker 4: But if you look at the long term track record
• 13:59
  Speaker 4: over ten twenty thirty year rolling periods, you basically should
• 14:03
  Speaker 4: hold those stocks and not do anything with them as
• 14:05
  Speaker 4: long as they fit your risk tolerance and personal situation
• 14:08
  Speaker 4: totally different. Buy them, hold, them, sit on them, whatever
• 14:12
  Speaker 4: you want to do. But what do people want to
• 14:14
  Speaker 4: do with stocks? Hey, I'm gonna trade in and out.
• 14:17
  Speaker 4: I'm gonna zig when they zag, and and most people
• 14:20
  Speaker 4: quite honestly, aren't very good at it.
• 14:22
  Speaker 2: You know.
• 14:23
  Speaker 4: It's just most people are not winning stock pickers, especially
• 14:27
  Speaker 4: when you factor in things like transaction cost, taxes, all
• 14:30
  Speaker 4: that stuff. Most people are not winning stock pickers.
• 14:34
  Speaker 2: They're just not.
• 14:36
  Speaker 4: On the other hand, gold people say, well, gold's my
• 14:41
  Speaker 4: insurance policy. I gotta hold this forever in case it
• 14:44
  Speaker 4: hits the fan, Like I'm this is something I'm holding forever.
• 14:49
  Speaker 2: And if you look at the long.
• 14:50
  Speaker 4: Term track record of gold, it's basically punctuated by these
• 14:53
  Speaker 4: bursts of just tremendous price growth over short periods of time,
• 14:57
  Speaker 4: but and then long periods of time where it is
• 15:00
  Speaker 4: absolutely nothing because it's not in a creative asset in
• 15:02
  Speaker 4: any way, shape or form.
• 15:03
  Speaker 3: Right, which is exactly what you'd expect from a form
• 15:06
  Speaker 3: of insurance your career. You bleed, you bleed, and then
• 15:09
  Speaker 3: eventually if things don't go well, but you're glad you've
• 15:13
  Speaker 3: got it, it pays off. And that's that's the way
• 15:15
  Speaker 3: to think about gold is distinguished from generative, as you say,
• 15:18
  Speaker 3: assets like.
• 15:18
  Speaker 4: Equity, which the wild thing is you talk to people
• 15:21
  Speaker 4: about their insurance company and they're like, can't stand my
• 15:25
  Speaker 4: insurance company.
• 15:26
  Speaker 2: Hate it.
• 15:27
  Speaker 4: All I do is give them money. And you have
• 15:29
  Speaker 4: people talk about their gold and they're like, this is
• 15:31
  Speaker 4: my pet rock.
• 15:32
  Speaker 2: Hmm, would you like it?
• 15:34
  Speaker 4: Like it's it's just kind of wild, like they even
• 15:38
  Speaker 4: though it is insurance that provides them no tangible benefit
• 15:41
  Speaker 4: on a daily basis, because if you're just sitting there
• 15:43
  Speaker 4: looking at your gold, does it actually do anything for you?
• 15:48
  Speaker 2: No, it doesn't.
• 15:49
  Speaker 4: It is an insurance policy. Well, but people love looking
• 15:53
  Speaker 4: at that insurance policy.
• 15:55
  Speaker 3: Yeah.
• 15:55
  Speaker 2: No, one loves looking.
• 15:57
  Speaker 4: At their thing from you know, so and so mutual
• 16:00
  Speaker 4: and being like, got to pay that premium again.
• 16:04
  Speaker 3: Yeah, And I'm I think that actually makes a lot
• 16:07
  Speaker 3: of sense. How much gold a long term investor should
• 16:11
  Speaker 3: own depends on their risk tolerance. Maybe they don't think
• 16:13
  Speaker 3: they need insurance against whatever.
• 16:15
  Speaker 2: You think.
• 16:15
  Speaker 3: Gold provides a hedge against geopolitical turmoil, bad policy, tariff uncertainty,
• 16:22
  Speaker 3: an outbreak of inflation.
• 16:25
  Speaker 2: Dollar defach or something like that, or.
• 16:27
  Speaker 3: Yeah, or the traditional outbreaks. So we all have something
• 16:32
  Speaker 3: slightly different in mind. When we think about gold as
• 16:34
  Speaker 3: a hedge, your hedge, you're the scenario you're edging against
• 16:38
  Speaker 3: a little different than the one I'm conjuring up. Probably
• 16:41
  Speaker 3: I don't make it good.
• 16:42
  Speaker 2: I don't believe in it is end of the world insurance.
• 16:44
  Speaker 3: Well, yeah, because it's not really marketable and in the
• 16:47
  Speaker 3: end its use area.
• 16:49
  Speaker 4: I always say, Look, if you really think the end
• 16:50
  Speaker 4: of the world's coming, you want plenty of arable land,
• 16:54
  Speaker 4: lots of animals, maybe a little bit of high ground,
• 16:57
  Speaker 4: and the ability to defend yourself.
• 17:00
  Speaker 2: Gold provides you none of those things.
• 17:03
  Speaker 3: No, probably not. It's way not easily marketable.
• 17:06
  Speaker 5: You know.
• 17:06
  Speaker 4: And by the way, once people find out that you
• 17:09
  Speaker 4: have a lot of it, not great in the end
• 17:11
  Speaker 4: of the world situation.
• 17:13
  Speaker 2: You know.
• 17:13
  Speaker 4: It's I know we all everyone likes to think they're
• 17:16
  Speaker 4: going to be the winners of the mad Max scenario.
• 17:19
  Speaker 4: I will tell you I would be the loser. I
• 17:22
  Speaker 4: would not be the winner in the mad Max scenario.
• 17:24
  Speaker 4: So I don't try to pretend that I would be.
• 17:26
  Speaker 3: But I struggle with this issue. I should an investor,
• 17:29
  Speaker 3: a serious investor own gold, And part of it depends
• 17:32
  Speaker 3: on your frame of reference. I started working in the nineties.
• 17:35
  Speaker 3: Gold had been a horrible investment since nineteen eighty and
• 17:38
  Speaker 3: it continued to be a horrible investment for the next
• 17:39
  Speaker 3: several years. And I remember telling institutional investors at the time,
• 17:43
  Speaker 3: you don't need it, you don't want it, it's not generative,
• 17:45
  Speaker 3: the same things we would say about bitcoin today. Sure,
• 17:49
  Speaker 3: but there are periods, as I think you put it
• 17:51
  Speaker 3: very well, there's long periods of nothing happening punctuated by
• 17:55
  Speaker 3: periods of a lot of excitement in.
• 17:56
  Speaker 2: Gold, and this year has been one of them.
• 17:58
  Speaker 3: It has been. But does that this neither makes the
• 18:02
  Speaker 3: case for nor against gold.
• 18:05
  Speaker 2: It doesn't help, but it doesn't.
• 18:06
  Speaker 3: Help me at all as an analyst, unfortunately.
• 18:07
  Speaker 1: No.
• 18:08
  Speaker 4: But I do think it's one of those where it
• 18:09
  Speaker 4: comes back to that fundamental question of Hey, if you're
• 18:12
  Speaker 4: putting something in your portfolio, whether it's a precious metal
• 18:16
  Speaker 4: and equity, a bond, private credit instrument, fart coin, whatever
• 18:23
  Speaker 4: it might be, you know, whatever you're putting in your portfolio.
• 18:28
  Speaker 4: Adolescent Listen, we realized by accident, like two weeks ago
• 18:32
  Speaker 4: that fart coin actually exists.
• 18:34
  Speaker 3: We yeah, he's a millionaire. Whoever started it? Yeah, Jimmy fart, Yeah,
• 18:39
  Speaker 3: Tony fart.
• 18:40
  Speaker 2: Yeah, he's oh boy, no, it's it's fine.
• 18:45
  Speaker 4: But word whatever is in My daughter learned how to
• 18:49
  Speaker 4: spell it this week.
• 18:51
  Speaker 2: I'm not kidding.
• 18:52
  Speaker 4: So we're out to dinner the other night and we
• 18:55
  Speaker 4: play She's five, but she loves to play Hangman with like,
• 18:58
  Speaker 4: you know, three four letter words because she like trying
• 19:00
  Speaker 4: to like start putting words together.
• 19:02
  Speaker 2: And the first word she does, it's a four letter word.
• 19:05
  Speaker 4: I'm like guessing letters and the last three are art,
• 19:09
  Speaker 4: and so naturally I guess C and I'm like, she's like, no,
• 19:12
  Speaker 4: it's not C. And I'm like, is it F? And
• 19:14
  Speaker 4: she's like, yeah, I spelled fart. I'm like, how did
• 19:17
  Speaker 4: you do that?
• 19:18
  Speaker 2: You're like, you're five and you're spelling fart in Hangman.
• 19:22
  Speaker 2: That's a proud moment. It was a great one.
• 19:24
  Speaker 4: But in any case, everything in your portfolio has to
• 19:27
  Speaker 4: have a purpose. Understand why gold may or may not
• 19:30
  Speaker 4: be in your portfolio according to your purposes. Quick Break,
• 19:34
  Speaker 4: Wall Street Watch and Ask Todd are next.
• 19:41
  Speaker 1: Like us on Facebook and follow us on Twitter. Act
• 19:44
  Speaker 1: TFE show breaking business news is always first right here
• 19:48
  Speaker 1: on the Financial Exchange Radio Network. Time Now for Wall
• 19:54
  Speaker 1: Street Watch a complete look at what's moving market so
• 19:57
  Speaker 1: far today right here on the Financial Extreme Change Radio Network.
• 20:01
  Speaker 6: Well its third quarter earning season ramps up. Markets today
• 20:05
  Speaker 6: are pulling back in negative territory right now. The Dow
• 20:09
  Speaker 6: is down by three tenths of one percent, or one
• 20:11
  Speaker 6: hundred and thirty three points. SMB five hundred also down
• 20:14
  Speaker 6: three tenths of one percent or twenty one points lower.
• 20:18
  Speaker 6: NASDAK down one hundred and fifty two points about two
• 20:21
  Speaker 6: thirds of one percent. Russell two thousand is down over
• 20:24
  Speaker 6: half a percent. Set Your Treasure reeled up one basis
• 20:28
  Speaker 6: point at three point nine seven four percent. In crude
• 20:31
  Speaker 6: oil up over two percent higher, trading a fifty eight
• 20:33
  Speaker 6: dollars and fifty one cents barrel. Netflix reported third quarter
• 20:38
  Speaker 6: earnings that miss street expectation, while its revenue matched estimates.
• 20:43
  Speaker 6: The streaming giant cut its extended operating margin for the
• 20:47
  Speaker 6: year to twenty nine percent from thirty percent, citing an
• 20:51
  Speaker 6: expense related to a dispute with Brazilian tax authorities, Netflix
• 20:56
  Speaker 6: sinking over nine percent. Following up on developing story where
• 21:01
  Speaker 6: CNBC's reporting that Warner Brothers Discovery rejected three paramount Skydance
• 21:06
  Speaker 6: offers as it fields broad buyout interest. Yesterday's reports said
• 21:10
  Speaker 6: Warner had received unsolicited interest from multiple parties. That stock
• 21:15
  Speaker 6: today's up modestly. Meanwhile, Beyond Meat is the latest meme
• 21:19
  Speaker 6: stock with wild gains continuing this week. Yesterday, shares in
• 21:23
  Speaker 6: the plant based meat alternative company rocketed one hundred and
• 21:27
  Speaker 6: forty percent higher after its signed a deal with Walmart
• 21:30
  Speaker 6: to expand distribution. Earlier this week, Round Hill Investments added
• 21:34
  Speaker 6: the stock to its meme stock. ETF shares today up
• 21:39
  Speaker 6: another one hundred percent. Elsewhere, shares an Intuitive Surgical jumping
• 21:44
  Speaker 6: sixteen percent higher after the maker of robotic assisted surgery
• 21:48
  Speaker 6: systems beat third quarter earnings expectations. Mattel down by two
• 21:53
  Speaker 6: percent after the barbie maker disappointed with its third quarter earning,
• 21:57
  Speaker 6: siting terrorists impacting North American sales. In after today's closing bell,
• 22:02
  Speaker 6: we'll see anticipated earnings from Tesla on Tucker Solva and
• 22:07
  Speaker 6: that is Wallstree Watch.
• 22:09
  Speaker 1: This is Ask Todd on the Financial Exchange Radio Network.
• 22:13
  Speaker 1: If you have an existing estate plan or in the
• 22:15
  Speaker 1: market for one, Todd Lutsky is here to answer your
• 22:18
  Speaker 1: questions and help you plan for a later life. Ask
• 22:20
  Speaker 1: Todd is presented by Cushing and Dolan, serving Massachusetts and
• 22:24
  Speaker 1: New England for more than thirty five years, helping families
• 22:27
  Speaker 1: with a state and tax planning, Medicaid planning, and probate law.
• 22:30
  Speaker 1: Visit Cushingdolan dot com. Now here's Todd Lutsky.
• 22:36
  Speaker 4: Todd Lutsky from the law firm of Cushing and Dolan
• 22:40
  Speaker 4: joins us now in studio, and he's here to answer
• 22:45
  Speaker 4: your questions about your state plans. We got the phone
• 22:47
  Speaker 4: line open at eight eight eight two zero five two
• 22:51
  Speaker 4: two six three. The last couple of weeks we have
• 22:53
  Speaker 4: not been able to get through all of your questions,
• 22:55
  Speaker 4: So if you do want to have your question answered
• 22:58
  Speaker 4: by Todd, get calling early and often again. Eight eight
• 23:02
  Speaker 4: eight two zero five two two sixty three is the number.
• 23:06
  Speaker 4: One more time. That is eight eight eight two zero
• 23:10
  Speaker 4: five two two six three. The segment is asked Todd,
• 23:12
  Speaker 4: so you can ask Todd your questions. Mister Lutsky, How
• 23:18
  Speaker 4: are you doing today?
• 23:20
  Speaker 7: I am never better? How you doing pretty good?
• 23:23
  Speaker 1: Uh? Uh?
• 23:24
  Speaker 2: Pretty good?
• 23:24
  Speaker 7: Yeah? Only pretty good?
• 23:26
  Speaker 2: I uh.
• 23:27
  Speaker 4: I went on a date with a matador the other day,
• 23:29
  Speaker 4: a matador. Yeah, it didn't work out. No, too many
• 23:32
  Speaker 4: red flags yeah, definitely.
• 23:34
  Speaker 2: Yeah.
• 23:34
  Speaker 4: Real problem, Todd, want to talk to you a little
• 23:36
  Speaker 4: bit about is state tax thresholds today. Okay, federal limit
• 23:44
  Speaker 4: right now is currently just under fourteen million, is that right?
• 23:47
  Speaker 2: Yeah?
• 23:48
  Speaker 7: Thirteen nine to nine.
• 23:49
  Speaker 2: What's it go do next year?
• 23:51
  Speaker 7: So January one, twenty twenty six, it's going to jump
• 23:54
  Speaker 7: up to fifteen million. Even even that makes the math easy,
• 23:58
  Speaker 7: it does so for a spout, you could shelter thirty.
• 24:02
  Speaker 7: So what I want to hone in on today the
• 24:05
  Speaker 7: number of states that have a state estate tax. It's
• 24:08
  Speaker 7: not particularly high, right, It's like high single digits, low
• 24:10
  Speaker 7: double digits, like somewhere around ten states have them. Yeah,
• 24:13
  Speaker 7: it's a little higher, it is double digits, but I
• 24:15
  Speaker 7: think I think it's.
• 24:16
  Speaker 4: Fifteen And most of those thresholds are significantly lower than
• 24:21
  Speaker 4: the federal limit. Correct, Yes, I don't know if I
• 24:24
  Speaker 4: can say most, but we can a number of them. Yeah,
• 24:26
  Speaker 4: a number of them could be lower, like Massachusetts is
• 24:28
  Speaker 4: the worst.
• 24:29
  Speaker 2: So I guess here's here's the question that I have.
• 24:33
  Speaker 4: People that fall above the fifteen million, we talk about,
• 24:36
  Speaker 4: you know, what you can do in those situations quite
• 24:38
  Speaker 4: a bit.
• 24:39
  Speaker 2: People that might be you.
• 24:40
  Speaker 4: Know, on the borderline of a state, a state tax threshold,
• 24:43
  Speaker 4: you know, a two million dollars state, three million.
• 24:45
  Speaker 2: We talk about those a lot.
• 24:47
  Speaker 4: Yeah, how does someone who kind of falls like right
• 24:50
  Speaker 4: in the middle, like again high levels of wealth, you know,
• 24:53
  Speaker 4: eight to twelve million dollars estate so no federal issue,
• 24:58
  Speaker 4: but they might have a sizeable state issue that they
• 25:01
  Speaker 4: need to deal with. What kind of tools are out
• 25:04
  Speaker 4: there to help mitigate those and work through those situations?
• 25:08
  Speaker 7: Yeah, that's that's perfect. I mean, the the answer you
• 25:11
  Speaker 7: have there is first and foremost, you still need your trust.
• 25:13
  Speaker 7: You still need your at that level, you're looking at
• 25:15
  Speaker 7: a revocable trust, probably a joint revocable trust. Probably don't
• 25:19
  Speaker 7: need two and you need it? Why not? And I'm assuming, Chuck,
• 25:24
  Speaker 7: that we're in a state with a state estate tax, right,
• 25:27
  Speaker 7: not just federal yes, state a state, yes. So I'll
• 25:30
  Speaker 7: just use mass as an example with the two million
• 25:32
  Speaker 7: dollar exemption.
• 25:34
  Speaker 2: And so.
• 25:36
  Speaker 7: First you need the joint revocable trust simply to obviously
• 25:39
  Speaker 7: avoid the probate. And I say, take care of federal
• 25:42
  Speaker 7: estate tax. And I know you're saying, Chuck, the exemption
• 25:45
  Speaker 7: is going to third fifteen million, This client is maybe
• 25:48
  Speaker 7: worth ten million somewhere in between there. Why do they
• 25:51
  Speaker 7: need to worry about the FED, Well, there's nothing you
• 25:53
  Speaker 7: need to worry about it. But when you do the
• 25:55
  Speaker 7: trust planning, you're going to shelter whatever the estate tax
• 25:58
  Speaker 7: exemption is in effect. When you die again, come a
• 26:02
  Speaker 7: new president right down the road, and new regimes in office,
• 26:05
  Speaker 7: that exemption could drop. We can't necessarily assume it's going
• 26:08
  Speaker 7: to stay at fifteen. It could fall to seven, and
• 26:10
  Speaker 7: so you need to be mindful of that. So you
• 26:12
  Speaker 7: need to do a planning just to take sure make
• 26:14
  Speaker 7: sure that you grab whatever the estate tax exemption is
• 26:17
  Speaker 7: and plus reportability reasons. If you die when it's high
• 26:20
  Speaker 7: and you leave a spouse, you want to make sure
• 26:22
  Speaker 7: you capture the unused exemption for the surviving spouse so
• 26:27
  Speaker 7: that in case they really lower the exemption for the
• 26:29
  Speaker 7: surviving when the surviving spouse dies, she will have that
• 26:33
  Speaker 7: unused exemption as a coupon in her pocket to take
• 26:36
  Speaker 7: care of that. For Massachusetts or other states that have
• 26:40
  Speaker 7: a state exemption, yeah, we want to make sure we
• 26:42
  Speaker 7: double the two million to four million, at least do that.
• 26:45
  Speaker 7: So if I'm at ten million, I'm sheltering four million,
• 26:48
  Speaker 7: but to your point, we still owe six million. Is
• 26:52
  Speaker 7: there something we can do for that? Yes, gifting. Gifting
• 26:56
  Speaker 7: is an option. Perhaps moving, of course there is always
• 26:58
  Speaker 7: an option, but gifting is an option. But then you
• 27:02
  Speaker 7: need to really analyze the gifting. Am I going to
• 27:05
  Speaker 7: gift high basis low basis assets? The big deal here
• 27:08
  Speaker 7: is that you've got to make sure that you're not
• 27:10
  Speaker 7: just when you make a gift. Now, in this situation,
• 27:13
  Speaker 7: you're not saving the forty percent piece, You're only saving
• 27:17
  Speaker 7: the mass piece. And if mass is at ten percent,
• 27:20
  Speaker 7: I don't want to give away something that traps capital
• 27:22
  Speaker 7: gain at twenty eight point eight percent. So think about
• 27:26
  Speaker 7: what you're gonna gift. But at least that's a little
• 27:28
  Speaker 7: guidelines for you.
• 27:29
  Speaker 4: Talking with Todd Lutsky from the law firm of Cushing
• 27:32
  Speaker 4: and Dolan. Phone lines still have room on them at
• 27:34
  Speaker 4: eight eight eight to zero five two two sixty three.
• 27:38
  Speaker 4: That is the number to call to ask Todd your
• 27:41
  Speaker 4: estate planning questions.
• 27:42
  Speaker 2: Live on air.
• 27:43
  Speaker 4: Right now again room on the phone lines at eight
• 27:46
  Speaker 4: eight eight to zero five two two sixty three. This
• 27:50
  Speaker 4: is your chance to ask Todd your estate planning questions.
• 27:54
  Speaker 4: We're going to take a quick break, but when we
• 27:55
  Speaker 4: come back, we'll have more Todd and your questions right
• 27:59
  Speaker 4: after this. That phone number is eight eight eight to
• 28:02
  Speaker 4: zero five two two six three. Again it is eight
• 28:05
  Speaker 4: eight eight two zero five two two sixty three.
• 28:10
  Speaker 1: Ask Todd with Todd Lutsky every Wednesday at ten thirty
• 28:13
  Speaker 1: only here on the Financial Exchange Radio Network. You're listening
• 28:19
  Speaker 1: to Ask Todd with Todd Lutsky on the Financial Exchange
• 28:23
  Speaker 1: Radio Network.
• 28:33
  Speaker 4: Todd Letski is here to answer your questions about your
• 28:36
  Speaker 4: estate plan Again. Phone number is eight eight eight to
• 28:39
  Speaker 4: zero five two two six three. That is the number
• 28:42
  Speaker 4: to call so that Todd can answer your estate planning
• 28:45
  Speaker 4: questions live on air again eight eight eight to zero
• 28:49
  Speaker 4: five two two six three. Let's go to Steve in
• 28:53
  Speaker 4: New Hampshire. Steve, what is your question for mister Lotsky?
• 28:58
  Speaker 5: Well, my question is is that I have retirement. I
• 29:02
  Speaker 5: have a step that's got a value of a little
• 29:04
  Speaker 5: over three million dollars. Got a brokerage account also that
• 29:11
  Speaker 5: a little over two million dollars. I'm sixty eight years
• 29:14
  Speaker 5: old and I've been going back and forth thinking or
• 29:21
  Speaker 5: considering switching some money over.
• 29:24
  Speaker 3: It's a raw.
• 29:27
  Speaker 5: And I'm not convinced that that's the way I should
• 29:30
  Speaker 5: go at this point, being that I don't know that
• 29:34
  Speaker 5: I can really convert over enough funds that's going to
• 29:38
  Speaker 5: make the difference when it comes down to my required
• 29:43
  Speaker 5: minimum distribution. And I am also still working.
• 29:48
  Speaker 7: Are you married, I am kids, I have two yet grandkids?
• 29:56
  Speaker 5: Yeah, just one?
• 29:57
  Speaker 7: That was just one, okay, And so you're looking at
• 30:01
  Speaker 7: maybe five million dollars. I think that the whether you
• 30:03
  Speaker 7: flip it to a wroth or don't flip it to
• 30:05
  Speaker 7: a wroth and and so forth, I really think is
• 30:07
  Speaker 7: more of a financial planner's question. You might want to
• 30:09
  Speaker 7: sit with your advisor and and sort of, you know,
• 30:13
  Speaker 7: play out whether or not it makes sense to do that,
• 30:15
  Speaker 7: and what are the taxes I'm going to pay now
• 30:17
  Speaker 7: when I do that? But so is the but do
• 30:20
  Speaker 7: you have like an estate planning question in here somewhere?
• 30:23
  Speaker 7: Like I notice you've got a step and a brokerage account,
• 30:26
  Speaker 7: so I've got five million. You also need your house
• 30:29
  Speaker 7: and any other assets to determine whether or not a
• 30:31
  Speaker 7: state planning is important or is that not an issue?
• 30:36
  Speaker 5: No, the estate planning, I'm trying to figure out how
• 30:39
  Speaker 5: this is going to work best for my estate and
• 30:43
  Speaker 5: for my children down the road. I know if the
• 30:47
  Speaker 5: money is in a step that helps them in a roth,
• 30:51
  Speaker 5: it helps them. But that's again secondary question.
• 30:55
  Speaker 2: Do you how much?
• 30:56
  Speaker 7: How much are you worth? Altogether? House money? Everything?
• 31:02
  Speaker 5: About seven millions.
• 31:03
  Speaker 7: So it's seven million dollars again, some being qualified money,
• 31:07
  Speaker 7: some being not qualified money. I get it. You know,
• 31:11
  Speaker 7: it's important to think from an income tax perspective and
• 31:13
  Speaker 7: how it fits into your estate plan as well. So
• 31:16
  Speaker 7: but just in general, for someone sixty eight seven million dollars,
• 31:20
  Speaker 7: we're probably looking at a joint revocable trust for you.
• 31:25
  Speaker 7: How we draft the joint trust to accommodate the step IRA,
• 31:30
  Speaker 7: which is a three million dollar asset, is important, And
• 31:33
  Speaker 7: that's why I'm recommending a joint trust, because with a
• 31:35
  Speaker 7: joint revocable trust, the three million can't go in there
• 31:39
  Speaker 7: while you're alive because there's a big income tax hit.
• 31:42
  Speaker 7: I get that, but it can get there when the
• 31:44
  Speaker 7: death of the survivor occurs. But when the first death,
• 31:48
  Speaker 7: I want to be able to cram down as much
• 31:49
  Speaker 7: as I can for state planning purposes. So if I
• 31:53
  Speaker 7: back out three million from year seven, I only have
• 31:56
  Speaker 7: four to deal with. Well, I want that whole four
• 31:59
  Speaker 7: to be down on the first death for a state
• 32:01
  Speaker 7: taxes and not divide it between a husband trust and
• 32:04
  Speaker 7: a wife trust.
• 32:05
  Speaker 2: So I think we're.
• 32:06
  Speaker 7: Talking about the same thing here in terms of taxes,
• 32:10
  Speaker 7: estate taxes, income taxes. But I think the joint trust
• 32:13
  Speaker 7: would work best for you because it will accommodate both
• 32:16
  Speaker 7: the large IRA asset, the large set and your estate planning.
• 32:20
  Speaker 7: And I don't think you're probably in a situation where
• 32:22
  Speaker 7: you need to worry about nursing home care. You're probably
• 32:24
  Speaker 7: self insured with the you know, the interests and the
• 32:27
  Speaker 7: and the money you can generate, the income that you
• 32:29
  Speaker 7: can generate with your with your assets, and then you
• 32:32
  Speaker 7: just need to decide how you want to leave these
• 32:34
  Speaker 7: assets to your children, you know, over time from a
• 32:37
  Speaker 7: generation skipping tax perspective, et cetera, divorce proofing, et cetera.
• 32:42
  Speaker 7: So hope that helps folks. That's a great estate planning question.
• 32:48
  Speaker 7: Let's just turn a minute for the guide though, And
• 32:51
  Speaker 7: one thing I didn't mention here to this caller Steve,
• 32:54
  Speaker 7: was that gifting was right. And the guide we're given
• 32:57
  Speaker 7: away is making the most of gifting assets right.
• 33:00
  Speaker 2: It is.
• 33:00
  Speaker 7: It is a guide that explains really whether you should
• 33:04
  Speaker 7: gift or not. And again, gifting didn't seem like a
• 33:06
  Speaker 7: huge deal for this past caller. It's not appropriate. However
• 33:10
  Speaker 7: for you it might be. But then you need to
• 33:12
  Speaker 7: know how to do it. Do I give it a
• 33:14
  Speaker 7: way outright to kids? Probably not? Maybe a gifting trust.
• 33:17
  Speaker 7: If I want to make big gifts, Do I put
• 33:19
  Speaker 7: it in a trust that I can keep control over
• 33:22
  Speaker 7: after I give it? Well, I would want that, So
• 33:24
  Speaker 7: espousal lifetime access trust comes up. There's a state tax
• 33:28
  Speaker 7: and income tax issues to consider and whether to gift
• 33:31
  Speaker 7: at all or not. Folks get the guide eight six
• 33:34
  Speaker 7: six eight four eight five six nine nine or Legal
• 33:38
  Speaker 7: Exchange Show dot com and learn how to make the
• 33:41
  Speaker 7: most of gifting assets eight six six eight four eight
• 33:45
  Speaker 7: five six nine nine or Legal Exchange Show dot com.
• 33:50
  Speaker 4: Todd in the last segment, we were talking about, you
• 33:53
  Speaker 4: know kind of things to do to potentially mitigate state
• 33:58
  Speaker 4: level is state taxing?
• 33:59
  Speaker 5: Yes?
• 34:00
  Speaker 4: Is the assumption if you are if you do have
• 34:03
  Speaker 4: a large enough estate where you have a federal estate
• 34:06
  Speaker 4: tax liability? Are you using the same tools or they're
• 34:09
  Speaker 4: different ones that come into play based on the size
• 34:13
  Speaker 4: and scale of an estate.
• 34:14
  Speaker 7: Yeah, and I think after the you know, the OBBBA,
• 34:18
  Speaker 7: if I said enough bees in there, the new Act
• 34:21
  Speaker 7: that passed, I think it's it's really important to talk
• 34:24
  Speaker 7: about those things because they left a lot of the
• 34:27
  Speaker 7: old rules in play. And so for larger estates, and
• 34:30
  Speaker 7: maybe a lot of times we don't speak enough about them,
• 34:33
  Speaker 7: but you know, for a larger estate, you're pushing close
• 34:36
  Speaker 7: to thirty million. When you're talking about larger you know,
• 34:40
  Speaker 7: these folks are going to be making much bigger gifts,
• 34:43
  Speaker 7: and gifts will matter.
• 34:45
  Speaker 2: Then.
• 34:46
  Speaker 7: Remember before we were talking about this, you know, ten
• 34:50
  Speaker 7: million dollar estate, and I'm saying, well, wow, if you
• 34:52
  Speaker 7: make a gift, you're really not helping to save the
• 34:58
  Speaker 7: forty percent estate tax rate. You're really only talking about
• 35:02
  Speaker 7: the state estate tax savings, which is closer to ten
• 35:06
  Speaker 7: twelve percent. Well that's not a huge savings. But as
• 35:10
  Speaker 7: you bring up, Chuck, if we're talking about larger estates,
• 35:15
  Speaker 7: now I'm not so worried about the carryover basis or
• 35:19
  Speaker 7: the trapping of the capital gain on the assets that
• 35:24
  Speaker 7: I give away, because now if I'm making a gift
• 35:27
  Speaker 7: at this larger level, I am saving you know, the
• 35:30
  Speaker 7: state and the federal estate tax, So that could be
• 35:35
  Speaker 7: fifty two percent. So let's just freazing numbers. Let's say
• 35:38
  Speaker 7: fifty percent. Well, if I give away something that saves
• 35:42
  Speaker 7: me at the fifty percent level and trap something at
• 35:45
  Speaker 7: the twenty eight percent level, I guess I'm okay with
• 35:48
  Speaker 7: that sure. And another reason I'd be okay with that
• 35:52
  Speaker 7: when you're dealing with those big numbers, is that tax
• 35:57
  Speaker 7: when you die is do nine months after you die.
• 36:01
  Speaker 7: It's a hard stop you gotta pay. I mean, you
• 36:04
  Speaker 7: could be faced with a down market. You could be
• 36:06
  Speaker 7: faced with a fire sale on real estate to come
• 36:09
  Speaker 7: up with the money you need to pay the tax.
• 36:12
  Speaker 7: Whereas if I've made the gift and I've built in
• 36:15
  Speaker 7: the capital gain, I get it, it's there, But the
• 36:20
  Speaker 7: kids don't have to sell it nine months after I'm dead.
• 36:24
  Speaker 7: They can play around with that capital gain, right, They
• 36:27
  Speaker 7: could say, well, you know what, I'll just hang on
• 36:29
  Speaker 7: to this. You know, as you know from a financial
• 36:32
  Speaker 7: planning standpoint, giving up. You know, selling all the time
• 36:34
  Speaker 7: isn't the right thing to do in a down market.
• 36:37
  Speaker 7: Maybe I know there's gain there, but if I've got
• 36:40
  Speaker 7: some losses built in, I can wait till I have
• 36:43
  Speaker 7: losses sell the lost items, then sell the gain items,
• 36:47
  Speaker 7: and offset the capital gain with the capital loss, so
• 36:50
  Speaker 7: you have a little more play with that capital gain
• 36:54
  Speaker 7: than you do with the death tax. That's a hard
• 36:57
  Speaker 7: and fast Hey, nine months you gotta pay, so I
• 36:59
  Speaker 7: think that's a little bit food for thought.
• 37:02
  Speaker 4: Mister Lutsky, I appreciate you joining us today. Thank you
• 37:04
  Speaker 4: so much for the time.
• 37:05
  Speaker 7: Thank you always a pleasure.
• 37:08
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• 37:12
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