Tag: finance

In a world where over $16 trillion in debt now trades with negative yields…

… the US remains one of the outliers where nominal yields are still positive (if not for too long). Still, with rates in the US remaining caught in a tight range, and as bank funding conditions increasingly normalize, it means that yields on mortgages continue to shrink, and sure enough according to the latest Freddie Mac data, the average yield for a 30-year, fixed loan dropped to 2.81%, down from 2.87% last week, which was not only the lowest in almost 50 years of data-keeping, but also the 10th record low this year.  The previous all time low – 2.86% – held for about a month.

The availability of record cheap loans – which is unlikely to change with the Fed signaling it will hold its benchmark rate near zero through at least 2023 – has fueled a home buying spree which while bolstering the pandemic economy, has resulted in yet another bubble (for more details see Visualizing The U.S. Housing Frenzy In 34 Charts)

Meanwhile,  the surging demand for the scarce supply of properties on the market is pushing up prices, putting homeownership out of reach for many Americans, and leading to even greater wealth inequality which, as a reminder, is how we got here in the first place. Adding insult to injury, lenders have tightened credit standards to near record levels, presenting another potential obstacle for would-be buyers.

“It’s important to remember that not all people are able to take advantage of low rates, given the effects of the pandemic,” Sam Khater, Freddie Mac’s chief economist, said in the statement.

After we saw a brief surge in market expectations that the election would be resolved quickly on Nov 3 amid an avalanche of polls that predict a Biden avalanche (the same polls that predicted a Hillary avalanche 4 years ago), sentiment for a painless outcome has soured in the past few days, perhaps as doubt has crept into the “accuracy” of these same pollsters whose track record is absolutely catastrophic (as even JPMorgan reminded us).

As we noted two days ago, it is the view of the vast majority of Wall Street professionals that a contested election is inevitable, a direct rebuke of all the Biden-friendly polls, with 74% expecting a long and drawn out process.

However, there is some good: contrary to some expectations that the election outcome could take as much as a month to be decided – a la Gore vs Bush – new data cited by Morgan Stanley suggests “the worst-case outcome is the least likely.” And while vote-by-mail (VBM) requests are breaking records, a concern given the slower process for counting those ballots, voters appear to be returning those ballots at a rapid pace in key battleground states according to Morgan Stanley’s Michael Zezas.

This reduces the risk of sufficient vote counts to reliably know the election result dragging out for weeks, according to the MS strategist who nonetheless predicts that a reliable result may take some time (i.e., a “Election Week”) given key swing states like WI, where VBM totals are high and ballots can’t be processed or counted before Election Day. In short, Morgan Stanley says that “there is an 80% chance the result is not determined on election night.”

On the other hand, there is an upside surprise is possible if VBM returns accelerate in FL and NC over the next two weeks. These are key tipping point states that can tabulate VBMs early.

Finally, judging by the VIX term structure where the November “kink” just spiked in the curve, the market is also far less sanguine, with both Oct and and Nov expiries which capture the period around the election, seeing a sizable move higher today (or “kinking”) compared to yesterday, and are almost in line with a week ago.

By Michael Every of Rabobank

Barbara Streisand in Split-screen

Life is very much split-screen at the moment. We obviously have the whole K-shaped recovery thing: depending on which screen you are watching, life is either great or terrible.

We also have the deep political dichotomy around the US election, which is taken up another notch today with the alleged scandal surrounding Hunter Biden: you are either reading all about this, or you aren’t aware of it, depending on which media you follow – and which stories they follow.

Notably, Facebook made clear it would be suppressing this particular unconfirmed story, unlike a slew of others, some of which have subsequently proved to be wrong. So did Twitter. The editor of the New York Post –running the Hunter story, and which can be sued for defamation and libel– claims he was blocked from tweeting it by Twitter, which can’t be. Other users trying to do the same saw the message: “We can’t complete this request because this link has been identified by Twitter or our partners as being potentially harmful. Visit our Help Center to learn more.” Those trying to share the story got a message saying the link was “unsafe”, “potentially spammy”, “malicious”, “violent”, or “misleading”. The original tweet from the New York Post was also deleted by Twitter, and the accounts of some people trying to retweet it were suspended.

This is all as the role of social media firms and censorship is already a hot political issue, with a Congressional report calling for them to be broken up: well, things just got even hotter. Expect to hear much more about the First Amendment, Section 230,…and the ‘Streisand Effect’.

On the same day in the US, the Miriam-Webster dictionary also redefined a commonly-used word to a completely new meaning to follow its use in the contentious confirmation hearing for judge Amy Coney Barret – and one in complete opposition to how the same word was used officially by Justice Ruth Bader Ginsburg, whom ACB might replace, as recently as 2017.

Turning the heat up even more, Germany’s ambassador to the US tweeted out (with no problems): “Hannah Arendt, a German Jew, political theorist and philosopher, was born on this day in 1906. One of her many legacies: Totalitarianism can flourish where people systematically refuse to engage with reality, and are ready to replace reason with ideology and outright fiction.” Whom was that directed at? Or was it just random European intellectual musing? Of course, the White House already accuses Germany of just that kind of fiction in its mercantilism-over-values foreign policy; and a German official was recently alleged to have covered up Chinese influence operations in the country so as not to provoke a response that could damage business ties. That tweet won’t help German-US business ties much though.

Similarly hot, then not on more than one level, and on two screens, a museum in France was displaying an exhibition about Genghis Khan and the Mongols and their Empire; and now isn’t, because China insisted it had to remove the words “Genghis Khan” and “Mongols” and “Empire”, and wanted a say over all legends, maps, and brochures; in response, the museum closed it all down so nobody gets to see anything at all.

Markets will probably remain sanguine about these kind of trends **in the West** right up until it’s something they care about –or themselves– in the cross-hairs. On which note, the US might be seeking to blacklist Ant Group, so we can add another Chinese firm to the list of market entities being blocked in some places.

Back to the US election, we can take two-screen-ery to extremes tonight as Democrat Biden holds a town-hall event live on ABC TV to replace the presidential debate we were supposed to have before President Trump caught Covid – which he looks to be over as he dances his way through YMCA. Meanwhile, Trump will be holding a rival town-hall event live on NBC TV at the same time. Joe Rogan is presumably not involved. Hopefully neither is YMCA.

For those who remember the good old days when there used to be live sport with actual people watching, this is like the World Cup football games that were big enough to be broadcasted live by both major TV networks. You were always tempted to keep flicking back and forwards between the two to see if you were missing an angle, replay, or sarcastic comment, or sometimes even in the forlorn hope the score was different (You weren’t; it wasn’t.) Let’s see what the scores are, and if there are any red cards. However, markets, as in 2016, aren’t even glancing at the other screen. As the media quotes an analyst today, a Trump win over Biden would be the ‘biggest error’ in ‘modern era of mass polling’. True: but then again, polling response rates didn’t used to be as low as 5-6%, which always distorts the sample group. This is the stuff fat tail risks are made of!

Meanwhile, we are far from guaranteed to get any fiscal stimulus pre-election given Republicans and Democrats are still only talking, with Mnuchin admitting a deal is “unlikely” – although there was pressure on Nancy Pelosi to compromise in an interview on CNN(!) yesterday, as the political screens somehow got crossed over briefly. Risk is not going to be on like that.

Very firmly on two very different screens is another ‘lower forever’ issue: the ineffectiveness of fiscal stimulus anyway. As a pithy example, wage inflation is still largely absent in the UK, and we can see why. However, Sky News reports one of the reasons the UK has managed to spend GBP12bn on a track and trace system that doesn’t work is that they have been paying management consultants up to GBP7,000 a day (equivalent to an annual salary of over GBP1,500,000). That’s almost like a day’s work for Mrs Streisand. Once again, we see the Cantillon effect in effect: it’s good to be close to the king. Or Babs. We also see why there is no real inflation despite huge fiscal expenditure. Or rather very localized inflation. The consultant paid GBP7,000 a day isn’t going to be too price sensitive or consumption averse at the moment; but is this really how the IMF recommends using fiscal stimulus, which it now recommends for once?

BoJo is meanwhile pleasing markets, as well as management consultants, by showing his 15 October deadline for walking away from Brexit talks is not a hard one. Issues like fishing may be flexible after all (as Bloomberg implies with its brilliant headline: ‘Fish as Chips’). Apparently now the real deadline is the end of the month, or even early November, which is starting to get last-minute enough to be genuinely European. Germany is allegedly pursuing its usual mercantilist policy, and telling France to be more flexible over the fishing issue that doesn’t matter to it at all compared to continued manufactured goods access to the UK market. One sees why markets like that kind of German stance, even as it takes the moral high ground.

China has again put its military in a “high state of alert” after two US Navy warships recently sailed through the Taiwan Strait. Late last week the US destroyer John McCain sailed near the disputed Paracel Islands administered and militarized by China, upon which the PLA military warned the US to “halt its provocations”.

The latest incident was Wednesday, when the Arleigh Burke class guided-missile destroyer USS Barry passed through the strait. Washington was quick to emphasize that it was a “routine transit” like others toward the purpose of peaceful ‘freedom of navigation’ operations, while Beijing once again denounced the “trouble-stirring statements and moves”.

State-backed Global Times said the USS Barry transit resulted in assets from China’s Eastern Theater Command being mobilized. It “organized naval and air forces and tracked and monitored the USS Barry destroyer for the entire course when the U.S. warship sailed through the Taiwan Straits on Wednesday,” according to GT.

The PLA’s Senior Colonel Zhang Chunhui said: “We sternly urge the U.S. to stop making trouble-stirring statements and moves. The command forces are always on high alert in resolutely safeguarding national sovereignty and territorial integrity, as well as peace and stability in the Taiwan Straits.”

These latest tensions based on US presence in the contested sea lanes cased the PLA military to be put on alert. While this is nothing new Chinese President Xi Jinping’s language has grown more threatening in referencing talk of war.

While touring a military base at Chaozhou City in the southern province of Guangdong Xi is reported to have told the elite troops to “maintain a state of high alert” and “put all (their) minds and energy on preparing for war”.

This also comes at a moment of fresh reports the Trump administration has authorized three types of major weapons sales to Taiwan, which China has condemned as a violation of the long-standing ‘One China’ status quo. More advanced weapons are also under consideration, thus the threats out of Beijing are only expected to grow more fierce. 

Oil prices plunged overnight, with WTI back below $40, as last night’s bullish API-reported bigger-than-expected draw was trumped by traders fears that weaker than expected US jobs data and new virus restrictions in Europe will further threaten any sustained demand rebound.

U.S. labor market data is providing “more fuel for the fire of a sour economic outlook,” said Gary Cunningham, a director at Tradition Energy. “If there are further restrictions or new restrictions put in place in Europe or here in the U.S., then that further decreases travel demand for petroleum.”

API

• Crude -5.422mm (-2.3mm exp)

• Cushing +2.199mm

• Gasoline -1.513mm (-1.8mm exp)

• Distillates -3.93mm (-2.5mm exp)

DOE

• Crude -3.818mm (-2.3mm exp)

• Cushing +2.906mm

• Gasoline -1.626mm (-1.8mm exp)

• Distillates -7.245mm (-2.5mm exp) – biggest draw since 2003

Official data showed a crude draw that was smaller than API reported, a big build at Cushing, and a huge draw in Distillates (biggest since 2003)…

Source: Bloomberg

US Crude production remains noisy given the storm-related impacts, with shut-ins sending production levels down 500k barrels per day…

Source: Bloomberg

Latest EIA data indicate drilling activities remain anemic in September, even as WTI recovered to near $40 per barrel.

WTI traded just below $40 ahead of the official inventory data, popping back above $40 after the draws…

As Bloomberg reported, oil-market sentiment had improved this week amid some positive signals on consumption from Asia. But the likelihood of drastic limitations on movement being reintroduced in some of Europe’s largest cities has reignited demand fears, with London set to face harsher measures from Friday night.

“The growing use of localized lockdowns are raising fears that energy demand could once again be set to tumble,” TD Securities commodity strategists including Bart Melek said in a note. “With a second wave well underway, this is the primary risk for energy bulls at the moment.”

Authored by John Rubino via DollarCollapse.com,

A consensus seems to have formed on both left and right that the upcoming presidential election involves some literally existential questions, making it THE MOST IMPORTANT ELECTION OF OUR LIFETIMES.

In fact, the opposite is true. This election is the least important of the past 30 years and very possibly the least important ever. Because, to put it bluntly, we’re kind of screwed either way.

Let’s consider some of those supposedly existential threats:

A Politicized Supreme Court

As this is written, Senate hearings on the nomination of Trump’s third Supreme Court Justice are in progress. Democrat questioners seem to be mainly concerned that a conservative Court would eliminate Obamacare and Roe v Wade, consigning women and the poor to circa 1915 levels of degradation and neglect.

Leaving aside the question of whether Obamacare and Roe were Constitutional in the first place, let’s consider what would happen if they’re overturned.

Would the elimination of Roe v Wade mean that abortion becomes illegal from coast to coast? Not at all. States containing 70 or so percent of the US population would immediately legalize abortion within their borders while making provisions to ferry in pregnant women from neighboring non-choice states. The result: The issue moves back into the legislative realm where actual voters get to have a say and the procedure remains available for the vast majority of American women. Not ideal for folks on either side of the issue, but par for the course in a Democracy where citizens seldom get all that they want. And certainly not an existential threat.

With Obamacare, the issue is not the whole program, but just its “mandate” provision through which the government orders every American to buy health insurance and penalizes us if we don’t. Striking it down as beyond the scope of Federal power does not mean that Obamacare – or any other healthcare entitlement – goes away. It would continue as before but without the government ordering people to participate. A little bit harder to administer perhaps, but probably not the end of the program and, again, certainly not the end of the world.

In any event, 49% of Democrats want to replace Obamacare with a single-payer system like Medicare For All, and the demise of Obamacare might speed up that process, thus improving the world from a liberal perspective.

Meanwhile, conservatives fear that the Democrats, should they retake control of the White House and Senate, will “pack the Supreme Court” by decreeing that it should have, say, 15 judges instead of the current 9 and then adding 6 liberals, to turn the court into a permanently liberal branch of Congress.

So how big a threat is a politicized Supreme Court? Obviously not too big, since Justices have been “legislating from the bench” for decades (Roe dates from 1973) and activists on both right and left continue to complain that the other side is winning. Sounds like business as usual whoever is the next president.

World War III

This is just filler because the military/industrial complex is obviously in charge either way.  Under Trump, we’re liable to be fighting China or Iran by this time next year while under Biden, WWIII will probably feature Russia. The details differ but our kids are cannon fodder either way.

Rampant Corruption

Let’s just agree that Trump, Biden, Harris, and Pence are each in their own way corrupt and more deserving of a prison cell than the Oval office. But since two of them will end up running the country come November, from a corruption standpoint does it really matter which two?

The environment

This seems like a legitimate potential difference — until you notice a couple of things. First, Trump has talked about rolling back regulations to “save” coal and boost fracking, but he’s actually accomplished very little. Coal is still dead and fracking is moribund.

Second, solar power is eating the electricity business. Here’s a chart showing how solar installations are soaring even as Trump tries to save coal. As the cost of solar keeps falling, it will eventually dominate the energy economy, and there’s nothing Trump can do to stop it.

And don’t forget cultured meat and vertical farms, which will, over the next couple of decades, do to factory agriculture what solar is doing to coal and natural gas.

Meanwhile, the Dems’ Green New Deal (which Biden in any event has disavowed) would, even in its most ambitious form, accomplish very little for the environment beyond what solar and other clean technologies will inevitably do via the free market.

The conclusion: Trump isn’t nearly the environmental threat he’s made out to be, and Biden isn’t that much of a savior. Technology and new business models are the big story here, and they don’t care who’s in charge.

Irresponsible borrowing

Each side accuses the other various kinds of financial impropriety. But the truth is that both are operating on an unspoken agreement to spend, borrow, and print whatever it takes to stave off a collapse brought about by past mismanagement.

The following chart shows the increase in US government debt over the past three administrations. Note that in the absence of labels you can’t tell by the amounts borrowed whether Democrats or Republicans were in charge in any given year.

The conclusion? If Trump wins he’ll continue to run trillion-dollar deficits. If Biden wins, he’ll borrow that much or more. Neither will scale back the military budget or soaring entitlements. And both will encourage, via zero and possibly negative interest rates, the private sector to continue its own borrowing binge. On fiscal policy, these guys are virtually indistinguishable.

Fascist dictator!

It’s amazing how many Democrats literally expect Trump to ignore the coming election and just declare himself dictator.

Please listen, liberals: Trump is trolling you. He’s a narcissistic stand-up comedian who finds himself with a vast audience of emotional children, and he’s doing what any self-respecting comic would do: He’s freaking you out. So pretend you’re at a stage-side Comedy Store table and just roll with it. When his set is over, he’ll drop his mike and amble off to his next gig.

Meanwhile, it’s equally amazing that conservatives look at Court stacking, the Green New Deal and other liberal power grabs as a prelude to an updated version of Orwell’s 1984. This is Joe Biden we’re talking about. He’s been a feckless political hack for longer than most voters have been alive and has never once displayed the ambition required to set up a dictatorship.

As President, he will take corporate donations and follow the orders implicit in those legal bribes. The result will be Clinton/Obama business as usual, not revolution.

Granted, Biden will likely die or lose what’s left of his mind before his first term ends. And yes, Kamala Harris is an instinctive authoritarian. But she has the same moral flexibility as the Bidens, Obamas and Clintons, which just implies a slightly nastier version of the status quo. Again, plenty of run-of-the-mill corruption and brutality, no coup in sight.

So the very real personality defects of this crop of candidates are an annoyance rather than a danger. And as such, they’re easily managed. Just don’t watch Fox or MSNBC and the coming political mess will wash over you like the smell from a passing garbage truck, unpleasant but ephemeral.

What DOES Matter?

The coming financial crisis of course. The pandemic turbocharged a process of hyper-financialization that was already underway, and now whoever is in charge next will have no choice but to keep bailing out everything in sight with tens of trillions of newly created dollars.

This will shift the pressure from bankrupt states and insolvent companies to the currency. Prices will start to rise as the dollar falls. And the fears of today’s voters will seem in retrospect like quaint fantasies from a simpler and embarrassingly naïve time.

And that’s when dictatorship becomes a real possibility. Not Because Trump or Biden are implementing long-held plans but because they are panicked by events spinning out of their control and have literally no idea what to do. This is a legitimately scary prospect. But the coming election will have nothing to do with it one way or the other. Buy gold now.

A double-whammy of ‘soft’ Mnuchin confirmation that a fiscal “deal” pre-election is unlikely and the reacceleration of COVID-19 restrictions and closures across Europe, sparked a significant ‘risk-off’ move overnight with Nasdaq almost erasing all its gains for the week…

But, as Nomura’s Charlie McElligott details, with stocks are the forefront of cross-asset risk sentiment, the talking-point on the desk is simple:

you cannot overstate the Gamma impact on the overall market of those single-name mega-cap Tech options expiring tomorrow

The reason, simple again – the options market tail wagging the broad US equity market dog as McElligott points out that the “negative Gamma” in these monster positions (from the calls which the Dealer is short this expiration in AMZN, ADBE and NFLX as largest standouts) has them chasing the market to remain Delta hedged, accelerating the swings in both directions this wk.

We saw the call-buying volume collapse – just like it did after Nasdaq-Whale impacts in August…

As Nomura’s MD notes, there is simply so much convexity now just a one day out from expiry in these Calls – similar to when the stocks blew through their strikes to the upside only a few days earlier and forced mass Delta buying to stay hedged – that we see the opposite accelerant flow on the way down, with the Delta on these now 1-day options having reversed those prior moves and utterly collapsing (looking much lower probability to strike), thus leaving the Dealer overhedged “long,” which means collectively / potentially ~$Billions of dollars for SALE intraday the lower we go across whatever the preferred hedging mix in these market leader Tech stocks (AMZN being the largest position – particularly the 8k Oct 3420 Calls, stock now 3289 last preopen after having traded up to $3496 just Monday!), QQQs or Nasdaq (even SPX) futures.

As McElligott warned earlier in the week, the issue into- and out of- expiry on the index level will be the dangerous set-up with:

1) “extreme long” $Delta via options (remember just two days ago we had QQQs at 100th %ile and SPX / SPY at 97.5%ile)…

…then synchronizing with 2) a massive “Gamma drop-off” coming out of this expiration (QQQ still showing ~60% of $Gamma dropping after Friday, SPX / SPY down slightly but still ~29% dropping-off).

Which, Nomura’s cross-asset-strategist fears, could set the potential for much larger trading range distribution coming-out next week with much smaller Dealer hedging “speed bumps”.

Looking locally today, things would get messy in index on a move down through 3400 (3389 to be exact) in SPX and / or through 284.63 in QQQs, where we estimate that the current index “long Gamma” position for Dealers flips “short”.

After yesterday’s cross-platform social media embargo on a New York Post exposé detailing explosive evidence against Joe and Hunter Biden, Twitter is at it again on Thursday – suspending the Trump campaign’s official account for sharing a video accusing the former Vice President of being a “liar who has been ripping off the country for years.”

Twitter has suspended ⁦@TeamTrump⁩ for posting a video calling Joe Biden a liar who has been ripping off our country for years, as it relates to the ⁦@nypost⁩ article.

19 days out from the election. pic.twitter.com/Z9FFzridyr

— Mike Hahn (@mikehahn_) October 15, 2020

According to emails obtained on a laptop reportedly abandoned at a Delaware computer repair shop (which also contained photos of Hunter smoking crack and an alleged sex tape), Hunter Biden introduced his father, then-Vice President Joe Biden, to a top executive at Burisma – a Ukrainian energy giant paying Hunter upwards of $50,000 per month to sit on its board.

“Dear Hunter, thank you for inviting me to DC and giving an opportunity to meet your father and spent [sic] some time together. It’s realty [sic] an honor and pleasure,” reads the email.

In another email from May 2014, Burisma board adviser Vadym Pozharskiy asked Hunter for “advice on how you could use your influence” on the company’s behalf.

In response to the allegations, Twitter and Facebook aggressively censored anyone sharing the Post story on Wednesday – suspended the Post itself while claiming that it was distributing ‘hacked material.’

The Post’s primary Twitter account (@nypost) has also been locked because the Hunter Biden stories violate its rules against “distribution of hacked material,” per email we received from Twitter https://t.co/wbeYd6c3CA

— Noah Manskar (@noahmanskar) October 14, 2020

The social media giant also blocked the official account of the House Judiciary GOP for sharing yesterday’s story.

Twitter is actively censoring the United States House of Representatives. https://t.co/aR32m8qZAP pic.twitter.com/YB4KRTEJd3

— Christopher Bedford (@CBedfordDC) October 15, 2020

Twitter’s response sparked such a political backlash – with accusations of partisan election interference flying, that CEO Jack Dorsey issued a mea culpa, admitting that the company hadn’t offered a sufficient explanation as to why the company blocked the Biden story (while failing to explain why they continue to allow unfounded Trump-Russia conspiracies to remain on the platform). Dorsey said that there had been a ‘lack of communication’ surrounding Twitter’s decision, and that “Our communication around our actions on the NYPost article was not great. And blocking URL sharing via tweet or DM with zero context as to why we’re blocking: unacceptable.”

Our communication around our actions on the @nypost article was not great. And blocking URL sharing via tweet or DM with zero context as to why we’re blocking: unacceptable. https://t.co/v55vDVVlgt

— jack (@jack) October 14, 2020

Yet, despite Dorsey’s mea culpa, Twitter is at it again on Thursday, censoring the Post‘s second installment of ‘Bidengate.’

Unbelievable. Yesterday, @twitter blocks links to @nypost story alleging Joe Biden corruption on China.

TODAY, blocking links to ANOTHER NYPost story alleging Hunter Biden sold access to communist China for millions. I just tried to share that story. Here’s Twitter’s response 👇 pic.twitter.com/NZpw4gmcb2

— Ted Cruz (@tedcruz) October 15, 2020

Twitter is now censoring the New York Post’s report on how Hunter Biden attempted to cash in with Chinese firms. pic.twitter.com/Az9KE0eens

— Josh Caplan (@joshdcaplan) October 15, 2020

There needs to be an immediate government investigation into @twitter/@jack.

Not just because of their blatant election interference to protect Biden, but to find out if they’re censoring these NY Post stories at the behest of the Chinese Communist Party.

Put Jack under oath!!! https://t.co/XCYzRWKsLk

— Donald Trump Jr. (@DonaldJTrumpJr) October 15, 2020

What would Twitter do if this was a scandal involving the Trumps? Based on the unverified Russia allegations they continue to allow on the platform, it becomes a rhetorical question.

Via SchiffGold.com,

When governments across the US forced businesses to close down in response to the coronavirus pandemic, everybody assumed the layoffs would be temporary. Despite the huge surge in unemployment, the expectation was people would quickly return to work once the crisis passed and the economy opened up again. But as the pandemic stretches into its eighth month, millions of Americans remain out of work and economists say many of those “temporary” job losses have become permanent.

Millions of Americans have returned to work as expected. The unemployment rate has nearly halved to 7.9% since April. But nearly 13 million Americans remain out of work. That’s about 7 million more than pre-pandemic levels.

According to the Bureau of Labor Statistics, the number of job losses categorized as permanent grew by 345,000 to 3.8 million people in September. In other words, nearly 4 million unemployed Americans have no prospects of returning to work.

The number of long-term unemployed – people out of work for a period exceeding six months – has ballooned. According to the Bureau of Labor Statistics, around 2.4 million Americans were unemployed for 27 weeks or more in September, up 781,000 from the previous month. The last time we saw this kind of jump in long-term unemployment was during the Great Recession.

Economists crunching the numbers say the trend shows that some layoffs once thought temporary have become permanent. To make matters worse, companies have begun initiating layoffs on a trajectory similar to a traditional recession, according to an article published by CNBC

Meanwhile, months since the lockdowns were generally lifted, hundreds of thousands of Americans continue to apply for unemployment for the first time every week. Last week, more than 800,000 people filed first-time unemployment claims. That compares with 188,000 first time claims during the same period in 2019.

And tens of thousands of people will get pink slips in the coming weeks as the long-term economic damage caused by government lockdowns in response to the coronavirus pandemic begin to ripple through the economy. Regal Cinemas closed all of its locations last week with no timetable for reopening. Disney announced it would lay off 28,000 workers. US airlines are shedding jobs at a dizzying pace.

“We’re still at a high level of layoffs in the economy,” Susan Houseman, VP and research director at the W.E. Upjohn Institute for Employment Research, told CNBC.

“The new job losses will, by and large, be perceived as permanent.”

In a recent podcast, Peter Schiff said he thinks a lot of the people who have gone back to work in recent weeks will eventually find themselves in the unemployment line again.

I think a lot of these people who have been recalled, who have come back to work, I think ultimately their employers are going to realize, after the fact, that they don’t really need a lot of these workers, and a lot of these workers are going to be re-fired. Except next time it is going to be permanent, not temporary.”

There is also the looming prospect of more corporate bankruptcies and business closures, putting more pressure on the jobs market. Large company bankruptcies have already surged to a level not seen since 2010 and more than 420,000 small businesses have closed their doors permanently since the beginning of the pandemic. That represents a staggering 7.1% of all small businesses. Brookings estimates that the US economy has lost some 4 million jobs in the small business sector “that will only return with the creation of new businesses.”

The current state of the jobs market dovetails with our report last month that suggested lockdowns may have permanently scarred the labor market and there are signs of deep wounds that won’t quickly heal. In a nutshell, a lot of people will likely never return to work.

And as Peter Schiff said in a recent interview on RT, it doesn’t appear to matter what letter you stick in front of the word “recovery.”

I don’t care what letter you want to use to describe it. My problem is with the word recovery. Because I don’t think we’ve recovered at all. Sure, there has been a recovery in the stock market in that the market recovered what it lost in the early days of COVID. And yes, this recession that we’re currently in began with a very substantial collapse. And yes, there’s been a bit of a bounce off of that collapse. But we’re still in recession. So, I don’t know if recovering to being in a less-severe recession than we were in at one point really qualifies as a recovery.”