banking

Some bets are safer than others

Making predictions are always a messy gamble. If you play it safe, your predictions look obvious. If you reach of the extreme you increase the chance of missing, which never looks good. Yet, making predictions for the new year is a bit of a time-honored tradition. Okay, maybe not the smartest time-honored tradition, but hey, you’re the one sitting here reading this stuff, so I’m definitely not alone in the equation.

Typically, predictions stay pretty narrowly focused on a specific genre. There are all kinds of digital media predictions for next year and the number of financial predictions, most of which disagree with each other, is myriad. I’m taking a more global approach this year in an effort to keep it interesting. I mean, how many years can I rehash the same fashion predictions of designers shifting houses and mergers and acquisitions? Oh, and in photography, Canon, Nikon, and Sony will all release new cameras. Yawn. We know those thins are going to happen so let’s look at things that are perhaps not quite so certain.

At the same time, I’m not going to step too far out onto any tree limb. I’ve chosen predictions that are corroborated to some degree by at least one other source if not more. This increases the likelihood of the prediction being correct, even if it seems out there a little bit.

I’m not putting our predictions in any particular order. They’re rather all over the place and trying to rank them feels less than genuine. Any one of them could end up being a huge story over the next year, or no story at all. We’ll just have to wait and see, won’t we?

The End of Globalization As We Know It

When the Berlin wall fell back in the 80’s, about the time many of you were born, everyone cheered the new openness and the concept of sharing everything and one new, giant world where we could all travel with ease and share common values. We would be citizens of the world, not the US or UK or any other specific country. It was a nice dream and it might have worked were it not for religious zealots bent on taking over the world. Terrorism fueled our fear of immigrants and caused us to guard our borders more carefully. Global recession caused us to question a shared currency and economies where one country’s foolishness can bring down others. Then came global hacking of critical networks.

Now, we feel nothing is safe and as a result we are pulling back. We see this in the British exit from the UK. We see the fear in populist elections not only in the US but around the world. The fear has countries looking for ways to cordon off their section of the Internet, protect their networks from theft or the kind of DDOS attack that took down much of the Eastern United States earlier this year. We are pulling back fast and even if there’s not a physical wall between the US and Mexico, we’ve already started erecting other walls in terms of policy that put us fully in protectionist mode.

Globalization awaits a death sentence in 2017. At the very least, it’s looking at a lengthy prison term until we figure out how to get along.

20% of activities will involve at least one of seven companies.

That list consists of Apple, Google, Facebook, Amazon, Baidu, Alibaba and Tencent. Everything you do, from buying groceries to shopping for blue jeans is going to involve the technology of one of those companies and the greater majority of the time you won’t even know it’s happening. Technology has permeated every part of our lives. We’re not just talking about the Internet here. Financial systems. Appliances. New home construction. Every last bit of it involves some form technology from at least one of those companies.

Where we will feel this transition the most is in the information arena. While social media is already a pervasive source of news, both real and fake, increasingly we’re going to see those same interfaces distributing far more personal information. For example, a simple connection between your Samsung appliance app and your Android phone could pop up a message on Facebook when your cookies are ready to come out of the oven. Or maybe your child’s school sends you a tweet when weather cancels school for the day. Already, Amazon can let you know seconds before the UPS delivery shows up at your front door.

Seven companies control the bulk of digital information and data being transferred from one place to another. These companies are larger than many of the governments around the world. They do what they want and are largely immune to any legislation that might be levied against them. The more I think about it, 20% may be too conservative a number. We’ll wait and see.

Separation of friends along ideological lines

One of the casualties of this past election season has been our friends list and who we follow on social media. We were passionate about this election and many of us were surprised when people we thought we knew, people we otherwise respected and thought were reasonable, expressed support for the political opposition. We unfollowed. We unfriended. And then we blocked. Social media users everywhere reported the destruction of their lists and the frequency with which they had to remove yet another name of what had been a long-term friend.

Now that the election is over, all is forgiven and we’re adding those people back, right? Nope, absolutely not. In fact, we’re still very much on edge about the whole matter. Those who lost are still angry about losing. Those who won are still aggressive about rubbing it in. We’re not friends anymore. That’s not going to change this year, and possibly not any year from here on out. We no longer trust those long-term friendships, not even the ones we held since high school.

Ideological divisions run deeper now than they did a year ago. We’re less likely to agree to disagree because the things over which we disagree matter too much. We don’t want to be friends with someone whose racism rose to the surface three months ago. We don’t want to continue a relationship with people who are willing to judge an entire religion on the actions of extremists. What we have seen this year is that too often those ideologies result in actions we cannot dream of supporting. So, we’ll keep weeding out our friends lists and unlike other post-election years we won’t be making up. Those friends are just gone.

More vegan & vegetarian menu choices

2017 could be a huge year for food on just about every culinary level imaginable. We’re seeing new restaurant concepts popping up in cities such as Indianapolis where food hadn’t been that big a deal before. More people in rural locations are caring about the quality and source of the things they eat. Even small town groceries are changing the stock on their shelves to reflect changes in our eating habits.

Where I think we’ll see some of the biggest changes in 2017 is in the number of vegan and vegetarian menu choices. There are a couple of reasons for this. As much as I thoroughly enjoy being carnivorous, meat prices continue to rise as maintaining production facilities free of diseases seems to be increasingly difficult. I actually saw a roasting hen for which I would never have paid more than $4 or $5 priced at $12 before Thanksgiving. Hell no, I’m not going to pay that price, and chances are a lot of other people are going to, at the very least, cut back on their meat consumption as well.

At the same time, more young people are taking up a pure vegan or vegetarian lifestyle and no, it’s not just a phase. As a result, there is a significantly larger audience looking for meatless options, whether because of price or because of preference. Expect restaurants to take notice of this opportunity and respond accordingly. What we will notice at first is the number of new places opening specifically to serve a vegan/vegetarian clientele. After all, these kids like to eat out. A lot. What will slip up on us, though, is an increase in vegan menu items at traditional meat places, especially fast food. It’s no secret that fast food powerhouse McDonald’s has been testing vegan and vegetarian menu items for a while now. 2017 may well be the year someone finally gets it right.

Streaming video on demand completely takes over

Stop and think for a minute about how many streaming video on demand accounts you have. Netflix. Hulu. Amazon. Those three are likely a given. Oh, but don’t forget HBOGo so that you don’t miss Game of Thrones. And then there’s that Showtime on demand subscription. When all is said and done, you may well be spending just as much money on SVOD services as you once did on a cable package. They add up quickly.

What we’re going to see in 2017, though, is a complete domination of entertainment by various SVOD services. Even the networks are starting to get in on the act with CBS offering its own subscription service apart from needing any kind of cable account to access live shows. Yes, this has your cable company a little frightened, but it’s not something they haven’t seen coming. This is one of the reasons AT&T wants to buy Time/Warner. This is also one of the reasons Comcast and NBC are joined at the hip. Content producers on every level are making deals and acquisitions with streaming providers as fast as they possibly can. By this time next year, you likely will be able to watch any show, any where, any time through a streaming service.

This streaming thing applies to more than video, though. Increasingly over this year, you’ll see more muscle put behind music streaming services, especially through three of the Big 7, Apple, Google, and Amazon. Don’t be surprised if by this time next year they’ve gobbled up smaller services like Pandora and Spotify. If you want to listen to music non-stop it will cost you $10 a month, or you can start buying CDs again. Yeah, they still make those. There could be a backlash against streaming at some point, but I don’t think it will happen in the next 12 months.

Mergers & acquisitions will rock the choice landscape

AT&T and Time Warner. Verizon and Yahoo! and possibly CBS. Mergers and acquisitions are positioned to be one of the biggest areas of business growth, gaining a strength and ferocity they’ve not seen since the late 1990s. What this comes down to is big companies have not been able to develop the technology to keep up as quickly as smaller companies. So, it makes sense for the big companies to buy the smaller companies. This makes the technologies available to a broader audience, increases the services of the larger company, and positively affects the bottom line. Everyone’s happy, right?

Wellllll, that’s not always the case, especially when it comes to technology and media acquisitions. When Rupert Murdock bought the National Geographic magazine, for example, there was wide-spread concern as to whether Murdock’s political ideology might affect the objectivity of the famous magazine. With pending deals such as the AT&T/Time Warner merger, not only does the Securities and Exchange Commission have to look at how the merger affects competition in the cable industry, they also have to consider whether the deal might limit access to content developed by Time Warner’s many creative holdings.

No matter which directions those decisions go, however, mergers and acquisitions are going to be big in almost every industry imaginable. Now is a great time to be an M&A attorney, to be sure. However, if you work at a mid-size company doing work that isn’t highly specialized (such as sales), I’d be sure to keep that resume polished and up to date.

Subscriptions become a really huge thing

Over the past year, I’ve seen plenty of marketing jokes about the dollar shave club. Those jokes are likely to fade into oblivion this next year as subscription services for a variety of products are poised to take off in a major way. Among those who are likely to be big winners are food and conglomerate personal toiletries. Think well beyond the dollar shave club. For $3 or $5 a month you can have everything from vegan toothpaste to organic deodorant along with brushes and combs. At the same time, you’ll be ordering specific food packages personally designed not only for your taste, but emphasizing locally-grown foods, and sustainable desserts.

What fuels this dramatic growth in subscriptions is the fact that the number of people who actually enjoy shopping is diminishing. Our lives are busier than ever and if we’re not working double shifts we’re maximizing our time with friends. The one thing we don’t have time to do is shop even for basic things such as toothpaste and snacks we can binge at 3AM. Subscriptions are an easy answer to that. We give the provider a list of personal preferences and they send us packages at predetermined intervals, all of which is conveniently billed to your credit card.

I’m anxious to see just what services show up with subscription services once they see that the trend has taken off. Will there be taco subscription services? Or maybe we can sign up for regular dress shoe upgrades. I’ve already seen ads for a service that provides one entirely new outfit a month. The foundation has already been laid. Just wait for it to explode.

Lower tax rates, fewer deductions

The last big tax overhaul was 1986 in the middle of the Reagan administration overseen by then Speaker of the House Newt Gingrich. Now, the Republicans are back in control and are ready to do the same thing again. Lower taxes, especially for corporations, were a big part of Republican campaign promises and now it’s time to make good on those promises. Wall Street is pretty much depending on some dramatic cuts and possibly the complete elimination of the inheritance tax, all of which would bouy stock prices.

The downside here is that there are likely to be fewer deductions and individuals and families might even see reductions in the earned income credit. Republicans have opposed raises to that credit the past few times it has come up but have compromised to get bills signed. Now that they don’t need to make that compromise there may be a number of deductions that are completely eliminated in order to pay for those cuts in corporate taxes.

While cutting taxes would seem to require a cut in spending, though, don’t expect that to actually happen. Much of the budgetary spending for the next several years has already been determined by contracts that would be even more expensive to renegotiate. So, it could be very interesting to see how the tax cuts affect the budget without adding more onto the national debt, which is another extremely sensitive topic in Washington. There are still a lot of people up there who don’t understand one can’t have a cake that’s already been eaten.

Your phone is your wallet

Credit and debit cards got an update this year with smart chips designed to make fraud much more difficult. Increasingly, though, we are less likely to have to pull our cards from our wallets at all. A mobile app from Google called Hands Free lets customers pay for stuff at stores without having to pull out their phones. Amazon is already testing their own hands-free technology with a special grocery store in the Seattle area. Plus an app being developed by Visa and Honda to allow drivers to pay for products without leaving their cars.

All this does require that you have a smart phone and that specific apps be functioning. What happens if you pull up to a drive-thru where you have no bars? I’m not sure. No one seems to want to talk about the inherent problems with this new cardless pay system. Hacking of personal data seems to be a high possibility, despite assurance from the big seven tech companies that each step brings with it increased security. The other downside is that this new technology eliminates the need for cashiers, so say goodbye to a whole bunch of unskilled jobs. The move also further marginalizes the poor and those whose credit is insufficient to have a bank account. As the number of stores with cashiers dwindles, where will these people have to go to buy food?

Advances in technology are wonderful and largely inevitable. What we have to do over the next year, however, is make sure that we are not leaving out those who lack the priveledges the rest of us take for granted.

A little more afraid

One of the most certain forecasts for 2017 is that we are all a little less trusting and a little more afraid than we were this year. 2016 showed us just how bad a year could be and how that even the best plans could fail in a colossal manner. Not only does 2017 not look any better, there are plenty of people telling us it could be worse. Given the amount of suffering and difficulty we’ve faced over the past 12 months, we are frightened about what might be coming next.

This fear is driving us in two different directions. On one hand, there is a new wave of activism coming, people who refuse to sit down and let the new administration roll over them and take away their rights. The success of the protests at the North Dakota Access Pipeline this year emboldened many people with its demonstration of how people can stand up to the government and win. Expect to see a lot more marching, a lot more protests, and a lot of requests for money to fund these campaigns.

On the other hand, however, people are more likely to guard their personal finances, to spend cautiously and carefully, and to minimize their personal risks. Expect banks to be more cautious in making loans, which could have a negative effect on the housing and car markets. We are likely to see fewer non-technology startups and people who have jobs are more likely to stay in them even if they’re not especially happy. When our global environment is this uncertain, we tend to be extremely careful about where we step.

That’s the end of our top ten predictions. If I had room to toss in a bonus prediction it would be that alternative energies are poised for a big boost this year, but there are some policy caveats that could derail that growth as well. I’m also concerned about US relations with foreign countries, especially China given its continued aggression in the South China Sea. My hope is that China might back down in order to prevent any disruption in trade, but that entire area of the world is very tentative as we enter the new year.

I’m still working on a separate survival guide for next year so be looking for that within the next week. 12 months can be a very long time and a lot can happen. When these predictions come true, though, remember that you saw it here first. Maybe. Unless you saw it somewhere else first, which would be very, very strange.