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Month: April 2019

Nearly Half Of Millennials Wouldn’t Invest In Stocks Even If They Had The Money

As the American equity market roars back toward its all-time highs, a majority of the millennial generation is probably learning the true meaning of FOMO, because as study after study has showed, those who came of age immediately before, during and after the financial crisis were so scarred by the experience that they refused to ever buy in to the equity market. Overall, equity ownership among American adults remains 8% below its pre-crisis levels. Of course, the factors behind the millennial generation’s inability to accumulate wealth are myriad: Stagnant wages, crushing student loan debt and widening inequality are just a few reasons why the savings rate among those under the age of 35 is basically nil. And when they do invest, they appear doomed to repeat the mistakes of the not-too-distant past, favoring get-rich-quick bubble plays like marijuana stocks and bitcoin over blue-chip stalwarts like Apple. But while most would probably chalk millennials’ aversion to investing up to the fact that they don’t have any savings or income to spare, one recent study suggested that even if they had the money, they wouldn’t put it in stocks. Lexington Law, a firm that offers services to help people fix their credit, asked 1,000 millennials how they would invest $10,000 if they had it to spare. Nearly half – 46% – said they wouldn’t put the money in stocks. Only one...

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Five Companies Represent 35% Of All The S&P 500’s Value Creation Over The Last 5 Years

Submitted by Nicholas Colas of DataTrek Six companies represent 37% of all the S&P 500’s value creation over the last 5 years: Amazon (10.1%), Apple (6.5%), Facebook (4.7%), Google (6.4%), Microsoft (7.8%), and Netflix (1.8%). And even though NFLX may look small, its increase in market value over the last 5 years is essentially the same as JP Morgan’s. US equity valuations reflect present and future Tech disruption. No other narrative need apply. * * * In our Markets section 2 nights ago we mentioned that Amazon is responsible for 6.7% of the S&P 500’s market value gain since November 2005. Amazon was added to the index in the that month, and since then: The value of the companies in the S&P 500 has risen by $13,161 billion. Amazon’s market cap has increased by $886 billion Divide the two figures and you get 6.7% That got us to thinking: how much have large Tech companies influenced the S&P 500 over just the last 5 years? Here are a few baseline numbers to start the analysis: At the end of March 2014, the S&P 500 had a total value of $17,206,453 million. At the end of March 2019, it was $24,760,982 million The difference: $7,554.5 billion, or 43.9% higher One technical note: the S&P 500 is +51.3% over this period with the difference due to stock buybacks. So how much...

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Americans Aren’t Buying Into The Elites’ Cashless Utopia

Nearly two-thirds of Americans were against a cashless society, according to a recent survey conducted by CivicScience. You will find more infographics at Statista Mobile payment and cashless stores are popping up across the country, between stores like Amazon Go and payment options like Apple Pay.  Using these services requires access to the banking system, namely a bank account and a credit card. According to the Federal Deposit Insurance Corporation, in 2017 FDIC survey showed that 6.5 percent of U.S. households were unbanked, meaning they lacked a checking or savings account, and an additional 18.7 percent of households were underbanked, meaning they had a checking or savings account but obtained financial products, like money orders or payday loans, outside of the banking system. As Statista’s Sarah Feldman notes, some advocates and legislators worry that an increasingly cashless world will further disenfranchise America’s homeless and working poor, who may fall into these unbanked and underbanked categories. New Jersey and Massachusetts both have laws that prohibit stores from discriminating against customers choosing to use cash. Cities, like Philadelphia, New York, Chicago, D.C., and San Francisco, all have proposed or have laws regulating cashless stores. Advocates of cashless stores point to the increased speed and ease of payment for customers, and the lower rates of theft that cashless places of business experience. Some cashless options, like Square Inc. and PayPal, offer payment services that don’t require a bank account. About...

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US Is “Japan On A Larger Scale”

Authored by James Rickards via The Daily Reckoning, In my 2014 book, The Death of Money, I wrote, “The United States is Japan on a larger scale.” That was five years ago. Last week, prominent economist Mohamed A. El-Erian, formerly CEO of PIMCO and now with Allianz, wrote, “With the return of Europe’s economic doldrums and signs of a coming growth slowdown in the United States, advanced economies could be at risk of falling into the same kind of long-term rut that has captured Japan.” Better late than never! Welcome to the club, Mohamed. Japan started its “lost decade” in the 1990s. Now their lost decade has dragged into three lost decades. The U.S. began its first lost decade in 2009 and is now entering its second lost decade with no end in sight. What I referred to in 2014 and what El-Erian refers to today is that central bank policy in both countries has been completely ineffective at restoring long-term trend growth or solving the steady accumulation of unsustainable debt. In Japan this problem began in the 1990s, and in the U.S. the problem began in 2009, but it’s the same problem with no clear solution. The irony is that in the early 2000s, former Fed Chair Ben Bernanke routinely criticized the Japanese for their inability to escape from recession, deflation and slow growth. When the U.S. recession began...

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The Greenwich Housing Market Is Imploding As Prices Tumble As Much As 25%

Houses in the exclusive Connecticut suburb of Greenwich, long known as an enclave for hedge fund managers, are now selling for significantly less lately, with one recent colonial house forced to the auction block. The property, located on the iconic Round Hill Road, is being sold in what would normally be unthinkable fashion for Greenwich: it’s being auctioned. It’s price tag used to be $3.795 million, but now the four-bedroom property will be sold for its reserve price of just $1.8 million, according to the Wall Street Journal. Its seller, Isaac Hakim, was faced with a grim buyer strike reality and said it was time to move on. “We are ready to sell and I don’t want it to drag on,” he told the WSJ. Where is Hakim rushing to? Why Florida of course. While these types of luxury home auctions frequently happen in other parts of the country, it’s rarely seen in a market like Greenwich which used to be a beacon for top players on Wall Street and still remains one of the richest towns in the United States. But Greenwich now faces new challenges, as New Yorkers opt to live in the city and even some, like Hakim, relocating to Florida in search of a favorable tax environment. The bonuses that were used to prop up the real estate market from bankers are also starting to run dry...

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