Covid-19 Market Update #13

COVID-19 News

Excellent white paper on non-pharma mitigation and impact modeling – https://www.imperial.ac.uk/media/imperial-college/medicine/sph/ide/gida-fellowships/Imperial-College-COVID19-NPI-modelling-16-03-2020.pdf

Market News

This makes me want to grab a pitchfork and burn the system down.

Fed Launches Primary Dealer Credit Facility Which Will Accept Stocks As Collateral

Since 2009 executive compensation has been directly tied to the price of stock. There are two ways to increase the price of a stock – make a company more profitable, decrease expenses and/or increase revenue, OR buyback the company’s shares. Less shares on the market increases the price of those shares.

These same executives are asking for a bailout from the federal government, e.g. you. As an example, Boeing spent 96% of its free cash flow, profit, on stock buybacks.

Boeing said Mr. Calhoun, who starts as chief executive on Monday, would receive a base salary of $1.4 million and be eligible for an annual target bonus of $2.5 million, long-term incentive awards worth $7.5 million and restricted stock units worth $10 million.

The outgoing CEO cashed out at $60MM. I’ve got no problem with executives making whatever their board and shareholders agree too. However, as a taxpayer, why should I have to backstop their losses, especially since they should have much deeper cash position for times like this. Rumor on the street is the airlines will be bankrupt by May. Really? You guys do not keep a few months of cash as reserves?

I say let them burn, bailout SWA and let them acquire everyone at book/fire sale prices funded by Treasury. SWA is the only airline that does discount travel right. Since the Continental/United merger, air travel, even in first class, has been lackluster at best. I think I am going to renew my SurfAir membership and avoid the whole public travel system.

Real Estate News

A complete surprise to us, our AirBnbs are doing extremely well. We are near 70% occupancy, yes, even our assets on the beach. We thought for sure with reduced corporate travel, most of our AirBnbs are for business travelers, our occupancy would plummet. Hotels in Las Vegas are below 15% occupancy at the time of this email.

An investor friend of mine sent me a text about Oil and Houston Real estate. Due to the ongoing price war between Putin and MBS, rumor I am hearing is a price target of $9/bbl, real estate above $300K is going to be substantially impacted. How much is anyone’s guess.

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

Join our email list

Register for one of our online workshops

Subscribe – to the Texas Real Estate Radio Network YouTube channel

See you online!

Jason Bible
Mr Texas Real Estate