Speaker 1: Welcome to the Bloomberg Penel Podcast. I'm Paul Swinge. You,
Speaker 1: along with my co host Lisa Brahma wits. Each day
Speaker 1: we bring you the most noteworthy and useful interviews for
Speaker 1: you and your money, whether at the grocery store or
Speaker 1: the trading floor. Find a Bloomberg Penl podcast on Apple
Speaker 1: Podcast or wherever you listen to podcasts, as well as
Speaker 1: at Bloomberg dot com. Another day, another trade skirmish. The
Speaker 1: US went after the European Union for, among other things,
Speaker 1: uh their air bus subsidies as well as wine and cheese.
Speaker 1: The European Union saying this is ridiculous a proposal for
Speaker 1: eleven billion dollars of goods potentially teriffed by the US,
Speaker 1: and that they will retaliate in kind. Joining us now
Speaker 1: to discuss why now? Sean Donnin, Bloomberg Senior Trade reporter
Speaker 1: here in our Bloomberg Interactive Broker Studios. Normally he's down
Speaker 1: in Washington, d C. We are so lucky to have him. Sean,
Speaker 1: Why now? Why now? It's uh, well, let's think back
Speaker 1: to what Donald Trump cares about when it comes to trade,
Speaker 1: and he cares about big deficits, and the US is
Speaker 1: a big trade deficit with the EU hundred seventy billion
Speaker 1: dollars or so last year, and he's been gearing up
Speaker 1: for a fund. Yeah, so he's been gearing up for
Speaker 1: a fight. But he has a bunch on his hands already.
Speaker 1: He has one with China, he has one he's working
Speaker 1: through the U S. M C. A if I got
Speaker 1: that correctly, But you know he's got he's got a
Speaker 1: lot of irons in the fire right now with trade. Well,
Speaker 1: it's a reminder that the trade wars aren't just about China.
Speaker 1: It's they're all over the place. And you know, there's
Speaker 1: a there's a trade war that's still going on in
Speaker 1: some ways with Canada and Mexico. Even though you've got
Speaker 1: the U S. N C. It's still tariffs that are
Speaker 1: still in place there. There's negotiations that are gonna get
Speaker 1: underway with Japan. I think there's a This is a
Speaker 1: reminder that a lot of us were thinking that as
Speaker 1: the U. S and China got close to a deal,
Speaker 1: and they are getting close to a deal, we think
Speaker 1: we're gonna see something in the next month or so,
Speaker 1: um that things were going to calm down. That this
Speaker 1: kind of shadow that was hanging over the global economy
Speaker 1: of the trade wars was going to go away. Well,
Speaker 1: it isn't because Donald Trump wants to take on all
Speaker 1: of these other trading partners like the EU, like Japan.
Speaker 1: These are big economies that Donald Trump is gearing up
Speaker 1: for a fight. Let's go to this one of the
Speaker 1: EU about the aviation. I mean, like if bubbing doesn't
Speaker 1: have enough problems with the seven thirty seven max that
Speaker 1: now has to deal with with this issue, give us
Speaker 1: a little history here, because these are both industries that
Speaker 1: have been highly subsidized and there's been tariffs for a
Speaker 1: long period of time. It seems like we've been rereading
Speaker 1: about this issue Airbus and Boeing and others for a
Speaker 1: long time. Yeah, this is the longest running fight in
Speaker 1: the w t OH. It's been going on for fourteen years.
Speaker 1: I think there's there's one element of normality about what
Speaker 1: Donald Trump is doing and that uh, these are gonna
Speaker 1: be tariffs that are likely to be sanctioned by the
Speaker 1: w t OH. This is going to be allowed under
Speaker 1: global trading rules. And normally Donald Trump wants to go
Speaker 1: around a w t O or rail against a W two.
Speaker 1: And we saw on tweet today, you know, sighting the
Speaker 1: w TO is ruling on the legal subsidies here. It's
Speaker 1: one of the longest running fights. It's a fight that's
Speaker 1: that has kind of refused to go away. It's also
Speaker 1: a fight that you hear people in the administration site
Speaker 1: as an example of what is wrong with the w
Speaker 1: t O and the global trading system. Why is it
Speaker 1: that it takes fourteen years to slve something like this? So, Sean,
Speaker 1: I love that you're here, Sean Donn and he's been
Speaker 1: coovering trade for a long time. You have a sense
Speaker 1: of what's real and what's not. And what I thought
Speaker 1: was really compelling this morning was when these headlines hit,
Speaker 1: the market didn't really move that much. You didn't see
Speaker 1: a huge drop in airbus shares, Bowing shares, which have
Speaker 1: already gotten so beaten up, didn't go down that much.
Speaker 1: And then just in general, there wasn't sort of any
Speaker 1: kind of reaction. What do you make of that? I
Speaker 1: think when I make of that is that the market
Speaker 1: has priced in this kind of uncertainty about trade that's
Speaker 1: been with us for the past year. And and and Terris,
Speaker 1: this is another volley from Donald Trump. But in some ways,
Speaker 1: it's a front that we knew was open in terms
Speaker 1: of the EU. It's also to be frank, it's a dispute.
Speaker 1: It's the airbus bowing dispute that probably puts a lot
Speaker 1: of people to sleep in the markets. It's been around
Speaker 1: so long. I'll tell you what doesn't put them to
Speaker 1: sleep is China trade negotiations. Although you just mentioned earlier,
Speaker 1: sometime in the next month, this was a deal. We've
Speaker 1: been expecting for the last couple of weeks to get
Speaker 1: an announcement, and you know, I thought they were gonna
Speaker 1: have a golf date at mar Lago and you know,
Speaker 1: maybe sushi. I mean, who knows. But what's what's the
Speaker 1: latest on the China trade negotiations? Are we are both
Speaker 1: sides making substantive progress or is it just going to
Speaker 1: be a headline? Do you think so? I think they're
Speaker 1: making substantive progress. I think there's a sign. You know,
Speaker 1: we're getting signs that there's there's a there's a real
Speaker 1: deal that's that's brewing here. What is happening right now? Well,
Speaker 1: the problem with trade is and one of the reasons
Speaker 1: that it tends to not get the attention to deserves
Speaker 1: sometimes in my mind, although I'm a I'm a trade geek,
Speaker 1: is very simply that drags on, and just when you're
Speaker 1: exhausted with the trade negotiation, that seems to drag on
Speaker 1: for another year or another month. Uh. And that's really
Speaker 1: what we're seeing here. These things are hard. I was
Speaker 1: on the fun last last week with someone in the
Speaker 1: administration is close to the negotiations, and he said, look,
Speaker 1: these things are going, they're going. Well, it's just really hard.
Speaker 1: So just real quickly here, I'm wondering people talk about
Speaker 1: these trade skirmishes as President Trump's doing. How much are
Speaker 1: are many Democrats kind of quietly happy about all this
Speaker 1: in the sense, not not from sort of like a
Speaker 1: political standpoint, but glad that he's doing and fighting these
Speaker 1: fights because they think that they're legitimate. So there's a
Speaker 1: lot of people in Washington and around the world, to
Speaker 1: be fair, who think that the fight against China's a
Speaker 1: legitimate fight. There's some legitimate issues there on industrial subsidies
Speaker 1: and intellectual property and so on. But what you've really
Speaker 1: pointed to is a big dilemma for the Democrats going
Speaker 1: into trade, and trade skepticism used to be their issue.
Speaker 1: Donald Trump's made it his issue, how do they respond?
Speaker 1: Sean Donna, thank you so much for joining us here
Speaker 1: in studio Bloomberg Interactive Broker Studio. We love having here
Speaker 1: talking authoring trade. Sean is a senior trade reporter for
Speaker 1: Bloomberg News. Well, despite the down market today, the SMP
Speaker 1: is up fifer cent this year. Today, the NASTAC is
Speaker 1: up almost The question for a lot of investors is
Speaker 1: what's left in the markets, particularly for seeing slowing global growth, uh,
Speaker 1: you know, evidenced by the I m F data this morning,
Speaker 1: for example. So it help us dig into that issue.
Speaker 1: We welcome David Deets to the show. David is founder,
Speaker 1: president and chief investment strategist for point View Wealth Management
Speaker 1: in Summit, New Jersey. David, thank you so much for
Speaker 1: joining us. So we did have some weaker growth numbers
Speaker 1: coming out of the I m F today, I think
Speaker 1: probably giving some of the bears some ammunition that say, gee,
Speaker 1: this market has really gotten ahead of itself given what
Speaker 1: appears to be slowing global growth. What say you, David, Well, certainly, um,
Speaker 1: that was one of it. That is one of the
Speaker 1: reasons for the sell off today. Um, you know, I
Speaker 1: would note that the I m F is still UH
Speaker 1: positing stronger growth in two thousand twenty than this year,
Speaker 1: so they do see the dip in global activity as
Speaker 1: somewhat temporary UM. But you know, I think from an
Speaker 1: investors point of view, the concerns about global growth are
Speaker 1: not new. And of course what has helped our markets
Speaker 1: here is that the story has been pretty positive on
Speaker 1: the US economy with the labor markets, unemployment rate about
Speaker 1: a forty year low. UM job creation was just report
Speaker 1: is very good in March. Consumer sentiment is very strong,
Speaker 1: small business sentiment is very strong. So I think on balance,
Speaker 1: what we're focused on here is how well the US
Speaker 1: is doing, how much creasmce. Can we actually give this
Speaker 1: idea that the I m F projections somehow is what's
Speaker 1: driving the market? I mean, is this just basically that
Speaker 1: no one really has an incentive trade and there are
Speaker 1: a couple of algorithms out there that are kind of
Speaker 1: like bouncing around a couple of styles, pushing things down
Speaker 1: in touch before we get actual real news. Well, certainly,
Speaker 1: if you put into the context of the success of
Speaker 1: economists predicting the economy, you do need to take it
Speaker 1: with a grain of salt. I remember, you know, Warren
Speaker 1: Buffett saying they put economists on earth to make astrologers
Speaker 1: look respectable. UM. Their track record, quite frankly, has not
Speaker 1: been particularly good. Is we look at the I mf
Speaker 1: UM report, we're scratching our heads a little bit because
Speaker 1: although they're positive for two thousand and twenty, they see
Speaker 1: the two biggest economies in the world, the US and China,
Speaker 1: being slower in two thousand twenty than two thousand nineteen.
Speaker 1: I'm trying to figure out how that works exactly. But
Speaker 1: you know, in any event, it's more than just the economy.
Speaker 1: What it really comes down to is corporate earnings. It
Speaker 1: comes down to interest rates UM, and it comes down to,
Speaker 1: you know, the outlook for global trade. I would say
Speaker 1: that the biggest factor that has driven the market this
Speaker 1: year is the d eighty degree turn in the position
Speaker 1: by the Federal Reserve from being very hawkish in terms
Speaker 1: of wanting to hike interrust rates to now being very dubbish,
Speaker 1: and many market UM participants see the next move in
Speaker 1: the Federal Reserve as a cut in interest rates as
Speaker 1: opposed to any further hikes. I think at the end
Speaker 1: of the day, low interest rates UM promote the US
Speaker 1: housing economy make corporate acquisitions and capital expenditures much more
Speaker 1: affordable and them And at the end, I mean people
Speaker 1: are looking at today, for example, ten year treasury two
Speaker 1: point four eight Very few of us can make our
Speaker 1: long term plans work getting two point four eight percent
Speaker 1: on our money. So therefore, I think that any kind
Speaker 1: of pullbacks are ultimately gonna be met with positive buying. So,
Speaker 1: David were later this week, we're gonna be coming into
Speaker 1: the beginning of the first quarter earnings period. We've got
Speaker 1: some of the big money center banks. Um I think
Speaker 1: SMP five hundred earnings forecast consensus for four percent decline
Speaker 1: or in the first quarter. How are you positioned going
Speaker 1: into the first quarter earning season? Well, so, I mean
Speaker 1: from the macro point of view, Um, yeah, it's it's
Speaker 1: very disconcerting when earnings are the most the biggest driver
Speaker 1: of of stocks to have a forecast for a four
Speaker 1: percent decline you over year. Take that with a grain
Speaker 1: of salt. For a couple of reasons. One is last
Speaker 1: year's Q one was very much juiced, as it were,
Speaker 1: by the cut in interest rates. That we don't have
Speaker 1: a second cut in this year, so that has to
Speaker 1: be taken any consideration, and of course, at the end
Speaker 1: of the day, is not what happened in the last
Speaker 1: three months. At the end of the day, it's going
Speaker 1: to be what UM market particiption, what these companies forecasts
Speaker 1: for the next let's say, nine to twelve months UM so,
Speaker 1: and certainly you can make the case anyway that the
Speaker 1: fact that UM the forecast for earnings is so negative
Speaker 1: now beats and positive surprises will be much easier. UM.
Speaker 1: I think what we're doing here is looking at some
Speaker 1: companies where the they have stellar franchises, but the prospect
Speaker 1: for near term earnings is somewhat muted. You mentioned Financials
Speaker 1: one that we like a lot, as wells Fargo. We're
Speaker 1: gonna be hearing from them on Friday. UM. I don't
Speaker 1: think they're gonna say a whole lot because they're in
Speaker 1: this period now where their current CEO is stepped down
Speaker 1: there in the process of not only finding a new one,
Speaker 1: but looking outside the bank. I think the catalyst for
Speaker 1: growth for this blue chip franchisees naming a bank executive
Speaker 1: UM which people respect and can turn the bank around.
Speaker 1: Names go ahead, any names that you have that you
Speaker 1: would like to see rise to the Holme of Wells Fargo. Well,
Speaker 1: certainly the UM. There's a number of lieutenants UM in
Speaker 1: JP Morgan. They have been cited UM the actually Warren
Speaker 1: Buffett UH is very high on JP Morgan and they're
Speaker 1: probably frustrated because Jamie Diamond seems to have no current
Speaker 1: plans to leave. I think that would make some sense there. Um,
Speaker 1: why would Jamie Diamond go from JP Morgan to Wells Fargo.
Speaker 1: I misspoke there. Jamie Diamond is not going to move,
Speaker 1: but people who want his job under him UM would
Speaker 1: be perhaps interested in taking over arguably bank just as
Speaker 1: good at JP as JP Morgan. Immediately. So we we
Speaker 1: had Walgreens pre announced, and I know that's the name
Speaker 1: we've talked about in the past. For you, that side
Speaker 1: of the business, that prescription business, the retail business very difficult.
Speaker 1: What are you views on on Walgreens? So Walgreens is
Speaker 1: a company that that we moved on to our BI
Speaker 1: list right now is trading in about eight times earnings
Speaker 1: versus a market that said about seventeen times earnings. You know,
Speaker 1: although much of retail has been gutted by the rise
Speaker 1: of the internet shopping, we still feel that buying prescription drugs,
Speaker 1: going in and talking with the pharmacist UM is not
Speaker 1: so easily displaced by buying online. Plus, of course, all
Speaker 1: these pharmacies are now developing clinics so that it could
Speaker 1: be a low cost option to get a check up,
Speaker 1: to get some medical care at at at a lower rate.
Speaker 1: And of course you're always looking for those companies which
Speaker 1: have size and scale. Walgreens and CBS almost have a
Speaker 1: duopoly in in this country. Put Walgreens in the context
Speaker 1: of healthcare. General healthcare is under a cloud. It's usually
Speaker 1: a defensive sector. Right now, of course, everyone's uh, the
Speaker 1: pace of prescription drug inflation has been reduced dramatically. Uh
Speaker 1: do the jaw boning from politicians on both sides of
Speaker 1: the aisle. Of course, there's some concerns as to whether
Speaker 1: we'll fundamentally change the system to a single payer. What
Speaker 1: has happened historically is those have been unbelievably great opportunities
Speaker 1: to take healthcare UM investment because normally, Uh, the fear
Speaker 1: goes away, the threat of price controls dissipates, the system
Speaker 1: doesn't change, and it can be a great way to
Speaker 1: see appreciation on your investment. David DIDs thank you so
Speaker 1: much for being with us. David DIDs is founder, president,
Speaker 1: and chief investment strategist at Point View Wealth Management, based
Speaker 1: in Summit, New Jersey. We have been in a low
Speaker 1: interest rate environment for more than a decade. We have
Speaker 1: been looking at robust credit markets, easy learning standards pretty
Speaker 1: much across the board. So there's kind of a mystery
Speaker 1: that's been baked into certain corners of credit markets, in
Speaker 1: particular the auto lending sector, which is seen delinquencies rise
Speaker 1: to a post crisis high in some cases, as well
Speaker 1: as the high defaults and delinquencies among some pure to
Speaker 1: peer loans. Joining us now to dig under the hood
Speaker 1: and explain perhaps why we're seeing that is Adam Tempken,
Speaker 1: credit market supporter for Bloomberg News, joining us here in
Speaker 1: our Bloomberg Inner Active Broker Studios. So Adam, let's just
Speaker 1: start there. What are people looking at for the possible
Speaker 1: cause for the uptick intolinquencies and defaults at a time
Speaker 1: of easy credit. Well, Goldman Sachs and Moody's analytics have
Speaker 1: recently said credit scores they do not include economic cycles,
Speaker 1: but economic cycles greatly influenced credit scores. So as the
Speaker 1: economy has expanded so have the scores. The problem is
Speaker 1: people's inherent risk, their inherent ability and attitude towards paining
Speaker 1: is the same. So a five fifty subprime person today
Speaker 1: is relatively riskier than a five fifty and two thousand nine,
Speaker 1: and that could be a hidden risk. So the idea
Speaker 1: here is the FICO scores, which are used by many
Speaker 1: peer to peer lenders, and some of these smaller deep
Speaker 1: subprime lenders are not as reliable exactly. The scores are
Speaker 1: migrating up, but the risk is the same, and the
Speaker 1: question is are lenders accounting for that? Are they raising
Speaker 1: their minimum FICO cutoffs? While Moody's Analytics and Goldman says
Speaker 1: some of them, the smaller ones maybe unsophisticated deep subprime auto,
Speaker 1: they're not. They're not bringing in like debt to income
Speaker 1: or LTV to have. It's not a good differentiator differentiator anymore,
Speaker 1: these FICO scores, and this is leading to hidden risk
Speaker 1: in certain corners deep subprime, private credit cards, and peer
Speaker 1: to peer marketplace lending. The categories you just mentioned kind
Speaker 1: of harkened me back to ten or twelve years ago. Okay,
Speaker 1: so are you trying to tell us or is Moody's
Speaker 1: and Goldman trying to tell us that the lending community
Speaker 1: had not really learned the lessons, or is kind of
Speaker 1: those lessons have kind of receded into the background, because
Speaker 1: this sounds eerily similar. Well, the good news is that
Speaker 1: some of the larger banks and savvier lenders are including
Speaker 1: other factors. The worry is complacency with some of the
Speaker 1: waller lenders like deep Subprime Um and some of the
Speaker 1: smaller online personal loan lenders. They may not be increasing
Speaker 1: their minimum credit scores, they might not be bringing other
Speaker 1: factors in. And Goldman is a little worried about this,
Speaker 1: and Moody's is saying there could be great complacency from
Speaker 1: these lenders that could lead to losses down the road.
Speaker 1: All Right, so let's put this into some scope here,
Speaker 1: because there's a question how much debt is there that
Speaker 1: is backed by loans that are underwritten with Phyco scores
Speaker 1: for first and foremost in the mind. I mean, that's
Speaker 1: how how much we talked about here. Well, this is
Speaker 1: probably not a systemic problem. If you look at just outstandings,
Speaker 1: it's about four hundred billion dollars worth across those areas
Speaker 1: that I just mentioned. However, not all of that is securitized,
Speaker 1: So maybe one fourth of that is securitized hundred billion
Speaker 1: or so approximately, So this is not systemic. However, the
Speaker 1: problem is it's a great risk for lenders. It's a
Speaker 1: great risk for some of the investors in the deep
Speaker 1: subprime A B s. Okay, and that's what I was
Speaker 1: going to ask. So a hundred billion dollars of these
Speaker 1: loans have been securitized. It means they've been pulled uh
Speaker 1: into bundles and then their bonds that are sold that
Speaker 1: are backed by the payments that go into those pools,
Speaker 1: and they're they're sort of given out to the investors
Speaker 1: depending on which trunch they invested in, and depending on
Speaker 1: on what the credit rating is and where they are
Speaker 1: in the waterfall structure. So I'm wondering, from your perspective,
Speaker 1: who are the investors and the riskiest trunches here? I mean,
Speaker 1: is there is there a sense of, oh, that's your
Speaker 1: pension fund. Pension funds are look going all the way
Speaker 1: down to double B and deep subprime. Auto asset managers,
Speaker 1: I mean across the board people pretty much think these
Speaker 1: types of auto loan A B s are safe and
Speaker 1: they've generally performed well, although I have to say, uh,
Speaker 1: thirty day delinquencies for subprime auto A B s are
Speaker 1: at close to a peak. Now does that translate to losses?
Speaker 1: Here's where it gets tricky. There could be great delinquencies,
Speaker 1: it doesn't always translate to a loss right away because
Speaker 1: there's such credit protections robusts. Uh, these are structured very well,
Speaker 1: but a lot of the banks are now saying do
Speaker 1: not buy lower rated you know, auto deep subprime A
Speaker 1: B s, stay away the personal loan a bs that's
Speaker 1: been securities only over the last few years performing pretty
Speaker 1: pretty poorly right out of the gate, honestly, very high delinquencies.
Speaker 1: We've not really seen a tightening of underwriting yet, but um,
Speaker 1: a lot of people stay away from that stuff, that
Speaker 1: type of peer to peer assepect securities, which is a newer,
Speaker 1: untested asset class. So it looks like Moody's and the
Speaker 1: Golden The reports here kind of shedding some light on
Speaker 1: this issue, which we've heard a little bit about certainly,
Speaker 1: but maybe not the scope. Has there been any regulatory
Speaker 1: response or how are the regulators looking at this little
Speaker 1: slice of the market. There's definitely been a lot of
Speaker 1: focus on subprime auto um. The the bond investors always say, hey,
Speaker 1: we think this is safe. You know, uh, there's great protections.
Speaker 1: But you know, the Federal Reserve came out February saying, hey,
Speaker 1: auto dilinquencies are at seven million. People are hind on
Speaker 1: their payments. So this is kind of a growing theme.
Speaker 1: Warning signals are flashing, and some of the regulators are
Speaker 1: slowly getting involved. You know. It seems to me like
Speaker 1: one of the biggest consequences of this is to sty
Speaker 1: me the peer to peer lending industry before it really
Speaker 1: had a chance to gain steam, Paul, because that seems
Speaker 1: to be one consequence they're having a harder time making
Speaker 1: money if the credit qualifications just aren't there. Yes, and
Speaker 1: we've had some period of peer folks in here before
Speaker 1: talking about kind of how they have a demand for
Speaker 1: their business because some of the banks have stepped away
Speaker 1: a little bit. So very it's very interesting, and I
Speaker 1: think it's the story we're gonna hear more about going forward.
Speaker 1: Adam Temptin, thank you so much, Credit Markets reporter for
Speaker 1: Bloomberg News. Joining us here in a Bloomberg eleventh three
Speaker 1: yo studio in New York. Well, we are fast approaching
Speaker 1: the April fifteen deadline, people are scrambling to get their
Speaker 1: returns done. A lot of tax law changes this year
Speaker 1: for people to get their hands around, including new tax
Speaker 1: law changes around alimony and child support. To get the
Speaker 1: latest on this, we welcome our next guest, Maggie John Drow.
Speaker 1: She's financial advisor and founder of John Drought Wealth Management.
Speaker 1: She joins us live here in Interactive Broker studio. Maggie,
Speaker 1: thank you so much for being with us again. A
Speaker 1: lot of tax law changes that people have to figure
Speaker 1: out this year. Talk to us a little bit about
Speaker 1: the alimony child support changes that are in this year's
Speaker 1: tax code. Sure, thank you for having me. So, if
Speaker 1: you were divorced on December thirty one, two eighteen, or
Speaker 1: prior to your divorce decree remains the same unless you
Speaker 1: decide to amend it. But if you were divorced on
Speaker 1: January one, two thousand, nineteen or thereafter, alimony has now
Speaker 1: is different for you the way it is taxed. Uh
Speaker 1: So it's essentially flopped um. In the past, those that
Speaker 1: were paying alimony could take that as a tax deduction,
Speaker 1: and that is no longer the case for those after
Speaker 1: January one two has a nineteen and those that are
Speaker 1: receiving the alimony, this is no longer taxable income for you. Okay,
Speaker 1: So basically it makes it more expensive for people who
Speaker 1: have to pay alimony. That's right. So how does this
Speaker 1: How have you seen this affecting clients so far? Yeah? Absolutely,
Speaker 1: so this is fairly new so at time when we
Speaker 1: tell but experts are concerned that while thinking about and
Speaker 1: finalizing your divorce decree, there's going to be less incentive
Speaker 1: to provide greater alimony. Much as you said, Um, so,
Speaker 1: of course that might be worse in general for the markets.
Speaker 1: There'll be less money being injected into goods and services,
Speaker 1: of course, But I'm wondering from your practical experience, whether
Speaker 1: it is affecting, uh, the ability of certain people to
Speaker 1: get the other partner to actually pay alimony. Yes, that
Speaker 1: is a fear that that's going to but it hasn't.
Speaker 1: You haven't seen a plan. It's it's been so new
Speaker 1: that not not really yet know. So Maggie, why why
Speaker 1: did the I R S do this? Yeah? Absolutely, um,
Speaker 1: I mean no one really knows what the I R
Speaker 1: S does. Well, they're hoping that it will make things
Speaker 1: easier right. So they've also increased um the standard deduction
Speaker 1: so that less people are itemizing, and this is probably
Speaker 1: another way to get people to take the standard deduction
Speaker 1: versus itemizing UM. Certainly though some analysts you believe it
Speaker 1: will raise revenue for the I R S over the
Speaker 1: next decade or so. So I'm wondering just broadening out
Speaker 1: some of the other tax changes. The salt issue is
Speaker 1: one that is very much in the forefront of people's minds.
Speaker 1: How is that bearing out from your perspective as you
Speaker 1: talk with clients. Yeah, we're here in New York and
Speaker 1: New Yorkers and others in the try Ster area, Connecticut,
Speaker 1: New Jersey. They are being affected the most. They've always
Speaker 1: taken the greatest salt deduction historically. So now, as you mentioned,
Speaker 1: there's a cap of ten thousand dollars as to what
Speaker 1: can be deducted from the federal taxes, and so um
Speaker 1: both from an alimony standpoint being taken away as a deduction.
Speaker 1: Now at the cap of the Salt Tact tax deduction
Speaker 1: and also at the standard deduction being increased, a lot
Speaker 1: less people are itemizing. So you know, it seems like
Speaker 1: it's a cat and mouse game between the I R
Speaker 1: s and tax advisors every year, it just kind of
Speaker 1: goes back and forth. So now you've got this issue
Speaker 1: about the alimony and divorce. Are there ways that, you know,
Speaker 1: maybe tax advisors are suggesting their clients can preserve maybe
Speaker 1: some of the tax benefit. Sure, I mean I always
Speaker 1: encourage everyone to speak to their cpay about their individual situation.
Speaker 1: Um but there are still those that will be taking
Speaker 1: the itemized deduction, certainly if you have to do ducked
Speaker 1: more than twenty four thousand, if you're married, filing jointly,
Speaker 1: and of course the standard uh ways apply, So maxing
Speaker 1: out that four oh one k your retirement plans, of
Speaker 1: course is a great way to UM to to increase
Speaker 1: your your deduction. So people your client has been kind
Speaker 1: of freaking out as they realize how different it can
Speaker 1: be for them. Yeah. I think most surprisingly was that
Speaker 1: the tax brackets were changed. So we still have seven,
Speaker 1: but obviously where those brackets falls different and therefore the
Speaker 1: withholding table has changed. And I think a lot of
Speaker 1: clients did not realize that they did not work with
Speaker 1: their employer to reflect that, and so people are either
Speaker 1: not getting as much of her turn back or they're
Speaker 1: actually owing the government money, which I think has been
Speaker 1: the most surprising. Maggie Jendre, thank you so much for
Speaker 1: being with us. We really appreciate you having here. Uh.
Speaker 1: Maggie Jendre is financial advisor and founder of Gendrew Wealth Management,
Speaker 1: joining us here in our Bloomberg Interactive Brokers Studios. Thanks
Speaker 1: for listening to the Bloomberg P and L podcast. You
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