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Don't invest when you are hungry! · The Financial Exchange Show

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Speaker 1: donation today. This is the Financial Exchange with Chuck Zada
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Speaker 1: and Paul Lane.
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Speaker 2: Kicking things off today here on Wednesday, Chuck, Paul and
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Speaker 2: Tucker with you, and top story here today is from
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Speaker 2: the classic newspaper, The New York Times. The headline is
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Speaker 2: the stock market's boomerang month has put investors in a bind.
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Speaker 2: Subheadline is, although they long for more clarity about tariffs,
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Speaker 2: investors are nervous about sitting on the sidelines as stocks climb,
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Speaker 2: which I think makes total sense. I mean, again, we
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Speaker 2: were at a point, you know, a few weeks ago,
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Speaker 2: where hey, if the tariff situation didn't change, we were
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Speaker 2: heading towards some pretty ugly stuff with you know, some
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Speaker 2: pretty solid certainty. The question I think that's out there now,
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Speaker 2: and the piece that I don't think anyone has any
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Speaker 2: great answers on is, look, how much damage was caused
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Speaker 2: to either the US or global economy over the last
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Speaker 2: thirty forty days. When is that damage going to show up?
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Speaker 2: And does the dropping of the China tariff from one
2:17
Speaker 2: forty five down to thirty provide enough of a release
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Speaker 2: in you know, kind of animal spirits and excitement to
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Speaker 2: offset whatever damage might have been done and keep the
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Speaker 2: economy on a track that keeps it out of recession.
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Speaker 2: I think these are the questions that are being asked,
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Speaker 2: and quite honestly, three days after the China tariff drop announcement,
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Speaker 2: I don't know that. I don't know that you have
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Speaker 2: anyone who can say, you know anything with a one
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Speaker 2: hundred percent certainty about this, because we were just starting
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Speaker 2: to get to the point where you'd likely see some
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Speaker 2: of the economic data coming in that would have shown
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Speaker 2: the damage from tariffs, and now you have to weigh
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Speaker 2: that against all these other things. So I think if
2:57
Speaker 2: you're trying to look at this economy and market and
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Speaker 2: be like, hey, where's it going, and you're sitting there
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Speaker 2: going I don't really know, I think that's a pretty
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Speaker 2: reasonable place to be.
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Speaker 3: Yeah, what we've seen is a seventeen percent gain from
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Speaker 3: the lows that we hit. I believe it was around
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Speaker 3: April eighth that was the low period for this year.
3:16
Speaker 3: The S and P five hundred is four percent off
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Speaker 3: its February highs, but year to date, if you look
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Speaker 3: at it, we're slightly in the positive. So it has
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Speaker 3: been a roller coaster ride, and like you mentioned, there
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Speaker 3: is no clear path as to what the impacts of
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Speaker 3: the tariffs are going to look like on the US economy,
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Speaker 3: the things that we would track most closely would be
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Speaker 3: the labor market, which we'll talk about a little bit
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Speaker 3: inflationary pressure. We got a reading on that yesterday which
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Speaker 3: didn't show any conclusive evidence of significant tariff impact increasing
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Speaker 3: inflation for the month of April. So it does come
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Speaker 3: back to very much a weight and see approach, and
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Speaker 3: so much so that I don't even think it's a
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Speaker 3: weight and see for next months. It may be several
4:03
Speaker 3: months till later in the summer that we have a
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Speaker 3: clear understanding of what things are gonna look like. And
4:07
Speaker 3: there's some of these pieces that will cover in the
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Speaker 3: stack today that are making these suppositions that because of
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Speaker 3: the tariffs that have been in place, there's gonna be
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Speaker 3: an inflationary impact. It's hard to say if that is
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Speaker 3: gonna be the case.
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Speaker 2: Yes, so I think, look, here's the thing that I
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Speaker 2: look at now with the economic data after the April
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Speaker 2: second announcements on tariffs. Remember we hadn't really gotten any
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Speaker 2: of the March economic data yet, we said, look, you
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Speaker 2: need to throw out all of the March data because
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Speaker 2: it doesn't really matter. It's a different world now than
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Speaker 2: it was before. We're sitting here now after the announcement
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Speaker 2: from this Monday, May twelfth, and I think you can
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Speaker 2: kind of make a case not that it doesn't matter,
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Speaker 2: like the data from April and even May, but you
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Speaker 2: can certainly like downgrade it and like say it's not
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Speaker 2: really as important as what's going to come later this
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Speaker 2: year now, just because the climate has clearly changed again
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Speaker 2: and we don't exactly know how it has. So I
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Speaker 2: think you know, you're at a point where you're gonna
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Speaker 2: have to pay attention to the data, and certainly if
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Speaker 2: it shows like any meaningful, you know, broad based shift
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Speaker 2: in trend in either direction. Okay, you sit there and
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Speaker 2: you say this means something. As an example, if we
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Speaker 2: see the next two months of retail data after tariffs
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Speaker 2: go you know, sky high crazy because everyone's saying, oh,
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Speaker 2: like great, like we don't have to worry about this,
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Speaker 2: Like you know, we were gonna you know, front load
5:40
Speaker 2: for you know, tariffs, but now we're gonna buy even
5:42
Speaker 2: more stuff because we feel better about our situation. Okay,
5:45
Speaker 2: you could probably say something you know, positive about that,
5:48
Speaker 2: especially if hiring intentions pick back up and all those
5:51
Speaker 2: kinds of things. You could be like, yeah, like, you know,
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Speaker 2: Americans feel good about where the economy is going now.
5:58
Speaker 2: On the other hand, if we start to see jobless claims,
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Speaker 2: you know, ratcheting up, and you see retail sales puking
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Speaker 2: left and right because hey, people did actually preload, you know,
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Speaker 2: try to front run tariffs and now they just don't
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Speaker 2: want to buy as much stuff because they already did,
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Speaker 2: then you could say, okay, like there's some weakness here
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Speaker 2: that we, you know, really need to pay attention to.
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Speaker 2: And there's something there, but it's also one where like
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Speaker 2: there's a reasonable case to be made that those are
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Speaker 2: still just like short term corrections from behavior that already
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Speaker 2: happened in the first quarter, and hey, maybe you're better
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Speaker 2: off just like waiting to see what the July data
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Speaker 2: shows in August and you go with that as a
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Speaker 2: sense of, you know, where the economy is starting to settle. This,
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Speaker 2: by the way, is also working with the assumption that, remember,
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Speaker 2: we're over thirty days into the ninety day pause on
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Speaker 2: all reciprocal tariffs ascide from China, so you get this
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Speaker 2: ticking clock that's gonna come do in July. We don't
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Speaker 2: know exactly what's going to happen there maybe every country
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Speaker 2: stays at a ten percent teriff rate, maybe some ratchet up,
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Speaker 2: maybe they all go away. I don't really know what
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Speaker 2: we are going to get, and so there is room
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Speaker 2: for the economic situation to further evolve as well as
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Speaker 2: it relates to you know, what you may see over
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Speaker 2: the next couple months. So I think by and large,
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Speaker 2: this is an economy that clearly had, you know, some
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Speaker 2: significant slowdown concerns and some that are probably gonna manifest
7:30
Speaker 2: over the next few months, just because I don't think
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Speaker 2: you can go through thirty days of what we went
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Speaker 2: through on tariffs and say, hey, everything's going to go
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Speaker 2: immediately back to how it was before. But we just
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Speaker 2: don't know what the balance is between what's that slowdown
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Speaker 2: look like and how much excitement is there now out there.
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Speaker 2: I don't really know, because talking to different people in
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Speaker 2: different industries you get all kinds of different answers.
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Speaker 3: At the moment, the severity is something that you cannot gauge,
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Speaker 3: you know how basically, in effect we had an embargo
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Speaker 3: in China for that thirty or four period. What type
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Speaker 3: impact does that have on the supply chain, the availability
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Speaker 3: of purchasing certain goods in the United States and or
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Speaker 3: how will that translate to potential price increases. All of
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Speaker 3: that is up for debate, and we need to continue
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Speaker 3: to monitor.
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Speaker 2: So yeah, it gets to you to this piece with
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Speaker 2: you know, hey, what do investors do as a result
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Speaker 2: of this? And I think ultimately it comes back to
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Speaker 2: the stuff that we've talked about kind of all along
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Speaker 2: over the last couple of months, which is, look, you
8:30
Speaker 2: don't panic and sell everything at the lows because you
8:33
Speaker 2: never know exactly what's going to come next. If if
8:36
Speaker 2: you sold out on April ninth and you said pull it,
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Speaker 2: like we're calling it, we got to get out of everything,
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Speaker 2: you probably feel pretty dumb right now. Certainly there's a
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Speaker 2: non zero chance that if you say, okay, everything's recovered,
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Speaker 2: it's time to pile back in, you might feel pretty
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Speaker 2: dumb two three months from now if we end up
8:57
Speaker 2: getting you know, a bunch of bad economic data that
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Speaker 2: the US economy can't overcome. I'm not saying that will
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Speaker 2: or won't happen. I'm just saying you never know. And
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Speaker 2: that's why making these binary decisions sell it all, buy
9:08
Speaker 2: it all, you know, just based on what the market
9:10
Speaker 2: is doing, Those are not good decisions. Emotional investing, whether
9:14
Speaker 2: it's out of fear, greed, or any other emotion that
9:17
Speaker 2: you may have, hunger, you know, don't invest when you're hungry. Like,
9:22
Speaker 2: if you feel yourself making emotional investment decisions, you're doing
9:27
Speaker 2: it wrong either way. And I think that's what I
9:30
Speaker 2: come back to on this. So if if you're looking
9:32
Speaker 2: at this right now and you're like, man, the S
9:34
Speaker 2: and P is rallied a thousand points off its bottom?
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Speaker 2: Did I miss the boat? Do I need to pile
9:41
Speaker 2: in right now? I don't think those are healthy questions
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Speaker 2: to be asking yourself. No, I think if you are,
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Speaker 2: if you're someone that's that swayed by price movements in
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Speaker 2: the stock market, you need to really think about, you know,
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Speaker 2: either a finding a way just to like detach yourself
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Speaker 2: from it, whether it's hey, I'm again, there's different ways
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Speaker 2: you can do this, like hey, I'm giving my investment
10:09
Speaker 2: account passwords to my spouse. They're gonna handle it so
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Speaker 2: that I can't, you know, do anything rightly, so that
10:16
Speaker 2: like if I get emotional, I can't go and just
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Speaker 2: trade it, or do I want to hire someone to
10:21
Speaker 2: manage this for me because I can't do it like
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Speaker 2: these are conversations that you need to have because there
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Speaker 2: is no world in which investing emotionally is going to
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Speaker 2: produce good outcomes for you. It's it's just not. And
10:36
Speaker 2: so when I when I read this piece about, oh,
10:38
Speaker 2: like you know you've had this you know, boomerang month,
10:42
Speaker 2: did you think this market was just going to go
10:44
Speaker 2: all one way, you know, either up or down this year?
10:48
Speaker 2: Because if you did, like, yeah, you've kind of been
10:50
Speaker 2: off sides there, you could have.
10:53
Speaker 3: Said if the tariffs had stayed in place, that you
10:55
Speaker 3: could have made the argument they continue to trend that way,
10:58
Speaker 3: but the policy has changed rapidly, so it's ever evolving.
11:04
Speaker 2: Take a quick break. When we come back, we'll talk
11:08
Speaker 2: a little bit about what we are seeing in the
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Speaker 2: labor market right now, right after this.
11:13
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12:11
Speaker 2: So we got a couple of labor market pieces here,
12:13
Speaker 2: one in the Wall Street Journal, one in Barons. The
12:15
Speaker 2: one in Barons is the one that we'll start off with.
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Speaker 2: Its titled Inflation is creeping into the labor market. Tariffs
12:21
Speaker 2: are a worry. And what it talks about is a
12:25
Speaker 2: statistic called the Employment Cost Index. And basically when we
12:30
Speaker 2: look at that, it's it's calculated by the Bureau of
12:33
Speaker 2: Labor Statistics, and what it says, I'll quote here, momentum
12:40
Speaker 2: could pick up in this index again. According to a
12:42
Speaker 2: less known data point up date this month, the Employment
12:44
Speaker 2: Cost Index, which felled a three point six percent in
12:47
Speaker 2: the first quarter of twenty twenty five at tracks the
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Speaker 2: cost of compensating employees blah blah blah, and basically says,
12:54
Speaker 2: look if the labor if this stays at this level,
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Speaker 2: it has the potential to be problematic for employers who
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Speaker 2: may want to reduce head counts. Now, I guess what
13:05
Speaker 2: I struggle with on this, Paul, is the employment cost
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Speaker 2: Index has been coming down since Q four of twenty
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Speaker 2: twenty two, and despite the ECI coming down over that time,
13:18
Speaker 2: we've seen the labor market slowing, and it had like
13:22
Speaker 2: that there has not been a correlation where a higher
13:24
Speaker 2: ECI results in more layoffs here, and you know that
13:29
Speaker 2: they try to make the point, hey, like a low
13:31
Speaker 2: employment cost index would you know, potentially boost hiring, I
13:35
Speaker 2: think is what they're trying to say. But the employment
13:37
Speaker 2: cost Index was basically hovering around like one eight to
13:40
Speaker 2: two during the early twenty tens, and that was a
13:43
Speaker 2: freaking horrible labor market. So I kind of wonder if
13:46
Speaker 2: this is mixing up supply and demand and kind of backwards.
13:49
Speaker 2: I didn't really get a good sense for what this
13:51
Speaker 2: piece was arguing in a convincing way.
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Speaker 3: Yeah, basically it's helpful, maybe just to give a little
13:56
Speaker 3: more context to the employment cost Index, because it's something
13:59
Speaker 3: that's not something that we regularly discussed. It's basically measuring
14:02
Speaker 3: the growth of labor costs in the United States, so
14:05
Speaker 3: including wages and salaries in it has a pretty tight
14:08
Speaker 3: correlation to inflation. And if we want to look at
14:11
Speaker 3: the periods of time that we've experienced over the last
14:13
Speaker 3: five years, which we've seen sort of every iteration of it,
14:16
Speaker 3: where twenty nineteen sort of pre pandemic levels, you had
14:20
Speaker 3: no concerns about inflation at all. Obviously in twenty twenty
14:24
Speaker 3: two that became a significant concern. If we look at
14:27
Speaker 3: this ECI measure that they're quoting here in ployt Cost Index,
14:30
Speaker 3: that percentage post COVID was in and around two point
14:34
Speaker 3: eight percent, extremely low. And what we saw post COVID
14:37
Speaker 3: was a tremendous demand for hiring because there was a
14:40
Speaker 3: ton of money in the system, significant amount of demand
14:43
Speaker 3: supply chain snarolops and things like that, and you saw
14:46
Speaker 3: a tremendous amount of mobility in the labor market. Fast
14:49
Speaker 3: forward to twenty twenty two through twenty twenty four, we
14:52
Speaker 3: were in the midst of battling significant inflation that we
14:54
Speaker 3: hadn't seen for many years. This employment cost index measure
14:58
Speaker 3: moved to five percent, as you mentioned, Chuck, it now
15:01
Speaker 3: sits at three point six percent. The argument that I
15:03
Speaker 3: believe is trying to be made the piece here is
15:05
Speaker 3: that tariffs are going to cause it. And I'm not
15:08
Speaker 3: saying I agree with this. I'm just saying this is
15:10
Speaker 3: the outline of the argument. Tariffs are going to cause
15:12
Speaker 3: inflation that's going to increase the cost of living for
15:14
Speaker 3: US employees. As a result of that, employers will need
15:17
Speaker 3: to allocate more capital to cover labor costs. Because of
15:21
Speaker 3: that cycle that we typically experience when there's inflationary pressure,
15:25
Speaker 3: our stuff costs more, Chuck, we turn to our employer
15:27
Speaker 3: and say, gee, we need a little bit more money
15:29
Speaker 3: because things are costing more. And this harkens back to
15:32
Speaker 3: what I was saying earlier in the show, this idea
15:34
Speaker 3: that this is making the assumption, Chuck, that we are
15:37
Speaker 3: going to see a significant or we're going to see
15:40
Speaker 3: an uptakeing inflation, right, And I just can't jump to
15:44
Speaker 3: that conclusion just yet, because maybe we'll see an uptake in inflation,
15:48
Speaker 3: but maybe it's quick and it subsides.
15:50
Speaker 2: Yeah, I just don't know how. I don't know how
15:55
Speaker 2: you can look at this as any kind of like
15:57
Speaker 2: leading indicator of where the labor market is going to go.
16:01
Speaker 2: It just seems to have the causation backwards.
16:03
Speaker 3: Because if there was perfect correlation, this three point six
16:06
Speaker 3: percentage figure off of the five percent figure that we
16:10
Speaker 3: saw in twenty twenty two to twenty twenty four would
16:12
Speaker 3: indicate perhaps robust hiring hiring, and it's not indicating that.
16:17
Speaker 3: So there's not perfect correlation with this argument here.
16:21
Speaker 2: So you do have then this is I think a
16:24
Speaker 2: meteor piece even though it's like eight sentences long from
16:27
Speaker 2: the Wall Street Journal. But hey, listen, like you can
16:30
Speaker 2: have you know, there's certain cuts of meat that are
16:34
Speaker 2: small but pack a punch, and that's what this piece
16:37
Speaker 2: in the Wall Street Journal does relative to this one
16:39
Speaker 2: from this Barons Tucker believe it was yes, okay, worried
16:44
Speaker 2: about the economy of America small businesses of reducing investment
16:47
Speaker 2: in hiring. Survey shows so what we are seeing, and
16:50
Speaker 2: again this is the question is does this continue or
16:53
Speaker 2: does the change in the tariff framework of just how
16:57
Speaker 2: businesses operate. But we are is a clear you know,
17:02
Speaker 2: slowdown in how businesses are indicating they're going to be
17:06
Speaker 2: hiring in the future. How that translates into actual hiring
17:10
Speaker 2: is still the question that's out there. But this is
17:13
Speaker 2: happening against a backdrop of a labor market that's been
17:16
Speaker 2: slowing significantly over the last couple of years. So I
17:19
Speaker 2: think this is the big question because I see a
17:21
Speaker 2: bunch of people trying to you know, kind of reference
17:24
Speaker 2: back to you know, twenty twenty three and even parts
17:27
Speaker 2: of twenty four, and this is a fundamentally different economy
17:32
Speaker 2: than it was at the start of twenty twenty three
17:34
Speaker 2: when people started to get recessionary fears the first time,
17:36
Speaker 2: remember Silicon Valley Bank blew up, and then later that
17:39
Speaker 2: summer we started to see a slowdown in hiring, and
17:42
Speaker 2: people are like, oh, is there like a problem? Is
17:44
Speaker 2: there a recession that's going to develop out of this?
17:47
Speaker 2: And ultimately, like the view that we talked about was no, like,
17:51
Speaker 2: there's enough momentum and there's enough stuff going on in
17:54
Speaker 2: the economy to be able to carry through that. I
17:57
Speaker 2: think the question here is, hey, is there an enough
18:00
Speaker 2: to offset you know, potential tariff damage and an already
18:03
Speaker 2: slowing labor market. We don't know, and so I think
18:06
Speaker 2: we're gonna have to see what develops over the next
18:09
Speaker 2: three to six months. I'm very much at this point
18:12
Speaker 2: kind of open to a possibility where the economy starts
18:16
Speaker 2: to rebound after maybe a little bit of a slowdown
18:18
Speaker 2: here and starts to rip again heading into twenty twenty six.
18:22
Speaker 2: There's also a case where it can't overcome, you know,
18:25
Speaker 2: just the way that sentiment has been, you know, hurt
18:28
Speaker 2: in the last month or so, and businesses then see,
18:31
Speaker 2: you know, a slowing of new orders that continues, and
18:34
Speaker 2: so they start to you know, pull back on their
18:36
Speaker 2: hiring and things like that. So I think right now
18:39
Speaker 2: you just have to be open to a wide range
18:41
Speaker 2: of outcomes and understand that no one knows exactly what
18:45
Speaker 2: the broad economy looks like right now or exactly how
18:48
Speaker 2: it's going to develop for the next three to six months.
18:50
Speaker 3: What I'm most eager to try and get a sense
18:52
Speaker 3: of is how does consumer sentiment and business sentiment translate
18:56
Speaker 3: to actual economic data potentially slowing down because all the
19:00
Speaker 3: things that we've been reading Chuck over the last four
19:02
Speaker 3: or six weeks is negative sentiment and less focus and
19:06
Speaker 3: sort of a paralysis on investing more and hiring more.
19:09
Speaker 3: But I can't quote you a single hard economic data report,
19:13
Speaker 3: you know, GDP or anything else that's back we're looking
19:15
Speaker 3: to point to that evidence.
19:17
Speaker 2: No, it's the question is the question has been is
19:21
Speaker 2: the hard data going to show what the soft data
19:23
Speaker 2: has been telling us? And now the question is, well,
19:26
Speaker 2: will the soft data rebound and then will the hard
19:28
Speaker 2: data follow the soft data. We it's a little bit
19:32
Speaker 2: one first, but we'll get there. Quick break here Wall
19:36
Speaker 2: Street Watch and ask Todter next.
19:40
Speaker 1: Like us on Facebook and follow us on Twitter at
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Speaker 1: TFE show. Breaking business news is always first right here
19:47
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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.
20:01
Speaker 4: Markets aren't extending their gains one day after the SMP
20:03
Speaker 4: five hundred term positive for the year after months of
20:07
Speaker 4: volatility due to ongoing trade concerns. Right now, the Dow
20:11
Speaker 4: is up by two tenths of a percent, or ninety
20:13
Speaker 4: four points, SMP five hundred edging four points higher in
20:16
Speaker 4: the Nasdaq up by four tenths of a percent or
20:18
Speaker 4: seventy five points. Russell two thousand actually down by six
20:22
Speaker 4: tenths of a percent, ten year treasure real flat at
20:24
Speaker 4: four point four to nine percent, and crude oil down
20:27
Speaker 4: just over a thirty percent lower trading It's sixty three
20:30
Speaker 4: dollars in forty three cents a barrel. After its eighteen
20:34
Speaker 4: percent plunge yesterday, shares and United Health are modestly rebounding
20:38
Speaker 4: two and a half percent today. Yesterday's decline was as
20:41
Speaker 4: a result of Chief executive Andrew Whitty stepping down, where
20:45
Speaker 4: Chairman Stephen Hemsley returned as the company's CEO. United Health
20:50
Speaker 4: also had a poor earnings miss ay and suspended its
20:53
Speaker 4: twenty twenty five outlook. Meanwhile, after rallying sixteen percent yesterday,
20:58
Speaker 4: Super micro Computer shares up another fourteen percent today. Raymond
21:03
Speaker 4: James analysts also gave the server makers stock and outperform rating.
21:07
Speaker 4: Sticking with the tech sector, with both in Vidia and
21:10
Speaker 4: AMD announceday deals with Saudi Company Humane to work on
21:14
Speaker 4: developing AI models and building data center infrastructure. Bank of
21:19
Speaker 4: America lifted its price targets of both stocks following the announcement.
21:23
Speaker 4: In Vidia up by two percent while AMD is actually
21:26
Speaker 4: up by six percent. AMD also announcing six billion dollars
21:30
Speaker 4: in share buybacks.
21:32
Speaker 5: Elsewhere.
21:32
Speaker 4: PVH up by eight percent after the parent company to
21:35
Speaker 4: Tommy Hillfigure and Calvin Klein was upgraded to buy from
21:38
Speaker 4: hold by Jeffries as the company undergoes a business transformation.
21:43
Speaker 4: JD dot Com down by three percent despite the Chinese
21:46
Speaker 4: e commerce platform posting better than expected earnings and revenue
21:50
Speaker 4: siting improving consumer sentiment, and after today's closing bell, we'll
21:55
Speaker 4: see earnings from Cisco Systems. I'm Tucker Silva and that's
22:00
Speaker 4: Wall Street Watch.
22:02
Speaker 1: This is Ask Todd on the Financial Exchange Radio network.
22:06
Speaker 1: If you have an existing estate plan or in the
22:08
Speaker 1: market for one, Todd Letsky is here to answer your
22:11
Speaker 1: questions and help you plan for a later life. Ask
22:13
Speaker 1: Todd is presented by Cushing and Dolan, serving Massachusetts and
22:17
Speaker 1: New England for more than thirty five years, helping families
22:20
Speaker 1: with a state and tax planning, Medicaid planning, and probate law.
22:23
Speaker 1: Visit Cushingdolan dot com. Now here's Todd Lutsky.
22:28
Speaker 2: As promised, we are now joined by Todd Lutsky from
22:31
Speaker 2: the law firm of Cushing and Dolan. Segment is Asked Todd,
22:34
Speaker 2: we got the phone lines open because you get to
22:36
Speaker 2: ask Todd your state planning questions live on air right now.
22:41
Speaker 2: Phone numbers eight eight eight two zero five two two
22:45
Speaker 2: sixty three. A reminder, we only get to maybe two
22:47
Speaker 2: or three calls each time, and so that gives you
22:51
Speaker 2: a pretty strong incentive to call early to make sure
22:54
Speaker 2: we get to answer your question again. Eight eight eight
22:57
Speaker 2: two zero five two two sixty three is the number
23:00
Speaker 2: to ask Todd Lutsky your estate planning questions live on
23:04
Speaker 2: air right now. That number again is eight eight eight
23:08
Speaker 2: two zero five two two six three. Mister Lutsky, how
23:13
Speaker 2: are you doing today? I am never better? You got
23:18
Speaker 2: a little bit annoyed h earlier this morning?
23:20
Speaker 5: Yeah, I'm always afraid to ask you this question.
23:21
Speaker 2: My phone keeps calling me Shirley for some reason. Really well,
23:26
Speaker 2: I realized though that I left in an airplane mode. Okay, yeah, Todd,
23:32
Speaker 2: I want to talk to you a little bit about trusts,
23:35
Speaker 2: and specifically, so you go to an estate planning attorney
23:39
Speaker 2: and you pay them a bunch of money to go
23:43
Speaker 2: do some legal work for you. Trust will's the whole bit.
23:46
Speaker 5: Yeah, got it.
23:47
Speaker 2: How does one know if their trust is actually funded
23:50
Speaker 2: with assets or if you just paid a bunch of
23:52
Speaker 2: money for an expensive piece of paper.
23:55
Speaker 5: And you know, I think the comment the way you
23:57
Speaker 5: phrase that is accurate because if you don't fund the trust,
24:02
Speaker 5: arguably it's not really doing anything for you. And that's important.
24:06
Speaker 5: That's when when Chuck says it's it's an expensive piece
24:08
Speaker 5: of paper, it could be. So a couple of things. One,
24:13
Speaker 5: if we're talking about a revocable trust, and then I'll
24:16
Speaker 5: tell you a little bit about an irrevocable trust and
24:19
Speaker 5: the differences by having them not funded. But the funding
24:23
Speaker 5: to determine whether either is funded is really the same.
24:27
Speaker 5: I would say, take a look at your brokerage statement,
24:31
Speaker 5: not your IRA statement from the broker, but your non IRA,
24:37
Speaker 5: non retirement qualified money brokerage statement. Take a look at,
24:43
Speaker 5: perhaps if it's a revocable trust, even your bank statements,
24:48
Speaker 5: and see if the name on the statement is your name,
24:53
Speaker 5: or your name and your wife's name alone, or if
24:58
Speaker 5: it's perhaps if it's revocable, your name trustee of the trust.
25:05
Speaker 5: So if it shows up as trustee of the trust,
25:07
Speaker 5: then you know that everything in that account is in
25:11
Speaker 5: the trust. If it shows up in your name, then
25:16
Speaker 5: everything in that account is not in your trust. And
25:19
Speaker 5: it is avoiding the trust, probably because it's jointly owned
25:23
Speaker 5: and would just pass to the survivor on the first death.
25:27
Speaker 5: Same idea with the irrevocable trust. See if the trust
25:30
Speaker 5: name's on there. Real estate's another big issue. Real estate
25:34
Speaker 5: needs to be put in the trust. Vacation homes and
25:38
Speaker 5: primary residents and the like. So with a vacation home
25:43
Speaker 5: or your primary residence, make sure that the tax bill,
25:46
Speaker 5: the real estate tax bill, comes in the name of
25:50
Speaker 5: the trust and not in your name personally. Remember, just
25:54
Speaker 5: because you see the name of the trustee there doesn't
25:57
Speaker 5: mean that's who owns it. Because when we talk about
25:59
Speaker 5: an irrevocable trust, you might see not your name on
26:03
Speaker 5: the real estate tax bill, but maybe a child's name
26:07
Speaker 5: trustee of the trust. And so I get calls all
26:11
Speaker 5: the time saying, oh, we didn't give the house to
26:14
Speaker 5: our daughter. No you didn't, it's trustee. So but people
26:18
Speaker 5: see the name and they think that that person owns it.
26:20
Speaker 5: No trust owns it.
26:22
Speaker 2: Talking with Todd Letsky from the law firm of Cushing
26:25
Speaker 2: and Dolan, if you've got a question that you want
26:27
Speaker 2: to ask Todd about your estate plan, this is the
26:30
Speaker 2: chance to do so eight eight eight to zero five
26:34
Speaker 2: two two sixty three is the phone number. Still got
26:37
Speaker 2: a little bit of room on the phone line, so
26:39
Speaker 2: this is your chance to speak with Todd again. Eight
26:42
Speaker 2: eight eight to zero five two two sixty three is
26:46
Speaker 2: the number to call uh to ask Todd your estate
26:50
Speaker 2: planning questions again. That number is eight eight eight to
26:55
Speaker 2: zero five two two six three. We're gonna take a
26:59
Speaker 2: quick break now, but when we come back, we're gonna
27:01
Speaker 2: get to your questions with Todd Lutsky again. That phone
27:04
Speaker 2: number is eight eight eight two zero five two two
27:07
Speaker 2: sixty three.
27:09
Speaker 1: Ask Todd with Todd Lutsky every Wednesday at ten thirty
27:13
Speaker 1: only here on the Financial Exchange Radio Network. You're listening
27:18
Speaker 1: to Ask Todd with Todd Lutsky on the Financial Exchange
27:22
Speaker 1: Radio Network.
27:33
Speaker 2: All right, we got you all cued up here with Todd.
27:35
Speaker 2: Let's get right to your calls. First up, we got
27:37
Speaker 2: Philip on the cave. Philip, what's your question for Todd Lutsky?
27:41
Speaker 6: Yes, my question is Todd did an irrevocable trust for
27:45
Speaker 6: me coming up on seven years ago? When should I
27:49
Speaker 6: mean do I have to redo it again? In how
27:53
Speaker 6: many years?
27:54
Speaker 5: So great question, it's always good idea to follow up
27:56
Speaker 5: and figure out after every five, six, seven years you
28:00
Speaker 5: into check in. I mean, if your estate hasn't grown
28:03
Speaker 5: significantly and you you know, I don't know what your
28:06
Speaker 5: total net worth is, But did we do one just
28:08
Speaker 5: for you? Are you married? I just can't recalling.
28:11
Speaker 6: Yeah, no, for for both myself and my wife. And yes,
28:17
Speaker 6: we have several properties involved in it, and that type
28:21
Speaker 6: of thing.
28:22
Speaker 2: Good good.
28:22
Speaker 5: And would the total value of your estate be over
28:24
Speaker 5: four million?
28:28
Speaker 6: I'm gonna say no, but you never know it today's prices.
28:33
Speaker 5: And are the trusts irrevocable or revocable?
28:37
Speaker 6: Irrevocable?
28:38
Speaker 5: So you know, if you're somewhere around that four million
28:41
Speaker 5: dollar mark, let's say, and we've got the assets funded
28:45
Speaker 5: as Chuck was asking earlier, they're already in the trust,
28:48
Speaker 5: I'm saying, and they're irrevocable, and you've gotten past the
28:51
Speaker 5: five year rule. No, there's been no law change that
28:54
Speaker 5: should affect you. You should not need to change your
28:56
Speaker 5: estate plan. I think based on those facts, your state
29:01
Speaker 5: plans still doing what we want it to do. It's
29:03
Speaker 5: avoiding probate, it's sheltering estate taxes, and it's protecting assets
29:06
Speaker 5: from the nursing home. The only thing that might change
29:09
Speaker 5: is if you've decided that you want to leave your
29:11
Speaker 5: assets to your family differently than the way we put
29:15
Speaker 5: it in there. Short of that, if that's the same,
29:17
Speaker 5: I think you're in pretty good shape. So great call, Phil,
29:20
Speaker 5: and I think a lot of people should take point
29:22
Speaker 5: or take note from Phillips call, because it's a good
29:25
Speaker 5: idea to check in with your estate planning lawyer. You know,
29:28
Speaker 5: every five years, or depending on how big your plan is,
29:31
Speaker 5: larger estates check in more frequently. But the point on
29:34
Speaker 5: that is that that's exactly what our guide is that
29:37
Speaker 5: we're giving away this month is avoiding potholes. And some
29:40
Speaker 5: of them is, Hey, I got divorced, I'm changing residency.
29:44
Speaker 5: You know, I've got a second marriage situation. These are
29:48
Speaker 5: things that make you say, hey, I better check into
29:51
Speaker 5: my estate plan. It's been five years, it's been ten years,
29:55
Speaker 5: and maybe I want to check in. These are some potholes.
29:57
Speaker 5: And for folks that haven't done their planning, you know,
30:00
Speaker 5: maybe they say I don't need it, I'm gonna rely
30:02
Speaker 5: on my will, or I'm going to rely on a
30:04
Speaker 5: nominee realty trust. You know, these are not I don't
30:07
Speaker 5: need to do planning because I'm not worth enough or
30:09
Speaker 5: I'm I'm single. No, folks, there's all kinds of potholes
30:13
Speaker 5: that you can run into. So if you haven't done
30:15
Speaker 5: your estate plan, get the guide before you do it
30:18
Speaker 5: so you can learn what not to do. And if
30:21
Speaker 5: you've done your plan, it might give you some ideas
30:23
Speaker 5: about how you might want to change it or what
30:25
Speaker 5: you might need to do to tweak it. So it's
30:28
Speaker 5: a guide for everyone. Eight six six eight four eight
30:32
Speaker 5: five six nine nine or Legal Exchange Show dot com.
30:35
Speaker 5: Estate Planning Potholes to Avoid eight six six eight four
30:39
Speaker 5: eight five six nine nine or Legal Exchange Show dot com.
30:45
Speaker 2: Next up, we got Jen in Worcestergen you are on
30:47
Speaker 2: with Todd Lutsky.
30:52
Speaker 7: Jen.
30:52
Speaker 5: Are you there?
30:54
Speaker 2: This is Ken, Ken, Ken, Ken, You're on with Todd Lutsky.
30:59
Speaker 8: Okay, great.
31:00
Speaker 9: You know I've heard you say many times the advantage
31:02
Speaker 9: of putting your assets in a trusts to avoid probate.
31:07
Speaker 9: I'm just wondering, if a will does go to probate
31:10
Speaker 9: and it's opened to public inspection, can you just show
31:14
Speaker 9: up at the city clerk at City Hall to say
31:17
Speaker 9: I want to see John Smith's will, or do you
31:19
Speaker 9: have to show cars and tell out a farm or
31:21
Speaker 9: how would that work?
31:22
Speaker 5: No, you're absolutely right. You could just show up at
31:25
Speaker 5: the probate court and say I'd like to pull this
31:27
Speaker 5: file and take a look at it. It is public record.
31:30
Speaker 5: So there is all the more reasons in the world
31:33
Speaker 5: that you want to avoid probate. We've mentioned many of
31:36
Speaker 5: them over the years. Privacy, of course, is one of them.
31:40
Speaker 5: If you don't want your neighbor swinging by to see
31:43
Speaker 5: what you own, because if it's in probate, there's lots
31:45
Speaker 5: of You got to file an inventory and so not
31:48
Speaker 5: only do you put the will there, but you have
31:49
Speaker 5: to list all of your assets and how much they're
31:53
Speaker 5: worth when you pass, So there's a lot of information there.
31:57
Speaker 5: So avoiding probate is a big reason, not the only
32:00
Speaker 5: reason to do a trust of some kind, revocable or irrevocable,
32:04
Speaker 5: but certainly putting assets in the trust will be avoiding probates,
32:08
Speaker 5: so you don't have to have that that privacy problem.
32:11
Speaker 5: So yeah, great, great question. Ken.
32:14
Speaker 2: Let's go over to Bob in Paxton. Bob, what is
32:17
Speaker 2: your question for Tom Lotski?
32:20
Speaker 8: Hello Todd, thank you for taking my call. Sure. My
32:23
Speaker 8: question is this a wife and I fortunately have approximately
32:29
Speaker 8: one point nine million dollars in a four oh one
32:32
Speaker 8: k and we own our own home. We do have
32:35
Speaker 8: a will, but should I get it? Should we get
32:39
Speaker 8: a trust? And if so, we kind you? So, how recommend?
32:43
Speaker 5: How old are you and your wife?
32:46
Speaker 8: Sixty eight?
32:47
Speaker 5: And how much is the house worth?
32:52
Speaker 8: Six hundred?
32:53
Speaker 5: And are there other investments outside of a four oh
32:57
Speaker 5: one k? On most so you're looking at you know,
33:02
Speaker 5: about two point five in value. So some of the
33:06
Speaker 5: things we look at when we determine a question like
33:08
Speaker 5: this is basically todd what kind of a state plan
33:12
Speaker 5: you know? What would be right for me? Well, I
33:15
Speaker 5: look at sixty eight, I look at you know two
33:18
Speaker 5: point five in assets, and I suggest that, Well, we
33:23
Speaker 5: want to make sure we have no death tax, so
33:25
Speaker 5: we need a trust to double your exemption to four million.
33:28
Speaker 5: That trust could be revocable, certainly. And then the other
33:32
Speaker 5: question is do we want to protect from the nursing home. Well,
33:35
Speaker 5: the only item we can protect from the nursing home
33:37
Speaker 5: currently is the house, which is fine, but it's also
33:42
Speaker 5: somewhat protected for each other with no planning. So we
33:45
Speaker 5: would have to get together and really iron out whether
33:48
Speaker 5: we do the irrevocable trust to try to protect assets
33:51
Speaker 5: from the nursing home, or whether we just do a
33:53
Speaker 5: revocable trust. But certainly one of those trusts is going
33:58
Speaker 5: to be right for you. But the type of asset
34:00
Speaker 5: you have what require a further discussion, one that we
34:03
Speaker 5: can't do on the radio. But you're absolutely right state
34:06
Speaker 5: planning at sixty eight is perfect timing. Again, I didn't ask,
34:10
Speaker 5: but assuming he has children another reason to do the plan.
34:14
Speaker 5: So you're right on point there, Bob. I think planning
34:17
Speaker 5: would be right for you. We just don't know exactly
34:19
Speaker 5: which trust yet, Todd.
34:20
Speaker 2: We got one more for you. We're going to try
34:21
Speaker 2: to go four for four here. Gene in Maine is
34:24
Speaker 2: on the line. Jean. We've only got a couple of minutes,
34:26
Speaker 2: so you got to be quick. But what's your question
34:28
Speaker 2: for Todd?
34:29
Speaker 7: Well, I was going to ask you about a trust,
34:32
Speaker 7: and your previous answer question answered half of what I
34:37
Speaker 7: wanted to know. Okay, I have about three million dollars
34:40
Speaker 7: in net net and it's all kinds of VERSI diversified
34:47
Speaker 7: and YouTube fun cod CD's land home. I want to
34:52
Speaker 7: put a trust with a reversible trust, but I want
34:57
Speaker 7: to have my two adult children on it also, is
35:01
Speaker 7: that possible?
35:02
Speaker 5: So the type of trust you said, you said reversible.
35:04
Speaker 5: I don't know if you meant revocable or irrevocable. Which
35:07
Speaker 5: one did you mean?
35:09
Speaker 7: Well, I was asking you the question as to I
35:12
Speaker 7: don't have one and I mean to set one up.
35:15
Speaker 5: So how old are you?
35:17
Speaker 7: I'm eighty one years old and my wife is seventy one, So.
35:22
Speaker 5: Yes, I would say, with two million dollars in assets,
35:25
Speaker 5: the type of planning would be just make sure we
35:28
Speaker 5: don't pay any death taxes. You're right on the bubble,
35:30
Speaker 5: and as a married couple, we certainly with a trust
35:32
Speaker 5: could double that exemption to four million, so you won't
35:35
Speaker 5: owe any estate taxes. So that's an easy fix. We
35:40
Speaker 5: can help you avoid probate when you pass away. That'll
35:43
Speaker 5: be an easy fix by funding the trust. Your age
35:46
Speaker 5: would then trigger me to say, assuming the two million
35:50
Speaker 5: that you're worth includes, as you said, a home, it
35:54
Speaker 5: includes you know, let's say, investment accounts that are not retirement,
36:01
Speaker 5: not qualified plan accounts. So just for fun, I'll say,
36:04
Speaker 5: you know, a million dollar home, five hundred thousand dollars
36:08
Speaker 5: of investments and five hundred thousand dollars of retirement accounts.
36:12
Speaker 5: If the breakdown is like that, I would say, do
36:17
Speaker 5: you want to protect assets from the nursing home? And
36:19
Speaker 5: if the answer to that is yes, then we would
36:22
Speaker 5: sit down and we would explore how an irrevocable trust
36:27
Speaker 5: would work. And yes, you could put both your children
36:31
Speaker 5: on as trustee of that irrevocable trust. We would put
36:35
Speaker 5: the assets in to get them protected from the nursing home,
36:38
Speaker 5: avoid taxes and avoid probate, and you can retain the
36:42
Speaker 5: control over removing and replacing those kids as trustees. And
36:47
Speaker 5: certainly upon your passing you would have the kids listed
36:51
Speaker 5: as beneficiaries. I assume that's what you meant when you
36:54
Speaker 5: said put them on. So you're on the right track.
36:56
Speaker 5: I think you just need to, you know, get in
36:58
Speaker 5: get in front of the lawyer and learn how to
37:00
Speaker 5: do all these things. But yes, planning is certainly right
37:03
Speaker 5: for you folks.
37:04
Speaker 2: Mister Utski, thank you so much for joining us today.
37:07
Speaker 5: Always a pleasure.
37:09
Speaker 1: This has been asked Odd on the Financial Exchange Radio network.
37:13
Speaker 1: Ask Todd with Todd. Lutsky has been presented by Cushing
37:15
Speaker 1: and Dolan, serving Massachusetts and New England for more than
37:18
Speaker 1: thirty years helping families with the state and tax planning,
37:21
Speaker 1: Medicaid planning, and probate law. Call eight hundred and three
37:24
Speaker 1: nine three four thousand and one or visit Cushingdolan dot com.
37:27
Speaker 1: The views expressed in this segment are solely those of
37:29
Speaker 1: Cushing and Dolan Armstrong advisor. He does not provide any
37:32
Speaker 1: legal or tax advice. Please consult with your legal or
37:34
Speaker 1: tax advisor on such matters. Cushing and Armstrong do not
37:36
Speaker 1: endorse each other and are not affiliated.
37:38
Speaker 2: Still a bunch of come. As we head towards the
37:40
Speaker 2: second hour of the show, we'll talk a little bit
37:42
Speaker 2: about the FED and where they go from here in
37:46
Speaker 2: the aftermath of the new reduced tariffs on China. Also
37:50
Speaker 2: going to be talking a little bit about what's going
37:53
Speaker 2: on in AI world, and well, I think we really
37:58
Speaker 2: have to cover this story from uh, this story about
38:03
Speaker 2: just a brand that refuses to die. To be fair,
38:09
Speaker 2: it was, you know, attempted to be killed off far
38:11
Speaker 2: too early. But we'll talk a little bit about what's
38:14
Speaker 2: going on with a key brand name in the media
38:17
Speaker 2: space when we return