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Weekly Market Recap[i]
The Week in Review
- Market PMI composite fell to 52.4
The Week Ahead
- FOMC Meeting
- 4Q24 GDP
- PCD
Thought of the Week
Immediately following his inauguration, President Trump signed a slew of executive orders (EOs) and made several declarations related to major policy themes from his campaign, including boosting U.S. energy production. These EOs were aimed at deregulating oil drilling (“Drill baby, Drill”) and increasing energy supply. President Trump also declared a “National Energy Emergency” to help address the energy needs for AI and data center build-outs.
Despite the “energy emergency” claims, the U.S. is producing energy in record quantities. As shown in this weeks chart (see link below), the difference between primary energy production and consumption reached the highest levels in recorded history. While these EOs may increase U.S. energy production going forward, the overall sector could continue to face performance challenges due to these supply/demand imbalances in energy markets.
The true impact of these EOs remains unknown. The U.S. is already the world’s largest crude oil producer and LNG exporter, producing 13.4 million barrels per day and aiming to increase LNG capacity by 50% in 2025 alone. It is unlikely that energy companies will want to significantly ramp up supply, resulting in a decrease in oil and gas prices and impacting profitability. For example, oil exploration and production firms need oil prices at ~$64 on average to profitably drill a new well, according to a 2024 Dallas Fed survey, leaving little room for current prices to decline. Additionally, even deregulating Arctic drilling, a specific EO target, high costs have led oil drillers to shift more of their capital spending from this region toward process efficiency projects.
While the term “energy emergency” seems apocalyptic, the reality is investors probably do not have too much to worry about with energy markets.
For market performance charts and important disclosures, CLICK HERE.
Philosophy Quote of the Week[ii]
The Three Areas of Training
“There are three areas in which the person who would be wise and good must be trained. The first has to do with desires and aversions – that a person may never miss the mark in desires nor fall into what repels them. The second has to do with impulses to act or not to act – and more broadly, with duty – that a person may act deliberately for good reasons and not carelessly. The third has to do with freedom from deception and composure and the whole area of judgment, the assent our mind gives to its perceptions. Of these areas, the chief and most urgent is the first which has to do with the passions, for strong emotions arise only when we fail in our desires and aversions.”
- Epictetus, Discourses, 3.2.1-3a
Today, let’s focus on the three areas of training that Epictetus laid out for us.
First we must consider what we should desire and what we should be averse to. Why? So that we want what is good and avoid what is bad. It’s not enough to just listen to your body – because our attractions often lead us astray.
Next we must examine our impulses to act – that is, our motivations. Are we doing things for the right reasons? Or do we act because we haven’t stopped to think? Or do we believe that we have to do something?
Finally there is our judgment. Our ability to see things clearly and properly comes when we use our great gift from nature: reason.
These are three distinct areas of training, but in practice they are inextricably intertwined. Our judgment affects what we desire, our desires affect how we act, just as our judgment determines how we act. But we can’t just expect this to happen. We must put real thought and energy into each area of our lives. If we do, we’ll find real clarity and success.
Tax Tips[iii]
Medical, Dental and Health Deductions and Expenses
Did you know that you may be able to deduct expenses you pay for someone who is not claimed as a dependent? This week’s tip is about medical expenses and deductions that a lot of people don’t know about.
Below is an excerpt from the IRS about medical expenses:
“Medical care expenses include payments for the diagnosis, cure, mitigation, treatment, or prevention of disease, or payments for treatments affecting any structure or function of the body.”
Medical care expenses include the insurance premiums you paid for policies that cover medical care or for a qualified long-term care insurance policy covering qualified long-term care services.
If you are self-employed and have a net profit for the year you may be able to deduct (as an adjustment to income) the premiums you paid on a health insurance policy covering medical care, including a qualified long-term care insurance policy that covers medical care for yourself, your spouse, and your dependents.
You may also deduct some medical expenses paid for even if you are not ill. In a 2007 ruling the IRS concluded some unreimbursed medical expenses are deductible even if you incur them when you are not sick. Examples include your annual physical check-ups, body scans and pregnancy test kits.
Medicine you buy without a doctor’s prescription is usually non-deductible; however, items such as crutches, braces, elastic hosiery, and blood sugar tests do qualify as expenses. Home health care items such as walkers, bed and chair lifts, and compression hoses also qualify.
If you, your spouse or a dependent attend a conference relating to your chronic disease the registration fee and travel expenses are deductible. Travel costs for medical care or treatments are also deductible as are the travel costs for a caregiver who goes with you for care or treatment.
Some of the Medical Care Costs You May be Able to Deduct
- Payments of fees to doctors, dentists, eye doctors, surgeons, chiropractors, psychiatrists, psychologists and nontraditional medical practitioners. This includes payments to plastic surgeons if the reason is due to accident, illness or injury to correct.
- Payments for in-patient hospital care or nursing home services, including the cost of meals and lodging, charged by the hospital or nursing home.
- Payments for acupuncture treatments or inpatient treatments at a center for alcohol or drug addition, for participation in a smoking-cessation program and for drugs to alleviate nicotine withdrawal that require a prescription.
- Payment to participate in a weight-loss program for a specific disease or diseases, including obesity, diagnosed by a physician but not ordinarily, payments for diet food items or the payment of health club dues. Health club dues may be deductible. See your tax professional or specifics.
- Payments for insulin and payments for drugs that require a prescription.
- Payments for admission and transportation to a medical conference relating to a chronic disease that you, your spouse, or your dependents have (if the costs are primarily for and essential to necessitated medical care). However, you may not deduct the costs for meals and lodging while attending the medical conference.
- Payments for false teeth, reading or prescription eyeglasses or contact lenses, hearing aids, crutches, wheelchairs and for service animals for the blind or deaf (including all costs for feeding, housing, care and medical costs, of service animals).
- Payments for transportation primarily for and essential to medical care that qualify as medical expenses, such as, payments of the actual fare for a taxi, bus, train or ambulance or for medical transportation by personal car, the amount of your actual out-of-pocket expenses such as for gas and oil, or the amount of the standard mileage rate for medical expenses, plus the cost of tolls and parking fees.
- If you are a business owner, partner or shareholder of an S-Corporation you can deduct your health insurance premiums (including Medicare insurance) on your tax return, even if you don’t itemize deductions.
- You may deduct as an expense any medicine or drug that is a prescribed drug (determined without regard to whether such drug is available without a prescription) or is insulin. A “prescription” is defined as a written or electronic order for a medicine or drug that meets the legal requirements of a prescription in the state in which the medical expense is incurred and that is issued by an individual who is legally authorized to issue a prescription in that state.
- You can only include the medical expenses you paid during the year. Your total deductible medical expenses for the year must be reduced by any reimbursement of deductible medical expenses. It make no difference if you receive the reimbursement or if it is paid directly to the doctor, hospital or other medical provider. Any reimbursement from employer or insurance reduces your medical expense deduction.
Non-Deductible Items
You may not deduct funeral or burial expenses, over-the-counter medicines, toothpaste, toiletries, cosmetics (except for accident, illness or injury), a trip or program for the general improvement of your health, or most cosmetic surgery (unless it’s a result of injury illness or physical damage). You may not deduct amounts paid for nicotine gum and nicotine patches, which do not require a prescription.
Important Points to Remember
- Medical, dental, eyecare or healthcare expenses paid (family, self, children or other dependents)
- Diagnostic procedures (body scans, pregnancy tests, and annual physical check-ups).
- Non-prescription equipment and supplies (crutches, braces, blood sugar tests, and walkers)
- Medical conferences and travel to and from (if relating to your chronic disease)
- Gym memberships (if a doctor gives you a prescription for weight loss, rehab, or to correct an injury, illness or accident). You cannot already belong to a gym.
- Fees paid to acupuncturists, chiropractors, and therapists (if related to a medical condition)
- Medical travel to and from providers (even if accompanied by a caregiver)
- Caregivers who aid in home and work (because of a medical condition)
- Business owners, partners, and shareholders of S-Corporations can deduct health insurance (including Medicare premiums) on their tax returns!
Financial Fitness Checkup[iv]
The "2025 Financial Fitness Checkup" checklist is a comprehensive guide to evaluating your financial well-being and preparing for a successful year. It covers critical areas of your life, helping you identify opportunities and address challenges. Here's why each section matters and what you'll gain from the February 11 webinar:
- Your Family: Evaluate the financial implications of major life changes such as marriage, divorce, having children, or caring for elderly parents, and learn how to adjust your financial plan accordingly.
- Your Goals: Identify and plan for significant personal goals like vacations, home renovations, or large purchases, ensuring they align with your overall financial strategy.
- Your Business: Whether you're starting, expanding, or selling a business, understand how these decisions impact your financial health, tax strategy, and retirement planning.
- Your Work: Prepare for potential changes in employment, total compensation, or benefits, and explore strategies to secure your career and financial future.
- Your Health: Address concerns about healthcare costs, Medicare, or the financial effects of serious illnesses for you or your family members.
- Your Money: Learn to manage debt, optimize your investment portfolio, draft effective spending and saving plans, and reduce tax burdens.
- Your Estate: Ensure your will, beneficiaries, and trusts are updated to reflect your current goals, and learn how to make substantial charitable contributions or manage life insurance policies effectively.
- Your Retirement: Understand how to maximize your retirement savings, navigate required minimum distributions (RMDs), and consolidate accounts for better efficiency.
- Your Future: Plan for significant life changes, financial organization, Social Security decisions, and achieving your "bucket list" goals, while reducing stress and building financial resilience.
Join us on February 11 at Noon CENTRAL STANDARD TIME to explore these topics in depth and learn how to apply the checklist to your unique circumstances. Access the webinar at this link: Join the Webinar.
For questions or further assistance, contact one of our financial planners:
- Matt Donaghue, CFP®, CLU®, CLTC®, RICP®, NSSA®, AIFA®, PPC®
Phone: 726-727-6581 | Email: mdonaghue@mfplanners.com
- Jason Duffaut, CFP®, CAP®, CPFA®, CExP®
Phone: 726-727-6583 | Email: jduffaut@mfplanners.com
- Kenneth Hamilton, CFP®, CDFA®, RICP®
Phone: 726-727-6582 | Email: khamilton@mfplanners.com
Take the first step toward achieving financial confidence in 2025!
[i]https://am.jpmorgan.com/content/dam/jpm-am-aem/americas/us/en/insights/market-insights/wmr/weekly_market_recap.pdf. Accessed 01.27.2025. See page 2 for important disclosures.
[ii] Holiday, Ryan. The Daily Stoic: 366 Meditations on Wisdom, Perseverance, and the Art of Living. Kindle edition, page 35. Accessed 01.26.2025.
[iii] Hockensmith, Robert F. 52 Ways to Outsmart the IRS, Weekly Tax Tips to Save You Money. Kindle edition, pages 24-28. Accessed 01.26.2025.
[iv]https://www.horsesmouth.com/shop/download.aspx?i=hzyqhKwku0I%3d&f=5GQCgyHBsIE%3d, accessed 01.20.2025