When shorting, look for obvious bubbles; How are American consumers still spending despite incomes not keeping up with inflation?; Will 'the Great Wealth Transfer' Trigger a Millennial Civil War?; I got fooled
1) Continuing where I left off in yesterday's e-mail, sharing slides from my presentation on "Lessons From 15 Years of Short Selling," these next slides make the point that it can be profitable shorting obvious bubbles like my 25-stock "Short Squeeze Bubble Basket" I named on the very day the meme stock bubble peaked on January 27, 2021. Here are two other examples:
2) Here's Charlie Bilello with an insightful tweet on how U.S. consumers are continuing to spend strongly in spite of their incomes not keeping up with inflation:
3) Here's another possible reason why at least some people can maintain their spending: Will 'the Great Wealth Transfer' Trigger a Millennial Civil War? Excerpt:
In a 2019 report, the consulting firm Cerulli Associates projected that, over the next quarter century, roughly 45 million U.S. households will collectively bequeath $68.4 trillion to their heirs. This transfer will constitute the largest redistribution of wealth in human history. Generation X stands to inherit 57% of that $68.4 trillion; millennials will collect the bulk of the rest.
Millennials, in other words, are one day going to be a lot richer (or at least, some millennials are). In the coming years, that reality is likely to heighten the generation's class contradictions – and just might redraw the dividing lines in American politics...
The impending "great wealth transfer" will be wildly regressive. A recent Federal Reserve study of intergenerational transfers in the U.S. found that Americans in the top 10% of the income distribution were twice as likely to receive an inheritance as those in the bottom 50%. Transfers of wealth made by living parents to their children were even more concentrated among the well-off. Putting inheritances and gifts together, Americans who were already in the top decile of the wealth distribution collected 56% of all intergenerational transfers in the U.S. between 1995 and 2016.
If the great wealth transfer is sure to be concentrated at the top of the socioeconomic pyramid, it will nevertheless reach a broader base. By Capitol One's estimate, more than half of the estates bequeathed over the next three decades will go to low or middle-income households. The nascent avalanche of asset handoffs between boomers and millennials will thus benefit a substantial subset of the latter generation...
And as familial wealth is transferred, and millennials' "earned" assets appreciate, the generation's internal class divisions are liable to become more invidious than those of its predecessors. The millennial rich and upper-middle class will be the wealthiest America has ever known. Working-class millennials, meanwhile, are poised to enjoy less economic security than their parents, as their wages fail to keep pace with the rising costs of housing and health care...
Still, you can see potential premonitions of a millennial class war. The conflict between millennials who own (and/or stand to inherit) assets, and those who do not, may be most visceral in the realm of housing. Our generation is just now entering its prime home-buying years. And those without high incomes or significant familial aid are finding themselves priced out of the American dream, while others can't even make rent in high-demand areas. The fundamental reason for this is a manufactured housing shortage: There are 3.8 million more willing buyers than available homes in the U.S. today. And the dearth of so-called starter homes – the kind millennials prefer – is even more acute. Last year saw the construction of just 65,000 homes that were smaller than 1,400 square feet; in the late 1970s, 400,000 such units were built annually.
The story is similar in the U.K.: Why inheritance is the dirty secret of the middle classes – harder to talk about than sex.
4) I'm super aware of phishing scams and to my knowledge had never fallen for one... until recently when I received a notification within my Facebook app from "Pages Community Standard and Protection" that "someone told us that you violated our terms and conditions of service" and threatened to close my account if I didn't respond (see screenshot below).
Because it came from within the app (not an e-mail) and because I've had friends who have had their accounts suspended, I missed the obviously phony Account Confirmation link, clicked it, and entered my username and password.
I soon recognized my error (someone simply set up an account named "Pages Community Standard and Protection" with an official-looking logo) and immediately changed my password (and I had two-factor authentication on my account), so no harm done – but be careful out there!
Best regards,
Whitney
P.S. I welcome your feedback at WTDfeedback@empirefinancialresearch.com.