Julius Baer’s Asia head of research Mark Mathews saw the recent Reddit rally as not only a social phenomenon but also a glimpse into the future of politics and economics.
Julius Baer’s Mark Matthews believes the recent Reddit rally was never powerful enough to create systematic risk in the market. But this social phenomenon in capital markets could be reflective of a greater issue and the consequences that could follow.
«This is, on its own, not a meaningful thing for the markets,» he said at a virtual roundtable. «But more philosophically, it gives you a little vignette of the imbalance between younger people and older people when it comes to the quality of life.»
S&P Split
According to Matthews, the share of ownership in the S&P index was split in half between those aged 55 and above and those that are 54 and below in 1990. As of last year, that split had reached 75/25, creating a significant gap between the two age groups.
«For younger people, life is so tough these days compared to previous generations because wages have been flat but asset prices have gone up – both properties and stocks,» Matthews explaining, adding that labor markets continue to be tight with workers from previous generations living and working longer due to better healthcare and low interest rates, respectively.
«Next 10 Years will be Friends of Labor»
The ongoing force of globalization and now digitalization will further add pressure to the world’s youth and Matthews believes that this will spillover from the just capital markets into political elections.
And my feeling is that as these [young] people become a larger part of the population, their voices will be heard more like they are doing in the stock markets now,» he said.
«But they will also reflect that in the voting ballots and they will insist on the distribution of wealth. The last 10-20 years have been friends of capital. The next ten years will be friends of labor.»
