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Is the big pullback in stocks many expected finally here? · The Financial Exchange Show

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Speaker 2: Well, it's Chuck, Paul and Tucker with you here today, and.
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Speaker 3: Top story here is from the blooming Berg.
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Speaker 2: Big pullback in stocks that many expect, it has yet
1:25
Speaker 2: to arrive. Man, we're really operating on some short timeframes
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Speaker 2: these days.
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Speaker 3: Huh. It's uh, you know.
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Speaker 2: It's it's been four months since the stock market went
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Speaker 2: through one of the dodgiest two week periods in history,
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Speaker 2: and we're sitting here being like, hey, like nothing's broken
1:48
Speaker 2: since then, which is accurate, But sometimes I Tucker, you
1:54
Speaker 2: remember last year when it was on like the third
1:58
Speaker 2: or fourth day of the year, the Wall Street Journal
2:01
Speaker 2: out of piece the stock market opened down the first
2:04
Speaker 2: three days of last year, and the Wall Street Journal
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Speaker 2: out of piece about like all, like the January effective
2:09
Speaker 2: stocks are down in January, like it's gonna be a
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Speaker 2: bad year, and lo and behold, stocks didn't even finish
2:14
Speaker 2: down for last January, and neither did the market. But
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Speaker 2: it didn't stop the Wall Street Journal from writing, oh
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Speaker 2: my goodness, like what a horrible year it's gonna be.
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Speaker 2: And things were just fine. So likewise, when I see
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Speaker 2: like a piece that's like, hey, there hasn't been a
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Speaker 2: big pullback you know, since the last big pullback in April.
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Speaker 2: I kind of sit there and I say, Paul, what
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Speaker 2: are we really doing here? Because first of all, typically
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Speaker 2: ten percent corrections in the stock market on a historical
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Speaker 2: basis happen usually every twelve to eighteen months.
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Speaker 3: It's not clockwork.
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Speaker 2: Sometimes they're you know, shorter time periods than that between them.
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Speaker 2: Sometimes they're longer ones. But that's generally what we see.
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Speaker 2: And so the fact that there hasn't been some kind
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Speaker 2: of big pullback in the last four months now A
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Speaker 2: doesn't mean that anything's you know, really different from the norm. B.
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Speaker 2: It doesn't mean that it can't happen tomorrow. And see
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Speaker 2: also means, hey, the reasons why stocks went down in
3:17
Speaker 2: April are not necessarily present in the same capacity today,
3:23
Speaker 2: and as such you have to evolve your view as
3:26
Speaker 2: the market and surrounding conditions evolve as well.
3:30
Speaker 4: The story of the tariffs that was so prevalent during
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Speaker 4: the month of April that led to that huge sell off,
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Speaker 4: like you said, has the concerns around it have subsided,
3:39
Speaker 4: not to say that they're not still there, it's just
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Speaker 4: not to the same degree it was in April. To me,
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Speaker 4: I have trouble with the word pullback when yesterday or
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Speaker 4: sell off yesterday.
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Speaker 3: Talk to me about it.
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Speaker 4: Really, I get everyone here. You gotta have headlines, you know,
3:57
Speaker 4: you got to keep things moving. They got to keep
3:59
Speaker 4: working every day, blue Berg and Wallster and so do we.
4:01
Speaker 4: We got to take care of business. But every day
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Speaker 4: when the market was off only a little over a
4:07
Speaker 4: half percent yesterday and the Nasdaq sold off what was
4:12
Speaker 4: it three quarters one to one and a half percent? Okay,
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Speaker 4: I'll give the nasdak if it's over a percent, chuck.
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Speaker 4: I'm willing to I'm willing to give them that grace
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Speaker 4: that there was some bit of a pullback.
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Speaker 3: But when the.
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Speaker 4: Overall S and P five hundred was off a half percent,
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Speaker 4: I just can't go there. Three hundred and fifty members
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Speaker 4: of the S and P five hundreds, five hundred were
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Speaker 4: up in positive territory yesterday. It just happened to be
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Speaker 4: the biggest weighted ones. And you mentioned it during the
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Speaker 4: program yesterday. The NVIDIAs, the you know, the heavier tech
4:41
Speaker 4: stocks that have some significant weight in the SMP, they
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Speaker 4: were down and they're largely in the Nasdaq too. That's
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Speaker 4: why we saw that pull back. But I can't go
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Speaker 4: there if it's not more than one percent.
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Speaker 2: Article is this article saying that there hasn't been a
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Speaker 2: big pullback. I mean, if if we want to get
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Speaker 2: into like terminology, look, bear market is down twenty percent
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Speaker 2: or more, correction is down ten percent. I think I
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Speaker 2: could define a pullback is maybe five percent, you know,
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Speaker 2: like now we're getting into like splitting hairs. A modest
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Speaker 2: decline is maybe one to three percent. And so, yeah,
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Speaker 2: what we are seeing right now, even today, where the
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Speaker 2: SMP continues to sell off down almost you know, one percent,
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Speaker 2: at the moment you look at it, there's still thirty
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Speaker 2: nine more S and P five hundred stocks positive right
5:31
Speaker 2: now than there are ones that are negative. And so
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Speaker 2: the reason why the index as a whole is getting
5:36
Speaker 2: you know, hit, is because okay, you know, you look
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Speaker 2: at Nvidio it's down three percent, Tesla's down three percent,
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Speaker 2: Metas down two percent, Amazon's down to Google's down two It's.
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Speaker 4: Close to twenty five percent of the SMP right there.
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Speaker 2: It doesn't matter that Chipotle is up one and a
5:52
Speaker 2: half percent, because it takes a lot of Chipotles to
5:54
Speaker 2: make an Nvidia. I know, the you know, the conversion
5:57
Speaker 2: changes time to time, but you need a lot of
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Speaker 2: to make a chip.
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Speaker 3: Is what is what I hear. So I think that
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Speaker 3: when we look at this.
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Speaker 2: The other thing is the market has changed what it's
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Speaker 2: been looking at over the last four to five months.
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Speaker 2: If you go back and I remember clear as day,
6:14
Speaker 2: because it wasn't that long ago. It was the beginning
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Speaker 2: of the year February, March, and April, markets were concerned
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Speaker 2: about tariff announcements because they took them to be gospel.
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Speaker 2: At this point, what we've seen is that the initial
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Speaker 2: announcement is often not as strong as the final implementation.
6:36
Speaker 2: You look at the Mexico and Canada tariffs as an example,
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Speaker 2: and it's oh, like, we're gonna have these tariffs of
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Speaker 2: x percent, but we're exempting you know, USMCA complying goods,
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Speaker 2: which is like ninety plus percent of goods traded between
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Speaker 2: the countries. So it's really not a huge thing. Hey,
6:51
Speaker 2: we're gonna, you know, have these big announcements about you know,
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Speaker 2: reciprocal tariff rates. Okay, then we're going down to ten percent.
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Speaker 2: We're gonna step back up a little bit. But okay,
6:59
Speaker 2: I don't know that people still fully believe that these
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Speaker 2: new rates from August first are going to stay in
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Speaker 2: effect long term. They may they may not, but this
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Speaker 2: is where we are. And so I think the market
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Speaker 2: has moved from hey, let's react to the announcement to Okay,
7:15
Speaker 2: now that the policy is in place, we have to
7:17
Speaker 2: react to the data. And that's fundamentally different also because
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Speaker 2: the announcements can happen like that, you know, any particular
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Speaker 2: point in time, and the markets back in February, March,
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Speaker 2: and April we're reacting really quickly as if oh, we
7:32
Speaker 2: got a position for this to happen. They're not doing
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Speaker 2: that anymore. And so now that we have tariffs that
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Speaker 2: are actually in place, it's, hey, show me how this
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Speaker 2: is actually affecting the US economy. And you can see
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Speaker 2: this because on August first, the thing that moved markets
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Speaker 2: wasn't the announcement of reciprocal tariff rates. We were down
7:54
Speaker 2: modestly and in pre market when you know that announcement
7:56
Speaker 2: had been made the night before. The thing that moved
7:59
Speaker 2: markets was bad jobs report that we got on August first.
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Speaker 2: That was the catalyst for that, you know, one hundred
8:04
Speaker 2: plus point downward day in the S and P five
8:07
Speaker 2: hundred and so I think, quite honestly, that's a healthy
8:11
Speaker 2: way to approach this, because look, if you're gonna run
8:16
Speaker 2: around like a chicken with your head cut off on
8:18
Speaker 2: every announcement about this and that, then you're gonna need
8:22
Speaker 2: a lot of a lot more chicken heads. You're gonna
8:25
Speaker 2: need lots of chicken heads, and quite honestly, like we
8:29
Speaker 2: don't have an ample supply of those here at the
8:31
Speaker 2: Financial Exchange. No, no, we're running short on the chicken heads.
8:37
Speaker 2: We've given all the live chickens to Pedro Serrano who
8:40
Speaker 2: was still trying to break out of his slump from
8:42
Speaker 2: Major League.
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Speaker 3: But I digress here.
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Speaker 2: Ultimately, markets looking at data is healthy and then responding
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Speaker 2: to that data as opposed to how are we gonna
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Speaker 2: you know, what's this announcement? I mean, what's that one? Hey,
8:56
Speaker 2: just take a step back and wait for you know,
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Speaker 2: the final policy, and then you can go from there.
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Speaker 4: That's a great, great point to make. It was very
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Speaker 4: challenging back during that time period covering it because there
9:08
Speaker 4: was a tremendous amount of uncertainty, the mess the final
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Speaker 4: rates would be different than what was initially announced, and
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Speaker 4: that was You're right, it was all the market cared
9:17
Speaker 4: about the earnings of Nvidia or whoever you want to
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Speaker 4: pick from the S and P five hundred. We're insignificant
9:23
Speaker 4: at that point in time. But now going through this
9:26
Speaker 4: most recent earning season and the jobs report and some
9:30
Speaker 4: of the inflationary reports, that has become the major focus
9:34
Speaker 4: on markets and the Federal Reserve to a degree too,
9:37
Speaker 4: which we'll talk about a little bit later in the
9:39
Speaker 4: Program's take.
9:40
Speaker 2: A quick break here, and when we return, a couple
9:45
Speaker 2: of items that I want to get to. I want
9:46
Speaker 2: to get to Target and then also stopping shop announcing
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Speaker 2: some price cuts on items, so let's talk about those
9:53
Speaker 2: when we come back.
9:55
Speaker 1: Tara Fleevery's in high gear. We've got the latest on
9:58
Speaker 1: what might be next and how long it might last.
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10:53
Speaker 2: Target's got a problem and they're hoping that a new
10:55
Speaker 2: CEO can shake them out of their malaise. Their chief
11:00
Speaker 2: operating officer, Michael, do you think it's Fidelk Fidelki?
11:05
Speaker 4: I was gonna for Fidelki when I was reading it
11:07
Speaker 4: this morning.
11:08
Speaker 3: Not fiddle K. Definitely not Fidelki. Fidelki.
11:12
Speaker 2: Okay, So their chief operating officer, micro Fidelki is going
11:16
Speaker 2: to be their new CEO starting in February. Brian Cornell,
11:21
Speaker 2: who was basically an outsider that they brought in.
11:24
Speaker 4: From Pepsi for the last eleven years.
11:26
Speaker 3: Correct.
11:27
Speaker 2: You can make a case that the first seven years
11:30
Speaker 2: he was there, they did a really strong run during
11:36
Speaker 2: that time. I mean, the stock price went from thirty
11:40
Speaker 2: eight bucks a share in early twenty fifteen, I'm sorry,
11:44
Speaker 2: early twenty fourteen up to two hundred and thirty nine
11:47
Speaker 2: and twenty twenty one.
11:48
Speaker 3: So when you're hitting, you know, an eight bagger on
11:50
Speaker 3: your stock.
11:51
Speaker 2: Granted a lot of that was fueled by spending in
11:54
Speaker 2: twenty twenty and twenty twenty one during you know, the.
11:56
Speaker 3: COVID stimulus days.
11:59
Speaker 2: Hey, you still have to take a victory opp and say, okay,
12:01
Speaker 2: it did a pretty good job. The problem is when
12:03
Speaker 2: your stock then goes from two hundred and thirty nine
12:04
Speaker 2: dollars a share to ninety six. The board looks at
12:07
Speaker 2: you and says, okay, what have you done for me lately?
12:09
Speaker 2: And the answer is not much. So I don't know
12:12
Speaker 2: that I can look at Cornell's tenure and say definitively, hey,
12:17
Speaker 2: this was all good or all bad, because like most
12:19
Speaker 2: of us, there's you know, a lot of nuance, and
12:22
Speaker 2: you know, sometimes you get up to bat and you
12:24
Speaker 2: hit two home runs. The next game hit you know,
12:26
Speaker 2: you got two strikeouts, and you're like, okay, who's the
12:29
Speaker 2: real me?
12:29
Speaker 3: It's it's it's both of them.
12:31
Speaker 4: Having over a ten year ten year as CEO there
12:33
Speaker 4: is certainly not too shabby, and he came in. It's
12:36
Speaker 4: easy to forget. I forgot personally. Target had been hit
12:40
Speaker 4: by a data breach where I believe forty million of
12:42
Speaker 4: their debit and credit cards had been compromised. They had
12:45
Speaker 4: tried to expand to Canada and that had failed, and
12:48
Speaker 4: he cut back that initiative totally and got them back
12:52
Speaker 4: on the right track. Where they sit today is over
12:55
Speaker 4: the last eleven quarters they have had basically flat or
12:59
Speaker 4: declining sales. They really have had a difficult time shifting
13:02
Speaker 4: from the pandemic. Whereas Chuck mentioned, they just did tremendous
13:06
Speaker 4: I mean, you had a ton of excess savings and
13:09
Speaker 4: cash slashing around in consumers pockets, and there was a
13:12
Speaker 4: tremendous amount of demand for really the specialty of Target,
13:17
Speaker 4: which is, you know, the discretionary items like clothing and
13:21
Speaker 4: then things for your home home good items. But now
13:24
Speaker 4: they sit in a spot, Chuck, where Walmart has very
13:30
Speaker 4: low prices and a dominance in grocery. They have a
13:33
Speaker 4: huge amount of market share there. So there's a tremendous
13:35
Speaker 4: amount of people who take a lot of trips to
13:37
Speaker 4: Walmart because their grocery presence. Amazon, its other big competitor,
13:41
Speaker 4: has the speed and efficiency. And I was talking to
13:43
Speaker 4: my wife this morning, the resident expert on all things retail,
13:47
Speaker 4: of course, and she was mentioning that the tricky thing
13:50
Speaker 4: for Target is that they do have a good clothes selection,
13:52
Speaker 4: but they have kids clothes from Carters that if she
13:55
Speaker 4: just wants it quickly, sure order from Amazon because she
13:57
Speaker 4: knows she'll get it in a twenty four hour turnaround,
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Speaker 4: versus Target really has to focus on that in store
14:03
Speaker 4: experience while also trying to service some e commerce too.
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Speaker 4: So they find themselves in kind of a difficult position
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Speaker 4: here where they're in competition with two other companies that
14:15
Speaker 4: have done tremendous in retail, but they have really lagged
14:18
Speaker 4: them significantly on all these issues that I've mentioned, issues
14:22
Speaker 4: with staffing and merchandise and sort of trying to get
14:26
Speaker 4: their reputation back.
14:27
Speaker 3: So excuse me.
14:29
Speaker 2: So we're gonna have to see how they do under
14:31
Speaker 2: the new CEO when he takes over officially in February.
14:34
Speaker 2: And obviously the clock's ticking because you know, this isn't
14:38
Speaker 2: quite it's not a Macy's or Coal situation yet, but
14:44
Speaker 2: you can see a path where it turns into that
14:46
Speaker 2: in the next five years. So I think this CEO
14:48
Speaker 2: is one of the most important hires that they've had,
14:51
Speaker 2: and he's got to nail this. He's got to stop
14:53
Speaker 2: the bleeding and figure out how to grow the company again,
14:55
Speaker 2: because they haven't really grown in.
14:56
Speaker 3: The last couple of years.
14:57
Speaker 4: Now, No, they haven't.
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Speaker 2: Boston Globe today Stop and Shop to cut prices on
15:03
Speaker 2: three thousand plus items in Massachusetts stores. So I was
15:07
Speaker 2: reading through this piece and I get to like the
15:10
Speaker 2: third or second, second or third.
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Speaker 3: Paragraph, and here's what it says.
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Speaker 2: The Quincy based retailer and arm of European conglomerate Ahold
15:18
Speaker 2: del Hayes started out testing out price cuts in other
15:22
Speaker 2: parts of New England last year. Now those price cuts
15:24
Speaker 2: are coming to the chain's home base starting on Friday
15:27
Speaker 2: at the eighty eight Stop and Shop supermarkets inside hang
15:31
Speaker 2: On Staple east of Interstate four ninety five. Price cuts
15:38
Speaker 2: will vary in size between five and forty percent. So
15:40
Speaker 2: they're saying they're gonna cut prices on three thousand items.
15:42
Speaker 2: So I went through and I pulled. Because Ahold del
15:45
Speaker 2: Hayes is a publicly traded company, they're based out of
15:50
Speaker 2: the Netherlands, but they operate Stop and Shop Food Lion Hannaford,
15:56
Speaker 2: so they've they've got, you know, a big grocery presence
15:58
Speaker 2: in the United States. Here's the thing, about a hold
16:02
Speaker 2: del Hayes.
16:03
Speaker 3: They made.
16:04
Speaker 2: They brought in ninety nine billion dollars in revenue last year,
16:08
Speaker 2: which is great, Like one hundred billion dollars in revenue,
16:10
Speaker 2: that's wonderful. They made on that net income of two
16:13
Speaker 2: billion dollars. So margins are anywhere generally two to three
16:16
Speaker 2: percent for them, as it is for most grocers. If
16:19
Speaker 2: you're not familiar with the economics of grocery stores.
16:21
Speaker 4: The margins are razor thin.
16:23
Speaker 2: The margins are razor thin, and there it's a horrible
16:26
Speaker 2: business to be in. You basically spend a bunch of
16:29
Speaker 2: money studying an area to make sure that it has
16:31
Speaker 2: the demographics that can support the development of a new store.
16:34
Speaker 2: Then you spend fifteen to twenty million dollars building a
16:37
Speaker 2: new store, and you hope to make that back over
16:40
Speaker 2: a twenty five year period. It's an absolutely horrible business
16:44
Speaker 2: to run. It's just it's really hard. I say this
16:47
Speaker 2: is someone who has never run a grocery store, but
16:49
Speaker 2: my first job was in a stopping shop. Actually, so
16:54
Speaker 2: I look at this and I see three percent margins,
16:57
Speaker 2: and I go, you're not going to be in grocery
17:00
Speaker 2: prices by five to forty percent. Maybe it'll be on
17:05
Speaker 2: some items here and there, but I have no idea
17:07
Speaker 2: how many items are actually stocked in the average, you know,
17:11
Speaker 2: stop and shop. It's got to be way more than
17:14
Speaker 2: three thousand. I mean, you could probably just find that
17:15
Speaker 2: just in the cereal aisle, you know, you're looking at it.
17:18
Speaker 4: I think for Walmart it's like one hundred thousand skews.
17:22
Speaker 4: I mean, so grocery store not the same scale. But yeah,
17:25
Speaker 4: that's a small portion of whatever the number is at
17:28
Speaker 4: a stop and shop.
17:28
Speaker 2: So I look at this and it's clear that they're
17:32
Speaker 2: trying to take back market share more than anything else
17:36
Speaker 2: because they don't have the margins to support broad based
17:39
Speaker 2: price cuts. But you sit there and you say, okay,
17:42
Speaker 2: they're going right after the market baskets and shaws, trying
17:46
Speaker 2: to compete on price there, And I guess I look
17:52
Speaker 2: at this and I just wonder, are they going to
17:56
Speaker 2: be able? You know, is this going to move the
17:59
Speaker 2: needle at all? Because they don't have the margins to
18:03
Speaker 2: do broad based price cuts. So the fact that they're
18:05
Speaker 2: announcing this is just trying to get people thinking, oh,
18:08
Speaker 2: stopping shop is its value.
18:09
Speaker 4: It's a pr move, for sure.
18:10
Speaker 2: It is because like you're not going to go to
18:13
Speaker 2: stop and shop and walk out saying, wow, I paid
18:15
Speaker 2: five to forty percent less for my groceries. The margins
18:18
Speaker 2: are not there to support it.
18:20
Speaker 4: Now, there was a survey done in June by a
18:22
Speaker 4: retail consultancy group, the Strategic Resources Group.
18:26
Speaker 3: The show.
18:26
Speaker 4: The survey showed that prices collectively at a stopping shop
18:29
Speaker 4: store in Greater Boston were nearly thirty percent higher than
18:32
Speaker 4: at relatively close Walmart or Market Basket stores, while prices
18:36
Speaker 4: at Shaws were nearly thirty seven percent higher. And so
18:39
Speaker 4: that's the deal. And you know this talking to any
18:41
Speaker 4: consumer around the Greater Boston area. Everyone knows that Market
18:44
Speaker 4: Basket from a pricing standpoint and Walmart two are going
18:47
Speaker 4: to be your best bet if you want cheap groceries
18:50
Speaker 4: out there. And this is just a move for stopping
18:52
Speaker 4: Shop in the minds of people to kind of bring
18:55
Speaker 4: down prices to the level. But it's gonna be tough
18:57
Speaker 4: to beat those two other chains that they're up again.
19:00
Speaker 2: Right you look at it, you go, Okay, So, like
19:01
Speaker 2: the if you're looking for the cheapest grocery stores, you
19:04
Speaker 2: got Walmart, you got Ald, you got you mentioned market basket.
19:09
Speaker 2: That next tier up is your stopping shopping Hannah Ferd's,
19:12
Speaker 2: and then you know the high end you get into,
19:15
Speaker 2: you know, your Brothers.
19:17
Speaker 3: Wegmans.
19:17
Speaker 2: I find is kind of all over the place. There's
19:19
Speaker 2: some stuff there where you're like, wow, this is really cheap.
19:22
Speaker 3: There's an other way.
19:22
Speaker 2: You're like, I'm not paying for that, Like how did
19:24
Speaker 2: this happen? It's it's just kind of sporadic. And I say,
19:28
Speaker 2: this is someone who used to be a really big
19:30
Speaker 2: fan of Wegmans.
19:31
Speaker 3: And I haven't soured on it. But they're they're just fine,
19:34
Speaker 3: you know, they're they're good. Let's take a quick break here.
19:36
Speaker 3: When we come back, we got Wall Street Watch and
19:38
Speaker 3: ask Todd.
19:41
Speaker 1: Like us on Facebook and follow us on Twitter at
19:44
Speaker 1: TFE show. Breaking business news is always first right here
19:48
Speaker 1: on the Financial Exchange Radio Network. Time now for Wall
19:54
Speaker 1: Street Watch a complete look at what's moving markets so
19:57
Speaker 1: far today right here on the Financial exchan Change Radio Network.
20:01
Speaker 3: All the tech sectors.
20:02
Speaker 5: Adding to its losses from yesterday's sell office traders, digest
20:06
Speaker 5: more retailer earnings. Wall Street's also waiting minutes from the
20:10
Speaker 5: feds July meeting, due out this afternoon at two o'clock
20:13
Speaker 5: right now, the Dow is down by about a quarter
20:16
Speaker 5: of a percent, or one hundred and sixteen points. SMP
20:19
Speaker 5: five hundred is down nearly nine tenths of one percent,
20:22
Speaker 5: Nasdaq selling off over one and a half percent or
20:26
Speaker 5: three hundred and forty eight points lower, Russell two thousands
20:29
Speaker 5: down nine tenths of one percent, Ten year Treasure realed
20:32
Speaker 5: flat at four point two nine to five percent, and
20:35
Speaker 5: crude oil up one percent higher today, trading just above
20:39
Speaker 5: sixty three dollars a barrel. Target tumbling over seven percent
20:44
Speaker 5: after the retailer posted it's eleventh straight quarter of flat
20:48
Speaker 5: or falling sales. The company noted improving quarterly traffic and
20:51
Speaker 5: sales trends, but noted terror related in other cost pressures
20:56
Speaker 5: in challenging retail conditions. However, the bigger news from Target
20:59
Speaker 5: is the appointment of COO Michael Fidelki as its next CEO,
21:04
Speaker 5: succeeding Brian Cornell. Meanwhile, Lows boosted its annual outlook after
21:08
Speaker 5: beating earnings forecast for the second quarter. The home improvement
21:12
Speaker 5: retailer also announced it agreed to buy distributor Foundation building
21:15
Speaker 5: Materials for eight point eight billion dollars. Low's stock is
21:20
Speaker 5: up modestly. Another retailer in TJX, seeing gains of four
21:23
Speaker 5: percent after the TJ Max and Home Goods parent company
21:27
Speaker 5: lifted its annual profit forecast after reporting better than expected
21:31
Speaker 5: second quarter results where consumers flocked to discount stores in
21:35
Speaker 5: search of deals. Elsewhere, STA Lawa down by four percent
21:40
Speaker 5: after the beauty company misquarterly estimates where its terraf related
21:43
Speaker 5: costs are projected to impact earnings by one hundred million
21:47
Speaker 5: dollars after its a recent skid. Pallinteer shares it down
21:51
Speaker 5: nearly seven percent today, bringing its total losses over the
21:54
Speaker 5: last five sessions to about twenty percent, and car rental
21:58
Speaker 5: company Hurts seeing a gain of sale seven percent after
22:01
Speaker 5: it announced it will begin selling use cars on Amazon
22:04
Speaker 5: Autos in four different cities as soon as today, and
22:08
Speaker 5: we'll expand to forty five locations nationwide. I'm Tucker Silva
22:13
Speaker 5: and that is Wall Street Watch.
22:16
Speaker 1: This is Ask Todd on the Financial Exchange Radio Network.
22:20
Speaker 1: If you have an existing estate plan or in the
22:22
Speaker 1: market for one, Todd Lutsky is here to answer your
22:24
Speaker 1: questions and help you plan for a later life. Ask
22:27
Speaker 1: Todd is presented by Cushing and Dolan, serving Massachusetts and
22:30
Speaker 1: New England for more than thirty five years, helping families
22:34
Speaker 1: with a state and tax planning, medicaid planning, and probate law.
22:37
Speaker 1: Visit Cushingdolan dot com.
22:39
Speaker 2: Now here's Todd Lutsky a promise. We're joined now by
22:46
Speaker 2: the one and only Todd Watski from the law firm
22:48
Speaker 2: of Cushing and Dolan. Phone lines are open, so get
22:51
Speaker 2: calling with your state planning questions for Todd. Eight eight
22:54
Speaker 2: eight two zero five two two sixty three is the number.
22:57
Speaker 2: Again we call the segment Ask Todd, so that you
23:00
Speaker 2: can ask Todd your estate planning questions live on air
23:04
Speaker 2: right now and so again room on the phone lines
23:08
Speaker 2: at eight eight eight to zero five two two six three.
23:11
Speaker 2: We can usually get through two to three calls in
23:13
Speaker 2: any given show, so get calling early and often.
23:17
Speaker 3: Again.
23:17
Speaker 2: That number is eight eight eight to zero five two
23:21
Speaker 2: two six'. Three Mister, lutsky how are you doing? Today
23:27
Speaker 2: i'm doing pretty, well pretty.
23:28
Speaker 3: Well can't complain, you, uh not. BAD I SO i
23:32
Speaker 3: have a pet. Snail, yeah that's an interesting.
23:35
Speaker 2: Pet YESTERDAY i took the shell off the snail to
23:39
Speaker 2: see if he'd get. Faster and made it more. Sluggish,
23:43
Speaker 2: Yeah i'm.
23:43
Speaker 1: Sure.
23:43
Speaker 2: Yeah real problem, Is, TODD i want to talk to
23:46
Speaker 2: you about irrevocable. Trusts when you look at the menu
23:51
Speaker 2: of choices that an individual, has how many different kinds
23:55
Speaker 2: of irrevocable trusts are there realistically for an individual to choose,
23:59
Speaker 2: from depending on what they're trying to.
24:01
Speaker 6: Do, YEAH i think that's a that's an interesting question
24:04
Speaker 6: BECAUSE i always tell, people, yeah there's many kinds of irrevocable,
24:07
Speaker 6: trust BUT i never know what kinds there.
24:08
Speaker 3: Are, yeah we never really get into all these different. Kinds.
24:11
Speaker 6: You you're absolutely, Right so you, know it really depends
24:15
Speaker 6: on what you're trying to. Accomplish so let's start with
24:18
Speaker 6: something like a qualified personal residence. Trust, well that's an irrevocable.
24:23
Speaker 6: Trust it's a way of getting your home or your vacation,
24:27
Speaker 6: home very specific to only those two kinds of, assets
24:32
Speaker 6: where you transfer the home to the trust and you. Reaserve,
24:36
Speaker 6: well you have this reversionary period where then you have
24:39
Speaker 6: to LIVE x number of years and you can pick
24:41
Speaker 6: the term of. Years of, course the longer the term of,
24:45
Speaker 6: years meaning if you die within that term of, years
24:49
Speaker 6: then that property never is out of your state it's back.
24:52
Speaker 6: In that's called a risk of. Reversion, well that risk
24:56
Speaker 6: of reversion allows me to discount the value of the
24:59
Speaker 6: Property i'm putting in there for gift tax, Purposes so
25:02
Speaker 6: it allows me to lower the value getting more assets
25:05
Speaker 6: out of my, estate leveraging my exemption by doing. So
25:10
Speaker 6: but the longer the time, period the larger the, discount
25:15
Speaker 6: and it's nice then get that asset out of your
25:16
Speaker 6: state and all the future growth.
25:18
Speaker 3: Out of your.
25:18
Speaker 6: State so that's for. That then there's people who want
25:23
Speaker 6: to just make regular. Gifts they might just set up
25:26
Speaker 6: gifting trust just for children or grandchildren and have it
25:28
Speaker 6: designed only for.
25:29
Speaker 3: Them that's okay.
25:30
Speaker 6: Too then there's people who set up spousal lifetime access,
25:34
Speaker 6: trusts also, irrevocable but these, are, yes like a gifting,
25:39
Speaker 6: trust but more designed for, you husband and. Wife that's
25:43
Speaker 6: why there's spousal lifetime access trusts to give something away
25:48
Speaker 6: but retain the right to enjoy what you gave, away
25:52
Speaker 6: kind of, indirectly so very different than an outright gifting
25:56
Speaker 6: trust to kids or a grandchildren's.
25:58
Speaker 3: Trust and Then i'd say.
25:59
Speaker 6: No other one might be irrevocable life insurance trust to
26:03
Speaker 6: hold life insurance and keep it a state and income tax.
26:06
Speaker 6: Free and, finally how about To medicaid irrevocable. Trust while
26:12
Speaker 6: we talk a lot about, that which is WHY i
26:13
Speaker 6: left it for, last because we know about, it we
26:16
Speaker 6: know it's designed Where unlike a lot of these other
26:19
Speaker 6: TRUSTS i just, mentioned this one is very much in
26:23
Speaker 6: control by, you so you get to control, it use,
26:25
Speaker 6: it benefit from, it but yet avoid, probate reduce, taxes
26:29
Speaker 6: and protect it from the cost of long term. Care
26:32
Speaker 6: so very different, trusts very different control aspects to the,
26:38
Speaker 6: trust and very different reasons to do each trust driven
26:43
Speaker 6: by your family.
26:44
Speaker 2: Needs talk With Todd lotski from the law firm Of
26:46
Speaker 2: cushing And. Dolan, again we've got space on the phone
26:48
Speaker 2: lines for your estate planning. Questions eight eight eight two
26:53
Speaker 2: zero five two two sixty three is the number, Again
26:56
Speaker 2: that is eight eight eight to zero five two two six.
27:01
Speaker 2: Three we are gonna take a quick break, here but
27:03
Speaker 2: when we come, back we're gonna get right to your
27:06
Speaker 2: questions With, Todd so again get. Calling we still do
27:08
Speaker 2: have room on the phone. Lines that number again is
27:11
Speaker 2: eight eight eight to zero five two two six. Three
27:15
Speaker 2: one more time it is eight eight eight to zero
27:18
Speaker 2: five two two six.
27:20
Speaker 1: Three Ask todd With Todd lutsky Every wednesday at ten
27:25
Speaker 1: thirty only here on The Financial Exchange Radio. Network you're
27:31
Speaker 1: listening To Ask todd With Todd lutsky on The Financial
27:35
Speaker 1: Exchange Radio.
27:36
Speaker 2: Network talking With Todd lutsky From. Christigan dolan's still got
27:48
Speaker 2: room for your phone? Calls eight eight eight to zero
27:52
Speaker 2: five two two six three is the. Number that number
27:56
Speaker 2: again is eight eight eight to zero five two two
28:00
Speaker 2: six three for you to Ask Todd letsky your state planning. Questions,
28:03
Speaker 2: again it's eight eight eight two zero five two two six. Three,
28:08
Speaker 2: todd during the last segment you mentioned irrevocable life insurance.
28:12
Speaker 2: Trust described to me what that does in who that
28:16
Speaker 2: would be a potential tool For.
28:19
Speaker 3: Yeah you know.
28:20
Speaker 6: Interesting not only is it a type of irrevocable, trust
28:24
Speaker 6: it actually has its own. Subcategory so there's two types
28:28
Speaker 6: of irrevocable life insurance. Trust so within the life insurance trust,
28:32
Speaker 6: world we actually have two. Kinds one is called the
28:36
Speaker 6: first to die and the second one is called ironically
28:40
Speaker 6: enough second to die irrevocable life insurance. Trust what DO
28:45
Speaker 6: i mean by? That that's driven by the type of
28:48
Speaker 6: life insurance that you. Own so let's let's play out the.
28:52
Speaker 6: String If i've got a first to, die let's Say
28:56
Speaker 6: i'm the. Insured it's a POLICY i on my. LIFE
29:01
Speaker 6: i would put that into an irrevocable life insurance first
29:05
Speaker 6: to die. Trust likely If i'm, married make my wife the,
29:08
Speaker 6: trustee which is, OKAY i can't, be and THEN i
29:13
Speaker 6: can be the, donor AND i can keep the power
29:15
Speaker 6: to remove and replace the, trustee SO i keep some control,
29:19
Speaker 6: sure and THEN i just pay the PREMIUMS i make
29:22
Speaker 6: a gift to the, trust the trust pays the, premium
29:26
Speaker 6: and life goes. On WHEN i, die the money flows
29:29
Speaker 6: into that trust income and estate tax free for the
29:35
Speaker 6: benefit of my spouse and my. Kids and there'll be
29:39
Speaker 6: language in there with the spouse as trustee SAYING i
29:42
Speaker 6: get the income for, life and the spouse can also
29:45
Speaker 6: take out the principle as needed to maintain her standard
29:49
Speaker 6: of living as, needed so great she gets to enjoy,
29:52
Speaker 6: it so state tax free WHEN i, die available for
29:56
Speaker 6: the use and enjoyment for my. Spouse and to the
29:59
Speaker 6: extent my spouse has not spent it, all not taken
30:02
Speaker 6: it all when she, dies whatever's left in there also
30:06
Speaker 6: not included in her estate and passes yet again estate
30:11
Speaker 6: tax free to either the kids or to a share
30:16
Speaker 6: for the benefit of the, kids depending on how long
30:20
Speaker 6: we want this to go, on generationally, speaking estate tax.
30:24
Speaker 6: Free so wonderful approach as to how that works with life.
30:29
Speaker 6: Insurance remember you got two million dollar policy and you
30:31
Speaker 6: die In. Massachusetts that's one asset you got in a
30:34
Speaker 6: state where two million, already so it can. Matter it can.
30:37
Speaker 6: Matter second to, die on the other, hand is one
30:41
Speaker 6: where my wife AND i are the owners of the,
30:44
Speaker 6: policy ensured on the. Policy we both then contribute it
30:50
Speaker 6: to the irrevocable trust and are both the, donors and
30:55
Speaker 6: neither of us are the. Trustees usually put the kids,
30:59
Speaker 6: on but keep the power to remove and replace the,
31:03
Speaker 6: trustee so he keeps some. Control now the benefits of
31:07
Speaker 6: the trust are for the kids and the. Grandkids but
31:10
Speaker 6: again we pay the premiums to the. Trust to trust
31:13
Speaker 6: then uses the money to pay the actual premium to
31:16
Speaker 6: the insurance. Company life goes on till we both. Die
31:21
Speaker 6: then the money flows in the. Trust and why is
31:23
Speaker 6: that Important because that's really when the estate tax would be,
31:26
Speaker 6: due if. Any and so now we use the money
31:30
Speaker 6: in the life insurance, trust to satisfy the estate tax,
31:34
Speaker 6: liability to prevent any liquidation, event to get money to
31:40
Speaker 6: pay any estate. Taxes number one and number two it
31:45
Speaker 6: was we leveraged our. Dollars, Right so if if we
31:48
Speaker 6: owed let's say a million dollars in, tax but we
31:52
Speaker 6: only paid you, know one hundred thousand dollars in. Premiums, wow,
31:56
Speaker 6: yeah the government gets there million dollars in, tax but
31:59
Speaker 6: really out of our, pocket they only got one hundred thousand. Bucks,
32:02
Speaker 6: SO i mean that's a pretty significant. Leverage but life
32:05
Speaker 6: insurance can do. THAT i don't know if it's to that,
32:08
Speaker 6: degree but it certainly can provide. Leverage i'm just trying
32:11
Speaker 6: to make a. Point so good idea if you're in that.
32:16
Speaker 6: Situation so folks that need estate planning that have life
32:20
Speaker 6: insurance in, play please consider. Those and if you need
32:25
Speaker 6: more information on these kinds of, trusts, islets, revocable other irrevocable,
32:31
Speaker 6: trusts revocable, trusts special needs, trusts pooled trusts you know
32:36
Speaker 6: you might have a disabled. Child of, course nominy realty trust,
32:40
Speaker 6: chuck you, know we hate. Those no one knows what they.
32:42
Speaker 6: Are so we certainly got to learn that this is
32:44
Speaker 6: a great. Guy the top seven estate planning trust will
32:47
Speaker 6: help you if you've never done your, planning get started
32:50
Speaker 6: doing your planning and pick which trust is right for.
32:54
Speaker 6: You and if you've done your planning, already then this
32:57
Speaker 6: trust will help you figure, out, well MAYBE i need to, upgrade,
33:01
Speaker 6: change maybe my dynamics have, Changed Maybe i'm older AND
33:04
Speaker 6: i want to switch. Trust something for everyone in these
33:08
Speaker 6: in this. Guy top seven estate planning trusts eight six
33:11
Speaker 6: six eight four eight five six nine nine Or Legal
33:15
Speaker 6: Exchange show dot com again eight six six eight four
33:19
Speaker 6: eight five six nine nine Or Legal Exchange show dot.
33:23
Speaker 2: Com todd got any question for you From sarah In. Westborough,
33:28
Speaker 2: sarah you're on With Todd lupski and what's your.
33:31
Speaker 7: Question, Well i'm kind of curious because it's more on
33:35
Speaker 7: behalf my mother in. LAW i listened to you guys
33:38
Speaker 7: all the, time AND i feel like she's gotten bad
33:41
Speaker 7: advice about the idea of doing a. Trust she's, eighty
33:45
Speaker 7: she only has my husband as a, child she has two,
33:48
Speaker 7: grandkids so she figures she's written a will and she's
33:52
Speaker 7: good to. Go and WHEN i mentioned trust stuff to,
33:56
Speaker 7: her she gets real. Prickly So i'm not sure how
33:59
Speaker 7: to approach, it but she owns a. House she has
34:02
Speaker 7: asked that she, has you, know pension and, whatever AND
34:08
Speaker 7: i think she's been given poor advice that she doesn't
34:10
Speaker 7: have enough assets to make it matter just right a.
34:13
Speaker 6: Will so so if if her goal is and again at,
34:17
Speaker 6: EIGHTY i have to talk about or think about at,
34:19
Speaker 6: least you, know nursing home type planning as, Well so
34:22
Speaker 6: we we really just have to ask her some questions
34:24
Speaker 6: help educate her as to what her wishes. Are you,
34:27
Speaker 6: know when WHEN i meet these, CLIENTS i would say to, them,
34:29
Speaker 6: well you, Know i'm not just going to throw a
34:31
Speaker 6: trust at. You i'm going to, say you, know do
34:34
Speaker 6: you want to make sure that you avoid? Probate and
34:37
Speaker 6: they would, say, oh, YES i hate, probate you, know
34:39
Speaker 6: do You it doesn't sound like she's over two, millions
34:42
Speaker 6: so let's assume she doesn't have any estate tax, issues
34:45
Speaker 6: but that's always an. Issue THEN i, say, well do
34:47
Speaker 6: you want to provide for your? Family do you want
34:49
Speaker 6: to figure out how to leave your assets in an efficient?
34:52
Speaker 6: Manner because a will won't do, that it'll won't even avoid.
34:54
Speaker 6: Probate and if they say, yes you, see you sort
34:57
Speaker 6: of you got to you gotta Get we only want
34:59
Speaker 6: to do what they want to, do and we can't
35:02
Speaker 6: make them do, anything nor do we. Try my goal
35:05
Speaker 6: is simply to, educate and as it should be, yours
35:08
Speaker 6: to just ask her these. Questions you, know avoid, Probate,
35:12
Speaker 6: yes provide for my, family, kid, grandkids what have? You?
35:16
Speaker 6: Yes do you want to make sure the nursing home
35:19
Speaker 6: doesn't take it so your kids and grandkids can get?
35:21
Speaker 1: It?
35:21
Speaker 6: Yes so you're getting her to say these are the
35:24
Speaker 6: things she wants to. Do then you can, say, well,
35:27
Speaker 6: okay a will will not accomplish that does not avoid,
35:32
Speaker 6: probate you file the will with the, court does not
35:35
Speaker 6: protect assets from the nursing. Home, Period so there's you,
35:38
Speaker 6: know a will's a. Won't i've said that more than one.
35:41
Speaker 6: Time then once you get them on, board then it's
35:45
Speaker 6: up to the lawyer to explain to them how the
35:48
Speaker 6: irrevocable trust will keep them in, control because that's their
35:51
Speaker 6: next big. Concern you, know oh my, gosh AM i
35:54
Speaker 6: going to lose all this? Control And i'm sure she
35:56
Speaker 6: might have those same, concerns and we have to educate
35:59
Speaker 6: them as to how they won't lose.
36:01
Speaker 3: CONTROL i.
36:02
Speaker 6: Know on even WHEN i do a seminar AND i
36:04
Speaker 6: teach other lawyers or accountants these, issues they'll come up
36:08
Speaker 6: to me and they'll, Say, todd it sounds great when
36:10
Speaker 6: you say all, this but WHEN i talk to my
36:12
Speaker 6: client and try to teach them these irrevocable, trusts they
36:15
Speaker 6: just say that there's too restrictive and they can't do.
36:17
Speaker 6: It AND i have to politely sort of answer them by, saying,
36:20
Speaker 6: well is it the irrevocable trust that's the problem or
36:24
Speaker 6: is it the person who's explaining. It perhaps not the
36:28
Speaker 6: right way is the, problem you. Know so it's just
36:31
Speaker 6: a matter of educating them so they understand that it
36:37
Speaker 6: does work for. Them but even at the end of the,
36:40
Speaker 6: day if they still, say you, KNOW i just can't
36:42
Speaker 6: get past the word irrevocable and it's not right for, me,
36:44
Speaker 6: well then we don't do.
36:45
Speaker 3: It SO i just want people to.
36:48
Speaker 6: Make sure they're making decisions based on as or based
36:53
Speaker 6: on answers and information that's. Accurate you hate to make
36:56
Speaker 6: them answer questions that on inaccurate. Information so that, SAID
37:02
Speaker 6: i hope that helps you with your. Situation Mister, Latski
37:06
Speaker 6: thank you so much for the time.
37:07
Speaker 3: Today always a.
37:08
Speaker 1: Pleasure this has been Asked odd on The Financial Exchange radio,
37:13
Speaker 1: Network Ask todd With. Todd lutsky has been presented By
37:15
Speaker 1: cushing And, dolan Serving massachusetts And New england for more
37:18
Speaker 1: than thirty, years helping families with the state and tax,
37:21
Speaker 1: Planning medicaid, planning and probate. Law call eight hundred and
37:24
Speaker 1: three nine three four thousand and one or Visit Cushing
37:27
Speaker 1: doolan dot. Com the views expressed in this segment are
37:29
Speaker 1: solely those Of cushing And Dolan armstrong. Advisor he does
37:32
Speaker 1: not provide any legal or tax. Advice please consult with
37:34
Speaker 1: your legal or tax advisor on such. Matters cushing And
37:36
Speaker 1: armstrong do not endorse each other and are not.
37:38
Speaker 2: Affiliated still quite a bit to get to as we
37:41
Speaker 2: head towards the second.
37:42
Speaker 3: Hour we Got low's.
37:43
Speaker 2: Earnings we're going to be talking About we've Got Jay,
37:45
Speaker 2: powell who's going to be speaking On friday From Jackson.
37:48
Speaker 2: Hole now that they've gotten the bats out of the,
37:50
Speaker 2: Cabins we've got let's, see, oh here's.
37:54
Speaker 3: One from Market.
37:55
Speaker 2: Watch will be covering why The rust of two thousand
37:57
Speaker 2: has a real chance to beat THE s AND p five.
37:59
Speaker 2: Hundred we'll talk about whether that's a bunch of hot
38:01
Speaker 2: air or. Not and then also we're gonna be talking
38:04
Speaker 2: about data centers and electricity, demand because this is a
38:09
Speaker 2: story that is just going to continue to, grow unlike electricity,
38:14
Speaker 2: supply which we just can't build fast. Enough all that
38:17
Speaker 2: and more coming up in our number two