The Daily Dose: Meddlesome Millennials

 | May 27, 2014 | 11:15 AM EDT
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I am a millennial, and quite proud to be one. I still remember driving around in my dad's Pacer, not to mention beating on my brother after the latest episode of Knight Rider. I also take great pride in being the last generation to study from actual textbooks and scribble down real notes on white paper.

That said, I often view myself as an abnormal millennial, considering the career obsession that has overtaken my existence. Much of the rest of my generation appears to be wasting away in subpar jobs, and I personally think this is because posting photos of food on Facebook (FB) is more pressing to these folks than schooling or anything career-related. In short, I believe millennials have an entitled mindset, and that this is causing problems all over the economy.

For example, Best Buy (BBY) currently has 1,400 stores in a buy-online, ship-from-store model. This has provided a big boost to online sales, as it means the "out-of-stock" issue has diminished. By summer's end, American Eagle Outfitters (AEO) will have approximately 100 stores on this model. The shift to Internet consumption has been spearheaded by my generation, and increasingly by their offspring -- and it seems to be borne of the desire for fast delivery of unnecessary goods at the lowest possible price. After all, that job at Starbucks (SBUX) isn't quite padding the back account.

Companies are being backed into a corner, and thanks to their reactive push to go mobile, there will likely be hundreds upon hundreds of vacant mall and off-mall storefronts by January 2015. What will go into all of that space? Where will the unemployed baby boomers migrate? Beyond this, retail stocks continue to get hammered despite all of the technological advancement, in part because of material industry-wide margin compression that even store closures can't prevent. Millennials, I believe, are playing a prime role in that shift due to their new devices and, in my opinion, their entrenched mindsets.

In the numerous executive interviews I conduct, I always ask one question in particular: How are millennials shaping your business? Execs are very reserved in their answers, usually citing millennials' fresh perspectives and energy -- but I can hear the doubt in their voices. We're talking about an entire generation of folks in their 50s and 60s sitting atop corporate America that have worked in every facet of a particular company for 30 years or, at least, in similar capacities within the industry. From my perspective, these wise elders tend to view work differently from how the millennial generation does, and I believe their experience keeps businesses healthy and thriving.

All this runs the risk of disappearing, as members of my generation seem more apt to job-hop if they don't land a promotion or raise in their bi-annual job reviews. As a result, it appears the next generation of leaders are liable to decline in quality, and that is something shareholders must heavily consider. More to the point, where the heck is that rock star 35-year-old CEO (not named Mark Zuckerberg) or Johnny App Maker that could make waves by getting appointed to lead Target's (TGT) turnaround? The only millennial I know in a position of power at a huge corporation is Stephen Gillett at Symantec (SYMC) -- who, in his wee 30s, overhauled Best Buy and worked alongside Howard Schultz at Starbucks.

Some will say that "The Man" is holding millennials down -- that boomers are fearful of relinquishing their positions in the corporate hierarchy. Of course, years into the latest economic recovery, it also remains an employer's market. But, even considering this, most millennials seem stuck in a rut thanks to the reasons I've listed above -- and while this may not be a quantifiable factor, it does appear to be one that is shaping larger economic outcomes.

On the Market

With that, let's take a quick look at the market -- and we'll start with a trio of interesting market stats.

  • Number of acquisitions: down 5% year over year
  • 20-year average premium paid for a takeover target: 24%
  • Dow Jones Transportation Average: 14 record closes this year

This aside, the plunge in social-media stocks has halted -- and, when the plunge had been under way, the broader market held on to its bid. In the meantime, the Dow Transports are rocking. Also, because core businesses are growing slowly, newspapers are calling for an explosion in second-half mergers-and-acquisitions activity.

Stocks are liable to maintain their upward bias until something disrupts sentiment. That could come in via the May employment report: Another solid beat would stoke fears that the Federal Reserve may accelerate the pace of their stimulus tapering. With that in mind, right now demand trends in many industries suggest the May employment report could be rather favorable.

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