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FJY News to Know #63

The IRS Postpones 2020 Tax Filing and Payment Deadline for 90 Days

The Internal Revenue Service has decided to postpone the traditional tax filing and payment due date for 90 days. The move comes in the wake of the coronavirus outbreak in the U.S., whose numbers appear to keep climbing — despite efforts to combat it. Treasury Secretary Steven Mnuchin, speaking from the White House, said that interest and penalties would be waved as well. The delay is geared toward taxpayers who owe less than $1M, and companies that owe less than $10M. This will open billions of dollars in liquidity for most households. The IRS will continue to process returns, and the secretary urged taxpayers to file if possible. Many IRS employees have shifted to working remotely due to the outbreak. To read more about the government’s response and statements about the evolving situation, go here.


The Fed Has Zeroed Their Interest Rate — Will the Average Mortgage Rate Follow Suit?

The move to zero-out the interest rate was a direct response to the impacts of the coronavirus outbreak, which originated in China’s Wuhan province at the end of last year. To date, there are more than 160,000 confirmed cases worldwide — and approximately 6,000 deaths. The Fed already cut the rate a few weeks ago; “The Fed is actually following and not leading when it comes to mortgage rates,” said Holden Lewis, mortgage and real estate expert at NerdWallet.
Current low rates have already caused a boom in refinancing activity, so Americans don’t need more incentive to apply for new loans. However, one of the big question marks is whether lenders can handle a volume surge. To read what the experts think about this dilemma, please visit this page.


Coronavirus Is Going to Hurt Companies Worldwide — Especially If They’re Carrying Too Much Debt

The coronavirus has exposed a longstanding problem with international companies: Too much debt. It began back when many borrowed because of the lower interest rates. However, as the virus outbreak forces many companies to start cutting corners, many of them face the possibility — or inevitability — of defaulting on those loans. As a result, investors have dumped riskier assets, like stocks, in favor of safe-havens like U.S. government bonds. Since 2008, corporations worldwide have issued roughly $1.8 trillion in new bonds each year, a pace nearly double to the previous seven years. However, the bond market has taken a risky turn itself. To read more about the future of bond investing, as well as some current number values, click here.


The New Oil Price War Is Taking Its Toll on Shale Companies and Production

Over the past few years, shale oil companies have struggled to keep costs down to maintain a healthier profit, based on the assumption that the price of crude would stay competitive or go higher. All this has changed with the recent OPEC vs. Russia vs. Saudi Arabia ‘Oil War’. Because of the higher costs associated with shale production, this war threatens to sink companies who can’t keep up with the tense situation they’re facing. According to Reuters’ analysis, only a handful of the hundreds of U.S. shale firms today can profit — since the price of crude dropped 50% to around $30 per barrel. To read how Chevron and Exxon-Mobil are dealing with this new crisis, please visit this page.


Before You React Too Quickly to This Brave New Market, Take Heed in Wisdom

tempted to entertain innovation. Fear often appeals to our irrational side, causing us to make choices we otherwise wouldn’t. However, a simple plan might be a better remedy. If your bonds are up or flat and stocks are down, do you want to take some profits from bonds to buy more stocks? Or do you want to sell bonds to raise cash for new opportunities? Another tactic is to take the long view: Your investments are geared for the long run and retirement — not just for this year. Risk is another element to consider. If you’re not a rollercoaster kind of person and feel better with slow and steady, you might not even want to board that ride. For more financial wisdom in these trying times, this page might help.