Last week jobless claims rose to 281,000. With the fast moving COVID-19 eviscerating demand, this is just the initial blast off of jobless claims. For those expecting a V-shape bottom, it is just way too early to call. Bill Gates believes the virus shutdown can last 10 weeks. This is going to be incredible strain on businesses.

In the chart below, you can see how quickly claims go up in a recession which are colored in the dark bars. In deep recessions, claims go to 500-700k. This is likely coming faster than ever. Goldman Sach's Jan Hatzius believes that initial claims for this week may surpass 2 million which would be the highest level on record!!!

Marriott International said it will be laying off tens of thousands of employees. Compass Coffee, which is based in Washington, D.C. and competes with Starbuck’s, has laid off 150 workers, or 80% of its staff. Danny Meyer’s Union Square Hospitality Group said it would furlough 3,000 workers, also 80% of its workforce.

We still believe that it is time to be in highly defensive mode. This is something that none of us have ever lived through. JP Morgan economists are now expecting GDP to fall 14% in the 2nd quarter before bouncing back.

If you want to hear some of our thoughts on coronavirus and how we shifted positions for clients, you can listen to our client only call from last week.

“U.S. Jobless Claims Fell Despite Recent Hurricanes” by marcoverch is licensed under CC BY 2.0