The Affluent Market Is Finally Fading… and Fast

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ECONOMY & MARKETS | February 26, 2016

The Affluent Market Is Finally Fading… and Fast By Harry S. Dent Jr., Senior Editor, Economy & Markets About 30 years ago, I was able to predict the U.S. would see a major generational spending peak in 2007, all from my demographic indicator, the Generational Spending Wave. On a 46-year lag from the time they were born, that's when the peak number of baby boomers would peak in spending for the average household. After that, they would slow in spending, ultimately sending the economy over a "demographic cliff." Remember, 70% of the economy relies on consumer spending! When it slows, everything falls with it. This first demographic cliff happened right on cue, and it helped carry the world into a financial crisis that we've still never really recovered from despite unprecedented government stimulus. But now, there is a second demographic cliff that I've been forecasting which appears to be happening in spades, and globally – not just in the U.S. and China. We Haven't Opened the Doors to This Next-Level Research Since September 2014… And we're only allowing 300 readers this exclusive access. Our track record proves we can make readers money no matter what the market's doing… and for a limited time, you can be one of only 300 new readers granted access to a level of research unavailable for the past 18 months. Click here now. Harry Dent explains everything in this presentation. While the peak number of baby boomers peaked in spending in 2007, the more affluent – the top 10% to 20% – didn't peak until late last year, 2015. In other words, up until now their spending has still been driving the economy. Going forward, that will be less and less the case. This group peaked eight years later simply because they tend to go to school longer and have kids later. They peak on about a 54-year lag, not 46 like the peak number of boomers. Don't underestimate this group. We're talking about the spending of the top 10% to 20% during a period of the highest income and wealth inequality since 1928 to 1929. They account for around 50% of income and spending. That gives them much more weight. And that means that as they cut back their spending as they're already starting to, it'll carve out a hole in the economy that'll really kick off this global crash. Look at the S&P Global Luxury Index, which gives you an indication as to how this group is spending: See larger image This index peaked in mid-2015 and has fallen 26% as of February 11. It's down much more than the broad S&P 500, down about 15% at worst recently from its high in May 2015. This is not a coincidence. This is basically an index for affluent spending, and it peaked in the same year this group peaked. The index includes iconic brans like Nike, Este Lauder, Mercedes, Moet Vuitton, BMW, Carnival Cruises and VF Corporation. But there are many leading brands that have also seen their stocks collapse in recent months or years. Nordstrom, a brand we all know, is down 36% since last March… Ralph Lauren has crashed 46% since last January… Sotheby's is off 48% since June… Tiffany & Co. is down 32% since August… Williams-Sonoma is off 44%, also since August… And Louis Vuitton, 24% since October... Clearly, the affluent sector is falling! They have benefited the most from zero interest rate policies and this artificial bubble and "recovery," but it's now starting to break down. This is another monumental change in demographic trends and the final death knell for the economy. If the Fed thought it could fight the demographic decline and debt crisis since 2007 with endless QE and stimulus, I want to see them fight this trend. There's no way. Game over! And guess who will lose the most wealth in this next, larger crash? The very group I'm talking about. The top 0.1%, 1%, 10%, and 20%, because they own almost all of the financial assets that have been favored in this bubble period with endless QE and zero interest rates. Worse, it'll be years before they see another great boom – not until late 2022-forward. And it won't be like the one we saw from 1983 to 2000. Now is the time to protect your wealth on this final, desperate rally before stocks see a more serious crash in the year to follow. I told Boom & Bust subscribers on Wednesday to eye this rally carefully. It could go higher, but the stage has already been set for a much steeper decline that will carry through into next year. And I've also instructed my team at Dent Research to unlock access to our higher form of research, Boom & Bust Elite. This includes a lifetime subscription to our Boom & Bust newsletter, whose model portfolio has held up remarkably well against the broader market, showing gains of 14.49%, 21.35% and 95.42% while the market's been down. You'll also get access to The Leading Edge in which I go into more detail on key economic events that I'm not able to do here or in Boom & Bust itself. In the latest issue I discussed the debt crisis that's building in Europe and China. There's also a new Boom & Bust out today on the coming real estate crisis. There's just no shortage of problems ahead! But we're here to guide you through it. Click here to make sure you're getting our full research with Boom & Bust Elite. Harry Follow me on Twitter @harrydentjr

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