Gen Y Likes the City. And Spaceships.
Wall Street Journal says get ready for a new era of corporate urbanism (Alt): large corporate companies are abandoning their suburban headquarters for the cities in an effort to attract Gen Y. Somewhat predictably, Gen Y (18-34) prefers the city over the burbs 38% to 20%; “in 2010, more than 43% of Americans with bachelor’s degrees chose to live in 20 metropolitan areas, primarily tech hubs such as Seattle, San Francisco and Raleigh, N.C.”. However, “as young workers start families, they may care more about soccer fields and good schools than sushi restaurants and bike paths.” But let’s be honest: what Gen Y really wants is to work aboard the Starship Enterprise (i.e. Apple’s Mothership).
All’s Fair in Love and Activism
A new rule from the SEC goes into effect today: odd lot trades (volumes that aren’t in rounded numbers by the hundred) “will be included in the consolidated tape on which price and volume data on U.S. stocks are published.” Expect highly liquid stocks to show an increase in volume on the ticker, but that increase in volume is not actually new, just newly visible. One reason odd lot trades are more common these days is due to increased algorithmic stock trading and institutional investor’s desire to keep their equity interests hush-hush, something Carl Icahn knows nothing about. Maybe we can better understand what Carl Icahn is doing if we consider the importance of branding for hedge funds? Speaking of Carl Icahn, check out this delightful irony: the tables are turning on Bill Ackman as Herbalife is urging Pershing Square investors to sell their stock. Since Ackman took a $1 billion short position in Herbalife he has lost $500 million as other activist investors like Carl Icahn have stepped up to keep Herbalife afloat. Says Professor John Coffee of Columbia University, “All’s fair in love and activism.”
America’s New Rich Hold Cash, Japanese Hold Long Term Treasuries
America’s wealth demographics are growing at polar ends: consider the new rich. While companies race to compete for this market with more luxury-premium-organic-concierge-VIP products and services, America’s new rich are notable for their economic fragility. “They’ve reached the top 2%, only to fall below it, in many cases. That makes them much more fiscally conservative than other Americans, polling suggests, and less likely to support public programs, such as food stamps or early public education, to help the disadvantaged.” Meanwhile, cash is still king(Alt) for affluent investors. According to BlackRock, “32 percent of affluent investors globally expect to increase cash and savings account deposits in the next 12 months,” and only 17% expect a reduction. Cash “is the comfort blanket that many investors connect with the most,” which may help the bullish argument for equities in 2014 since high portfolio holdings in cash don’t really demonstrate irrational exuberance and therefore might not indicate a coming correction or sell-off in the market. In Q3 of 2013, 35% of “affluent investors’ assets were in cash or savings accounts; for all investors it was 56 percent.” 49% of affluent investors do not want to take any risk with their money and American clients are less risk tolerant than their European counterparts. Then there is the Japanese: investors in Japan are buying up long-term US treasuries on predictions of disinflation for the US economy. As US consumer prices stagnate and Bill Gross urges investors to look for short-term bonds, investment firms like Mizuho Asset Management seem to be saying “Thanks Bill but trust us, we’ve seen this before.”