🌞 No Pants On – March 16 2020



Happy Monday. We’re hoping you’ve found a way to pass the time under quarantine. Remember Issac Newton invented calculus during the plague in 1665 when Cambridge University was shutdown. True story. Meanwhile, in Italy people are singing from balconies. All around the world internet service providers are removing data caps and giving a speed boost. Now your Netflix binge won’t buffer.

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In Today’s Newsletter:

  • The Fed calls in the rate cutting Calvary, again.
  • One of the reddest states starts turning blue
  • Crisis hits AirBnB owners


Program Rate Change APR Change
30 year 4.69% 0.30% 4.78% 0.31%
15 year 3.66% 0.02% 3.89% 0.09%

The Lead: The Fed Fires Another Round

federal reserve, credit: getty

US stock futures indicated a massive sell-off when markets open today. People around the globe are asked to stay home if they can, and schools are closed. This has created uncertainty in just about everything we have come to know and understand about modern life.

No going out to restaurants, no travel, no personal grooming services, no elective medical appointments, limited access to shopping. We are about to see just how interconnected our economy is because even if you can do your computer-based job from home, what about the restauranteur or Uber driver who will suffer next door? It’s foolish to think that their inability to earn income won’t affect us all.

The Fed’s Response

The Federal Reserve has responded by cutting interest rates for the second time in just two weeks by a full percentage point. They also committed to buying Treasuries and mortgage bonds to boost the economy that is teetering on the brink of recession.

“The coronavirus outbreak has harmed communities and disrupted economic activity in many countries, including the United States, the Fed said in a statement issued on Sunday at 5 p.m. “The effects of the coronavirus will weigh on economic activity in the near term and pose risks to the economic outlook.”

To put it lightly.

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Come Sail Away, Just Not Today

credit: bloomberg finance

AirBnb makes accomodations

The vacation rental market is undoubtedly about to take a big hit from the coronavirus pandemic. As humans are encouraged not to travel, that will mean no renters in vacation homes. AirBnb is allowing free cancelations with full refunds as a result.

The short-term rental company updated it’s “extenuating circumstances” terms to reflect that reservations booked on or before March 14 would be eligible for cancelations with full refunds.

Reservations made after March 14 are not eligible unless the host or guest has contracted the virus. And if that is you, how rude would it be to quarantine in another person’s home?


credit: giphy

While Italy has suspected mortgage payments due to the country’s shutdown, don’t hold your breath that the U.S. will do the same thing. The mortgage market in the U.S. is far more extensive than the Italian mortgage market, and American mortgages are backed by Fannie Mae and Freddie Mac bonds.

The Federal Housing Finance Agency asked nicely last week for banks to “work constructively” with borrowers effected by the coronavirus outbreak but there is no law to enforce this.

The bonds that back mortgages have to be paid. This is how a mortgage crisis can set an entire economy into a tailspin, a lesson we learned the hard way in 2008. So don’t expect regulators to let the mortgage market implode. More likely, they will find ways to work with borrowers, such as extending the life of the loans or lowering interest rates. But a mortgage vacation? Not very likely.

Red State Turning Blue

giphy.gif arizona, credit: kiplinger

Yes, but it’s a dry heat.

As families turn away from high-tax states such as California and New Jersey, this is showing a political shift in tax-friendly states such as Arizona and Texas. Typically immigrants into these states come from Democratic-leaning communities. The result is that red states are testing on the brink of turning blue.

In Arizona, one out of four new residents come from California, one of the bluest states in the country. The result of this pattern is that registered Democratic voters grew by 10.6%, compared to 8.7% for Republicans. This puts Democrats ahead of Republicans by about 8,000 voters.

These are gross approximations but indicative of a growing trend. Blue states are losing their blue voters because of their high tax rates and inhospitable nature towards entrepreneurs. Tax expert Tom Wheelwright has long since predicted a mass exodus from California for what he calls their “draconian tax laws.” The receiving states that could see this purple-to-blue trend include Arizona, New Mexico, and Texas on the West Coast, and North Carolina, Tennessee and Florida on the East.

News By The Numbers

2 out of 5. A new Redfin survey finds that only two out of five people believe the coronavirus will hurt the housing market. Half of respondents expect no effect at all. While 8.9% predict that it will have a positive impact—likely due to the recent drop in mortgage rates.

1,395. That’s the number of people in the U.K. that have tested postive for coronavirus. Now a new #WhereisBoris hashtag has emerged on Twitter. Britain’s prime minister Boris Johnson is facing criticism over his crisis response with many pushing him take more drastic measures like closing schools and public gathering spaces.

2 weeks. That’s how long most of the casinos in Las Vegas will close due to the virus. You know this is serious when Vegas shuts down and the strip goes dark. What is Wayne Newton going to do with himself?

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