Looks – based on early futures – like the market is heading skyward with the Dow pointing to a +350-point pop at the open.
Unfortunately, there are too many moving pieces for the rally to be called sustainable on a number of fronts. We can wade through them one-at-a-time and I think you’ll see what I’m talking about.
Slamming Trump Finances
Biggest buzz on the net this morning seems to be the NY Times piece over here on Donald Trump’s reputed income tax filings. The headline is interesting, too: “Long-Concealed Records Show Trump’s Chronic Losses and Years of Tax Avoidance.”
The story – while certainly damaging to Trump – leaves us asking a number of critical thinking questions that (for now) remain in the “Unanswerable column.”
- The NY Times doesn’t say where the records came from. Since we know Trump has been under ongoing review by the IRS, did the Times get the records from an “official source” and – if so – why aren’t people going to jail?
- The Times also doesn’t give us a clinical definition of what a “billionaire” is. And that’s something of a critical point. For example, is….
- A Billionaire someone with $1 billion of assets?
- …or is a Billionaire someone with $1-billion of “net worth?”
- …or is a Billionaire someone with $1-billion of “ready cash?”
- Last, but not least, is why does the reporting on this not honor the Tax Code, instead of making use of the Tax Code “bad”?
People With Real Money…
,,,march to a “different drummer.” They are pretty clear on the principle of “not confusing “work” with “income.” They are only weakly related.
Just to give you a thumbnail: If you are an “employee” you take an employer’s check – taxes are witheld. And at the end of the year, that’s broadly what you made and what you owe on.
But, owning a business is a whole OTHER way of Life. It’s the difference between being a “worker” and being an “owner.”
America Treats “Owners” Very Well
Say you stop being an employee. Instead you go into some kind of business. Look at how you can “work” the tax angles (and these are only a very few!):
- What you wear to work (in your business) may be deductible. Uniforms. Or, in Hollywood, where appearance is the product, make-up, wardrobe, grooming, trainers may qualify… because that’s your product…
- When you go to a work location, your vehicle becomes an expense item: You can depreciate it, charge-off your gas, maintenance, insurance, and more… (Or you can claim the IRS allowed mileage deduction.)
- If you have a separate building for your business, all those expenses are a write-off against income. Rent/mortgage, utilities…Including the biggie: Depreciation.
- All your tools and supplies (including office furniture, computers, software, phones, and related,. your expenses may include pens, paper, furniture, office chair, postage…the list is endless.
- Bad debts are deductible. Taxes generally…fees and commissions paid….
- People in a hurry can (of course) write off their airplanes. Because time is money and it’s customary for high-end execs to have a business jet…No airport delays for them, by golly.
- There are limitations on entertainment, food, and travel. But if you don’t understand that many T&E (travel and entertainment) expenses are totally legit, you’ve missed understanding the tax-advantaged Life of Owners.
At the end of the day, the NY Times “tax story” seems to us to exploit the public’s lack of understanding about how the two economic classes in America work.
Those who file long-form is one class of folks while those who have a less than 4-page return are plebes. (Disclosure: The Ure’s tax filing for 2019 was 42-pages, for example. And we’re super conservative in what we write off and we NEVER try to “push it.” In “the game” – we “know our place.”) In big real estate organizations, everything is open to “pushing.” The public may be appalled, but that’s “the deal” and if you’re an “owner” – you love it!
Bottom line: The Trump “tax revelations” story has “shock value” only if you don’t know “how the game works.” When you do, it’s a kind of ho-hum.
We’ve always assumed Trump was basing his “billionaire” claims on total asset values, not cash in his checking account. Because that’s “how the game is played.” Even people with a handful of rental homes can be “Asset-Rich” while at the same time being “Cash-Poor.”
Turnaround Tuesday Ahead?
While market futures are trying to gin-up a 400 point rally today, there are plenty of side bets to be made on what’s possible later this week.
- For example, could Joe Biden use the “tax revelations” as a pretext to not “waste my time debating a liar”? Nasty Nancy has been pre-selling “No debate” in background.
- Or, what happens when the taxes become a “get Trump” debate question if there’s not a counter-balancing “What about Hunter’s Burisma deal or threatening to have Obama fire someone if a Ukraine guy didn’t go along…?”
- Skipping the Silly Season episodes, tomorrow the Case-Shiller Housing report will be out. Call us skeptical, but how far is UP, anyway? We think BLM and Antifa are already hurting big city real estate.
- And don’t forget this is “Employment Week.” We have ADP Wednesday, then Job Cuts Thursday along with weekly filings, and then the Federal data Friday.
Notwithstanding, it’s pretty clear the markets are saying “Biden being up +10 in some polls is not scaring us…”
Markets don’t really fear Slow Joe and “Scare-Us” because business knows that “corporations don’t pay taxes: People do. So when [whoever] wins the White House (and it almost doesn’t matter) for next year, any tax increases will be passed on to who? You and me, Bubba.
All of us can change our names to Ben Dover. Corporations are – in a sense – only passthroughs for costs and efficiencies.
America has Electile Dysfunction. Only the crooks will argue that changing the Electoral College of turning D.C. isn’t a state is the “blue pill for all that ails us.” It’s not. We don’t have a big National Goal, a thrilling New Technology…and with declining pop-growth, the American economic system is a disaster without a growth story to tell.
Media Playing “The Race Card”
Having overdone the virus hysteria, the “billionaire who isn’t” and what’s actually not a bad year (all things considered) we see the “race game” coming out in unusual ways in headlines.
“White men backing Trump say they can’t be swayed.” We would sure like to see an equality of coverage of Black and Hispanic men’s voting preferences. Dividing us to conquer…that’s the game. Ure’s Union of Solidarity (people4people) is dangerous and threatens the Monetizers and Marxists.
Subtle how American politics is about our tiny differences and not about our common shared values (like invention, exploration, sound money, lower taxes, more investment in future). Instead – race and gender-based stories? GMAFB.
We need to be demanding faster internet, more police (not less), and lower taxes for smaller bureaucracies. Could-a, should-a, would-a….
Quest for What Matters
We will be terribly disappointed if one of the key questions in the “debate” tomorrow isn’t about “law and order.” Especially with headlines line “Los Angeles officer ‘will be ok’ after being injured during shooting inside police station, authorities say” making the rounds. Biden’s got exposure on this issue.
Cause and effect? Meanwhile, we can’t help but wonder – with all the demonstrations and stress in Louisville – whether the move of Papa John’s Pizza corporate offices to the Atlanta area might not be telegraphing something. What have I been telling you? “Business goes where money flows…” Stories like “Louisville protesters defy curfew in third night of Breonna Taylor demonstrations” came after the announcement. But before, there were stories like “Tension rises in Louisville, while violence breaks out in Rochester…”
Corporations are not especially tied to specific communities…and they home shop just like individuals do… Peaceful neighborhoods and homes matter.
It’s something of an international trend we can see starting up: With “social distancing” and social stresses building in cities, we can make out (in stories like Rising number of Londoners looking for work outside capital, says job site) a general dissatisfaction with cities.
The nextgen of “hipster” housesteaders may be eyeing the exits with good reason.
Golden State Bummers
The lesson from the lack of controlled burns being funded in forestry management is still being driven home: Extreme fire danger likely as record-breaking heat continues in California.
Meantime, financially strapped California is eyeing a huge wealth tax. With predictable consequences such as “Billionaire ‘Bond King’ Gundlach hints he might leave California to a lower-tax state if local taxes for the wealthy are raised.” Dude – No state income tax in Texas!
Not that Texas is perfect: We have a deadly brain-eating amoeba outbreak down at Lake Jackson, Texas in the Houston area (Brazoria County). [Medical thought, though: How would you differentially diagnose a brain-eating disease as differentiated from a case of California?]
And other things are shaky in California (besides finances!): 3.4 Earthquake Rattles East And South Bay. Not stirred, we trust?
Off to see if the futures can run up to 400-points... good luck to us all and we will maybe see today if our outlook changes.
Psst! Want in the “Biden cancels out of the debate” pool, ol’ Zeus the Cat has set up in the office here? Damn cat’s always looking for action…
Write when you get rich,