Authored by Chris Hamilton via Econimica blog,

• Pre QE Era…Jan '00–>Nov. '08 = $50 average

• QE Era…Dec '08–>Nov '14 = $87 average

  • Oct '10–>Nov '14 = $95 average & not a single month under $80!?!

• Post QE Era…Dec '14–>Mar '17 = $47 average

• +965% Price increase

• <-6%> US Production decrease

• US Consumption rises and then suddenly declines

• +700% Price increase

• <-20%> US Production decrease

• US Consumption rises and then suddenly declines

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Saturday, April 29, marks what may be a bittersweet anniversary for the Administration: it is President Trump’s 100th day in office. It could also mark Day 1 of a government shutdown if Congress doesn’t pass a spending bill authorizing funding, or if the president doesn’t sign it before then. This is a risk the GOP will be eager to avoid, although in recent days chatter has again picked up as a result of Trump’s insistence to add wall funding in the spending bill. As noted earlier today, there is virtual unanimity among Democrats to oppose any bill that budgets for a wall, and since passing a new Continuing Resolution would require 60 votes in the Senate, at least some Democratic support is needed.

So while it remains at best a moderate risk factor – Goldman’s latest estimate puts it at about 1-in-3 chance – the question of what happens if the government does shut down at midnight on Saturday is starting to percolate. Here are some thoughts from Citi.

First, threats of a shutdown are more common than actual shutdowns. The last one occurred in October 2013, and the one prior to that was 1995/96. Those that last have an impact on the economy. In 1995/96 the government shut down for 21 days. In 2013, for 16 days. But not all shutdowns are impactful. During the Regan administrations, there were a total of 8 shutdowns with the maximum lasting 3 days.

What is the economic impact?

• In 2013, reduction in fourth quarter Gross Domestic Product (GDP)  was estimated to be between -0.2 and -0.6 percentage points. 120,000 fewer private-sector jobs created during the first two weeks of October.
• A second and important point for markets, federal data collection ceases over this period. Statistical reports will be delayed. This economic uncertainty acts like a tax on confidence. It also makes trading off data releases difficult.

Financial market impacts?

Taking the 2013 market impact as a baseline most of the negative impacts precede the actual shutdown. Rates recover slower than FX.

• USD – In the three weeks prior to the shutdown the TW USD fell 3%. It set a base 3 business days after the shutdown ended for a total loss of 3.5%. In the following month it recovered ½ of the loss.
• UST – 5y yields lost a total of 57 bps (1.84%-1.27%), and were slower to recover with yields rising by only 15bps in the next month. 

What happens in a shutdown?

1. Details of which government functions stop are determined by the Office of Management and Budget.
2. If it looks like a shutdown will occur, White House budget office works with federal agencies to determine which federal functions and employees are “essential” or “excepted.” The White House has latitude in how broadly it defines “excepted.”
3. Agencies and services considered non-essential close. Federal workers will be furloughed without pay. The Federal Government employs over 4-million individuals, so this can be hundreds of thousands of workers affected. Congress may decide after the shutdown to pay them for the time off. Financial disruption is one concern.
4. “Emergency personnel” continue to be employed, including the active duty military, federal law enforcement agents, doctors and nurses working in federal hospitals, and air traffic controllers. For the Department of Defense, at least half of the civilian workforce, and the full-time, dual-status military technicians in the US National Guard and traditional Guardsmen (those on Title 32 status) are furloughed without pay. Members of Congress continue to be paid, because their pay cannot be altered except by direct law.

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Via The Daily Bell

The federal ban on cannabis is one of those policies which make living in Americ feel like the dark ages. It wastes tax dollars with enforcement, and it tramples states’ rights to make their own laws.

Worst of all though, it threatens legal businesses in states which are pot friendly and threatens the life, liberty, and property of countless individuals who harm no one while using marijuana for recreational or medical purposes.

That’s why it is an exciting development to see Congress taking steps towards solving these issues. But it’s not all cut and dry yet. A provision expires next week that needs to be renewed in order to:

…prohibit the Justice Department from cracking down on medical marijuana companies that follow state laws. Reps. Dana Rohrabacher (R-Calif.) and Earl Blumenauer (D-Ore.) are teaming up to push the renewal of those protections, which will otherwise expire at the end of April.

This could spell trouble if the provision is not continued as it is hard to tell how the Trump administration will treat businesses in states that have legalized marijuana.

But at the same time other provisions are being introduced to expand these protections for marijuana companies to not just medical, but recreational cannabis businesses as well. If both provisions pass it would mean all businesses in the 29 states which legalized medical marijuana, and the 8 states which legalized recreational use of marijuana, would be safe from federal prosecution.

But again, it may not be as easy as it sounds. If these bills are attached to other more controversial bills they might get caught up in the fight over funding things like a border wall. While the marijuana bills each have bipartisan support, there is no guarantee they will pass in a hostile legislative environment.

McClintock and Polis want to attach their recreational marijuana amendment to the Justice Department’s funding bill later this year — and they believe it has the votes to pass — but if GOP leadership elects to lump all of the government spending bills together in what’s known as an “omnibus,” that could spell trouble for pot advocates.

So they’re hoping the Justice Department’s spending bill get its own vote.

“If the bill comes to the House floor, the McClintock-Polis amendment will pass,” said Michael Collins of the Drug Policy Alliance.

Root Issues

This whole marijuana fight highlights some deeper issues with the USA’s entire legislative and government process.

First, there should be only one subject per bill. A bill was introduced in January which would do that, but it hasn’t gone anywhere yet, and past bills have likewise floundered. But if this bill passes, it would not only bolster good reforms like allowing states to make their own pot laws, it would also stop bad bills hidden in the depths of other bills, like funding laws.

But it also points to the fact that states have lost basically all their power to govern. It’s not like their policies would be necessarily saner or just if states were released from their federal tethers, but there would at least be more competition to attract residents with better government policies.

So even though the majority of states clearly believe it is time to stop treating the use of marijuana as criminal, the federal government that these states supposedly control keeps them from allowing businesses to operate under normal conditions. Things might be different if the Senate was still controlled by state legislators electing representatives, as opposed to electing Senators by popular vote, which went into effect in 1913.

It is also still difficult for marijuana businesses to find banks to accept their money, based on federal regulations against cannabis. And furthermore, businesses cannot plan ahead, crippling long-term success. The worst thing for a business is uncertainty, and the federal and state sparring over pot laws creates massive uncertainty in the marijuana market.

The bottom line is that the federal government needs to back off states and back off businesses. Marijuana should not be restricted, as basically, everyone agrees. Yet despite the widespread approval of cannabis, government policies prevent individuals and businesses from being able to go exercise their basic rights.

via http://ift.tt/2pagTdw TDB

Confirming a Bloomberg report from early March, on Monday the State Department issued a statement that Former Fox News anchor and correspondent Heather Nauert will be the new U.S. State Department spokeswoman.

“The Department of State is pleased to welcome Heather Nauert as the new State Department spokesperson,” the announcement said.

“Nauert comes to the department with more than 15 years of experience as an anchor and correspondent covering both foreign and domestic news and events, including the 9/11 terror attacks, the war in Iraq, and the genocide in Darfur, Sudan. Heather’s media experience and long interest in international affairs will be invaluable as she conveys the administration’s foreign policy priorities to the American people and the world.”

Taking the job that CNBC’s John Harwood would have been delighted to land had Hillary Clinton won, Nauert reportedly accepted the job last month although it was not confirmed until now.

Nauert has been a news anchor on “Fox & Friends” since 2012 and has been with the Fox News and local New York Fox affiliate Fox-5 for most of the past 20 years, save for a two-year stint at ABC News from 2005-2007. Before announcing his candidacy, President Trump had appeared on the Fox morning show as a weekly guest over the course of several years. 

During a recent press conference, Trump specifically praised “Fox & Friends” for having “very honorable people.”

Nauert’s hiring would represent the second Fox journalist to jump to the State Department recently. Jonathan Wachtel, who served as the network’s United Nations correspondent, was named spokesman for the U.S. mission to the U.N. on Feb. 25.

Nauert graduated from Mt. Vernon College for Women and earned her master’s degree in journalism from Columbia University. She is also a member of the Council on Foreign Relations.

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The most widely-expected "base-case" outcome of the first round of the French election occurred… and yet, as RBC's head of cross-aset strategy Charlie McElligott notes, risk-markets have still screamed-higher in comedic relief rally fashion.

Why?

 McElligott write, this sounds obvious, but two points:

1) the hedging-flows into the event-risk now come off (i.e. Japanese owners of OATs punting on their EURJPY downside hedges, thus EURJPY +2.7% on day as an example) and

 

2) we now see general investors ‘unshackled’ and able to add exposure to the region in what has rapidly become the world’s favorite risk-region.

But, now is where it gets interesting though, as the ‘risk-ON’ / ‘bond bear’ catalysts by-and-large are again being priced back into the market, with little thought of downside.  This is where expectations are again ripe for an overshoot.

So taking a step back from Euro-phoria for a hot-second…I wanted to touch on a concept that Mark and I have been discussing / working-on – this idea of a tactical “US reflation trap.”

This move higher in rates is playing-out exactly as we expected and spoke to last week: the squeeze / capitulatory ‘force-in’ to that 2.15-18 level, then followed by a double-whammy of 1) event- / geopolitical- risk fade (France, Syria / Russia, and China now ‘handling’ NK) and 2) new hope on Trump fiscal progress (tax plan roll-out and ‘trending’ Freedom Caucus support of new ACA repeal & replace) sees a push up to 2.35/40 levels.  In turn, this emboldens the ‘bond bear’ camp further—especially if you look at Fischer’s comments last week as him essentially telling-us that June is a “go” for the Fed.

Here too is where I come back to my recent focus on China commodities price-action, and the view that the recently better data there means that the clamps are now being put back on the ‘PBoC liquidity pumping mechanism’ (from daily operations to social financing to new loans cram-down).  Check out some of the distress in Shanghai commod futures recently:

Take a look at the Bloomberg Commodities Index trend-support break:

As I’ve stated approximately 1000 times in recent weeks, there is no factor more critical to risk-asset upside that ‘inflation expectations’ – which are of course fueled by the price input that is commodities.  Looking at those forward prices above, there is ‘real’ downside coming. 

This is now bleeding through to the Chinese equities complex, with Shanghai Comp -1.4% today (crashing through its 200DMA to the downside) and -2.9% MTD; Shenzhen -2.4% today and now -5.7% on the MTD; while perhaps most-glaringly, the Shanghai Property Index closed -2.2% on the day today as a risk appetite bell-weather.  The liquidity tightening in conjunction with shadow-banking crackdown is now a real negative driver.

A world away, the US economic data ‘upside’ dynamic is now fatiguing, with the ‘soft’ data mean-reverting lower, while on average, the ‘hard’ data is now modestly surprising LOWER on a z-score basis.  Still expansive, but this ‘true-up’ will come with adjustment.

With this sudden pivot with the market again turning bullish on US fiscal policy progress, it is critical to note that there is still significant Democrat pushback to tax plans on principle of ‘tax cuts for rich’ (Schumer comments this morning) while the prickly determination of ‘revenue neutrality’ being required for long-term tax change now looking unlikely per reports on the ‘death of the BAT’….which now means that ‘dynamic scoring’ will be required for just short-term tax changes, which still need to be still be ironed-out amongst the sponsoring GOP itself.  Trump’s “big announcement” Wednesday is already being downgraded by his own White House budget director Mick Mulvaney, stating that they will be speaking to governing principles and guidance on tax rates, rather than policy details.

Finally, one need highlight what the removal of this French event-risk does to the mindset of both the ECB and the Fed with regards to their not-so-secret ‘market stability’ mandates: it eases them.  As such, the eventual ‘easy’ election of Macron will likely see Draghi quicker to exit their extraordinary policy now, as the background conditions continue their better trajectory.  I would expect the forward guidance laid-out this week to be upgraded as such.  And looking at the Fed, this dictates a similar response – it provides them an easier backdrop to hike into.

Of course I understand that this ‘green light to hike’ in theory means higher front-end rates.  But against the backdrop of ‘pivoting lower’ data beats and a breakdown of the commodities which have been driving higher ‘inflation expectations,’ the market risk remains concerned around the idea that the Fed will be ‘tightening faster that we are growing’—especially with a growing handful of perceived ‘cracks’ (retail messy, subprime auto, C&I loan growth collapse as debts are instead serviced, multi-year highs in bank card default rate) developing in real-time.

As such, I continue to believe we ‘range trade’ in both rates and stocks.

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The following article by David Haggith was first published on The Great Recession Blog:

via http://ift.tt/2onWDbm Knave Dave

Interested in precious metals investing or storage? Contact us HERE 

 

The REAL New World Order

Written by Jeff Nielson (CLICK HERE FOR ORIGINAL)

 

 

Regular readers are familiar with the Old World Order: the cabal of Western oligarchs who control not only our own puppet governments, but generally dictate events to most nations around the world. The vehicle used by these oligarchs to maintain their (economic) control over Western governments to keep them meek and submissive is the One Bank.

 

Regular readers are also familiar with this entity. The One Bank is a banking crime syndicate. Its dimensions have been previously defined in the computer modeling of a trio of Swiss researchers. The finding of that model is that by itself this crime syndicate controls roughly 40% of the entire global economy – all of the most important sectors.

 

What is one of the biggest problems for the One Bank? When you are a crime syndicate which controls 40% of the global economy, it becomes hard to continue to hide in the shadows.

 

The solution? The oligarchs resorted to the same solution they use to cover up all of the One Bank’s mega crimes: propaganda. In this case, it was disinformation. The oligarchs went and borrowed a metaphor which already existed in the extremes of conspiracy-theory writing: “the New World Order.”

 

They then began spreading this disinformation on a much larger scale than any of the previous conspiracy-mongering in this area. To give the disinformation a veneer of plausibility, the oligarchs of the Old World Order even allowed themselves to be (supposedly) linked to the mythological New World Order.

 

What is the NWO supposed to be? According to the propagandists (inadvertent and otherwise) who promote it, it is a secret socialist, one-world government being constructed “above” the level of our own pathetic puppet governments.

 

How do you hide if you are a crime syndicate which controls 40% of the global economy? Where do you hide? Inside a great, big lie.

 

Alert and intelligent readers should automatically dismiss this NWO as nothing but absurd propaganda. What has the OWO been doing, perpetually and ravenously? Stealing all of the wealth of the masses and piling it atop the own obscene hoards of the oligarchs.

 

That is not “socialism”. Socialism is “share the wealth”, not steal all of the wealth.

 

It has become so easy to fool most people with vacuous ideological labels. Barack Obama was frequently labeled a “socialist” by much of the brain-dead Right. What did Obama do for eight years? He stole from the bottom 80% of the U.S. population and gave to his Masters: the Top 0.01%. That is not socialism either. Just another reverse-Robin Hood, right-wing government: steal from the Poor; give to the (very, very) Rich.

 

There is no “new world order”. There is only the Old World Order, or at least this has been the case for many, many decades up until now.

 

There is great irony here. The Old World Order invented the myth of the “New World Order” to hide its raping-and-pillaging of the planet. But it is precisely this continuous and ever more rapacious plundering that has now resulted in the rise of an actual New World Order.

 

This NWO is not a crime syndicate of psychopaths like the Old World Order. Neither is it some totally ridiculous ideological contrivance like the (mythological) New World Order. The real New World Order that is coming into existence today is an association of necessity, led by China and Russia, to help the nations of the Rest of the World protect themselves from the psychopathic West, and the oligarchs in control of it.

 

Remember the demise of the Soviet Union and the end of the Cold War? Weren’t those happy times? The “evil” Soviets had been defeated, and now we were all going to live happily ever after. China and even Russia were wooed by the West – old enemies becoming new friends.

 

However, when the oligarchs of the One Bank learned that Russia and China had no intentions of serving the West (i.e. the Old World Order), this new friendship quickly deteriorated. The next thing we knew, the Corporate media in the West were back to Cold War rhetoric, simply substituting “Russia” for “Soviet Union”.

 

Russia was first in the cross-hairs because it had never really benefitted from the new (supposed) era of cooperation between East and West. Put another way, the oligarchs had invested nothing in their faux friendship with Russia. Meanwhile, their puppets in the Corrupt West had already begun targeting nations allied to Russia.

 

One of the ways these puppet governments have been covering up their own campaign of naked aggression is through fabricating a massive blanket of propaganda. Every act of naked aggression by the West was supposedly a “reaction” by these fascist governments to supposed aggression from Russia’s allies or even Russia itself — or else “the terrorists” (the West’s mercenary henchmen).

 

It culminated when the U.S. staged a coup in Ukraine, Russia’s closest neighbour and ally. The coup was justified according to the West because the regime previously in power was corrupt. There are two obvious rebuttals to that pathetically flimsy argument.

 

1.  There was already an election scheduled in Ukraine in less than six months. Are the Champions of Democracy (what the Corrupt West likes to call itself) telling us that a coup d’etat is better than simply waiting for an election?
2.  If “corruption” was reason enough to stage a revolution, there would already be revolutions-in-progress all over the West itself.

 

After the U.S. staged that coup, demonization of Russia dramatically escalated, along with the military campaign against Syria – another Russian ally. Economic terrorism was launched against Russia’s economy. The ruble was ruthlessly attacked by the convicted currency manipulators of the One Bank. Oil prices were manipulated dramatically lower, with Barack Obama publicly boasting that this manipulation was “a part of the U.S. strategy” against Russia.

 

Soon, even China was targeted. China had outlived its usefulness as a (low wage) jurisdiction for Western multinational corporations. The Chinese people now wanted to be paid decent wages, so the oligarchs had already begun to shift their corporate operations to other even lower-wage jurisdictions.

 

The excuse for (once again) referring to China as an enemy was/is the South China Sea. While the West flexes its muscles by dropping bombs on the heads of people in Africa and Asia, the Western media has been relentlessly demonizing China for building artificial islands in essentially unoccupied waters.

 

Building islands or dropping bombs? Which is the more deplorable international crime? According to Western media, it is (conveniently) the “crime” of building islands.

 

This renewed aggression against Russia and China by the West did not spawn the Rest of the World’s “New World Order”. Instead, this aggression is the belated realization by the West’s psychopathic oligarchs of the existence of this new, world order. While the oligarchs have been busy destroying everything in sight, China and Russia were attempting to build something.

 

Here China has taken the lead with its Belt and Road Initiative. Loosely based upon China’s ancient “Silk Road”, it is the world’s largest project in terms of infrastructure and economic cooperation, even larger than the Marshall Plan at the end of World War II.

 

The Marshall Plan was an enormously successful initiative where the oligarchs actually worked on fixing all of the damage and destruction they had engineered after manufacturing World War II. In contrast, the Belt and Road Initiative is a plan to economically fortify (first) Asia and (then) the Rest of the World against the Corrupt West.

 

Along with this, China and Russia have constructed “parallel” economic institutions which now exist side-by-side with similar Western-based institutions. The great joke here is that while China and Russia have publicly spoken of these institutions existing in conjunction with their (corrupted) versions in the West, the oligarchs can clearly see that they are intended to replace Western-based institutions.

 

With which institutions would the Rest of the World prefer to do business: entities rancid with corruption like the World Bank and the IMF, or an honest broker like the Asia Development Bank?

 

Constant economic predation. Ever more reckless military acts from ever more-desperate regimes. The psychopathic empire of the One Bank has simply become so intolerable and so dangerous that the Rest of the World is being forced to unite as a mechanism of self-preservation.

 

This is the New World Order – the real one.

 

It really is “new”. It really does involve the “world” (except for the Corrupt West). And it really could/should lead to “order”, not the ever-worsening chaos as the One Bank regularly orders its puppet governments to destroy any nation that gets in its way.

 

What the New World Order is not is any sort of one-world government. What the New World Order is not is some (supposed) “socialist utopia”.

 

The new, world order being crafted by China and Russia is non-ideological. It is non-controlling. Another great irony here is that as Western regimes have gotten increasingly corrupt, belligerent, and simply evil, the Eastern powers have become relatively more virtuous.

 

Perhaps it was simply being able to observe how not to run the world (for several decades), but China and Russia have seemingly adopted the doctrine of Enlightened Self-Interest. By helping neighbouring nations and acting as honest brokers in the global community, China and Russia see the surest path to their own prosperity and security.

 

Another thing that the New World Order is not is perfect. As global powers, China and Russia do not resemble White Knights, merely the lessers-of-evil – much less evil. The New World Order coming into existence today is not some ideologically based pipe-dream. It is a construct of pragmatism, designed to help nations co-exist and (hopefully) prosper. In time, perhaps it will replace the United Nations – another corrupted Western institution.

 

The real NWO will succeed as the new “order” in the world because the Old World Order has succeeded in making itself obsolete.

 

 

Questions or comments about this article? Leave your thoughts HERE.

 

 

 

 

The REAL New World Order

Written by Jeff Nielson (CLICK HERE FOR ORIGINAL)

via http://ift.tt/2pWXsF7 Sprott Money

As previewed last Friday, ending a three-month period of silence since he left the White House on Jan. 20 – much of which was spent on vacation in Palm Springs, Calif., on a Caribbean island with English billionaire Richard Branson and at an exclusive resort in French Polynesia –  former president Barack Obama will make the first public appearance of his post-presidency at noon on Monday when he speaks at the University of Chicago.

Obama will address community organizers, activists and students at the university, which will be the site of his presidential library.

He met with at-risk youth on Sunday in the same South Side Chicago neighborhood where he began his career as a community organizer. His speech comes just days before Trump’s 100th day in office on Saturday.

Watch Obama’s speech below:

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Authored by Charles Hugh-Smith via OfTwoMinds blog,

Who's going to pay bubble-valuation prices for the millions of suburban homes Baby Boomers will be off-loading in the coming decade as they retire/ downsize?

Longtime readers know I follow the work of urbanist Richard Florida, whose recent book was the topic of Are Cities the Incubators of Decentralized Solutions? (March 14, 2017).

Florida's thesis–that urban zones are the primary incubators of technological and economic growth–is well-supported by data that shows that the large urban regions (NYC, L.A., S.F. Bay Area, Seattle, Minneapolis,etc.) generate the majority of GDP and wage gains.

Cities have always attracted capital, talent and people rich and poor alike. Indeed, "city" is the root of our word "civilization." So in this sense, Florida is simply confirming the central role cities have played for millennia.

More recently, Florida has addressed the rising wealth/income inequality that is making desirable urban areas unaffordable to all but the top 10% or even 5% wage earners. This is a critical concern, because vitality is a function of diversity: a city of wealthy elites paying low wages to masses of service workers is not an economic powerhouse.

What happens as buying a home in a desirable city becomes out of reach of all but the most highly paid tranche of workers?

The larger question is: what happens to home ownership as housing prices continue higher while the next generation's wages remain significantly lower than previous generations' incomes?

Millennials are typically earning less than Baby Boomers and Gen-X did in their 20s and 30s, and if this continues–and history suggests it will–then how many Millennials will be able to buy a pricey house?

One consequence of stagnating wages and rising home valuations is a "nation of homeowners" morphs into a "nation of renters."

The other big question is: if Millennials aren't earning enough to buy pricey homes, who is going to buy the tens of millions of houses Baby Boomers will be selling as they downsize/move to assisted living? As for inheriting Mom and Dad's house–that's not likely if Mom or Dad need the cash to fund their retirement/assisted living.

This question is especially relevant to suburban homes, especially those far from employment centers. Though data on this trend is sketchy, it seems Millennials strongly favor city living over exurban/suburban living.

Anecdotally, I can't think of a single individual in their 20s or 30s that I know personally who has bought a house in a distant suburb. Everyone in this age group has bought a house in an urban zone. Not a highrise condo in the city center, but a house in a ring city near public transport.

Though data on this is hard to find (if it exists at all), Millennials seem more willing to make the sacrifices necessary to live in the urban core, either by renting rather than buying a cheaper suburban home, or by purchasing a modest bungalow on a small lot rather than an expansive suburban home on a big lot.

(This could change if Millennials start having lots of children, but to date small bungalows in urban regions appear big enough for families with two children.)

In a turn-around from the postwar era, which saw a mass exodus of the middle class from city centers to suburbia, the upper middle class is moving back to urban centers and the lower-income populace–once the urban poor–are being pushed out to the suburbs. We can now speak of the suburban poor.

To some degree, the suburbs have become victims of their own success. Long commutes in heavy traffic are the inevitable result of the vast expansion of suburban subdivisions, shopping malls and business parks. These killer commutes detract from the desirability of suburbs, especially to auto-agnostics of the Millennial generation, who exhibit low enthusiasm for auto ownership.

Rather than symbolizing freedom, auto ownership is viewed as a burdensome necessity at best.

If we overlay these trends (assuming they continue into the future), we discern the possibility that marginal suburban housing could crash in price and morph into suburban ghettos of isolated low-income residents.

The Pareto Distribution may play a role in this transformation. Should 20% of the suburban housing stock fall into disrepair, that could trigger the collapse of valuation in the remaining 80%.

Not all suburbs are equal. Those with diverse job growth may well act as magnets much like small cities. Those with few jobs and long commutes are less desirable and have smaller tax bases to support services.

The asymmetry between modest/stagnant Millennial wages and the soaring cost of housing cannot be bridged. If these trends continue, only the top tranche of highly paid young workers will be able to afford housing in desirable areas. Given a choice between affordable ownership in a small city or in a distant suburb, Millennials may well choose the affordable small city rather than the distant exurb or low-services suburb.

Note that most incomes have gone nowhere since about 1998. Even the top 5% has made modest gains in real (inflation-adjusted) income.

Meanwhile, home prices are back in bubble territory. "Hot" urban areas such as Seattle, Portland, the San Francisco Bay Area, Los Angeles, Brooklyn NYC, etc. have logged double-digit gains in recent years.

So who's going to pay bubble-valuation prices for the millions of suburban homes Baby Boomers will be off-loading in the coming decade as they retire/ downsize? We know one part of the answer: it won't be Millennials, as they don't have the income or savings to afford homes at these prices.

These trends promise to remake the financial geography of cities (large and small) and suburbia–and in the process, radically shift the financial assets of households, renters and owners alike.

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