No Bueno!!! Soon Most 30-Year-Olds Will Be Earning Less Than Their Parents Did At The Same Age

by 10 months ago

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QUOTE OF THE DAY

“We have no plans to open 2,000 of anything. Not even close. We are still learning” — An Amazon spokesperson, refuting a WSJ report that Amazon is planning on opening 2,000 grocery stores.

Market Snapshot

  • We’ll come clean: we’re running out of words to describe this incredible run. All five major U.S. indexes closed at record highs on the same day—a feat that hasn’t happened in the past 18 years
  • Shares of Time, Inc. (+7.9%) surged on reports that the media giant has hired banks to begin fielding takeover offers. With a sluggish transition to digital and declining print ad sales suppressing revenues, it was only a matter of time

Less Money

…Less to lose? China just announced ATM withdrawal limit cuts in its casino capital, aka Macau. Any guesses as to who that might hurt? Time’s up: casinos. Macau’s gambling industry has been in decline over the last few of years due to a crackdown on corruption, but the Chinese territory still dwarfs Las Vegas’ gambling market. The Chinese government had already instituted a daily withdrawal limit of $1,250, so why is it cutting the limit back to $626? Hard to tell, but it may have something to do with China’s currency reserves. Due to recent trouble with the Chinese yuan, people are scrambling to get money out of the country…and a popular way of getting it out is to, yes, gamble it in Macau. Fancy that. With China’s reserves down $1 trillion from the summer of 2014, it has to start taking some more drastic measures to stop the cash outflow…resulting in some seriously unhappy casinos.

Spotify Steps Back

…And gives up its efforts to acquire SoundCloud, in what would have been a very, very big deal for the digital music industry. The two have been stop and go over the past two years, but things escalated after Twitter (+0.82%) bought a stake in SoundCloud this past June. While streaming giant Spotify hasn’t officially announced its long-awaited plan for an IPO, rumor has it the company has been making moves. How? It recently raised money with incentives tied to a theoretical public listing, and it came amidst serious attempts to stabilize finances and reorganize the company. This lost acquisition only further underscores the intensity of the music industry, where music labels carve out up to 82% of revenue share from streaming companies as a result of licensing agreements. Looks like someone hit the stop button. Time to shuffle?

Sears In Tears

…Again. Yesterday, Sears Holdings (+5.28%), owner of Sears (duh) and Kmart, reported its fifth consecutive quarterly loss. If five quarters sounds bad, then get this: Sears hasn’t posted an increase in quarterly sales in five years. On top of that, 64 Kmart stores will be closing this month, with 80 more closing by July. Bottom line? Sears is running out of options. Cutting costs, selling assets and even digging into its CEO’s hedge fund can’t seem to put the bankruptcy nightmares to bed. Previously America’s largest retailer, Sears has taken a rocky road into the new millennium, and it has Amazon and Walmart to thank.

Party’s Over?

…Not yet. Yesterday, the European Central Bank (ECB) announced it will extend its bond buying program another nine months as part of its quantitative easing efforts, nudging European stocks a little higher. The program, which is all about keeping interest rates low to spur borrowing, will continue until the end of 2017. The goal? Bump Eurozone inflation to 2%, well above the current 0.6%. As expected, skepticism is rampant—investors are worried about Europe’s economic stability after Italy rejected a referendum for constitutional change last weekend, with some saying the bond extension will actually hurt the Eurozone economy. And there’s a catch: yes, the stimulus will continue into next year, but in April the pace will slow a bit. It’s a balancing act.

Other Stories

Economic Calendar

Thirty, Flirty and Broke

Just how attainable is the American Dream in 2016? Researchers from Stanford, Harvard and UC Berkeley set out to investigate. They researched how many American 30-year-olds earned more than their parents did at the same age, and their findings aren’t too promising for the next generation:

  • In 1970, 92% of 30-year-olds earned more than their parents did at age 30. That percentage plummeted to 51% in 2014 and is expected to continue to drop.
  • The decline is even sharper in the Midwest, and for young men in particular. Impacted by competition from globalization and technology, 2014 saw only 41% of 30-year-old men earn more than their fathers did at 30.
  • Can the trend be reversed? Researchers are pessimistic. Even if the economy grew at Trump’s promised 3.8% annually (economists predict it will be closer to 2%), the percentage of children out-earning their parents would only jump to 62%. Good luck, millennials.

Interview Question of the Day

Two mathematicians, Andrew and Bason, were sitting face to face when Andrew came up with an idea. He scribbled some mathematical equation on the table and told Bason to read it. Bason said that it was wrong, but Andrew said it’s absolutely right. What would Andrew have scribbled to make both of them correct? (Answer)

Business Person of the Day

Sean Rad is stepping down as CEO of Tinder—but he’ll still be around. Yesterday, Rad became chairman of a new M&A branch of the company, playfully dubbed Swipe Ventures. Swipe Ventures will focus on expanding Tinder’s footprint through acquisitions, new business development and investments in new and existing companies. Looks like Rad and Tinder are just taking a little break.

Food for Thought

Some more good news for airlines: according to the leading airline trade group, about 45.2 million passengers are expected to fly globally on U.S. airlines during the 21-day holiday period from December 16 through January 5, up 3.5% from the same period in 2015. The best Christmas gift? A short and painless security line.


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