Axios Markets: A full year of unprecedented job losses

Plus, rising rates sink the Nasdaq again | Friday, March 19, 2021

Open in app View in browser   Presented By Babbel   Axios Markets By Dion Rabouin ·Mar 19, 2021 Happy Friday! Was this email forwarded to you? Sign up here. (Today's Smart Brevity count: 1,144 words, 4 minutes.) 🎙 "The straight line belongs to men, the curved one to God." - See who said it and why it matters at the bottom.     1 big thing: A full year of staggering and unprecedented job losses Data: U.S. Department of Labor; Chart: Andrew Witherspoon/Axios This week's initial jobless claims report marked a sobering milestone — it was the 52nd straight week that more than 1 million Americans filed for unemployment assistance. Why it matters: Despite more than $5 trillion in dedicated government spending and $3 trillion added to the Federal Reserve's balance sheet, for a full calendar year now at least 1 million people have submitted applications for traditional or pandemic-based unemployment benefits every single week. What it means: Including the global financial crisis, the 1973 oil crisis, the dot-com bubble burst and every other recession since 1967, only one week prior to the pandemic — the week ending Jan. 9, 1982 — now registers on the list of top 50 worst weeks for U.S. job losses, and it ranks 49th. For many weeks during the pandemic, initial jobless claims totaled more than twice what they did during the worst week of the Great Recession. Be smart: "Despite dramatically fewer cases, COVID-19 still is inflicting painfully high layoffs, and the latest week saw an unexpected surge in state unemployment claims," Robert Frick, corporate economist at Navy Federal Credit Union, said in an email. "State claims remain above 700,000, and combined state and federal claims remain above 1 million, as they have since the economy crashed one year ago." Yes, but: Excluding applications for the Pandemic Unemployment Assistance program, numbers have been below 1 million since August, with the exception of one week in late January. Yes, but, but: PUA is not the first recession-era jobless program. Following the Great Recession in 2008, Congress created similar programs through the Workforce Investment Act. In fact, Congress enacted additional temporary unemployment programs in response to recessions in 1971, 1974, 1982, 1991, 2002 and 2008, per the Bureau of Labor Statistics. By the numbers: In 52 weeks, there have been more than 81 million first-time filings for jobless benefits. There were 18.2 million people receiving some form of unemployment assistance in the U.S. as of Feb. 27. A year prior, there were 2 million. "This is evidence of the long-term scarring in the labor sector that, despite what is going to be a booming economy over the next two to three years, will not be repaired anytime soon and requires sustained policy attention," Joe Brusuelas, chief economist at tax advisory firm RSM, said in a note to clients. On the bright side: "[A]s businesses reopen and vaccinations continue at an accelerating rate, we can expect steep drops in claims this spring," Frick said.     2. Catch up quick The first high-level, in-person talks of the Biden administration between the U.S. and China descended immediately into bickering, with each side sharply criticizing the other over human rights, trade and international alliances. (Bloomberg) The Bank of Japan will allow 10-year rates to move to 0.25%, up from 0.20%, and announced it would drop its stock purchase target, after having accumulated $450 billion worth of stock holdings. (WSJ) The NFL finalized a new 11-year media rights agreement that could be worth over $100 billion and announced it will add Amazon Prime as an exclusive partner for its Thursday Night Football package. (CNBC) AstraZeneca's COVID-19 vaccine was dubbed "safe and effective" and deemed not to increase the risk of blood clots by the European Union's health agency. (WSJ) France is set to lock down the Paris area for four weeks amid a third wave of coronavirus infections. (Bloomberg)     3. Rising yields sink Nasdaq again Data: FactSet; Chart: Axios Visuals Long-dated U.S. Treasury yields continued their parabolic rise on Thursday, dragging down equity indexes, with the Nasdaq falling by 3%, its largest one-day decline since Feb. 25. What happened: The benchmark 10-year Treasury yield hit a 14-month high of 1.75% as investors sold bonds following Wednesday's Federal Open Markets Committee meeting. Fed chair Jerome Powell swatted away inflation worries and said with a straight face that the U.S. had not seen asset bubbles or excessive debt taken on over the past decade. Crude oil prices plunged 7%, declining for a fifth straight session. What they're saying: "Risk of rates rising too fast remains a key concern," Craig Johnson, technical market strategist at Piper Sandler, told CNBC. "Buying pressure has not been equal over the last several weeks as growth stocks lag behind due to headwinds from higher interest rates."     A message from Babbel The app that'll teach you a new language in less than a month     Babbel helps you become conversational in a new language with just three weeks of practice. The number one selling language app teaches you the skills you need for real-life scenarios, excluding any random words or unhelpful phrases. Get 50% off one of 14 languages.     4. EU moves toward vaccine passports Illustration: Eniola Odetunde/Axios   Axios World author Dave Lawler writes: The EU unveiled its proposal for vaccine passports this week, offering the most detailed picture yet of how international travel might resume in the coming months. Why it matters: Vaccines should provide a path out of closed borders and mandatory quarantines, but there's no universal way to track who has actually been vaccinated. Driving the news: The EU "Green Certificate" — available in digital or paper form — would allow all EU residents to prove that they've been vaccinated, recently tested negative, or already recovered from COVID-19. The aim is to roll out the passports before the summer travel season. The European Commission suggests that those who've had an EU-approved vaccine be free to cross borders without any quarantine requirements. People from outside the EU, including Americans, could also potentially benefit from the system when traveling to Europe. Some airlines and airports are already starting to roll out a global platform called CommonPass, which allows people to digitally document their COVID-19 status — through test results and, eventually, vaccinations — while protecting their health data privacy, Axios transportation correspondent Joann Muller notes. Several other such systems are currently in development. What to watch: While vaccine passports have a clear application in international travel, it's less clear if and how they'll feature in day-to-day life. Israelis can already show a QR code at bars, gyms and theaters to reveal their vaccination status and enter if they've received both doses. But the barriers to such a system being widely rolled out in the U.S. are probably too high, Axios' Bryan Walsh writes.     5. Philly Fed index posts best reading since 1973 The Philadelphia Federal Reserve's business activity index jumped to a nearly 50-year high in March, touching 51.8 from 23.1 in February. Economists had expected the index to decline this month to 22. Any reading above zero indicates businesses in the manufacturing sector are seeing expansion. Why it matters: It's the strongest indicator yet of the continuing strength of U.S. manufacturing, as the index for new orders doubled and rose to the highest since 1973, shipments increased notably and the employment index rose for the third straight month. What they're saying: "Month after month, we've seen manufacturing drive the recovery and it won't be long before services follow," Kathy Lien, managing director of FX strategy for BK Asset Management, said in a note. But, but, but: Increasing sentiment numbers like the Fed's manufacturing indexes and surveys from the Institute of Supply Management and IHS-Markit also consistently have shown clear signs of price inflation and been accompanied by increasing reports of materials and supply shortages. The prices paid index rose to 75.9, up from 54.4 in February. That's the highest reading since March 1980. No cap: Manufacturers also complained of worker shortages, a remarkable trend given the still high number of unemployed Americans but one that has become common in recent business surveys.     A message from Babbel How Babbel trains your brain to learn a new language     Unlike other apps that use machine learning to teach you languages, Babbel takes a human-based approach. What this means: Lessons are built by over 150 linguists and prepare you for situations you'll actually encounter in real-life. No random words or abstract grammar. Sign up and get 50% off.   Thanks for reading! Quote: "The straight line belongs to men, the curved one to God." Why it matters: On March 19, 1882, the first stone was laid for the Sagrada Família basilica in Barcelona, designed by Antoni Gaudí. The basilica is one of the most impressive things I have ever seen in my life. 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