March 31 2020

The U.S. stock market has taken some very hard hits as of late, which we analyzed for you in our last newsletter. In today’s edition, we want to take a closer look at the market volatility that has driven bipartisan lawmakers to pass the largest bailout package in U.S. history. 
 

Market Volatility

The Cboe VIX Volatility Index, which measures the market’s expectation of future volatility, has been increasing significantly since mid-February 2020. During regular economic conditions , the index hovers around a range of 11 to 14 points. In August 2019, when economic indicators where sending warning signals, it had increased to 25 points, which was considered high at the time.

On February 20, 2020 the volatility index was at 15.56 points from where it began a steep climb to its high of 82.69 points on March 16, 2020. Since then it has declined slightly to 65.45 points on Friday March 27, 2020. Looking at the period between February 20 and March 27, 2020, one can see that the level of volatility increased by 321%. See chart “VIX Volatility Index Q1 2020” for details.

Such a level of volatility is extremely high. It means that market participants have very little confidence in the stability of the market and little to no idea which direction it may be headed next. Plainly it means no one knows what will happen next.

Historic Bailout Bill

This situation of uncertainty has united the U.S. Congress to jointly pass a bailout bill worth the unprecedented amount of $2.2 trillion, in order to provide reassurance and stability to American workers, companies, and institutions.
For your convenience, we have prepared  a summary with the most relevant highlights of the $2.2 trillion covid-19 bailout bill below :

Other governments around the world, such as China, the United Kingdom, France and Germany have passed similar bailout bills for their citizens and industries. However, when the U.S. government, one that firmly believes in free and unregulated markets, intervenes in such a powerful way, it is clear that the economic outlook is massively under threat.

It is unclear when market volatility will return to regular levels again, because no one knows how the covid-19 pandemic will continue to spread across the U.S., and whether the current bailout bill will be enough to counteract its effect on the U.S. economy.

In a time like this, we offer you a form of investing that focuses on the safety of your principal as well as constant cash flows at a high rate of return. We encourage you to take a look at the concept of First Deed Lending, which provides you with the cash flow advantages of owning a rental property, without the hassle of being a landlord. This is your opportunity to earn a stable stream of income during unstable times.