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Three factors you need to watch closely · The Financial Exchange Show

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Speaker 1: Zada and Mark Vandetti.
1:10
Speaker 2: Chuck Mark Tucker with you here on a Wednesday, and
1:15
Speaker 2: we got a fun one lined up today. It is
1:17
Speaker 2: in Nvidia earnings day. And anytime that you have I mean, look,
1:24
Speaker 2: the best way to describe it in the context of
1:27
Speaker 2: this market is anytime you have the largest company on
1:31
Speaker 2: the planet reporting earnings and the options market for that
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Speaker 2: company projecting a seven percent move in either direction, well
1:42
Speaker 2: you kind of got to wake up and pay attention
1:45
Speaker 2: to it. So we'll have a little bit of discussion
1:47
Speaker 2: on in Vidia also this afternoon. Not normally something that
1:52
Speaker 2: I find interesting in any way, shape or form, but
1:54
Speaker 2: we get FED meeting minutes, and I'm a little more
1:56
Speaker 2: interested this time, partly because just the overall dearth of
2:00
Speaker 2: you know, economic data that we've had, but also the
2:03
Speaker 2: FED over the last couple of weeks, FED speakers have
2:06
Speaker 2: indicated more, you know, more pushback against the idea of
2:10
Speaker 2: December rate cut than I think I had anticipated. So
2:13
Speaker 2: I'm interested to see what those meeting minutes may say.
2:17
Speaker 2: And tomorrow we're going to be getting the September jobs report,
2:19
Speaker 2: so we'll do a little bit of a preview of
2:22
Speaker 2: what to expect there with some outdated jobs data that
2:25
Speaker 2: is going to be gracing our computer screens at eight
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Speaker 2: thirty am tomorrow. So ultimately where we stand right now
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Speaker 2: is markets are you know, kind of at a point
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Speaker 2: where you know, there are some real questions that have
2:40
Speaker 2: reared their heads in reared their heads sure in the
2:46
Speaker 2: last month or so. The two big ones, in my
2:49
Speaker 2: opinion read three big ones that are out there. Number
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Speaker 2: one the labor market. Is it continuing to slow? Number
2:55
Speaker 2: two the private credit space. Is it going to be
3:00
Speaker 2: a problem for the overall health of the financial system
3:04
Speaker 2: or is it just you know, these few little blips
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Speaker 2: here and there that don't turn into anything big. And
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Speaker 2: third one in the artificial intelligence space, is the rate
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Speaker 2: of spending that we've seen projected into the future actually
3:17
Speaker 2: going to be realized as that kapex starts to hit
3:22
Speaker 2: financial statements over the next year or two in the
3:25
Speaker 2: form of additional depreciation, Like at some point you actually
3:28
Speaker 2: have to make money off this stuff, not just build it.
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Speaker 2: So this has caused a few wobbles and markets over
3:34
Speaker 2: the last month or so, none of them particularly big.
3:38
Speaker 2: I mean, even this last one at the open air
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Speaker 2: at the close of yesterday, it was like four and
3:43
Speaker 2: a half percent, down from the all time highs that
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Speaker 2: we hit in October. Again, that's why I characterize these
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Speaker 2: as like little wobbles. But the question that you ask
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Speaker 2: on this is do little wobbles turn into something bigger?
3:57
Speaker 2: And we're going to get you know, not the final land,
4:00
Speaker 2: but we're gonna get in Vidio earnings today that can
4:03
Speaker 2: tell us a little bit about what's going on with AI.
4:05
Speaker 2: We'll get that jobs report tomorrow that'll tell us a
4:07
Speaker 2: little bit about the labor market. And so I'm kind
4:09
Speaker 2: of excited about what the next twenty four hours has
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Speaker 2: in store for us.
4:13
Speaker 3: That's great. So what are the big questions on people's minds?
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Speaker 3: You think, what's the stock market going to do next year?
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Speaker 3: Will it finish this year with a whimper or something
4:24
Speaker 3: more impressive? What will it do next year? What will
4:27
Speaker 3: economic growth be next year? We're on track for maybe
4:30
Speaker 3: in line with trend economic growth this year about two percent.
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Speaker 3: We didn't get a GDP report for last.
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Speaker 2: We think probably that range, which is not bad.
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Speaker 3: It sounds weak relative to the last couple of years.
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Speaker 3: And we're talking real now, so inflation doesn't distort any
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Speaker 3: of these conclusions. Will it be stronger or weaker than trend.
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Speaker 3: And this year again it was choppy, but it was
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Speaker 3: about trend. Seemingly it about trend that we won't know
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Speaker 3: really for several months with all the revisions and stuff.
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Speaker 3: And then maybe related to that, unemployment. Is it gonna
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Speaker 3: hold steady word at about four point three according to
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Speaker 3: the last report. We'll get it updated ever later this week.
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Speaker 3: Will that go up or down? And then maybe some
5:07
Speaker 3: people want to know about gas prices and prices particular
5:11
Speaker 3: to the industry that they work in, or inputs that
5:14
Speaker 3: they use for their company, stuff, stuff like that. But
5:17
Speaker 3: I guess if you know the overall direction of the
5:20
Speaker 3: rate of change is you like to talk about of
5:22
Speaker 3: the direction of the economy's always growing, so on average
5:25
Speaker 3: the rate of change is positive, But what is the
5:27
Speaker 3: rate of change of the rate of change? Is it
5:29
Speaker 3: going to pick up next?
5:29
Speaker 4: Sure is?
5:31
Speaker 3: Will it be zero? Will grow it about the same
5:32
Speaker 3: rate as today? Or will it slow down? I don't
5:34
Speaker 3: have answers to any of these questions. But some of
5:36
Speaker 3: the news items that will come to fulfillment in the
5:40
Speaker 3: next day or two or maybe week as the government
5:44
Speaker 3: government data trickles in, will help us I think get
5:48
Speaker 3: a better handle on what the answers to those questions might.
5:51
Speaker 2: Be, and so I think ultimately all markets, like all
5:57
Speaker 2: bull markets, face challenges on a pretty regular or basis.
6:00
Speaker 2: There's a reason why we say that volatility is a
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Speaker 2: feature of markets, not a bug. You have these questions
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Speaker 2: that get asked from time to time, and most of
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Speaker 2: the time they end up being resolved with, Okay, we had,
6:13
Speaker 2: you know, a few bad days or maybe a bad week,
6:15
Speaker 2: and markets fell you know, two to four percent, and
6:18
Speaker 2: then the questions were answered satisfactorily enough and you move on.
6:22
Speaker 2: Sometimes the questions linger a little bit longer, and you
6:25
Speaker 2: end up with maybe a ten percent pullback, a market
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Speaker 2: correction as it's referred to, and you know, it might
6:32
Speaker 2: take a month or so, maybe a couple months, and
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Speaker 2: you go through that ten percent correction, and then the
6:37
Speaker 2: market gets a satisfactory answer and says, okay, I can
6:39
Speaker 2: continue on and you know, resume you know, normal growth.
6:44
Speaker 2: Other times, the market does not get a satisfactory answer,
6:47
Speaker 2: and that's where you typically end up with bear markets,
6:49
Speaker 2: which most of the time don't behave like the bear
6:53
Speaker 2: markets that we saw in twenty twenty, which lasted for
6:57
Speaker 2: all of you know, several weeks, or the one that
7:01
Speaker 2: we saw this year that lasted for all of several months.
7:05
Speaker 2: More often than not, bear markets tend to look like
7:07
Speaker 2: twenty twenty two, where they can last for you know,
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Speaker 2: six months to a year, sometimes even a period of
7:12
Speaker 2: multiple years if there's significant excess that needs to be unwound.
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Speaker 2: And that's because the questions are not answered satisfactorily, and
7:19
Speaker 2: there's some pain that has to be felt in markets
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Speaker 2: by people that keep wanting them to be answered satisfactorily
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Speaker 2: even though they can't be. So the next you know,
7:30
Speaker 2: six to eight weeks is about you know, starting to
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Speaker 2: find out, Hey, are these questions that you know? Number one?
7:36
Speaker 2: Do they need to be answered right now? Sometimes the
7:38
Speaker 2: answers just know you can't provide them and you need
7:41
Speaker 2: to wait until later until you have more data. So
7:44
Speaker 2: can they be answered right now? And if they can
7:46
Speaker 2: be answered, do we get good answers the ones that
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Speaker 2: we want, or do we get bad answers that we
7:51
Speaker 2: don't want but unfortunately sometimes have to say?
7:54
Speaker 3: Way, if Nvidia has a blowout report blowout the period
7:58
Speaker 3: is the quarter right?
7:59
Speaker 2: Yes?
7:59
Speaker 3: Okay, they have a blowout quarter. Does that tell you
8:02
Speaker 3: anything you didn't. Does that answer any of the questions
8:05
Speaker 3: that to you are that are giving you heartburn right.
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Speaker 2: Now about AI?
8:10
Speaker 3: Yeah, I don't think that's That's what I'm getting at.
8:11
Speaker 2: I don't think so in terms of their current quarter.
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Speaker 2: If their you know, future guidance is weaker than anticipated,
8:18
Speaker 2: if they're you know, if they're trying to give revenue
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Speaker 2: guidance out further and it's not you know, what people anticipated,
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Speaker 2: that could be something that's.
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Speaker 3: A concern, But how serious guys?
8:27
Speaker 2: Sorry, but quite honestly, the stuff that concerns people about
8:31
Speaker 2: AI is not what was spent in the last quarter. Yeah,
8:34
Speaker 2: it's what's going to be spent in like twenty twenty
8:36
Speaker 2: eight through twenty thirty. And I just don't know how
8:40
Speaker 2: great of an answer we can get on those questions
8:44
Speaker 2: right now. I think they need to be answered probably
8:46
Speaker 2: over the next twelve to eighteen months more likely.
8:48
Speaker 3: If there are real problems in credit markets. We've gotten some.
8:54
Speaker 3: There are some disturbing tremors. They've yet to rerupt into
8:59
Speaker 3: any thing major, but some indications that the the very
9:04
Speaker 3: loose financial conditions for which I of course blamed the FED.
9:07
Speaker 3: That's my eternal bumper sticker. Very loose financial conditions in
9:10
Speaker 3: the past five years.
9:13
Speaker 2: I blame the FED.
9:14
Speaker 3: I that is a terrific idea Tucker.
9:17
Speaker 2: Can you get like financial exchange ones of those.
9:21
Speaker 3: And it doesn't matter what you're complaining about. You can
9:25
Speaker 3: always conclude with you know, and Carthage must be destroyed,
9:28
Speaker 3: as one of our moment ancestors like to say, and
9:32
Speaker 3: the FED. You can always conclude your your your, you're fed,
9:35
Speaker 3: you're Philippic with and the FED must be destroyed or
9:38
Speaker 3: less radically, Yeah, maybe we don't want to threaten violence.
9:42
Speaker 2: No, I don't. I don't. I don't think it needs
9:44
Speaker 2: to be you know, destroyed. He needed neither to. I think,
9:46
Speaker 2: you know, And I blame the FED.
9:48
Speaker 3: Is just so very loose financial conditions, Chuck managers getting sloppy,
9:54
Speaker 3: not doing their due diligence, not checking whether, say the
9:56
Speaker 3: collateral was double pledged. As we've seen, there are a
9:59
Speaker 3: lot of examples of this. Jamie Diamond, I think correctly
10:03
Speaker 3: characterized it as cockroaches. We're gonna see more. Does that
10:09
Speaker 3: suppose private suppose we have a credit crunch. Nvidia could
10:13
Speaker 3: give the best looking forecast in the world today and
10:16
Speaker 3: it's all irrelevant in six months if credit market sees
10:19
Speaker 3: up again, yes, or even if they become less forgiving
10:23
Speaker 3: than they are today.
10:24
Speaker 2: Yes. So I think that, in my opinion, like the
10:29
Speaker 2: next six weeks, like the last six weeks of the year,
10:32
Speaker 2: I don't know that you can get satisfactory answers to
10:35
Speaker 2: put these things to bed.
10:37
Speaker 3: No, that's kind of what I'm trying to say.
10:38
Speaker 2: But you also might not need them because the market
10:41
Speaker 2: might just say, Okay, these are things to worry about
10:43
Speaker 2: in twenty six and let's have one last rally in
10:45
Speaker 2: twenty five before you know, before we reckon with them.
10:49
Speaker 2: So that can be an answer that you get as well.
10:52
Speaker 2: Let's take a quick break and when we return, I
10:56
Speaker 2: want to talk a little bit more about private credit,
10:57
Speaker 2: and then we'll do some discussion of target earned as well.
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12:09
Speaker 2: Jamie Diamond asked back in October about the concerns in
12:13
Speaker 2: the private credit market after the bankruptcies of Tricolor and
12:17
Speaker 2: First Brands, said, Hey, look, usually when you see a cockroach,
12:21
Speaker 2: there's generally others, and that then prompted Blue Owl CEO.
12:26
Speaker 2: Blue Owl is a big asset manager who runs a huge,
12:30
Speaker 2: you know, business in that private credit and private equity space,
12:34
Speaker 2: and the Blue Owl CEO said, like, basically, in no
12:37
Speaker 2: uncertain terms, Jamie Diamond, should you know, stick to his
12:39
Speaker 2: own business, like we'll we'll do ours, and you know,
12:42
Speaker 2: that was that. And then over the weekend, blue Owl
12:47
Speaker 2: came out. It came out The Financial Times reported that
12:50
Speaker 2: Blue Owl was trying to take one of their private
12:53
Speaker 2: credit funds and merge it into a publicly traded fund,
12:58
Speaker 2: giving investors in the private held one a twenty percent
13:01
Speaker 2: haircut in the process. Subsequently, this morning, following the outrage
13:06
Speaker 2: from investors over the last several days, Blue Owl has
13:09
Speaker 2: said no, we're not actually gonna do that, and we'll
13:12
Speaker 2: figure out a way to meet redemptions in the January
13:16
Speaker 2: quarter instead. But Blue Owl didn't make the decision to
13:22
Speaker 2: try to merge those funds just because they thought it
13:25
Speaker 2: was like, hey, this is happy and great. They did
13:27
Speaker 2: it because out of necessity, they couldn't meet redemptions that
13:31
Speaker 2: were being requested at the prices that were being requested.
13:35
Speaker 3: Private markets are very different than public markets. When you
13:37
Speaker 3: get into them, you don't know what they're gonna buy.
13:39
Speaker 3: That's the whole point. It's kind of a blind trust.
13:41
Speaker 3: You give a manager money. If your pension fund you
13:43
Speaker 3: commit that's in the language of private markets, you commit
13:46
Speaker 3: twenty million dollars to Armstrong fund. And this's a bad
13:49
Speaker 3: exampleation to XYZ folk.
13:52
Speaker 6: We don't do that, by the.
13:52
Speaker 3: Way, but if we did, it would be x y
13:54
Speaker 3: Z fund two because we had a one and it
13:56
Speaker 3: was great, and now everybody wants in our fund too.
13:59
Speaker 3: So a pension fund or an endowment, we'll commit twenty million.
14:01
Speaker 3: You don't know what they're going to invest. You also
14:03
Speaker 3: don't know what it's worth. They make educated guesses. Auditors
14:07
Speaker 3: help them with this periodically for the roughly ten year
14:11
Speaker 3: period during which you're invested, but you don't know. It's
14:13
Speaker 3: quite opaque. That's why the returns have been generous relative
14:17
Speaker 3: to public markets for a select few, very skilled private
14:20
Speaker 3: market investors. And I put Blue Owl and some of
14:23
Speaker 3: the others that you hear about Aries and Blackstone.
14:25
Speaker 2: There's a reason why they're as big as there. I mean,
14:27
Speaker 2: Blue OU's a three billion dollar assets. They've generally been
14:31
Speaker 2: skilly good at what they've done, and they've had some
14:33
Speaker 2: favorable tail winds for the last decades in that market
14:36
Speaker 2: as well.
14:37
Speaker 3: You cannot overlook that. So this is to be expected
14:40
Speaker 3: if if you, as an individual investor, get into private markets.
14:43
Speaker 3: Keep in mind you don't know what you're buying, and
14:45
Speaker 3: that's okay. That's the nature of it. There's nothing sinister
14:47
Speaker 3: about it. You don't really know what it's worth. That's
14:49
Speaker 3: okay too. That's sort of what allows private markets to
14:52
Speaker 3: be private market managers to be nimble and to effect
14:55
Speaker 3: changes in the firms that they buy, as distinguished from
14:58
Speaker 3: public markets, where you're really just a long the ride
15:00
Speaker 3: and you don't know how long the investment's going to
15:03
Speaker 3: take to come to fruition. Either private market managers can
15:05
Speaker 3: extend the term of their funds or through other accounting machinations,
15:09
Speaker 3: and I don't mean that in a negative way, give
15:13
Speaker 3: their underlying investments more time to work out. It's just
15:15
Speaker 3: a very different beast chuck in the idea of this
15:18
Speaker 3: stuff going into a four h one k, even if
15:20
Speaker 3: it's supervised by a diligent professional investment consultant something like that,
15:26
Speaker 3: or someone who advises these four h one K funds,
15:29
Speaker 3: I still wonder how the opacity and the very very
15:33
Speaker 3: long term nature it's gonna sit with investors and a
15:36
Speaker 3: couple different things.
15:37
Speaker 2: The first is, like earlier this year was when you've
15:40
Speaker 2: really seen the push to try to get private assets
15:43
Speaker 2: into four and k plans picked up, and quite honestly,
15:47
Speaker 2: given what's coming out now, and I said this at
15:49
Speaker 2: the time, I'm like, look, these companies have made an
15:52
Speaker 2: awful lot of money by being exclusive to the high
15:56
Speaker 2: net worth and institutional investor. The only reason they go
15:59
Speaker 2: down market is generally because they've run out of, you know,
16:03
Speaker 2: ways to raise money from those other types of investors
16:05
Speaker 2: and they want someone else to kind of be that
16:07
Speaker 2: next wave of liquidity. And this has done nothing to
16:10
Speaker 2: dissuade me from that. Like, not quite the opposite. Blue
16:13
Speaker 2: Owl does not want to deal with Jimmy, you know,
16:16
Speaker 2: Q Public sticking fifty dollars a month into his four
16:19
Speaker 2: to h one k.
16:20
Speaker 3: Plan and Blue Owl never will. They're hiring intermediaries, correct,
16:24
Speaker 3: But the reason that they're doing that is because they're
16:27
Speaker 3: not getting the money coming in that they want to
16:29
Speaker 3: from other.
16:29
Speaker 2: Sources now or there.
16:31
Speaker 3: You know, there's about five hundred and fifty billion and
16:33
Speaker 3: I'm not giving you a reference point, but trust me,
16:35
Speaker 3: this is a lot of dry powder in private debt alone.
16:39
Speaker 3: Dry powder means a pension fund is said, we'll give
16:40
Speaker 3: you the money, but it hasn't been called away from
16:43
Speaker 3: the pension fund yet because the manager hasn't had trouble
16:46
Speaker 3: with an opportunity, I don't. It boggles the mind to
16:50
Speaker 3: me anyway, why they need more They're sitting on way
16:53
Speaker 3: and this is true, a venture cap moving over to
16:55
Speaker 3: equity now it's true.
16:56
Speaker 2: Of it doesn't make me feel good as to why.
16:59
Speaker 3: Maybe, well, we know why, I mean, we know.
17:03
Speaker 2: So there's this and then this whole move from blue
17:05
Speaker 2: out over the last couple of you know, over the
17:08
Speaker 2: last week. Call it, I gotta be honest. It gives
17:13
Speaker 2: me flashbacks to the summer of two thousand and seven
17:17
Speaker 2: with Lehmann trying to shuffle you know, money around its
17:21
Speaker 2: you know, mortgage backed securities funds in order to keep
17:24
Speaker 2: the plate spinning like It gives me real flashbacks to
17:28
Speaker 2: that Mark Well.
17:29
Speaker 3: The fact that if this was caused by i'll just
17:31
Speaker 3: call it a run, a run on the fund, A
17:33
Speaker 3: bunch of people went in said we want our money.
17:35
Speaker 3: They threw up so called gates. Now I'm bringing hedge
17:38
Speaker 3: fund language into this. But the problem this is a
17:40
Speaker 3: better visual imagine everybody gets concerned about private credit this.
17:43
Speaker 2: It wasn't even everyone. It was six pen They receive
17:45
Speaker 2: redemptions for about six percent of assets in the fund.
17:48
Speaker 2: This stuff is.
17:49
Speaker 3: So inherently liquid and there's nothing again sinister about that.
17:52
Speaker 3: It's the nature of the asset class that if indeed
17:54
Speaker 3: people run for the there's no running for the exits
17:57
Speaker 3: in private markets, much like there isn't with anything.
18:00
Speaker 2: Are not entitled to it anything.
18:03
Speaker 3: You're right, It is in the documents, it's in the contracts,
18:06
Speaker 3: and this is true hedge funds too. They throw up
18:08
Speaker 3: gates and like you said, there were instances of this
18:11
Speaker 3: in six seven leading up to the crisis. They didn't
18:13
Speaker 3: precipitate it, but sometimes they can be warning signs.
18:16
Speaker 2: So it just gives me a little bit of an
18:19
Speaker 2: ugly feeling about it and worthy of further monitoring. Just
18:24
Speaker 2: because this stuff doesn't happen when everything is hunky dory,
18:29
Speaker 2: it still can be that this doesn't cause any major
18:32
Speaker 2: issues in markets because it's not big enough to But
18:36
Speaker 2: my antenna are fully up on this and paying attention
18:38
Speaker 2: at least.
18:39
Speaker 3: Couple this with the alleged fraud. This is a different fun,
18:42
Speaker 3: different management, different sub asset class, but other pieces of
18:47
Speaker 3: evidence that very loose conditions over the past several years,
18:50
Speaker 3: and you'll be shocked to find out I blame the
18:51
Speaker 3: FED for those have precipitated larger concerns. Carelessness, laxity, and
18:57
Speaker 3: lending has led to potentially larger concerns.
19:00
Speaker 2: So worth monitoring. Oh yeah, has the potential to cause
19:04
Speaker 2: some real issues in twenty six. Yep, maybe we skate
19:08
Speaker 2: through somehow, but this is something worth watching. And this,
19:11
Speaker 2: by the way, has been a decade in the making. Like,
19:13
Speaker 2: this is not something that you just woke up to
19:15
Speaker 2: this year. This is something where the seeds of this
19:19
Speaker 2: were sown in the mid twenty tens and maybe reaped
19:23
Speaker 2: in the mid twenty twenty. Yes, let's take a quick
19:25
Speaker 2: break here. When we return, it's Wall Street, Watch and
19:28
Speaker 2: ask Todd.
19:40
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19:47
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19:50
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20:21
Speaker 1: Time now for Wall Street. Watch a complete look at
20:24
Speaker 1: what's moving markets so far today right here on the
20:27
Speaker 1: Financial Exchange, Radio Network.
20:30
Speaker 5: And video days upon US where the AI and Shift
20:32
Speaker 5: Giant will report their highly anticipated third quarter earnings after
20:36
Speaker 5: today's close, and Video stock is up over three percent
20:39
Speaker 5: ahead of its earnings. As for markets right now, the
20:43
Speaker 5: Dow is up about a quarter percent, or one hundred
20:46
Speaker 5: and seven points, SMP five hundred is up over nine
20:49
Speaker 5: tenths of a percent or sixty one points, Hired NASDAC
20:52
Speaker 5: up about one and a half percent or three hundred
20:55
Speaker 5: and twenty nine points, Russell two thousand and up over
20:58
Speaker 5: one percent, ten Your treasure Field is flat at four
21:00
Speaker 5: point one two nine percent, and crude oiled down nearly
21:04
Speaker 5: three percent today, trading just above fifty nine.
21:07
Speaker 6: Dollars a barrel.
21:09
Speaker 5: More retailer earnings this morning after Target reported a decline
21:12
Speaker 5: in third quarter sales as the company saw it shoppy
21:15
Speaker 5: spending in shoppers hunting four value. Target also cut its
21:18
Speaker 5: annual profit outlook and said it would invest billions to
21:22
Speaker 5: upgrade stores to help lift sales. Target shares are down
21:25
Speaker 5: over half a percent. Meanwhile, Low's is up by four
21:28
Speaker 5: percent after the retailer b third quarter expectations, where its
21:32
Speaker 5: online business helped offset weakness in the home improvement sector.
21:37
Speaker 5: One other retailer to report, where TJX posted better than
21:41
Speaker 5: expected earnings in revenue estimates. The parent company two tj
21:46
Speaker 5: Max and Marshall's lifted its annual outlook again as it
21:49
Speaker 5: continues to win over inflation weary shoppers. TJX shares are
21:53
Speaker 5: up over one percent, Alphabet jumping six percent one day
21:57
Speaker 5: after Google launched its updated Gemini AI motl Separately, Loop
22:01
Speaker 5: Capital upgraded the stock to buy from holding, upped its
22:04
Speaker 5: price target, and Constellation Andrew stock is climbing nearly six
22:08
Speaker 5: percent after the company received a one billion dollar loan
22:11
Speaker 5: from the government to restart its Crane clean energy nuclear plants.
22:16
Speaker 5: I'm Tucker Silva in That is Wall Street Watch.
22:20
Speaker 1: This is ask Todd on the Financial Exchange Radio network.
22:24
Speaker 1: If you have an existing estate plan or in the
22:26
Speaker 1: market for one, Todd Lutsky is here to answer your
22:29
Speaker 1: questions and help you plan for a later life. Ask
22:31
Speaker 1: Todd is presented by Cushing and Dolan, serving Massachusetts and
22:35
Speaker 1: New England for more than thirty five years, helping families
22:38
Speaker 1: with a state and tax planning, Medicaid planning, and probate law.
22:42
Speaker 1: Visit Cushingdolan dot com. Now here's Todd Lutsky.
22:47
Speaker 2: And we do have Todd Lutsky with us right now
22:50
Speaker 2: for Ask Todd. Phone lines are wide open for you.
22:54
Speaker 2: Get those fingers dial in eight eight eight two zero
22:57
Speaker 2: five two two sixty three. That is the number to
23:00
Speaker 2: call to Ask Todd your estate planning questions live on air. Again.
23:05
Speaker 2: Eight eight eight to zero five two two six three
23:10
Speaker 2: is the number. We usually get two to three calls
23:13
Speaker 2: that we can get through. To make sure you call
23:15
Speaker 2: early and often in order to get in line. That
23:19
Speaker 2: phone number again is eight eight eight two zero five
23:23
Speaker 2: two two six three. Mister Lotsky, how you doing? I'm
23:27
Speaker 2: doing great.
23:29
Speaker 8: I'm afraid to ask you.
23:31
Speaker 2: I actually learned something interesting yesterday. Yeah. Do you have
23:34
Speaker 2: the biggest export from Australia is boomerangs? Really it's also
23:38
Speaker 2: the biggest import, that's true, wild, Yeah, Todd want to
23:42
Speaker 2: talk to you a little bit about revocable trusts. Can
23:47
Speaker 2: you give a quick simple explanation for similarities and differences
23:54
Speaker 2: as it relates to someone doing their estate plan with
23:56
Speaker 2: a revocable trust compared to a will.
23:59
Speaker 8: Yeah, so it it makes a big difference, I mean
24:04
Speaker 8: just from a probate standpoints where you have to start
24:07
Speaker 8: with that. But that's just really the tip of the iceberg, really,
24:10
Speaker 8: because yeah, everybody wants to avoid probate, and you say,
24:12
Speaker 8: why do I want to avoid probate, Well, it's a
24:14
Speaker 8: big along process. And if you have a will, the
24:16
Speaker 8: will absolutely will go to probate. It's the only estate
24:19
Speaker 8: planning document that you must file at the probate court.
24:22
Speaker 8: So we already know by having things governed by the
24:26
Speaker 8: probate by the will means it's going to be governed
24:29
Speaker 8: by the probate court. So a probate asset is first
24:32
Speaker 8: defined as something you own in your own name and
24:36
Speaker 8: it is not a designated beneficiary attached to it. So
24:40
Speaker 8: if it's in your own name, no designated beneficiary, it's
24:44
Speaker 8: going to probate. What's that A house, vacation home, a
24:47
Speaker 8: rental property right. Iras generally have beneficiary, so you're probably
24:52
Speaker 8: gonna luck out there. Jointly, how it accounts also will
24:55
Speaker 8: avoid probate. Not great for est aid planning, but they
24:58
Speaker 8: will avoid probate. And so those are the typical kinds
25:02
Speaker 8: of own By the way, with probate assets, remember while
25:06
Speaker 8: it's important to avoid probate just in general, house, vacation home,
25:11
Speaker 8: rental properties, you know that vacation home might be in
25:13
Speaker 8: another state, so we want to avoid probate. We also
25:17
Speaker 8: want to avoid probate in every state. So when you
25:19
Speaker 8: start talking about the need to avoid probate, you really
25:22
Speaker 8: need to think about it when you've got real estate
25:24
Speaker 8: because now you could be going and probating an ancillary
25:27
Speaker 8: probate in any state that you have property in, so
25:31
Speaker 8: really important to avoid it.
25:32
Speaker 2: That's the easy part.
25:34
Speaker 8: The second part is people come in and say, jeez, Todd,
25:38
Speaker 8: I've done a will, I've got my estate plan all done. Well, no,
25:42
Speaker 8: not really, because a wills won't is what I like
25:45
Speaker 8: to say, meaning it won't do the following things, and
25:49
Speaker 8: these might be important to you. Well, it won't avoid probate,
25:52
Speaker 8: as we just explained, it won't likely reduce the state
25:56
Speaker 8: taxes because it'll probably just say I leave everything to
25:58
Speaker 8: my spouse and then my kids, so not avoiding estate taxes,
26:03
Speaker 8: and it won't protect assets from a nursing home if
26:06
Speaker 8: that's a concern of yours. So to me, there's three
26:09
Speaker 8: major parts of an estate plan that are not covered
26:12
Speaker 8: by a will, So a will's a won't. So I'm
26:15
Speaker 8: thinking we now know the difference because if we set
26:18
Speaker 8: up a trust, whether it's revocable or irrevocable, at least
26:22
Speaker 8: we know it will avoid probate, it will shelter assets
26:26
Speaker 8: for a state taxes, and it will protect assets from
26:29
Speaker 8: a nursing home if it's irrevocable.
26:30
Speaker 2: Talking with Todd Lutsky from the law firm of Kushingen
26:33
Speaker 2: Dolan segment is your chance to ask Todd your estate
26:37
Speaker 2: planning questions. Studio line still open it eight eight eight
26:42
Speaker 2: to zero five two two six'. Three that is the
26:46
Speaker 2: number to call to Ask todd your estate planning questions
26:49
Speaker 2: live on air right now again it's eight eight eight
26:54
Speaker 2: to zero five two two six. Three still got room for,
26:59
Speaker 2: you so again get calling it eight eight eight to
27:02
Speaker 2: zero five two two sixty. Three we're going to take
27:05
Speaker 2: a quick break, now but when we come. Back it's
27:07
Speaker 2: going to be right to your questions With Todd lutsky.
27:11
Speaker 2: Again that phone number is eight eight eight to zero
27:14
Speaker 2: five two two six to.
27:17
Speaker 1: Three Ask todd With Todd lutsky Every wednesday at ten
27:21
Speaker 1: thirty only here on The Financial Exchange Radio. Network you're
27:27
Speaker 1: listening To Ask todd With Todd lutsky on The Financial
27:30
Speaker 1: Exchange Radio.
27:31
Speaker 2: Network, alrighty let's get right to your calls With Todd.
27:43
Speaker 2: Lutsky first in the, queue we've Got dave And. Melrose,
27:46
Speaker 2: dave what's your question For?
27:47
Speaker 9: Todd good, morning. GENTLEMEN i have a question beguiding the
27:54
Speaker 9: trust MONEY i have to. Trust, okay give you both
27:59
Speaker 9: trust set up By. Todd thank, You. Todd you did
28:03
Speaker 9: a great.
28:04
Speaker 8: Job you're checking the.
28:06
Speaker 2: Mail.
28:11
Speaker 9: WELL i just want to make Sure i'm not doing
28:13
Speaker 9: anything wrong by having all my, income even Social security
28:19
Speaker 9: this and, that you, know going to the trust and
28:22
Speaker 9: then take it out into my personal account WHEN i
28:26
Speaker 9: need it or AS i need. It but my idea
28:29
Speaker 9: is it it'll if it's if if there's any IF
28:33
Speaker 9: i don't use all the, money it stacks up in the,
28:37
Speaker 9: trust and that's a good place for it to be
28:40
Speaker 9: in terms of the nursing.
28:42
Speaker 8: Home so let me ask you just a couple of.
28:44
Speaker 8: Questions so you said a couple of. Things that one
28:46
Speaker 8: one is a little. Alarming but let me, so in
28:48
Speaker 8: the trust you, have i'd imagine just some, investments, right, stocks, bonds, money, right.
28:54
Speaker 9: Plus income coming in Social i'm.
28:57
Speaker 8: Going to stop on that just for a, seconds just for. Now,
29:00
Speaker 8: well the first question is you do have, stocks, bonds
29:02
Speaker 8: and money that generates what we call interest and, dividends, right?
29:06
Speaker 8: Correct so, okay So i'm going to address interests and
29:08
Speaker 8: dividends as number one and number two social. Security, okay
29:12
Speaker 8: those are the two items that really need to be.
29:14
Speaker 8: Addressed this is a very important question for everybody. Listening
29:18
Speaker 8: so you need to go back and look at my
29:20
Speaker 8: engagement letter just to remind, you which we talked about
29:23
Speaker 8: when we funded the. Trust the one ITEM i indicated
29:26
Speaker 8: should never go in your trust is your personal bank.
29:30
Speaker 8: Account your personal bank account that receives your social security
29:34
Speaker 8: and pension for some, people should never be in the.
29:38
Speaker 8: Trust so please stop that from. Happening because every single
29:44
Speaker 8: time you deposit that social security check into that, trust
29:48
Speaker 8: you start a five year waiting period for medicaid. Eligibility
29:52
Speaker 8: so you do not ever want your Social security to
29:56
Speaker 8: go into your trust that stays in your bank account
29:59
Speaker 8: outside the. Trust, okay so you're going to need to
30:02
Speaker 8: fix that asap if you want to just take the
30:06
Speaker 8: account out or tell Social security to redirect the money
30:10
Speaker 8: to an account that is not in the. Trust, now
30:14
Speaker 8: the other, part interest and. Dividends the money you have
30:17
Speaker 8: sitting in the trust regarding interest and, dividends absolutely love, it.
30:22
Speaker 8: Right you can have that money in, there you can
30:24
Speaker 8: have it, grow you can have capital gains, grow and
30:27
Speaker 8: you can even have the interest and dividends kicked out
30:30
Speaker 8: every month automatically to your personal account which is outside the,
30:34
Speaker 8: trust which is now going to be that same account
30:35
Speaker 8: that receives your Social. Security so as that money comes, out,
30:39
Speaker 8: perfectly allowed to use it and live on. It but
30:41
Speaker 8: as you, said you might, not you might want to
30:43
Speaker 8: leave it in there, perfectly, okay if you want to
30:45
Speaker 8: leave it in, there we have it's set up as
30:48
Speaker 8: a grant or trust for income tax. Purposes so In,
30:51
Speaker 8: english that means you're going to be able to continue
30:53
Speaker 8: to pay the income taxes on that money at your
30:55
Speaker 8: own personal, rate even if you don't take it. Out
30:58
Speaker 8: so there's no tax problem for you leaving it in,
31:01
Speaker 8: there and it's completely available for you if you choose
31:04
Speaker 8: not to leave it in. There SO i like that
31:06
Speaker 8: whole aspect of what you're. Doing and, again even if
31:10
Speaker 8: it builds up in, there it doesn't. Matter it's an account,
31:12
Speaker 8: receivable so you can always Take let's, say let's say
31:15
Speaker 8: it builds up five thousand dollars a year that you're
31:17
Speaker 8: are a month that you're not taken, out and they're
31:21
Speaker 8: maybe you, know at the end of three months you
31:23
Speaker 8: got fifteen thousand dollars in, There, well you can take
31:26
Speaker 8: out fifteen thousand dollars if you need it for.
31:28
Speaker 2: Something because it's.
31:28
Speaker 8: Income it's an account, receivable it's not and it's not
31:32
Speaker 8: added to, principle so it doesn't affect your five year waiting.
31:35
Speaker 8: Period SO i think you're doing a great job on that.
31:38
Speaker 8: Front just go fix That Social security account and have
31:41
Speaker 8: it be paid to your personal, account not the. Trust
31:44
Speaker 8: so hope that was helpful and hopeful it's helpful for everybody.
31:48
Speaker 8: Listening folks want to tell you the new guide never
31:53
Speaker 8: been given away. Before it's new for this month and
31:56
Speaker 8: never be given away. Before it's really becoming much more
32:00
Speaker 8: in vogue to do a simply joint revocable trust when
32:03
Speaker 8: you do your. Planning why because of the new law
32:07
Speaker 8: that passed keeping the estate tax exemptions. High this trust
32:11
Speaker 8: allows you to cram down more assets than you could
32:14
Speaker 8: if you divided assets between husband and, wife so you
32:17
Speaker 8: can shelter more on the first death for estate tax.
32:20
Speaker 8: Purposes you also get a full step up in basis
32:24
Speaker 8: on the first, death so you win on that, front
32:26
Speaker 8: and of course it'll play out to your family the
32:28
Speaker 8: way you wanted. To, Folks this guide is all about
32:32
Speaker 8: the simplicity of joint revocable. Trust learn how they work
32:35
Speaker 8: and win on both the income tax side by getting
32:39
Speaker 8: the step up in basis and the estate tax side
32:42
Speaker 8: by cramming down more on the first death eight six
32:45
Speaker 8: six eight four eight five six nine nine Or Legal
32:50
Speaker 8: exchange show dot. Com you can download it there one
32:52
Speaker 8: more time eight six six eight four eight five six
32:57
Speaker 8: nine nine Or Legal Exchange show dot.
32:59
Speaker 2: Com todd got another one here for. You let's go
33:02
Speaker 2: to al In. Marblehead, oh what's your question For? Todd good, morning.
33:07
Speaker 4: GUYS i have a question. Tried my neighbor's going into
33:10
Speaker 4: a nursing home eighty nine years.
33:11
Speaker 9: Old they're in the.
33:13
Speaker 4: Butstal right, now and they've already asked for to fill
33:17
Speaker 4: out A medicare for, Him Medica Medicaid, yeah, sorry, math excuse,
33:23
Speaker 4: me math.
33:24
Speaker 2: Health it's the same, time.
33:25
Speaker 9: Okay and she.
33:27
Speaker 4: Went to the senior center in our local. Towne she's
33:30
Speaker 4: sixty years, old she sort of, disabled she needs, help
33:32
Speaker 4: and they they've filled out the form with. Her i'm very.
33:35
Speaker 4: Concerned the house is actually in her. Name she didn't
33:39
Speaker 4: have much. MONEY i don't know how she's going to live,
33:41
Speaker 4: there but that's a different. Story but what my question
33:43
Speaker 4: is he has about forty thousand in. Cash it was
33:47
Speaker 4: in a joint account with her because she's an only,
33:49
Speaker 4: child SO i always lived with them and the wife passed.
33:53
Speaker 4: On what my question is is it a good idea
33:56
Speaker 4: for just a senior center to BE i, MEAN i
33:59
Speaker 4: thought the first time days medicare used to. Pay why
34:01
Speaker 4: are they asking me to have this form filled belt
34:03
Speaker 4: even before they go into these.
34:05
Speaker 8: Facilities, well because if we know we're going into a nursing, home,
34:09
Speaker 8: right not an assisted, living but a nursing, home, right
34:12
Speaker 8: we know that's where we're. Headed, yes you are, Right
34:14
Speaker 8: medicare AND i wish they wouldn't use the same word
34:18
Speaker 8: all the. Time But medicare will pay for the first hundred,
34:23
Speaker 8: days but not always the first one hundred, days, right
34:27
Speaker 8: it will pay up to one hundred. Days so if
34:31
Speaker 8: you end up needing not skilled care, anymore then there is,
34:35
Speaker 8: uh there's going to be a, cutoff, Right and you
34:39
Speaker 8: want to be ready For medicaid to kick, in which
34:42
Speaker 8: is a different payment, source, Right so you definitely want
34:46
Speaker 8: to fill out the application because it's a.
34:48
Speaker 2: Process it takes.
34:49
Speaker 8: Time BUT i don't agree with you that they should
34:54
Speaker 8: be using The Senior. Center no offense to The Senior,
34:56
Speaker 8: center but this might be out of their, league and
35:00
Speaker 8: AND i would say they should probably seek out a.
35:01
Speaker 2: Lawyer here's what should happen. Though if there's only forty grand.
35:05
Speaker 8: In a, house as long as the house is worth
35:07
Speaker 8: less than a million, dollars And i'm guessing it, is it.
35:10
Speaker 8: Is so if it's worth less than a million dollars and,
35:15
Speaker 8: change then the house would be considered non countable when
35:19
Speaker 8: you apply for. Medicaid, okay it's non countable as long
35:23
Speaker 8: as you check a, box know what you're, doing fill
35:25
Speaker 8: out the, application, Right they'll put a lien on, it
35:29
Speaker 8: but it won't prevent you from becoming eligible For. Medicaid
35:32
Speaker 8: so the forty, grand of course. Will but, again as
35:36
Speaker 8: you're going through this, process we would be telling, them,
35:38
Speaker 8: look why don't you take ten twelve thousand dollars in
35:41
Speaker 8: pre pay a? Funeral want to cover? That that's perfectly all.
35:44
Speaker 8: Right now you see we're whittling this. Down now we
35:46
Speaker 8: got like twenty eight grand. Left all, Right, well, yeah
35:49
Speaker 8: you're gonna hire a. Lawyer you're gonna have to pay the,
35:51
Speaker 8: lawyer take some money out of, that, right is there
35:53
Speaker 8: anything else you need to?
35:54
Speaker 1: Pay?
35:55
Speaker 8: Right and whittle that down a, little and then whatever is, Left,
35:59
Speaker 8: okay IF i have TO i that pay the nursing
36:00
Speaker 8: home for one, month you, Know i'm fine with, that,
36:03
Speaker 8: right just to get the rest. Down but that's the
36:06
Speaker 8: process of getting you eligible For, medicaid not just you,
36:10
Speaker 8: know give all the money to the nursing home and then.
36:12
Speaker 8: Apply but they should be able to get On medicaid
36:14
Speaker 8: on their own in this. Case but JUST i think
36:17
Speaker 8: they still might might want to try getting a lawyer
36:20
Speaker 8: to help him out a. Little So todd got one
36:23
Speaker 8: more for.
36:23
Speaker 2: You but we're gonna have to be. Quick jerry In,
36:25
Speaker 2: vermont you've got about thirty seconds. Here what's your question For?
36:28
Speaker 2: Todd thank?
36:30
Speaker 1: You?
36:31
Speaker 10: Mother elderly mother and nursing home without has a house
36:36
Speaker 10: and nothing else, else and she's been told she has
36:39
Speaker 10: to sell the house to pay for her.
36:42
Speaker 8: Bill, okay so great, question and sorry for that, situation of,
36:47
Speaker 8: course but absolutely.
36:49
Speaker 2: Not you need to go get.
36:50
Speaker 8: Help you need to get someone to help her fill
36:52
Speaker 8: out The medicaid. Application she's actually naturally. Eligible you don't
36:56
Speaker 8: even need any fancy planning at this. Point but you
36:58
Speaker 8: also don't need to pay fifty teen or sixteen thousand
37:01
Speaker 8: dollars a month to the nursing home and sell the.
37:03
Speaker 8: House you want to keep the, house check the box
37:06
Speaker 8: that it's non. Countable get On. Medicaid it'll be a
37:09
Speaker 8: much lower, rate so you're lean that runs up against
37:13
Speaker 8: the house will be way smaller than. That plus you
37:16
Speaker 8: still got the house. Right since someone passes, away you
37:19
Speaker 8: get a step up in. Basis kids have an option
37:22
Speaker 8: keep the house or sell. It no capital gains. Tax
37:25
Speaker 8: sorry for the quick, answer but but just get some
37:28
Speaker 8: help on. That they're going to be eligible For medicaid
37:30
Speaker 8: the way it. Is don't sell The, House.
37:32
Speaker 2: Todd, lotski thank you so much for joining us. Today
37:34
Speaker 2: always a. Pleasure thank.
37:35
Speaker 1: You this has been asked on on The Financial Exchange radio,
37:40
Speaker 1: Network askedd With Todd leedskey has been presented By cushing And,
37:43
Speaker 1: dolan Serving massachusetts And New england for more than thirty,
37:46
Speaker 1: years helping families with the state and tax, Planning medicaid,
37:49
Speaker 1: planning and probate. Law call eight hundred three nine three
37:52
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