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Millennials & Zoomers Inherit A Boomer Mess, What Will They Do With Their Turn?

Millennials & Zoomers Inherit A Boomer Mess, What Will They Do With Their Turn?

Authored by Mike Shedlock via MishTalk.com,

Looking ahead,…

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This article was originally published by Zero Hedge
Millennials & Zoomers Inherit A Boomer Mess, What Will They Do With Their Turn?

Authored by Mike Shedlock via MishTalk.com,

Looking ahead, the M's and Z's are about to set policy. What will it be and what are the implications?

Move Over Boomers

In response to Social Security Will Not Be Able to Pay Promised Benefits by 2034 a reader asked "What is the most likely outcome of the most likely 'solution'? At what point will pretending break down, and what will the consequences be?"

I answered in a Three-Part Tweet.

  1. Excellent Questions: Much depends on what the Progressives can get passed by the end of the year. I assume income and corporate taxes will rise, but by how much? What about energy taxes? Those answers may decide whether its stagflation or deflation.

  2. Then Millennials and Zoomers replace Boomers in Congress. What then? The M's and Z's have a lot of scorn for the B's. Normally I am willing to take a political educated guess. My election calls have been pretty good, but I really just do not know.

  3. One way or another, I am firmly convinced the stock market will not like the outcome no matter what the M's and Z's decide. These imbalances cannot last even if we cannot see the precise path. Meanwhile, I remain in awe of the Fed's ability to keep these bubbles going.

Average Age of Congress 

Please consider How Old is the 117th Congress?

  • The average age of the 117th Congress is 59 years old and the median is 60 years old. This is much higher than the median age of 38 years in the United States in 2019, according to the U.S. Census Bureau. 
  • The average age of the Senate is 63 years. The most popular years of birth are 1952 and 1954 with seven members each.

Oldest Senators 

Purple Shift

In addition to aging Senators who will retire or die in office, there's an ongoing "Purple Shift" in Southern States as noted by Nate Silver

Biden won these two states in large part by improving upon Democrats’ performance in each state’s metro area. For instance, he won Maricopa County, which includes Phoenix and usually makes up 60 percent of Arizona’s total vote share, by 2 points. He also surged in the Atlanta metro area, improving on Clinton’s margin in the 10 counties that make up the Atlanta Regional Commission by 9 points, enabling him to win Georgia. Biden was also aided by the fact that both of these states are more racially diverse than states in the Upper Midwest.

Part of that was an anti-Trump backlash but part of it was younger voters tend to be more liberal.

Spotlight Texas

In both states, Biden did better in the more diverse and well-educated major metropolitan areas, but that proved insufficient. However, he still made some gains. In Texas, for instance, Biden became the first Democratic presidential candidate to carry Tarrant County (Fort Worth) since 1964, and in North Carolina, he improved on Clinton’s margins in the two most populous counties in the state, Mecklenburg (Charlotte) and Wake (Raleigh). He even carried some suburban and exurban counties that Trump won in 2016, such as Williamson County outside of Austin, Texas, and New Hanover County, North Carolina (Wilmington).

Once again, some of these shifts are due to demographics and immigration, while part was due to huge anti-Trump turnout. 

Priorities, Priorities 

Millennials and Zoomers do not have the same priorities as their Boomer parents and grandparents. 

In general, M's and Z's they care more about the environment, are more liberal, and are far less addicted to automobiles and warmongering than boomers. 

In less than a decade, they will be in control, calling all the shots on climate, taxes, Social Security, spending, energy, and wars. 

They have far less to protect in the stock market.

The Path We Take

The M's, the Z's and the Purples will decide what's next. But when?

Biden is pushing a $3.5 trillion progressive agenda. We still don't have an outline. 

Sooner or Later? 

That's the key question right now. Will it pass? What will be in it?

I do expect Democrats will lose control of Congress in the Midterms. 

If so, Biden has a one-time-for-now shot at passing something. So what will Democratic Senators Joe Manchin of West Virginia, and Kristen Sinema be willing to go along with? 

Longer term, the fate is sealed. One look at the Purple shift in Texas is all you need to know. 

Stagflation or Deflation?

I can easily make a case for either, or both, or one right after the other.

Case for Stagflation

  • Biden passes a massive energy tax coupled with "free education" and "free" child care. 

  • This results in higher prices across the board for everything. 

  • In response to higher prices, the demand curve shifts in causing a recession. 

  • Yet, escalating energy triggers through 2030 stubbornly keep prices rising. 

Case for Deflation

  • The stock market bubble bursts reducing demand for houses, cars, purchases in general. 

  • Prices fall as a result of falling demand. 

Recession Assumptions

Neither Biden, the nonpartisan Congressional Budget Office, nor economists see any recession on the horizon. 

Both of the above scenarios imply a recession. 

Regardless of which one, the notion the Fed or Congress can prevent recessions is laughable. 

Bubbles do burst, with consequences.

Another recession within a decade is coming. And one next year in response to a Biden budget would not surprise me in the least. 

For more discussion on the stagflationary case, please see ...

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Tyler Durden Mon, 09/06/2021 - 13:35

Economics

Between a rock and a hard place

What will the Fed do? European stocks are making decent gains on Thursday, while US futures look a little flat ahead of the open on Wall Street. US equities…

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What will the Fed do?

European stocks are making decent gains on Thursday, while US futures look a little flat ahead of the open on Wall Street.

US equities rallied as the session wore on yesterday and we’re seeing Europe playing a little catchup this morning. Overall, the mood remains a little downbeat in the markets, with investors torn between the “buy the dip” approach that has fared so well in the past and the growing list of economic and market risks that are increasingly evident.

We may see more of this over the coming months as countries get to grips with winter Covid surges, higher energy prices and higher inflation, among other things. Which makes the positions of central banks all the more uncomfortable, with many seemingly determined to persevere with paring back their pandemic stimulus measures.

Of course, if they are becoming more of the view that inflation is not as transitory as they previously believed, then they’re caught between a rock and a hard place and may be forced to act. But that will only pile on the pressure and disrupt the economic recoveries that many have enjoyed.

Next week we should learn a lot more about what the world’s most important central bank thinks of recent developments and how it perceives the risks posed by inflation. It may not be surprising therefore if equities err on the side of caution between now and then as an undesirable response could trigger a nasty reaction in the markets.

US data delivers gains for stocks, yields and USD as gold tumbles

Today’s data from the US has done little to clear things up, with both retail sales and the Philly Fed manufacturing index smashing expectations while jobless claims popped a little but only just exceeded forecasts. Retail sales have been volatile for a number of months but an August increase of 0.7% was the reverse of the decline that was expected.

Philly Fed has been trending lower since March and that trend was expected to continue but a surprise jump may be cause for optimism. While new orders and employment indicators softened, firms remain optimistic about the next 6 months as current general activity and shipments saw large increases.

US futures got a small lift on the back of the data while the dollar continued to rally as US yields drifted higher once more. Gold, which has been through a rough patch over the last 48 hours, didn’t fare well with the data and continued to trend lower on the day.

Bitcoin struggling at $48,000 once again

Bitcoin has steadied once more around $48,000 which remains an interesting technical level. A rotation off here back towards $44,000 could see correction pressure grow. I say this having talked about the prospect of a correction for weeks now and yet, bitcoin has shown remarkable resilience.

It obviously hasn’t burst higher in that time either but it’s certainly dragging its feet. With that in mind, there isn’t much to add at this point. A significant break below $44,000 could make things interesting, while a move above $48,000 will put the focus back on $50,000 and may even trigger a shift in momentum that has been absent in previous rallies.

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Precious Metals

Oil pares gains, gold plummets ahead of Fed

Oil sees profit taking at summer highs Oil is pulling back a little on Thursday after enjoying another strong rally in recent days. Hurricanes hitting…

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Oil sees profit taking at summer highs

Oil is pulling back a little on Thursday after enjoying another strong rally in recent days. Hurricanes hitting the Gulf Coast in recent weeks have disrupted production in the region which has given a boost to prices. And with two more months of Hurricane season remaining, more disruption could follow.

Inventory data from EIA gave prices another lift on Wednesday, with WTI and Brent also rallying ahead of the release after API also reported a large drawdown a day earlier. With prices now back around summer highs, we are seeing some profit taking kicking in but the rally continues to look well supported.

WTI fell a little short of its summer highs around $75, stumbling around $73, while Brent saw resistance around $76. A break through these levels could see the rally gather even more momentum. If we do see a small pullback, the first test of support could come around $70 in WTI, where it had previously seen resistance.

Tough times ahead for gold?

Gold has fallen out of favour and fast, with the yellow metal slipping more than 1.5% today and below a key support level. This comes only a couple of days after it broke back above $1,800 on the back of softer US inflation data but that celebration was short-lived and it’s suddenly looking rather vulnerable.

From a technical perspective, $1,780 marked the neckline of a head and shoulders that formed over the last month, peaking at $1,833. The next major test below could come around $1,750 but further downside could be on the cards.

The fact that this has come ahead of the Fed meeting doesn’t bode well for the yellow metal. Recent data has given the Fed room to be more patient with tapering but the commentary we had late last week from officials suggested many aren’t discouraged. Gold could feel the love once more should policymakers change course next Wednesday but it could be a long week for the yellow metal in the interim.

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Economics

OIl Firm But Gold Flashes Danger

Oil prices leap higher.   Oil prices staged an impressive rally overnight having spent the week ignoring the gloom sweeping other asset classes. Official…

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Oil prices leap higher.

 

Oil prices staged an impressive rally overnight having spent the week ignoring the gloom sweeping other asset classes. Official US Crude Inventories surprised by falling by a much higher than expected 6.40 million barrels. The slow return of production and refining post-Hurricane-Ida being the main culprit. The relentless rise in natural gas prices, now starting to cause nerves to fray in Europe, is also helping to elevate oil prices and is a situation that I believe will get much worse before it gets better.

 

Brent crude carved through $74.00 a barrel on its way to an impressive gain to $75.50 overnight, rising slightly to $75.60 in Asia. $74.00 now becomes a support/pivot point. China’s announcement that it is selling some of its strategic reserves to the domestic market has had zero impact on prices and dips to the $74.00 region should find keen buyers. Brent crude has resistance near by at $76.00 and if that gives way, Brent crude should target the $78.00 a barrel area.

 

WTI leapt 2.65% higher overnight, climbing to $72.60 a barrel, advancing to $72.70 in Asia. Any dips to $71.00 a barrel should be well supported, at least until we see concrete recovery progress from the Gulf of Mexico hub. A rise through the overnight high at $73.10 suggests a test of $74.00 a barrel, which could extend to $76.00 next week.

 

Gold flashes more danger signals.

 

Gold’s price action overnight flashed more warning signs to bullish investors as prices fell despite the US Dollar weakening and US yields remaining barely changed. Gold finished the overnight session down 0.60% to $1793.50 an ounce. Gold rally on Tuesday failed at the 200-day moving average (DMA), and the uninspiring price action overnight is a huge warning signal that gold is living on borrowed time at these levels, with the path of least resistance looking more like lower by the day.

 

Gold has resistance at $1808.50, the 200-DMA which caped gains so well this week, followed by the 100-DMA at $1816.50 and a formidable series of daily highs around $1834.00 an ounce. Support lies initially at $1790.00 followed by the more crucial $1780.00 an ounce zone. Failure there is likely to see gold fall rapidly to $1750.00 an ounce and potentially lower.

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