Without Your Knowledge or Consent

  • Digital hijackers hope to use your phone to mine crypto
  • If stocks resume their slide, when will the Fed change course?
  • Rural economy starts catching up with the rest of America
  • The expatriation surge levels off
  • Debt and deficits: Readers are concerned even if Congress isn’t

Even if you’ve never bought a cryptocurrency, you might become an unwilling participant in the crypto market.

The makers of the Malwarebytes anti-virus software have been looking into a devious scheme by which potentially millions of smartphones could be hijacked for crypto mining.

For real. Explains the Digital Trends website, “By redirecting web traffic to a specific address, a device’s capabilities are hijacked by a bit of JavaScript code and harnessed to mine the cryptocurrency monero.”

Here’s what it typically looks like. The hijackers try to make it look as if they’re doing you a favor by sniffing out bots…

Hacked Crypto Mining

From what we understand, only Android phones are affected. If you fall victim, the most likely culprit is an app you recently installed. Uninstall it and you should be good.

It’s not even that much of a moneymaker for the hijackers. “Because of the low hash rate and the limited time spent mining,” say the Malwarebytes researchers, “we estimate this scheme is probably only netting a few thousand dollars each month.”

But hey, if you’re resourceful and have no scruples, it’s a lot cheaper than buying your own computer with a high-end graphics card…

At least the keepers of the Salon website are being upfront about their attempts to use your hardware for crypto mining.

The site is offering an ad-free option — as long as you allow it to use some of the processing power in your smartphone or computer to mine some monero. (What is it about monero?)

“Your unused processing power are the resources you already have but are not actively using to its full potential at the time of browsing Salon.com,” says an FAQ at the site. “Indeed, your computer itself can help support our ability to pay our editors and journalists.”

Well, as long as you don’t mind lower performance and lessened battery life…

[Crypto update: Bitcoin has jumped back above $10,000. But there’s another development in the crypto markets with far greater profit potential.

It’s a time-sensitive opportunity: This presentation will be pulled from the internet at midnight tomorrow night.]

The U.S. stock market is on track for its best week since 2013.

As we write, the Dow is up more than 100 points — past 25,300. The Big Board has recovered more than half of the losses it notched in the two weeks from the peak on Jan. 26 to the trough a week ago Thursday. That’s a heckuva comeback.


Gold is inching higher, the bid now $1,354. Little wonder as the dollar index is once again below 89, testing lows last seen more than three years ago. “With the threat of inflation growing and the dollar tumbling, conditions are ripe for an extended rally in precious metals,” says Greg Guenthner in today’s Rude Awakening.

The big economic number of the day is housing starts — up 9.7% in January, according to the Commerce Department. Permits, a better indicator of future activity, leaped 7.4%, to the highest level since mid-2007. Both numbers indicate that builders are starting to respond to pent-up demand.

If the stock market resumes its slide — a possibility we still won’t rule out — at what point does the Federal Reserve change course?

After all, much of the stock market recovery since 2009 has relied on easy money from the Fed. Frequently, the Fed would step in if the market swooned — the “Bernanke put,” as traders called it. The Fed definitely stepped in during the last correction in late 2015-early 2016, postponing plans for a March interest rate increase — the “Yellen put,” that was.

Now there’s a new Fed chairman, Jerome Powell. “When does the Powell put come into effect?” asks our Jim Rickards, rhetorically.

“Based on my personal conversations with Ben Bernanke, recent remarks by New York Fed President Bill Dudley and the actual interventions of the Fed over the past 20 years,” says Jim, “we actually have good transparency as to how and when the Powell put will come into play.

“The put operates based on a two-factor formula,” says Jim. “The first factor is the size of the market decline measured in percentage terms, and the second factor is the speed with which the market declines… The key percentage decline is 15%. Bernanke told me in a private conversation that a decline of 15% will trigger a Fed intervention but anything less than that is not particularly troubling to the Fed.”

That means a quick tumble to Dow 22,000 before Powell would pipe up in the media about a change in plans. And even if the Dow stabilizes in the 24,000 neighborhood for the next few weeks, that would effectively set a new, lower, bar. Only a spill to Dow 20,000 would make the Fed stand pat next month.

“The next few days will tell the tale,” Jim concludes. “If the Dow drops to 22,000 precipitously, the Fed will postpone the March rate hike to rescue markets. If the Dow stabilizes at 24,000 or higher, the Fed will raise rates in March. A new Powell put would be set at Dow 20,000 using 24,000 as a baseline.”

Finally the economy in rural America is starting to catch up with the rest of the country.

Creighton University economist Ernie Goss is out with his monthly Rural Mainstreet Index — a survey of bank presidents and CEOs in rural areas of 10 states stretching from Illinois west to Wyoming. Numbers above 50 indicate a growing economy; below 50, shrinkage.

The number leaped from 46.8 in January to 54.8 this month — the first time the number has poked above 50 since July 2015. Goss cautions, however, “Weak agriculture commodity prices continue to weigh on the rural economy.” And job growth in rural areas continues to trail urban areas in those 10 states.

For the record: The surge in Americans surrendering their citizenship has now plateaued.

Every quarter, the Treasury Department publishes the names of individuals who expatriate. For 2017, the annual total is 5,133 — the first decrease since 2012.

The Exodus Slows

As the numbers grew for most of this decade, a myth took hold in the mainstream — it was super-wealthy Americans looking to “evade” their tax burden who dominated these numbers. Big-name expatriations like Tina Turner and Facebook co-founder Eduardo Saverin fed into the myth.

The reality is that many expatriates are everyday people earning pedestrian salaries who happen to live overseas — and can’t afford to pay taxes to two nations.

“This is how it works,” writes George Mason University economist Veronique de Rugy in Reason: “If you’re an American living and working abroad, you report your income in that country and pay taxes to that government. You must then pay U.S. taxes on the same income. Yes, there is an exclusion for foreign earnings of about $100,000. And yes, you get a tax credit for the foreign taxes paid. If you’re lucky, filing the U.S. return is simply a time-consuming hassle.”

But even if your foreign earnings are below that $100,000 threshold, there’s still the cost of complying with Uncle Sam’s paperwork requirements — an average $2,000 a year by one estimate. Oh, and if you have a spouse who never had U.S. citizenship, you’re still required to disclose his or her assets. And good luck trying to get a bank account overseas — IRS rules are so onerous that most banks want nothing to do with American customers.

Crazy, huh? Only one other country on the planet, Eritrea, has a similar arrangement. Even the North Koreans gave it up a few years ago.

“I am very concerned about the deficit spending in Washington,” a reader writes after we sought out feedback earlier this week.

“They are spending money we don’t have like drunken sailors on shore leave. We are at risk because we owe our enemies more than we can ever repay. Our enemies are emboldened because they know we couldn’t raise the money to fight a war if we were attacked. They could just stop buying our Treasuries and our borrowed house of cards tumbles to the ground.

“Our government reminds me of the old fable of the man riding on another’s back. He commiserates with the struggles of the man under him, but won’t get off his back! Our behemoth federal government does the same thing — it speaks of solving problems, which they created in the first place with their policies, and then they throw money at them, with no measure of accountability. Meanwhile, the middle class shrinks and the rich get richer. I’m no redistributionist, but I do believe in a fair playing field for all, and there is none.

“The utter capitulation of the Republicans to the spendthrift ways of the Democrats is disgusting. We gave them the House, Senate and the White House and this is what we get?!!!! If you gathered together all the integrity in Washington, it wouldn’t even fill a thimble!

“I feel like I am living in the days of Marie Antoinette — ‘Let them eat cake,’ they say. Perhaps, like then, it’s time for a revolution!”

“Debt does not have a good history for providing for the stability of nations,” writes another. “The ancient Romans had a sad and extensive experience with this.

“At one point in their history (the century and a half prior to Caesar Augustus) the republic not only had a regular cash flow coming in but they also had a fair-sized rainy day fund for such things as wars or national emergencies. The average Roman citizens in that time paid not one dime in taxes because the government had no need to hit them up for money.

“In spite of this good situation Augustus used what we would today call the Big Lie technique. He insisted the republic-turned-empire needed money and didn’t quit until he got it out of the Roman people. Even though the tax load increased over the centuries, debt grew faster for a variety of reasons. Long, costly wars were not the only hitters on this list. In the end the western half of the Roman Empire fell in A.D. 476. The eastern half fell in 1453, and debt did them no favors either. That was among their contributing factors to the fall.

“The French under Louis XVI had that same experience. We can only be grateful they saw fit to help us out during the American Revolution. To do so they spent borrowed money and they were spending it three times as fast as it came in. They were in hock to the tune of $1 billion by the time of the French Revolution and saw the demise of the royal family as a result.

“Useful indeed are such things as a strong national defense and good roads. But we can’t just keep printing money forever. At some point the bills always come due, and I fear for our future when day arrives.”

The 5: Deficits don’t matter… until the moment they do.

Have a good weekend,

David Gonigam

Dave Gonigam
The 5 Min. Forecast

P.S. We’re back tomorrow with our Saturday countdown edition, 5 Things You Need to Know. U.S. markets are closed Monday for Presidents Day, so the weekday edition of The 5 returns on Tuesday.

Dave Gonigam

Dave Gonigam

Dave Gonigam has been managing editor of The 5 Min. Forecast since September 2010. Before joining the research and writing team at Agora Financial in 2007, he worked for 20 years as an Emmy award-winning television news producer.

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