How will the Republic survive?
“The Department of Homeland Security runs out of money at midnight Friday,” says NPR.
We’ll spare you the mind-numbing details of how we got here, the political taffy pull over immigration. You can read that anywhere.
We’re much more interested in the consequences. Which are positively bizarre.
TSA workers will continue to harass you at the airport. Customs and Border Protection will continue to harass you at the border (and elsewhere within the “Constitution-Free Zone” as far as 100 miles away from the borders and coasts). The Secret Service will still protect the exalted personage of the president. They are considered “essential” personnel.
From USA Today: “About 30,000 DHS employees — mostly office workers — will be furloughed. But more than 80% of the department’s 240,000 employees will still go to work because their jobs are deemed essential to the nation’s safety.
“Those workers, however, will not get paid.”
Wasn’t that sort of thing banned under the 13th Amendment?
Presumably, they’ll receive back pay once the department gets full funding again. And if that’s not good enough for them, they can always quit.
Hmmm…
“The U.S. tax code confuses the average American, and that confusion can be costly,” says Shiyan Koh from the website NerdWallet.
Well, as long as we’re on the subject of gargantuan federal agencies performing senseless activities that subtract from the well-being of humanity…
NerdWallet came out this week with a survey of more than 1,000 Americans. They were asked a series of multiple-choice questions about the tax code. The average score on the quiz — 51%.
The questions ran the gamut. Some were no-brainers…
A) Yes.
B) No.
Ninety percent correctly answered “A.”
Other questions were tricky…
A) Yes, but you can only write off certain items like food, shelter and medical expenses.
B) Yes, you can write off all expenses.
C) No, you can’t write this off.
Make sure you read the question carefully. I didn’t. I thought it said “adopt,” not “foster,” and incorrectly answered “C” (and wondered what my wife and I had been missing all these years). The correct answer is “A.” Only 45% got it right.
Still other questions might seem obvious to you, but not to the majority…
A) Pretax.
B) Post-tax.
C) None of the above.
Only 42% got the correct answer, “B.”
Is that ignorance… or a reflection of the fact many Americans’ retirement savings are in such poor shape that the question doesn’t apply?
At least a majority got it right when asked what their refund should be if they got their exemptions and withholdings correct: 56% said “as close to zero as possible.”
We weep for the other 44%.
That said… you might be due a substantial refund if you follow the guidance in Laissez Faire’s revised and updated tax guide for 2015. You might be entitled to deductions and credits you never knew existed. To wit…
- Employed but want to make a lot more money? The “Wake up Late” loophole can increase your take-home pay as much as 18 times or more!
- A simple secret called the “Romney Clause” allows you to pay the LOWEST legal tax rates… This is the same secret used by former presidential candidate Mitt Romney to pay just 14% tax rates despite being a billionaire!
- Owning a very specific type of vehicle could lead to your biggest tax deduction ever… up to $500,000 in tax savings. (Hint: This has NOTHING to do with any hybrid or energy-efficient vehicle.)
You follow the tips this year and collect a big refund. Then you adjust your withholding for next year and keep more of what you earn right now. Good deal, huh? Learn how to get your free copy of this comprehensive report by clicking here.
Still another quiet day for the major U.S. stock indexes. The Dow and the S&P are little changed as we write, floating around their record highs. The Nasdaq sits 15 points away from the 5,000 level last reached in 2000.
“Consumer stocks, health care and materials are leading the charge this year,” says Greg Guenthner of our trading desk — pulling apart the 10 sectors of the S&P 500. “Energy, financials and utilities are bringing up the rear.”
Looking for a short-term trade? Go with a health care ETF, Greg told his Rude Awakening PRO readers today: “I liked XLV back in early November when it led the market off its lows, and I love it here as the averages search for higher prices.”
The big economic number of the day is GDP. The Commerce Department issued its second guess at the fourth-quarter number. Last month’s guess was an annualized 2.6%. Now it’s down to 2.2%.
Not to worry, we’re told, most of the change can be chalked up to a slower inventory build than first thought: “The underlying fundamentals remained solid,” says Reuters.
We’ll file that one away for future reference. Heh…
Meanwhile, just in from the lively Twitter feed of our Jim Rickards…
Gold has picked up a few more bucks today, the bid now $1,216. Crude has recovered a good chunk of yesterday’s losses at $49.14.
“The fix for oil’s woes is in,” writes Jody Chudley of our energy team. “It just won’t show up immediately.”
Jody’s been examining a case study from America’s shale patch — EOG Resources. “This company has the best shale acreage in the country and has experienced incredible oil production growth” — fivefold in five years.
Last week, the firm held its quarterly conference call: “EOG is putting the brakes on its oil production growth, and it is doing it immediately,” Jody sums up. “Not only is EOG scaling back on its drilling, but the company indicated that it also plans to defer the fracking and completion of some of the wells that it does drill.
“The reason for this is simple. If EOG drills and then produces shale oil wells at the current oil price, it is barely earning a positive return on the money it is spending.
“And remember, this is EOG, which has land in the sweet spot of the Bakken and Eagle Ford. If EOG can’t drill wells that generate an acceptable return, then nobody can.”
“The entire industry is doing the same thing as EOG,” Jody continues. “They are slamming their collective feet on the brakes and won’t take them off until oil is at a significantly higher price.
“One thing to remember is that there is a lag of a few months between the time a well is drilled and when it is fracked and put into production. By May and June of this year, I think we are going to see U.S. oil production growth completely disappear, and perhaps even start to decline.
“That will be a huge event for the oil market, because global oil demand marches higher every year, and United States shale production has been the only real source of growth over the past five years. Once shale production growth disappears, I think the oil price will react positively.
“Ignore the noise coming from the media over the next couple of months,” Jody concludes. “We don’t have to guess what is going to happen to U.S. shale production. Companies like EOG are telling us exactly what is going to happen.”
“Please, please, please, please,” a reader implores after yesterday’s episode, “if you have nothing to say, stay quiet and don’t publish bull****. It is disgusting.
[We love how the reader assumes we automatically know what he’s referring to…]
“By the way,” he goes on with a more valid concern, “we pay for Capital & Crisis and Mayer’s Special Situations. Why do you publish his recommendation?”
The 5: We don’t make a habit of it. Fact is, Chris was musing about SHLD late last year before it became an official recommendation, and we included his remarks in The 5 then.
We thought there was worthy follow-up yesterday: We like bragging on our editors anytime they get something right, like Sears’ conversion to a REIT, and if that can encourage more people to become satisfied Mayer’s Special Situations readers like yourself, so much the better.
Rest assured it won’t be a regular thing…
“Aw, for cryin’ out loud, please tell all of the whiners to unwad their panties and get a life!” a reader writes on two hot topics this week.
“First up, the jail stock. Ever heard of making money on ‘sin’ stocks? Sounds like a good ‘take a look see’ stock to me. Lots of sin took place for those peeps to wind up in jail, and ye DID warn folks. Geez.
“The second group, on Yellen. REALLY?? Don’t folks have a sense of humor anymore? Guess those ‘tolerant’ folks aren’t as ‘tolerant’ if the shoe comes close to fitting.
“Keep up the good work, guys!
“P.S. You’ll know you’re doing a good job when you get responses like the above, much to the amusement of many of your loyal readers.”
“Wow,” chimes in another, “it sure is fun to watch the senior demographic get up in arms over your ‘mentally checked out’ comment. I have read it several times and don’t see where you are wrong. You did not say that all of them have checked out, only some, and last time I read my Webster’s, some and all did not have the same definition.
“Of course, some of them have checked out, and if you have spent any time in a senior community — and I have on numerous visits to see my parents — many of them are not current on politics or economics and simply use party-issued ideology that they learned 40 or 50 years ago. That said, others are very up-to-date.
“As is the case in our knee-jerk society, people seem to constantly be looking for a reason to complain about some imagined slight, and you seem to regularly deliver that which they are looking for, which in turn provides entertainment for the rest of us. Thanks for The 5.”
“Thanks for putting up with the hypersensitive, snarky and take-everything-completely-serious group of readers. Not all fall into this group, but apparently far too many do.
“I just knew this bunch was going to attack you about your comments on some 68-year-olds checking out mentally.
“So I sincerely thank you for doing all you do and for putting up with this group of thin-skinned, hypercritical readers.
“I sincerely hope this is a small percentage of readership, but I’m afraid it is reflective of the disjunction and childish behavior we see in D.C.
“As de Tocqueville reportedly said, ‘In a democracy, the people get the government they deserve.’
“Washington’s habitual sniping and intransigence increasingly reflect the insight of de Tocqueville.”
“I can’t believe people’s reaction to comments made on your site,” writes our final correspondent.
“I’m a blonde, and most of you will remember how many blonde jokes went around, perhaps still do. I’m from the South, have a Southern accent and don’t have to tell you how much kidding is done in that area. I’m female, well, we have all heard the male-versus-female jokes and statements. I’m over 65, and we all hear old age jokes.
“My point is this… the problem isn’t the statements, and I DON’T take offense to every statement I’ve heard in my life that could somehow apply to me, so my final statement is simple…….. GROW SOME DAMN SKIN AND GET A SENSE OF HUMOR ABOUT YOURSELF.
“Personally, I’m offended that everyone today thinks they are so perfect that no one can say anything without someone being offended, so this old blonde, slow-speaking woman is signing off now. There, I said it…”
The 5: Anyone ever ask you how many D’s there are in Indiana Jones?
Have a good weekend,
Dave Gonigam
The 5 Min. Forecast
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