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Will Trump hold firm on his no tariff extension? · The Financial Exchange Show

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  Speaker 2: Chuck, Mark and Tucker with you, and our top story
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  Speaker 2: today is the continued evolution of tariffs this week. On Monday,
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  Speaker 2: we saw the Trump administration send letters out to fourteen
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  Speaker 2: different countries indicating tariff rates that would be similar, if
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  Speaker 2: not exactly the same as what were to be imposed
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  Speaker 2: in the April second announcement. President Trump last night indicated
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  Speaker 2: in additional seven letters were set to go out sometime
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  Speaker 2: this morning, and so we'll continue to monitor to see
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  Speaker 2: what those look like. In addition to this, we also
• 1:47
  Speaker 2: had the President indicate that he was going to be
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  Speaker 2: placing a fifty percent tariff on copper product imports. We
• 1:54
  Speaker 2: have not yet seen an executive order to that effect yet,
• 1:56
  Speaker 2: so we don't have any specifics regarding the actual imple
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  Speaker 2: mentation at this point, and indicated that he would want
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  Speaker 2: to impose a two hundred percent tariff on pharmaceutical imports,
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  Speaker 2: but that that would be phased in over a period
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  Speaker 2: of a couple of years. Markets have largely responded to
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  Speaker 2: this by saying, we're not really sure you're going to
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  Speaker 2: do this, simply because you haven't really done most of
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  Speaker 2: what you've proposed this year from a tariff perspective anyways,
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  Speaker 2: and you can go and kind of follow the you know,
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  Speaker 2: the whole progress chart that we've seen on tariffs from
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  Speaker 2: Remember in early February, we're going to see twenty five
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  Speaker 2: percent tariffs on Mexico and Canada and a ten percent
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  Speaker 2: tariff on China. The Mexico and Canada ones went away.
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  Speaker 2: You then had in March a twenty five percent tariff
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  Speaker 2: that was going to be imposed again on you know,
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  Speaker 2: Mexico and Canada, was a delay, it ended up not
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  Speaker 2: going into effect. You then had the April second tariffs,
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  Speaker 2: which then went through a ninety day delay. You had
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  Speaker 2: the China tariffs, which initially were fifty four percent, went
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  Speaker 2: up over one hundred, and now we're back down at
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  Speaker 2: thirty four. The one place that you have seen the
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  Speaker 2: tariffs maintained has been on sector specific tariffs, where auto
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  Speaker 2: tariffs still remain at twenty five percent. Steel and aluminum
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  Speaker 2: have actually gone from twenty five up to fifty. So
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  Speaker 2: maybe this is an indication that that copper one could
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  Speaker 2: be for real. But on the country related tariffs, I
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  Speaker 2: think the market is by and large saying we're not
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  Speaker 2: really going to see these, and we expect these to
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  Speaker 2: end up being lower than you are telling us. Yeah.
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  Speaker 3: I like the way you just laid it out, because
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  Speaker 3: there's a thread of consistency and all the seeming haphazard
• 3:38
  Speaker 3: announcements on again, off again, and it is protecting. I'll
• 3:43
  Speaker 3: just say key what he've used to be key industries,
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  Speaker 3: which is the oldest argument that I know of for tariffs.
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  Speaker 3: If surely everybody remembers the infant industry arguments of I
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  Speaker 3: don't know Alexander Hamilton from history, class protect important In
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  Speaker 3: that case, they were these nascent industries. Sure I thought
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  Speaker 3: needed to be coddled. Didn't work, but well it worked
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  Speaker 3: to the extent that it allowed some people to profit greatly.
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  Speaker 3: The rest of us paid. I wasn't around at the time.
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  Speaker 3: You may be surprised, know that, A little surprised to
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  Speaker 3: learn that, but everybody else paid higher prices, is my point.
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  Speaker 3: But politically it might make sense, and there's at least
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  Speaker 3: it's sort of coherent, so I can live with that.
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  Speaker 3: I disagree with slapping it tariffs on cars or copper.
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  Speaker 3: It makes the most of us, it makes most of
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  Speaker 3: us poor, but there's at least a consistent thread behind
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  Speaker 3: it all.
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  Speaker 2: As you said, so, I think we're gonna have to again.
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  Speaker 2: This has been kind of like the whole theme of
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  Speaker 2: twenty twenty five is We're gonna have to wait and
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  Speaker 2: see how this plays out, because it obviously can evolve
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  Speaker 2: over the next several weeks. There is a subsequent report
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  Speaker 2: from the Wall Street Journal it's actually a Wall Street
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  Speaker 2: Journal exclusive, that President Trump wanted to impose these new
• 4:53
  Speaker 2: higher tariff rates immediately as of today, July ninth, but
• 4:59
  Speaker 2: was talked out of it Scott Besson, who said, no,
• 5:02
  Speaker 2: I think I can get a few more deals across
• 5:03
  Speaker 2: the finish line by the first if you give me
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  Speaker 2: a little bit more time here, And so, you know,
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  Speaker 2: that's what we are kind of seeing as the rationale for,
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  Speaker 2: you know, another three week delay.
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  Speaker 3: Do you buy that? You think maybe they had that
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  Speaker 3: story league deliberately to make it sound like Trump's on
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  Speaker 3: a hair trigger ready to do this and that gives
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  Speaker 3: percent more leverage. Hey, I'm just trying to get this
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  Speaker 3: done for you. My boss is really on my back here.
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  Speaker 3: Does it give percent more leverage? You think or best sent?
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  Speaker 2: I'm sorry, honestly, I don't know how his last name
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  Speaker 2: is pronounced. And I say this is someone who constantly
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  Speaker 2: has his last name mispronounced. So I'm, you know, in
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  Speaker 2: the same boat.
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  Speaker 3: Okay, the Treasury Secretary.
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  Speaker 2: Here's the thing, We've had two deals to this point.
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  Speaker 2: The first one with the UK is pretty much, Hey,
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  Speaker 2: you're going to pay the ten percent blanket rate. There's
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  Speaker 2: a couple of little differences on you know, some food
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  Speaker 2: imports and steel, and you get you know, a few
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  Speaker 2: cars that you can import at a cheaper rate to
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  Speaker 2: the United States. By and large, there wasn't much there.
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  Speaker 2: The Vietnam one, Okay, you're gonna be paying a tariff
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  Speaker 2: of twenty percent to import Vietnamese goods forty percent on
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  Speaker 2: transshipped goods. I guess my question is if you're threatening
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  Speaker 2: I said this yesterday, if you're threatening Japan with a
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  Speaker 2: twenty five percent tariff and the best deal that you've
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  Speaker 2: done for your you know, arguably closest like ally in
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  Speaker 2: every respect in the world with the UK is ten.
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  Speaker 2: Vietnam's at twenty. Where's your wiggle room for Japan? Is
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  Speaker 2: it like I can get down to like twelve or thirteen?
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  Speaker 2: Is that the best case scenario that I have? And
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  Speaker 2: so I guess my question is if I'm Japan, and
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  Speaker 2: I'm sitting there saying, well, you're threatening to tax my
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  Speaker 2: stuff at twenty five percent if I send it over
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  Speaker 2: to you. The best case that I've seen is ten.
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  Speaker 2: What am I actually negotiating four? If you're gonna make
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  Speaker 2: me do all this other stuff in order to get
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  Speaker 2: to ten, that might not be in my economic best
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  Speaker 2: interest anyways, Like is it? What's the actual difference? Because
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  Speaker 2: if you're gonna make me do a bunch of stuff
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  Speaker 2: that's not economically best for me, then maybe an effective
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  Speaker 2: terifrate of like twenty five percent, I'll just be fine
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  Speaker 2: with it and go with it. And I'm not saying
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  Speaker 2: that that's where they are, but it's just there's a
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  Speaker 2: pretty narrow range on this. I mean, how much difference
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  Speaker 2: is there between a twenty and a twenty five percent terifrate?
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  Speaker 2: I know it's five percent obviously, but in implementation, like
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  Speaker 2: what are we looking at here? So I think, from
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  Speaker 2: from my perspective on this, if if other countries were
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  Speaker 2: really nervous about the implementation of these, they had the
• 7:52
  Speaker 2: last three months to chat, they had the last three
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  Speaker 2: months to bring stuff to the table. I'm not saying
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  Speaker 2: that you won't get more countries that are able to
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  Speaker 2: solidify something. But I don't think that there's there's going
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  Speaker 2: to be that much wiggle room, and I don't think
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  Speaker 2: the Trump administration is giving them that much wiggle room
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  Speaker 2: based on what we've seen from the UK and from Vietnam.
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  Speaker 3: I mean, there are countless domestic factors to I don't
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  Speaker 3: know what kind of pressure the Japanese government gets from
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  Speaker 3: its constituencies. There. Governments don't okay a ton.
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  Speaker 2: All governments do. All governments a ton of pressure from
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  Speaker 2: their local do. The Japanese government is not responsible to
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  Speaker 2: the United States right right right now.
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  Speaker 3: I guess what I'm saying is that may affect their
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  Speaker 3: incentives to negotiate if their producers say we keep saying that.
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  Speaker 3: The administration keeps saying because I'm still convinced they don't
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  Speaker 3: actually know how tariffs work because they repeatedly misrepresent them,
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  Speaker 3: or maybe it's just framing for political purposes. I don't know.
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  Speaker 3: They keep saying we're going to charge Japan, but it's
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  Speaker 3: not to be clear, it's not Japan that gets charged,
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  Speaker 3: it's companies that are doing depending on who is at
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  Speaker 3: the port where it gets important.
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  Speaker 2: I've talked that lent about. I have friends who run
• 9:02
  Speaker 2: businesses where they import and when a shipment comes in
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  Speaker 2: from DHL and it says, okay, you're you know, cost
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  Speaker 2: the goods is sixty thousand, and you've got a thirty
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  Speaker 2: percent tariff you know on Chinese imports, and pay us
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  Speaker 2: another eighteen thousand. It's my friend's business who is paying
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  Speaker 2: the eighteen thousand, right, not a Chinese company.
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  Speaker 3: So maybe one public service that we can perform on
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  Speaker 3: the Financial Exchange is to clarify that it's it's companies,
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  Speaker 3: either domestic or foreign or some combination, depending on how
• 9:26
  Speaker 3: they work it out between them who pay tariffs. We're
• 9:29
  Speaker 3: not charging countries. That just isn't how it works. And
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  Speaker 3: so I wonder how that affects the incentive of various
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  Speaker 3: countries to negotiate. Are they calling their exporters and asking
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  Speaker 3: can you eat some of this? What are you hearing
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  Speaker 3: from people that you supply? How urgent is this? Can
• 9:45
  Speaker 3: we take six months and make Trump sweat? I wonder what?
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  Speaker 3: I wonder what they're they're what's what's informing their strategy
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  Speaker 3: on this?
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  Speaker 2: I think there's a lot of there's a ton of
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  Speaker 2: communication that's going on on this. And it's not just
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  Speaker 2: with the country, it's also with us businesses that that are,
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  Speaker 2: you know, trying to figure out how to manage it
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  Speaker 2: as well. Yeah, you know, I have one person that
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  Speaker 2: I know who basically said, look with this, you know
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  Speaker 2: China tariff. They import a lot of stuff from China,
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  Speaker 2: and they said, the producer in China was able to
• 10:14
  Speaker 2: eat some of the cost, the shipper was able to
• 10:18
  Speaker 2: able to eat some of the cost. We're going to
• 10:20
  Speaker 2: eat some and we're gonna have to pass some on.
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  Speaker 2: So a you know, a thirty percent increase in price
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  Speaker 2: that would have been you know, twenty because of the
• 10:27
  Speaker 2: difference between wholesale and retail. Okay, instead of it being
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  Speaker 2: a twenty percent increase in price, we can hold it
• 10:33
  Speaker 2: down to a five or six percent percent increasing price.
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  Speaker 2: But it's still going to be there because all of
• 10:39
  Speaker 2: us are just going to have to feel some of
• 10:41
  Speaker 2: this pain. So and these are the conversations that are
• 10:44
  Speaker 2: going on constantly. So I think that when it comes
• 10:48
  Speaker 2: to the tariff situation, the big thing that I continue
• 10:52
  Speaker 2: to hear consistently is just figure out where these rates
• 10:58
  Speaker 2: are going to be and leave them so that we
• 11:00
  Speaker 2: can actually adjust because I did finally talk to my
• 11:04
  Speaker 2: buddy who makes board games last night after our conversation
• 11:07
  Speaker 2: on the show yesterday, I was able to chat with
• 11:10
  Speaker 2: him and basically learned, like, okay, like one of the
• 11:15
  Speaker 2: countries that he had been trying to outsource production to
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  Speaker 2: was Vietnam. A ton of problems trying to do so
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  Speaker 2: in terms of lack of expertise. Even in Vietnam, they
• 11:24
  Speaker 2: don't make some of the stuff that he needs to make.
• 11:26
  Speaker 2: As an example, board games. What's one of the what's
• 11:29
  Speaker 2: one of the key things that you need for any
• 11:31
  Speaker 2: board game or for most board games? Just little pieces
• 11:34
  Speaker 2: uhcle board dice? Dice? Okay, sorry I shouldn't have he can?
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  Speaker 3: Did he say?
• 11:42
  Speaker 2: I didn't get that into it. There are no dice
• 11:44
  Speaker 2: manufacturers in Vietnam. They all if you are making a
• 11:47
  Speaker 2: board game in Vietnam, the dice still have to be
• 11:50
  Speaker 2: imported from dice China. So Vietnam no dice. So this
• 11:55
  Speaker 2: is a thing where he's like, okay, so now I'm
• 11:56
  Speaker 2: I've decided to move my production to Vietnam. Thought that
• 12:00
  Speaker 2: was going to be this ten percent tariff right for
• 12:01
  Speaker 2: an extended period. Now it's a twenty plus because the
• 12:05
  Speaker 2: dice still have to be imported from China, that portion
• 12:09
  Speaker 2: is going to be subject to the forty percent transshipping tariff.
• 12:12
  Speaker 2: Whoa bewildering And so it's just he's just like, I
• 12:17
  Speaker 2: just need some consistency because I can't figure out how
• 12:21
  Speaker 2: to run my business right now? Are there substitutes for dice?
• 12:24
  Speaker 3: Is there an electronic substitute, some sort of random number
• 12:27
  Speaker 3: generator they could throw in there? Nothing that's as cheap as.
• 12:29
  Speaker 2: Probably that's made or as fun as dice.
• 12:31
  Speaker 3: Dice so uniquely well, if.
• 12:33
  Speaker 2: You're playing a punt, if you want to play a
• 12:34
  Speaker 2: computer game hole, man, yeah, you got you gotta feel
• 12:38
  Speaker 2: them in your hand. You gotta be able to blow
• 12:39
  Speaker 2: on them. Like does anyone like do you when you
• 12:42
  Speaker 2: pull the random number generator up on your iPhone? Do
• 12:44
  Speaker 2: you blow on the iPhone? And then you're like, ew,
• 12:46
  Speaker 2: I just spin on my iPhone. That's a fair point,
• 12:49
  Speaker 2: you know. More importantly, why does anyone touch dice to
• 12:52
  Speaker 2: casino knowing how many people have spit on them? And
• 12:56
  Speaker 2: I say, this is someone who loves to go and
• 12:58
  Speaker 2: play some craps from time to time, But man, what
• 13:01
  Speaker 2: a gross game When you actually think about it. Let's
• 13:05
  Speaker 2: take a quick break on that, and when we come back,
• 13:09
  Speaker 2: let's talk a little bit about inflation expectations right after this.
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• 14:23
  Speaker 2: The Federal Reserve Bank of New York yesterday put out
• 14:27
  Speaker 2: their June survey of consumer expectations. The big thing that
• 14:32
  Speaker 2: people like to look at in this is the inflation
• 14:35
  Speaker 2: expectations number, and we saw that it came in at
• 14:38
  Speaker 2: three percent compared to three point two percent in the
• 14:43
  Speaker 2: prior month. What do you make of this mark? Is
• 14:45
  Speaker 2: this statistical noise? Is this room for optimism? What's what
• 14:48
  Speaker 2: do you make of it?
• 14:50
  Speaker 3: Inflation expectations have gone up, according to most survey measures
• 14:53
  Speaker 3: over the past few months. As you'd expect, people are
• 14:56
  Speaker 3: following tariff news closely. They know that tariffs are taxes
• 15:00
  Speaker 3: on goods. Taxes on goods increase prices. The FED can
• 15:04
  Speaker 3: accommodate those price increases so as to not let demand slip,
• 15:09
  Speaker 3: which is what it's done in the modern era, and
• 15:11
  Speaker 3: that results in a little burst of inflation. How much
• 15:13
  Speaker 3: depends on a lot of factors, among them inflation expectations.
• 15:16
  Speaker 3: That's why the FED follows it closely. So what do
• 15:18
  Speaker 3: I make of this particular reading. It's close enough to
• 15:21
  Speaker 3: the prior reading that it may not be different. As
• 15:23
  Speaker 3: you point out, in a statistical sense, bigger picture, expectations
• 15:27
  Speaker 3: have gone up. This makes the Fed's job harder. Inflation,
• 15:30
  Speaker 3: if you think about it as a process, is being
• 15:33
  Speaker 3: driven by different things. Is partly driven by what people
• 15:35
  Speaker 3: believe inflation will be. And as it turns out, survey
• 15:38
  Speaker 3: based expectations do better than more sophisticated financial market expectations.
• 15:43
  Speaker 3: And we can get into how you calculate financial market expectations.
• 15:46
  Speaker 3: That's not really important other than to say one comes
• 15:48
  Speaker 3: from people, the other comes from looking at stuff that
• 15:50
  Speaker 3: people buy that financial market participants buy and sell, so
• 15:56
  Speaker 3: expectations are up. That suggests that the FED is going
• 15:59
  Speaker 3: to be more vigilant than they were had they not
• 16:01
  Speaker 3: risen all l sqal. On top of that, of course,
• 16:04
  Speaker 3: output is still probably at or above trend, which suggests
• 16:08
  Speaker 3: word about the economy speed limit, which is determined by
• 16:11
  Speaker 3: the structural forces are its productive capacity. So it's not
• 16:15
  Speaker 3: surprising the FED would be hesitant to ease further right now.
• 16:19
  Speaker 2: Mark how much do current changes in price typically impact
• 16:23
  Speaker 2: inflation expectations? What I mean by that is, if people
• 16:25
  Speaker 2: see prices moving up today, does that cause them to
• 16:29
  Speaker 2: report higher expectations for inflation in the future.
• 16:32
  Speaker 3: They're quite sensitive to commodity prices and to the salient
• 16:35
  Speaker 3: stuff gasoline, The old chestnut among people who follow this
• 16:41
  Speaker 3: closely is if you want to know what inflation expectations are,
• 16:43
  Speaker 3: just look at the price of gasoline, food too, because
• 16:47
  Speaker 3: it's very conspicuous. Sure, so, yeah, people are, and we're
• 16:50
  Speaker 3: all on a hair trigger now with respect to inflation.
• 16:52
  Speaker 3: It's not something we ever paid attention to.
• 16:54
  Speaker 2: We all PTSD from twenty twelve ago.
• 16:56
  Speaker 3: Yeah, perfect, So expectations will jump more quickly than they
• 16:59
  Speaker 3: did previously. This is a well documented phenomenon, not just here,
• 17:03
  Speaker 3: but as we talked about yesterday, For you to have
• 17:05
  Speaker 3: confidence that something should be used in forecasting, it should
• 17:08
  Speaker 3: hold up in other markets and across time. This is
• 17:11
  Speaker 3: the case all over the place. So this is why
• 17:13
  Speaker 3: again the FED is reluctant to ease.
• 17:18
  Speaker 2: If and Jay Powell said as much. But I'm curious
• 17:21
  Speaker 2: to get your opinion on this. Let's say that we
• 17:24
  Speaker 2: didn't have these questions about tariffs. Let's say that we
• 17:26
  Speaker 2: just had We've gone through the first six months of
• 17:29
  Speaker 2: you know, the Trump administration, and we've had the reconciliation
• 17:32
  Speaker 2: bill pass, and we're seeing the economic day of the
• 17:34
  Speaker 2: way to today. I know that everything wouldn't be exactly
• 17:36
  Speaker 2: the same because you know, it's a dynamic system. But
• 17:39
  Speaker 2: let's say that aside from tariff's things are the same.
• 17:42
  Speaker 2: Jay Powell came out a couple weeks ago and pretty
• 17:44
  Speaker 2: much said, yeah, there could be a case for cutting
• 17:47
  Speaker 2: rates now if it weren't for tariffs. Is that a
• 17:51
  Speaker 2: fair Well.
• 17:52
  Speaker 3: Let's go go back to the framework. Let's assume that
• 17:55
  Speaker 3: the inflation expectations component of the inflation process was stable,
• 18:00
  Speaker 3: hadn't gone up. It's still elevated. It's still around three.
• 18:04
  Speaker 3: And it could be because of the inflation ptsd PTA
• 18:08
  Speaker 3: that you pointed out a moment ago. It could be
• 18:13
  Speaker 3: for other reasons. I don't know, but expectations are still elevated.
• 18:16
  Speaker 3: The economy is still look Unemployment has gone up a
• 18:19
  Speaker 3: little bit, other measures of labor market strength have sagged
• 18:24
  Speaker 3: a little bit, but by all measures, the labor market
• 18:27
  Speaker 3: is still very very strong in historical terms. Any unemployment
• 18:29
  Speaker 3: rate in the fours is exceptional, as is the fives
• 18:33
  Speaker 3: for that matter, historically speaking. So I wish Powell hadn't
• 18:36
  Speaker 3: put it that way, because now we're all waiting for
• 18:41
  Speaker 3: clarity on tariffs or some sort of resolution, and then
• 18:45
  Speaker 3: you've got the green light, right because Powell sort of
• 18:47
  Speaker 3: made it a prerequisite. Oh well, as as soon as
• 18:50
  Speaker 3: that uncertainty is resolved, then he can start to cut.
• 18:52
  Speaker 3: I wish he hadn't done that. I wish when he
• 18:55
  Speaker 3: he has to do a better job or the box
• 18:57
  Speaker 3: of filf boxed himself in thank you the next fed here,
• 19:00
  Speaker 3: I hope we'll do a better job of presenting these
• 19:04
  Speaker 3: things in sort of a more slippery way so as
• 19:06
  Speaker 3: to give himself or herself wiggle room.
• 19:08
  Speaker 2: Well, and because part of it, again, it's a dynamic system.
• 19:11
  Speaker 2: So let's say the Terrorfisher does go away. Does that
• 19:14
  Speaker 2: mean that all of the inflation issue has gone away?
• 19:16
  Speaker 2: Or does it just move from goods to services? And
• 19:18
  Speaker 2: now you've got inflation showing up somewhere else. So let's
• 19:22
  Speaker 2: take a quick break. When we come back, we got
• 19:25
  Speaker 2: Wall Street Watch and Todd Lutsky joins us right after this.
• 19:41
  Speaker 1: Like us on Facebook and follow us on Twitter at
• 19:43
  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
• 19:53
  Speaker 1: Street Watch. A complete look at what's moving markets so
• 19:56
  Speaker 1: far today, right here on the Financial Exchange Radio Network.
• 20:00
  Speaker 4: Markets in positive territory despite a new round of tariff
• 20:03
  Speaker 4: threats and a deadline delay to August first. For the more,
• 20:07
  Speaker 4: President Trump said he would impose fifty percent tariffs on
• 20:10
  Speaker 4: copper and a levy of up to two hundred percent
• 20:12
  Speaker 4: on pharmaceutical imports over a span of a couple of years.
• 20:16
  Speaker 4: Right now, the Dow is up by two tenths of
• 20:19
  Speaker 4: one percent. SMP five hundred is up three tenths of
• 20:23
  Speaker 4: one percent, or twenty two points, NASDAC up two thirds
• 20:26
  Speaker 4: of one percent or one hundred and twenty six points,
• 20:29
  Speaker 4: RUSSED two thousand up four tenths of one percent. Ten
• 20:31
  Speaker 4: year Treasureel pulling back three basis points at four point
• 20:35
  Speaker 4: three seven percent. In crude oil is off seven tenths
• 20:38
  Speaker 4: of one percent, rating at sixty seven dollars and eighty
• 20:41
  Speaker 4: six cents a barrel. With copper prices soaring in reaction
• 20:46
  Speaker 4: to the new duties on the metal shares and minor
• 20:49
  Speaker 4: freeport Macmarine are actually down two percent now after yesterday's gains,
• 20:53
  Speaker 4: while overseas copper producers including glen Core an Anglo American
• 20:57
  Speaker 4: also falling slightly as well. Meanwhile, according to Bloomberg, Meta
• 21:01
  Speaker 4: purchased a minority steak in eyewear giant eslor Luxotica, as
• 21:07
  Speaker 4: a Facebook parent already partners with the company to make
• 21:10
  Speaker 4: ray Band smart glasses. Meta shares are up one and
• 21:13
  Speaker 4: a half percent. Separately, Bloomberg also reporting that energy company
• 21:17
  Speaker 4: Aes was exploring a potential sale amid interest from infrastructure investors,
• 21:24
  Speaker 4: that stock surging by seventeen percent elsewhere, as several reports
• 21:28
  Speaker 4: say Starbucks has drawn bids for a steak in its
• 21:31
  Speaker 4: China business. CNBC said bids valued Starbucks China up to
• 21:36
  Speaker 4: ten billion dollars. Starbucks today is up by one percent,
• 21:40
  Speaker 4: and this morning chip in Ai giant In Nvidia became
• 21:44
  Speaker 4: the first company to hit four trillion dollars in market cap,
• 21:47
  Speaker 4: with its stock up two percent today. I'm Tucker Silva
• 21:51
  Speaker 4: and that is Wallstree.
• 21:52
  Speaker 2: Watch.
• 21:54
  Speaker 1: This is Asked Todd on the Financial Exchange Radio Network.
• 21:58
  Speaker 1: If you have an existing estate plan in the market
• 22:00
  Speaker 1: for one, Todd Letsky is here to answer your questions
• 22:03
  Speaker 1: and help you plan for a later life. Ask Todd
• 22:05
  Speaker 1: is presented by Cushing and Dolan, serving Massachusetts and New
• 22:08
  Speaker 1: England for more than thirty five years, helping families with
• 22:12
  Speaker 1: a state and tax planning, Medicaid planning, and probate law.
• 22:15
  Speaker 1: Visit Cushingdolan dot com. Now here's Todd Lutsky.
• 22:20
  Speaker 2: We are now joined by the one and only Todd
• 22:23
  Speaker 2: Lutsky from the law firm of Cushing and Dolan. Phone
• 22:26
  Speaker 2: lines are open because the segment is asked Todd. Where
• 22:28
  Speaker 2: you get to ask Todd your estate planning questions live
• 22:31
  Speaker 2: on air right now? Eight eight eight to zero five
• 22:36
  Speaker 2: two two sixty three. That is the number to call
• 22:38
  Speaker 2: to ask Todd your estate planning questions. We usually have
• 22:42
  Speaker 2: time for two to three of these, so get callin early,
• 22:45
  Speaker 2: get calling often to make sure you get your question
• 22:49
  Speaker 2: answered by Todd. That number is eight eight eight to
• 22:52
  Speaker 2: zero five two two six three. Again, that number is
• 22:57
  Speaker 2: eight eight eight to zero five two six three, And
• 23:00
  Speaker 2: we do have limited space on the phone lines, so
• 23:02
  Speaker 2: get calling now, mister Lutsky. How are you doing today?
• 23:06
  Speaker 2: I am never better and you I'm okay ish, just
• 23:10
  Speaker 2: okay ish. Well, that had a doctor's appointment yesterday? Yeah,
• 23:12
  Speaker 2: how'd that go? Doctor asked why I drank the break
• 23:14
  Speaker 2: fluid break fluid? Told him I couldn't stop. That makes sense, Ye,
• 23:20
  Speaker 2: wasn't a good appointment.
• 23:21
  Speaker 5: Wasn't a good appointment?
• 23:21
  Speaker 2: Todd? I want to talk to you a little bit
• 23:23
  Speaker 2: about nursing, home planning and being able to qualify for Medicaid.
• 23:29
  Speaker 2: When you look at how Medicaid examines assets and incomes
• 23:35
  Speaker 2: of a family, what do they look at in order
• 23:39
  Speaker 2: to determine eligibility.
• 23:41
  Speaker 5: So it's a little different for a single person versus
• 23:45
  Speaker 5: a married couple.
• 23:46
  Speaker 2: Let's start with a single person then, so.
• 23:48
  Speaker 5: The single person is a little easier because pretty much
• 23:53
  Speaker 5: everything is countable. Let's start with that. But then let's
• 23:58
  Speaker 5: try to back off assets. So you got this big pile.
• 24:02
  Speaker 5: In order for an individual to become eligible for Medicaid,
• 24:06
  Speaker 5: you need to have two thousand dollars. That doesn't seem
• 24:09
  Speaker 5: like a lot of money, no, So however, if you
• 24:13
  Speaker 5: have a house, it's your primary residence, and most people do,
• 24:19
  Speaker 5: they can check a box on the application that they
• 24:21
  Speaker 5: intend to return home. And as long as the value
• 24:23
  Speaker 5: of that home is less than about a million, thirty
• 24:25
  Speaker 5: three thousand dollars. It very varies right around there, goes
• 24:29
  Speaker 5: up and down and a it's it was your primary
• 24:35
  Speaker 5: residence and it's located in Massachusetts. If you're applying in
• 24:38
  Speaker 5: mass it'll be non countable, yeah, but leanable Okay, so
• 24:43
  Speaker 5: they're going to put a lien on it, but at
• 24:44
  Speaker 5: least that won't prevent you from It won't count towards
• 24:47
  Speaker 5: your two thousand dollars limit. All the rest of the money,
• 24:52
  Speaker 5: if you have no other no other real estate, all
• 24:54
  Speaker 5: the rest of the money is countable. How do I
• 24:56
  Speaker 5: get rid of it?
• 24:57
  Speaker 2: What?
• 24:57
  Speaker 5: Can't give it away?
• 24:58
  Speaker 2: It's too late.
• 24:58
  Speaker 5: You have a five year waiting period. So the only
• 25:01
  Speaker 5: thing you could do there is think about buying a
• 25:02
  Speaker 5: Medicaid annuity if you need one, right to take those dollars.
• 25:07
  Speaker 5: It's a special annuity. Can't do this on your own,
• 25:10
  Speaker 5: and you follow the annuity rules that do provide a
• 25:14
  Speaker 5: payback to the state in case the annuity doesn't expire
• 25:18
  Speaker 5: by the time you do. You convert those assets into
• 25:22
  Speaker 5: an income stream. So if I had a five hundred
• 25:26
  Speaker 5: and two thousand dollars of assets, I would have to
• 25:28
  Speaker 5: take five hundred, leaving the two. Buy the annuity for
• 25:32
  Speaker 5: five hundred, pays out over my life expectancy based on
• 25:36
  Speaker 5: a table, and then I get this stream of income. Well,
• 25:39
  Speaker 5: that income goes to the nursing home, but the five
• 25:42
  Speaker 5: hundred thousand went away. Now it looks like I'm worth
• 25:45
  Speaker 5: two thousand dollars and I'm immediately eligible for Medicaid provide it. However,
• 25:50
  Speaker 5: that it does have a payback provision in case I die.
• 25:52
  Speaker 2: Talking with Todd Watski from Cushing and Dolan. If you've
• 25:55
  Speaker 2: got a question to ask Todd about your estate plan,
• 25:57
  Speaker 2: phone lines still have space on them at eight eighty
• 25:59
  Speaker 2: eight to zero five two two six three. That number
• 26:04
  Speaker 2: again is eight eight eight to zero five two two
• 26:09
  Speaker 2: six three. Todd, What about the situation for a married couple,
• 26:12
  Speaker 2: how does that differ?
• 26:13
  Speaker 5: Yeah, So take the same situation, and I haven't discussed
• 26:16
  Speaker 5: rental property or vacation homes. I'm just assuming a home
• 26:19
  Speaker 5: and money. Those are the two assets, which is mostly
• 26:22
  Speaker 5: what people have, sure, And so with a married couple,
• 26:25
  Speaker 5: it's a little different, right, It's it's actually a little
• 26:27
  Speaker 5: easier because with a married couple you have again everything
• 26:31
  Speaker 5: starts off asccountable, but the home is different. The home
• 26:36
  Speaker 5: if the community spouse is living there and it's located
• 26:41
  Speaker 5: in Massachusetts, there is no value limitation. Remember we talked
• 26:47
  Speaker 5: about the value limitation for the single person. Remember if
• 26:50
  Speaker 5: that home that the single person had was worth a
• 26:52
  Speaker 5: million five hard stop they're not eligible for medicaid. That's
• 26:56
  Speaker 5: a toughie. However, for a married couple, if your primary
• 27:00
  Speaker 5: residence is worth a million, five or two million or
• 27:02
  Speaker 5: whatever it is, doesn't matter as long as this community
• 27:04
  Speaker 5: spouse is living there, non countable, non leanable. What I
• 27:09
  Speaker 5: would recommend, though, is that you take the jointly owned
• 27:11
  Speaker 5: property and convey it to the survive, to the healthy spouse.
• 27:16
  Speaker 5: Don't leave it own jointly, because if I leave it
• 27:19
  Speaker 5: owned jointly, it's possibly going to be you know, I
• 27:22
  Speaker 5: could die out of order. And then it goes back
• 27:24
  Speaker 5: to the surviving, the health the six spouse who's in
• 27:26
  Speaker 5: the nursing home. All the rest of the money, same deal.
• 27:30
  Speaker 5: It's all at risk, except the community spouse gets about
• 27:33
  Speaker 5: one hundred and fifty four thousand dollars give or take
• 27:37
  Speaker 5: of money that she can reach in and take out
• 27:39
  Speaker 5: of that pot of money, and that'll be non countable,
• 27:42
  Speaker 5: along with the house. Everything else countable unless you transfer
• 27:48
  Speaker 5: it to the healthy spouse. What you can do because
• 27:50
  Speaker 5: that's a permissible transfer, no five year waiting period. And
• 27:53
  Speaker 5: then the healthy spouse buys that same annuity that we
• 27:56
  Speaker 5: talked about for this single person and like magic.
• 27:59
  Speaker 2: You're on Medicaid Talk with Todd Lutsky from Cushing and Dolan.
• 28:03
  Speaker 2: If you've got a question for Todd, we do still
• 28:05
  Speaker 2: have room on the phone lines at eight eight eight
• 28:07
  Speaker 2: to zero five two two sixty three. We are going
• 28:11
  Speaker 2: to take a quick break right now, but when we
• 28:13
  Speaker 2: come back, we're gonna get to your questions with Todd.
• 28:15
  Speaker 2: That phone number is eight eight eight to zero five
• 28:19
  Speaker 2: two two six three. One last time, it's eight eight
• 28:22
  Speaker 2: eight two zero five two two sixty three.
• 28:26
  Speaker 1: Ask Todd with Todd Lutskey every Wednesday at ten thirty
• 28:29
  Speaker 1: only here on the Financial Exchange Radio Network. You're listening
• 28:35
  Speaker 1: to Ask Todd with Todd Lutsky on the Financial Exchange
• 28:39
  Speaker 1: Radio Network.
• 29:03
  Speaker 2: Talking with Todd Letski from the law firm of Cushing
• 29:06
  Speaker 2: and Dolan. Todd, we talked about, you know, the assets
• 29:09
  Speaker 2: that are potentially at risk and income streams that are
• 29:11
  Speaker 2: potentially at risk in the event that you have a
• 29:14
  Speaker 2: long term care situation. Yeah, given all of that money
• 29:18
  Speaker 2: that could be at risk, at what age does someone
• 29:20
  Speaker 2: need to start getting their estate plan in order for
• 29:24
  Speaker 2: potential long term care situations?
• 29:27
  Speaker 5: You know, I would say I just as a general rule,
• 29:30
  Speaker 5: I say, you know, sixty and over. If they come
• 29:32
  Speaker 5: in and they and they are talking about doing long
• 29:35
  Speaker 5: term care planning, I would say, you know, sixty and
• 29:38
  Speaker 5: overs is a time in which I'm going to at
• 29:40
  Speaker 5: least ask the question, because you know, it takes five
• 29:45
  Speaker 5: years to protect stuff. And I know we've been talking
• 29:47
  Speaker 5: about last minute planning a minute ago, but if you
• 29:51
  Speaker 5: want to avoid that problem, it does take five years.
• 29:54
  Speaker 5: So you know, if I can have this in my
• 29:56
  Speaker 5: rear view mirror by the time I'm sixty five or seventy,
• 30:00
  Speaker 5: why not is.
• 30:01
  Speaker 2: There downside to doing it sooner than that. Let's say
• 30:05
  Speaker 2: that you're fifty five and you say, hey, should I
• 30:08
  Speaker 2: start getting you know, things in order for potential long
• 30:11
  Speaker 2: term care situations? Is there a problem with going that route?
• 30:15
  Speaker 5: Well, I mean, when you're when you're younger, you probably
• 30:18
  Speaker 5: have younger children. You might not want them serving as
• 30:21
  Speaker 5: trustee yet you know, you might need more access to
• 30:25
  Speaker 5: the assets to pay for college, or you know, mortgages
• 30:28
  Speaker 5: exist on houses. So yeah, there can be some issues
• 30:32
  Speaker 5: when you're when you're younger that you might just not
• 30:35
  Speaker 5: be ready for that irrevocable trust. You haven't quite settled
• 30:38
  Speaker 5: down yet. So so let's go forward.
• 30:41
  Speaker 2: Now, Let's say that someone is approaching a nursing home
• 30:44
  Speaker 2: situation where you know their health is failing, spouse can't
• 30:48
  Speaker 2: keep them at home, or maybe they're just not you know,
• 30:50
  Speaker 2: maybe they don't have a spouse. How does qualifying for
• 30:54
  Speaker 2: medicaid to cover the cost of that nursing home actually work? Like,
• 30:57
  Speaker 2: what are the steps that are involved in being able
• 31:01
  Speaker 2: to say I'm going to have Medicaid cover the cost
• 31:05
  Speaker 2: of this long term care situation.
• 31:06
  Speaker 5: So this is more back to that last minute idea, right.
• 31:09
  Speaker 5: You know, if you've not planned, if you have planned,
• 31:12
  Speaker 5: there's always going to be some assets that are sort
• 31:14
  Speaker 5: of kicking around that you have to deal with. And
• 31:17
  Speaker 5: so the process itself is pretty arduous. I mean you
• 31:22
  Speaker 5: basically come in, you explain how all the assets are owned.
• 31:26
  Speaker 5: You decide what assets are countable, what assets are not.
• 31:29
  Speaker 5: Like a house we talked about might not be countable,
• 31:33
  Speaker 5: you know, perhaps a rental property is not countable if
• 31:37
  Speaker 5: it's making money, if it's generating income essential self support,
• 31:41
  Speaker 5: but leanable. So you have to rearrange all the assets
• 31:44
  Speaker 5: to find out what's countable and what's non countable. Once
• 31:46
  Speaker 5: you do that and you've met the financial requirements of eligibility. Again,
• 31:53
  Speaker 5: for a married couple, that would be one hundred and
• 31:56
  Speaker 5: fifty four thousand dollars ISSH for the healthy spouse, two
• 32:01
  Speaker 5: thousand for the six spouse, and one home. So when
• 32:05
  Speaker 5: you meet that eligibility requirement, now you can begin the
• 32:08
  Speaker 5: application process. But the application process is going to require,
• 32:13
  Speaker 5: you know, five years worth of bank statements, five years
• 32:17
  Speaker 5: worth of brokerage statements, birth certificates, social Security card, three
• 32:21
  Speaker 5: years where it the tax returns, on and on.
• 32:23
  Speaker 2: There's a list. So it's not a simple and easy process,
• 32:27
  Speaker 2: is what you're telling me.
• 32:28
  Speaker 5: No, not, in fact, we do it all, but you've
• 32:31
  Speaker 5: got to help me help you by providing that support
• 32:34
  Speaker 5: for everything I put on the application. Then you file,
• 32:38
  Speaker 5: then you wait thirty days for them to sniff it
• 32:40
  Speaker 5: over and come back and say, you know what, we
• 32:43
  Speaker 5: need more stuff. And then you have thirty days to
• 32:46
  Speaker 5: get that more stuff. And then you wait another thirty
• 32:49
  Speaker 5: days and if all has gone well, you should get
• 32:52
  Speaker 5: a letter of eligibility retroactive back to the day we
• 32:56
  Speaker 5: said you were financially eligible, the day we proved that
• 32:59
  Speaker 5: you were financially eligible for Medicaid. So it's a process,
• 33:03
  Speaker 5: but it's one worth going down that road if you
• 33:06
  Speaker 5: can save these assets. So, folks, we're talking now a
• 33:10
  Speaker 5: little bit about what to do last minute. We just
• 33:14
  Speaker 5: talked about the application process itself, which is time consuming
• 33:20
  Speaker 5: and a little arduous, but again, the lawyers do most
• 33:22
  Speaker 5: of the work. However, what do we do last minute
• 33:27
  Speaker 5: to make sure these assets aren't taken? And that's what
• 33:30
  Speaker 5: this guide is all about. Whether you're married or single,
• 33:33
  Speaker 5: the rules are different, right, So how you treat assets
• 33:37
  Speaker 5: that are accountable non countable? You know, think about a home,
• 33:40
  Speaker 5: a vacation home, a rental property, what about life insurance,
• 33:44
  Speaker 5: what about annuities four oh one k's. They're all treated differently.
• 33:48
  Speaker 5: And there's even some information in here about how you
• 33:51
  Speaker 5: can transfer some of these assets last minute without the
• 33:56
  Speaker 5: five year waiting period. So don't just write the check, folks,
• 34:00
  Speaker 5: call and get the guide last minute Medicaid eligibility techniques
• 34:05
  Speaker 5: to save it. It's for people who have planned and
• 34:07
  Speaker 5: people who have not planned. Eight six six eight four
• 34:11
  Speaker 5: eight five six nine nine or Legal Exchange Show dot
• 34:16
  Speaker 5: com again eight six six eight four eight five six
• 34:20
  Speaker 5: ninety nine or Legal Exchange Show dot com.
• 34:23
  Speaker 2: Todd as you're you know, trying to navigate that situation,
• 34:28
  Speaker 2: and you know, let's say that again, you've got a
• 34:31
  Speaker 2: medicaid situation or a nursing home situation rather that you're
• 34:34
  Speaker 2: trying to qualify for medicaid on Are there any differences
• 34:38
  Speaker 2: from state to state and how that works in terms
• 34:42
  Speaker 2: of qualifying or is it largely the same between most
• 34:45
  Speaker 2: most states? Depending on where people are listening.
• 34:47
  Speaker 5: Right now, I'm going to say that largely it's the
• 34:51
  Speaker 5: same because it's a federal statute that is implemented by
• 34:56
  Speaker 5: the state. But they are not all the same. Right Like,
• 35:00
  Speaker 5: for example, in Massachusetts, the value of a home when
• 35:07
  Speaker 5: we talked about a single person, the value of the
• 35:10
  Speaker 5: home was when the state passed the medicaid laws in
• 35:15
  Speaker 5: twenty oh six, they said a home will be considered
• 35:18
  Speaker 5: non countable unless the value exceeds seven hundred and fifty
• 35:22
  Speaker 5: thousand dollars or five hundred thousand dollars depending on where
• 35:27
  Speaker 5: you live, right, because certain states have higher value real
• 35:30
  Speaker 5: estate than others, So they put that option in there,
• 35:33
  Speaker 5: and the state got to pick which value they used,
• 35:37
  Speaker 5: and of course those were indexed for inflation. So that's
• 35:40
  Speaker 5: why we're at a million plus in Massachusetts today. So
• 35:44
  Speaker 5: Massachusetts opted for the seven hundred and fifty valuation, whereas
• 35:49
  Speaker 5: many other states that didn't opt for that five hundred
• 35:53
  Speaker 5: was enough to make it non count but because they're
• 35:55
  Speaker 5: most of the values of the of the real estate
• 35:57
  Speaker 5: in that state were lower, and so that that would
• 36:01
  Speaker 5: be it. That would be a difference. But generally the
• 36:04
  Speaker 5: rules are are pretty pretty uniform, Todd.
• 36:07
  Speaker 2: I know that with the latest reconciliation bill that just
• 36:11
  Speaker 2: passed Congress and was signed by the President, there are
• 36:14
  Speaker 2: some changes to Medicaid that happen as we go out
• 36:17
  Speaker 2: a couple of years from now. Do any of those
• 36:19
  Speaker 2: impact Medicaid coverage of nursing home costs?
• 36:23
  Speaker 5: Yeah, the good news is not not really except interestingly enough,
• 36:29
  Speaker 5: this valuation on the home thing, right, they've now decided
• 36:33
  Speaker 5: to make it uniform and make the value one million
• 36:37
  Speaker 5: dollars on the house going forward.
• 36:39
  Speaker 2: Across the board.
• 36:41
  Speaker 5: I'm still digesting the bill as we speak, but it
• 36:45
  Speaker 5: it it appears to me that it's that it's going
• 36:47
  Speaker 5: to be across the board. The thing I'm waiting on
• 36:49
  Speaker 5: is is it going to remain indexed for inflation? And
• 36:53
  Speaker 5: then the question is if you're already at a million
• 36:55
  Speaker 5: one like we are in mass Is it going to
• 36:57
  Speaker 5: fall back to a million? Or do we stay at
• 36:58
  Speaker 5: a million one and go forward? These are some things
• 37:01
  Speaker 5: that we need to work out. But nevertheless, folks, that's
• 37:05
  Speaker 5: what I have for today.
• 37:06
  Speaker 2: Mister Lutsky, Thank you so much for joining us.
• 37:08
  Speaker 5: Always a pleasure.
• 37:10
  Speaker 1: This has been asked Todd on the Financial Exchange Radio
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