Tis the season for predictions… In fact, it seems to us that the requisite crystal ball gazing gets more popular every year. A nice compact list of bite-sized thoughts makes for easy social media sharing, after all.
But the really interesting thing to us is not “What” a person or organization predicts, but rather two other factors. First, how many different prognosticators agree on a given topic? Second, how do they all come to their conclusions?
We have spent the last few days combing through the year-end predictions from a wide array of brokerage firms, consultancies, and other sources.
What follows is a “Top 10 list” of the best of those. We have annotated each to highlight the important points, and included links so you can read them for yourself. There are many predictions in each full report we could not summarize efficiently, and each one merits a quick skim if you have the time.
With that introduction, the list:
#1): You don’t need to be a Goldman Sachs client to read a comprehensive summary of their very positive case for global economic growth in 2018. The only problem in translating that into a bullish stance on stocks: they see the US Federal Reserve tightening monetary policy much more aggressively than market expectations. Even still, however, they still expect global interest rates to remain low.
#2) From AT Kearney (who had a pretty good run with their 2017 predictions): expect more regulatory pressure on US Tech giants (a concern we share), a tougher than expected final Brexit negotiation, and a breakthrough in quantum computing. That last one is a very important call for technology – Moore’s Law won’t keep working forever. Quantum computing is the answer, but it has been an elusive solution so far.
#3): From Accenture, a splash of cold water for those who think self-driving cars are just around the corner: “Fully autonomous cars will not come in 2018”. They do, however, see value in blockchain technology to secure the data transfer between passenger vehicles and dealerships, factory, and IT solutions.
#4) From Deloitte: “More than a billion smartphone users will create augmented reality content at least once in 2018”. What’s augmented reality? Remember the Pokemon smartphone game that overlaid cartoon characters on your screen? That’s AR. But just imagine being able to shop for a new sofa or TV console and see how it would look in your living room, all right on your smartphone screen in real time. That’s AR, too.
#5) A very thoughtful prediction piece from TechCrunch agrees with the AR point above, and also thinks:
- Competition between providers of streaming content will only accelerate, and Apple will enter the fray more aggressively.
- A breakthrough year for Siri and Alexa as Apple and Amazon start to monetize these Trojan Horses with advertising and shopping suggestions for users.
#6) Still on the mobile technology theme, App Annie (a research firm in the space) notes that 2018 is the 10th anniversary of the Apple App Store, and predicts:
- Consumers will continue to download and use new video streaming apps, further fragmenting content consumption.
- Physical retail stores will increasingly become order pickup locations for customers who order on their mobile device but want an item right away.
#7) From health care investors Venrock: “Amazon will not shake up pharmacy benefits managers.” They also expect another health care unicorn to fail in 2018 (as Theranos did this year), hospital hiring to slow (bad for macro job growth), and Anthem, Humana, Cigna, and Optum to all “Aggressively acquire higher margin, less regulated businesses”.
#8) Aetna’s Global President of Population Health puts undiagnosed diabetes on the same list as better-known problems like opioid addiction and mental health. And while not strictly a 2018 prediction, Dr. Sneh Khemka notes that a rapidly expanding global middle class is straining health care systems around the world. Lifestyle related diseases are “In”; infectious diseases are “out”.
9) Will it still be President Trump in December 2018? Yes, with a 69% chance according to Predictit.org. If that doesn’t sound especially high to you, we tend to agree.
10) And which political party will control the House after midterm elections? (Drum roll, please)… Predictit.org gives the odds to the Democrats, at 62%. We think this is an underappreciated market risk for next year. Midterm elections strongly favor the party that doesn’t hold the White House. What happens to US equities as the market starts to discount a return to gridlock?