Paradigm shifts. Technological quantum leaps. Mass revelations and revolutions. The time has come for market-beating investors to get their game on and predict all the surprises 2020 has in-store! 2019 undoubtedly left markets open-ended, but there’s still so much to look forward to (and not!) between now and 2021.
You cast your vote on the year ahead and bagged some extra trades in our ‘2020 Vision’ poll. We asked “Where do your investment hopes lie next year?”, and the bulls saw nothing to stop the climb. Over a fifth of respondents are bold enough to bet the opposite way. If they’re right, their 0% returns will handsomely outperform the market. If they’re wrong, they’ll be left with egg on their face!
- 57% Stocks continue to grow
- 10% Phoenix rise of the Cryptos
- 7%: Emerging Markets to re-emerge
- 21% Pile up the Cash
- 5% Off-piste. I’m going for exotics!
Last year tested investors’ loyalty to cryptocurrencies, but our poll suggests those digital currencies garnering more support than high risk-high reward emerging markets. Clearly, coming market events are dividing us. Let’s get underneath the bonnet of the world economy and predict some of the key drivers. Spoiler alert, it’s time to go back to the future!
Conclusion to the Sino-US trade (tech) war.
It’s hard to be more specific than that.
Trump originally imposed tariffs on Chinese imports because he was sick of American industries being “ripped off on trade.” Ever since 2018, hundreds of billions-worth in border taxes have gone back-and-forth between the superpowers, negotiations for a new deal hinged on the resiliency of those invested in both economies.
Some tariffs are already being wound back as part of a ‘phase one’ agreement, but a more far-reaching deal is on the cards given investors’ patience has been tested to a breaking point for two-a-half years.
Nothing ever “concludes” in macroeconomics, but a comprehensive deal would certainly bring an end to woes in the manufacturing sector. It would boost investment and confidence and do wonders for stocks, especially in emerging markets.
More Brexit headaches.
With support from the green benches behind him, general election victor Boris Johnson can now push his Brexit deal through Parliament to get the UK out by January 31st, 2020.
Investors have watched British politicians tear themselves apart over this issue for years now, but how the UK leaves is just as important as if it leaves, when it leaves, or why it leaves.
That’s why 2020 is hosting a ‘transition period’ in which the details of a post-divorce UK-EU relationship are fleshed out. Will it be a grueling year? Probably. Will life change one iota in the interim? Probably not, but the pound could drop heavily if Parliament triggers a two-year delay. Delay? Parliament? Never!
China stealthily increases world domination.
Investment inflows into China remain tightly controlled, but outflows from China continue to move freely into less developed continents along the New Silk Road. Latin American, Indian, and African dependency on China is growing. You can take this one to the bank!
USCMA replaces NAFTA.
The United States, Mexico and Canada (USMCA) agreement is waiting for approval from the Mexican president. Then, it’s a done deal. As a marginally improved version of the North Atlantic Free Trade Agreement (NAFTA), investors will raise a toast to the uptick in economic activity it generates come January or February, but no more than that.
It’s now or never! Either neoclassical corporate cultures embrace regenerative economics and clean energy in 2020, or a growing troop of sustainable investors will receive sorry cash-outs.
The world may or may not wake up to a scene out of Michael Bay’s ‘Armageddon,’ but investors are sure to notice rising business insurance costs, severe weather risks to supply chains, more expensive natural resources, regulatory restrictions, and public discontent.
Don’t be surprised if a mega-storm hits a big metropolitan city, a glacial collapse threatens the world food supply, or we say our goodbyes to a Pacific island nation!
Oil prices go boom.
Yep, a gulf war is brewing. If the Middle East stages an Iran-Saudi conflict in 2020, both countries will zero in on each other’s oil facilities. As OPEC’s biggest drillers, fears of a sudden drop in the world’s oil supply would see Brent Crude oil prices soar.
Territorial disputes between Turkey and Greece for an oil patch off Crete are becoming heated, over forty dogfights already between the two sides. Plus, passive aggressiveness surrounding the Al-Fakkah field in the Iraq-ish, Iran-y area are resurfacing, too.
The repercussions of higher gas prices on consumer confidence and the fight against fossil fuels are huge, but for stocks also. Companies with no choice but to run on kerosene (airlines and railroads) will see their share prices tumble. However, the traditional energy sector’s pure-play upstream oil companies like Transocean, Diamond Offshore, and Nabors would easily become above-market investments.
As a third or fourth order of effects, that would lift shipbuilding companies out of their doldrums (hint: when shipbuilders do well, they do very well!), and manufacturers like Halliburton and Caterpillar would see demand for oil field services return. There are profits here, but does a World War 3-induced fossil-fuel bounce pass your ethical sniff test?
Piracy wins the streaming wars.
Subscription fatigue is real, and the costs of switching to this bad habit from the past are meager. However, if the industry can sink the pirates, Netflix will probably defend its crown in the streaming wars.
It’s not about the money. You can throw gobs of cash at star writers like Shonda Rimes for years and get diddly squat viewing-per-dollar-invested, and then suddenly hit the jackpot with a back-burner project like Stranger Things. Creative arts are hit and miss!
Investors care about the content that hits, and normally, that content starts depreciating from the get-go. That’s why Netflix drops whole seasons at once and lets us binge on them all night long! It drives maximum viewing while the content is fresh, justifying huge marketing budgets that put the entire business on steroids.
Disney+’s family-oriented affair will stream in a country where 30% of households are single-person dwellings, and the service will drip original content weekly.
Who knows? This ain’t the whole story! We’re still waiting on key deets from Apple TV and Amazon’s Prime Video, and it’s obvious that one of America’s greatest brands will find success in streaming. This show will be the one to watch in 2020!
President Trump reelected, not impeached.
“We don’t win anymore. We don’t win anymore in our country, Shaun! We don’t win anymore. We used to win. We don’t win anymore. We don’t win with trade. We don’t win with war. We can’t even beat ISIS! And we’re going to win! If I win, I will tell you. If I win, we all win because we are gonna win!” (Trump, Fox News, 2017, win counter: 12).
Feeling numb, yet? What gets repeated gets remembered, and the President’s superpower to thrive on scandals and win free airtime from networks thirsty for simplified sensations is unmatched by any 2020 challenger. Trust me, I’m lying!
Moody’s Analytics hasn’t got a presidential prediction wrong since 1980, and says this one’s “Trump’s to lose.” Unemployment is at record lows with the economy roaring, millions of Americans are voting with consistency bias, and the Republican-controlled Senate should stave off impeachment.
Of course, he could crash and burn. Bernie, Biden, Bloomberg, Buttigieg, and Warren, are mounting strong counter-campaigns. Inequality will be key in November, a subject upon which he has a poor record. Plus, The Washington Post has “counted 10,796 lies” from the man in office so far. Would Trump refuse to concede the election? “Probability: 100%!”
Investors who only care about investing will favor his reelection. He’s practically a Wall Street man himself. However, given the unpredictability of it all, some unsettled investors are “underweighting” US stocks this year.
A worsening cult of self.
The pace of innovation and change is frightening. The fiercer its speed, the more desperately we crave attention and belonging. Jordan Peterson says as much! The rise of “soul searching” will continue to shape consumer trends in 2020.
The bull market endures, just.
Nobody – really, nobody – has an inkling of when the next crash will come. Timing the market to a tick is a literal impossibility, but hey, let’s talk about it anyway!
Busts usually coincide with sky-high interest rates, but they can also be triggered by “free money” shenanigans encouraged by super-low borrowing costs. Currently, rates are very low, and they’re expected to stay that way or be cautiously hiked in 2020.
On the continent, all eyes are on Germany to reach into its pockets and give the Eurozone that kick that Draghi’s Central Bank (ECB) never could. That would help keep a recession at bay, assuming it’s not already too late.
What are the experts saying? UBS sees “no obvious short-term catalyst” for a crisis. HSBC agrees. Goldman Sachs has its recession odds at 20%. Good to know. Moving on!
More stocks debut with direct listings.
When a company joins a stock exchange with a traditional initial public offering (IPO), early trading is usually extremely volatile. That’s because underwriting banks decide the opening price ahead of time, and if the market disagrees, mass buying or mass-selling can take hold.
In 2019, Slack and Spotify showed Wall Street how it’s really done with direct public offerings (DPOs)! Instead of making big splashes, they eased onto the market by allowing insiders to naturally discover prices with outside investors without a banker’s valuation getting in the way. This new ‘best practice’ was more transparent, liquid, and cost-effective.
Expect more DPOs in 2020!
Someone will get a computer chip in the brain.
If he can find a willing volunteer, Neuralink CEO Elon Musk plans to embed an AI-symbiotic, neural lace chip into the brain. This means tech will improve cognitive ability like speech and sight and relieve symptoms of severe brain injuries. Beyond 2020, Musk is eyeing transhumanism (human-enhancement) with brain-implanted machines.
Bitcoin will hit $100k.
Those are pretty good odds! A rise in the price of Bitcoin is not compatible with a conclusion to the trade war, as geopolitical uncertainties feed the digital currency legitimacy in a similar way to gold. However, few can deny that Blockchain technology looks here to stay.
But if it doesn’t produce a predictable cash flow, it’s not an investment. Rightly or wrongly, most still see cryptocurrencies as gambles on the craziness of the world, the solidarity of the technology (which we cannot assess), and the success of it becoming a store of value (which it won’t). Bitcoin will remain a trading vehicle in 2020. Prepare to lose all of what you invest in!
With brand trust an issue, regulators breathing down its neck, Chinese state competition looming, and partners dropping out like crazy, Zuck will probably also ditch Libra in 2020.
Finally, some dates for your diary!
January 20 – 24th: Trump doesn’t skip the Davos World Economic Conference.
January 31st: Britain finally makes its EU departure stick.
February 2nd: The Yahoo Time Capsule opens and we revisit 2006.
June 1st – 2nd: 138 world leaders attend the World Business Forum in London.
July 24th: The NASA Mars Mission – not humans, just a rover.
July 24th – 9th: Russia is forced to watch Japan’s Summer Olympics from the grandstands.
November: Historic US Presidential Elections.
December: The COP26 United Nations Summit on Climate Change.
So, in sum, expect the unexpected! Take our predictions with a pinch of salt. It’s all just a bit of fun! Don’t forget to have your say on the year ahead in our current poll, ‘2020 Vision?’ You’ll earn two extra trades for it! Happy investing!