| | | | | | | Presented By Fidelity | | | | Axios Markets | | By Courtenay Brown ·Sep 25, 2020 | | 👋🏾 Morning! Courtenay here, filling in while Dion enjoys a day off. - Today's newsletter is 1,044 words, or a quick 4-minute read. (Sign up here if this was forwarded to you.)
💬 "Give freely of yourself always to your family, your friends, your community, and your country. The world will pay you back many times over." — See who said it and why it matters below. | | | | | | 1 big thing: The next cliff for the unemployed |  | | | Illustration: Sarah Grillo/Axios | | | | A program supporting Americans who are typically ineligible for unemployment benefits will expire at the end of the year, with millions still relying on it as the labor market sputters. Why it matters: The result could be catastrophic for the economic recovery that Wall Street fears is already fragile. - Unemployment insurance is "propping up all parts of our economy," Kathryn Edwards, an economist at think tank RAND Corporation, tells Axios.
- The money has buffered consumer spending and helped unemployed Americans pay bills while out of work, she says.
Background: The Pandemic Unemployment Assistance (PUA) program, created by the CARES Act, allows freelancers, gig workers or others with limited work history to get unemployment benefits. Driving the news: Data from the Labor Department on Thursday showed over 11 million people were receiving benefits through PUA as of Sept. 5 — a whopping 43% of the roughly 26 million Americans relying on some form of unemployment. - Economists estimate millions are depending on the program, though they warn the DOL's number is overstated. Goldman Sachs economists wrote in a note Thursday that "processing backlogs, delayed filings and fraudulent filings" have boosted the figure.
Where it stands: Congress can't seem to agree on another stimulus package. Even if they do break the stalemate, it's unclear whether the PUA will be extended. - A failed version passed by the House over the summer proposed extending the PUA through January.
- A failed version proposed by Senate Republicans didn't mention a PUA extension.
Between the lines: Economists aren't expecting a massive shift in economic conditions (or a complete return to pre-pandemic life) between now and December that would cause a substantial drop-off in the number of workers receiving these benefits. - PUA recipients — who can span from lawyers who can't be in court to salon stylists — have a different kind of job search experience.
- "Someone who is self employed is not looking for a job, they're looking for a customer," Edwards says.
The bottom line: There have been endless cliffs for the unemployed, heightening anxiety around being jobless during the pandemic. - First: Millions watched their financial cushion dwindle when the additional $600 in payments expired.
- Then: The supplemental $300 in aid provided by President Trump's executive action dried up earlier this month for most states that offered it.
- Now: An unemployment program helping keep Americans afloat is set to expire, and there's little hope that Congress will act.
|     | | | | | | Bonus story: Behind the numbers |  Data: Department of Labor; Chart: Andrew Witherspoon/Axios Grant McDonald, a video director who's been receiving unemployment through the PUA program, tells Axios that the benefits will expire long before the industry where he made a living before COVID-19 — concert touring — comes back to life. What happened: Like millions working in sectors that rely on people gathering in public places, McDonald's income vanished when the pandemic hit. - Unemployment — with the additional $600 in weekly aid — replaced roughly a third of his pre-pandemic income, were it to be extended every week for the year. Since those supplemental benefits expired, the gap in income is even wider.
- By year-end, his income will likely drop back to zero when the PUA program lapses. And even if he gives up his New York City apartment and moves back in with his parents, McDonald says, other bills are still mounting.
What they're saying: "I wouldn't know how to pay for health insurance," or a number of other bills, says McDonald, who co-founded the advocacy group Extend PUA in July. The bottom line: The number of Americans receiving any type of unemployment fell after weeks of increase — but the number of Americans with disrupted income remains devastatingly high. - New unemployment applications — which came in at 824,542 for the week ending Sept. 19 — are still higher than at any point in U.S. history before the pandemic hit, though they're way down from the peak in March.
- That figure rises to 1.4 million when new applications for PUA are included.
| | | | | | | | 2. Catch up quick | | House Democrats are preparing a new, slimmed down COVID-19 relief package that would cost $2.4 trillion. (Axios) Palantir is reportedly set to be valued at $22 billion when it goes public next week. Recent private market transactions gave the company a valuation as high as $18.8 billion. (WSJ) Blast from the past: A court said investors that made money from Bernie Madoff's Ponzi scheme would have to pay back their profits — even though they were unaware of the fraud. (AP) | | | | | | | | A message from Fidelity | | The strategy behind investing in disruptors | | |  | | | | Disruptors are companies that are changing the way we live. Why it's important: Investing in disruptors with Fidelity's thematic funds can provide exposure to a range of new opportunities. Find out more about Fidelity's 6 new disruption funds. Investing involves risk, including risk of loss.
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Read additional important information. | | | | | | 3. On the cusp of a correction |  Data: FactSet, Chart: Axios Visuals The S&P 500 hit its highest level ever earlier this month — but as September closes out, the index is teetering on the brink of correction territory. Where it stands: As of Thursday's close, the S&P 500 has sunk 9.3% below its record high. Slight gains on Thursday pushed it a bit further away from the 10% decline that would mark a correction — but investors say volatility could be here to stay. What's going on: The pullback comes as pessimism grows about the economic recovery — and whether the stimulus Wall Street pinned its hopes on will ever arrive. - The tech stocks that powered the market higher this year have dragged down the S&P 500 in recent weeks.
- The index is on track for its worst September since 2008, Brian Belski, BMO Capital Markets' chief investment strategist, points out in a note to clients.
- It's a reversal from the stock market's near unstoppable surge, boosted by the Fed's unprecedented support for the market and the economy. The index is still up 30% since it bottomed out when the pandemic hit in March.
What to watch: Next week's job report will shed more light on the economy. - Early estimates indicate the economy likely added 900,000 jobs in September. Job growth has slowed every month since June — when the economy added 4.8 million payrolls.
| | | | | | | | 4. Senate panel plans subpoena vote for Big Tech CEOs | | The Senate Commerce Committee said Thursday it plans to hold a subpoena vote to compel testimony from the top executives of Google, Facebook and Twitter for a hearing next month, Axios' Ashley Gold reports. Why it matters: The subpoena threat is the latest move by lawmakers to pare back the tech industry's prized liability shield, Section 230 of the Communications Decency Act. - Lawmakers want to hold another hearing on the topic with industry executives as legislative proposals work their way through Congress.
What's happening: On Oct. 1, the Senate Commerce Committee will vote to authorize subpoenas for Facebook's Mark Zuckerberg, Google's Sundar Pichai and Twitter's Jack Dorsey. But, but, but: It's doubtful Democrats will be on board, which puts the outcome of the subpoena vote in flux, though Republicans run the Senate Commerce Committee. | | | | | | | | A message from Fidelity | | What you should know about megatrend investing | | |  | | | | Fidelity megatrend funds help you invest in companies at the forefront of global change—like those pioneering solutions for water sustainability and agricultural productivity. Find out more about Fidelity's 2 important megatrend funds. Investing involves risk, including risk of loss.
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Read additional important information. | | | | 💭 "Give freely of yourself always to your family, your friends, your community, and your country. The world will pay you back many times over." - That quote is by Sandra Day O'Connor who, thirty nine years ago today, was sworn in as a Supreme Court justice — becoming the first woman to serve on the court.
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