The Federal Reserve, in order to save the bond market and add liquidity to the system, just dropped rates to ZERO and announced quantitative easing – QE5. They are throwing everything they can to prop up the market. Full article here.
The only thing I have missed with my predictions is how FAST they are coming to fruition. I expected these measures in April or June. They must have data we don’t have access to; especially liquidity challenges – which started in October.
So what really happened? A 12 TRILLION DOLLAR margin call and the markets were about 6.5T short. This is VERY similar to 2008.
Two important points in the announcement. The fed has removed reserve requirements for banks to ZERO, effective 3/26 and they are all coordinating with all the G-8 banks.
With all due respect to Thursday’s massive repo expansion, this is the Fed’s bazooka. It also means that after this, the Fed – which just cut rates to zero and launched QE5 – is now out of ammo, as Powell will have to cut rates to negative next and/or buy stocks outright for further monetary stimulus, something that would require the permission of Congress. And since that is unlikely absent a total collapse in the financial system, we are now down to fiscal stimulus and US politicians acting in a bipartisan fashion. Which may be a huge gamble.
They are going to flood the marketplace with piles of cash to shore up the bond and corporate debt markets.
What does this mean for real estate investors?
We identified 8 challenges and opportunities in the current real estate investing market. Monday night we are hosting a webinar to discuss all 8 challenges and opportunities and how best to navigate them in this market.
SO…...here is what are we doing during Lockdown 2020.
Lots of real estate training; most of it free. We are going to be hosting a ton of free webinars and “lives” throughout the quarantine.
There are a few ways to enjoy our content:
Join the – Mr Texas Real Estate Facebook group
Register for one of our online workshops
Subscribe – to the Texas Real Estate Radio Network YouTube channel
See you online!
Mr Texas Real Estate