September 30, 2025 • 38 mins
Mike Armstrong and Paul Lane explain why your electric keeps rising. Jessica Caldwell, Head of Insights at Edmunds, joins the show to share the Q3 new car sales forecast. Why GM boss Mary Barra is slamming the brakes on lofty EV ambitions. Investors are fretting that the stock market rally is on borrowed time. McDonald's is bringing back Monopoly after a decade.
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Episode Transcript
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Speaker 1 (00:00):
The Financial Exchange is produced by Money Matters Radio and
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(00:20):
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(00:42):
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(01:06):
and fall Lane.
Speaker 2 (01:09):
Good Mordan, welcome back to the Financial Exchange. It's at
Tuesday here with Mike, Paul and Tucker. We've got markets
in mixed territory, NASDAQ slightly up, down, SMP very slightly
to the red. So we will keep you updated on
where markets. And today we are staring down at government
shut down in thirteen or so hours, assuming nothing gets
(01:32):
dealt with between our elected officials. We released We got
a release of jobs data this morning at ten am
on the Joltz Report, the job openings labor Turnover survey
that was about in line with expectations. And then we
also received some consumer confidence data that was very slightly
(01:53):
below expectations. Any recap on the on the jobs data, Paul,
I mean, what do we need to know about the
state of job, of hiring and openings right now? When
it comes to labor market, what.
Speaker 3 (02:04):
We're continuing to see is a very much a no hire,
no fire environment where we're not seeing a huge uptick
in layoffs or people being let go from their jobs.
But at the same point in time, there is a
tremendous amount of hiring and to that point, a lot
of people are holding on to the jobs that they have.
We're not seeing a tremendous amount of mobility of people
(02:25):
quitting their job and taking a new position elsewhere.
Speaker 2 (02:28):
So with that in mind, let's switch over to something
that people are pretty passionate about. I'm pretty upset about,
which is electricity costs. Who's to blame what's actually happening here?
And we have two different pieces here. One says don't
blame AI or Trump. The other one says definitely blame AI.
So I guess let's kind of walk through each of
(02:50):
the arguments because I kind of buy both. If you
want the real exact reason, why is your electricity price
going up so dramatic grid right now? A big reason
is because of new demand from AI data centers. I
don't think there's much debate about that, right Like you
are very quickly having a bunch of companies wanting more power. Yeah,
(03:14):
our grid is set up in a way and our
laws are set up in a way where you can't
quickly add supply to the grid, and so therefore prices
are shooting through the roof. The author in the journal,
Mario Loyola, points out, Hey, a lot of this problem
with supply and why electricity costs so much in the
first place is actually a result of policy, not of
(03:35):
practical you know, building requirements or the ability for us
to add generation. It has a lot to do with
the laws that are on the books. What does he
highlight as a specific problem when it comes to supply
side for electricity.
Speaker 3 (03:48):
What's incredibly just hard to wrap your mind around is
just how difficult it is to expand out new supply
side capacity. I mean the amount of red tape that
is required to go through any expansion of the grid
in this country, and the way it's kind of regionally
broken out. It's just extremely difficult. Where you're seeing a
(04:10):
backlog and manufacturing of natural gas fire turbines with way
times that are now extending three or more years.
Speaker 1 (04:17):
And this is.
Speaker 3 (04:17):
All really because of regulations that were put in place
to make it pretty difficult to kind of get these
endeavors through.
Speaker 1 (04:25):
Where you can.
Speaker 2 (04:26):
It takes all different forms, right Like, some of these
are red tape regulations on green energy requirements, you know
you have to have this much capacity here. Some of
it is subsidies that exist, right we. I think even
with the phase out of the solar subsidies, I think
that they tied them in through twenty twenty seven because
a bunch of Republican lawmakers wanted to see commercial projects
(04:47):
that have already been planned out get finished. So the
economics part of building new non renewable power generation is difficult.
I don't really know how to weigh that piece versus
all of us continually voting down new power generation in
our area, but I think that also plays a really
(05:08):
big role. Nobody wants high power, high capacity power lines
in their backyard. Nobody wants a nuclear power plant, or
a coal fired power plant, or any gas fire power
plant right in their backyards. And so we end up
with this incredibly complex system where the federal government kind
of takes a backseat other than providing subsidies, and then
each local city and state drafts up their own rules
(05:32):
and regulations for how power gets regulated and built out
in their areas. And it makes for the environment we
have now, where supply demand is pretty elastic, demand demand
can switch quickly, and supply is very much constrained.
Speaker 3 (05:47):
Exactly, and what ultimately you'd like to see, and this
isn't something that's going to happen immediately, is more of
a free market system in order to increase that supply
so that you can meet what is more and more
look like a huge uptick in demand. And so hopefully
I don't really see anything on the near term horizon.
There could be some undoing of some of this red
(06:09):
tape to meet some of these needs. Nuclear something that
gets brought up a lot, but again there are challenges
with expanding that. It's almost reversing course. A lot of
nucle pants were being set to be sut down. Some
of those endeavors have resumed, but it's taking a long time.
Speaker 2 (06:28):
Yeah, I think the optimist in me says, you know
what we are going to ten years from now, we
are going to have an incredibly competitive and resilient grid
with a bunch of nuclear power plants and you know,
something that is really scalable and flexible and capable of
supporting all of the demands. The problem is to get there.
(06:48):
I think we're going to have a decade of really
messy stuff and that includes huge increases in power bills.
I mean, there's been a number of pieces written about
this and what is it Bloomberg today that has the
visual piece of it. Yeah, Bloomberg has a pretty good
visual of it. But you know, energy bills across the
country are fifty to one hundred percent higher than they
(07:11):
were five years ago, right, And I don't really see
that slowing any point in the near future because Google
will pay whatever they have to pay for that electricity,
so they're setting the rate yep. And so I also
think there's gonna be a patchwork of bad policy out there, like, Okay,
we're locking in rates for individual homeowners, or we're providing
(07:34):
subsidies for electricity for homeowners because the demand side of
the equation has been so mucked up. But that's the
reality is. There are some limitations, but generally speaking, Google
and Microsoft will pay whatever they have to pay for
power because they see this as such an extraordinary opportunity
and that leaves the rest of us basically have to
follow along and say, Okay, well, if Google's willing to
(07:55):
pay this, then I'm gonna have to pay that because
there's a limited supply, and so that's that's the deal.
Speaker 3 (08:00):
It's it's tricky. What we're gonna need is a lot
of investment and a lot of change to some of
the regulatory and permitting process, and it's going to take time.
Speaker 2 (08:08):
But I would also just go back to I think
the blame is on all of us, right, Like, the
reason that supply cannot dramatically increase is because we the
voters have either voted directly for or put in politicians
who create a whole bunch of regulation on power and
not allow the free market to operate. Sure, And so
(08:28):
again I go back to, now we find ourselves in
this situation that would have been difficult to predict ten
years ago.
Speaker 4 (08:34):
Right.
Speaker 2 (08:35):
I don't think anybody knew that AI was going to
be the thing that increased power generation, but we've all
been talking about it, like we all have known for
a decade or more that Okay, whether it's EVS or
whether it's AI or some new technological tool, there's only
one direction where power consumption was going ten years ago,
and it's just happened to hit this mountain of demand.
(08:58):
I was trying to think of the opposite of a cliff,
a mountain of demand. That's for electricity. And the price
changes that we've seen have just occurred a lot faster
than I think any of us were anticipating. Let's take
quick break when we come back. Jessica Caldwell from Edmonds
join us to talk about their third quarter Newcar Forecast.
We've seen a lot going on in the auto industry
(09:20):
just over the course of the last few weeks. Interested
to talk to Jessica soon about what they are seeing
as we head into the fourth quarter. Now in the
Auto Industry quick break, we'll be right back.
Speaker 1 (09:31):
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Speaker 3 (10:38):
We are joined by Jessica Caldwell from Edmunds to talk
about Q three New Car Forecast. Jessica, thanks so much
for joining us today.
Speaker 5 (10:47):
Oh happy to be here. Thank you for having me.
Speaker 3 (10:49):
So it's been an interesting year for the vehicle market.
Certainly Q two it seemed as if there was sort
of a front loading of purchases for consumers who are
concerned about the impact of tariffs. Talk to us a
little bit about what we anticipate for Q three and
Q four and just what the auto vehicle market has
looked like this year through twenty twenty five, which has
(11:10):
been an interesting year to stay the least.
Speaker 5 (11:13):
Yeah, I mean it's been a lot of ups and downs,
I guess you can say. I mean, what we saw
on in March, especially when tariffs were announced, I think
the predictions were really dire that auto sales would just
continue to plummet because prices would go up. If you
probably remember that time, there were these wild predictions saying
that vehicle prices by the summer would go up five, ten, fifteen.
I think I even saw someone that said twenty thousand dollars,
(11:35):
which is a bit out there considering the average price
of a new vehicle is about forty eight thousand dollars.
So I mean that's already high as itself. And we
know what we saw was that prices didn't necessarily go up.
So we saw kind of that rush in Q two
of people thinking, okay, let me get my vehicle before
tariffs are implemented. And in Q three, what we saw
(11:57):
was that that, you know what, with prices kind of
remaining somewhat similar to as they have all year in
incentive programs still on the vehicle that we really didn't see.
We didn't really still sells drop. In fact, we saw
actually sales go up, which is just not something we
necessarily expected six months ago.
Speaker 3 (12:16):
Does it seem like some of the recent rate cuts,
the most recent one that we had, and perhaps to
looming through the end of the year, that could spur
some more demand here, Jessica on the vehicle purchase side
of things.
Speaker 5 (12:29):
Well, what we think is that people are looking for
those signals to buy, and we know people are holding
on to their cars for a longer period of time
because if you look at the past five years, it's
been pretty tumultuous, and those folks that have been holding out,
they are paying a lot in repairs probably at this point,
so they're just thinking to themselves, they just need that
signal to buy, and although the FED rate cuts, they're
you know, a quarter point isn't going to make a
(12:50):
massive difference, you know, on your monthly payment, you know
at this point in time. But what it does help
with is the consumer psyche and kind of giving them
that buy now message, and then especially you combine that
with you know, model your cell down end of summer,
Black Friday, end of year, like those type of deal messages.
It gets people in the mood to at least start shopping.
And then once you start shopping, you know how it is,
(13:11):
you find something, you fall in love and you know,
you start sending out inquiries about it.
Speaker 3 (13:15):
Yeah, what would you recommend to some of our listeners
here in terms of timing on a vehicle purchase. If
they're sitting there thinking that they may be primed for
a new car, is there a particular time of the year,
the last couple of months that we have remaining that
you would recommend taking a look at purchasing.
Speaker 5 (13:32):
I mean, at this point, I would if you need
a car, do the shopping and buy one soon. Because
what we can say is that it's been unpredictable, right
like especially with like the semiconductor shortage and COVID, you
just know, you just feel like you don't know what's
around the corner, and right now as as good as
time as any to buy a vehicle. So whether that's used,
whether that's new, whether that's certified pre own, do the shopping,
see what it works out for you. Look at the
(13:53):
different interest rates available, because a lot of times on
the new vehicles we're still seeing low interest APR offers,
and that that's the case, it may make more sense
for you to buy new versus used, even though they
used initially is going to be less money. So kind
of look at those different factors, and as we go
towards the end of the year, you will see a
lot of buying messages, a lot of sale messages, and
you know, just kind of put your feelers out as
(14:14):
to what that looks like. But you know, there's really
not a reason, I would say, just to hold out
on your vehicle purchase. As we've seen prices go up
every year, and not just an auto has been in everything.
So would it be great to wait a few more years?
Likely not.
Speaker 3 (14:29):
Yeah, certainly would have thought that prices would have gone
up more this summer, but that's what keeps this interesting.
Jessica Caldwell from Edmunds Jessica, thanks so much for the
time today. We appreciate it.
Speaker 5 (14:38):
Yeah, anytime, Thank you so much.
Speaker 6 (14:40):
All right, time for ture to you here in the
Financial Exchange and on this day. Back in nineteen sixty
to Flintstones premiered on ABC. The Flintstones was the first
animated series with the primetime slot on TV, as well
as the first animated sitcom. The creators of The Flintstones
also created Tom and Jerry, the Jetsons in The Huckleberry
(15:00):
Hound Show. So our trivia question today which animation duo
created the Flintstones? Once again? Which animation duo created the Flintstones?
Be the second person today at the 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 once again. The second correct response to Texas
(15:23):
to the number six one seven three six two thirteen
eighty five will win that T shirt. See complete contest
rules at Financial Exchange Show dot com.
Speaker 2 (15:32):
It's a good it's a good reference right at nineteen
Wait was the question about a year?
Speaker 3 (15:38):
Well, it was about the two creators.
Speaker 2 (15:40):
Okay, nineteen sixty Jetson's met the Flintstones and they did
a crossover show, a crossover made for TV movie. I
remember that distinctly. I didn't see it in nineteen eighty seven.
But Jetson's Meet the Flintstones. And now that that all
makes sense, Tucker, thank you General Motors. It's actually wall.
Should you ask the question why General Motors boss Mary
(16:02):
Bearra is slamming the brakes on lofty EV ambitions and
is this honestly a mystery to anyone. She's slamming the
brakes on this for two reasons. One, demand was way
below what anyone forecast. Two, the current administration is rolling
back any and all subsidies and taking a very critical
(16:23):
eye at companies who are pushing this stuff. And so
of course she's reversing course. It is a little bit
it's a little bit funny when you go and look
at her quotes. I funny would be a kind of
innocent word. Here's her quote from twenty twenty two. We
have an opportunity and frankly, a responsibility to create a
better future. This was when she was promising EV production.
(16:44):
She promised to launch thirty electric vehicle models globally within
a few years, and then soon after convert more than
half of GM's North America plans to EV production and
took actual steps to try and do so. These days,
she is moved to General Motors, being one of the
biggest opponents of more stringent emissions requirements. She played a
(17:08):
role in California's losing the court case on setting their
own emission standards and has completely reversed course on this,
which again I think is good for the stock price.
My question is this is such a hot button political
issue these days. It seems like, do you really think
that this is not going to swing right back in
(17:28):
the other direction if a Democrat gets elected, Because I
don't know. I don't think the consumer demand piece will
swing back, but I'm quite certain that all the regulations
are going to get talked about once again, and all
the emission standards and all of the EV requirements are
going to get pushed by the next Democrat elected president too,
And then Mary Barr is going to find herself in
the exact same place here once again trying to play
(17:50):
to the whims of elected officials when it comes to
car production.
Speaker 3 (17:52):
That's the problem with this whole sentiment in general, is
it's too influenced by political direction. It seems like the
strategic moves behind GM. Ultimately, your customer and demand should
drive the endeavors that you focus on as a company,
and renewable energy or environmental concern should be a backseat,
because ultimately your job as a CEO of the company
(18:15):
is to return value to shareholders and you have not.
Speaker 2 (18:17):
To create a better future for the world.
Speaker 3 (18:20):
No, that was the cool thing to say in twenty
one or twenty two, and you can argue is to
maybe that is the right direction to take it. I
don't really I don't really know, you know what direction
it could should be in. But ultimately I know as
a GM shareholder what I would be most focused on
if I sat in that seat is how can you
generate the most profitable returns to us as shareholders? And
(18:41):
what she correctly learned by reversing courses, it is those
trucks and SUVs that are the most profitable ones, and
they focus more in that area, in that lane. But
the commentary, I remember it when it came out in
twenty two. It was just so overly ambitious.
Speaker 2 (18:56):
It's not posterous, it's not you don't call that out
at the time as never going down.
Speaker 3 (19:01):
Toyota caught crossfire from that. Just what were they doing
sitting there not focusing on it? And she was critical
of others who didn't put enough emphasis on it. And
it's just the market dynamics turned down really quickly on her.
You got to be careful going out too far in
a limb with that kind of stuff.
Speaker 2 (19:16):
Toyota like at the time was criticized and five years
later is now kind of the model far how you
should you should have looked at all this quick break.
Wall Street Watch is coming up next.
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 market so far today right here on the
Financial Exchange Radio Network.
Speaker 6 (19:58):
Market slightly in the red, with all sis pointing toward
a government shutdown pending a last minute deal. A shutdown
would delay the jobs report, which is slated to be
released on Friday morning. Right now, the Dow is down
by a third of a percent, SMP five hundred down
nearly two tenths of one percent. Nasdaq also down two
tenths one percent, or thirty eight points lower. Rust thousands
(20:20):
down seven tents and one percent, Tenure, Treasurerail flat at
four point one three three percent, and crude oil down
one and a half percent lower, trading at sixty two
dollars and forty nine cents a barrel. Some breaking news
last hour after The Wall Street Journal reported the White
House is planning to unveil a direct to consumer website
for Americans to buy drugs dubbed Trump Rx, as well
(20:43):
as announced that Pfizer plans to lower prices on several
of its medications in the US. Pfizer shares are climbing
over three percent. Meanwhile, Spotify's Daniel Eck stepping down from
his role as CEO after founding the company nearly two
decades ago. He will remain on as executive chairman. Spotify
shares are down nearly five percent. Elsewhere, Corp We've jumping
(21:06):
twelve percent after the company agreed to a multi year
deal with Meta, where Core We've will provide Meta with
fourteen point two billion dollars of AI cloud infrastructure. Amazon
unveiled a slew of new smart speakers and voice activated
displays that are revamped with Alexa Plus, it's personal assistant
that's powered by Generative AI. Theecho Dot Max will cost
(21:27):
ninety nine dollars in ninety nine cents. Amazon down over
one percent. In after today's closing bell, we'll see earnings
from Nike. I'm Tucker Silva and that is Wall Street Watch.
Speaker 2 (21:38):
Joining us now is Todd Lutsky from the law firm
of Christian Dolnut to talk to us about their new
guide out for the month of September. Todd, thanks for
joining us.
Speaker 4 (21:46):
Always pleasure, Thank you. So.
Speaker 2 (21:48):
I always like a piece that completely goes against what
I previously understood it, and this month's guy, it does
that in a big way. Here's my take. When I
think about it state planning, when I think about hiring
an attorney to do this stuff, one of the key
goals that comes to mind is avoiding the probate process.
That's why a lot of people do this sort of
(22:09):
Thing's fun trust, et cetera. This guy's all about intentionally
going through probate, it seems so, what's the story. Why
would anyone want to leave their IRA through the probate process?
Speaker 4 (22:21):
You know, it's funny. I thought you were going to
say it goes against your instincts as a financial advisor
in two fronts?
Speaker 2 (22:29):
Does that a little bit too.
Speaker 4 (22:31):
Why we're going to probit is one instinct. The other
instinct is todd I was always told never to name
my estate the beneficiary of an IRA, and that is
true in general. You're absolutely right on both fronts. But
in this situation, if you're interested in avoiding, if you're
interested in protecting assets from a nursing home, reducing estate
taxes and doing it without avoiding, without causing and era
(22:55):
a problem on the income tax front, and you're over
seventy three or at least seventy three, so I know
there's some restrictions that that's what iras do. They restrict you,
but this idea allows you to do that. It's so
hard to prevent, so hard to protect an IRA from
the nursing home, right, but this gives you an opportunity
(23:18):
to do that. Remember, normally, changing an IRA to a
trust creates a taxable event, so you can't do it
during life. But you know what, to take one item
through the probate process is not that horrific for the
benefits that you get in doing it in terms of
the protection from the nursing home and the tax savings
(23:39):
that go with it.
Speaker 2 (23:39):
Okay, so big picture, this seems complicated, tod I'm sure
it's not just quite as simple as you know, naming
the estates my beneficiary. Who should consider this, who definitely
should not consider doing something like this. Who is this
really targeted for if you're going to use this strategy,
And what do people need to do ahead of time
if they're going to go do it?
Speaker 4 (24:00):
Yeah? Yeah, great question. Again. I would say most people
are probably somewhere around you know, sixty sixty five and
up number one, number two. They have concerns about the
cost of long term care. So you know, you, you know,
you're you don't think you have enough assets to private
pay and you're afraid of them taking your assets. So
I'm a little concerned about that. And of course you
(24:21):
might have enough assets that are more than that two
million dollar exemption, but by the way, it could be
less as well. That doesn't matter. But you know, so
you're concerned about Massachusetts a state tax at a bare minimum,
and those would be the people. And then I would say,
you know, if you're not over seventy three or seventy
three and over, you still can do it, you just don't.
(24:41):
You set up the Testamentary Trust, which is a trust
built into your will prior to being seventy three and
then change the beneficiaries at seventy three. But certainly if
you're seventy three or over, it makes the most sense.
So you know that age group concerned about protecting assets
from the nursing home and reducing a state taxes and
not causing an adverse income tax consequence, those are the
(25:04):
folks that should be thinking about this situation. Folks. It's
definitely something in the guide that it's something that, as
you could hear from our discussion here with Mike, that
it's not so easy. You do need to learn about it,
but it does offer a tremendous amount of benefits. Calling
it the guide, it's the end of the month. It's
pretty new, it's only been around since twenty twenty two
(25:26):
in terms of how to do this, why naming your
estate and ir IRA beneficiary and by the way, also
for life insurance you can do the same thing eight
six six eight four eight five six ninety nine or
Legal Exchange Show dot com. Again the end of the month, folks,
it's going away eight six six eight four eight five
(25:47):
six nine nine or Legal Exchange Show dot com.
Speaker 2 (25:50):
Todd always appreciate really interesting conversation. Thanks so much, and
we'll talk to you soon.
Speaker 4 (25:55):
Thank you.
Speaker 1 (25:56):
Taking the proceeding was paid for in the music exprest
are solely those of Kushian 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 6 (26:08):
The trivia question we asked in the prior segment was
which animation duo created the Flintstones. That would be Hannah Barbera.
Stephen from Hope, Rhode Island is our winner today, taking
home the Financial Exchange Show t shirt. Congrats to Steven
and we play trivia every day here in the Financial
e Xchange. See complete contest rules at Financial Exchange Show
dot com.
Speaker 2 (26:29):
Two pieces on markets right now. Wall Street Journal has
one on investors fretting about valuations in the stock market rally.
The other of the S and P five hundred index
very pricey. This is from Bloomberg. And look, more and
more of these pieces are getting written. More and more
comparisons are being made to the dot com bubble. I
myself have made the same comparisons. The question always comes
(26:51):
back to okay, and so what what do I do
about all this? And that's really tough, that's the toughest
piece to answer, But I don't know. Part of me, Paul,
the fact that everyone and their mother is now writing
about stock market valuations and how the rally is getting
a little bit long in the tooth, and all the
comparisons between AI and the dot com bubble. When everyone's
(27:12):
so hyper vigilant and aware of this sort of thing,
it kind of, in my mind, reduces the likelihood of
that outcome happening. What has been justifying these valuations, at
least in part, is that, look, the earnings growth is
still there. We've continued to get surprise beats on the
upside when it comes to earnings. You're continuing to see
(27:35):
high single digit or low double digit earnings growth on
a year over year basis. And to me, that's the
piece that has to break before all the rest of
this comes crashing down. Right When it's no longer possible
to justify these super rich valuations that you are paying
for in stocks, that's when you have a real problem
with folks questioning, Okay, what precisely are we doing here?
Speaker 3 (27:58):
Yeah, Nvidia's kind of been the head of this of
this rally that we've seen in AI companies this year,
and they have delivered in the sense that they have
continued to have great revenue growth. Now it wasn't as
tremendous as it's been in years prior, but it still
continues to grow. And I think those types of companies,
if we are to see plateauing of revenue growth or
(28:19):
any dent to the story on AI from a demand perspective,
those would be the ones that could potentially bring this down.
But I think you make a fair point into this
question of so what so what do I do? And
there are some solutions that are mentioned of looking at
companies that have these extended valuations and potentially trimming exposure
(28:41):
to certain sectors. But ultimately, what it comes back to
is a client's allocation or any an individual's allocation. That's
what you rest your laurels on. And it's really dangerous
to play into patterns or trends on valuations just because
they can be so fleeting and hard to gauge. Like
I think of one that we covered at the beginning
(29:01):
of this month is September historically has been the worst
month for stocks since nineteen twenty nine. We're about ten
September today, and we are looking at a market that's
been up three point six or three point seven percent
through the close of business yesterday. We'll see how we
close today. On average, what you've seen from September is
it's been a decline of one point two percent since
(29:24):
nineteen twenty eight, the S and P five hundred. So
we had led that story with the beginning of this month.
And it's just the advice we always give is you
just can't lean too heavy into these patterns or trends.
The same thing applies with valuations, but making sure you're
not overextended in one air of your portfolio. That's really
the best way you could do it.
Speaker 2 (29:43):
I think the important thing to ask yourself if you're
managing your own money or managing somebody else's money, is
take what you believe to be about markets, and ask yourself,
what if I'm wrong? What happens if I am wrong
about this? If I am all in on AI and
tech and I think that it is going to be
the technology that revolutionizes markets and makes a whole bunch
(30:06):
of profitable, hugely profitable companies, what if I'm misreading the situation.
What if it's more like the dot com bubble? Then
I'm realizing if I am fully avoiding the stock market
right now because I am firmly in the camp that
this is all a bubble and it's all going to
implode in on itself. What if I'm wrong and it
does end up continuing for another six years to appreciate
in the stock market? How will I be left in
(30:27):
those circumstances? Those are the important questions to ask rather
than obsessing over Am I picking the right thing at
the right moment? Am I entering markets at the peak
that are about to come crashing down? Nobody knows. Don't
try and answer that question, but ask yourself, am I
financially prepared if my narrative about markets turns out to
(30:47):
be wrong? Because even the best in the world are
right fifty three or fifty four percent of the time
on this stuff. Quick break when we come back. Stack
Roulette is coming up next.
Speaker 1 (31:00):
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Speaker 6 (31:35):
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Speaker 2 (32:13):
Time for a bit of stack roulette. What do you
have for us?
Speaker 3 (32:15):
Paul Mike McDonald's is bringing back monopoly after a decade,
and I feel like this is a little too soon
because I'm still rattling around my head that twenty twenty
documentary that was done on It was called mcmillions on HBO. Fantastic.
I'd recommend anyone go back and watch it because the
last time they did Monopoly, from nineteen eighty nine to
(32:38):
two thousand and one, there was a employee of a
security company that stole over twenty four million in prizes
and there was an FBI scandal which led to the
conviction of more than fifty people. So that's still rendered.
Speaker 2 (32:52):
When did they end it last time? Oh one from.
Speaker 3 (32:56):
Uh, no, they've done it. No, they've done it after that,
but the scandal went on for more than a decade
where it was Uncle Jerry or this guy Jerome Jacobson.
Really recommend watching mcmillion's HBO documentary on it where basically
he had access to the game winning million dollar prizes
and he would charge a fifty thousand dollars fee and
sell it to all these associates. Good deal that he
(33:18):
had unlocked. But for today's standards, Monopoly will be offered
for all of the loyalty members on McDonald's platform, where
it's a loyalty so I have to like, you gotta
be ass it's a it's all digital, you'll be able
to be not.
Speaker 2 (33:32):
Fun, right, I like the stickers right to put them
on the board.
Speaker 3 (33:36):
You can peel them off the box, but you got
to scan them in to your digital app. McDonald's has
a goal of getting two hundred and fifty million active
loyalty users by the end of twenty twenty seven. They've
got about one hundred and eighty five million globally on
their loyalty platform. That accounts for about a quarter of
their business in the US, so it clearly focus.
Speaker 2 (33:57):
We do Friday lunches here at the Army Group for
all employees, So I guess I know what we're doing
for the next How long are they running this? Two years?
Speaker 3 (34:05):
Probably the next decade. We'll see how many prizes get stolen.
Speaker 2 (34:08):
Everyone here is gonna put on twenty pounds in our
health insurance premiums are gonna go through the roof. But
we're gonna win some money on this McDonald's monopoly game.
If I if I have.
Speaker 3 (34:18):
My Hamburglar, be damned well.
Speaker 2 (34:19):
Paul was mentioning fraud of one sort. I'm gonna bring
up a different type of fraud. Charlie Javis has been
sent us to eighty five months in prison. If you
haven't heard of miss Javis. She is the one who
created a company called Frank Frank. Seemed like it was
a fairly helpful company that people would probably pay for.
(34:41):
It was meant to help students fill out for their
financial aid forms, and she did have quite a few customers.
I think there were actually something like a couple hundred
thousand customers. The problem occurred when JP morgan Chase started,
you know, expressing some interest in maybe buying this company,
ended up buying it for one hundred and seventy five
million dollars, partly based on miss Javis's representations that there
(35:04):
were to the tune of four million subscribers to this service.
So should I not have done that?
Speaker 1 (35:12):
Yeah? So was that wrong with me?
Speaker 2 (35:15):
Yeah? It seemed that way because then she, after realizing
or all the long knowing that that wasn't going to
be happening, she said about creating synthetic data to add
millions of customers, with the help of a associate professor
of mathematics at Queen's College, who of course had no
idea why he was doing this and wasn't at all
(35:35):
privy to what was going on, was just there to
help her create the synthetic data. Here's to me. I mean, okay,
so miss Javis is going to federal prison for going
to prison for eighty five months, she deserves to be there.
She's the perpetuator of the fraud. She lied to the investors,
misrepresented everything. She's going to jail. She should be. We
(35:58):
always talk about JP Morgan, she as having the best
risk management out there and granted one hundred and seventy
five million dollars. Dropping the bucket not a big deal
for them. It's not going to shrink, it's not going
to hurt their bank in any meaningful way. They'll probably
recover a lot of this in a civil suit that
they've filed. But they really missed the boat on this, like,
(36:19):
you know, you created a fake customer list, and again
you hired a professor to do it, and so allegedly
they know not allegedly it's been proven now because she's
guilty in court that they used real people's names to
create this customer list, and you know, use data to
make it look that way. But if I'm paying one
hundred and seventy five million dollars for this, you're not
(36:41):
calling one of those millions of customers prior to sending
that check. I like, because presumably if you had done so,
any one of them would have been gonna tell you.
I have no idea what you're talking about. What is
frank right?
Speaker 3 (36:55):
Because if we're saying two to three hundred thousand of
them were actually real of the four million chance or more,
that you're probably going to call someone who, yeah, actually
isn't an active customer.
Speaker 2 (37:08):
So again, miss Javis is to blame here, She's going
to prison for it. Kind of embarrassing for JP Morgan Chase.
Not something that you see written about them every day
as they completely screwed up an acquisition and bought a
company that was defrauding them of one hundred more than
one hundred million dollars. Pretty impressive screw up. Also, missus Javis,
(37:29):
did you think they weren't going to find out eventually?
Speaker 3 (37:31):
That was my other thing.
Speaker 1 (37:32):
It's just these greed.
Speaker 2 (37:34):
Things always just completely just confuse me because there's so
much what circumstance. Did you think they weren't going to
someday find out that you were creating fake customers representing
that they were ninety percent of your users? That is
has a very clear endgame. I the delusion on some
(37:58):
of these greed and fraud odds is just is just
fascinating to me, but would be crazy to prison. Markets
are all in negative territory now. We've got the Dow
leading the way down, off about a quarter of a percent.
We've got quite possible government shutdown looming in twelve hours.
We'll cover it all and more tomorrow here on the
(38:18):
Financial Exchange
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(01:06):
and fall Lane.
Speaker 2 (01:09):
Good Mordan, welcome back to the Financial Exchange. It's at
Tuesday here with Mike, Paul and Tucker. We've got markets
in mixed territory, NASDAQ slightly up, down, SMP very slightly
to the red. So we will keep you updated on
where markets. And today we are staring down at government
shut down in thirteen or so hours, assuming nothing gets
(01:32):
dealt with between our elected officials. We released We got
a release of jobs data this morning at ten am
on the Joltz Report, the job openings labor Turnover survey
that was about in line with expectations. And then we
also received some consumer confidence data that was very slightly
(01:53):
below expectations. Any recap on the on the jobs data, Paul,
I mean, what do we need to know about the
state of job, of hiring and openings right now? When
it comes to labor market, what.
Speaker 3 (02:04):
We're continuing to see is a very much a no hire,
no fire environment where we're not seeing a huge uptick
in layoffs or people being let go from their jobs.
But at the same point in time, there is a
tremendous amount of hiring and to that point, a lot
of people are holding on to the jobs that they have.
We're not seeing a tremendous amount of mobility of people
(02:25):
quitting their job and taking a new position elsewhere.
Speaker 2 (02:28):
So with that in mind, let's switch over to something
that people are pretty passionate about. I'm pretty upset about,
which is electricity costs. Who's to blame what's actually happening here?
And we have two different pieces here. One says don't
blame AI or Trump. The other one says definitely blame AI.
So I guess let's kind of walk through each of
(02:50):
the arguments because I kind of buy both. If you
want the real exact reason, why is your electricity price
going up so dramatic grid right now? A big reason
is because of new demand from AI data centers. I
don't think there's much debate about that, right Like you
are very quickly having a bunch of companies wanting more power. Yeah,
(03:14):
our grid is set up in a way and our
laws are set up in a way where you can't
quickly add supply to the grid, and so therefore prices
are shooting through the roof. The author in the journal,
Mario Loyola, points out, Hey, a lot of this problem
with supply and why electricity costs so much in the
first place is actually a result of policy, not of
(03:35):
practical you know, building requirements or the ability for us
to add generation. It has a lot to do with
the laws that are on the books. What does he
highlight as a specific problem when it comes to supply
side for electricity.
Speaker 3 (03:48):
What's incredibly just hard to wrap your mind around is
just how difficult it is to expand out new supply
side capacity. I mean the amount of red tape that
is required to go through any expansion of the grid
in this country, and the way it's kind of regionally
broken out. It's just extremely difficult. Where you're seeing a
(04:10):
backlog and manufacturing of natural gas fire turbines with way
times that are now extending three or more years.
Speaker 1 (04:17):
And this is.
Speaker 3 (04:17):
All really because of regulations that were put in place
to make it pretty difficult to kind of get these
endeavors through.
Speaker 1 (04:25):
Where you can.
Speaker 2 (04:26):
It takes all different forms, right Like, some of these
are red tape regulations on green energy requirements, you know
you have to have this much capacity here. Some of
it is subsidies that exist, right we. I think even
with the phase out of the solar subsidies, I think
that they tied them in through twenty twenty seven because
a bunch of Republican lawmakers wanted to see commercial projects
(04:47):
that have already been planned out get finished. So the
economics part of building new non renewable power generation is difficult.
I don't really know how to weigh that piece versus
all of us continually voting down new power generation in
our area, but I think that also plays a really
(05:08):
big role. Nobody wants high power, high capacity power lines
in their backyard. Nobody wants a nuclear power plant, or
a coal fired power plant, or any gas fire power
plant right in their backyards. And so we end up
with this incredibly complex system where the federal government kind
of takes a backseat other than providing subsidies, and then
each local city and state drafts up their own rules
(05:32):
and regulations for how power gets regulated and built out
in their areas. And it makes for the environment we
have now, where supply demand is pretty elastic, demand demand
can switch quickly, and supply is very much constrained.
Speaker 3 (05:47):
Exactly, and what ultimately you'd like to see, and this
isn't something that's going to happen immediately, is more of
a free market system in order to increase that supply
so that you can meet what is more and more
look like a huge uptick in demand. And so hopefully
I don't really see anything on the near term horizon.
There could be some undoing of some of this red
(06:09):
tape to meet some of these needs. Nuclear something that
gets brought up a lot, but again there are challenges
with expanding that. It's almost reversing course. A lot of
nucle pants were being set to be sut down. Some
of those endeavors have resumed, but it's taking a long time.
Speaker 2 (06:28):
Yeah, I think the optimist in me says, you know
what we are going to ten years from now, we
are going to have an incredibly competitive and resilient grid
with a bunch of nuclear power plants and you know,
something that is really scalable and flexible and capable of
supporting all of the demands. The problem is to get there.
(06:48):
I think we're going to have a decade of really
messy stuff and that includes huge increases in power bills.
I mean, there's been a number of pieces written about
this and what is it Bloomberg today that has the
visual piece of it. Yeah, Bloomberg has a pretty good
visual of it. But you know, energy bills across the
country are fifty to one hundred percent higher than they
(07:11):
were five years ago, right, And I don't really see
that slowing any point in the near future because Google
will pay whatever they have to pay for that electricity,
so they're setting the rate yep. And so I also
think there's gonna be a patchwork of bad policy out there, like, Okay,
we're locking in rates for individual homeowners, or we're providing
(07:34):
subsidies for electricity for homeowners because the demand side of
the equation has been so mucked up. But that's the
reality is. There are some limitations, but generally speaking, Google
and Microsoft will pay whatever they have to pay for
power because they see this as such an extraordinary opportunity
and that leaves the rest of us basically have to
follow along and say, Okay, well, if Google's willing to
(07:55):
pay this, then I'm gonna have to pay that because
there's a limited supply, and so that's that's the deal.
Speaker 3 (08:00):
It's it's tricky. What we're gonna need is a lot
of investment and a lot of change to some of
the regulatory and permitting process, and it's going to take time.
Speaker 2 (08:08):
But I would also just go back to I think
the blame is on all of us, right, Like, the
reason that supply cannot dramatically increase is because we the
voters have either voted directly for or put in politicians
who create a whole bunch of regulation on power and
not allow the free market to operate. Sure, And so
(08:28):
again I go back to, now we find ourselves in
this situation that would have been difficult to predict ten
years ago.
Speaker 4 (08:34):
Right.
Speaker 2 (08:35):
I don't think anybody knew that AI was going to
be the thing that increased power generation, but we've all
been talking about it, like we all have known for
a decade or more that Okay, whether it's EVS or
whether it's AI or some new technological tool, there's only
one direction where power consumption was going ten years ago,
and it's just happened to hit this mountain of demand.
(08:58):
I was trying to think of the opposite of a cliff,
a mountain of demand. That's for electricity. And the price
changes that we've seen have just occurred a lot faster
than I think any of us were anticipating. Let's take
quick break when we come back. Jessica Caldwell from Edmonds
join us to talk about their third quarter Newcar Forecast.
We've seen a lot going on in the auto industry
(09:20):
just over the course of the last few weeks. Interested
to talk to Jessica soon about what they are seeing
as we head into the fourth quarter. Now in the
Auto Industry quick break, we'll be right back.
Speaker 1 (09:31):
Miss any of the show. Catch up at your convenience
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(09:51):
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Speaker 3 (10:38):
We are joined by Jessica Caldwell from Edmunds to talk
about Q three New Car Forecast. Jessica, thanks so much
for joining us today.
Speaker 5 (10:47):
Oh happy to be here. Thank you for having me.
Speaker 3 (10:49):
So it's been an interesting year for the vehicle market.
Certainly Q two it seemed as if there was sort
of a front loading of purchases for consumers who are
concerned about the impact of tariffs. Talk to us a
little bit about what we anticipate for Q three and
Q four and just what the auto vehicle market has
looked like this year through twenty twenty five, which has
(11:10):
been an interesting year to stay the least.
Speaker 5 (11:13):
Yeah, I mean it's been a lot of ups and downs,
I guess you can say. I mean, what we saw
on in March, especially when tariffs were announced, I think
the predictions were really dire that auto sales would just
continue to plummet because prices would go up. If you
probably remember that time, there were these wild predictions saying
that vehicle prices by the summer would go up five, ten, fifteen.
I think I even saw someone that said twenty thousand dollars,
(11:35):
which is a bit out there considering the average price
of a new vehicle is about forty eight thousand dollars.
So I mean that's already high as itself. And we
know what we saw was that prices didn't necessarily go up.
So we saw kind of that rush in Q two
of people thinking, okay, let me get my vehicle before
tariffs are implemented. And in Q three, what we saw
(11:57):
was that that, you know what, with prices kind of
remaining somewhat similar to as they have all year in
incentive programs still on the vehicle that we really didn't see.
We didn't really still sells drop. In fact, we saw
actually sales go up, which is just not something we
necessarily expected six months ago.
Speaker 3 (12:16):
Does it seem like some of the recent rate cuts,
the most recent one that we had, and perhaps to
looming through the end of the year, that could spur
some more demand here, Jessica on the vehicle purchase side
of things.
Speaker 5 (12:29):
Well, what we think is that people are looking for
those signals to buy, and we know people are holding
on to their cars for a longer period of time
because if you look at the past five years, it's
been pretty tumultuous, and those folks that have been holding out,
they are paying a lot in repairs probably at this point,
so they're just thinking to themselves, they just need that
signal to buy, and although the FED rate cuts, they're
you know, a quarter point isn't going to make a
(12:50):
massive difference, you know, on your monthly payment, you know
at this point in time. But what it does help
with is the consumer psyche and kind of giving them
that buy now message, and then especially you combine that
with you know, model your cell down end of summer,
Black Friday, end of year, like those type of deal messages.
It gets people in the mood to at least start shopping.
And then once you start shopping, you know how it is,
(13:11):
you find something, you fall in love and you know,
you start sending out inquiries about it.
Speaker 3 (13:15):
Yeah, what would you recommend to some of our listeners
here in terms of timing on a vehicle purchase. If
they're sitting there thinking that they may be primed for
a new car, is there a particular time of the year,
the last couple of months that we have remaining that
you would recommend taking a look at purchasing.
Speaker 5 (13:32):
I mean, at this point, I would if you need
a car, do the shopping and buy one soon. Because
what we can say is that it's been unpredictable, right
like especially with like the semiconductor shortage and COVID, you
just know, you just feel like you don't know what's
around the corner, and right now as as good as
time as any to buy a vehicle. So whether that's used,
whether that's new, whether that's certified pre own, do the shopping,
see what it works out for you. Look at the
(13:53):
different interest rates available, because a lot of times on
the new vehicles we're still seeing low interest APR offers,
and that that's the case, it may make more sense
for you to buy new versus used, even though they
used initially is going to be less money. So kind
of look at those different factors, and as we go
towards the end of the year, you will see a
lot of buying messages, a lot of sale messages, and
you know, just kind of put your feelers out as
(14:14):
to what that looks like. But you know, there's really
not a reason, I would say, just to hold out
on your vehicle purchase. As we've seen prices go up
every year, and not just an auto has been in everything.
So would it be great to wait a few more years?
Likely not.
Speaker 3 (14:29):
Yeah, certainly would have thought that prices would have gone
up more this summer, but that's what keeps this interesting.
Jessica Caldwell from Edmunds Jessica, thanks so much for the
time today. We appreciate it.
Speaker 5 (14:38):
Yeah, anytime, Thank you so much.
Speaker 6 (14:40):
All right, time for ture to you here in the
Financial Exchange and on this day. Back in nineteen sixty
to Flintstones premiered on ABC. The Flintstones was the first
animated series with the primetime slot on TV, as well
as the first animated sitcom. The creators of The Flintstones
also created Tom and Jerry, the Jetsons in The Huckleberry
(15:00):
Hound Show. So our trivia question today which animation duo
created the Flintstones? Once again? Which animation duo created the Flintstones?
Be the second person today at the text us at
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(15:23):
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Speaker 2 (15:32):
It's a good it's a good reference right at nineteen
Wait was the question about a year?
Speaker 3 (15:38):
Well, it was about the two creators.
Speaker 2 (15:40):
Okay, nineteen sixty Jetson's met the Flintstones and they did
a crossover show, a crossover made for TV movie. I
remember that distinctly. I didn't see it in nineteen eighty seven.
But Jetson's Meet the Flintstones. And now that that all
makes sense, Tucker, thank you General Motors. It's actually wall.
Should you ask the question why General Motors boss Mary
(16:02):
Bearra is slamming the brakes on lofty EV ambitions and
is this honestly a mystery to anyone. She's slamming the
brakes on this for two reasons. One, demand was way
below what anyone forecast. Two, the current administration is rolling
back any and all subsidies and taking a very critical
(16:23):
eye at companies who are pushing this stuff. And so
of course she's reversing course. It is a little bit
it's a little bit funny when you go and look
at her quotes. I funny would be a kind of
innocent word. Here's her quote from twenty twenty two. We
have an opportunity and frankly, a responsibility to create a
better future. This was when she was promising EV production.
(16:44):
She promised to launch thirty electric vehicle models globally within
a few years, and then soon after convert more than
half of GM's North America plans to EV production and
took actual steps to try and do so. These days,
she is moved to General Motors, being one of the
biggest opponents of more stringent emissions requirements. She played a
(17:08):
role in California's losing the court case on setting their
own emission standards and has completely reversed course on this,
which again I think is good for the stock price.
My question is this is such a hot button political
issue these days. It seems like, do you really think
that this is not going to swing right back in
(17:28):
the other direction if a Democrat gets elected, Because I
don't know. I don't think the consumer demand piece will
swing back, but I'm quite certain that all the regulations
are going to get talked about once again, and all
the emission standards and all of the EV requirements are
going to get pushed by the next Democrat elected president too,
And then Mary Barr is going to find herself in
the exact same place here once again trying to play
(17:50):
to the whims of elected officials when it comes to
car production.
Speaker 3 (17:52):
That's the problem with this whole sentiment in general, is
it's too influenced by political direction. It seems like the
strategic moves behind GM. Ultimately, your customer and demand should
drive the endeavors that you focus on as a company,
and renewable energy or environmental concern should be a backseat,
because ultimately your job as a CEO of the company
(18:15):
is to return value to shareholders and you have not.
Speaker 2 (18:17):
To create a better future for the world.
Speaker 3 (18:20):
No, that was the cool thing to say in twenty
one or twenty two, and you can argue is to
maybe that is the right direction to take it. I
don't really I don't really know, you know what direction
it could should be in. But ultimately I know as
a GM shareholder what I would be most focused on
if I sat in that seat is how can you
generate the most profitable returns to us as shareholders? And
(18:41):
what she correctly learned by reversing courses, it is those
trucks and SUVs that are the most profitable ones, and
they focus more in that area, in that lane. But
the commentary, I remember it when it came out in
twenty two. It was just so overly ambitious.
Speaker 2 (18:56):
It's not posterous, it's not you don't call that out
at the time as never going down.
Speaker 3 (19:01):
Toyota caught crossfire from that. Just what were they doing
sitting there not focusing on it? And she was critical
of others who didn't put enough emphasis on it. And
it's just the market dynamics turned down really quickly on her.
You got to be careful going out too far in
a limb with that kind of stuff.
Speaker 2 (19:16):
Toyota like at the time was criticized and five years
later is now kind of the model far how you
should you should have looked at all this quick break.
Wall Street Watch is coming up next.
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 market so far today right here on the
Financial Exchange Radio Network.
Speaker 6 (19:58):
Market slightly in the red, with all sis pointing toward
a government shutdown pending a last minute deal. A shutdown
would delay the jobs report, which is slated to be
released on Friday morning. Right now, the Dow is down
by a third of a percent, SMP five hundred down
nearly two tenths of one percent. Nasdaq also down two
tenths one percent, or thirty eight points lower. Rust thousands
(20:20):
down seven tents and one percent, Tenure, Treasurerail flat at
four point one three three percent, and crude oil down
one and a half percent lower, trading at sixty two
dollars and forty nine cents a barrel. Some breaking news
last hour after The Wall Street Journal reported the White
House is planning to unveil a direct to consumer website
for Americans to buy drugs dubbed Trump Rx, as well
(20:43):
as announced that Pfizer plans to lower prices on several
of its medications in the US. Pfizer shares are climbing
over three percent. Meanwhile, Spotify's Daniel Eck stepping down from
his role as CEO after founding the company nearly two
decades ago. He will remain on as executive chairman. Spotify
shares are down nearly five percent. Elsewhere, Corp We've jumping
(21:06):
twelve percent after the company agreed to a multi year
deal with Meta, where Core We've will provide Meta with
fourteen point two billion dollars of AI cloud infrastructure. Amazon
unveiled a slew of new smart speakers and voice activated
displays that are revamped with Alexa Plus, it's personal assistant
that's powered by Generative AI. Theecho Dot Max will cost
(21:27):
ninety nine dollars in ninety nine cents. Amazon down over
one percent. In after today's closing bell, we'll see earnings
from Nike. I'm Tucker Silva and that is Wall Street Watch.
Speaker 2 (21:38):
Joining us now is Todd Lutsky from the law firm
of Christian Dolnut to talk to us about their new
guide out for the month of September. Todd, thanks for
joining us.
Speaker 4 (21:46):
Always pleasure, Thank you. So.
Speaker 2 (21:48):
I always like a piece that completely goes against what
I previously understood it, and this month's guy, it does
that in a big way. Here's my take. When I
think about it state planning, when I think about hiring
an attorney to do this stuff, one of the key
goals that comes to mind is avoiding the probate process.
That's why a lot of people do this sort of
(22:09):
Thing's fun trust, et cetera. This guy's all about intentionally
going through probate, it seems so, what's the story. Why
would anyone want to leave their IRA through the probate process?
Speaker 4 (22:21):
You know, it's funny. I thought you were going to
say it goes against your instincts as a financial advisor
in two fronts?
Speaker 2 (22:29):
Does that a little bit too.
Speaker 4 (22:31):
Why we're going to probit is one instinct. The other
instinct is todd I was always told never to name
my estate the beneficiary of an IRA, and that is
true in general. You're absolutely right on both fronts. But
in this situation, if you're interested in avoiding, if you're
interested in protecting assets from a nursing home, reducing estate
taxes and doing it without avoiding, without causing and era
(22:55):
a problem on the income tax front, and you're over
seventy three or at least seventy three, so I know
there's some restrictions that that's what iras do. They restrict you,
but this idea allows you to do that. It's so
hard to prevent, so hard to protect an IRA from
the nursing home, right, but this gives you an opportunity
(23:18):
to do that. Remember, normally, changing an IRA to a
trust creates a taxable event, so you can't do it
during life. But you know what, to take one item
through the probate process is not that horrific for the
benefits that you get in doing it in terms of
the protection from the nursing home and the tax savings
(23:39):
that go with it.
Speaker 2 (23:39):
Okay, so big picture, this seems complicated, tod I'm sure
it's not just quite as simple as you know, naming
the estates my beneficiary. Who should consider this, who definitely
should not consider doing something like this. Who is this
really targeted for if you're going to use this strategy,
And what do people need to do ahead of time
if they're going to go do it?
Speaker 4 (24:00):
Yeah? Yeah, great question. Again. I would say most people
are probably somewhere around you know, sixty sixty five and
up number one, number two. They have concerns about the
cost of long term care. So you know, you, you know,
you're you don't think you have enough assets to private
pay and you're afraid of them taking your assets. So
I'm a little concerned about that. And of course you
(24:21):
might have enough assets that are more than that two
million dollar exemption, but by the way, it could be
less as well. That doesn't matter. But you know, so
you're concerned about Massachusetts a state tax at a bare minimum,
and those would be the people. And then I would say,
you know, if you're not over seventy three or seventy
three and over, you still can do it, you just don't.
(24:41):
You set up the Testamentary Trust, which is a trust
built into your will prior to being seventy three and
then change the beneficiaries at seventy three. But certainly if
you're seventy three or over, it makes the most sense.
So you know that age group concerned about protecting assets
from the nursing home and reducing a state taxes and
not causing an adverse income tax consequence, those are the
(25:04):
folks that should be thinking about this situation. Folks. It's
definitely something in the guide that it's something that, as
you could hear from our discussion here with Mike, that
it's not so easy. You do need to learn about it,
but it does offer a tremendous amount of benefits. Calling
it the guide, it's the end of the month. It's
pretty new, it's only been around since twenty twenty two
(25:26):
in terms of how to do this, why naming your
estate and ir IRA beneficiary and by the way, also
for life insurance you can do the same thing eight
six six eight four eight five six ninety nine or
Legal Exchange Show dot com. Again the end of the month, folks,
it's going away eight six six eight four eight five
(25:47):
six nine nine or Legal Exchange Show dot com.
Speaker 2 (25:50):
Todd always appreciate really interesting conversation. Thanks so much, and
we'll talk to you soon.
Speaker 4 (25:55):
Thank you.
Speaker 1 (25:56):
Taking the proceeding was paid for in the music exprest
are solely those of Kushian 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 6 (26:08):
The trivia question we asked in the prior segment was
which animation duo created the Flintstones. That would be Hannah Barbera.
Stephen from Hope, Rhode Island is our winner today, taking
home the Financial Exchange Show t shirt. Congrats to Steven
and we play trivia every day here in the Financial
e Xchange. See complete contest rules at Financial Exchange Show
dot com.
Speaker 2 (26:29):
Two pieces on markets right now. Wall Street Journal has
one on investors fretting about valuations in the stock market rally.
The other of the S and P five hundred index
very pricey. This is from Bloomberg. And look, more and
more of these pieces are getting written. More and more
comparisons are being made to the dot com bubble. I
myself have made the same comparisons. The question always comes
(26:51):
back to okay, and so what what do I do
about all this? And that's really tough, that's the toughest
piece to answer, But I don't know. Part of me, Paul,
the fact that everyone and their mother is now writing
about stock market valuations and how the rally is getting
a little bit long in the tooth, and all the
comparisons between AI and the dot com bubble. When everyone's
(27:12):
so hyper vigilant and aware of this sort of thing,
it kind of, in my mind, reduces the likelihood of
that outcome happening. What has been justifying these valuations, at
least in part, is that, look, the earnings growth is
still there. We've continued to get surprise beats on the
upside when it comes to earnings. You're continuing to see
(27:35):
high single digit or low double digit earnings growth on
a year over year basis. And to me, that's the
piece that has to break before all the rest of
this comes crashing down. Right When it's no longer possible
to justify these super rich valuations that you are paying
for in stocks, that's when you have a real problem
with folks questioning, Okay, what precisely are we doing here?
Speaker 3 (27:58):
Yeah, Nvidia's kind of been the head of this of
this rally that we've seen in AI companies this year,
and they have delivered in the sense that they have
continued to have great revenue growth. Now it wasn't as
tremendous as it's been in years prior, but it still
continues to grow. And I think those types of companies,
if we are to see plateauing of revenue growth or
(28:19):
any dent to the story on AI from a demand perspective,
those would be the ones that could potentially bring this down.
But I think you make a fair point into this
question of so what so what do I do? And
there are some solutions that are mentioned of looking at
companies that have these extended valuations and potentially trimming exposure
(28:41):
to certain sectors. But ultimately, what it comes back to
is a client's allocation or any an individual's allocation. That's
what you rest your laurels on. And it's really dangerous
to play into patterns or trends on valuations just because
they can be so fleeting and hard to gauge. Like
I think of one that we covered at the beginning
(29:01):
of this month is September historically has been the worst
month for stocks since nineteen twenty nine. We're about ten
September today, and we are looking at a market that's
been up three point six or three point seven percent
through the close of business yesterday. We'll see how we
close today. On average, what you've seen from September is
it's been a decline of one point two percent since
(29:24):
nineteen twenty eight, the S and P five hundred. So
we had led that story with the beginning of this month.
And it's just the advice we always give is you
just can't lean too heavy into these patterns or trends.
The same thing applies with valuations, but making sure you're
not overextended in one air of your portfolio. That's really
the best way you could do it.
Speaker 2 (29:43):
I think the important thing to ask yourself if you're
managing your own money or managing somebody else's money, is
take what you believe to be about markets, and ask yourself,
what if I'm wrong? What happens if I am wrong
about this? If I am all in on AI and
tech and I think that it is going to be
the technology that revolutionizes markets and makes a whole bunch
(30:06):
of profitable, hugely profitable companies, what if I'm misreading the situation.
What if it's more like the dot com bubble? Then
I'm realizing if I am fully avoiding the stock market
right now because I am firmly in the camp that
this is all a bubble and it's all going to
implode in on itself. What if I'm wrong and it
does end up continuing for another six years to appreciate
in the stock market? How will I be left in
(30:27):
those circumstances? Those are the important questions to ask rather
than obsessing over Am I picking the right thing at
the right moment? Am I entering markets at the peak
that are about to come crashing down? Nobody knows. Don't
try and answer that question, but ask yourself, am I
financially prepared if my narrative about markets turns out to
(30:47):
be wrong? Because even the best in the world are
right fifty three or fifty four percent of the time
on this stuff. Quick break when we come back. Stack
Roulette is coming up next.
Speaker 1 (31:00):
Financial Exchange every day from eleven to noon Non Serious
XM's business Radio Channel one thirty two. Keep it here
for the latest business and financial news and the trends
on Wall Street. The Financial Exchange is now life on
Serious XM's business radio Channel one thirty two. This is
the Financial Exchange Radio Network. Find daily interviews and full
(31:21):
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to our page and get caught up on anything and
everything you might have missed. This is the Financial Exchange
Radio Network.
Speaker 6 (31:35):
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(31:57):
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Speaker 2 (32:13):
Time for a bit of stack roulette. What do you
have for us?
Speaker 3 (32:15):
Paul Mike McDonald's is bringing back monopoly after a decade,
and I feel like this is a little too soon
because I'm still rattling around my head that twenty twenty
documentary that was done on It was called mcmillions on HBO. Fantastic.
I'd recommend anyone go back and watch it because the
last time they did Monopoly, from nineteen eighty nine to
(32:38):
two thousand and one, there was a employee of a
security company that stole over twenty four million in prizes
and there was an FBI scandal which led to the
conviction of more than fifty people. So that's still rendered.
Speaker 2 (32:52):
When did they end it last time? Oh one from.
Speaker 3 (32:56):
Uh, no, they've done it. No, they've done it after that,
but the scandal went on for more than a decade
where it was Uncle Jerry or this guy Jerome Jacobson.
Really recommend watching mcmillion's HBO documentary on it where basically
he had access to the game winning million dollar prizes
and he would charge a fifty thousand dollars fee and
sell it to all these associates. Good deal that he
(33:18):
had unlocked. But for today's standards, Monopoly will be offered
for all of the loyalty members on McDonald's platform, where
it's a loyalty so I have to like, you gotta
be ass it's a it's all digital, you'll be able
to be not.
Speaker 2 (33:32):
Fun, right, I like the stickers right to put them
on the board.
Speaker 3 (33:36):
You can peel them off the box, but you got
to scan them in to your digital app. McDonald's has
a goal of getting two hundred and fifty million active
loyalty users by the end of twenty twenty seven. They've
got about one hundred and eighty five million globally on
their loyalty platform. That accounts for about a quarter of
their business in the US, so it clearly focus.
Speaker 2 (33:57):
We do Friday lunches here at the Army Group for
all employees, So I guess I know what we're doing
for the next How long are they running this? Two years?
Speaker 3 (34:05):
Probably the next decade. We'll see how many prizes get stolen.
Speaker 2 (34:08):
Everyone here is gonna put on twenty pounds in our
health insurance premiums are gonna go through the roof. But
we're gonna win some money on this McDonald's monopoly game.
If I if I have.
Speaker 3 (34:18):
My Hamburglar, be damned well.
Speaker 2 (34:19):
Paul was mentioning fraud of one sort. I'm gonna bring
up a different type of fraud. Charlie Javis has been
sent us to eighty five months in prison. If you
haven't heard of miss Javis. She is the one who
created a company called Frank Frank. Seemed like it was
a fairly helpful company that people would probably pay for.
(34:41):
It was meant to help students fill out for their
financial aid forms, and she did have quite a few customers.
I think there were actually something like a couple hundred
thousand customers. The problem occurred when JP morgan Chase started,
you know, expressing some interest in maybe buying this company,
ended up buying it for one hundred and seventy five
million dollars, partly based on miss Javis's representations that there
(35:04):
were to the tune of four million subscribers to this service.
So should I not have done that?
Speaker 1 (35:12):
Yeah? So was that wrong with me?
Speaker 2 (35:15):
Yeah? It seemed that way because then she, after realizing
or all the long knowing that that wasn't going to
be happening, she said about creating synthetic data to add
millions of customers, with the help of a associate professor
of mathematics at Queen's College, who of course had no
idea why he was doing this and wasn't at all
(35:35):
privy to what was going on, was just there to
help her create the synthetic data. Here's to me. I mean, okay,
so miss Javis is going to federal prison for going
to prison for eighty five months, she deserves to be there.
She's the perpetuator of the fraud. She lied to the investors,
misrepresented everything. She's going to jail. She should be. We
(35:58):
always talk about JP Morgan, she as having the best
risk management out there and granted one hundred and seventy
five million dollars. Dropping the bucket not a big deal
for them. It's not going to shrink, it's not going
to hurt their bank in any meaningful way. They'll probably
recover a lot of this in a civil suit that
they've filed. But they really missed the boat on this, like,
(36:19):
you know, you created a fake customer list, and again
you hired a professor to do it, and so allegedly
they know not allegedly it's been proven now because she's
guilty in court that they used real people's names to
create this customer list, and you know, use data to
make it look that way. But if I'm paying one
hundred and seventy five million dollars for this, you're not
(36:41):
calling one of those millions of customers prior to sending
that check. I like, because presumably if you had done so,
any one of them would have been gonna tell you.
I have no idea what you're talking about. What is
frank right?
Speaker 3 (36:55):
Because if we're saying two to three hundred thousand of
them were actually real of the four million chance or more,
that you're probably going to call someone who, yeah, actually
isn't an active customer.
Speaker 2 (37:08):
So again, miss Javis is to blame here, She's going
to prison for it. Kind of embarrassing for JP Morgan Chase.
Not something that you see written about them every day
as they completely screwed up an acquisition and bought a
company that was defrauding them of one hundred more than
one hundred million dollars. Pretty impressive screw up. Also, missus Javis,
(37:29):
did you think they weren't going to find out eventually?
Speaker 3 (37:31):
That was my other thing.
Speaker 1 (37:32):
It's just these greed.
Speaker 2 (37:34):
Things always just completely just confuse me because there's so
much what circumstance. Did you think they weren't going to
someday find out that you were creating fake customers representing
that they were ninety percent of your users? That is
has a very clear endgame. I the delusion on some
(37:58):
of these greed and fraud odds is just is just
fascinating to me, but would be crazy to prison. Markets
are all in negative territory now. We've got the Dow
leading the way down, off about a quarter of a percent.
We've got quite possible government shutdown looming in twelve hours.
We'll cover it all and more tomorrow here on the
(38:18):
Financial Exchange
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