Category: zerohedge

Via SchiffGold.com,

Gold reached a new milestone Tuesday, breaking above $2,000 for the first time ever. The yellow metal closed just above $2,017 an ounce. Peter talked about gold’s new record high and what it’s telling us in his latest podcast. He says most people still don’t really understand the significance of $2,000 gold.

Peter noted that when gold first peaked its head above $2,000, it immediately sold off. He said that kind of nervousness is exactly what he wants to see in a gold bull market.

Instead of wanting to buy the breakout, they want to sell the high print. And that’s exactly what they did. And of course, once gold pulled back, all the buying that drove it up to $2,000 in the first place was still there. The problem for the sellers, or the shorts, is once it got back above 2,000 again, all the people who wanted to sell 2,000 gold had already sold and the smart money had bought it from them.”

Peter said gold could be building support above $2,000, although it’s too early to tell.

I’ve been saying that the support has been inching higher and higher and higher as more and more buyers enter the market and the supply of sellers is diminished.”

Peter said more evidence of the wall of worry is that we haven’t seen a big rush into gold stocks yet. They are doing well, but they are nowhere near their 2011 highs even though the price of gold is higher than it was at that peak.

I don’t think we’re going to see a meaningful correction in this market until we see that rush, until we see some money actually coming off the sideline, until we see some mainstream investors coming into gold.”

Peter said he was listening to CNBC and one analyst was explaining why gold’s move above $2,000 wasn’t a big deal and predicting the yellow metal will sell off as soon as real interest rates go positive.

I’m just laughing. I mean, just as soon as real interest rates go positive? When is that going to happen? I mean, that’s not even close to happening. Positive real interest rates aren’t even anywhere on the horizon. So, if you think gold is going to keep rising until real interest rates go positive, you should be buying it with both hands. I mean, obviously, there’s no way the Fed is ever going to get in front of the inflation curve and have nominal interest rates higher than the CPI, let alone the actual rate of inflation, which the CPI doesn’t even come close to capturing.”

Peter said if you’re actually worried about gold crashing, you should be more concerned about the stock market, or the real estate market, or the bond market, or the entire economy crashing.

The only reason anything is going up is because real interest rates are negative. So, if that’s your view on gold, you should have the same view on every single asset that there is. But no, I’m sure if you talk to that guy, he’s bullish on the stock market.”

In reality, gold is the only asset that’s not in a bubble because of negative real interest rates.

Silver has gone along for the ride with gold. The white metal was trading just below $26 when Peter recorded his podcast. By Wednesday morning, silver had surged to over $26.80. Peter said $26 silver is still a steal.

Don’t worry is you missed the bottom… You can keep buying now because we are still much closer to the bottom than to the top. You can buy gold and silver at SchiffGold.”

Peter said the only thing that really surprised him about $2,000 gold is that it took so long to get here.

But I think that the thousand dollar milestones are going to start dropping like dominoes here. And I think people are going to take notice, because today, very few people are noticing or commenting on the significance of gold going over 2,000 because they don’t understand it.”

The rising price of gold is telling us that the dollar is in trouble.

The dollar is on fire, and the fire may have begun with the dollar, but it’s going to spread to the financial markets and the entire economy and people just don’t get this.”

Peter said that even though the rise in gold is vindicating and financially rewarding, he doesn’t feel like he can really celebrate gold going to $2,000.

This is not a happy occasion because it really portends some real big problems on the horizon. I mean, most Americans don’t have any gold. There is severe economic hardship that the vast majority of Americans are going to be enduring, and gold is basically letting you know that that hardship is on the way.”

Peter said he thinks that the dollar is close to a Wile E. Coyote moment where it drops off the cliff and plummets.

I think that’s what’s going to happen soon to people who are in the dollar. As soon as they look down and realize where they’re standing, the dollar is going to drop like a stone and that’s when the price of gold is going to skyrocket. And so, you’d better be on that rocketship before that ride begins.”

In this podcast, Peter also talks about bitcoin and the Fed’s willingness to commit to more inflation.

As millions of unemployed Americans and struggling businesses wait for lawmakers to hammer out the fifth coronavirus relief package, Democrats remain unwilling to consider a temporary extension of a $600 per week unemployment boost – instead suggesting the GOP meet them in the middle.

Looks like that’s a non-starter.

While walking into House Speaker Nancy Pelosi’s (D-CA) office on Friday, Treasury Secretary Steven Mnuchin told reporters that a Democratic proposal to double the GOP’s $1 trillion stimulus proposal if the Democrats drop theirs by $1 trillion is a “non-starter.”

Secretary Mnuchin called it a “non-starter,” when asked about Speaker Pelosi saying him and Meadows needed to come up a trillion dollars in negotiations. pic.twitter.com/m9ApxFEQle

— Jason Donner (@jason_donner) August 7, 2020

“Yesterday, I offered to them, we’ll take down $1 trillion if you add $1 trillion in. They said absolutely not,” said Pelosi, adding “If we could do that, if we take down $1 trillion and they add $1 trillion, we’ll be within range, but we must meet the needs of the American people.”

Speaker Pelosi: “Yesterday I offered to them we’ll take down a trillion if you add a trillion in.” pic.twitter.com/f9dRn6Zwey

— The Hill (@thehill) August 7, 2020

During the presser, Senate Minority Leader Chuck Schumer (D-NY) blamed White House Chief of Staff Mark Meadows for the impasse.

“Basically what’s happening is Mr. Meadows is from the tea party. You have 20 Republicans in the Senate greatly influenced by them. And they don’t want to spend the necessary dollars to help get America out of this mess. Ideology sorta blinds them,” said Schumer, adding “The House doesn’t have the votes to go south of $2 trillion. The Senate Democrats won’t support something less than $2 trillion.”

Meadows and Mnuchin hit back, saying that Democrats have rejected their offers of compromise on the unemployment insurance boost.

While there’s an overlap in having schools, extended unemployment benefits, direct payments to the public as top priorities, the sticking points are, as always, in the details — who qualifies and how much to spend.

Additionally, Republicans have a heavy emphasis on liability protection, which Democrats said are unnecessary.

Meanwhile, the Democrats are pushing for funds for mail-in-ballots and elections, the financially struggling post office, food security programs, and a surge of funding for state and local governments — none of which have gained traction with the Republicans. –Washington Times

Senate Republicans, meanwhile, are divided on their own proposal according to the Washington Times, which notes that “about a dozen of their ranks skeptical of adding another $1 trillion to the nearly $3 trillion coronavirus tab that Congress has created.”

Meadows and Mnuchin also added that a larger deal, or even a “skinny” extension for top priorities are President Trump’s preference – while the Commander in Chief is looking at executing an executive order which would include a payroll tax cut, eviction protections, an unemployment boost extension and flexibility on student loan repayments, according to the Times.

In short, Democrats are about to hand Trump a big optics win. And which liberal #resistance judge wants to be known as the person who took money out of Americans’ pockets by striking it down?

Many U.S. cities are emerging from the coronavirus pandemic that has triggered the most severe economic contraction since the Great Depression of the 1930s. 

Research firms Webster Pacific and New World Wealth have published a new report (seen by Bloomberg) taking into account the impact of the virus-induced recession on individual wealth. 

What they found, on a metro by metro basis, is that New Yorkers lost the most wealth, recorded a whopping $336 billion loss, or -13%, compared with the previous year. 

Residents in San Francisco, the second-wealthiest city in the nation, fared better than New Yorkers, lost $105 billion, or 5% of the wealth, during the pandemic. At least two billionaires in the Bay Area were downgraded to centi-millionaires, while five billionaires were downgraded to centi-millionaires in the Big Apple. 

Researchers identify the wealthiest cities in the U.S. by including all residents’ assets (property, cash, equities, business interests) less any liabilities: 

“Job losses, declining income levels, falling stocks, and weaker high-end property values led to a 9% decrease in total wealth held in the U.S. during the first half of 2020,” Bloomberg said, citing the report.

Andrew Amoils, a wealth analyst at New World Wealth and the report’s author, said despite the U.S. being epicenter of the virus pandemic, it’s faring much better than other nations to protect wealth. 

“The 9% drop in U.S. wealth compares with a 14% drop worldwide and declines of as much as 20% in countries like Russia and Brazil,” Amoils said.

U.S. residents held $58 trillion in total wealth or about 30% of the worldwide wealth, as of June 30, making it the wealthiest nation. On a per-capita basis, Americans each held, on average, about $178,000 in net assets, place it the fifth in the world, behind Monaco, Luxembourg, Switzerland, and Australia. 

The recent spread of the virus has caused the recovery to reverse, this could lead to even more wealth loss in the U.S., despite the unprecedented money printing by the Federal Reserve, and countless fiscal injections by the federal government. 

While wealth loss is hitting the rich and poor, here’s what the most richest folks are doing to avoid the next downturn. 

The number of rigs drilling for oil in the U.S. fell by 4 in the past week to 176, according to oil-field services company Baker Hughes. That represented a decline of 588 from the year-ago period, when there were 764 oil rigs drilling in the US and is the lowest since 2004…

The U.S. oil-rig count is often seen as a proxy for activity in the sector, but for now production has held up…

But, as OilPrice.com’s Irina Slav notes, after slashing capex plans for 2020 and idling rigs by the dozen, U.S. shale drillers are still not ready to return to their default state of perpetual growth. Oil is simply too cheap for that, so they are staying in survival mode, maintaining production with no plans to start boosting it anytime soon. Shale producers are caving in to low oil prices and worried investors, pledging to stick to production maintenance for the time being, Bloomberg reported this week, citing updates by several of the larger shale drillers in the United States. Modest growth in production is the most that any of these producers can offer their shareholders, with some cutting their earlier production guidance for this year and declining to provide any update on 2021.

According to some, U.S. onshore oil production shed as much as 2 million bpd when the double blow of the Saudi-Russian price war and the coronavirus pandemic struck. It will be a while before it recovers, and analysts see this “while” as at least a couple of years. Some even doubt that the industry will recover to its pre-crisis state at all.

Prices are at the heart of the problem, of course. This week benchmarks have been trending higher, but the rally has been limited: after both the API and the EIA reported substantial inventory declines that pushed West Texas Intermediate higher, today the U.S. benchmark was down at the time of writing, albeit modestly. Oil prices will likely continue to move extra-dynamically in the coming months as the spread of Covid-19 continues to cast a thick shadow over the future of the energy industry.

Karr Ingham, Petroleum Economist for the Texas Alliance of Energy Producers and creator of the Texas Petro Index summarized the situation in a June news release:

“Petroleum energy demand dropped off the cliff sharply and rapidly at the same time crude oil production was peaking, particularly in Texas and the U.S.,” Ingham said.

“That would have been bad enough; throw in a market share temper tantrum between Saudi Arabia and Russia at the worst possible time, and you have a thoroughly devastating impact on energy markets.”

It takes a lot of time to recover from such an impact, and this is becoming increasingly clear as prices remain stubbornly below $50, thwarting any hypothetical production growth plans. Layoffs, capex cuts, and bankruptcies are on the agenda right now, and this agenda will stay in place until WTI rises to at least $50, at least according to some industry executives who see that price level as high enough to restart drilling new wells. 

Even then, however, efforts will focus on development, that is, exploiting already proven reserves. Spending on new exploration, meaning, a substantial increase in new production, will have to wait as the industry grapples with a reality that may involve some permanent oil demand loss. This reality may force a rethinking of the whole shale business model.

“For most of my career, we would reinvest all our cash flow and then show our success by how much we could grow our production,” Bloomberg quoted the chief executive of Concho Resources as saying earlier this month. “Well, that’s not how it’s going to work in the future.”

Tim Leach is very likely right: with all that cash flow getting poured back into production, most shale producers have accumulated sizable debt piles, and now these debt piles are sinking them. In the first half of the year, 23 shale oil companies in the U.S. filed for bankruptcy protection, with a collective debt loan of over $30 billion. And more debt is maturing over the next two years, which means more bankruptcies. Those that survive will need to come with a more financially sustainable model after burning through billions of cash for the single purpose of boosting production to the record-high cliff it fell off in the spring.

Lebanon is bracing itself for a return to the massive demonstrations and riots which gripped the streets for much of last year, leading to closures of highways, banks, and public buildings. Like the years-long banking crisis, the government is seen as directly responsible for this week’s epic tragedy.

Already Thursday night small, sporadic angry protests popped up downtown areas of Beirut. It’s expected that following ongoing searches of rubble, as well as funerals for the over 135 killed, and initial clean-up efforts of a capital city covered in glass, mass demonstrations are expected to explode. 

Yes people are angry tonight in #Beirut – what does the government expect?

We basically have been living on a ticking time bomb in this city for the past 6 years with 2,750 tons of ammonium nitrate impounded in Beirut’s port since 2014. #Lebanon pic.twitter.com/otpdKGC2Xz

— Luna Safwan – لونا صفوان (@LunaSafwan) August 6, 2020

It was already a country on the brink, but the Tuesday blast centered on the port which had such force as to be compared to a mini-nuke has reportedly displaced 300,000 people – many of which saw entire walls of their homes ripped out – already in a dire situation of huge unemployment especially among young people, skyrocketing inflation, and a banking system teetering on collapse, which already saw closures for weeks at a time over the past year.

There’s also of course the COVID-19 crisis which has not abated yet. But even before pandemic shutdowns in Lebanon the World Bank projected a whopping 45% of the population would be below the poverty line by the end of 2020.

Thus anger at widespread government corruption and ineptitude was already swelling before it was revealed that the government allowed 2,750 metric tons of ammonium nitrate to be left in unsafe conditions right on the doorstep of populous residential areas.

It’s difficult to see how the #BeirutExplosion will not lead to huge national demonstrations in the coming weeks. Over the past 5 yrs, far less dramatic symptoms of govt failure brought thousands of ppl to the streets. Today, a tsunami of rage is gathering.

— Elias Muhanna (@QifaNabki) August 5, 2020

One Middle East analyst and US-based professor, Elias Muhanna, aptly described that “a tsunami of rage” is gathering and about to be unleashed across the country.

Recall too how earlier this year and into last year it’s believed a record 25% of the entire population (of nearly seven million people) was on the streets protesting at one point.

Every day a new video emerges documenting the massive #BeirutExplosion from different angle.

This one taken from a jetski offshore during the explosion – you can hear the voice of a man shouting for a woman named Salma asking her to jump.

pic.twitter.com/LuJ2zwRAtl

— Luna Safwan – لونا صفوان (@LunaSafwan) August 7, 2020

This at the height of the banking and currency crisis which saw unprecedented restrictions put on patrons of banks: they couldn’t draw from their own savings accounts on fears of a run on cash (specifically the dollar), and had strict controls put on external transfers out of the country. This as the local Lebanese lira had effectively collapsed.

Lebanese officials estimate that the explosion resulted in between three and five billion dollars worth of destruction. Currently international aid is en route, including at least three cargo planes worth of emergency aid from the United States.

Multiple countries have also sent emergency teams to set up makeshift clinics at local stadiums, given the over 5,000 wounded in the blast are still being treated.

By Ven Ram, currency and rates strategist for Bloomberg’s Markets Live

Gold already boasts several qualities that enhance its allure: a hedge against inflation, a haven asset, a friend in need. Add one more to the list: convexity.

When real rates decline, gold’s value tends to go up more than it declines when yields climb. That’s based on analysis of the metal’s duration, which measures percentage changes in reaction to a 1ppt shift in underlying interest rates, and convexity, which gauges the change in duration in response to yields.

To measure duration, I took into account the value of gold against real rates, as delineated by the path of linker bonds in the U.S., over the past decade. I then used interest-rate simulation to see how the metal would move in response

The analysis shows that the duration of gold is 17 when interest rates go up and 20 when yields trend lower, suggesting that the second derivative of the shift in rates is alive and kicking. Back in 2018, Pimco found a duration of almost 30.

If real interest rates shift 100 basis points lower from current levels, gold prices may approach $2,500 an ounce, while a similar move higher would send the metal to around $1,700.

Gold has been on a tear this year, having surged 35% in response to a 120-basis point slump in real interest rates. Other catalysts include low global yields; erosion of confidence in global fiat money in general and a weaker dollar in particular; unbridled global monetary and fiscal stimulus; investor purchases through exchange-traded funds in response to uncertainty about the evolution of the pandemic.

However, the outlook for gold gets murky once it goes to around $2,500 an ounce. Beyond that level, it would imply a massive plunge in real rates and an even sharper rally in breakevens than what we have already seen.

Correlations suggest these factors would also imply a big decline in nominal 10-year yields, which currently sit near 0.50%. Such a move would essentially mean the markets are pricing in a depression-like scenario. Should it play out, the study indicates gold may be propelled toward $3,000 should real yields slump to -3.15%.

Given that gold has a longer duration than linkers, the metal offers a balance sheet-economical way to hedge against inflation.

There are some limitations to note for the study. It looked at the behavior of gold just in the past decade, but the metal has a far longer history and its duration may change depending on the time frame. Meanwhile, the methodology used nominal gold prices. But given how anemic inflation has been in the past decade, it’s unlikely to have distorted the findings.

Also, while there are many factors that play into the price of gold, I studied the effect of only changes in real yields to isolate their impact.

All told, gold’s positive convexity means that investors’ gains will be amplified if real rates fall and their losses will be limited if rates rise. In an environment of heightened uncertainty, it’s about as close as they could get to a win-win scenario.

Small Caps are soaring… short-squeezed ever higher but the big tech Nasdaq is down hard today…

Bonds are being sold

And gold (and silver) are being dumped…

 

Is “good” jobs news, “bad” money-printing/stimulus news? And therefore “sell it all”?

 

Authored by Patrick Buchanan via Buchanan.org,

When Vice President Calvin Coolidge ascended to the presidency on the death of Warren Harding in 1923, a wag remarked that Silent Cal’s career had exhibited unmistakable signs of celestial intervention.

Governor Coolidge vaulted to national attention during the Boston police strike of 1919, where, in a stinging letter to Sam Gompers of the AFL, he thundered: “There is no right to strike against the public safety by anybody, anywhere, any time.”

If Joe Biden becomes president, celestial intervention, once again, cannot be ruled out.

Consider.

In the first Democratic contest in 2020 in Iowa, Biden, though the clear front-runner in the national polls, ran a humiliating fourth. In New Hampshire, a week later, he ran fifth. In Nevada, Joe was crushed again by Bernie Sanders but edged out Sens. Elizabeth Warren and Amy Klobuchar thanks to his loyal African American base.

Came then South Carolina where the Black vote, 60% of the total, gave Biden a triumph — and the momentum that propelled him to a sweeping victory on Super Tuesday. Biden’s delegate count became so large it was virtually impossible for Sanders to overcome.

That March, however, which had begun with the resurrection of Biden’s campaign, was also the month the COVID-19 pandemic hit in full fury, sinking the exuberant economy that had been Donald Trump’s ticket to reelection.

At that point, Biden went to earth. Through the spring of 2020 and this summer, he has socially distanced himself from the press and the public and sheltered in place in a basement bunker as the worst pandemic in a century drove down the best economy in decades to Depression-era levels. The last quarter alone saw a 9% plunge in our gross domestic product.

If Biden wins in November, then his “basement bunker” campaign will be studied by historians alongside the “front porch” campaign of Harding that led to the 1920 landslide victory over Democrat James M. Cox.

Yet, several scheduled events could still upend Biden’s take-no-risks-and-run-out-the-clock strategy.

The first is his choice of a vice presidential nominee, which Biden has promised will be a woman.

However, if Biden restricts his choice to a Black woman, as some have insisted, he eliminates from consideration every governor and senator in the party save Kamala Harris.

And if all the media attention given to Harris and other VP candidates fails to produce that Black woman, in this hour of renewed demands for racial equality, Biden will have some serious explaining to do to the core constituency that saved his bacon in South Carolina.

There is another danger in Biden’s choice.

When General Eisenhower chose Richard Nixon in 1952, the liberal press ginned up a story about a “secret Nixon slush fund,” so intense that Ike was almost stampeded into dropping his running mate.

In 1972, Sen. George McGovern’s campaign failed in its due diligence on his vice presidential choice, and McGovern was forced to drop Sen. Tom Eagleton from his ticket and replace him with Sargent Shriver.

Moreover, given Biden’s age — he would be the oldest president ever inaugurated by eight full years — his choice will have to be seen by the nation as a credible president.

A second hurdle for Biden is his speech accepting the Democratic nomination.

The country would be watching intently to see if the Biden of August 2020 had lost the mental and communication skills he once had.

But Biden’s advisers bypassed that hurdle this week by declaring that the pandemic prevents Biden from traveling to the Milwaukee convention.

This leaves the three presently scheduled debates as perhaps the last major hurdles between Biden and the presidency.

Since 1960, when John F. Kennedy established himself as a credible challenger to Vice President Nixon in the first of four debates, these confrontations have often proven critical.

In 1976, President Gerald Ford severely damaged his chances of holding onto the office he had inherited from Nixon when he insisted during his debate with Jimmy Carter that Poland, then under Soviet control, was a free nation.

Ronald Reagan used his 1980 debate with Carter to show with his wit and demeanor that he was anything but the reactionary of the major media’s depiction.

For Trump to regain lost ground, he must convince the country that not only is he the right man to manage America’s way out of the health crisis, economic crisis and racial crisis that were none of his doing, but that Biden has lost the physical rigor and mental capacity to cope with the triple crisis. And the best, and perhaps last, place to do that is in the debates.

The left understands this, which is why we are suddenly seeing media suggestions that Biden should cancel the debates.

A terrified left wants Joe Biden to coast to victory, and many on that side share a belief that this may be the only way he gets there.

The Chinese investment bank, China Renaissance, found that President Trump’s executive order to ban U.S. residents from doing any business with Chinese messenger WeChat in about 45 days would have little impact on Tencent Holding’s revenue. 

“Tencent’s non-China revenue (2019) accounted for less than 5% of total revenue (Ex. 1). Tencent disclosed that 23% of total online game revenue came from non-China markets in 4Q19, and we estimate U.S. revenue accounted for 20-30% of total non-China game revenue. As such, we estimate Tencent’s current revenue exposure to the U.S. is less than 3%, with earnings exposure less than 5%.“

Tencent, the owner of WeChat, saw shares plunged 5% in Hong Kong trading on Friday after President Trump issued the executive order to ban not just WeChat but also TikTok, a video app popular with Americans. 

While the details for the ban are unclear, China Renaissance offers their thoughts on this developing story, concentrating on potential financial impacts:

What’s the scope of the ban?

1. The executive order prohibits “any transaction that is related to WeChat by any person, or with respect to any property, subject to the jurisdiction of the United States, with Tencent Holdings Ltd, or any subsidiaries of that entity, as identified by the Secretary of Commerce”.
2.  The executive order notes that after 45 days, the U.S. Secretary of Commerce shall “identify the transactions that will be subjected to the ban”.

What’s unclear at the moment?

1. It is unclear whether the ban focuses solely on “WeChat the product” or “Tencent the corporation, along with its subsidiaries”. The wording of the executive order seems to allow interpretation in both scenarios, which would have drastically different financial consequences, in our view.
2.  If focused solely on WeChat, it would presumably result in the WeChat app stopping operation for users in the U.S. However, if applicable to “Tencent the corporation”, there could be notable disruption to Tencent’s online game operation and its investment portfolio in U.S. companies, in our view.
3. According to L.A. Times (link), citing a U.S. government official, the ban mainly targets transactions related to the WeChat app but not transactions with Tencent.
4.  It is still unclear whether the ban will lead to WeChat being removed from China’s iOS app store, considering Apple (AAPL US, BUY, T.P.: US$478.40, Jason Sun) is under U.S. jurisdiction (over 200mn MAU of WeChat on iOS system in China, per QuestMobile).
5.  Also, it’s unclear whether the ban will block U.S. companies from using WeChat business functions, including payment and mini programs, to reach consumers in China.

Tencent is the largest video game publisher in the world by revenue. And if the proposed ban of WeChat by Washington is really an attack to crush the publisher, then it’s kind of pointless considering exposure in U.S. markets is fairly limited: 

“We believe WeChat itself has immaterial business and financial exposure to the U.S.,” China Renaissance said. 

However, the story gets more complex, Tencent “has manageable revenue and investment exposure in the U.S.” Some of those investments include:

“For instance, Riot Game and Supercell, two leading global game developers, are majority-owned by Tencent. It also has a minority holding in Activision Blizzard (ATVI US, Not Covered) and Tesla (TSLA US, NC), among others,” the Chinese bank said.

If the Trump administration goes ahead with the banning of WeChat and TikTok next month, well, it would certainly confirm a technology war between both countries is underway. That would result in a retaliatory response by China… 

Authored by Mike Shedlock via MishTalk,

Due to failed reopenings people have been called back to work only to be laid off again.

The California Policy Lab has interesting insights into Unemployment Insurance Claims in  California During the COVID-19 Pandemic.  

Key Findings

1. The number of  initial UI claims has increased steadily from May 17th to July 18th, followed by a slight drop in the week of July 25th . In each of the last nine weeks, regular initial UI claims were over two times the peak of weekly initial claims during the Great Recession, yet data from continuing claims indicates a gradual decline in the number of individuals collecting benefits each week.

2. The steady rise in initial claims since May 17th is nearly entirely explained by an increasing number of additional claims—claims which are “reopened” after a claimant’s temporary return to work, implying many workers suffered from repeated layoffs during the crisis. In the week ending July 25th, 57% of regular initial claims were additional claims, compared to just above 40% before the crisis, and 5% during the peak. [Lead Chart]

3. This is the first study publishing the number of unique claimants in the state, instead of tallying all initial claims, which results in substantial double-counting. 6.23 million unique California claimants, or 32% of the California workforce, has filed for UI benefits since the start of the COVID-19 crisis in mid-March. Since many of these 6.23 million workers have filed multiple claims, this total is substantially smaller (24% less) than the 8.18 million initial claims that have been filed in the same period.

4. In the week ending July 11th, 3.46 million claimants, or about 18% of the CA labor force, were eligible to receive unemployment insurance benefits. Unlike more common statistics of weekly UI payment receipt, we are able to count claimants in terms of when they were unemployed, not when they were paid (which is usually several weeks later, and complicated by varying processing lags). 

5. Without the $600 per week additional benefits from FPUC, half of all individuals receiving UI benefits would have received payments below the Federal Poverty Level. California claimants have received $35.5 billion in FPUC payments for unemployment experienced between the start of the program and July 11th.

6. In the week ending July 11th , a total of 529 thousand individuals (or 2.7% of the labor force) either received partial UI or were denied benefits because of excess earnings. The share of paid claimants receiving partial benefits has risen substantially since early May, but ticked down during the week ending July 11th. This indicates a substantial fraction of individuals that recently returned to work are working reduced hours and may still be receiving unemployment benefits. 

Impact of $600 Weekly Checks

FPUC benefits made a substantial difference for UI claimants in CA. For example, $914 per week ($314 + $600) puts the median claimant at about 55% of median family income (MFI), and above the HUD threshold for “very low-income” (50% MFI). The claimant would still be deemed “low-income” (below 80% MFI) in the absence of other income sources in the household

California Not Unique

Points number two, five, and six are the key ideas. 

California is not unique. This implies millions of workers nationally are suffering through repeated layoffs and reduced hours. 

PUA Dependency

Nationally, about 13 million workers are solely dependent on PUA, having no state benefits. 

Some of those people are working part-time. Working or not, the weekly $600 checks stopped flowing  on July 25. 

Progress?

There is still a Huge Gap Between the GOP and the Democrat Stimulus Plans but we keep hearing reports of progress.

The alleged progress is so great that Trump Weighs Imposing His Stimulus Plan, Constitution be Damned.