Covid-19 cases continue to climb, growth outlook revised lower and China risks inflating another bubble. More highsThe World Health Organization reported a one-day high in global coronavirus infections, with Iran and Indonesia reporting their deadliest days yet. Pakistan is emerging as another hot spot in South Asia. The economic fallout from the pandemic is likely to continue long into the second half of the year, with a rebound in 2021 now less certain. Speaking of prospects for 2021, support for President Donald Trump is dropping in areas where virus cases are rising fastest in the U.S. Prospects The slower-than-hoped-for reversal of lockdowns means banks are reducing some of their forecasts for growth this year. Goldman Sachs Group Inc. economists revised their estimate for the U.S. slump in 2020 to a 4.6% contraction, while reducing their year-end unemployment forecast to 9%. JPMorgan Chase & Co. see global debt levels surging $16 trillion this year, bringing combined public and private sector borrowing past $200 trillion for the first time. The strategists said that this is bullish as "most of this liquidity will eventually be deployed into equities." China surgeInvestors in Chinese stocks are not waiting for increased fiscal spending to feed through to the equity market before piling in. The CSI 300 Index has now added 14% in five days, the most since December 2014, with that rally leading to a spectacular bubble (and crash) in 2015. Influential state media are pushing for a "healthy" bull market. But it's not just local speculators that are driving the rush with BlackRock Inc., the world's biggest asset manager, saying it expects stocks and bonds in China -- and those of its main trading partners -- will do better than global emerging markets in the next six to 12 months. Stocks jumpThe bullish enthusiasm from Beijing is helping drive global equities higher this morning. Overnight, the MSCI Asia Pacific Index gained 1.7% while Japan's Topix index closed 1.6% higher. In Europe, the Stoxx 600 Index had added 1.4% by 5:50 a.m. Eastern Time with every industry sector posting gains. S&P 500 futures pointed to a strong open in the U.S. after the holiday weekend, the 10-year Treasury yield was at 0.689% and oil was higher. Coming up...The final reading of U.S. services and composite PMIs for June is at 9:45 a.m., while the ISM non-manufacturing Index is at 10:00 a.m. The Bank of Canada's second quarter business outlook is at 10:30 a.m. It is a big week for commodity traders, with copper remaining in focus after Chile's state-owned Codelco suspended construction work at its largest mine, helping to keep the metal above $6,000. Chile releases export data for June tomorrow. What we've been readingThis is what's caught our eye over the last 24 hours. And finally, here's what Joe's interested in this morningThroughout this crisis, there have been two kinds of job losses, one due to the virus and second caused by the economic distress. The first category are straightforward situations where it's physically dangerous to operate close to customers, such as jobs in restaurants or salons. The second is simply jobs lost due to the economic contraction. Of course, the two are fluid, and it seems very possible that millions of people who were initially laid off on expectation of it being temporary will end up having lost their job permanently due to the difficult time suppressing the virus.
Last Friday's jobs report was better than expected. Some 4.8 million people went out to work, and the headline unemployment rate dropped to 11.1%. But the number of people losing their jobs on a permanent basis continues to rise. In just four months, the number of people who characterize their layoff as permanent has jumped by over 1.6 million. By contrast, after the official start of the recession during the last crisis, it took 11 months to see more than 1.6 million permanent layoffs. As Jed Kolko of Indeed explained to me, this category (which is of course difficult and subjective) is arrived at by asking workers whether they expect to get their old job back within six months. If they say no, they're described as permanent. Jed's own measure of what he calls the "Core Unemployment Rate" has risen two points in just the last four months, also faster than at the start of the Great Recession.  The glass half-full view is that perhaps persistent headline unemployment in the teens, as some were envisioning not long ago, may not pan out. What's worrisome is that even with the reopening, by one measure we're still losing jobs at a much faster clip than at the start of the last crisis.
Joe Weisenthal is an editor at Bloomberg. Like Bloomberg's Five Things? Subscribe for unlimited access to trusted, data-based journalism in 120 countries around the world and gain expert analysis from exclusive daily newsletters, The Bloomberg Open and The Bloomberg Close. | 
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