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Why the AI Trade Is Taking Over the Market · The Financial Exchange Show

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Speaker 2: It's Chuck and Paul and Ben with you today and
1:15
Speaker 2: as we kick things off. Top story that Tucker, who's
1:19
Speaker 2: not here today, put in our stack is titled US
1:24
Speaker 2: stocks stall as Middle East flare ups lift oil, and
1:29
Speaker 2: I need to talk a little bit about US stocks
1:33
Speaker 2: stalling because it's pure poppycock that there's anything notable happening here.
1:42
Speaker 2: The reason why is, Paul, do you know the last
1:45
Speaker 2: day that the S and P five hundred went down?
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Speaker 3: I would say about nine or ten days ago, I know, But.
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Speaker 2: Do you know the exact day.
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Speaker 4: I'm gonna guess. Let's see, before Memorial Day. We'll call
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Speaker 4: it the nineteenth.
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Speaker 2: Wow, Paul, got it. The nineteenth is the last day
2:06
Speaker 2: that the S and P five hundred went down, which
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Speaker 2: means that in the interim, if I use my superior
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Speaker 2: counting skills, which are very advanced, we had nine days
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Speaker 2: in a row, nine trading days in a row because
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Speaker 2: the market doesn't trade on Saturdays and Sundays, doesn't trade
2:25
Speaker 2: on Memorial Day, but nine trading days in neu row
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Speaker 2: where the S and P five hundred went up. So yeah,
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Speaker 2: eventually you're gonna have a day where it doesn't go
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Speaker 2: up and that day maybe today as the S and
2:39
Speaker 2: P is you know, kind of trying to find its
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Speaker 2: footing down, you know, third to a half percent. But look,
2:45
Speaker 2: this thing could also rally before the end of the
2:47
Speaker 2: day as well. So I don't really care what the
2:50
Speaker 2: S and P five hundred does on any given day,
2:52
Speaker 2: because in the long term, almost a fifty to fifty
2:55
Speaker 2: toss up as to whether or not the SMP is
2:57
Speaker 2: positive or negative in any day. The stuff that drives
3:00
Speaker 2: longer term three months, six months, a year, ten years
3:04
Speaker 2: is can companies based in the United States make more
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Speaker 2: money selling their stuff than they previously did? And over
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Speaker 2: the eighty year track record of the S and P,
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Speaker 2: that answer has come in with a resounding yes. Will
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Speaker 2: there inevitably be a time in American history where that's
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Speaker 2: not the case? Sure, but it hasn't happened really for
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Speaker 2: the last eighty years, aside from a few brief periods
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Speaker 2: where you had, you know, a decade of you know,
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Speaker 2: no to slow earnings growth. So, yeah, US stocks are
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Speaker 2: stalling a little bit here. This is the market, you know,
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Speaker 2: saying okay, maybe we've gotten a little you know, out
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Speaker 2: of whack on this and we need to pause now
3:47
Speaker 2: if you want to talk about my concerns about the
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Speaker 2: Middle East and oil and the energy crisis. Quite honestly,
3:52
Speaker 2: if you've been listening for the last three months, you've
3:54
Speaker 2: heard all them. We've got some real oil inventory issues
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Speaker 2: that are going to be cropping up in the US
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Speaker 2: starting and probably six to eight weeks the early effects
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Speaker 2: might be felt, you know, two to three weeks from now,
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Speaker 2: but the second half of the summer has potentially some
4:07
Speaker 2: ugly stuff happening from an energy pricing perspective. But I
4:10
Speaker 2: also got to tell you, Paul, that the market hasn't
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Speaker 2: cared about oil prices in about two months, and I'm
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Speaker 2: not about to say it's gonna start caring about it today.
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Speaker 3: Yeah.
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Speaker 4: Really, what we've seen is the markets sort of rally
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Speaker 4: around what was a very good Q one in terms
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Speaker 4: of the earnings numbers that we saw anywhere from I
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Speaker 4: think it was twenty seven to twenty eight percent year
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Speaker 4: over year earnings growth for the S and P five hundred,
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Speaker 4: best since Q four of twenty one. Now, Mike was
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Speaker 4: making the point yesterday some of those gains that were
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Speaker 4: largely attributable to the big guys, the Googles, the Amazons,
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Speaker 4: et cetera. Came from some private investments that they had,
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Speaker 4: so you can you can nippick them a little bit.
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Speaker 3: But it was a very good earnings quarter.
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Speaker 4: However, you look at it, if you expand out the
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Speaker 4: sectors beyond tech, which was driving a lot of it,
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Speaker 4: we did see earnings growth in other areas as well.
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Speaker 4: Only I believe two sectors that were not tremend in
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Speaker 4: terms of earnings growth are slightly negative. So that's the
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Speaker 4: backdrop that we find ourselves in. Is it seems like
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Speaker 4: check every single day, there is a company now in
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Speaker 4: the tech sector that's jumping twenty five thirty percent. Some
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Speaker 4: of those and we'll get into it later in the program,
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Speaker 4: some of those because of growth and earnings and revenue projections,
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Speaker 4: others because of perhaps some speculation that's bubbled into the market.
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Speaker 4: But when I've talked with clients, there's kind of these
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Speaker 4: two stories that you can play out. One is the
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Speaker 4: concerns that you can have with inflation, oil prices, the issues,
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Speaker 4: the geopolitical issues between the US and I ran war.
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Speaker 4: But the other sort of counter side of it with
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Speaker 4: the market is we've seen a great robust earning season,
5:40
Speaker 4: consumer spending has continued to be relatively resilient, and we've
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Speaker 4: got a labor market that heading into the year was
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Speaker 4: probably a big concern. Now, with all the data that
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Speaker 4: we've got, and we'll get more of it on Friday
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Speaker 4: with the jobs report for the month of May, it
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Speaker 4: appears to be in a pretty good place. Not you know,
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Speaker 4: humming on all cylinders like it was in the glory
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Speaker 4: days of twenty two and twenty three, but certainly stable
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Speaker 4: and lesser concerns there. So it's the inflation story versus
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Speaker 4: the earnings grows story in terms of what we're seeing
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Speaker 4: in the markets today.
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Speaker 2: Yeah, I think that's fair. And look, if you want
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Speaker 2: to talk about, you know, market mechanics and things like that,
6:19
Speaker 2: there are some things that you look at in markets
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Speaker 2: and you're like, guys, this can't continue forever because it's
6:27
Speaker 2: it's it's kind of a little problematic. I mean, you
6:30
Speaker 2: have things now that the Philly Semiconductor Index has now.
6:35
Speaker 3: At one point.
6:36
Speaker 2: Today it's not there right now, just because it's come
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Speaker 2: back a little bit. It's now doubled since the start
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Speaker 2: of April.
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Speaker 3: April. Here here's what I.
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Speaker 2: Can tell you. The Philly Semiconductor Index is not going
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Speaker 2: to double every two months for the rest of our lives.
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Speaker 2: That is unsustainable. Other things that are unsustainable. S and
6:58
Speaker 2: P five hundred and one month correlate. So how much
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Speaker 2: do the stocks within the index correlate with each other
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Speaker 2: in terms of how they're moving. They're basically at all
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Speaker 2: time lows, which is the reason why you've had relatively
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Speaker 2: little volatility in the index. It's this rotation that's happening
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Speaker 2: under the surface from certain parts of the index into others,
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Speaker 2: basically from everywhere into semiconductors. If you take a look
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Speaker 2: at the one month you know performance for the S
7:27
Speaker 2: and P five hundred, it's a whole bunch of green
7:31
Speaker 2: for semiconductors, and the only other stuff that is like
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Speaker 2: a nice bright green is either you know, weird idiosyncratic
7:43
Speaker 2: things like you know, Eli Lilly had a new GLP
7:46
Speaker 2: one drug that went through a successful trial. So they're up,
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Speaker 2: you know, twelve percent in the last month. Morgan Stanley
7:51
Speaker 2: and Goldman Sachs. Hey, good, you're underwriting the test the
7:53
Speaker 2: SpaceX deal. Okay, I get that. A couple more to come,
7:56
Speaker 2: probably Honeywell's doing a spin off of a quantum computing
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Speaker 2: thing Okay, Like that makes sense. App loven is basically
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Speaker 2: me rallying along with software now in the last month.
8:06
Speaker 2: But it's it's pretty much semi's are sucking up all
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Speaker 2: the oxygen and nothing else really has room to go anywhere.
8:13
Speaker 2: Even other you know mag seven names like Amazon. Amazon's
8:16
Speaker 2: down six percent in the last month. Now, Tesla's up eight,
8:20
Speaker 2: Meta's flat, Google's down five like and again, even Google
8:25
Speaker 2: has like semiconductor stuff inside it, and it's just it's
8:28
Speaker 2: it's all going to memory. Micron's up eighty percent in
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Speaker 2: the last month. AMD's a fifty five. Qualcom Qualcomm, No,
8:37
Speaker 2: No one's even paid attention to Qualcom for twenty five years.
8:40
Speaker 2: They're forty two percent in the last month.
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Speaker 3: Like, what do you do with that?
8:46
Speaker 2: Can't really do anything with a Della guys, no one's
8:49
Speaker 2: paid any attention to Dell since nineteen ninety nine. It's
8:53
Speaker 2: up ninety two percent in the last month. Sand Disc,
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Speaker 2: a company that no one even knew existed last year.
9:02
Speaker 2: Sand Disk is up. This is actually the wildest one
9:06
Speaker 2: Santa stock in the last twelve months. Has gone from
9:10
Speaker 2: forty three dollars a share to seventeen hundred whoo and
9:15
Speaker 2: this is the stuff that again, I'm not saying that
9:18
Speaker 2: imminent collapse is happening here, I am very much. I
9:21
Speaker 2: am the person who six weeks ago said, hey, if
9:24
Speaker 2: you want to consider the bullish path for markets, the
9:28
Speaker 2: bullish path is stocks get back to their twenty twenty
9:30
Speaker 2: two multiples. It's just that earnings growth has gone up
9:33
Speaker 2: since we, you know, last were at those and that's
9:36
Speaker 2: how you get to S and P seventy five hundred.
9:38
Speaker 2: We're at S ANDP seventy six hundred now. I'm sure
9:41
Speaker 2: a lot of people are like, Chuck, that's never gonna happen. No,
9:43
Speaker 2: you gotta hold two views in your head at the
9:45
Speaker 2: same time. Gas prices are a huge pain for a
9:48
Speaker 2: ton of families and businesses out there right now, But
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Speaker 2: it doesn't matter to S and P five hundred earnings yet.
9:56
Speaker 2: Maybe it will at some point, maybe it won't. But
9:59
Speaker 2: you can complain about gas prices and still see what's
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Speaker 2: happening with earnings projections and earnings growth and say, these
10:06
Speaker 2: two things, at least for now, can coexist. Maybe eventually
10:10
Speaker 2: we get to a point where they can't. If gas
10:12
Speaker 2: prices go you know, crazy high, or just stay elevated
10:15
Speaker 2: for an extended period. But at this point these two
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Speaker 2: things are coexisting. One final point, the second part of
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Speaker 2: that headline, US stock stall is Middle East flare ups
10:26
Speaker 2: lift oil. If you didn't see what happened overnight, Basically,
10:32
Speaker 2: the US struck some installations on an island off the
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Speaker 2: coast of Iran, not Horrmu, not Hormu's island or what's
10:39
Speaker 2: the carg island, the big Iranian export hub, and Iran
10:45
Speaker 2: responded by launching a bunch of ballistic missiles at Saudi
10:48
Speaker 2: Arabian Kuwait, some of which actually, if you look at
10:50
Speaker 2: the footage out of the Kuwaiti Airport, pretty significant damage
10:54
Speaker 2: to one of the terminals there with like you know,
10:57
Speaker 2: like I don't know if it was a drone or
10:58
Speaker 2: it was probably a drone given the eyes, that caused
11:01
Speaker 2: some real significant damage there. Uh, if we' all are listening,
11:07
Speaker 2: if you wonder why whenever, you know, once a week
11:09
Speaker 2: we get these rumors that you know, a piece deal
11:12
Speaker 2: is half an hour away or three hours away, and
11:14
Speaker 2: I discounted them, like let's wait and see it's this
11:17
Speaker 2: because we the last two weeks, on Wednesday and Thursday,
11:20
Speaker 2: we've had well, we think we're, you know, hours away
11:22
Speaker 2: from a deal, and we're sitting here a week after
11:25
Speaker 2: and the Kuwaiti airport's got a big hole in it.
11:28
Speaker 2: So I'm always hopeful that a deal gets done. But
11:33
Speaker 2: y'all got to understand it hasn't happened yet. And every
11:37
Speaker 2: time you say, oh, we're hours away, and then a
11:40
Speaker 2: week goes by and something else gets you know, struck
11:43
Speaker 2: in the region. Guys, you're you're you're fooling yourself if
11:47
Speaker 2: you think we're three hours away.
11:49
Speaker 5: Now.
11:49
Speaker 2: Having said that, obviously something's gonna get signed at one
11:51
Speaker 2: pm Eastern today, but again, we're not three hours away.
11:58
Speaker 2: Given the broad context of what we're seeing. At some
12:02
Speaker 2: point there's going to be a deal that has to
12:04
Speaker 2: get done because this won't go on forever. Actually, I
12:09
Speaker 2: take that back. I mean, Ben, you're a big history guy.
12:13
Speaker 2: The Korean War has never officially ended. Correct, it was
12:17
Speaker 2: never officially a war. Okay, there you go. So I
12:22
Speaker 2: don't know. Maybe this can actually go on forever like this.
12:27
Speaker 2: I really hope it doesn't. But we'll just have to see,
12:32
Speaker 2: you know, what happens. Let's take a quick break when
12:35
Speaker 2: we return, Let's talk a little bit about what we're
12:38
Speaker 2: seeing in US treasury markets. And yeah's talk about the
12:43
Speaker 2: World Cup that's coming up. Also right after this.
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Speaker 2: Peace in Bloomberg. Treasury's i biggest drop in two weeks
13:54
Speaker 2: on federal rate hike bets Yeah, the tenure treasury is
13:59
Speaker 2: down a whole four base Nope, not only two basis
14:04
Speaker 2: points at this point, I gotta tell you two basis
14:10
Speaker 2: points on the tenure treasury is not worth writing a
14:12
Speaker 2: piece on.
14:13
Speaker 4: Agreed, It's not even reached the highs that we sell,
14:17
Speaker 4: you know, a week two weeks ago on the nineteenth,
14:19
Speaker 4: So there is not a lot to chew on with that.
14:24
Speaker 2: Consider me unimpressed by the move in treasuries. What I
14:29
Speaker 2: do want to talk about piece of the Boston Globe
14:33
Speaker 2: Boston is I don't know if it's the City of
14:35
Speaker 2: Boston or if it's no, it's it's actually sorry, it's
14:38
Speaker 2: a state representative who has proposed statewide legislation. They would
14:43
Speaker 2: allow Massachusetts cities to authorize bars to remain open until
14:46
Speaker 2: three am, an hour later than two am, during the
14:50
Speaker 2: duration of the World Cup. And it's getting all kinds
14:55
Speaker 2: of different pushback from you know, one bartender quote an
15:00
Speaker 2: extra two hours, there's a lot to put on the staff.
15:03
Speaker 2: Another one saying, hey, you know, Boston is already a
15:08
Speaker 2: drunk city. The extra hours aren't gonna do anything but
15:11
Speaker 2: cause more trouble. If I know anything about sports, that
15:14
Speaker 2: people are very passionate about them, and that mixed with
15:16
Speaker 2: alcohol brings fights and aggressions. So a few things on this.
15:20
Speaker 2: First learned very very early in my college experience that
15:25
Speaker 2: nothing good happens after two as.
15:27
Speaker 4: I thought you might drop that one. Okay, I thought
15:29
Speaker 4: you might. Nothing such a common one that comes up
15:32
Speaker 4: with this.
15:32
Speaker 2: Okay, I gotta be honest, nothing good happens after two am. Yes,
15:36
Speaker 2: like this will undoubtedly lead to more fights more du wise,
15:43
Speaker 2: like you can like basically say this will lead to
15:46
Speaker 2: more problems. I'm not debating that. What I am debating
15:51
Speaker 2: is it's the World freaking Cup, and I don't know,
16:00
Speaker 2: keeping keeping bars open for one extra hour is not
16:04
Speaker 2: going to make the state melt. Okay, it's not going
16:09
Speaker 2: to cause like you know, it's just not Uh. Anyone
16:15
Speaker 2: who wants to be drinking during the World Cup at
16:18
Speaker 2: three am is going to be anyways, whether they're at home,
16:21
Speaker 2: at a friend's house, at a bar, wherever it may be.
16:25
Speaker 2: I'm also pretty sure that the one guy who complained about, oh,
16:31
Speaker 2: like I'm gonna get home from working too late, because
16:33
Speaker 2: like that one hour difference is going to mean the
16:35
Speaker 2: difference between going to bed at four am and five am, like.
16:39
Speaker 3: You're almost nocturnal at that point.
16:41
Speaker 2: Any I don't know, right, your sleep schedules already horribly
16:44
Speaker 2: messed up, right, So in the other piece here that
16:47
Speaker 2: I'm looking at the scheduling, so the latest games that
16:51
Speaker 2: you're gonna see are on.
16:52
Speaker 4: The west coast or ten o'clock starts if you're looking
16:55
Speaker 4: at different like Fday at midnight. So that's where I'm
16:58
Speaker 4: going with this, is like, okay, so the as at
17:00
Speaker 4: midnight and let's let's be real. You know, South Korea
17:04
Speaker 4: versus Chesia, which I guess that's the Czech Republic.
17:08
Speaker 3: Why does ESPN have it like that.
17:10
Speaker 2: Because that's what the country's called.
17:11
Speaker 3: Well, I like Chech Republic better, but anyway, not the
17:13
Speaker 3: Czech Republic. Okay?
17:15
Speaker 4: Noted, who is gonna be clamoring to stay at the
17:18
Speaker 4: bar still three a m. Because that's the ten pm
17:21
Speaker 4: matchup on a particular the Thursday, June eleventh. The other
17:24
Speaker 4: one Sweden versus Tunisia on Sunday, June fourteenth, also at
17:29
Speaker 4: ten pm.
17:30
Speaker 3: I just don't know.
17:31
Speaker 4: Perhaps there's gonna be an influx of a lot of
17:33
Speaker 4: visitors from those countries and maybe they'll want to stay
17:35
Speaker 4: out to the bars till three M. But to your point,
17:38
Speaker 4: it's just not so sure that it's going to cause
17:42
Speaker 4: such unbridled chaos here in the Boston.
17:46
Speaker 2: Here's the other thing again, This is legislation to allow
17:51
Speaker 2: cities to authorize their bars to stay open.
17:53
Speaker 3: Bars don't have to do it.
17:54
Speaker 2: Bars A don't have to do it. B cities don't
17:58
Speaker 2: have to do it. This is just like if you
18:00
Speaker 2: want to. But I also want to point out that
18:05
Speaker 2: when you look at I pulled a list of bar
18:09
Speaker 2: closing times by state, do you guys know that Alaska
18:12
Speaker 2: lets bar stay open until five am?
18:14
Speaker 3: That sounds fitting most other states.
18:18
Speaker 2: The vast majority of other states. I figured Boston would
18:22
Speaker 2: be like, you know, very you know pure most other
18:25
Speaker 2: states are two am. They're actually a handful that are sooner.
18:32
Speaker 2: Mississippi close at midnight, except for Clay County, which I'm
18:36
Speaker 2: guessing is encompasses some major city. Maybe it's Oxford, I
18:41
Speaker 2: don't know, but it's it's pretty much like state wide,
18:46
Speaker 2: two am is the norm. New York City is four am,
18:49
Speaker 2: but that's a carve out within New York. Two am
18:53
Speaker 2: is basically everywhere aside from again, the only ones I
18:57
Speaker 2: found that were later Alaska's five am statewide, Ohio is
19:02
Speaker 2: two thirty am, and Tennessee is three am. In West
19:06
Speaker 2: Virginia's three am as well.
19:07
Speaker 3: No, Illinois, I thought that Chicago bars stayed open a
19:10
Speaker 3: little bit later.
19:11
Speaker 2: Illinois two am. But Chicago allows for four am or
19:13
Speaker 2: five am.
19:14
Speaker 3: Got it.
19:14
Speaker 2: But again it's a carve out for the city of Chicago.
19:19
Speaker 2: So again, generally, statewide, two am actually is the norm,
19:24
Speaker 2: which surprised me. I was not expecting to see that
19:27
Speaker 2: quick break here. Toddletsky does not. Does Toddletsky join us? Okay,
19:31
Speaker 2: it was not on the schedule. Tom Lotsky does join
19:34
Speaker 2: us right after this for ask Todd.
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20:00
Speaker 6: All right, there's a lot of red on the board.
20:03
Speaker 6: It's Wednesday, ten thirty four a m. The Dow Jones
20:06
Speaker 6: is off by six point six seven percent, or three
20:08
Speaker 6: hundred and forty two points. The S and P five
20:11
Speaker 6: hundred is off a third of a percent, or twenty
20:14
Speaker 6: seven points. Nasdaq is down just under half a percent,
20:17
Speaker 6: or one hundred and sixteen points.
20:20
Speaker 3: Meanwhile, oil is up one.
20:22
Speaker 6: Point two percent one point two six percent, natural gases
20:25
Speaker 6: up a quarter of a percent, Gold is off by
20:27
Speaker 6: nearly a percent, and silver is off by over two
20:31
Speaker 6: and a two point two percent. Palo Alto Networks is
20:35
Speaker 6: down six percent. Palo Alto posted stronger than expected revenue
20:38
Speaker 6: guidance for its current quarter and lifted its full yer
20:41
Speaker 6: revenue guidance. The company also posted fiscal third quarter adjusted
20:45
Speaker 6: earnings of eighty five cents per share on three billion
20:48
Speaker 6: dollars in revenue, beating the earnings of eighty cents and
20:51
Speaker 6: two point nine to four billion in revenue that analysts
20:54
Speaker 6: had expected. Marvel Technology is up another eight percent today,
20:58
Speaker 6: just the day after it posted its best day ever,
21:01
Speaker 6: where it jumped thirty two percent. Macy's shares are down
21:05
Speaker 6: or off by about a half a percent, after it
21:07
Speaker 6: posted its strongest first quarter growth in four years. Revenue
21:11
Speaker 6: also came in above estimates, at four point six eight
21:13
Speaker 6: billion dollars, compared to analysts expectations of four point six
21:17
Speaker 6: one billion dollars. The company also hiked its full year outlook,
21:22
Speaker 6: and finally, video game retailer game Stop is up seven
21:26
Speaker 6: point four percent after reported adjusted earnings of thirty cents
21:29
Speaker 6: per share in the first quarter.
21:32
Speaker 3: That was above.
21:33
Speaker 6: Analysts pulled by Factset's estimates of for sixteen. For sixteen
21:38
Speaker 6: in earnings per share. Revenue also rode rose fourteen percent
21:43
Speaker 6: from a year ago. I am ben Kitchen, and that
21:47
Speaker 6: was Wall Street Watch.
21:50
Speaker 1: This is Asked Todd on the Financial Exchange Radio Network.
21:54
Speaker 1: If you have an existing estate plan or in the
21:56
Speaker 1: market for one, Tod Letskey is here to answer your
21:59
Speaker 1: questions and help you plan for a later life. Ask
22:02
Speaker 1: Todd is presented by Cushing and Dolan, serving Massachusetts and
22:05
Speaker 1: New England for more than thirty five years, helping families
22:08
Speaker 1: with estate and tax planning, Medicaid planning, and probate law.
22:12
Speaker 1: Visit Cushingdolan dot com. Now here's Todd Lutsky.
22:18
Speaker 2: As a promise, Todd Lutsky now joins us for Ask Todd.
22:24
Speaker 2: We got the phone lines wide open. It eight eight
22:27
Speaker 2: eight to zero five two two six three. That's the
22:31
Speaker 2: number to call to Ask Todd your estate planning questions.
22:34
Speaker 2: Live on air right now. Eight eight eight to zero
22:39
Speaker 2: five two two six three. Remember we can only get
22:42
Speaker 2: through two to three year questions, so get calling early
22:46
Speaker 2: to make sure you get your opportunity to ask Todd
22:50
Speaker 2: your estate planning questions. Eight eight eight to zero five
22:54
Speaker 2: two two six three. Mister Lutsky, how are you doing today?
22:58
Speaker 7: I am never better?
22:59
Speaker 3: How are you you? I'm good?
23:00
Speaker 8: Have you?
23:01
Speaker 3: Uh?
23:02
Speaker 2: You happen to see the new Mortal Kombat.
23:04
Speaker 7: Film Mortal Kombat?
23:06
Speaker 5: No?
23:07
Speaker 2: Do you know what's actually based on a Scandinavian church song?
23:12
Speaker 7: No, no way I would know that.
23:14
Speaker 2: To finish him?
23:15
Speaker 7: Oh yeah, to finish him? Yeah, I got it.
23:17
Speaker 2: Yeah, Todd, I want to talk a little bit about
23:19
Speaker 2: trusts because I keep hearing about all kinds of different trusts,
23:26
Speaker 2: and I'm wondering if you can give us just a
23:30
Speaker 2: general breakdown of the taxonomy, like what kinds of different
23:34
Speaker 2: trusts exist in general that most people may consider at
23:39
Speaker 2: some point in their estate planning.
23:42
Speaker 7: Yeah, so we've broken it down now. I'm gonna think
23:45
Speaker 7: there's about eight that seemed to come up all the time.
23:47
Speaker 7: And I say eight. You might shay, that's a big number,
23:50
Speaker 7: But folks, remember always people ask me they probably ask you, Chuck.
23:53
Speaker 7: You know what if I google trusts and if I
23:56
Speaker 7: google the word irrevocable trust, well, you know how many
23:59
Speaker 7: hits you're gonna get million?
24:01
Speaker 2: Quite a few.
24:02
Speaker 7: So it's confusing because there's different kinds of trust out there.
24:06
Speaker 7: But again, not every trust is for everybody. It's your situation,
24:12
Speaker 7: your family dynamics, your net worth, your overall asset structure
24:19
Speaker 7: dictates what kind of trust is right for you. So
24:22
Speaker 7: let's start with that backdrop that said most people would
24:27
Speaker 7: think about a revocable a regular revocable family trust. This
24:33
Speaker 7: is the you know, people that are probably sixty and under,
24:37
Speaker 7: you know, just doing estate planning, wanting to take care
24:40
Speaker 7: of the family, avoid probate, reduced taxes, provide a nice
24:44
Speaker 7: bloodline family, you know, distribution for the family, pretty much basic.
24:51
Speaker 7: As we get a little older, maybe say sixty plus,
24:54
Speaker 7: and we start thinking about protecting assets from the nursing home,
24:59
Speaker 7: if you add that component to the mix, well then
25:03
Speaker 7: you might be shifting over to the medicaid irrevocable trust.
25:08
Speaker 7: So that's a different animal altogether, doing everything the revocable
25:13
Speaker 7: trust does, but adding nursing home protection, well, what about
25:19
Speaker 7: people who might have a little larger estate and own
25:22
Speaker 7: a life insurance policy, say a two three, four million
25:26
Speaker 7: dollar life insurance policy. You don't think about those a lot.
25:30
Speaker 7: But dying owning that in your name makes it an
25:34
Speaker 7: estate taxable item. Well, I don't want it to be
25:37
Speaker 7: a state taxable How can I fix that? Get it
25:40
Speaker 7: into an irrevocable life insurance trust. Oh but todd that
25:44
Speaker 7: has the word irrevocable in it. But it's very different
25:48
Speaker 7: than the irrevocable Medicaid income only trust that we use
25:52
Speaker 7: for nursing home protection. This is more of a completed gift.
25:57
Speaker 7: Get it out of my name, out of my estate
25:59
Speaker 7: for a state tax purposes, providing estate and income tax
26:03
Speaker 7: free money for either a spouse if it's a first
26:06
Speaker 7: to die policy, or for the family if it's a
26:10
Speaker 7: second to die policy. So that would be a type
26:14
Speaker 7: of trust. And you know there's more. Obviously we're not
26:18
Speaker 7: going to get through all eight today. But you know
26:20
Speaker 7: another one that people see all the time as a
26:23
Speaker 7: nominee realty trust, Well, that's not even a trust at all.
26:28
Speaker 7: That's like a Massachusetts anomaly that we need to spend
26:31
Speaker 7: a little more time talking about. But basically, things you
26:34
Speaker 7: put in those trusts are really completed gifts immediately to
26:41
Speaker 7: the schedule of beneficiaries listed there. So if you got
26:44
Speaker 7: one of those and your kids are listed as beneficiaries,
26:46
Speaker 7: you might want to take a peek because you gave
26:49
Speaker 7: it away.
26:50
Speaker 2: Talking with Todd Lotski from the law firm of Cushing
26:53
Speaker 2: and Dolan. Phone lines still have room on them at
26:55
Speaker 2: eight eight eight two zero five two two six three.
27:00
Speaker 2: That is the number to call to ask Todd your
27:03
Speaker 2: estate planning questions live on air again eight eight eight
27:08
Speaker 2: to zero five two two six three. Quick break right
27:12
Speaker 2: to your questions. That number one more time is eight
27:15
Speaker 2: eight eight to zero five two two sixty three.
27:19
Speaker 1: Subscribe now to our YouTube page where you'll find daily
27:22
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27:25
Speaker 1: you caught up on anything and everything you might have
27:27
Speaker 1: missed right here on the Financial Exchange. Text us six
27:31
Speaker 1: one seven three six two one three eight five with
27:34
Speaker 1: your comments and questions about today's show. This is the
27:37
Speaker 1: Financial Exchange Radio Network.
27:49
Speaker 2: Still got a little room on the phone lines. It's
27:52
Speaker 2: eight eight eight to zero five two two six three.
27:56
Speaker 2: That's the number to call to ask Todd your estate
27:58
Speaker 2: planning questions.
28:00
Speaker 3: Live on air right now.
28:02
Speaker 2: Again, that phone number is eight eight eight two zero
28:07
Speaker 2: five two two six three. We've got Cindy in Central
28:12
Speaker 2: mass Cindy, what is your question for Todd Lutsky?
28:17
Speaker 6: Good morning, my husband and Iron.
28:19
Speaker 1: I'm mid sixties.
28:21
Speaker 3: We do have will and we do not have a truck.
28:25
Speaker 7: I didn't know the trust is absolutely necessary. Well, let's
28:29
Speaker 7: that's really a great question because so many people, this
28:33
Speaker 7: is going to help so many other listeners. Uh, you know,
28:36
Speaker 7: how do we get started? But by the way, the
28:38
Speaker 7: guide that we're given away will be a great start
28:40
Speaker 7: for you, so you should get that.
28:41
Speaker 3: But this is you know, do I.
28:43
Speaker 7: Need a trust? And then more than that, what kind
28:45
Speaker 7: of trust do I need? So let me ask you
28:46
Speaker 7: a couple of follow up questions. Uh, Cindy, Uh, so
28:49
Speaker 7: you're married, you're in your sixties. Do you have children?
28:53
Speaker 8: Yeah?
28:54
Speaker 7: Any grandchildren?
28:56
Speaker 8: Yeah?
28:56
Speaker 7: Okay, great? And then a lot of this is driven
28:59
Speaker 7: by the size of your estate. So I'm just going
29:01
Speaker 7: to ask round numbers like Massachusetts estate tax exemption is
29:05
Speaker 7: two million each, which is four million combined? Is your
29:09
Speaker 7: estate over that if you add up all the assets
29:13
Speaker 7: including real estate, money, life, insurance, investments, et cetera. No, No, okay,
29:22
Speaker 7: are we over the two million, which is the one
29:24
Speaker 7: million dollar Massachusetts or which is the one estate tax
29:27
Speaker 7: exemption for a single person. Yeah, okay, so we're somewhere
29:33
Speaker 7: between the two.
29:34
Speaker 6: Yeah.
29:35
Speaker 7: Great, that's good enough, somewhere between the two and the four.
29:38
Speaker 3: Right.
29:38
Speaker 7: So so at this point my last question would be
29:42
Speaker 7: obviously you don't want to pay any estate taxes, so
29:44
Speaker 7: if you creep over the two million, a trust is needed.
29:47
Speaker 7: You ask if do I need one? Well, if one
29:49
Speaker 7: of your objectives is I want to avoid paying anything
29:52
Speaker 7: to Massachusetts when we die, a trust, even a simple
29:57
Speaker 7: revocable trust, will allow you to shelter four million dollars
30:02
Speaker 7: from the state taxes. So even if you creep up,
30:05
Speaker 7: values go up and you end up dying with two
30:07
Speaker 7: and a half or three million by the time you
30:09
Speaker 7: pass away no estate taxes. So that would be important,
30:13
Speaker 7: and that would give you a revocable trust. However, you
30:17
Speaker 7: might also want to think about as you As I
30:19
Speaker 7: always tell people sixty and over, it's sort of the
30:21
Speaker 7: time I ask the question, not that I think you're
30:24
Speaker 7: going there, but if protecting these assets down the road
30:28
Speaker 7: from the nursing home is on your list. Well, then
30:31
Speaker 7: another type of trust would be needed. Instead of the
30:34
Speaker 7: revocable trust, we might do an irrevocable trust, which will
30:37
Speaker 7: keep you in control of your assets and enjoying them,
30:43
Speaker 7: but starting a five year waiting period so that five
30:47
Speaker 7: years from now the assets in the trust will not
30:50
Speaker 7: only be sheltered from probate eliminating your estate tax much
30:54
Speaker 7: like the revocable trust does, but also protecting them from
30:59
Speaker 7: the cost of nursing home care, and then finally providing
31:02
Speaker 7: some kind of a bloodline plan for your family. So
31:05
Speaker 7: that would be where I would address your question. And
31:08
Speaker 7: you fit into one of those two categories, which one
31:12
Speaker 7: is really up to you and your own family objectives.
31:14
Speaker 7: But to quickly answer the question, now, yes, I think
31:18
Speaker 7: you are in a situation where a trust revocable or
31:22
Speaker 7: irrevocable would be I think very very helpful. So, folks,
31:27
Speaker 7: this is a great question. Because the guide this month
31:30
Speaker 7: brand new. For the month we're given away top eight
31:33
Speaker 7: estate planning trusts to go. We've added to it. Actually
31:36
Speaker 7: it's it went up where there's more common trust that
31:40
Speaker 7: I wanted to add to this, so it's been fully updated.
31:43
Speaker 7: This would be right for people like Cindy. Anybody who
31:45
Speaker 7: hasn't done their planning? Which one of these trusts is right?
31:49
Speaker 7: The revocable, the irrevocable. Do I have a special needs child?
31:52
Speaker 7: Do I need a situation where I have a pool
31:56
Speaker 7: trust maybe I want to use? Or do I have
31:59
Speaker 7: a nominee realty trust? Or or do I have life insurance?
32:02
Speaker 7: How do I handle that? Different kinds of trust?
32:05
Speaker 3: Folks?
32:05
Speaker 7: If you haven't done your planning, this will get you started.
32:08
Speaker 7: If you've done your planning and you're thinking, geez, I
32:10
Speaker 7: want to switch, then you can shift and get the
32:14
Speaker 7: guide and learn about irrevocable trusts eight six six eight
32:19
Speaker 7: four eight five six nine nine or Legal Exchange Show
32:22
Speaker 7: dot com again eight six six eight four eight five
32:26
Speaker 7: six nine nine or Legal Exchange Show dot com. You
32:29
Speaker 7: can download it there and always go to Cushing Dolan
32:32
Speaker 7: PC our Instagram page for more information.
32:35
Speaker 2: Todd, I got another one for you here. Let's go
32:37
Speaker 2: to Michael in Boston. Michael, what is your question for
32:41
Speaker 2: Todd Lutsky?
32:43
Speaker 5: Oh, good morning. I had a debating doing the irrevocable
32:48
Speaker 5: trust with assets around five million dollars uh, and I
32:56
Speaker 5: dislike for feeving nursing homes I'd rather value then going one.
33:01
Speaker 5: I value there doesn't seem to be a tax advantage
33:05
Speaker 5: for a single person. But I think the chipping point
33:08
Speaker 5: is you're on radio a lot. But you never mentioned
33:13
Speaker 5: what it costs to do a simple irrevocable trust, mister Luski.
33:18
Speaker 5: So the round most of doing the trust or do it.
33:25
Speaker 3: Hourly?
33:27
Speaker 5: Yeah? Free? No?
33:30
Speaker 7: And I think in your case actually the example you
33:34
Speaker 7: and again I think do you even need one? Right,
33:36
Speaker 7: that's the first question. Are you single with with kids
33:40
Speaker 7: or no kids?
33:44
Speaker 5: No?
33:44
Speaker 7: No, no kids? So if you have no children and
33:48
Speaker 7: your single and you don't have a lot of loved
33:49
Speaker 7: ones you need to provide for if that's not a
33:53
Speaker 7: goal of yours. Again, this is the reason the cost
33:56
Speaker 7: is relevant. But maybe I would tell you save your money, right,
34:00
Speaker 7: Maybe we don't spend the money on that, And so
34:04
Speaker 7: I would say, you know, an irrevocable trust probably is
34:07
Speaker 7: not even right for you. So meaning I think you
34:12
Speaker 7: just want your assets, want complete control of your assets,
34:15
Speaker 7: and we would want you to be taken care of
34:17
Speaker 7: throughout your life. So I would think that that would
34:20
Speaker 7: probably be the answer for you. You know, you don't
34:23
Speaker 7: do it, But what I can tell you is that
34:25
Speaker 7: you know, many cases are designed based on flat fees,
34:29
Speaker 7: and it's really a flat fee based on what it
34:32
Speaker 7: is that you need to do, and they do range.
34:34
Speaker 7: There's a variable range depending on what you're doing. I
34:37
Speaker 7: don't know, five grand to eight grand might be a
34:40
Speaker 7: range for an estate plan somewhere in there. So if
34:44
Speaker 7: that's helpful, but again, not not right for everybody.
34:47
Speaker 2: Todd, I got one more for you. Let's go to
34:49
Speaker 2: already in Brockton. Already You've only got a couple of
34:52
Speaker 2: minutes here, so got to be quick. But what's your
34:54
Speaker 2: question for Todd?
34:55
Speaker 8: Okay, I have some gold coins in a purchase over
34:58
Speaker 8: the last fifteen years, and uh, I want to protect them.
35:02
Speaker 8: I'm I'm leaving everything to my kid, one child, I get.
35:10
Speaker 8: Everything else is in his name right now, my I,
35:14
Speaker 8: I raise and whatever.
35:16
Speaker 5: Uh.
35:17
Speaker 8: The only thing that isn't you know, I want to
35:19
Speaker 8: make sure's protected is the gold coins.
35:22
Speaker 7: Those one ounce So you've you've given everything away already?
35:27
Speaker 8: No, no, no, I was I was told like with
35:30
Speaker 8: my I rais, I cannot put them in the trust
35:34
Speaker 8: well and the irrevocable correct, Because like I was in
35:38
Speaker 8: your office in November and I was told that, you know,
35:41
Speaker 8: I got to take care of all the stuff first
35:44
Speaker 8: before I can do anything. But the thing is, you know,
35:47
Speaker 8: I don't know how to get rid of everything.
35:49
Speaker 7: Well, like I don't know who you met with, But
35:52
Speaker 7: you're right, an Ira, you can't get rid of it's
35:54
Speaker 7: a huge income tax if you do it, So that's
35:57
Speaker 7: a problem.
35:58
Speaker 5: Uh.
35:58
Speaker 7: But other assets like houses and money and so forth,
36:00
Speaker 7: you can put them into the irrevocable trust to protect
36:03
Speaker 7: them from the nursing home and for your child. Ultimately,
36:06
Speaker 7: I wouldn't give things away to your child at the moment.
36:10
Speaker 7: I think keeping things you know away from the children
36:13
Speaker 7: and owned by you or controlled by you before you
36:16
Speaker 7: die is better from a tax perspective and a control perspective.
36:20
Speaker 7: So I would say keep those. But gold coins themselves.
36:24
Speaker 7: I don't know how you retitle a gold coin to
36:28
Speaker 7: a trust, so that would be something that maybe you
36:31
Speaker 7: check with a coin dealer that understands how to actually
36:36
Speaker 7: retitle a gold coin to a trust. Maybe throw it
36:39
Speaker 7: in a safety deposit box and make the safety deposit
36:42
Speaker 7: box owned by the trusty. Maybe that's a way of
36:46
Speaker 7: doing it. I don't really have the answer to that.
36:48
Speaker 7: So that's the biggest issue there. But please don't just
36:50
Speaker 7: give everything away. And that's what I hear. You know
36:53
Speaker 7: that you might be leaning towards that would not be right,
36:56
Speaker 7: and I think that's the best we can do.
36:59
Speaker 2: Mister Letski, thank you so much for joining us today.
37:01
Speaker 7: Thank you always a pleasure.
37:03
Speaker 1: This has been Asked Todd on the Financial Exchange Radio Network.
37:07
Speaker 1: Ask Todd with Todd. Lutsky has been presented by Cushing
37:09
Speaker 1: and Dolan, serving Massachusetts and New England for more than
37:12
Speaker 1: thirty years, helping families with the state and tax planning,
37:15
Speaker 1: Medicaid planning, and probate law. Call eight hundred three nine
37:18
Speaker 1: three four thousand and one or visit Cushingdolan dot com.
37:21
Speaker 1: The views expressed in this segment are solely those of
37:23
Speaker 1: Cushing and Dolan. Armstrong Advisory does not provide any legal
37:26
Speaker 1: or tax advice. Please consult with your illegal or tax
37:28
Speaker 1: advisor on such matters. Cushing and Armstrong do not endorse
37:31
Speaker 1: each other and are not affiliated.