January 03, 2020

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Situational awareness: Stock prices in Asia and Europe dropped and oil prices jumped by more than 4% after a U.S. airstrike ordered by President Trump killed a top Iranian general in Iraq. (Bloomberg)

"Your time is limited, so don't waste it living someone else's life." - See who said it and why it matters at the bottom.

1 big thing: Growing divide between the two Americas

Illustration: Aïda Amer/Axios

Life in the U.S. is increasingly divided into two realities — one in which things have almost never been better and another in which it's hard to imagine them being worse.

Driving the news: Bankruptcies led more companies to announce job cuts last year than at any time in more than a decade, WSJ's Aisha Al-Muslim reports, citing data from outplacement firm Challenger, Gray and Christmas.

Details: Despite the latest jobs report from the Labor Department showing the unemployment rate near a 50-year low, 2019 saw the third highest number of total layoffs in the decade, with nearly 600,000 people losing their jobs, a 10% increase over 2018.

  • There were more job cuts related to bankruptcy in 2019 than in both 2008 and 2009, during the Great Recession.
  • 2019 was the year the oft-invoked healthy American consumer carried the economy, but U.S. retailers announced 9,302 store closings, a 59% increase from 2018 and the highest number since Coresight Research began tracking the data in 2012.

The intrigue: Overall, job gains and growth have been confined to certain areas and industries.

  • While the U.S. added an average of 180,000 jobs a month in 2019, the retail, mining and utilities sectors all saw net job losses for the year, as of November, which is the last month with available data.
  • The lion's share of new jobs has been in health care, leisure and hospitality, and professional and business services.

Meanwhile, a new report from the Philadelphia Fed shows nine states are expected to see their economies shrink this year, even as the central bank and most economists expect the U.S. as a whole will avoid recession.

  • The number of states projected to see contracting economies is the highest since July 2009.

What we're watching: The U.S. jobs report will be released next Friday, Jan. 10, not today.

2. The generational confidence gap

Data: The Conference Board, DB Global Research; Chart: Axios Visuals
Data: The Conference Board, DB Global Research; Chart: Axios Visuals

November's consumer confidence report showed the largest gap between the confidence of consumers under 35 and those over 55 in the history of the Conference Board's report.

  • The chart above shows the result of subtracting the monthly confidence score of respondents over 55 from those under 35.
  • Younger people have typically had higher confidence scores, but that has changed in recent years, the data show.

What's happening: That's largely because older Americans have benefited much more from the current low interest rate environment and gains from the stock market, Nela Richardson, investment strategist at Edward Jones, tells Axios.

  • "People at different ages are experiencing the economy differently," she says.
  • "If you’re under 35 you’re looking more likely at student loan debt and really high home prices, even if interest rates are low. If you’re older, you’re probably not as affected by student loan debt, and you’re probably not negatively affected by high home prices, though you might have a huge gain from home equity."

The bottom line: Richardson also points out that younger people are less willing to take on risk assets like equities and have missed out on much of the bull market, in part because of their albatross of student debt.

  • "Whereas every other form of debt — from credit cards to mortgages — actually have this wealth effect that makes you want to invest more and be part of the economy, student loan debt makes young people more risk averse, and it makes them more risk averse precisely at the time you should be taking on more risk assets."

Of note: December's consumer confidence report showed the gap between older and younger people shrinking and younger people growing more confident, but the difference remains below the historical average.

3. The present and future confidence gap

Data: The Conference Board; Chart: Axios Visuals

Data: The Conference Board; Chart: Axios Visuals

The difference between Americans' views of their current situation and their expectations for the future continues to grow.

  • The Conference Board's December consumer confidence report showed a 3.4 point rise in consumers' assessment of their present situation, and a 3-point decline in their expectations for the future.

4. Catch up quick

Apple announced an exclusive production deal with former HBO CEO Richard Plepler and saw a 2% jump in its stock price, to an all-time high above $300 a share. (Axios)

The death toll from the Australian wildfires has risen to 20 and authorities declared a state of emergency and ordered thousands of tourists to evacuate. (Bloomberg)

5. Global manufacturing pauses its rebound

After a modest recovery over the past four months, manufacturing reports produced by IHS Markit from around the world almost all worsened in December, showing that the sector continues to face global challenges.

The latest: The U.S. saw little change from November to December, remaining just above contraction with a reading of 50.1, but the eurozone looked tortured with both Italy and the Netherlands posting their worst PMI reports in 80 months.

  • The eurozone as a bloc recorded a PMI of 46.3, suggesting it's still in the midst of its manufacturing recession.
  • Of the more than 40 markets IHS Markit covers, only Russia and India saw improvements in their PMI reports.

What it means: "While we are not sounding any alarms, today’s data tells us that investors may have been a bit premature in pricing in a global economic recovery," Emily Roland, co-chief investment strategist at John Hancock Investment Management, tells Axios.

6. AMD's hot 2020 start could lead to another S&P record

Data: Investing.com; Chart: Axios Visuals
Data: Investing.com; Chart: Axios Visuals

AMD was the best-performing stock on the S&P 500 in both 2018 and 2019, and it got off to a hot start in 2020, rising 7.1% on Thursday to touch a fresh all-time high.

  • The stock rose nearly 80% in 2018, despite falling 40% during that year's disastrous fourth quarter, and it gained 148% in 2019, according to MarketWatch.
  • The company's previous record high stock price was set June 21, 2000.

On this day in 1977, Steve Jobs and Steve Wozniak incorporated Apple Computer. Later, Jobs noted the shortness of life in his celebrated "Stay Hungry, Stay Foolish" commencement speech at Stanford in 2005.