Just when you thought you had just figured out millennials a new generation of influencers has come on the scene. They are Gen Z—loosely, people born from 1995 to 2010— and they are true digital natives.  From their beginning they have been exposed to the internet, to social networks, and to mobile systems.

Corporate America is shifting advertising focus to Gen Z, away from the millennials, as this group is massive and influential. In U.S. alone, there are 65 million of them. By 2020, Generation Z will account for 40% of all consumers in the U.S.

Gen Zers are very comfortable with collecting and cross-referencing many sources of information as they’ve grown up in a world where they have limitless options, but not limitless time.

McKinsey & Company did a survey on Gen Z and its implications for business.

Our study based on the survey reveals four core Gen Z behaviors, all anchored in one element: this generation’s search for truth. Gen Zers value individual expression and avoid labels. They mobilize themselves for a variety of causes. They believe profoundly in the efficacy of dialogue to solve conflicts and improve the world. Finally, they make decisions and relate to institutions in a highly analytical and pragmatic way. That is why, for us, Gen Z is “True Gen.” In contrast, the previous generation—the millennials, sometimes called the “me generation”—got its start in an era of economic prosperity and focuses on the self. Its members are more idealistic, more confrontational, and less willing to accept diverse points of view.

Such behaviors influence the way Gen Zers view consumption and their relationships with brands. Companies should be attuned to three implications for this generation: consumption as access rather than possession, consumption as an expression of individual identity, and consumption as a matter of ethical concern. Coupled with technological advances, this generational shift is transforming the consumer landscape in a way that cuts across all socioeconomic brackets and extends beyond Gen Z, permeating the whole demographic pyramid. The possibilities now emerging for companies are as transformational as they are challenging. Businesses must rethink how they deliver value to the consumer, rebalance scale and mass production against personalization, and—more than ever—practice what they preach when they address marketing issues and work ethics.

Generations are shaped by the context in which they emerged . Baby boomers, born from 1940 to 1959, were immersed in the post–World War II context and are best represented by consumption as an expression of ideology. Gen Xers (born 1960–79) consumed status, while millennials (born 1980–94) consumed experiences. For Generation Z, as we have seen, the main spur to consumption is the search for truth, in both a personal and a communal form. This generation feels comfortable not having only one way to be itself. Its search for authenticity generates greater freedom of expression and greater openness to understanding different kinds of people.

Gen Zers, with vast amounts of information at their disposal, are more pragmatic and analytical about their decisions than members of previous generations were. Sixty-five percent of the Gen Zers in our survey said that they particularly value knowing what is going on around them and being in control. This generation of self-learners is also more comfortable absorbing knowledge online than in traditional institutions of learning.

Gen Z have a carefully tuned radar for being sold to and a limited amount of time and energy to spend assessing whether something’s worth their time. Getting past these filters, and winning Gen Z’s attention, will mean providing them with engaging and immediately beneficial experiences. One-way messaging alone will likely get drowned out in the noise.

Stay tuned!

The S&P 500 hit a new all-time high yesterday.

While the mainstream media keeps pointing to Fed policy on interest rates and US-China trade optimism, the real driving force for the rise in the S&P 500 is much deeper and more powerful than the daily news. We have often stated that if you get the currencies right, the rest follows. The main reason that the S&P 500 is rising is that for many foreign investors, US equities are a ‘safer’ place to invest than most others.

Most investors focus far too much on their domestic markets. We live in Canada, and we are amazed how little Canadian and American investors understand of the global markets. We keep getting questions from American investors wondering why the US dollar keeps rising, given the huge debt problem the US has. It is true the US has a massive, unsustainable debt problem, but right now, that is not the big global problem.

To illustrate how currencies drive most markets, let’s see how wealthy investors look at things. Let’s assume we are a Swiss investor. Here is a chart of the Swiss Franc and we we can see it has lost over 6% in value since late September. 

Not only is their currency declining, if they want to make a ‘safe’ investment in their country’s Government Bonds, the yield they receive is actually negative. For every SF 100,000 invested in Swiss bonds, the investors loses SF 750 each year or SF 7,500 over the 10 year time-frame.

It is not just the Swiss Franc that is losing ground to the $US, virtually every currency has lost ground to the $US. The Euro is no exception. In 2014 we recommended subscribers buy an Exchange Traded Fund (ETF) that allows investors to ‘short’ the Euro very easily without having to invest in futures or options. That initial trade netted subscribers over 55% in less than a year. We re-entered that trade last February and still hold that trade which is currently up over 30% today.

Why are the Euro and Swiss Franc declining while the $US is rising? Think about it. Say you live in Switzerland, France, or Portugal, or even Germany. Your currency is declining, your economy is declining, and your domestic government bonds are paying very little or even negative yields. Then you look at the US. Yes, it has a terrible debt situation and eventually that will be a big problem, but it is not as big a problem as what is currently happening in Europe and Japan.

Wealthy investors in those countries (and many others such as China, Russia, South America etc) are looking for a safer, better place to put their capital, and the US bond and equity markets look very attractive to them. That Swiss investor could put $100,000 into US bonds and instead of paying -.75%, each year, he or she would receive 2.55% every year.

Those investors are also moving their capital into the US equity markets where they are seeing great returns on their capital. In addition to those gains, whenever they buy US stocks or bonds, they are converting their SF into $US. As the $US appreciates against the SF they are gaining on the currency exchange as well.

The following chart illustrates how foreigners having been moving their capital into the US markets.

It is this  global flow of capital into US markets that is driving up the US stocks and $US. These foreign investors are quickly losing faith in their governments and central bankers to manage their economy. Europe and Japan are the biggest risks for the next couple of years. Once they collapse, the debt and economic issues in North America will move to centre stage and then we will see a global economic crash, far worse than 2007, or 2001.

Every investor needs to think like a global investor. We continue to guide our subscribers through this looming global crisis and while it will be volatile and frightening to most, we plan to make significant gains staying ahead of the herd by following the global flow of capital. In addition to the Trend Letter, we have a great hedging service called Trend Technical Trader which will help our subscribers not just protect themselves during severe market corrections, but to actually profit from those dramatic moves.

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