Skip to main content

The Fed: Rate hikes off the table. IRS: 2021 tax deadline now May 17

Written By | Mar 17, 2021
The Fed, IRS

The Fed, porkulus bill, the IRS, etc. Cartoon by Garrison. Reproduced with permission and by arrangement with

WASHINGTON – Two potentially positive bits of news emerged from Washington Wednesday afternoon. First, in a just-released Federal Open Market Committee (FOMC) report, the Fed indicated that significant interest rate hikes were off the table. At least for the foreseeable future. But this report was followed by news that the IRS has just extended the 2021 deadline for filing personal taxes by a month, moving it to May 17.

The latest Fed reading of the economic tea leaves

Here’s the brief CNBC instant replay of the latest Fed report.

“The Federal Reserve on Wednesday sharply ramped up its expectations for economic growth but indicated that there are no expected interest rate hikes through 2023 despite an improving outlook and a turn this year to higher inflation.

“As widely expected, the policymaking Federal Open Market Committee also voted to keep short-term borrowing rates steady near zero, while continuing an asset purchase program in which the central bank buys at least $120 billion of bonds a month.

“The key changes came in how central bankers view the economic road ahead and what impact that could have on policy.

“‘Following a moderation in the pace of the recovery, indicators of economic activity and employment have turned up recently, although the sectors most adversely affected by the pandemic remain weak. Inflation continues to run below 2 percent,’ the committee said in its post-meeting statement.”

Also Read: Tales from the Fed, the Porkulus Bill, and the mysterious Silver Bandits

IRS compensating for the Porkulus Bill?

As for that IRS income tax filing extension? America’s favorite government agency announced the news Wednesday. It’s geared to allow tax filers time to incorporate any effects from the Democrats’ latest Porkulus Bill – aka, the “American Rescue Plan Act (ARPA?) of 2021 – into their current returns before filing.

Specifically, the IRS also provided some advice on filing amended tax returns if certain taxpayers received unemployment benefits in 2020. As in, “Don’t file an amended return if you’ve already filed your return for 2020.” Apparently, IRS advice for those situations will be forthcoming. I.e., it’s the usual “paperwork reduction act” madness. Plus, since the IRS must now deal with special unemployment benefits treatment in 2020 returns, they’re having to tell individuals in this situation how to treat those benefits, which are now, hopefully, not taxable. Yeah, I’m confused, too.

At any rate, I’m up on most tax rulings, but I’m not a tax expert and don’t play one on TV. So check out CNBC’s advisory story on this and proceed accordingly. All should eventually be well. but your paperwork probably won’t be reduced. Even though most IRS forms still claim they’re reducing it.

A negative Wednesday market turns positive

US stocks moped around Wednesday for the most part, with investors largely reluctant to make buy, sell or short commitments without reviewing the upcoming economic news and forecasts from the Fed. The Dow Jones Industrials remained in the green all morning, while the broader-based S&P 500 remained in the red and the tech-heavy NASDAQ returned to its recent losing ways, battering most stocks in that average.

But now, as of approximately 2:15 p.m. ET, the Dow is up a robust 201+ points for a 0.6+% gain. The NASDAQ is struggling to break even at plus or minus the zero point flat line. And the S&P 500 is trying to stay positive, up 0.6 points (0.2%) at the moment.

None of these numbers seem secure at the moment. And averages have a history of whipping around for at least the first 45 minutes following major Fed reports. So it looks like we just have to wait until the 4 p.m. ET closing bell to see what investors really think. (Or not.)

Some unaccustomed fun this week in the oil patch

Bright spots: Oil stocks, which have been pounded this week, did a quick about-face after the Fed report. That’s good for our large portfolio. It holds modest positions in US majors EOG (NYSE:EOG), Exxon Mobil (NYSE:XOM), and mega-refiner Valero (NYSE:VLO); in addition to small spec positions in European oil majors including Italy’s Eni Spa (NYSE:E), The Netherlands’ Royal Dutch Shell (NYSE:RDS/A) and French oil giant Total SE (NYSE: TOT).

These large-cap players remain good-to-great dividend payers. That’s true even though Royal Dutch Shell did trim its dividend recently in a move to rationalize debt and assets. We got into several oil holdings during H2 2020 and paid a price for being too early. But holding on for the most part and adding to each position during sickeningly regular selling squalls seems finally to have paid off. However, why oil prices, which have soared recently (check your price at the pump), took a hit earlier this week remains something of a mystery.

Perhaps the increasingly weird Dr. Faucet’s recent and bizarrely negative advice on keeping US coronavirus lockdowns in place until at least the 4th of July, 2030 were at least partially to blame. This unfortunate (and undoubtedly wrong) prognosis might have scared off the airline and cruise ship optimists. That, in turn, may have scared off new investors in the oil patch.

Perhaps the fossil fuel guys just got a bit ahead of themselves. At any rate, these stocks snapped back this afternoon. And, for purely selfish reasons, I hope they keep snapping back for some time. We small investors need all the profits we can get. At least before Biden’s proposed confiscatory tax increases have a chance to pass a Congress that’s ready to give us “progressivism” good and hard. (Check your wallets.) Investing in a company we love to hate; or, Why investors should not equate morality with investing strategies

Another small holding of ours – since it’s per share price is so costly – (NASDAQ:AMZN) seems to have turned around. We hope this continues as well. It seems that every time AMZN shares climb up somewhere between $3,250-$3,350 per share or thereabouts, holders jump in and sell the dickens out of them. That sends them down hundreds of points. Such moves can quickly transform a winning position into a sickening dance of death. It’s not a pleasant experience.

That said, those who know better than I tell us AMZN shares should meet or beat the $4,000 per share mark this year if not sooner. So hey, Jeff, where’s the bounce? I actually think the Feds should break up this robber baron monopoly sooner rather than later. Or at least before Bezos can corner every viable business in the world. Besides, George Soros probably wouldn’t like that kind of competition from a whippersnapper like Bezos.

But that said, investors, including moi, always need to save moral scruples for life in general. Not for making investment decisions. Which is why I continue to hold a reasonable (and small) number of these highly volatile shares. They almost always make money for me. Which is why we all play this silly game, right?

Note: This slightly revised version of the original article corrects the IRS 2020 due date to May 17, 2021. The original version listed an incorrect date of May 15. We regret the error.

– Headline image: The Fed, Porkulus Bill, the IRS, etc. Cartoon by Garrison. Reproduced with permission and by arrangement with


Terry Ponick

Biographical Note: Dateline Award-winning music and theater critic for The Connection Newspapers and the Reston-Fairfax Times, Terry was the music critic for the Washington Times print edition (1994-2010) and online Communities (2010-2014). Since 2014, he has been the Senior Business and Entertainment Editor for Communities Digital News (CDN). A former stockbroker and a writer and editor with many interests, he served as editor under contract from the White House Office of Science and Technology Policy (OSTP) and continues to write on science and business topics. He is a graduate of Georgetown University (BA, MA) and the University of South Carolina where he was awarded a Ph.D. in English and American Literature and co-founded one of the earliest Writing Labs in the country. Twitter: @terryp17