NEWSWIRE: 11/13/17

  • Morgan Stanley analysts predict that traditional brick-and-mortar retail sales will decline in Q4 2017, which would mark the first Q4 decline since 2008. While the holiday season is usually a boon for these retailers, several factors—such as the introduction of a pricey new iPhone and the continued advance of e-tail—may make this year an exception. (Morgan Stanley)
    • NH: We'll see. As the WSJ summarizes the case, conventional b&m retailers (MS defines away big-box stores and off-price retailers) will be kneecapped by 30 million iPhone X buyers (there goes $30 billion), higher gas prices, and the ongoing Amazon juggernaut. At least as important IMO is whether the hot September retail momentum (+1.7% MoM excluding food sales) continues. Not coincidentally, the personal savings rate in September just hit its post-GFC low (3.1%). Will belts tighten, or will Xmas be one more hell-with-tomorrow extravaganza?
  • Fully 64% of Millennials say they’re “very or extremely confident” making investment decisions on their own—compared to only 47% of Xers and 39% of Boomers. With so much information at their fingertips thanks to the Internet, tech-savvy Millennials are able to do their due diligence before making any investment decisions. (Charles Schwab)
    • NH: It's not just lots of information--which can paralyze as easily as it can mobilize--but the way all the data is so well organized and can be accessed so easily on sites like Brightscope and FeeX. Millennial confidence also comes from expecting less from their investments. Boomers and Xers, who recall an era of plush double-digit total returns, always fret that they're just one great tip away from riches. No such FOMO for Millennials: They're resigned to saving more, at lower returns, to get where they need to be in their "target year." What's more, they don't mind ending up where all their friends end up, heads or tails, which gives today's passive index herding an extra push.
  • In the United Kingdom, the number of annual alcohol-related deaths among the 50+ has increased 45% since 2001. According to Dr. James Nicholls, “A heavier-drinking postwar generation is now reaching an age where accumulated alcohol harms start to have a real impact.” (The Guardian)
    • NH: Drinking deaths in the U.K. are soaring in the age 50-70 bracket at the same time that they are dropping in age 15-35 bracket. This is very similar, with a lag, to what has happened in the United States. (See: "The Next Big Thing: Where the Wild Things Aren't.") We first started commenting on this European Millennials-with-a-lag shift in substance abuse back in 2012.
  • Gen Xer Mira Zaslove offers tips for Millennials with Xer managers. She makes several astute observations, including this bit of sage wisdom: “Xers grew up questioning everything. Expect them to give the pros and cons to even the best of ideas.” (Ladders)
    • NH: Kudos, Mira, for defining generational birth years as we do (e.g., Gen X as born 1961-81)! Among her other choice pearls: "Xers tend to be more independent. So, when working with a [sic] Xer, don’t be surprised or offended if they choose to work alone." Or this: "Xers tend to be hands-off, low face-time managers. So when working for an Xer, ask them to clearly define their expectations."
  • Millennials are twice as likely to be a registered nurse as young Boomers were—and 60% more likely than young Xers were. In addition to being situated in a growing sector of the economy, nursing jobs are a good fit for Millennials who want to make a difference at work. (Health Affairs)
  • Nike is opening dedicated athleisure studios in its 5,000 retail locations to highlight its new gear. While the sheer amount of real estate that Nike is devoting to athleisure is impressive, the company still has yet to match the aspirational “lifestyle fitness” brand reputation of Lululemon. (Bloomberg Business)
    • NH: Gee, I didn't know Nike had 5,000 retail locations! Maybe some of these "studios" will be opened in retail chains. Whatever the number, it's a lot more stores than Lululemon has (421)--a fact which pulled down the yoga-inspired Canadian company's stock by 2% when the headline first appeared. I agree that NKE has to do a lot more before it puts LULU in danger. As it takes on athleisure, Nike keeps aspiring to Lululemon's upmarket friendliness, confidence, and elite fashionability. But in vain. Nike can't let go of its over-the-top Xer branding (see here and here)--full of unsmiling, black-clad, winner-take-all maximizers, desperate to win the big race. Lighten up, Nike, you're trying too hard!
  • Millennial contributor Sarah Kessler compares popular criticisms of her generation with criticisms levied against young Xers. Her analysis reveals that, as young adults, Xers were dismissed as entitled, lazy, feedback-craving, and reward-seeking—sound familiar? (Quartz)
    • NH: Superficially, all youth put-downs are alike because they are all predicated on universal phase-of-life differences. Of course, the young are always less experienced, less patient, less worn by care, and more willing to think outside the box of society's recent past. These sorts of complaints are timeless. If you look more closely at the particulars of the complaints, however, you notice that they shift markedly from one generation to the next. Back in the early '90s, older generations worried that Xers were fearless, edgy, undersocialized risk takers--disinterested in the team, only in themselves. Today they worry that Millennials are too cossetted, want too much feedback, and don't know how to take risks. And they love the team so much, they want to bury their own performance inside of it.
  • According to a new OECD report, Millennials have a higher average disposable income than previous generations had at the same age. While this distinction is far less prominent in the United States, this finding is a friendly reminder to Millennials paying off student loans or saving for a home that things could be worse. (OECD)
    • NH: Alas, yes, "far less prominent" in the United States indeed. The 35-member OECD average now includes Millennials in southern and central Europe plus Chile, South Korea, and Turkey. These Millennials are certainly doing better than their parents. But in the original EEC members plus the United States and Canada, Millennials show little or no real income gain over their parents' generations at the same age. (For the U.S. generational experience, see: "A Generational Perspective on Living Standards: Where We've Been and Prospects for the Future.")
  • A new Honda ad portrays a young couple, grown tired of social media, travelling via Honda motorcycle to meet their friends in person. While the ad is an ingenious way to appeal to sociable Millennials, it may take more than the promise of a road trip to get most Millennials to hop on a motorcycle. (MediaPost)
    • NH: Nice ad. Unlike Harley-Davidson, Honda is really trying to brand its motorcycle as a vehicle that enables reaching out to others and staying literally in touch with friends. The message starts with the (Millennial) premise that everyone is too immersed in digital media. Let's see if it works.
  • Contributor Ted Hesson argues that Boomers need immigrants to be home health workers as they enter old age. He suggests that the demand for home health care aides will explode thanks to fiercely independent Boomers who would rather age in place than move into a retirement community. (Politico)
    • NH: Up until about a decade ago, many liberals used to argue that more immigration was bad because it lowered wages for the unskilled. Today, as the Democratic Party aligns itself more fully around a pro-immigration platform, that argument has almost disappeared--either because unions have weakened to the point of irrelevance or because Democrats see more to gain from pulling in immigrants as voters. In any case, the outcome of this debate is unlikely to affect the trend in net immigration--which, as we have often argued, is almost certain to trend down regardless of which party reclaims the White House or Congress. Thus, when in comes to home health, markets will simply have to adjust by raising pay for these workers: This will somewhat expand their supply and somewhat constrict their demand as some Boomers make other arrangements (like living with their own kids).


      Oh Give Me a Home. We’ve written before that reports of a Millennial homeownership boom have been greatly exaggerated. But some firms are trying to win over young renters with programs that could help them afford a home. Unison Home Ownership Investors, for instance, promises to pay up to half of the down payment and reduce monthly mortgage costs through a shared appreciation model. (Whenever the home is sold, Unison will get a portion of the sale.) Eagle Home Mortgage attempts to hit two birds with one stone by offering to pay as much as 3 percent of the total purchase price toward a homebuyer’s student loans, up to $13,000. Seattle-based startup Loftium, meanwhile, attempts to capitalize on this generation’s affinity for the sharing economy: Loftium will pay a whopping $50,000 toward a down payment as long as the homebuyer agrees to rent out a spare room on Airbnb for one to three years and split the income with the company.