October 31, 2025 • 38 mins
Chuck Zodda and Mike Armstrong discuss another big money fraud case coming out of the private credit world. Too much experience is hurting job candidates now? Todd Lutsky explains the benefits of gifting assets as a part of your estate plan. Cities across America are putting robots to work. Paul LaMonica (Barron's) joins the show to chat about Rithm Capital.
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Episode Transcript
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Speaker 1 (00:01):
The Financial Exchange is produced by Money Matters Radio and
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(00:21):
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(00:43):
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a donation today. This is the Financial Exchange with Chuck
(01:06):
Zada and Mike Armstraw.
Speaker 2 (01:15):
Chuck Mike Tucker with you here Friday, getting ready to
wrap up the week. And we've got markets rallying today
on the back of strong earnings from Amazon, mostly the
Dow Jones Industrial average up eighty nine points, not too much,
but the S and P five hundreds up forty points
about point six percent, the NASDAK composite up two hundred
(01:36):
and seventy nine points almost one point two percent. We've
got the ten year US Treasury down two tenths of
a basis point to four point zho nine to one,
so pretty boring in bond Land after a little bit
of excitement the last couple of days there. We've got
the Dollar index up point to two percent today, so
dollar continuing to show a little bit of recent strength.
(01:57):
And we've got gold up fifteen seventy and hours to
four thirty one dollars and sixty cents.
Speaker 3 (02:04):
On the crude.
Speaker 2 (02:05):
Oil side of things, West Texas Intermediate up thirty six
cents a barrel to sixty dollars and ninety three cents
in the triple A national average for gas prices up
two tens of a cent to three oh four. Also
taking OI at mortgage rates. They continue to rise yesterday
up another six hundredths of a percent to six point
three to three percent. So we've gone from six point
(02:26):
one to three to six point three to three in
the last two days, almost a quarter percent higher. Have
to imagine that will impact the market at the margins
over the next week or so.
Speaker 3 (02:37):
Will be interesting to see what we.
Speaker 2 (02:39):
Get in terms of mortgage applications, in particular refinancing had
a little bit of a boomlet going on over the
last few weeks. Does this take some of the edge
off that. We'll see what happens on that side of things.
Speaking of boomlet, this is the bad kind, not the
good kind. Black Rock the big old asset manager. They
have a private credit investing arm like most asset managers
(03:02):
now and apparently they are currently accusing a company by
the name of Broadband Telecom in Bridge Voice run by Bonquim,
Bombrot or Brombot sorry, of a five hundred million dollar fraud. Basically,
the long stories short on this.
Speaker 3 (03:25):
Is when you see one cockroach, there's usually more than one.
Speaker 2 (03:29):
Is well again, I just I always like to dig
in on the specific frauds because it's it's it's interesting
to me to see how the frauds are perpetrated, just
to know, like, oh gee, this is something I should
look out for in the future. So I'll quote here
from the Wall Street Journal.
Speaker 3 (03:46):
This is a WSJ exclusive.
Speaker 2 (03:48):
The dispute centers on a kind of debt deal known
as asset based finance, in which the bar or post
is collateral a stream of revenue generated by specified businesses, equipment,
or customer receivables. Okay, so in this case is a telecomsiness,
and so they borrow and the lender says, if you
default on this, I get the receivables coming in from
whoever it might be.
Speaker 3 (04:11):
So basically.
Speaker 2 (04:14):
This company that operated in the telecom space. Maybe it's
unclear if they actually did. To be completely honest, and
they but they.
Speaker 3 (04:26):
R in a brand named Carryouts in addition to the
two names that we mentioned.
Speaker 2 (04:31):
Yeah, so they effectively these loans were underwritten by a
company that Blackrock bought earlier this year called HPS, and
HPS hired Deloitte to audit the financials and verify that
the assets actually existed. They also hired an accounting firm,
CBIZ to conduct annual asset checks as well.
Speaker 3 (04:53):
So again thinking about what the asset is here is important.
The asset is the customers who are pay this company money.
And so again because the asset that was loaned against
was the future revenues that these customers will pay. And
so what do you do when you do something like this, Well,
sometimes you hire a company to go drive down to
(05:16):
the building and make sure that it's in good shape.
If you are an insurance company, you might do that.
If you are a mortgage company, you might go do that.
If you're lending somebody money for a home. In this case,
you need to verify that the revenue that they are
claiming exists and that you are lending against actually does
in fact exist. The customers are there.
Speaker 2 (05:35):
So what they were doing HPS was reportedly emailing the
customers saying, hey, like just making sure, can you like
give us proof of contract? Things along those lines, And
apparently the company that was doing this auditing in July
noticed irregularities with the email addresses and basically said, actually,
(05:55):
I don't.
Speaker 3 (05:56):
Believe it was the auditor. It was HPS. Oh HPS, yes,
meaning the asset man themselves rather than the companies hire
to check.
Speaker 2 (06:02):
Yes, So HPS goes to Brombot and says, hey, like,
these email addresses don't like seem to match up. What
gives He says, there's nothing to worry about, and then
stops answering their phone calls.
Speaker 3 (06:19):
Which is just like, it's good to hear that it's
not just gen Z that ghosts people. Not great. I'll
quote here.
Speaker 2 (06:25):
On Wednesday morning, Brombot's office suite was locked and appeared vacant,
and an employee and adjacent tennant said she hadn't seen
anyone enter or leave the office recently. At the Garden
City house listed at Brombots as Brombot's residents, two BMW's,
a Porsche of Tesla and Audi were parked in the driveway,
and a package next to the front door was collecting dust.
Speaker 3 (06:45):
So is the are they alleging that he's gone?
Speaker 2 (06:48):
The Wall Street Journal is basically making the case he
ain't been here in a while. And after the HPS
employee flagged these irregularities, a law firm started to investigate
eight you know, hey, show me like some of these borrowers,
and they found that these email addresses didn't match up
with actual public web domains that were out there and
(07:09):
one of the customers, a Belgian telecom called BICS, said, look,
we don't have anything to do with these emails, like
we've never seen these before. And a security staffer from
there said, this is indeed a confirmed fraud attempt.
Speaker 3 (07:25):
Is it really this easy to borrow half a billion
dollars or a third of a billion or whatever he borrowed.
Here's the thing.
Speaker 2 (07:32):
So the private credit space is one that has scared
me for the last couple of years.
Speaker 3 (07:37):
And the reason about this this guy set up a business,
allegedly created a bunch of fake customers and borrowed hundreds
half a billion dollars of millions of dollars.
Speaker 2 (07:49):
Half a billion dollars. There's been so much excitement for
people trying to raise money in this space that the
concern that I've had out there is just like, Okay,
there's just so much out there and you don't really
know what any of this is. It all just gets
lumped under like private credit, and you know the stuff
(08:10):
that you get pitched on. This stuff, it's like, well,
it doesn't move around, so it takes volatility, and it's like, no,
just because something is privately held doesn't mean the value
doesn't change, it just doesn't get marked to market on
the same frequency as public markets.
Speaker 3 (08:25):
It's more than that too, though, because what I have
consistently heard from the industry is we are better at
assessing the risk. We use different tools.
Speaker 2 (08:34):
We know these companies, we get to know them, blah
blah blah.
Speaker 3 (08:38):
We use different tools. You know, we're able to track
this stuff via online trends and really get to the
bottom of the lending. And in okay, I shouldn't paint
with a broadbrush in a few specific instances here that
is being alleged to be boloney. It's no longer a
(09:01):
few specific instances. It's three or four.
Speaker 2 (09:04):
It's three in a four week period that are all
pretty grim and no one knows what else is out there.
Speaker 3 (09:14):
Okay, So like this one we didn't know was here
until this story was published. Right And by the way,
you know, suits have been filed back in August, and
we're hearing about it now. Why should the average person
listening care? That's that's a really important thing, right, Like
most people out there are not managing money for insurance companies. Therefore,
(09:35):
the average person might not have heard about private credit
before the last six months.
Speaker 2 (09:40):
So there are three reasons why the average person should care.
In my mind, the first is, as you noted, insurance
companies have been big buyers of private credit because they
like the high yield that you get. Typically anywhere from
like nine to fifteen percent is what you see out
there at this point. And if you're an insurance company
who's trying to keep your you know, premiums down to
(10:02):
be competitive in the marketplace, you say, if I can
just earn more on my general account, I don't have
to charge my customers as much. And so the concern
out here is, hey, if more of this turns out
to be bad than you would think, insurance companies may
be left saying, oh, we don't actually have the money
set aside that we thought we did.
Speaker 3 (10:21):
Who else is out there? Endowments, pension funds.
Speaker 2 (10:24):
Endowments, pension funds. The other thing, Quite a lot of
high net worth individuals have brought up a bunch of
this stuff in the last you know, few years. Sure,
if you're not a high net worth individual doesn't own
this stuff, like that's not really your concern, but like, yeah,
you could be you know someone who is in that situation.
Speaker 3 (10:41):
Uh.
Speaker 2 (10:41):
The other place where this is potentially a concern for people.
Is the mechanism for all of this as a as
a as a way to generate economic growth is these
small to mid sized companies tap these private credit markets
in order to get access to funds, which grows the economy,
(11:02):
which causes these private credit firms to loan more money,
which grows the economy more. If the private credit firms
suddenly say, gee, we need to you know, slow down
or pause new issuance, it has an impact on the
US economy because that money is not going in the
comparable in twenty two thousand and six, two thousand and seven, hey,
(11:22):
as you started to see subprime loans going under, companies
pulled back from some prime lending, which then made it
harder for real estate prices to move up, which in
turn made more loans go under, which in turn ended
up blowing the whole thing up. This case, the problem,
like the center of this, if it develops into a problem,
(11:43):
would be small to mid sized companies in the US,
not housing.
Speaker 3 (11:47):
Yep. And that's the point here is Okay, there's been
a few cases of fraud. Is it incredibly widespread? Is
it all over the place? I don't no, one knows
quila's got any idea.
Speaker 2 (11:57):
Anyone who says like this is going to be this
or this is going to be that doesn't know right now.
Speaker 3 (12:03):
But whether it's widespread or not, the logical thing to
do if you're one of the companies that owns this
stuff or is one of the ones originating the loans,
is to scrutinize it a heck of a lot more
than you did this time last year.
Speaker 2 (12:16):
You finally start asking the question, hey, what's in my portfolio?
And it's not just that it's that market for you know,
packaging this and selling it off. The people buying it
from you are now saying, hey, how do I know
that you don't have some of this stuff in here?
Can you securitize it and get it off your balance
sheet quickly enough? That's, you know, a potential issue. And
(12:38):
the third place where this potentially matters to people is
in public markets. There are companies in the S and
P five hundred where this is their main business model.
And look at how heavily financials have traded over the
last month or two since this started coming out, even
with the S and P five hundred making new all
time highs, even with strong quarterly earnings from a lot
of the big banks. Financials as a whole, in particular
(13:00):
the regional banks and the asset managers can't really get
off the mat right now. So again, does this develop
into a problem?
Speaker 3 (13:08):
Maybe maybe not.
Speaker 2 (13:10):
Like I'm not one to sit here and say like
it's going to be this or that. But since you know,
early September I started saying, hey, something kind of smells here,
the smell's grown. And now we're gonna find out in
probably the next six to nine months, is there anything
worse coming or not.
Speaker 3 (13:25):
There may be, there may not. We don't know right now.
Speaker 2 (13:28):
And that's about as much as anyone I think can
conclusively say, because the people who do know, the people
that actually own this stuff, they're not talking. They're trying
to either get it off their books if it's not
worth the paper it's printed on, or buy more of
it if they think it's at a discount based on
what they're seeing, right. But those people are not talking.
Quick break here when we come back, we've got trivia
(13:50):
right after this.
Speaker 1 (13:52):
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Speaker 4 (14:30):
All right, it's up for trivia here on the Financial Exchange.
If you didn't hear, today is Halloween, So here's our
final Halloween trivia question of the year.
Speaker 1 (14:40):
So here we go.
Speaker 4 (14:41):
Which famous Halloween movie features the line do you like
scary movies?
Speaker 3 (14:46):
Once again?
Speaker 4 (14:46):
Which famous Halloween movie features the line do you like
scary movies? Be the seventh person today to text us
at six one seven three six two thirteen eighty five
with the correct answer, and you win a Financial Exchange
Show T shirt.
Speaker 3 (15:02):
Once again.
Speaker 4 (15:02):
The seventh correct response to text us to the number
six one seven three six two thirteen eighty five, we'll
win that T shirt. See complete contest rules at Financial
Exchange Show dot com. And if you missed any of
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(15:24):
interviews and clips. Go to YouTube, hit subscribe, and search
for the Financial Exchange Show, Wall Street Journal piece Too
much experience hurts you. In today's tough job market, the
subatter overqualified job applicants are scaring off cost conscious businesses.
Speaker 3 (15:40):
Your thoughts, all, right, So we've got young college grads
who can't get jobs. Yes, the twenty five to thirty
five domb So the under experienced can't find jobs, and
the over experienced can't find jobs. You have to we
can find jobs goldilocks the experienced, so not too not
too little.
Speaker 2 (15:59):
You've got to be forty one years old, interested in
exploring what AI can do for your career.
Speaker 3 (16:07):
Yeah, and willing to take a small salary. But you
also know how a copier works. Yeah, Okay, Like that's
the ideal job Canada. I'm just wondering, like, can it
really be all of these things at once? And I
suppose it can. But we're what we're getting to is
just describing a bad labor market, and the story is
(16:30):
about who it's bad for. Are becoming less relevant. I
guess broadly speaking, I think the answer is it's bad
for white collar workers. Yeah, yeah, that that feel right
to you, because I not just white.
Speaker 2 (16:44):
Call it like you talk about what's going on in
housing and it, you know, talk to any anyone who
works as a contractor. Yeah, and like I know people
in you know, drywall and they're you know, they're like, yeah, like,
you know, things are a little bit slow right now.
You talk to your plumbers and they're like, yeah, there's
more renovations, but you know, new constructions dried up a
little bit, you know it.
Speaker 3 (17:05):
Talk to truckers.
Speaker 2 (17:06):
They'll tell you, look, I'm not as busy, like I'm
not able to you know, stay as busy as I
want to be. So here's the thing that's wild to
me is like that you try to find like who
says that, you know, their particular job is booming right now,
and it's kind of hard to And yet the the
overall economic data that we get is like, yeah, the
(17:28):
economy is pretty good aside from the labor market.
Speaker 3 (17:30):
Do you remember in twenty thirteen and twenty fourteen when
oil prices were around one hundred bucks a barrel and
you could move to like North Dakota with no skills
and get one hundred thousand dollars a year job.
Speaker 2 (17:43):
Not like you can move to like pipelines in Alaska
and get like three hundred thousand dollars year jobs.
Speaker 3 (17:47):
I think we're gonna get there with data center construction.
Speaker 2 (17:49):
No, no, okay, just because I think you're just repurposing
excess capacity from elsewhere.
Speaker 3 (17:58):
It's like the electricians. It's not the same.
Speaker 2 (18:00):
But if you are, you know, if you're one of
the contractors that is putting that together, like the GC
for a data center, you're going out to all your
subs and you're saying, hey, give me your best bids
in order to do this work. Yeah, and those subs, now,
if you're in Texas, you know they're saying, okay, we're
building you know, Stargate and Abilene. Hey, all the guys
(18:21):
who were you know, working and doing electrical work for
all the housing in austin the last few years, guys
come down here for the year and help work on Stargate.
Speaker 3 (18:28):
Yeah. I just wonder, right, because there's it's going to
be concentrated in a few areas, And that's the piece
that reminds me of that period of time, because it's
not going to be construction in the Northeast, and there's
a bunch of people with those skills that are here
in the Northeast, And so do you have that shift
to say, yeah, I'm gonna go take a job out
in Wisconsin. Maybe that's where all the construction is. I
take your point there, you're probably not getting that same. Hey,
(18:50):
I can move there and become a chef and make
seventy five thousand dollars like you could in North But
it's just wild to me.
Speaker 2 (18:55):
Like the economic data that we're getting, aside from the
labor is still pretty darn good.
Speaker 3 (19:01):
It is.
Speaker 2 (19:02):
And yet you talk to people and they're like, yeah,
my personal like my personal business is not Like, is
not how I want to see it.
Speaker 3 (19:10):
I can't reconcile it.
Speaker 2 (19:11):
But it is the case like consumer spending, like all
the banks are telling you consumer spending growth is.
Speaker 3 (19:17):
Still fine, and.
Speaker 2 (19:20):
It's it's just it's different from what we've seen before.
It just is quick break. When we come back, we've
got Wall Street watch the trivia answer, and then we're
joined by Todd Lutsky from Cushing and Dolan.
Speaker 1 (19:39):
Bringing the latest financial news straight to your radio. Every day.
It's the Financial Exchange on the Financial Exchange Radio Network.
Time now for Wall Street watch a complete look at
what's moving markets so far today right here on the
Financial Exchange Radio Network.
Speaker 4 (19:58):
Market's currently in positive territory on the heels of more
impressive big tech earnings from the likes of Amazon and Apple.
Right now, the Dow is up about a tenth of
a percent or seventy four points. Hire S and P
five hundred, up over half a percent or thirty six points.
NASDAC up two hundred and sixty points over one percent higher.
(20:19):
Russell two thousand is up a half a percent. Tenure
Treasure reeled flat at four point zero nine seven percent.
Dan crude oil up two thirds of a percent, rating
just below sixty one dollars a barrel. Amazon among the
big winners on the day after the e commerce in
web services Giant b third quarter earnings and revenue expectations,
(20:40):
where revenue from AWS jumped twenty percent during the period.
Amazon also reported aggressive plans to grow data data center
capacity shares a rallying eleven percent. Meanwhile, Apple also b
quarterly expectations, with the iPhone maker offered an optimistic forecast
for the holiday quarter due to strong demand from customers
(21:02):
seeking to upgrade to the iPhone seventeen. Applestock is currently
dipping and Netflix announced a ten for one stock split
to make it stock more affordable for its employees. Netflix
shares are up nearly four percent. I'm Tucker Silva and
that is Wall Street Watch and in the previous segment
we ask the trivia question which famous Halloween movie features
the line do you like scary movies? That would of
(21:25):
course be scream. Jim from Teamsborough Mass is our winner
today taking on the Financial Looks Shange Show t shirt.
Congrats to Jim, and we play trivia every day here
on the Financial Looks Change See complete contest rules at
Financial Looks Change show dot com.
Speaker 3 (21:39):
Joining us now is Todd. Let'sket from the law firm
of Cushing and Dolan talk to us a little bit
today about gifting. Todd, thanks for joining us here on Halloween.
Speaker 5 (21:47):
Oh, thank you. Always scary to have me.
Speaker 3 (21:50):
On so Todd, there is some misunderstanding when it comes
to gifting and gift taxes, and I wanted to ask
you about that because I know that there's an amount
you can give to somebody where you're under that gift
tax limit, but what happens? I guess where is that limit?
And what happens if I go over it?
Speaker 5 (22:11):
Yeah? Great question, And I know it's funny about gifting,
And then we talk about scariness and Halloween is you
think about gifting and taxes involved in it, and you
wouldn't think that it would be the giver that has
to pay the tax. But unfortunately, no good deed goes unpunished.
I guess. So nineteen thousand dollars is the amount you
can gift per person per year to anybody, and there
(22:35):
is no filing required and no tax return, no tax
is due. It's complete freebe Okay, got it. But a
lot of people say, you know what, I got to
get more out of my estate faster, and I know
I can gift thirteen point nine million, right, So if
I go over that number, there's another number you can
look at. And so if I gave away one hundred
(22:59):
and nineteen thousand dollars, let's say the nineteen thousand would
be your freebie. But because you went over the nineteen
you've now created a taxable gift situation and you need
to report it on a Form seven oh nine. And
that one hundred thousand dollars increment is the taxable gift part,
(23:19):
and so technically the giver would have to pay the tax. However,
on the gift tax return that you file, you would
simply reduce your thirteen point nine million dollar gift tax exemption,
which we all have to once in a lifetime exemption,
by one hundred thousand dollars. So now I can only
give away thirteen point eight million, but I pay no
(23:41):
tax on that seven oh nine. So even though there
is a gift tax, oftentimes there's no gift tax due
depending on how you make sure you follow those those parameters.
Speaker 3 (23:51):
So I'm going to try and translate some of this
into English, which I feel like I do best. Todd,
If I want to give away a bunch of money
and I go over that nineteen thousand dollar limit, what
you're saying is that unless I'm worth, unless I end
up dying being worth, you know, tens of millions of dollars,
I may not actually owe any taxes on those gifts,
(24:11):
even though the name of it seems to imply that
I would owe taxes. That is that generally correct? Or
am I missing something?
Speaker 5 (24:18):
No? That that is correct? And I think where we're
headed is not only will you will you not owe
the gift tax on the amount you give. I think
you are also noticing or implement inquiring about whether or
not that federal exemption falls down as well. So if
you give away let's say ten thirteen, Let's say you
(24:39):
give away three million, and you're left with thirty with
ten million dollars of exemption, so you have ten million
dollars of assets left, you would not have not only
not paid any gift tax, you're still not going to
pay any federal estate tax because you're still under what
would be left is your ten million dollar exemption. So
it can get confusing sometimes. But keeping those two together,
(25:00):
whether you can, you can win on the gift taxing
front and on the estate taxing front. But you got
to learn how to make the gifts, and that's the problem.
Or by the way, maybe you don't make the gift
at all. Just because you can doesn't mean you should.
So getting the guide, it's the end of the month,
it's the last time we're giving it away. Making the
most of gifting assets. Do I give away the asset
(25:22):
at all? Do I give it to kids in an
irrevocable trust. I don't want them to have it? Can
I control it when I give it away? If I'm
giving away bigger assets, I might want to still enjoy
what I give away. Well, maybe spouse a lifetime access
trust for the way to go for those. So there's
many things to think about when you're giving how to
give them. Both income and gift taxes and estate taxes
(25:44):
have to be considered, and lastly, whether I should even
give it all? Which might be the best answer. Call
and get the guide guy. Folks, it's the end of
the month making the most of gifting assets eight sixty
six eight four eight five six nine nine or Legal
Exchange Show dot com again end of the month eight
six six eight four eight five six nine nine or
(26:06):
Legal Exchange Show dot com.
Speaker 3 (26:08):
Todd, thanks so much for joining us. You managed to
do all that without making it too spooky for us
here on a Halloween Friday. So appreciate being here and
we'll talk to you again soon. Thank you, Todd Lusky
from the law firm of Cushing and Dolan.
Speaker 1 (26:20):
The proceeding was paid for and the music express are
slowly those of Cushing and Dolan, Cushing and Dolan and
or Armstrong advisory may contact you offering legal or investment services.
Cushing and Armstrong did not endorse each other and are
not affiliated.
Speaker 3 (26:31):
Todd didn't make it that spooky, did he. No, No,
it's usually some scary stuff. And I didn't once get
afraid of what he had to say. Do you know
why the zombies suit his employer? He wanted to get
out of his dead end job. It's all I don't know. Yeah,
it's fine, Yeah, thank you.
Speaker 2 (26:52):
Uh, cities across the US are putting robots to work finally,
So okay, I mean I'm.
Speaker 3 (27:02):
Not all that impressed, to be quite honest. No, the
stuff that firefighting robot actually kind of looks cool. It
looks like a batman a batmobile hooked up to a
couple hoses.
Speaker 2 (27:12):
So there are some places where I think this stuff
can be useful, and like this is one of them
where it's like, hey, if you've got you know, a
dangerous fire that you don't want to put firefighters' lives
at risk, you know, in but you still want to
try to do more than you can otherwise. Stuff like
this is really interesting to me and also is probably
going to you know, be controlled by a firefighter who's
(27:35):
trained and you know what to do, and so it's
something where you're not talking about losing jobs, but just hey,
instead of that firefighter needing to you know, get as
close as he may have previously gotten to said fire
or dangerous building, they can maintain more distance and the
job becomes less dangerous. Sure, this is great when you have,
(27:55):
you know stuff some of the other stuff that's being
talked about in here where okay, Like are robots that
are measuring the angle of curb ramps to help, you know,
determine where to where you need to make changes so
that they're up to you know, city code. Like I
(28:18):
just I don't really know that that's useful because again,
in this case, you have someone who's controlling them. They're
not doing it autonomously, and so it's just, well, why
can't that person be out there with a level getting
the angle of the ramps and measuring it.
Speaker 3 (28:35):
Yeah, sometimes it feels like we roll out solutions to
problems when you know it would work just as well.
In this case, are really easy to use app that
the city rolls out where people can report this stuff
to the city. Sure, Like, Hey, I'm in a wheelchair
and this curb does not allow me to get on
top of it. You're gonna report that to the town
and they can go figure that out on their own.
(28:56):
They don't need a seventy five thousand dollars robot to
figure that out. Now, My guess what I will say,
Where I keep hitting the same darn pothole on the
entrance to ninety five and if I hit it again,
my axle is gonna break again. You know, a good
useful app that I can report that to the city
would be useful.
Speaker 2 (29:12):
What I will say The place that I think markets
are still under pricing is humanoid robots becoming more useful
and more normal over the next five.
Speaker 3 (29:20):
To six years.
Speaker 2 (29:22):
Have either of you guys seen the videos out there
over the last couple of days for the Neo No,
this is new this week. It's a humanoid robot that
lives in your home. Weigs about sixty pounds. It's the
size of mic so it's not too big. And they
made it like by the way, so that like if
the thing falls on you, you don't know.
Speaker 4 (29:42):
I think the Wall Street Journal did something with this.
Speaker 2 (29:44):
Yeah, and right now they're rolling it out for beta testing,
which is basically, look, you're gonna pay four hundred dollars
a month. Someone in our home office is going to
control it, but that's going to train it on how
to actually do the stuff that you wanted to eventually
do autonomously.
Speaker 3 (29:58):
Well, let fold by laundry, yes, not particularly well right now.
Speaker 2 (30:02):
The big thing is that you know, people are poop
pooing it, being like, oh, like this is you know,
this is useless. Like, guys, this is the first iteration.
I'm telling you humanoid robots are going to come for
human jobs in the next three to five years, and
we are not prepared for it. I'm not saying this
is good or bad. Actually, I am saying if you
(30:25):
are in a job that requires manual labor, it may
end up being bad for you. If you're in a
job that pays for manual labor, or if you're a
person who pays for manual labor, this may end.
Speaker 3 (30:36):
Up being good. But societally, we are not prepared for this,
and that is bad. Yeah, I can agree with that.
Quick break here. Paul Monica from Baron's joins us.
Speaker 1 (30:45):
After this, find daily interviews and full shows of the
Financial Exchange on now our YouTube page. Subscribe to our
page and get caught up on anything and everything you
might have missed. This is the Financial Exchange Radio Network.
The Financial Exchange is now available every day from eleven
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(31:06):
Stay informed about the latest from Wall Street, fiscal policy,
and breaking business news every day. The Financial Exchange is
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This is the Financial Exchange Radio Network. Ladies and gentlemen
the weekend.
Speaker 3 (31:31):
As promised.
Speaker 2 (31:31):
Joining us now is Paul the Monica from Barons, just
as he does every single Friday.
Speaker 3 (31:38):
Mister Lamonica, how are you doing?
Speaker 6 (31:41):
I'm good. How are you guys doing?
Speaker 2 (31:43):
Doing well? You got a piece that's out this week.
It's titled this ret yields nine percent and isn't worried
about Zoron Mandanmi. Paul, what is the rut that you're
talking about? And why would AT be worried about? Why
would a RT be worried about Mamdani?
Speaker 3 (32:00):
Yeah, no, it's a great question.
Speaker 6 (32:01):
So the read is Rhythm Capital, which, again, as we
point out in the headline, pays dividend more than nine percent.
What's interesting about Rhythm is that it is a company
that is in the process of making an acquisition for
another office rut named Paramount, not to be confused with
(32:24):
the media company, and Paramount owns what they claim are
you know, flagship a quality type buildings in New York
and San Francisco. So one point six billion dollar deal.
And the bet is that despite the fact that I'm
sitting at home right now doing this interview while working
a lot of people in New York and San Francisco,
(32:46):
particularly in the financial services and tech communities, are being
pushed to go back to the office five days a week.
So Rhythm Capital is making this bet with Paramount Group
that you know, they will benefit from potentially higher rents
and higher occupancies.
Speaker 2 (33:04):
When we look at the overall you know, tenor of
the office market in those areas, does it match up
with their optimism right now? Where is this you know,
kind of out of not out a character, but not
matching up with the data and more, Hey, we think
we're buying low.
Speaker 6 (33:22):
Well it's a combination of both. I spoke to the
CEO of Rhythm and he thinks that they are buying low,
but he is optimistic that you are going to see
more and more people in New York and San Francisco
in particular return to the office, and then that headline
about Mamdani why he's not worried even though there are
(33:43):
some people in the financial services community who've been expressing
concerns about the proposed policies of Mamdani, who you know,
seems likely to be elected the next mayor of New
York and does lean socialist that you know that will
be maybe a bigger issue for apartment owners, multifamily, you know,
(34:05):
companies that could get hit by rent stabilization. This person,
the CEO of Rhythm, He doesn't think that companies are
going to suddenly flee New York City because of Mamdani.
And if anything, you're going to see big banks like
JP Morgan Chase, despite some backlash, push workers to come
(34:25):
back to the office more often, and that again should
boost occupancies, demand and eventually rental rates.
Speaker 2 (34:33):
When we talk about reads, two potential crosswinds that can
move things around are Hey, what are we seeing in
the general economy and what's happening with interest rates? How
do those ideas factor into this plan.
Speaker 6 (34:47):
Yeah, no, it's a great question, you know, the economy aspect,
it's definitely a bit murkier even though the labor market
is showing some softness, we seem to be stuck in this.
Not too many people are getting fired, despite some of
those high profile headlines you know, coming out of Amazon,
you know, recently. But maybe it's more that people aren't
(35:10):
getting hired as much, and that's been an issue for
some of the other big office rates like Vernado, sl
Green that have a big presence in New York. And
then obviously the regional banks have been hit because of
worries about real estate long portfolios maybe starting to go
bad in light of the bankruptcies of things like you know,
Tricolor and First Brands. But overall, despite JP Morgan, Chase City,
(35:35):
you know, Jamie Diamond talking about cockroaches, you are starting
to get a sense that maybe they are isolated incidents
and not necessarily the start of a big economic crisis.
So if that's the case, then you know, you could
have your real estate in New York, San Francisco. Not
every market, by any stretching the imagination, you know, start
(35:56):
to rebound. And then obviously there are other areas, you know,
particularly in the Sun Belt. You think of Nashville, and
you think of you know, Phoenix and other places in
warmer climates, they're really still doing well. This company doesn't
have a presence there, but wouldn't shock me if they
started to look at those types of markets as well.
Speaker 2 (36:15):
Very good, Paul, appreciate the time today. I hope you
have a great weekend and we'll catch up with you soon.
Speaker 6 (36:21):
Thanks a lot. I have a good one, guys.
Speaker 2 (36:23):
That is Paul Monica from Baron's Mike. What else do
we want to get to?
Speaker 3 (36:28):
Listener email? Tom sent in an email from Ludlow just
listening to the segment on you sports. Couldn't agree more.
My son was a Super seven two times Volleyball Hall
of Fame All Star middle hitter. He's also an Eagle
scout and guess which one served him more as an
electrical engineer. He goes on, but the answer is the
(36:48):
Eagle scouting, and he kind of talks about in his email.
You know, every year more and more kids dropping out
of scouting in favor because frankly, the sporting schedules don't
allow for it. And uh yeah, it's a it's an
interesting point.
Speaker 2 (37:03):
Yeah, and look, it's not to poo pooh like sports
like I still play sports. I love playing sports. We
got the dav five k coming up in about a week,
and I'm hoping to run the pants off of most
everyone there, except for like all the eighteen year olds
that run faster than me.
Speaker 3 (37:18):
Because the literal college athletes that run cross country, yeah, the.
Speaker 2 (37:21):
Cross country runners generally beat me, but I want to
try to beat everyone else because I'm competitive and I
just love competing. So it's not to pooh poo participating
in sports, but it's to understand do it for the
right reasons, Like, don't push your kids into sports because
you think they're gonna get a scholarship.
Speaker 3 (37:35):
They're not.
Speaker 2 (37:36):
Don't push them into sports because you want them to
live the athletic life that you never could. They're just
gonna resent you for it most likely. Like read about
every kid whose parents like push them that hard, and
they're generally like, yeah, like my relationship with my mom
and dad are kind of strained because of it, and
I would have preferred things to be a little different.
So use sports participation is great, but your kid's not
(38:02):
going to be that guy or that girl, and you
can all just relax and if they're really that good
at it, their natural talent will get them there. That's
just kind of how it works. Let's take a quick
break for the entire rest of the weekend. We're gonna
see on Monday. Happy Halloween everyone,
The Financial Exchange is produced by Money Matters Radio and
is hosted by employees of the Armstrong Advisory Group, a
registered investment advisor. All opinions expressed are solely those of
the hosts. Do not reflect the opinions of Armstrong Advisory
or anyone else. Investments can lose money. This program does
not offer any specific financial or investment advice. Please consult
your own financial, tax, and estate planning advisors before making
(00:21):
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Armstrong and Money Matters Radio do not compensate each other
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Exchange with Chuck Zada and Mike Armstrong, your exclusive look
at business and financial news affecting your day, your city,
(00:43):
your world. Stay informed and up to date about economic
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heroes by visiting dav five K dot Boston and making
a donation today. This is the Financial Exchange with Chuck
(01:06):
Zada and Mike Armstraw.
Speaker 2 (01:15):
Chuck Mike Tucker with you here Friday, getting ready to
wrap up the week. And we've got markets rallying today
on the back of strong earnings from Amazon, mostly the
Dow Jones Industrial average up eighty nine points, not too much,
but the S and P five hundreds up forty points
about point six percent, the NASDAK composite up two hundred
(01:36):
and seventy nine points almost one point two percent. We've
got the ten year US Treasury down two tenths of
a basis point to four point zho nine to one,
so pretty boring in bond Land after a little bit
of excitement the last couple of days there. We've got
the Dollar index up point to two percent today, so
dollar continuing to show a little bit of recent strength.
(01:57):
And we've got gold up fifteen seventy and hours to
four thirty one dollars and sixty cents.
Speaker 3 (02:04):
On the crude.
Speaker 2 (02:05):
Oil side of things, West Texas Intermediate up thirty six
cents a barrel to sixty dollars and ninety three cents
in the triple A national average for gas prices up
two tens of a cent to three oh four. Also
taking OI at mortgage rates. They continue to rise yesterday
up another six hundredths of a percent to six point
three to three percent. So we've gone from six point
(02:26):
one to three to six point three to three in
the last two days, almost a quarter percent higher. Have
to imagine that will impact the market at the margins
over the next week or so.
Speaker 3 (02:37):
Will be interesting to see what we.
Speaker 2 (02:39):
Get in terms of mortgage applications, in particular refinancing had
a little bit of a boomlet going on over the
last few weeks. Does this take some of the edge
off that. We'll see what happens on that side of things.
Speaking of boomlet, this is the bad kind, not the
good kind. Black Rock the big old asset manager. They
have a private credit investing arm like most asset managers
(03:02):
now and apparently they are currently accusing a company by
the name of Broadband Telecom in Bridge Voice run by Bonquim,
Bombrot or Brombot sorry, of a five hundred million dollar fraud. Basically,
the long stories short on this.
Speaker 3 (03:25):
Is when you see one cockroach, there's usually more than one.
Speaker 2 (03:29):
Is well again, I just I always like to dig
in on the specific frauds because it's it's it's interesting
to me to see how the frauds are perpetrated, just
to know, like, oh gee, this is something I should
look out for in the future. So I'll quote here
from the Wall Street Journal.
Speaker 3 (03:46):
This is a WSJ exclusive.
Speaker 2 (03:48):
The dispute centers on a kind of debt deal known
as asset based finance, in which the bar or post
is collateral a stream of revenue generated by specified businesses, equipment,
or customer receivables. Okay, so in this case is a telecomsiness,
and so they borrow and the lender says, if you
default on this, I get the receivables coming in from
whoever it might be.
Speaker 3 (04:11):
So basically.
Speaker 2 (04:14):
This company that operated in the telecom space. Maybe it's
unclear if they actually did. To be completely honest, and
they but they.
Speaker 3 (04:26):
R in a brand named Carryouts in addition to the
two names that we mentioned.
Speaker 2 (04:31):
Yeah, so they effectively these loans were underwritten by a
company that Blackrock bought earlier this year called HPS, and
HPS hired Deloitte to audit the financials and verify that
the assets actually existed. They also hired an accounting firm,
CBIZ to conduct annual asset checks as well.
Speaker 3 (04:53):
So again thinking about what the asset is here is important.
The asset is the customers who are pay this company money.
And so again because the asset that was loaned against
was the future revenues that these customers will pay. And
so what do you do when you do something like this, Well,
sometimes you hire a company to go drive down to
(05:16):
the building and make sure that it's in good shape.
If you are an insurance company, you might do that.
If you are a mortgage company, you might go do that.
If you're lending somebody money for a home. In this case,
you need to verify that the revenue that they are
claiming exists and that you are lending against actually does
in fact exist. The customers are there.
Speaker 2 (05:35):
So what they were doing HPS was reportedly emailing the
customers saying, hey, like just making sure, can you like
give us proof of contract? Things along those lines, And
apparently the company that was doing this auditing in July
noticed irregularities with the email addresses and basically said, actually,
(05:55):
I don't.
Speaker 3 (05:56):
Believe it was the auditor. It was HPS. Oh HPS, yes,
meaning the asset man themselves rather than the companies hire
to check.
Speaker 2 (06:02):
Yes, So HPS goes to Brombot and says, hey, like,
these email addresses don't like seem to match up. What
gives He says, there's nothing to worry about, and then
stops answering their phone calls.
Speaker 3 (06:19):
Which is just like, it's good to hear that it's
not just gen Z that ghosts people. Not great. I'll
quote here.
Speaker 2 (06:25):
On Wednesday morning, Brombot's office suite was locked and appeared vacant,
and an employee and adjacent tennant said she hadn't seen
anyone enter or leave the office recently. At the Garden
City house listed at Brombots as Brombot's residents, two BMW's,
a Porsche of Tesla and Audi were parked in the driveway,
and a package next to the front door was collecting dust.
Speaker 3 (06:45):
So is the are they alleging that he's gone?
Speaker 2 (06:48):
The Wall Street Journal is basically making the case he
ain't been here in a while. And after the HPS
employee flagged these irregularities, a law firm started to investigate
eight you know, hey, show me like some of these borrowers,
and they found that these email addresses didn't match up
with actual public web domains that were out there and
(07:09):
one of the customers, a Belgian telecom called BICS, said, look,
we don't have anything to do with these emails, like
we've never seen these before. And a security staffer from
there said, this is indeed a confirmed fraud attempt.
Speaker 3 (07:25):
Is it really this easy to borrow half a billion
dollars or a third of a billion or whatever he borrowed.
Here's the thing.
Speaker 2 (07:32):
So the private credit space is one that has scared
me for the last couple of years.
Speaker 3 (07:37):
And the reason about this this guy set up a business,
allegedly created a bunch of fake customers and borrowed hundreds
half a billion dollars of millions of dollars.
Speaker 2 (07:49):
Half a billion dollars. There's been so much excitement for
people trying to raise money in this space that the
concern that I've had out there is just like, Okay,
there's just so much out there and you don't really
know what any of this is. It all just gets
lumped under like private credit, and you know the stuff
(08:10):
that you get pitched on. This stuff, it's like, well,
it doesn't move around, so it takes volatility, and it's like, no,
just because something is privately held doesn't mean the value
doesn't change, it just doesn't get marked to market on
the same frequency as public markets.
Speaker 3 (08:25):
It's more than that too, though, because what I have
consistently heard from the industry is we are better at
assessing the risk. We use different tools.
Speaker 2 (08:34):
We know these companies, we get to know them, blah
blah blah.
Speaker 3 (08:38):
We use different tools. You know, we're able to track
this stuff via online trends and really get to the
bottom of the lending. And in okay, I shouldn't paint
with a broadbrush in a few specific instances here that
is being alleged to be boloney. It's no longer a
(09:01):
few specific instances. It's three or four.
Speaker 2 (09:04):
It's three in a four week period that are all
pretty grim and no one knows what else is out there.
Speaker 3 (09:14):
Okay, So like this one we didn't know was here
until this story was published. Right And by the way,
you know, suits have been filed back in August, and
we're hearing about it now. Why should the average person
listening care? That's that's a really important thing, right, Like
most people out there are not managing money for insurance companies. Therefore,
(09:35):
the average person might not have heard about private credit
before the last six months.
Speaker 2 (09:40):
So there are three reasons why the average person should care.
In my mind, the first is, as you noted, insurance
companies have been big buyers of private credit because they
like the high yield that you get. Typically anywhere from
like nine to fifteen percent is what you see out
there at this point. And if you're an insurance company
who's trying to keep your you know, premiums down to
(10:02):
be competitive in the marketplace, you say, if I can
just earn more on my general account, I don't have
to charge my customers as much. And so the concern
out here is, hey, if more of this turns out
to be bad than you would think, insurance companies may
be left saying, oh, we don't actually have the money
set aside that we thought we did.
Speaker 3 (10:21):
Who else is out there? Endowments, pension funds.
Speaker 2 (10:24):
Endowments, pension funds. The other thing, Quite a lot of
high net worth individuals have brought up a bunch of
this stuff in the last you know, few years. Sure,
if you're not a high net worth individual doesn't own
this stuff, like that's not really your concern, but like, yeah,
you could be you know someone who is in that situation.
Speaker 3 (10:41):
Uh.
Speaker 2 (10:41):
The other place where this is potentially a concern for people.
Is the mechanism for all of this as a as
a as a way to generate economic growth is these
small to mid sized companies tap these private credit markets
in order to get access to funds, which grows the economy,
(11:02):
which causes these private credit firms to loan more money,
which grows the economy more. If the private credit firms
suddenly say, gee, we need to you know, slow down
or pause new issuance, it has an impact on the
US economy because that money is not going in the
comparable in twenty two thousand and six, two thousand and seven, hey,
(11:22):
as you started to see subprime loans going under, companies
pulled back from some prime lending, which then made it
harder for real estate prices to move up, which in
turn made more loans go under, which in turn ended
up blowing the whole thing up. This case, the problem,
like the center of this, if it develops into a problem,
(11:43):
would be small to mid sized companies in the US,
not housing.
Speaker 3 (11:47):
Yep. And that's the point here is Okay, there's been
a few cases of fraud. Is it incredibly widespread? Is
it all over the place? I don't no, one knows
quila's got any idea.
Speaker 2 (11:57):
Anyone who says like this is going to be this
or this is going to be that doesn't know right now.
Speaker 3 (12:03):
But whether it's widespread or not, the logical thing to
do if you're one of the companies that owns this
stuff or is one of the ones originating the loans,
is to scrutinize it a heck of a lot more
than you did this time last year.
Speaker 2 (12:16):
You finally start asking the question, hey, what's in my portfolio?
And it's not just that it's that market for you know,
packaging this and selling it off. The people buying it
from you are now saying, hey, how do I know
that you don't have some of this stuff in here?
Can you securitize it and get it off your balance
sheet quickly enough? That's, you know, a potential issue. And
(12:38):
the third place where this potentially matters to people is
in public markets. There are companies in the S and
P five hundred where this is their main business model.
And look at how heavily financials have traded over the
last month or two since this started coming out, even
with the S and P five hundred making new all
time highs, even with strong quarterly earnings from a lot
of the big banks. Financials as a whole, in particular
(13:00):
the regional banks and the asset managers can't really get
off the mat right now. So again, does this develop
into a problem?
Speaker 3 (13:08):
Maybe maybe not.
Speaker 2 (13:10):
Like I'm not one to sit here and say like
it's going to be this or that. But since you know,
early September I started saying, hey, something kind of smells here,
the smell's grown. And now we're gonna find out in
probably the next six to nine months, is there anything
worse coming or not.
Speaker 3 (13:25):
There may be, there may not. We don't know right now.
Speaker 2 (13:28):
And that's about as much as anyone I think can
conclusively say, because the people who do know, the people
that actually own this stuff, they're not talking. They're trying
to either get it off their books if it's not
worth the paper it's printed on, or buy more of
it if they think it's at a discount based on
what they're seeing, right. But those people are not talking.
Quick break here when we come back, we've got trivia
(13:50):
right after this.
Speaker 1 (13:52):
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Radio Network.
Speaker 4 (14:30):
All right, it's up for trivia here on the Financial Exchange.
If you didn't hear, today is Halloween, So here's our
final Halloween trivia question of the year.
Speaker 1 (14:40):
So here we go.
Speaker 4 (14:41):
Which famous Halloween movie features the line do you like
scary movies?
Speaker 3 (14:46):
Once again?
Speaker 4 (14:46):
Which famous Halloween movie features the line do you like
scary movies? Be the seventh person today to text us
at six one seven three six two thirteen eighty five
with the correct answer, and you win a Financial Exchange
Show T shirt.
Speaker 3 (15:02):
Once again.
Speaker 4 (15:02):
The seventh correct response to text us to the number
six one seven three six two thirteen eighty five, we'll
win that T shirt. See complete contest rules at Financial
Exchange Show dot com. And if you missed any of
our shows this week, You can find them on our
YouTube page. We stream the show live every day, but
also archive every hour and all of our most newsworthy
(15:24):
interviews and clips. Go to YouTube, hit subscribe, and search
for the Financial Exchange Show, Wall Street Journal piece Too
much experience hurts you. In today's tough job market, the
subatter overqualified job applicants are scaring off cost conscious businesses.
Speaker 3 (15:40):
Your thoughts, all, right, So we've got young college grads
who can't get jobs. Yes, the twenty five to thirty
five domb So the under experienced can't find jobs, and
the over experienced can't find jobs. You have to we
can find jobs goldilocks the experienced, so not too not
too little.
Speaker 2 (15:59):
You've got to be forty one years old, interested in
exploring what AI can do for your career.
Speaker 3 (16:07):
Yeah, and willing to take a small salary. But you
also know how a copier works. Yeah, Okay, Like that's
the ideal job Canada. I'm just wondering, like, can it
really be all of these things at once? And I
suppose it can. But we're what we're getting to is
just describing a bad labor market, and the story is
(16:30):
about who it's bad for. Are becoming less relevant. I
guess broadly speaking, I think the answer is it's bad
for white collar workers. Yeah, yeah, that that feel right
to you, because I not just white.
Speaker 2 (16:44):
Call it like you talk about what's going on in
housing and it, you know, talk to any anyone who
works as a contractor. Yeah, and like I know people
in you know, drywall and they're you know, they're like, yeah, like,
you know, things are a little bit slow right now.
You talk to your plumbers and they're like, yeah, there's
more renovations, but you know, new constructions dried up a
little bit, you know it.
Speaker 3 (17:05):
Talk to truckers.
Speaker 2 (17:06):
They'll tell you, look, I'm not as busy, like I'm
not able to you know, stay as busy as I
want to be. So here's the thing that's wild to
me is like that you try to find like who
says that, you know, their particular job is booming right now,
and it's kind of hard to And yet the the
overall economic data that we get is like, yeah, the
(17:28):
economy is pretty good aside from the labor market.
Speaker 3 (17:30):
Do you remember in twenty thirteen and twenty fourteen when
oil prices were around one hundred bucks a barrel and
you could move to like North Dakota with no skills
and get one hundred thousand dollars a year job.
Speaker 2 (17:43):
Not like you can move to like pipelines in Alaska
and get like three hundred thousand dollars year jobs.
Speaker 3 (17:47):
I think we're gonna get there with data center construction.
Speaker 2 (17:49):
No, no, okay, just because I think you're just repurposing
excess capacity from elsewhere.
Speaker 3 (17:58):
It's like the electricians. It's not the same.
Speaker 2 (18:00):
But if you are, you know, if you're one of
the contractors that is putting that together, like the GC
for a data center, you're going out to all your
subs and you're saying, hey, give me your best bids
in order to do this work. Yeah, and those subs, now,
if you're in Texas, you know they're saying, okay, we're
building you know, Stargate and Abilene. Hey, all the guys
(18:21):
who were you know, working and doing electrical work for
all the housing in austin the last few years, guys
come down here for the year and help work on Stargate.
Speaker 3 (18:28):
Yeah. I just wonder, right, because there's it's going to
be concentrated in a few areas, And that's the piece
that reminds me of that period of time, because it's
not going to be construction in the Northeast, and there's
a bunch of people with those skills that are here
in the Northeast, And so do you have that shift
to say, yeah, I'm gonna go take a job out
in Wisconsin. Maybe that's where all the construction is. I
take your point there, you're probably not getting that same. Hey,
(18:50):
I can move there and become a chef and make
seventy five thousand dollars like you could in North But
it's just wild to me.
Speaker 2 (18:55):
Like the economic data that we're getting, aside from the
labor is still pretty darn good.
Speaker 3 (19:01):
It is.
Speaker 2 (19:02):
And yet you talk to people and they're like, yeah,
my personal like my personal business is not Like, is
not how I want to see it.
Speaker 3 (19:10):
I can't reconcile it.
Speaker 2 (19:11):
But it is the case like consumer spending, like all
the banks are telling you consumer spending growth is.
Speaker 3 (19:17):
Still fine, and.
Speaker 2 (19:20):
It's it's just it's different from what we've seen before.
It just is quick break. When we come back, we've
got Wall Street watch the trivia answer, and then we're
joined by Todd Lutsky from Cushing and Dolan.
Speaker 1 (19:39):
Bringing the latest financial news straight to your radio. Every day.
It's the Financial Exchange on the Financial Exchange Radio Network.
Time now for Wall Street watch a complete look at
what's moving markets so far today right here on the
Financial Exchange Radio Network.
Speaker 4 (19:58):
Market's currently in positive territory on the heels of more
impressive big tech earnings from the likes of Amazon and Apple.
Right now, the Dow is up about a tenth of
a percent or seventy four points. Hire S and P
five hundred, up over half a percent or thirty six points.
NASDAC up two hundred and sixty points over one percent higher.
(20:19):
Russell two thousand is up a half a percent. Tenure
Treasure reeled flat at four point zero nine seven percent.
Dan crude oil up two thirds of a percent, rating
just below sixty one dollars a barrel. Amazon among the
big winners on the day after the e commerce in
web services Giant b third quarter earnings and revenue expectations,
(20:40):
where revenue from AWS jumped twenty percent during the period.
Amazon also reported aggressive plans to grow data data center
capacity shares a rallying eleven percent. Meanwhile, Apple also b
quarterly expectations, with the iPhone maker offered an optimistic forecast
for the holiday quarter due to strong demand from customers
(21:02):
seeking to upgrade to the iPhone seventeen. Applestock is currently
dipping and Netflix announced a ten for one stock split
to make it stock more affordable for its employees. Netflix
shares are up nearly four percent. I'm Tucker Silva and
that is Wall Street Watch and in the previous segment
we ask the trivia question which famous Halloween movie features
the line do you like scary movies? That would of
(21:25):
course be scream. Jim from Teamsborough Mass is our winner
today taking on the Financial Looks Shange Show t shirt.
Congrats to Jim, and we play trivia every day here
on the Financial Looks Change See complete contest rules at
Financial Looks Change show dot com.
Speaker 3 (21:39):
Joining us now is Todd. Let'sket from the law firm
of Cushing and Dolan talk to us a little bit
today about gifting. Todd, thanks for joining us here on Halloween.
Speaker 5 (21:47):
Oh, thank you. Always scary to have me.
Speaker 3 (21:50):
On so Todd, there is some misunderstanding when it comes
to gifting and gift taxes, and I wanted to ask
you about that because I know that there's an amount
you can give to somebody where you're under that gift
tax limit, but what happens? I guess where is that limit?
And what happens if I go over it?
Speaker 5 (22:11):
Yeah? Great question, And I know it's funny about gifting,
And then we talk about scariness and Halloween is you
think about gifting and taxes involved in it, and you
wouldn't think that it would be the giver that has
to pay the tax. But unfortunately, no good deed goes unpunished.
I guess. So nineteen thousand dollars is the amount you
can gift per person per year to anybody, and there
(22:35):
is no filing required and no tax return, no tax
is due. It's complete freebe Okay, got it. But a
lot of people say, you know what, I got to
get more out of my estate faster, and I know
I can gift thirteen point nine million, right, So if
I go over that number, there's another number you can
look at. And so if I gave away one hundred
(22:59):
and nineteen thousand dollars, let's say the nineteen thousand would
be your freebie. But because you went over the nineteen
you've now created a taxable gift situation and you need
to report it on a Form seven oh nine. And
that one hundred thousand dollars increment is the taxable gift part,
(23:19):
and so technically the giver would have to pay the tax. However,
on the gift tax return that you file, you would
simply reduce your thirteen point nine million dollar gift tax exemption,
which we all have to once in a lifetime exemption,
by one hundred thousand dollars. So now I can only
give away thirteen point eight million, but I pay no
(23:41):
tax on that seven oh nine. So even though there
is a gift tax, oftentimes there's no gift tax due
depending on how you make sure you follow those those parameters.
Speaker 3 (23:51):
So I'm going to try and translate some of this
into English, which I feel like I do best. Todd,
If I want to give away a bunch of money
and I go over that nineteen thousand dollar limit, what
you're saying is that unless I'm worth, unless I end
up dying being worth, you know, tens of millions of dollars,
I may not actually owe any taxes on those gifts,
(24:11):
even though the name of it seems to imply that
I would owe taxes. That is that generally correct? Or
am I missing something?
Speaker 5 (24:18):
No? That that is correct? And I think where we're
headed is not only will you will you not owe
the gift tax on the amount you give. I think
you are also noticing or implement inquiring about whether or
not that federal exemption falls down as well. So if
you give away let's say ten thirteen, Let's say you
(24:39):
give away three million, and you're left with thirty with
ten million dollars of exemption, so you have ten million
dollars of assets left, you would not have not only
not paid any gift tax, you're still not going to
pay any federal estate tax because you're still under what
would be left is your ten million dollar exemption. So
it can get confusing sometimes. But keeping those two together,
(25:00):
whether you can, you can win on the gift taxing
front and on the estate taxing front. But you got
to learn how to make the gifts, and that's the problem.
Or by the way, maybe you don't make the gift
at all. Just because you can doesn't mean you should.
So getting the guide, it's the end of the month,
it's the last time we're giving it away. Making the
most of gifting assets. Do I give away the asset
(25:22):
at all? Do I give it to kids in an
irrevocable trust. I don't want them to have it? Can
I control it when I give it away? If I'm
giving away bigger assets, I might want to still enjoy
what I give away. Well, maybe spouse a lifetime access
trust for the way to go for those. So there's
many things to think about when you're giving how to
give them. Both income and gift taxes and estate taxes
(25:44):
have to be considered, and lastly, whether I should even
give it all? Which might be the best answer. Call
and get the guide guy. Folks, it's the end of
the month making the most of gifting assets eight sixty
six eight four eight five six nine nine or Legal
Exchange Show dot com again end of the month eight
six six eight four eight five six nine nine or
(26:06):
Legal Exchange Show dot com.
Speaker 3 (26:08):
Todd, thanks so much for joining us. You managed to
do all that without making it too spooky for us
here on a Halloween Friday. So appreciate being here and
we'll talk to you again soon. Thank you, Todd Lusky
from the law firm of Cushing and Dolan.
Speaker 1 (26:20):
The proceeding was paid for and the music express are
slowly those of Cushing and Dolan, Cushing and Dolan and
or Armstrong advisory may contact you offering legal or investment services.
Cushing and Armstrong did not endorse each other and are
not affiliated.
Speaker 3 (26:31):
Todd didn't make it that spooky, did he. No, No,
it's usually some scary stuff. And I didn't once get
afraid of what he had to say. Do you know
why the zombies suit his employer? He wanted to get
out of his dead end job. It's all I don't know. Yeah,
it's fine, Yeah, thank you.
Speaker 2 (26:52):
Uh, cities across the US are putting robots to work finally,
So okay, I mean I'm.
Speaker 3 (27:02):
Not all that impressed, to be quite honest. No, the
stuff that firefighting robot actually kind of looks cool. It
looks like a batman a batmobile hooked up to a
couple hoses.
Speaker 2 (27:12):
So there are some places where I think this stuff
can be useful, and like this is one of them
where it's like, hey, if you've got you know, a
dangerous fire that you don't want to put firefighters' lives
at risk, you know, in but you still want to
try to do more than you can otherwise. Stuff like
this is really interesting to me and also is probably
going to you know, be controlled by a firefighter who's
(27:35):
trained and you know what to do, and so it's
something where you're not talking about losing jobs, but just hey,
instead of that firefighter needing to you know, get as
close as he may have previously gotten to said fire
or dangerous building, they can maintain more distance and the
job becomes less dangerous. Sure, this is great when you have,
(27:55):
you know stuff some of the other stuff that's being
talked about in here where okay, Like are robots that
are measuring the angle of curb ramps to help, you know,
determine where to where you need to make changes so
that they're up to you know, city code. Like I
(28:18):
just I don't really know that that's useful because again,
in this case, you have someone who's controlling them. They're
not doing it autonomously, and so it's just, well, why
can't that person be out there with a level getting
the angle of the ramps and measuring it.
Speaker 3 (28:35):
Yeah, sometimes it feels like we roll out solutions to
problems when you know it would work just as well.
In this case, are really easy to use app that
the city rolls out where people can report this stuff
to the city. Sure, Like, Hey, I'm in a wheelchair
and this curb does not allow me to get on
top of it. You're gonna report that to the town
and they can go figure that out on their own.
(28:56):
They don't need a seventy five thousand dollars robot to
figure that out. Now, My guess what I will say,
Where I keep hitting the same darn pothole on the
entrance to ninety five and if I hit it again,
my axle is gonna break again. You know, a good
useful app that I can report that to the city
would be useful.
Speaker 2 (29:12):
What I will say The place that I think markets
are still under pricing is humanoid robots becoming more useful
and more normal over the next five.
Speaker 3 (29:20):
To six years.
Speaker 2 (29:22):
Have either of you guys seen the videos out there
over the last couple of days for the Neo No,
this is new this week. It's a humanoid robot that
lives in your home. Weigs about sixty pounds. It's the
size of mic so it's not too big. And they
made it like by the way, so that like if
the thing falls on you, you don't know.
Speaker 4 (29:42):
I think the Wall Street Journal did something with this.
Speaker 2 (29:44):
Yeah, and right now they're rolling it out for beta testing,
which is basically, look, you're gonna pay four hundred dollars
a month. Someone in our home office is going to
control it, but that's going to train it on how
to actually do the stuff that you wanted to eventually
do autonomously.
Speaker 3 (29:58):
Well, let fold by laundry, yes, not particularly well right now.
Speaker 2 (30:02):
The big thing is that you know, people are poop
pooing it, being like, oh, like this is you know,
this is useless. Like, guys, this is the first iteration.
I'm telling you humanoid robots are going to come for
human jobs in the next three to five years, and
we are not prepared for it. I'm not saying this
is good or bad. Actually, I am saying if you
(30:25):
are in a job that requires manual labor, it may
end up being bad for you. If you're in a
job that pays for manual labor, or if you're a
person who pays for manual labor, this may end.
Speaker 3 (30:36):
Up being good. But societally, we are not prepared for this,
and that is bad. Yeah, I can agree with that.
Quick break here. Paul Monica from Baron's joins us.
Speaker 1 (30:45):
After this, find daily interviews and full shows of the
Financial Exchange on now our YouTube page. Subscribe to our
page and get caught up on anything and everything you
might have missed. This is the Financial Exchange Radio Network.
The Financial Exchange is now available every day from eleven
to noon non Serious XM's Business Radio Channel one thirty two.
(31:06):
Stay informed about the latest from Wall Street, fiscal policy,
and breaking business news every day. The Financial Exchange is
life on Serious XM's Business Radio Channel one thirty two.
This is the Financial Exchange Radio Network. Ladies and gentlemen
the weekend.
Speaker 3 (31:31):
As promised.
Speaker 2 (31:31):
Joining us now is Paul the Monica from Barons, just
as he does every single Friday.
Speaker 3 (31:38):
Mister Lamonica, how are you doing?
Speaker 6 (31:41):
I'm good. How are you guys doing?
Speaker 2 (31:43):
Doing well? You got a piece that's out this week.
It's titled this ret yields nine percent and isn't worried
about Zoron Mandanmi. Paul, what is the rut that you're
talking about? And why would AT be worried about? Why
would a RT be worried about Mamdani?
Speaker 3 (32:00):
Yeah, no, it's a great question.
Speaker 6 (32:01):
So the read is Rhythm Capital, which, again, as we
point out in the headline, pays dividend more than nine percent.
What's interesting about Rhythm is that it is a company
that is in the process of making an acquisition for
another office rut named Paramount, not to be confused with
(32:24):
the media company, and Paramount owns what they claim are
you know, flagship a quality type buildings in New York
and San Francisco. So one point six billion dollar deal.
And the bet is that despite the fact that I'm
sitting at home right now doing this interview while working
a lot of people in New York and San Francisco,
(32:46):
particularly in the financial services and tech communities, are being
pushed to go back to the office five days a week.
So Rhythm Capital is making this bet with Paramount Group
that you know, they will benefit from potentially higher rents
and higher occupancies.
Speaker 2 (33:04):
When we look at the overall you know, tenor of
the office market in those areas, does it match up
with their optimism right now? Where is this you know,
kind of out of not out a character, but not
matching up with the data and more, Hey, we think
we're buying low.
Speaker 6 (33:22):
Well it's a combination of both. I spoke to the
CEO of Rhythm and he thinks that they are buying low,
but he is optimistic that you are going to see
more and more people in New York and San Francisco
in particular return to the office, and then that headline
about Mamdani why he's not worried even though there are
(33:43):
some people in the financial services community who've been expressing
concerns about the proposed policies of Mamdani, who you know,
seems likely to be elected the next mayor of New
York and does lean socialist that you know that will
be maybe a bigger issue for apartment owners, multifamily, you know,
(34:05):
companies that could get hit by rent stabilization. This person,
the CEO of Rhythm, He doesn't think that companies are
going to suddenly flee New York City because of Mamdani.
And if anything, you're going to see big banks like
JP Morgan Chase, despite some backlash, push workers to come
(34:25):
back to the office more often, and that again should
boost occupancies, demand and eventually rental rates.
Speaker 2 (34:33):
When we talk about reads, two potential crosswinds that can
move things around are Hey, what are we seeing in
the general economy and what's happening with interest rates? How
do those ideas factor into this plan.
Speaker 6 (34:47):
Yeah, no, it's a great question, you know, the economy aspect,
it's definitely a bit murkier even though the labor market
is showing some softness, we seem to be stuck in this.
Not too many people are getting fired, despite some of
those high profile headlines you know, coming out of Amazon,
you know, recently. But maybe it's more that people aren't
(35:10):
getting hired as much, and that's been an issue for
some of the other big office rates like Vernado, sl
Green that have a big presence in New York. And
then obviously the regional banks have been hit because of
worries about real estate long portfolios maybe starting to go
bad in light of the bankruptcies of things like you know,
Tricolor and First Brands. But overall, despite JP Morgan, Chase City,
(35:35):
you know, Jamie Diamond talking about cockroaches, you are starting
to get a sense that maybe they are isolated incidents
and not necessarily the start of a big economic crisis.
So if that's the case, then you know, you could
have your real estate in New York, San Francisco. Not
every market, by any stretching the imagination, you know, start
(35:56):
to rebound. And then obviously there are other areas, you know,
particularly in the Sun Belt. You think of Nashville, and
you think of you know, Phoenix and other places in
warmer climates, they're really still doing well. This company doesn't
have a presence there, but wouldn't shock me if they
started to look at those types of markets as well.
Speaker 2 (36:15):
Very good, Paul, appreciate the time today. I hope you
have a great weekend and we'll catch up with you soon.
Speaker 6 (36:21):
Thanks a lot. I have a good one, guys.
Speaker 2 (36:23):
That is Paul Monica from Baron's Mike. What else do
we want to get to?
Speaker 3 (36:28):
Listener email? Tom sent in an email from Ludlow just
listening to the segment on you sports. Couldn't agree more.
My son was a Super seven two times Volleyball Hall
of Fame All Star middle hitter. He's also an Eagle
scout and guess which one served him more as an
electrical engineer. He goes on, but the answer is the
(36:48):
Eagle scouting, and he kind of talks about in his email.
You know, every year more and more kids dropping out
of scouting in favor because frankly, the sporting schedules don't
allow for it. And uh yeah, it's a it's an
interesting point.
Speaker 2 (37:03):
Yeah, and look, it's not to poo pooh like sports
like I still play sports. I love playing sports. We
got the dav five k coming up in about a week,
and I'm hoping to run the pants off of most
everyone there, except for like all the eighteen year olds
that run faster than me.
Speaker 3 (37:18):
Because the literal college athletes that run cross country, yeah, the.
Speaker 2 (37:21):
Cross country runners generally beat me, but I want to
try to beat everyone else because I'm competitive and I
just love competing. So it's not to pooh poo participating
in sports, but it's to understand do it for the
right reasons, Like, don't push your kids into sports because
you think they're gonna get a scholarship.
Speaker 3 (37:35):
They're not.
Speaker 2 (37:36):
Don't push them into sports because you want them to
live the athletic life that you never could. They're just
gonna resent you for it most likely. Like read about
every kid whose parents like push them that hard, and
they're generally like, yeah, like my relationship with my mom
and dad are kind of strained because of it, and
I would have preferred things to be a little different.
So use sports participation is great, but your kid's not
(38:02):
going to be that guy or that girl, and you
can all just relax and if they're really that good
at it, their natural talent will get them there. That's
just kind of how it works. Let's take a quick
break for the entire rest of the weekend. We're gonna
see on Monday. Happy Halloween everyone,
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