The mega Chinese stock market bubble:Â Over half of new investors only have a junior high education or less and the Shanghai Composite is up 100 percent in one year.
I still have vivid memories of Japan’s massive bull-run in stocks and real estate. For many years the consensus was that Japan had found a secret method of perma-growth and prices would only go up. Down was not in the vocabulary. We are seeing similar perceptions and narratives when it comes to China’s roaring economy. Let us make this clear, China is clearly growing and at a very fast pace. I don’t think that is subject to debate. But what is up to debate is that valuations in real estate and now stocks are fully out of hand. In other words, a bubble is fermenting. There are a few key metrics that really reveal to me that we are heading into deep bubble territory for China. The first is that the government has stepped in dramatically to curb real estate speculation and this has done very little to curb the rush for real assets. Next, we see the stock market through the Shanghai Composite being up 100 percent in only one year. But finally, a large portion of new entry level investors only have up to a junior high education and many new investors do not even qualify as literate. You still think valuations are fine? Let us take a look.
Record 93.2 million Americans now not in the labor force: The not in the labor force rebound added 277,000 Americans in March alone.
In the last year alone we have added 2.1 million Americans to the “not in the labor force†category. This mysterious category continues to grow and is having a field day with the employment data. It is hard to ignore this number because it represents a large portion of our population that is simply not counted in the labor force data. You have older Americans in this category but you also have a large number of people wanting work and simply not being able to find it. You also have many relenting and taking up work in the low wage segment of our economy. The unemployment rate would have you believe that this is a fantastic recovery but in March alone we added 277,000 to the not in the labor force category while only 126,000 jobs were created. It is becoming more apparent there will be a strain on the one-third of Americans supporting the other two-thirds.
The economically lost generation of Millennials: taking a look at net worth data, living arrangements, and student debt.
Young Americans probably missed the memo regarding the economic recovery that has been taking place since 2009. Apparently massive student debt, living at home, and a market full of low-wage jobs isn’t exactly the picture perfect ideal of a booming economy. Millennials are facing an uphill battle. The market has virtually eliminated the pension system and has reduced benefits to the barebones for most workers. All of a sudden a large army of Americans are part of the “Uber†economy of freelance workers. You have two systems clashing with one another when many baby boomers are trying to unload their assets to another generation that is simply not as wealthy or economically secure. The recovery has been anything but even and the brunt of the financial damage has been taken on by the young. If we look at the figures it paints a picture of a lost generation financially for young adults.
Largest for-profit sees half of its students vanish in last five years: For-profits under fire as value comes into question.
Many prospective students are starting to become savvier when it comes to looking at colleges. For-profit colleges largely rely on federal funding and market to lower income Americans. There is little oversight for the colleges in producing any sort of measurable result. Many students are simply saddled with massive debt and a degree that has little value in the marketplace. Yet it does seem like the tide is turning with some for-profits. The University of Phoenix, the largest for-profit in the country has lost half of its students since 2010. It is a big deal when you once enrolled 460,000 students and are now down to 213,000. And it certainly wasn’t because of advertising. In 2009 the school was spending around $100 million a year in marketing. With $1.2 trillion in student debt outstanding this is a telling trend. Is the University of Phoenix reflecting a bigger change in for-profits?