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Since the COVID-19 pandemic began, food bank lines stretching for miles were seen across the US have come to symbolize the financial destruction of households triggered by an abrupt closing of businesses and unprecedented job losses. 

Tens of millions of people lost their jobs, and millions more turned to food banks. The demand for food pantries was at record levels as the federal government deployed the National Guard to manage food supply chains to thwart disruptions. 

In March, April, and May, food bank systems nationwide reported unprecedented demand as millions of hungry, jobless, and broke Americans, with insurmountable debts and no savings, had no meaningful way of putting food on their tables. To be more specific, food security among households in San Antonio, Texas, was a huge issue, resulting in more than 23 million pounds of food, serving 240,000 cars at drive-through distributions and 5,800 home visits – was seen at the San Antonio Food Bank over the three months. 

During the period, retails sales bounced modestly after a stunning record decline – mostly because a quarter of all personal income was derived from the government. Essentially what this means is that the Trump administration activated the money helicopters to avoid a total collapse of the US economy – via unemployment and emergency benefits, welfare checks, and so on.

So here’s the issue explained by Twitter handle The Long View – the account notes the stimulus checks that have “bounced” retail sales “like a rubber band” are “all over in a few weeks & with the new uptick we likely see at least six more weeks of contraction with no plug. The real hit starts now.” 

And Maybe, The Long View is right, because, while President Trump has given several press conferences where he declared that the economy is quickly recovering: “We’ve been talking about the V,” the president said. “This is better than a V. This is a rocket ship” – food bank lines could be, once again, reappearing… 

Twitter handle Alastair Williamson posted a video Sunday shows dozens of vehicles waiting in line at what appears to be a food bank in Baltimore, Maryland. We were able to pinpoint the location via looking at local businesses in the video, able to determine the video was taken on York Road in Lutherville-Timonium, MD, outside the Maryland State Fair. 

It appears the Maryland State Fair & Agricultural Society, Inc. has been running a food bank out of the fairgrounds for several months. 

So about that V-recovery? Sunday drive down Main Street and food bank line spotted. pic.twitter.com/KC3jfSdwUd

— Alastair Williamson (@StockBoardAsset) June 28, 2020

On Twitter user asked: “How can so many people afford cars and not food?” 

Williamson replied: “their auto payments likely deferred for a certain period.” 

Another Twitter user said: “7M US auto owners/borrowers are 90 days + in arrears.”

What this all suggests is that households remain devastated – President Trump’s helicopter drops of free money are likely wearing off as people are now having difficulty putting food on the table. 

As a consumption hangover is imminent, the Trump administration will need to unleash more stimulus/socialist checks to broke and jobless Americans – though, as per The Long View, it appears consumption is set to plunge before the next checks arrive. 

The perfect storm of weak consumption and the emergence of a second coronavirus wave could crush households and businesses in a second-round – food bank lines are becoming the new normal. 

Via AlMasdarNews.com, 

The former Israeli Defense Minister, Avigdor Lieberman, said that Iran and Lebanese Hezbollah are pushing Israel to the brink.

In an interview with Israel’s national Hebrew-language daily newspaper Maariv on Friday, the former Israeli Defense Minister had expressed his concern about Iran possessing enriched uranium, which he said is eight times the permitted amount according to the nuclear agreement, and that a month ago Iran successfully launched a spy satellite into orbit.

Lieberman further charged that Hezbollah is now building a precision missile factory in honor of the late Iranian Quds Force commander, General Qassem Soleimani, which is pushing Israel to the brink, claiming that Israeli Prime Minister Benjamin Netanyahu has no plans to confront them.

Lieberman said Iran is continuing its ongoing policies in its regular military programs and continues to fund Hezbollah, Hamas, and the Islamic Jihad, although Iran faces enormous economic difficulties of its own.

However, despite Lieberman’s claims, Israel has in fact intensified their attacks against the Iranian forces and allies inside Syria this year, with multiple attacks taking place each month.

Footage of Iran IRGC’s satellite launch. Commanders say it has image & intelligence gathering & defense capabilities. Entering space a “necessity not choice,” they said.#Iran pic.twitter.com/Jm84Lmkhai

— Farnaz Fassihi (@farnazfassihi) April 22, 2020

Last week, the Israeli Defense Forces (IDF) were believed to have bombed not only eastern Hama (Salamiyah District), but also, a number of sites between the Al-Sweida and Deir Ezzor governorates.

43% of all COVID-19 deaths in the United States are residents or employees of nursing homes or other long-term care (LTC) facilities, according to the New York Times (which fails to mention that New York Governor Andrew Cuomo ordered NY nursing homes to accept coronavirus patients from hospitals). Nursing homes, meanwhile, account for just 11% of all COVID-19 cases in the United States.

To date, just over 125,000 people in the US have died of COVID-19, 54,000 of which were linked to LTC facilities.

By state, New Hampshire LTC facilities are at the top of the list – accounting 80% of COVID-19 deaths in the state. Rhode Island and Minnesota are tied at 77%, while Connecticut comes in at 73% of deaths linked to nursing homes.

The share of deaths linked to long-term care facilities for older adults is even starker at the state level. In 24 states, the number of residents and workers who have died accounts for either half or more than half of all deaths from the virus.

Infected people linked to nursing homes also die at a higher rate than the general population. The median case fatality rate — the number of deaths divided by the number of cases — at facilities with reliable data is 17 percent, significantly higher than the 5 percent case fatality rate nationwide. –New York Times

And while New York ranks at the bottom of the pack when it comes to LTC facility deaths as a percentage of overall deaths in the state, New York nursing homes come in 2nd on the list after New Jersey in terms of overall deaths in LTC facilities, at 6,432.

this is horrifying to look at

NYC saw a spike in nursing home deaths to 35X prev year baseline

that’s 3X as much as detroit and cleveland barely budged

i’ll wager florida looks like cleveland

this really drives home the carnage cuomo’s policy of focing NH to take cov+ set off pic.twitter.com/Sz84fJwHoV

— el gato malo (@boriquagato) June 28, 2020

Perhaps protecting the elderly and those with comorbidities would have been preferable to tanking the economy with months-long lockdowns.

Submitted by Jan Nieuwenhuijs from Voima Insight.

For thousands of years gold is the ultimate store of value. Currently, gold is undervalued as there are massive bubbles in asset markets and central banks continue to print money, which supports these bubbles. This is an unsustainable situation; and when the bubbles burst the gold price will rise.

Gold is the ultimate store of value, as it’s the only globally accepted financial asset without counterparty risk, and it has preserved its purchasing power throughout history. In the long-term, the stability of gold’s value is unparalleled.

Because gold is scarce and immutable, it has been used as money for thousands of years. Gold’s first use was for adornments—jewelry, regalia, and prestige goods. As early as the 5th millennium BC gold beads of different sizes and purities were manufactured through serial production in Varna, Bulgaria. The semi-finished products were worn in a necklace, and possibly traded.

Gold beads from Varna, Bulgaria, 5th millennium BC. Courtesy Leusch, V., Pernicka, E, and Armbruster, B. 2014. Chalcolithic gold from Varna – Provenance, circulation, processing, and function.

Around 3000 BC weights and scales were invented, which allowed precise measurement of materials and enhanced trade. Gold developed as a store of value, unit of account, and symbol of wealth. By 600 BC coinage was invented in Lydia, what is now Turkey, which promoted gold to be used as a currency. In many civilizations ever since gold was either officially money, or used as a store of value.

Since 1971, the World has been on a pure “paper money” standard despite the fact that bank notes are hardly used nowadays. Most of the time, what is used as money are digital book entries. Whether in paper or digital form, money issued by governments is commonly referred to as fiat money.

The Price of Gold Goes Up

Because fiat currencies can be created boundlessly, over time their value declines, and thus the price of gold denominated in fiat money goes up.

In August 1971—when the last remnants of the gold standard were abandoned—the gold price was $41 U.S. dollars per troy ounce. At the end of May 2020, the gold price had reached $1,729 dollars per ounce, an increase of more than 4,100%.

Although, the gold price doesn’t go up in a straight line, it has always “caught up.” Over time, the price of gold has always compensated for devaluing fiat currencies. Gold’s purchasing power has remained markedly stable in the long run.

Gold Preserves its Purchasing Power

Governments aim for stable prices of consumer goods. But with the seductive ability to “print” money, they always create too much. The printed currency loses value, and prices of consumer goods go up.

Because the gold price keeps up with prices of consumer goods, gold preserves its purchasing power. Since 1800, gold’s purchasing power in the U.S. has been remarkably stable. It became more volatile after 1971, but has kept trending slightly upwards.

This is the power of gold: it preserves personal as well as generational wealth.

So, while fiat currencies lose their value relative to consumer goods, gold has gained in value relative to consumer goods, and not only in the U.S.

On the Voima Gold homepage you can see that since the euro was created in 1999, the gold price in euros has gone up by 550%. When corrected for (consumer price) inflation, gold in the eurozone has increased in purchasing power by 350% in 20 years.

Gold Keeps up With Other Financial Assets

Hedge Fund Manager Ray Dalio has compared storing value in gold versus government bills (bonds with a maturity of less than one year), since the classic gold standard has been gradually dismantled (1912). Government bills are thought to be safer than bank deposits, although both have counterparty risk, unlike gold.

Dalio computed the annual returns in real terms, which is done by subtracting inflation from interest rates. Gold doesn’t have an interest rate—when it’s not lent—it just goes up in price. The result over 100 years is that in major economies the average annual return of government bills was -0.2%, while gold’s return was 2.2%.

The poor result of the bills is because they are denominated in currencies that have been strongly debased since 1912. The U.S. dollar, for example, lost more than 98% of its value against gold over this time horizon.

Compared to stocks and long-term bonds gold’s performance is impressive as well. With dividends reinvested, gold has kept up with the U.S. stock market since 1971, and outperformed it since 1999. Although, gold did worse than the U.S. stock market since 2009.

With interest reinvested, gold has outperformed U.S. Treasuries (government bonds) since 1971, 1999, and 2009.

Performances of all assets in the chart above are measured by their compound annual growth rate, and are not corrected for inflation.

As you can see, inflation is included in the chart, and “U.S. cash” doesn’t keep up with it. Clearly, the ones that do not own gold, but have a bank savings account, will see their wealth diminish.

Every Investment Portfolio Needs Gold

Regularly, when stock markets crash investors flee to gold, causing the gold price to rise. Stocks and gold are often negatively correlated. For investment purposes gold is an excellent diversification. When gold is added to an investment portfolio it lowers volatility and improves performance. Owning gold is for everyone and for all seasons.

CPM Group calculated that the best risk-return balance of an investment portfolio is reached when it includes 20% of gold (next to an equal share of stocks and bonds).

Other studies suggest a different allocation of gold. The sweet spot depends on your time horizon, risk appetite, and the size of your portfolio.

The Future of Gold

As mentioned, since 1971 the price of gold hasn’t gone up in a straight line. Naturally, the question arises, is it now a good time to buy gold? I believe it is.

I expect the gold price to rise going forward, because there are currently huge bubbles in asset markets and central banks continue to print money to support these bubbles. This year alone, the Federal Reserve has expanded its balance sheet from $4 trillion to $7 trillion dollars. A whopping $3 trillion dollars have been printed in just 4 months. The stock “price to earnings ratio” has reached record levels. Needless to say, this is a highly unsustainable situation; and when the bubbles burst more investors will turn to gold.

Currently, the stock market is overvalued versus gold, as can be seen in the chart below. Gold will outperform stocks in the years ahead.

Since 1971, instead of gold being the centerpiece of the international monetary system, government bonds have taken its place. Capital has been invested in sovereign bonds based on the (false) belief they are risk-free. Now, the sovereign bond market is in a bubble.

One sign of the bubble is that debt obligations of many developed nations have a negative interest rate. This reflects these securities are strongly overvalued. Another sign is that the world has never been this much in debt. World debt to GDP is currently well over 330%.

Over-investing in sovereign bonds—incentivized by central banks—has caused governments to borrow beyond their means. For these countries their debt to GDP levels are skyrocketing, and are unsustainable. In the years ahead, global debt levels can only be lowered through debt restructuring or inflation, and both are bullish for gold.

Data provided to me by CPM Group, shows that in 1960 gold made up 5% of all global financial assets. At the end of 2019, this percentage was 0.52%. There is ample upside for gold. In nominal terms, and—although to a lesser extent—in real terms, too.

The Threat of Bank Bail-ins

Last but not least, a serious threat for people’s fiat savings held at commercial banks, are “bail-ins.” In 2014, the European Union adopted the Bank Recovery and Resolution Directive. The implemented rules dictate that when a bank becomes insolvent, the banks’ shareholders and creditors pay the costs through a bail-in mechanism.

Money held at banks is technically a loan to the bank. This makes depositors “unsecured creditors” of the bank. Under the current rules, when the bank becomes insolvent, deposits will be seized to save the bank. Outside the EU bail-in rules have been implemented as well.

The reason why people are still holding large sums of fiat money at banks, is because many aren’t aware of the risks.

Conclusion

Above is a list of reasons why it makes sense to own gold. Gold is the ultimate store of value, and offers protection from inflation caused by reckless money printing by central banks. Currently, governments want inflation, as politically it’s the easiest way of lowering the debt burden. On May 7, 2020, Ray Dalio wrote, “Printing money is the most expedient, least well-understood, and most common big way of restructuring debts.”

The stock market is currently overvalued, as economic growth around the world is collapsing due to the corona crisis. Stock indices haven’t corrected yet, because they are high on the newly printed money. On June 24, 2020, Money Manager Jesse Felder wrote (based on calculations), “the current disconnect between stock prices and sustainable profits is, in fact, greater than anything we have seen in modern history.” Hence, I believe gold will perform better than stocks in the years ahead.

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A Lebanese businessman and central witness in former special counsel Robert Mueller’s Russia investigation was sentenced to 10 years in prison after pleading guilty in January to sex crimes involving minors.

Lobbyist George Nader – who had ties to both the Clinton and Trump campaigns during the 2016 US election for Middle Eastern associates (and was later indicted for illegal contributions to Hillary Clinton’s campaign) – was intercepted at Dulles Airport in January 2018 by agents working for Mueller. A search of his iPhones revealed child pornography, which we imagine was used as leverage to gain his cooperation.

Three months later, prosecutors filed charges against Nader for the images – however they were filed under seal and kept secret from Nader’s lawyers while he was working with Mueller.

In July of 2017 – 15 months after Mueller let a serial pedophile roam the streets in the hopes he’d be able to nail Trump, Nader was finally indicted on both the child porn and for sex-trafficking a 14-year-old boy.

Keep in mind, Mueller knew about Nader’s 1991 conviction on child pornography charges in the US – for which he served only six months in a halfway house thanks to his role in helping to free American hostages in Beirut. He was also convicted in the Czech Republic in 2003 on 10 counts of having sex with underage boys, and eventually received a one-year prison sentence.

Months after Nader’s indictment for pedophilia, he was indicted on campaign finance charges in December 2019, along with Ahmad “Andy” Khawaja – a Lebanese-American businessman who has donated to Clinton, Adam Schiff, Joe Biden, Chris Coons, Dianne Feinstein and a host of other Democrats who received up to $3 million in campaign funds. He also gave $1 million to Priorities USA, the primary super PAC supporting Clinton, and $1 million to Trump’s inaugural fund.

Khawaja was appointed to the US Commission on International Religious Freedom (USCIRF) by Sen. Chuck Schumer (D-NY) in June of 2018.

Nader embarked on the scheme in a bid to gain influence in Clinton’s circle while reporting to a foreign official, according to the Justice Department.

Among his alleged co-conspirators is Ahmad “Andy” Khawaja, the CEO of a payments processing company, according to the Justice Department news release announcing the unsealing of the indictment, which was made by a grand jury in the District of Columbia.

Nader conspired with Khawaja to secretly fund $3.5 million in donations that were made in the name of Khawaja, his wife and his firm, Allied Wallet Inc., according to the indictment. –Politico

In 2016, Khawaja co-hosted an August fundraiser for Clinton which included a laundry list of high-profile guests, including Univision owner Haim Saban, movie mogul Jeffrey Katzenberg and basketball legend Magic Johnson, according to the report. According to the indictment, Khawaja conspired with six other individuals to conceal his excessive contributions. Others who were indicted were also linked to donations to Clinton and other Democrats.

The indictment quotes an alleged encrypted message that Nader sent an official from Foreign Country A via WhatsApp after Khawaja contributed $275,000 and invited Nader to attend and April 16, 2016, event for presidential Candidate 1.

“Wonderful meeting with the Big Lady . . . Can’t wait to tell you about it,” Nader allegedly wrote, in an apparent reference to Clinton.

The indictment noted that political committees that received funding unwittingly submitted false disclosure reports and were presumably victims of the plot. Still, Hillary Clinton apparently attended numerous events, including small gatherings, with Nader, who on July 19, 2016, messaged the foreign official a photograph of him with Candidate 1’s spouse — an apparent reference to Bill Clinton — at Khawaja’s home. –Washington Post

Nader is also known to have interacted with Jared Kushner, Trump’s son-in-law, according to The Hill, a well as former strategist Steve Bannon and Michael Flynn. He is also reported to have helped arrange Trump’s 2017 trip to Saudi Arabia – interactions which likely piqued Mueller’s interest.

President Trump’s economic COVID-19 response, through massive fiscal and monetary stimuli, was expected to generate a V-shaped recovery ahead of the elections. We noted, all along, there was never a snowball’s chance in hell that economic growth would revert to 2019 levels later this year; nevertheless, the labor market would fully recover. 

If readers recall, President Trump has given several press conferences where he declared that the economy is quickly recovering: “We’ve been talking about the V,” the president said. “This is better than a V. This is a rocket ship.”

A new report via Yelp, tilted “Local Economic Impact Report,” debunks the V-shaped narrative and tells a much different story of slow reopenings and widespread permanent closures, all suggesting the economic devastation continues to crush the economy with no recovery in sight. 

Yelp data shows large swathes of Americans remain in deep recession through mid-June. Since April 19, only 20% of the 175,000 Yelp-registered stores that were closed during lockdowns have reopened. 

“As of June 15, there were nearly 140,000 total business closures on Yelp since March 1. In April, we reported more than 175,000 business closures, indicating that more than 20% of businesses closed in April have reopened.

“Las Vegas, NV, endured the highest number of closures relative to the number of businesses in the city (1,921 total closures), while Los Angeles, CA, had the largest total number of closures (11,774 total closures).” 

 

Yelp makes a shocking claim: “Of all business closures on Yelp since March 1, 41% are permanent closures.” 

“Our data shows the largest spikes of permanent closures occurred in March, followed by May and June, indicating that the businesses that were already struggling had to permanently close right away and the businesses that were trying to hold on, but unable to weather the COVID-19 storm, were forced to shutter in recent months.” 

Of the businesses that shuttered operations, restaurants and shopping/retail have led with the most permanent closures.  

“Among those with the highest rate of business closures are shopping and retail (27,663 closed businesses), restaurants (23,981 closed businesses), beauty (15,348 closed businesses) and fitness (5,589 closed businesses).

“Retail was by far the hardest hit, experiencing the highest number of total closures, with the average daily rate continuing to increase since March. Of all closures on Yelp since March 1, 20% are for retail businesses and 35% of closed retail businesses are indicated as permanent on Yelp.

“In March, Restaurants had the highest number of business closures, compared to other industries, and have continued to close at high rates. Of the businesses that closed, 17% are restaurants, and 53% of those restaurant closures are indicated as permanent on Yelp. Restaurants run on thin margins and can sometimes take months or even years to break even, resulting in this higher rate of permanent closures.”

What this all means is the recovery is losing steam. Consumer spending is set to plunge again this summer as the Paycheck Protection Program and other stimulus has run its course. With no recovery – more business closures/ likely more permanent closures and increased job losses are ahead.  

To make matters worse, the virus pandemic is re-emerging, resulting in states like Florida, Texas, and California to reverse reopenings, which will further pressure businesses.  

Readers should review our latest pieces on severe economic damage that is crushing the economy and how recovery might not be seen until 2023: 

• 25,000 More Store Closures Expected As Pandemic-Fueled “Retail Apocalypse” Rolls On
• 25% Of US Restaurants Will Never Reopen: Opentable
• Killed By COVID-Lockdowns: 1000s Of Shut-Down US Businesses Will Be Closed Permanently
• 52% Of Small Businesses “Expect To Be Out Of Business Within Six Months”; Shocking New Survey

By now, readers should realize the deep economic scarring by COVID-19 will have long-term impacts and a recovery that is years away.  

Authored by Ryan McMaken via The Mises Institute,

The pressure is already mounting for state and local governments to move again toward coerced stay at home orders and mandatory business closures.

The constant drumbeat of headlines designed to convince people to adopt new draconian government controls is more of less exactly the same as what it was back in March. Arizona “lost control of the epidemic” one headline proclaims, while another insists “ICU beds full.” A government bureaucrat in Texas says the situation is “apocalyptic” and Bloomberg dutifully features the word in its headline. The governor of California is threatening another stay-at-home order. The Texas governor has re-imposed some restrictions. Florida has “paused” its scaling back of lockdown edicts.

Americans should expect more of this as the year proceeds. Once we arrive at September, hospitalizations due to the usual winter diseases like flu will begin to mount. At that point, the daily headlines about “full” or nearly-full hospitals will be a daily or even hourly occurrence.

There is no doubt politicians and government “experts” like Anthony Fauci will briefly emerge from their luxury homes and gated communities to demand that middle class and working class Americans be once again forced to abandon their jobs, take pay cuts, and sit at home. (The politicians decreeing lockdowns, of course, will keep collecting their six-figure salaries.)

But there’s a problem with the politicos’ plans. They assume Americans will comply with the stay-at-home orders to the same degree they did back in March and April.

This may not be a very prudent assumption. This will be due to at least two reasons.

First, more Americans now doubt the official narrative on the disease.

Second, Americans are now in a worse economic position compared to the time of the first lockdown.

Both of these factors will contribute to more resistance to lockdowns.

In other words, a second lockdown will be more difficult – both economically and politically – than the first. Economic pain will mount as political doubts grow.

The Economic Threat

A second round of lockdowns also poses a very large economic risk to families.

Advocates of coercive lockdowns have long tried to portray opponents of lockdowns as just “people who want a haircut.”  The reality is a lot more grim than that, however, and the threat to the economic well-being of many families is going to make a second round of lockdowns far worse than the first.

Many Americans voluntarily complied the first time around because they were starting from a relatively good economic position. The politicians kept assuring them it was all just for “two weeks” or maybe even a month. After all, when the lockdowns began, the economy was at very high levels of employment. The US was in the waning days of the boom phase of a boom-bust cycle. But it was nonetheless still in the boom phase. Since the spring lockdowns began, 40 million Americans have become unemployed. Twenty million of them are still unemployed, and more than 1.3 million Americans became newly unemployed over the past week. Tax revenue has also plummeted reflecting the downward spiral in Americans’ income.

The bankruptcies are now mounting. In recent weeks, just some of the companies that have declared bankruptcy are J.Crew, Gold’s Gym, Neiman Marcus, Hertz, GNC, and Chuck E. Cheese. Thousands of retail locations for these companies will be closed. Their staffs will be laid off.

The idea that everyone can just “work from home,” of course, has always been a fantasy of the well-off. The work-from-home myth is especially damaging for lower-income workers and for blacks and Hispanics. Moreover, if school closures remain, many parents who rely on government schools as a type of “free” day care will find themselves without schools as a resource.

So far, all of this has been cushioned by outlandish fiscal and monetary “stimulus” designed to bailout bankrupted industries, small businesses and households. Households have received stimulus checks as incomes dried up or were reduced.

The federal budget is likely to top ten trillion this year (well more than double last-year’s budget) as a result of literally trillions of new dollars being created out of thin air to finance the stimulus checks and bailouts.

If lockdowns are imposed again, expect even more “stimulus,” bringing the federal budget to 12 trillion, or maybe 14 trillion. There will be no end in sight.

But apparently-endless money printing can’t continue indefinitely. At some point the upward pressure on interest rates, and concerns over the value of the dollar, become so great that even Congress and the Fed fear another round of stimulus. If that comes this year, household finances will immediately collapse. More businesses will go under. Jobs will dry up. 30 percent of Americans already missed their house payments in June. Expect that to get a lot worse if lockdown mandates are tightened again.

And as economic  turmoil becomes worse expect more of what resulted during the lockdowns of March and April: more child abuse, more suicide, more drug overdoses. Expect more death from non-COVID causes as  “elective” medical care is banned by executive order. 

The New Lockdowns Will Be Longer

Also complicating the situation is the fact that if lockdowns are tightened now, the duration of the lockdowns will likely last well beyond the month or two of lockdowns initially promised. Hospitalizations for a wide variety of diseases (not just COVID-19) will only get worse as the northern hemisphere approaches flu season three months from now. At that point, the end of the 2020-21 flu season will still be a long way away.

If the current plan for the “experts” and the politicians is to impose a six- or eight-month lockdown until next summer, get ready for an economic depression of unprecedented proportions.

The lockdown advocates have always claimed the economy would survive relatively unscathed because the job losses and closures were just “temporary.” Their narrative claimed workers would only be furloughed for a couple of months and then the recovery would begin.

But what if they get their wish for an open-ended lockdown that continues from mid-summer through May of next year? After all, that is the reality we’re looking at if rising hospitalizations justify lockdowns. We’ll be looking at month after month of mounting unemployment.

Compliance Will Be a Problem

The heightened economic pain means lockdowns will be harder to enforce, and Americans now estimate their risk of severe illness to be much lower now than was the case during the first lockdown.

Back in March and April, many Americans didn’t know what to expect. The experts and politicians assured us we were all facing a truly apocalyptic scenario. Bodies would be piling up in the streets. Gurneys would be lining the sidewalks as patients died unattended. Americans were concerned: does this disease affect everyone equally? What is my risk level? Many people took a wait-and-see attitude.

But now that so much more is known than was the case in March, it is clear risk is hardly equal for everyone — 40 percent of deaths were in nursing homes —and it makes little sense to lock down an entire population to protect certain specific populations. States that never enacted lockdowns during the first round, for example, had fewer deaths per capita.

Since March, the CDC has repeatedly reduced its estimated fatality rate. Many Americans have also gradually become aware, for example, that in the US 40 percent of deaths attributed to COVID-19 occurred in nursing homes. Many now know that among known cases under age 50, the fatality rate is now estimated at well under 1 percent. The CDC estimates that the symptomatic case fatality rate for people younger than 50 is just 0.05 percent, compared to 1.3 percent for people 65 or older and 0.2 percent for 50-to-64-year-olds. Those are just the symptomatic cases. Many who get the disease show no symptoms at all.

Americans have realized the risk to most Americans is much lower than what is suggested by the over-the-top panic-inducing rhetoric repeatedly employed my media outlets and politicians. Moreover, for many people, COVID-19 news has already receded to the point of becoming background noise. Every day they are bombarded with dire warning of impending death and destruction. Warnings of this sort soon have a diminishing effect.

Just as Americans long ago made peace with the relatively high risks associated with highway travel, many Americans are likely to do the same with COVID-19. After all, the most dangerous thing most people do every day — by far — is get in a motor vehicle and drive. Yet few people seem to let the risk limit their daily activities. The more the dangers of COVID-19 become just another daily bullet point, the easier the warnings are to ignore.

Many will also be less likely to comply because of the obvious hypocrisy of government officials over June’s riots and protests. Medical personnel who condemned any sort of gathering — and especially anti-lockdown protests — suddenly decided mass gatherings were perfectly fine so long as the politics behind the protests was to the experts’ liking. People won’t forget that.

For those who refuse to comply, the politicians will send in the police to enforce their edicts. Police who refused to stop rioters will nonetheless arrest peaceful business owners. This will also be remembered. The resentment will build. The impoverishment will continue. Americans will be going into foreclosure. “Deaths of despair” will mount.

Politicians will insist it’s all “worth it” and “we’re all in this together.” The longer it goes on, the less the public will agree.

In a repeat of last Sunday’s gloomy open (which had fully reversed overnight with futures nice and green by morning), futures slumped after reopening at 6pm with two key catalysts emerging: i) coronavirus deaths around the world topped half a million and infections continued to mount in American states, coupled with ii) concerns about the growing advertiser boycott of Facebook.

S&P 500 futures opened below 3,000, just as they did last Sunday, sliding to 2,988, or 0.6% lower, alongside oil and the dollar, while gold rose. However, there was some comfort over the weekend from the latest Chinese “data” which showed local industrial production growth was +6.0% yoy in May compared with -4.3% yoy in April, the first positive year-over-year growth since the virus outbreak as downstream industries continued to see stronger profit growth compared with upstream industries, and overall profit margins widened in May (that said, by now we doubt anyone believes any Chinese reporting).

Offsetting this boost to sentiment were growing fears about Facebook’s revenue base as a growing number of advertisers have announced intentions to halt spending on social media, undermining the company’s sales outlook and putting its stock price under further pressure. A partial list of the companies that have said they’re curtailing ad spending on Facebook and its peers is shown below:

• Unilever
• Verizon
• Hershey’s
• Honda
• The North Face
• Ben & Jerry’s
• REI
• Patagonia
• Eddie Bauer
• Upwork
• Mozilla
• Magnolia Pictures
• Birchbox
• Dashlane
• TalkSpace
• LendingClub

Bloomberg writes that “as more brands publicize plans to join boycotts or otherwise rein in ad spending, Facebook shares remain under pressure. The stock tumbled 8.3% Friday after Unilever, one of the world’s largest advertisers, said it would halt spending on Facebook properties this year, eliminating $56 billion in market value and shaving the net worth of Chief Executive Officer Mark Zuckerberg by more than $7 billion. Shares closed at $216.08 Friday after reaching a record $242.24 the preceding Tuesday.”

While no single company can significantly dent growth at Facebook, which generated $17.7 billion in revenue last quarter alone, a rising tally adds to pressure on other brands to follow suit, and when combined with a pandemic-fueled economic slowdown, the threat to Facebook deepens.

“Given the amount of noise this is drawing, this will have significant impact to Facebook’s business,” Wedbush Securities analyst Bradley Gastwirth wrote in a research note. “Facebook needs to address this issue quickly and effectively in order to stop advertising exits from potentially spiraling out of control.”

Facebook aside, the continued emergence of the coronavirus in several US hotspots has been the dominant theme for short-term sentiment. As of this weekend, global confirmed cases have now topped 10mln worldwide with the death toll nearing 500,000. As such, Amplify Trading writes that “it remains critical to remain vigilant for further updates with the daily US case numbers… now a main feature of the daily calendar. Below is a snaphot of the total cases and deaths in the United States as of 28th June 2020 via the NYTimes.”

Amid the growing uncertainty from the rising number of covid infections and fears about Facebook’s tech dominance, last week’s risk-off stance could endure.

Of course, central banks are on their way: as Bloomberg notes, China’s central bank said it will implement new monetary tools to make sure liquidity reaches the real economy. The People’s Bank of China said it will increase the proportion of smaller company, credit and manufacturing loans, and continue to lower lending rates, while reiterating that it will keep the yuan stable.

Looking ahead, here are some of the key events and features to keep a close eye on, courtesy of Amplify Trading:

Payrolls & Powell

US Markets are closed on Friday due to the July 4th Independence Day holiday. As such, the latest US jobs report will be released on Thursday and I would make a mental note that the week as a whole will be somewhat front-loaded. Recent US economic indicators in the US have continued to surprise to the upside with the Citi Economic Surprise Index standing at a record high.

Expectations are that the US has added another 3.074mln jobs in the last month with unemployment expected to decrease once again to 12.3% from 13.3%.

However, I think it would be unwise to take these figures on face value as with an emerging second wave virus across several of the largest US states, in addition to the methodology quirks that have under reported the true level of unemployment, I think the data will do little to change markets current thinking.

Analysts at ING also note that average hourly earnings will fall sharply, but this is a statistical effect caused by lots of relatively low earning workers regaining employment, dragging the “average” level of hourly wages lower – therefore, it is meaningless.

On Tuesday, Fed Chair Powell is scheduled to testify again in Washington with Treasury Secretary Steven Mnuchin about the stimulus and lending facilities to support the economy in the pandemic. Although unlikely to be a market moving event it may give some indication as to the timing and appetite towards further stimulus measures from the US government following Trump’s comments last week that he favoured sending Americans another stimulus check..

Meanwhile, Wednesday night sees the release of the latest FOMC minutes which will be srutinised for any insights as to the risks to the recovery and what methods the central bank may adopt if the situation were to change.

Is Trump already too far behind Biden?

This was the headline from the FT’s Big Read this weekend and comes in the context of Biden holding a 9.4 point lead in the Real Clear Politics Average poll of polls.

The FT article explains how Trump’s ratings have nosedived as he has been criticised over his handling of the lockdown and the reaction to the killing of George Floyd. This has led to the President hitting the road again holding rallies in Oklahoma and Arizona, the latter being a crucial political pawn given the recent rise in COVID cases and a key battleground in the upcoming election.

By comparison, Biden has been hunkering down and in a similar tactic in what we saw the former Labour leader Jermey Corbyn deploy against Theresa May during the initial Brexit negotiations, he appears content to let Trump self-harm until these political hot potatoes cool off. The problem comes when, at some point, Biden will need to emerge and confront the combative President and therein lies the problem in my mind.

The FT notes that Biden has struggled to excite the Obama coalition of the young and people of colour and that is right where Trump has already been targeting the democrat candidate in numerous jibes and memes.

Although people are fully aware of Trump’s diversion and deflection tactics on Twitter, I still believe that this direct and unfilered line of communication is as effective as ever for the US President.

For now, my view is that the wound of division post the financial crisis never truly healed and the pandemic has only further amplified the underlying inequalities that exist in American society today. Although this should be the catalyst for change, I think it will only polarise the ‘law-and-order’ narrative over the coming months, whether that be against the protestors or the Chinese virus. As a result, I still see Trump winning the election come November, despite what the polls indicate as of today.

I asked my Twitter followers this weekend what they thought – this was the result:

Growing challenges in China

The Chinese central bank said on Sunday that the country’s economic growth faces challenges from the global coronavirus pandemic, despite signs of improvement amid business re-openings. The cautious observation comes ahead of the official manufacturing PMI data for June scheduled for release on Tuesday, which is expected at 50.6.

Despite the headline figure reflecting an expansion of the manufacturing sector, many analysts have begun to question the strength of the recent bounce back in confidence as the rest of the world continues to grapple with rising COVID cases and the subsequent impact on orders for Chinese products.

Not only this, reports in the SCMP this weekend say that a county in northern China (Anxin) has been “sealed off” with its 400,000 residents placed under tight restrictions after more than a dozen Covid-19 cases were reported – all linked to the Xinfadi market cluster in Beijing.

CALENDAR HIGHLIGHTS via newsquawk

Monday

• Data: Japanese Retail Sales, EZ Consumer Confidence (Final), Economic Sentiment, German CPI (Prelim)
• Speakers: Fed’s Daly, Williams, BoE’s Bailey & Vlieghe, ECB’s Schnabel

Tuesday

• Data: Japanese Unemployment, Chinese NB Official Manufacturing PMI, UK GDP, EZ CPI (Flash), Canadian GDP, US Consumer Confidence
• Speakers: Fed’s Powell & US Treasury’s Mnuchin Testify, Williams & Brainard, BoE’s Haldane & Cunliffe, ECB’s de Guindos, RBA’s Debelle
• Supply: Germany

Wednesday

• Data: Japanese Tankan, Chinese Manufacturing PMI (Final), German Retail Sales, Unemployment & Manufacturing PMI, EZ, UK & US Manufacturing PMI (Final), US ADP & ISM Manufacturing
• Events: Riksbank Rate Decision, FOMC Minutes
• Speakers: ECB’s Panetta, BoE’s Haskel
• Supply: UK

Thursday

• Data: US Labour Market Report, Initial Jobless Claims & Factory Orders
• Speakers: ECB’s Mersch & Schnabel
• Supply: French & UK

Friday

• Data: Australian Retail Sales, Trade Balance, EZ & UK Services & Composite PMIs (Final)
• Speakers: ECB’s Knot
• Holiday: US Independence Day