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Youthful Angst

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Oh, and twisted thoughts that spin round my head
I'm spinning, oh, I'm spinning
How quick the sun can drop away

And now my bitter hands cradle broken glass
Of what was everything?
All the pictures have all been washed in black tattooed everything...
-Pearl Jam

Youthful angst is a rite of passage, but its concentration on economics marks the difference between Generation Y and previous classes of generations. The thing is this generation was born and many were reared through heady economic times (60% by some accounts) but have begun their adult lives amid a fierce economic crisis. The laissez faire attitude of Gen X offset equally harsh economic conditions going into the 1980s, but maybe growing up under those conditions meant less stress for young adults.

Today, twenty-somethings sing a song that pounds eardrums like the haunting lyrics of "Black" from Pearl Jam. The sources of angst are different, the pain and (mental) suffering the same.

Yesterday, I asked: "Is a house with a white picket fence and backyard still the American Dream?" I was shocked at how many people said it is not or offered a list of priorities that subordinated owning a home for other desires. On that note I've been thinking about a survey sponsored by PNC on the mindset of the twenty-somethings with respect to debt and saving. That survey set the tune for this morning's report. It begins with a funny yet ominous headline:

"OMG! 20-Somethings Stressed By $45,000 In Average Debt"

In addition to feeling stressed, this group is scared, apprehensive, and guilty. It's the first such survey by PNC, so there isn't any trend to follow but slivers of hope include the reading on determination, feeling grown up and in control.

More than half hold education debt throughout their twenties according to the report, followed by credit card, car loans and mortgages. Interestingly, 94% of those surveyed said they save either when they can or on a regular basis. But what are they saving for?

> 76% in case of emergency
> 53% for major purchase in future
> 41% trip in next 12 months
> 38% for retirement
> 36% down payment for a home

This is why homebuilders are building so many apartments, because this generation probably saw someone in their family lose a house and are simply afraid. This is a very smart generation, but it seems to be very emotional as well. PNC, which partnered with Artemis to create the report, points out the Millennials have knowledge, tools, and other advantages over previous generations. I can only hope at some point this group will have enough confidence in the nation to buy houses, with or without, the white picket fences. The thought that vacation trips and even retirement is more important to twenty-somethings is a problem.

There was a time when you bought your house so you could have a retirement resource.

New Transportation Index

There have been several problems with this year's rally, including lack of volume (conviction) and poor participation by the transportation sector. Last week, the sector came on like gangbusters but continues to trail the broad market's performance. While traditional transportation numbers have lagged, the Baltic Dry Bulk shipping index has begun to rally hard and fast. A few years ago there was talk of dry bulk shippers being the new Transportation Index as a reflection of the global economy. That notion went bust as these businesses got locked into long term and highly unprofitable contracts to lease ships at rates that couldn't be passed along.

Still, I think there's a role for dry bulk somewhere, but it's not the new paradigm or proxy for the global economy. I'm going to see if there is a correlation and maybe we can glean a plus from the recent spike in the index.


The Market

The big question and challenge for the stock market is can it move without its new trinity:

It seems like a slot machine. If any of the above has a problem than so does our precious stock market rally. It's like pulling a lever on a slot machine and one of the windows has a lemon—makes for a very sour session.

In the meantime, if the United States is going to lead the way and trading is going to get real traction and credibility, we need to see better economic data. This morning we discover that mortgage applications continue to plunge. Our housing analyst will have more on that in the afternoon update, but if lower rates don't motivate would-be buyers and a spike in rates doesn't work either then what the heck will get people to buy homes? By the way, purchase applications were slightly lower while refinances crashed 9.3%.

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