Friday night Rob and I hosted an emergency market update. The crash is here, duh, but the question is what happens next.
BAILOUTS, lots and lots of bailouts.
But first, how did the crash happen? It is real simple.
Executive management teams,
at most publicly traded companies,
borrowed cheap money,
with interest rates set by the Fed,
to buy back their company’s stock
to boost the management teams’ compensation.
I predicted last night that the next crash is in the dollar. Deficits and bailouts don’t matter until they do. It is quit possible in the next few years, the next crash will be in the dollar. Why do I think this? Volatility in the bond market is unprecedented. Bonds, especially US bonds, are not supposed to be volatile, because they are the safe haven for the world….. until they are not.
There are no safe havens in financial assets. COVID-19 exposed the underlying challenges in US fiscal and monetary policy.
The government is in full panic mode.
The Coronvirus stimulus package is expected to be at least $2 trillion, that is 10% of GDP. By comparison the 2008 stimulus package started at less than $200 Billion or $0.2 trillion.
The Federal Reserve stated that they will backstop the banks at $1 trillion a DAY for the month of March. By comparison, quantitative easing, QE, and TARP from 2008-2014 – over 6 years – totaled $4.5 trillion.
I keep hearing from the Wall Street crowd and Financial Wizards that this crash is not as serious as 2008 – I tend to disagree based on their actions.
None of these actions will be good for the US Economy.
Here is what happens next, REAL assets, are going to become way more EXPENSIVE. How do we know this? Because that is exactly what happened after 2008. Too few dollars chasing too few REAL assets.
I highly recommend watching Peter Schiff’s podcast from Friday night. He explains in language that everyone can understand.
On a positive note – this too shall pass – and we are doing our level best to buy every piece of cash flowing real estate we can get our hands on.
We launched a COVID-19 section on our website. To the best of my knowledge we are the ONLY real estate investors sharing daily content about the virus and its evolving impact on the real estate market. In the last two weeks we’ve created over 50 pieces of unique content. Review our page, daily, as we will update it with the last two weeks of content and new updates.
Attention: Due to COVID-19, MRTXRE Events will be hosted online until further notice.
In addition to our usual class list, Rob and Jason are hosting DAILY webinars and live streams to update you on the latest COVID-19 and market news that may impact your portfolio.
There are a few ways to enjoy our content:
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