- INTL FCStone's Vincent Deluard says the longest bull market on record could end as millennials lose their "cool" factor.
- The strategist points out that high-flying tech names like Facebook, Amazon, Apple, Netflix and Alphabet are all showing signs of slowing growth.
- "The recent struggles of Millennial-oriented companies may simply reflect that Millennials are no longer cool. Trends are not set by balding pot-bellied Dads and strolling-pushing Moms," he says.
If you're tired of reading reports about millennials, new research out Wednesday may be the last you'll have to read because it suggests this generation has peaked.
Along with this peak could come the end of longest bull market on record, as well as other trends as the younger Generation Z takes over, says Vincent Deluard, global macro strategist at INTL FCStone.
Deluard pointed out in a note titled "Peak FANG, Peak Pot, Peak Millennials" that revenues from high-flying tech stocks like Facebook, Amazon, Apple, Netflix and Google-parent Alphabet (FAANG) grew by just 10.4% in the first quarter. Netflix also reported last week a surprise loss in U.S. subscribers for the second quarter. At the same time, publicly traded marijuana companies that took off like a rocket have lost a large chunk of their value recently.
Some of these high-flying tech stocks are among the best performers of the bull market. Amazon, for example, is up more than 3,100% since the bull market started in March 2009. Netflix and Alphabet have surged over 5,700% and 600%, respectively. Apple is also up 1,600% in that time.
Deluard notes that such strong growth seemed natural for companies levered to millennial preferences like binge-watching shows, for example. However, this may be changing as millennials grow up.
"The growth gap is closing fast," Deluard said. "Ultimately, the recent struggles of Millennial-oriented companies may simply reflect that Millennials are no longer cool. Trends are not set by balding pot-bellied Dads and strolling-pushing Moms. Marketers have already shifted their attention to younger, more attractive Generation Z."
The S&P 500 has rallied more than 300% during the current bull market. The 10-year bull run also coincided with a large influx of millennials entering the labor force after the financial crisis in 2008.
Millennials have been criticized for their light work ethic and unusual consumer choices. Previous generations give heat to millennials for being woefully underinvested in financial markets. However, Deluard argues that millennials deserve more credit for the bull run.
"Millennials have been accused of ruining pretty much everything, from sex to diamonds and beers. Worse, Millennials get no credit for the one thing they did right: the equity bull market," he said. "The massive tide of Millennials' rising demand boosted the revenues of the FAANG stocks for almost two decades."
But FAANG's recent struggles may be a sign that the end is near as millennials become uncool and Gen Z dictates market trends. The strategist noted there is historical precedent for such demographic changes pointing to the end of a bull market.
Deluard notes that the "Nifty Fifty" — a group of popular stocks that led a bull market in the early 1970s — peaked in 1972, "just as boomers started their own families."
"Most of these companies kept doing well, but their high-multiple, high-growth stocks were decimated in the brutal bear markets of the 70s," he added. "Last, the number of U.S. live births collapsed in the late 70s, creating another economic headwind for stocks. Similarly and worryingly, the U.S. fertility rate dropped to a historical low last year. Blame all these Netflix shows."