Money Talks

"They're going to be giving this stuff away soon" I mumbled to myself

as I shook change out of a fifteen dollar bill to fill my tank.

When I drive by a gas station with low prices, I remark "they're going to be giving it away soon." It's my inside joke that gets a guaranteed eye roll from whoever else is in the car. Sometimes that is just me. Recently, some gas stations have come close to giving gas away, one near my house sold gas for $1 and gave free sandwiches and water away with a fill up recently. Costco was selling gas $1.17/gallon.

But yesterday - they really were giving it away for free.

To be precise, the price of oil went below $0. People were PAYING to get rid of oil. What's up with that?

First, a primer. If you're trading oil for financial purposes (speculation, hedging, fun or profit, etc) you don't go out and secure a few barrels of the stuff, you trade contracts on a bunch of it. These standardized futures contracts state what type of oil, how much ($10,000 barrels, generally), what type (West Texas Intermediate, in this case) and when it will be delivered (there is a monthly schedule). If you hold the contract when it expires, congratulations, you own the oil! You just need to go to Cushing, OK to pick it up. This is all very standard stuff, and it's right there in the contract:

Delivery shall be made free-on-board ("F.O.B.") at any pipeline or storage facility in Cushing, Oklahoma with pipeline access to Enterprise, Cushing storage or Enbridge, Cushing storage. Delivery shall be made in accordance with all applicable Federal executive orders and all applicable Federal, State and local laws and regulations.

At buyer's option, delivery shall be made by any of the following methods: (1) by interfacility transfer ("pumpover") into a designated pipeline or storage facility with access to seller's incoming pipeline or storage facility; (2) by in-line (or in-system) transfer, or book-out of title to the buyer; or (3) if the seller agrees to such transfer and if the facility used by the seller allows for such transfer, without physical movement of product, by in-tank transfer of title to the buyer.

If you don't want to own the oil, easy, just sell the contract and pick up the next month. Generally, this works pretty smoothly. Again, oil is a widely used commodity and if you don't want it, someone else probably does.

But lately, oil prices haven't been working the same way they generally do. With heavy travel restrictions and everyone working from home, demand for oil in the form of gasoline and jet fuel has declined precipitously. On top of that Saudi Arabia and Russia decided start a price war, pumping as fast as they could and pushing the price down even further. American producers, indebted since the last oil price shock in 2016, kept their rigs pumping even though they starting losing money on every barrel. Having a little money and a lot of bills is better than having no money, and still a lot of bills, they figured.

So oil prices kept dropping, but how did they get negative?

If you're pumping oil, but nobody wants it, you've got to store it. People with storage space, in huge above ground tanks, massive ships or a salt dome in their back yard, charge for storage. That storage was filling up fast. When storage is full, and nobody will buy from you, the price will plummet more. Eventually, you've got to pay someone to take it from you.

A particular problem emerges when people holding contracts for oil realize that they can't store the oil either. If you're just holding the contracts in your brokerage account, or a fund like USO you can't take physical delivery of oil. You have to get rid of those contracts at any price - even if it means paying someone to take them.

That is what happened Monday. Nobody had storage space for oil and nobody wanted to hold their contract as it expired. Brokerages dumped the shares as fast as they could, which meant in some cases they were paying to get rid of them. The price of oil to be delivered in May dropped as low as -$40 at one point!

Could this happen again?

It is not impossible for oil prices to go below zero, but this has been a lesson learned for a lot of market participants. Brokers don't want to be on the hook for closing out customers positions at such a large loss (these are traded using money borrowed from the brokerage, if the value goes negative again, and you can't pay the broker back, that is the broker's problem!). Many will likely update their policies and procedures to keep that from happening again. Plenty of investors will continue to buy oil futures or funds though and storage will continue to fill up. The price action may not be as dramatic next time, but there certainly can be a next time.

Posted by Ryder Taff, CFA

 https://newper.blogspot.com/2020/04/free-oil.html

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UPDATE: Read host Ryder Taff's blog post about oil prices going negative https://newper.blogspot.com/2020/04/free-oil.html

The official name for the COVID-19 stimulus checks is the Economic Impact Payment. Have you gotten your check yet?

Want to see when you should get your check? Get My Payment is helping millions of taxpayers. Since its launch on April 15, millions of taxpayers have been able to input their direct deposit information to speed—and track—their payments. The IRS reminds taxpayers the information is updated once daily, usually overnight, so they only need to check the application once a day. www.irs.gov/getmypaymentfaq

Need to give your payment information to the IRS? www.irs.gov/getmypaymentfaq

Have you filed and paid your personal income taxes yet? The Mississippi Department of Revenue extended Income tax due dates, including estimated payments, to Friday, May 15th, 2020. The deadlines to FILE and PAY federal income taxes are extended to July 15, 2020.

For the calendar year 2020, no one will have to take a required minimum distribution from any individual retirement accounts or workplace retirement savings plans, like a 401(k). That way, you aren’t forced to sell investments that may have fallen in value, which would lock in losses. If you don’t need the money now, you can let the investments sit and hope that they recover.

You can withdraw up to $100,000 this year from your IRA that you are contributing to without the usual 10 percent penalty, as long as it’s because of the outbreak. You will also be able to spread out any income taxes that you owe over three years from the date you took the distribution. And if you want, you could put the money back into the account before those three years are up, even though the rules may normally keep you from making a contribution that large.

https://www.npr.org/2020/03/26/821457551/whats-inside-the-senate-s-2-trillion-coronavirus-aid-package

Calls concerned:

• inheritance check
• EIP check
• IRS non filer
• EIP and college kids
• moving money from IRA to a Roth IRA
• Social Security recipients getting checks
• Small businesses
• email - parent who was a dependent in the past
• Self employed
• Required minimum distributions

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This is the 8th week Money Talks has focused on the financial aspect of the COVID-19 pandemic.

Don't compound your financial troubles by being a victim of scammers targeting your economic impact payment. Guest Wilks Cutrer from MPB's Everyday Tech gave out some advice. http://everydaytech.mpbonline.org/

Beware of scammers wanting to reimburse you for your extra costs during this emergency or sell you items to ensure your protection. Look out for "snake oil salesmen". Watch out for bogus charities.

If you think you are a victim of a scam or attempted fraud involving COVID-19, you can report it without leaving your home though a number of platforms. Contact the National Center for Disaster Fraud Hotline at 866-720-5721 or via email at [email protected] If it's a cyber scam, submit your complaint through https://www.ic3.gov/default.aspx https://www.justice.gov/coronavirus

Those who receive unsolicited emails, text messages or social media attempts to gather information that appear to be from either the IRS or an organization closely linked to the IRS, such as the Electronic Federal Tax Payment System (EFTPS), should forward it to [email protected].

Taxpayers are encouraged not to engage potential scammers online or on the phone. Learn more about reporting suspected scams by going to the Report Phishing and Online Scams page on IRS.gov.

Official IRS information about the COVID-19 pandemic and economic impact payments can be found on the Coronavirus Tax Relief page on IRS.gov. The page is updated quickly when new information is available.

https://www.consumer.ftc.gov/articles/how-recognize-and-avoid-phishing-scams

https://www.irs.gov/coronavirus-tax-relief-and-economic-impact-payments

https://www.irs.gov/newsroom/irs-issues-warning-about-coronavirus-related-scams-watch-out-for-schemes-tied-to-economic-impact-payments

https://www.npr.org/2020/03/26/821457551/whats-inside-the-senate-s-2-trillion-coronavirus-aid-package

http://moneytalks.mpbonline.org/episodes/money-talks-unemployment MDES

http://moneytalks.mpbonline.org/episodes/money-talks-cyber-security Cyber Security

http://moneytalks.mpbonline.org/episodes/5cd31f1533f6c1be55607d8c Scams

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What a jam packed podcast! We took so many calls and emails with our guests: Jackie Turner, Executive Director and Timothy Rush, Director of Unemployment Insurance from MDES. Have a listen - maybe we answered your questions.

The big takeaway from the show - have patience. This is happening fast. The 900 phone lines are jammed. Try again, try another phone line, try to email. Have patience.

• Visit the MDES website at www.mdes.ms.gov or call the MDES Contact Center at 1-888-844-3577.
• The contact center hours are 7:00 a.m. to 7:00 p.m., seven days a week.
• If you are experiencing difficulty filing your Unemployment Insurance claim, you can contact your local WIN Job Center by phone or email for assistance. WIN Job Center lobbies are currently closed to prevent the spread of COVID-19. https://mdes.ms.gov/win-job-centers/ 

Calls dealt with:

• email about weekly job search filing
• how to contact
• help for self employed
• out of state employment
• reduced wages
• partial wage loss
• gig workers
• 1099 religious workers
• Social Security recipient - stimulus check
• when do checks start
• who's eligible

Individuals receiving unemployment benefits will not be required to serve a waiting period week for initial claims filed from now through June 27, 2020.

Work search requirements that normally must be met to be considered eligible for Unemployment Insurance benefits will be suspended beginning March 21, 2020, until June 27, 2020. So to remain eligible for benefits, you don’t have to report job searching.

Who is eligible to file a claim due to COVID-19?

• Those who are quarantined by a medical professional or a government agency,
• Those who are laid off or sent home without pay for an extended period by their employers due to COVID-19 concerns,
• Those who are diagnosed with COVID-19,
• Or, those who are caring for an immediate family member who is diagnosed with COVID-19.

https://mdes.ms.gov/news/2020/03/20/mississippi-announces-support-for-workers-impacted-by-covid-19/

https://mdes.ms.gov/unemployment-claims/covid19/

CARE Act relief check: If you don’t have direct deposit on file with the IRS, there will be an online portal where you can add your information. The IRS hasn’t set that up yet, but once it does, you’ll be able to access it. https://www.irs.gov/newsroom/economic-impact-payments-what-you-need-to-know

You don’t have to do anything to get your payment as long as you have filed a tax return for 2018 or 2019. If you receive Social Security or railroad retirement benefits and don’t typically file a tax return, you don’t have to do anything. The IRS will use your benefit payment information to generate your relief payment.

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Listeners want to know how the CARES Act will affect their personal finances. Host Dr. Nancy Lottridge-Anderson, remotely, answered questions for the hour.

• The Mississippi Department of Employment Security announced recently that Mississippi workers who are not able to work due to COVID-19 will be eligible to file for unemployment benefits.                  This applies to:
• Anyone who is quarantined by a medical professional or a government agency.
• Those who are laid off or sent home without pay for an extended period by their employers due to COVID-19 concerns.
• Those who are diagnosed with COVID-19.
• Those who are caring for an immediate family member who is diagnosed with COVID-19.
• The governor on Sunday released a “Memorandum of Understanding” after Congress passed their legislation. He reminded us:
• Emergency increase in unemployment compensation benefits. The weekly benefit amount goes up by $600. This includes workers that are self-employed – or freelancers or gig workers.
• Funds the first extra week of unemployment insurance that is made available at the state level.
• Provides additional weeks of unemployment benefits for anyone who remains unemployed after typical state unemployment benefits are no longer available.
• With everyone being encouraged to stay at home, folks can file for unemployment by:
• Visiting the MDES website at www.mdes.ms.gov or call the MDES Contact Center at 1-888-844-3577.
• The contact center hours are 7:00 a.m. to 7:00 p.m., seven days a week.

https://www.clarionledger.com/story/news/2020/03/29/coronavirus-mississippi-tate-reeves-shelter-in-place-covid-19-testing-symptoms-health-department/2936075001/

https://mdes.ms.gov/news/2020/03/20/mississippi-announces-support-for-workers-impacted-by-covid-19/

• President Trump on Friday signed the $2 trillion federal stimulus package called the CARE Act. Here are some of the highlights.
• Most adults will get $1,200, although some would get less. For every qualifying child age 16 or under, the payment will be an additional $500.
• The amount of your check depends on your income. Single adults with Social Security numbers who have an adjusted gross income of $75,000 or less will get the full amount. Married couples with no children earning $150,000 or less will receive a total of $2,400. And taxpayers filing as head of household will get the full payment if they earned $112,500 or less.
• Above those income figures, the payment decreases until it stops altogether for single people earning $99,000 or married people who have no children and earn $198,000.
• The government determines income by looking at the 2019 tax return. If you haven’t prepared a tax return yet, you can use your 2018 return.
• You don't have to sign up for this check. If the Internal Revenue Service already has your bank account information, it will transfer the money to you via direct deposit based on the recent income-tax figures it already has.
• Most people who are receiving Social Security retirement and disability payments each month also get a stimulus payment.
• Student loans
• The federal government has waived two months of payments and interest for many federal student loan borrowers. Until Sept. 30, there will be automatic payment suspensions for any student loan held by the federal government.
• If you’ve borrowed money from the federal government — a so-called direct loan — in the past 10 years, you’re definitely eligible.
• Retirement account rules:
• For the calendar year 2020, no one will have to take a required minimum distribution from any individual retirement accounts or workplace retirement savings plans, like a 401(k). That way, you aren’t forced to sell investments that may have fallen in value, which would lock in losses. If you don’t need the money now, you can let the investments sit and hope that they recover.
• If you aren’t retired and are still making contributions but need that money to live on you can withdraw up to $100,000 this year without the usual 10 percent penalty, as long as it’s because of the outbreak.
• You will also be able to spread out any income taxes that you owe from money withdrawn from an IRA over three years from the date you took the distribution. And if you want, you could put the money back into the account before those three years are up, even though the rules may normally keep you from making a contribution that large.
• The bill makes a new deduction available for up to $300 in annual charitable contributions. It’s available only to people who don’t itemize their deductions, and you calculate this new one by subtracting the amount you give from your gross income.
• The Mississippi Public Service Commission voted to temporarily suspended disconnections of certain utility services due to coronavirus concerns. The restriction will be in place for 60 days and apply to all water, sewer, electricity, and gas services. 
• The bill puts a temporary, nationwide eviction moratorium in place for any renters whose landlords have mortgages backed or owned by Fannie Mae, Freddie Mac and other federal entities. This will last for 120 days after the bill passes, and landlords also can’t charge any fees or penalties for nonpayment of rent.

https://www.msema.org/news/public-service-commission-to-prohibiting-utility-shutoffs/

 https://www.npr.org/2020/03/26/821457551/whats-inside-the-senate-s-2-trillion-coronavirus-aid-package

https://www.nytimes.com/article/coronavirus-stimulus-package-questions-answers.html

Small business load information https://covid19relief.sba.gov/#/ and https://www.peoplelease.com/hubfs/023595_comm_corona_virus_smallbiz_loan_final_revised.pdf

The potentially forgivable SBA 7(a) Relief Loan is not yet available. SBA will have to issue regulations for them in the next couple of weeks before banks can begin taking applications. 

The SBA 7(b) Economic Injury Disaster Loans (what I call the O.G. of SBA loans during times of federally declared disasters) are available, but they will not be forgivable. However, they do have very favorable terms.

Basically, if small business owners can hold on for a couple of weeks and wait until the 7(a) loans are made available, they could reap the benefit of potentially free money by complying with the spending terms (payroll, mortgage, utilities, etc.) and having their loans forgiven over time.

Here's a breakdown HORNE has put together explaining the differences between the two options: https://connect.hornellp.com/en/resources/tax/2-loan-options-can-help-businesses-weather-covid-19-shutdown

HORNE will be rolling out more guidance as they know more here: https://connect.hornellp.com/en/covid19

Phone call questions:

• checks
• getting a check if you owe taxes
• getting a check if you draw social security
• social security
• small business loans
• withdrawing from IRAs
• checks
• credit score
• unemployment
• social security
• email about taxes
• adult daughter's check
• check
• check
• small business info
• disability

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Nancy Lottridge-Anderson answered questions remotely for our show.

• IRS extened filing and payment deadline to July 15, 2020 for 2019 person income taxes https://www.irs.gov/newsroom/payment-deadline-extended-to-july-15-2020
• Mississippi Department of Revenue extended the deadline to pay and file state taxes to May 15, 2020 for individual and corporate income tax https://twitter.com/MSDeptofRevenue/status/1242177964101468160/photo/1
• All Mississippi businesses and non-profits that are severely impacted by the Coronavirus (COVID-19) pandemic are eligible to apply for low-interest federal disaster loans. https://disasterloan.sba.gov/ela/
• Social Security Administration isn't seeing individuals in the office for now. You can call the National 800 Number. Toll-Free: 1-800-772-1213, call your local office, or go online for answers https://www.ssa.gov/coronavirus/
• The Mississippi Public Service Commission is prohibiting utility shutoffs during this state of emergency. https://www.msema.org/news/public-service-commission-to-prohibiting-utility-shutoffs/
• Congress is currently negotiating a stimulus package.
• Last week, Money Talks discussed picking up groceries. Since then Kroger has waved the pick up fee https://www.kroger.com/i/ways-to-shop/pickup

Calls and email dealt with

• church contributions
• IRA required minimum distributions
• who will get a stimulus check
• investing in oil companies

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We continue to experience the financial effects of COVID-19. Ryder Taff talks more about the stock market and our economy.

Call topics:

• percentage of budget going to food
• losing a job due to the virus
• municipal / treasury / corporate bonds

Websites we discussed:

Congressional leaders, administration push swift action on third coronavirus relief bill with major economic stimulus. https://www.washingtonpost.com/business/2020/03/16/congress-fiscal-coronavirus/

https://www.usatoday.com/story/money/personalfinance/2019/02/28/average-grocery-store-bill-cost-is-driven-up-most-by-these-items/39094659/

https://grocery.walmart.com/

https://www.kroger.com/i/ways-to-shop

https://www.cnbc.com/2019/08/27/best-low-cost-online-grocery-delivery-service-reviews.html

https://www.moneycrashers.com/online-grocery-home-delivery-service/

https://clark.com/shopping-retail/foods-to-buy-in-bulk-to-save-money/

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MPB's Money Talks discusses the stock markets' reactions to the 2020 Corona virus ramification.

• Market circuit breakers
• Oil and gas futures
• Airline change fees
• Fees for financial advisers
• Mortgage rates

Ryder Taff mentioned the Wall Street Journal article about circuit breakers.

https://www.wsj.com/articles/traders-closely-watching-circuit-breakers-thresholds-11583761223

Here's another article about circuit breakers:

https://finance.yahoo.com/news/7-plunge-p-triggered-trading-062630195.html

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What's going on with the 2020 stock market?! Our Chartered Financial Analyst takes questions and talks about uncertainties and personal finance. Ryder Taff from New Perspectives Check the background of this investment professional on FINRA's BrokerCheck.

Joshua Ryder Taff CRD# 6009566

Calls concerning:

• Aggressive investing during retirement
• Paying off a mortgage
• Investing in the stock market

Which explanation for the term"bear" market do you like best?

• Bearskin seller
• Bear claw attack
• Bare bulletin board

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Nancy and Ryder often give advice on what to do with your money. Today they’re going to remind you what you might NOT want to do with your savings, investments, or retirement funds. They also take other personal finance questions. 

• Precious metals
• Cryptocurrency

• Recent stock market drop
• Young adult's debt
• No credit score
• Ginny Mac
• Free IRS filing

https://www.irs.gov/

https://www.irs.gov/filing/free-file-do-your-federal-taxes-for-free

• File your taxes with free, easy to use software
• Free state return options are available
• Use the Free File Online Lookup Tool to find free federal and free state return options

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