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Authored by Jonathan Turley,

A tape has surfaced of Democratic presidential nominee Joe Biden bizarrely claiming that he “started” at a historically black college in speaking to supporters in South Carolina during the primary. Biden has never made any mention of going to Delaware State University and it is not clear why the many reporters in attendance at the event did not ask when he attended a HBCU. Indeed, he would be the first president to claim such a distinction. He might also have been inartfully referencing his start as a politician. Alternatively, this would seem like an academic version of cultural appropriation. It would seem a valid point of clarification for the media.

This story obviously created an immediate buzz among professors who tend to track academic credentials and associations of presidents and other leaders. It would certainly be a significant story if a president attended a HBCU but I am not sure what Biden meant by his statement.

Most obvious interpretation was that Biden was claiming to have been a student at Delaware State when he spoke at October 2019 town hall event held at the historic Wilson High School in Florence. The school was founded in 1866 by the Freedmen’s Bureau for Black children.  He stated “I got started out of an HBCU, Delaware State — now, I don’t want to hear anything negative about Delaware State,” Biden told the crowd, as shown on video. “They’re my folks.”

The university has stated that he was never a student there. It said that it has only records of a couple of visits as a commencement speaker.

The statement is so weird that I have tried to find an alternative meaning.  One possibility was that he got a job teaching there. However, he never claims such a position.  I am not sure when that could have happened. He became a bar member in 1969 and was elected the very next year to the New Castle County Council in 1970. Two years later he was elected to the United States Senate.

Another possibility is that he is claiming that he started his political career at the school, but again the campaign has said nothing and his own book does not mention the connection.  Did he launch his campaign for the New Castle County Council at the university? I believe the university is about 45 minutes away in Dover from New Castle.  He might be referencing his start for the Senate.  The campaign however has gone days without explaining if there was a speech launching his campaign from the university (though that would raise some issues on the use of a state school).  Absent such an explanation, the clear impression is that he attended a HCBU as a student.

Biden has been previously criticized for false claims ranging from graduating in the top half of his class to having three degrees from college to being the first in his family to attend college to coming from a family of coal miners  to being arrested in trying to meet with Nelson Mandela.

Obviously, President Donald Trump has also been regularly and correctly flagged for false statements, including denials of his prior statements. I have joined in that criticism. Yet, that is no reason to also demand accuracy or explanations from his opponent.  If President Trump made such a statement, it would have had every network and newspaper demanding clarification or proof.

The story also magnifies the concerns over the lack of serious journalism surrounding Biden, who has been routinely given softball questions and faced little scrutiny from the press corp. Interviews with Biden have been cringeworthy as reporters from major media seem to actively assist the campaign in staging favorable pressers. I could not find any reporting of this extraordinary statement when it was made in the primary. There is still little reporting. If this video is false, it is a major story. If it is true, it is an even greater story. Yet, once again, there has been virtually no coverage of the claim. I seriously do not know what to make of the story but there seems very little interest in whether Biden is the product of a HCBU or falsely claimed such a status.  Biden can simply clarify the point. As an academic, I am honestly interested in what role a HCBU played in his career and I do not believe that this is a major scandal. Yet, if it was a reference to launching his career from the Delaware State campus, it is incredibly interesting. Indeed, with the discussion of HCBU funding throughout the campaign (including in his speech), it would seem something that the campaign would have been emphasizing.

Summary:

• COVID-19 deaths near 1 million
• Global cases hit 32.8 million
• France, Italy oppose new lockdowns
• Deaths climb in Iran
• Moscow cases hit 4 month high
• Dr. Fauci says therapeutics could be “bridge” to COVID-19 vaccine

* * *

US cases continued to accelerate over the weekend, with cases climbing 0.7% on Saturday, in line with the recent increase in the 7-day average. The pace of deaths slowed, however, with the US seeing only 740 new deaths yesterday, snapping a 4-day streak of 900+ deaths.

However, global numbers are more important right now.  Countries around the world reported just 277,937 new cases on Saturday, down from a peak a few days ago.

This brought the total to 32.8 million. Another 5,279 deaths were reported, bringing the death toll to 994,000, within striking distance of the 1 million-death milestone.

As local authorities placed more than 1 million people in and around Madrid on lockdown this week, at least one local official felt this wasn’t a strong enough response, and demanded that local officials review their efforts.

As thousands continue to rally in London over the weekend, the sheer unpopularity of lockdowns was reflected in an announcement across the English Channel, where French Health Minister Olivier Veran rejected the possibility of another lockdown.

“We don’t want to bring the economic, social, cultural, sports and family life of the French people to a complete standstill,” he said on LCI television. “That’s why we take decisions that are adapted to the seriousness of the moment, region by region.”

Elsewhere, Italian Prime Minister Giuseppe Conte also spoke out against the possibility of another lockdown, saying the country is “in a completely different situation” compared with the beginning of the year.

said there won’t be a new national lockdown as the country is “in a completely different situation” compared with the beginning of the year. Saying that the government has strengthened the health system, he added that there may be more stringent measures in specific clusters or areas “but in a limited, circumscribed way.”

In the US, Silicon Valley VC Bill Gurley tweeted a chart noting the hospitalization rates for students infected with COVID-19 on America’s college campuses.

This deserves discussion. pic.twitter.com/HAdLY7oANr

— Bill Gurley (@bgurley) September 27, 2020

The notion that colleges should keep students on campus for as long as possible to prevent a massive pre-holiday outbreak as students return home isn’t exactly controversial, yet colleges seem dead set against this (possibly for financial reasons).

Here’s other news on COVID-19 from overnight:

Iran’s death count from the virus reached 25,589 on Sunday, with 195 more fatalities overnight, up from 172 during the prior day. New cases increased by 3,362  – compared with 3,204 the day prior – bringing the total to 446,448, according to the latest Health Ministry figures. Over 374,000 patients have recovered from the virus in Iran while 4,059 people are in critical condition (Source: Bloomberg).

Czech Health Minister Roman Prymula said the country will limit gatherings of people in public next week, with the government discussing whether a 10- or 20-person limit is most appropriate. The nation of 10.7 million recorded 2,946 cases on Friday, the second highest since the beginning of the pandemic in March. Prymula said his country is currently among the four European nations being hit hardest by Covid-19’s spread (Source: Bloomberg).

As the number of cases in Moscow reached its highest level in almost four months, Mayor Sergei Sobyanin admitted on his blog on Sunday that heating, which is centrally controlled, would be switched on earlier than usual so that people isolating at home or in country houses would be more comfortable. He also cautioned that those over 65 or with high-risk illnesses should remain at home as much as possible during the coming weeks. He also advised companies to switch as many employees as possible back to working from home. There were 99  deaths counted yesterday, bringing Russia’s total to 20,324 (Source: Bloomberg).

And finally, Dr. Fauci says in a recent interview that antibody-based medications potentially even the convalescent plasma approach could act as a “bridge” to help society endure until a vaccine can be found.

“We are focusing very heavily now on treatment of early infection and, or prevention of infection,” Dr. Fauci told the Journal of the American Medical Association in an interview Friday. “And that’s the bridge to the vaccine.”

Authored by Adam Taggart via PeakProsperity.com,

The year 1971 saw the trajectories of nearly every major trend relative to our way of life shift massively.

That year is such a noticeable inflection point in so many data sets, that an intriguing website WTFHappenedIn1971.com has been created to drive the point home.

The website is a parade of data series visually showing how the world changed that year.

Be it income…

…the cost of living…

….political polarization…

… the divorce rate…

…and a kitchen sink’s worth of other statistics — from the national debt to deficit spending, childhood obesity, the incarceration rate, energy use per capita — pretty much all aspects of life as we know it changed materially and permanently in the early 1970s.

This week’s guest experts, Ben Prentice and Collin, founders of WTFHappenedIn1971.com, explain how virtually all of these changes are a direct or indirect result of the monetary system “breaking” that year with the Nixon Shock and the end of the Bretton Woods System.

On a personal note, interviewing Ben and Collin was an unexpected pleasure, as I found it encouraging to discover that members of the Millennial generation are engaging with the shortcomings of our modern debt-based fiat currency system with the same passion and critical thinking as we older cohorts. Perhaps the future might just turn out OK in their hands after all…

That said, Ben and Collin echo similar concerns and advice as our previous experts. The system is unfair, unsustainable, and in desperate need of reform. The prudent investor shouldn’t expect any real positive change until a painful enough shock forces an abandonment of the status quo — so it’s best to use the time now to position prudently in advance for that inevitability:

*  *  *

Anyone interested in scheduling a free consultation and portfolio review with Mike Preston and John Llodra and their team at New Harbor Financial can do so by clicking here.

After Metropolitan Police claimed they would only crack down on marchers flagrantly violating social distancing rules (though the hated “rule of six” had been suspended due to the gathering’s “protest” status), German professor Dr. Heiko Schoening was arrested by a gang of British officers – he was filmed being loaded into a paddy wagon –  after speaking out against using tactics like economy-destroying mandatory lockdowns during yesterday’s “We Do Not Consent” rally in London.

Video of the arrest was shared on Twitter.

LONDON – Respected German Doctor Heiko Schöning was arrested by Met Police for speaking about Covid-19. pic.twitter.com/RmU5705hi3

— ShatteredWorldMedia (@MediaShattered) September 27, 2020

Several purported bystanders tweeted in protest, by the story appears to have gone largely unnoticed.

Dr. Heiko Schöning has just been arrested and put into a police van @garethicke Shame on the UK #FacismIsHere https://t.co/DVTsecfu38

— Medea Matters (@Medea_Matters) September 26, 2020

Here’s video of the doctor speaking to a reporter at the event yesterday. This was filmed before he was arrested.

German Doctor Dr. Heiko Schöning was arrested yesterday, he has not been charged but is still being held in custody.

When doctors speak out the truth and are silenced, locked up, you know we are in deep deep trouble.pic.twitter.com/JMAytuyWiC

— Darren of Plymouth 🇬🇧 (@DarrenPlymouth) September 27, 2020

 

The rally was organized by groups opposing a second lockdown in the UK, along with mandatory vaccination efforts by the government once a vaccine is approved. The doctor was pat of a group of hundreds of German doctors and scientists who have signed on to investigate and analyze whether the heavy handed measures favored by governments to combat the virus were the appropriate response.

Purported friends of the professor claimed that his wife was calling supporters to attend a peaceful demonstration on Sunday outside Wandsworth police station (146 Wandsworth High St).

Authored by Lance Roberts via RealInvestmentAdvice.com,

An Orderly Sell-Off

Over the last couple of weeks, we have been discussing the ongoing market correction. As shown below, the sell-off has been orderly and not one of a “panic” induced decline.

The market did retrace from the top of the 2-standard deviation range to the bottom, which is part of a healthy correction process. As we noted last week, the correction also aligns with the historical weakness seen in September and October, particularly in years preceding an election.

Importantly, given there was no sharp rise in volatility, such also confirms this was a more orderly and healthy market retracement.

While the sell-off in the market has gotten overdone short-term, we still suggest using rallies back to the 50-dma to rebalance portfolio risks. Look at the first chart above. The market is currently in a very defined downtrend. Friday’s march failed to break out of that resistance.

In the chart below, we see the market rallied back to the previous consolidation lows with the 20-dma approaching a cross of the 50-dma. Such would suggest more downward pressure on prices short-term. The 200-dma is roughly 7% lower from Friday’s close. 

If the market can break above resistance on Monday, clear the 50- and 20-dma’s, then old highs should not be an issue.

But that will take a fair bit of work at a time where market risks have increased.

Is The Fed Done?

“Federal Reserve Board Chairman Jerome Powell warned Wednesday that a lack of further fiscal support from Congress and President Trump could “scar and damage” a U.S. economy restrained by the coronavirus pandemic.” – The Hill

Such is an interesting position from the head of the Central Bank who has flooded the system with liquidity. The chart below is a bit dated but shows the rather tepid uptake of emergency measures.

The reason the usage of the programs is so low is two-fold.

1. The functioning credit markets function on sentiment. There is always plenty of liquidity in the credit markets. What was needed was the “confidence” the markets would work properly. Once the Fed cured the “sentiment” problem, there was mostly no need for liquidity from the Fed. Companies were able to go to market, issue securities, or borrow money as needed. 

2. Companies didn’t want to take on additional debt. While the design of the programs was to support businesses in keeping employees paid, if there is “no” or “greatly reduced” customers due to lockdowns, taking on debt to keep employees makes little sense.

The second point is more important. While the Federal Reserve can calm and support public markets, they have little impact on the non-public markets. The real crisis is in small and medium-sized businesses that do not have access to public markets, either equity or debt, to raise needed capital.

The large pool of non-public businesses are facing large amounts of devastation currently, and the “death rate” of small businesses is rising to nearly 50%. Given that small businesses make up roughly half of the employment in the U.S., this is no trivial matter.

The Fiscal Kink

The Federal Reserve is trying to plug a hole that fiscal policy was widely expected to fill by now. However, the Fed’s ability to expand on current programs is limited to the Treasury Department’s issuance of additional debt. Without another “fiscal relief” bill, there isn’t enough debt issuance to support another round of interventions by the Fed. 

Currently, the Federal Reserve is continuing to run “Quantitative Easing” at $120 billion per month, but much of that is just replacing bills that are maturing. As shown below, the Fed’s balance sheet has been stagnating since June as the uptake from its various programs has waned.

Subsequently, excess bank reserves, which have supported the market recovery from the March lows, have also peaked.

A Louder Message

While the Federal Reserve could undoubtedly begin to more bonds in the open market, they realize they run the risk of disrupting the credit market by becoming too big of a buyer. The Fed has previously warned they did not want to disrupt markets in this manner.

As noted by Zerohedge on Friday:

“Two weeks ago, when the Fed published its latest monthly breakdown of purchases Secondary Market Corporate Credit Facility which shockingly showed that in the entire month of August, the Fed had not purchased a single corporate bond ETF and had barely purchased any corporate bonds in the open market, we asked if Powell was ‘sending the market as message.’

In the subsequent two weeks, which saw a sharp drop in risk assets and the Nasdaq sliding into a 10% correction, coupled with a modest rout across the corporate bond sector, many had expected the Fed to revert to its role as custodian of market stability and ramp up its purchases of corporate bonds, if for no other reason then to assure investors that Uncle Jerome was still watching over everyone.

So in what may come as a big surprise to all those praying for the Fed to bail them out, or to at least telegraph that he is keeping an eye on the current tech-led market mess, Powell did no such thing and in fact the Fed’s latest weekly H.4.1 report showed that the corporate credit facilities held $12.911bn of corporate bonds and ETFs as of Tuesday, up a tiny $44 million from $12.867BN the prior week.”

As noted, without more “fiscal” support, their “monetary” capabilities become much more limited.

Fiscal Support Not Likely 

Despite the Federal Reserve imploring Washington for more “fiscal” support during the last couple of speeches, it is unlikely to happen. As we discussed in Tuesday’s report “No Help Is Coming:”

“Why is this important to the market? Because Congress is facing three different events that have removed the focus from additional financial support for the economy.

1. With the election fast approaching, Congress does not want to pass a fiscal support bill to help the other Presidential candidate. Such is why there are dueling bills between the House and Senate currently.  

2. September ends the 2020 fiscal year of Congress. Such requires either a “budget,” or another C.R. (Continuing Resolution) to fund the government and avoid another shut-down.

3. Lastly, the death of RBG will have the entire Democratic Party, which controls the House, focused on how to stop President Trump from nominating a replacement before the election. All Trump needs is a simple majority in the Senate to confirm a justice that he can likely get.”

Without more fiscal support, the entire premise of the “economic reflation” trade may be over. Economic data is already starting to disappoint as stimulus runs dry, and earnings estimates have begun to fall again, as I addressed last week.

“Such also correlates with weaker economic data showing up. Weaker economic data translates into reduced earnings outlooks for companies. During the last 30-days, 2021 estimates for the S&P 500 have declined by an additional $5/share. Furthermore, those estimates are down nearly $30 from the original forecast in January 2020. Yet, markets remain only slightly off all-time highs.”

For these reasons, while the markets may indeed see a short-term bounce, the longer-term correction may not be over.

The Correction May Not Be Done

Given the challenges facing the markets over the intermediate-term from a “contested election,” a lack of financial support, a pandemic resurgence, and economic disruption, the risk of a deeper correction remain.

If we look at the weekly chart below, we find that when the market has historically broken below its short-term weekly moving average, it has, with some consistently, tested the longer-term average. Currently, that is almost 7% lower than where we closed on Friday.

Given we are still in a recessionary environment, that earnings remain weak, and the market remains rather extended from its long-term means, a deeper correction in the months ahead is certainly not out of the question.

Investors will likely benefit from maintaining caution in portfolios and continuing to use rallies to rebalance risks accordingly.

Not only are EV makers seeking out ways to duplicate Tesla’s “success” as an automaker, but many are also hoping to duplicate their success in the capital markets. There’s nary a bigger success than taking a company that can’t consistently turn a profit and fooling the capital markets to assign it a $400 billion valuation. So, naturally, we understand why other company are seeking out ways to be like Tesla.

One of those companies is telecom giant Huawei. Xu Zhijun, a rotating chairman of Huawei is on record in 2019 as saying: “If you look at the stock price of Tesla, you will know where the future of automobiles lies.”

His comment was foreshadowing as to where Huawei’s future business efforts may be directed, according to Nikkei. In April 2019, the company set up a “smart car solutions” segment of its auto business. Their auto business currently has 5 segments: smart driving, smart cockpit platform, intelligent network, smart electric and cloud services.

They are like many other who have “drank the Kool-Aid” and think that Tesla is the next big thing in AI and the auto industry – and they know they can compete. “Anything that Tesla can do, we can do,” Xu said. 

Huawei reportedly wants to become a “one-stop supplier of all software and hardware for smart cars and seeks a dominant say in the industry,” Nikkei says. There will only be two or three such major players globally, the report predicts.

Huawei has been recruiting talent from companies like Bosch and, in August, modified its business registration by adding “research, production and sales of auto parts and smart driving systems” to public records. In September, it released its Harmony 2.0 OS that it installed in its smart cockpit platform. 

The company wants to do “everything related to silicon” in cars, one source said. Another said that the auto industry is closely monitoring their expansion into the industry. “Huawei is likely to become a Chinese version of Bosch,” one source said. 

And the time to enter the industry is arguably the most vulnerable for potential competition, as the Covid-19 pandemic has weakened the industry globally, forcing cuts and slowing demand. 

Huawei first looked at EVs back in 2013 when they became a popular investment in China. There have been rumors swirling that the company would launch a car-building business for years.

Though Xu said in 2019 that there “wasn’t a consensus inside Huawei as of late 2018 about whether the company should push further into the auto market”, one must remember this was the same company that said on the record it wasn’t going to get into cell phones. 

Now, Huawei is the world’s biggest smartphone maker, having overtaken Samsung and Apple. Could it become similar competition for Tesla?

 

Authored by Andrew Korybko via OneWorld.press,

The US is ruthlessly waging an intense Hybrid War on Russian energy interests in Europe by targeting the Eurasian Great Power’s relevant projects in Germany, Belarus, and Bulgaria, banking on the fact that even the partial success of this strategy would greatly advance the scenario of an externally provoked “decoupling” between Moscow and Washington’s transatlantic allies.

The Newest Front In The New Cold War

The New Cold War is heating up in Europe after the US intensified its Hybrid War on Russian interests there over the past two months. This proxy conflict is being simultaneously waged in Germany, Belarus, and Bulgaria, all three of which are key transit states for Russian energy exports to the continent, which enable it to maintain at least some influence there even during the worst of times. The US, however, wants to greatly advance the scenario of an externally provoked “decoupling” between Moscow and Washington’s transatlantic allies which would allow America to reassert its unipolar hegemony there even if this campaign is only partially successful. This article aims to explore the broad contours of the US’ contemporary Hybrid War strategy on Russian energy in Europe, pointing out how recent events in those three previously mentioned transit states are all part of this larger plan.

Germany

From north to south, the first and largest of these targets is Germany, which is nowadays treating Russian anti-corruption blogger Navalny. The author accurately predicted in late August that “intense pressure might be put upon the authorities by domestic politicians and their American patrons to politicize the final leg of Nord Stream II’s construction by potentially delaying it as ‘punishment to Putin’”, which is exactly what’s happening after Berlin signaled that it might rethink its commitment to this energy project. America isn’t all to blame, however, since Germany ultimately takes responsibility for its provocative statements to this effect. Dmitri Trenin, Director of the Carnegie Moscow Center, published a thought-provoking piece titled “Russian-German Relations: Back To The Future” about how bilateral relations will drastically change in the aftermath of this incident. It’s concise and well worth the read for those who are interested in this topic.

Belarus

The next Hybrid War target is Belarus, which the author has been tracking for half a decade already. After failing to convince Lukashenko to break off ties with Russia after this summer’s Wagner incident, a Color Revolution was then hatched to overthrow him so that his replacements can turn the country into another Ukraine insofar as it relates to holding Russian energy exports to Europe hostage. The end goal is to increase the costs of Russian resources so that the US’ own become more competitive by comparison. Ultimately, it’s planned that Russian pipelines will be phased out in the worst-case scenario, though this would happen gradually since Europe can’t immediately replace such imports with American and other ones. “Losing” Belarus, whether on its own or together with Nord Stream II, would deal a heavy blow to Russia’s geopolitical interests. Countries like Germany wouldn’t have a need to maintain cordial relations with it, thus facilitating a possible “decoupling”.

Bulgaria

That’s where Bulgaria could become the proverbial “icing on the cake”. Turkish Stream is expected to transit through this Balkan country en route to Europe, but the latest anti-government protests there threaten to topple the government, leading to worries that its replacement might either politicize or suspend this project. Azerbaijan’s TANAP and the Eastern Mediterranean’s GRISCY pipelines might help Southeastern Europe compensate for the loss of Russian resources, though the latter has yet to be constructed and is only in the planning stages right now. Nevertheless, eliminating Turkish Stream from the energy equation (or at the very least hamstringing the project prior to replacing/scrapping it) would deal a death blow to Russia’s already very limited Balkan influence. Russia would then be practically pushed out of the region, becoming nothing more than a distant cultural-historical memory with close to no remaining political influence to speak of.

Economic Warfare

The overarching goal connecting these three Hybrid War fronts isn’t just to weaken Russia’s energy interests, but to replace its current role with American and other industry competitors. The US-backed and Polish-led “Three Seas Initiative” is vying to become a serious player in the strategic Central & Eastern European space, and it can achieve a lot of its ambitions through the construction of new LNG and oil terminals for facilitating America’s plans. In addition, artificially increasing the costs of Russian energy imports through political means related to these Hybrid Wars could also reduce Russia’s revenue from these sources, which presently account for 40% of its budget. Considering that Russia’s in the midst of a systemic economic transition away from its disproportionate budgetary dependence on energy, this could hit Moscow where it hurts at a sensitive time.

The Ball’s In Berlin’s Court

The linchpin of Russia’s defensive strategy is Germany, without whose support all of Moscow’s energy plans stand zero chance of succeeding. If Germany submits to the US on one, some, or all three of these Hybrid War fronts in contravention of its natural economic interests, then it’ll be much easier for America to provoke a comprehensive “decoupling” between Russia and Europe. It’s only energy geopolitics that allows for both sides to maintain some sense of cooperation despite the US-encouraged sanctions regime against Russia after its reunification with Crimea and thus provides an opportunity for improving their relations sometime in the future. Sabotaging Russia’s energy interests there would thus doom any realistic prospects for a rapprochement between them, but the ball’s in Berlin’s court since it has the chance to say no to the US and ensure that the German-Russian Strategic Partnership upholds Europe’s strategic autonomy across the present century.

Concluding Thoughts

For as much as cautiously optimistic as many in the Alt-Media Community might be that the US’ Hybrid War on Russian energy in Europe will fail, the facts paint a much more sobering picture which suggests that at least one of these plots will succeed. Should that happen, then the era of energy geopolitics laying the foundation for Russian-European relations will soon draw to a close, thereby facilitating the US’ hoped-for “decoupling” between them, causing budgetary difficulties for Moscow at the moment when it can least afford to experience such, and pushing the Eurasian Great Power’s strategic attention even further towards Asia. The last-mentioned consequence will put more pressure on Russia to perfect its “balancing” act between China and India, which could potentially be a double-edged sword that makes it more relevant in Asian geopolitical affairs but also means that one wrong move might seriously complicate its 21st-century grand strategy.

The latest data compiled by the International Labour Organization (ILO) sheds new light on COVID-19’s “devastating” impact on the labor market reveals a “massive” drop in labor income and hours for workers worldwide. 

Global labor income plunged 10.7%, or $3.5 trillion, in the first nine months of 2020, compared with the same period in 2019, ILO’s new report found, which is one of the first measurements to quantify the deep economic scarring that has left the global economy paralyzed. The figure excludes income derived by governments to compensate for labor loss during the pandemic.  

The report, titled “ILO Monitor: COVID-19 and the world of work. Sixth edition,” was published on Wednesday (Sept. 23), notes how global labor hour losses in the first nine months of 2020 have been “considerably larger” than the estimate from the previous report issued in late June. 

The report found the largest income loss was primarily in lower-middle income countries, where the labor income losses reached 15.1%. 

“Workplace closures continue to disrupt labor markets around the world, leading to working-hour losses that are higher than previously estimated,” ILO said.

The United Nations agency said global working-hour losses are expected to remain elevated in 3Q20, at 12.1%, or equivalent to 345 million full-time equivalent (FTE) jobs (based on a 48-hour working week). The revised downside projections for 4Q20 suggest a more pessimistic outlook for the global economy is ahead. 

ILO’s baseline scenario, for working-hour losses, in the fourth quarter, is -8.6%. The most optimistic is +5.7%, while the most pessimistic is -18%. 

“The latest data confirm that working-hour losses are reflected in higher levels of unemployment and inactivity, with inactivity increasing to a greater extent than unemployment. Rising inactivity is a notable feature of the current job crisis calling for strong policy attention. The decline in employment numbers has generally been greater for women than for men,” ILO said. 

The driver behind increased working-hour losses in developing and emerging economies is that informal employment continues to be affected by strict public health orders to mitigate the virus spread.

ILO said there’s a “clear correlation” between how much fiscal stimulus a country does and working-hour losses. For example, more stimulus has offset a reduction in working hours. Many of these stimulus packages have been observed in high-income countries, as emerging and developing economies had limited borrowing capacity to finance such measures. 

ILO Director-General Guy Ryder warned about a “huge fiscal stimulus gap,” and the dire need for governments to unleash more fiscal stimulus to mitigate additional stresses in the global labor market. 

“Just as we need to redouble our efforts to beat the virus, so we need to act urgently and at scale to overcome its economic, social, and employment impacts. That includes sustaining support for jobs, businesses, and incomes,” Ryder said in a statement.

The report debuted as the US entered the 53rd day of the fiscal cliff. As discussed extensively in late July in” ‘Look Out Below’: Why The Economy Is About To Fly Off A Fiscal Cliff“, a lapse in stimulus has the risk in reversing the economic recovery. 

A record of 25% of all personal income in the US is derived from the government via stimulus programs. Without stimulus, the economy craters. 

With ILO’s report noting more labor market stress is ahead for the final quarter of the year, it all suggests there will be no “V”- shaped recovery in 2H20.

And this could be the moment where Wall Street realizes the shape of the recovery was never a “V,” resulting in the next wave down in stocks.