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Home>Daily Capital>Investing & Markets>Weekly Market Digest: What Will the Next Decade Bring?

Weekly Market Digest: What Will the Next Decade Bring?

We kicked off the first full work week of 2020 with plenty of geo-political controversy. Tensions flared after the U.S. killed Iranian General Soleimani in a drone strike, leading Iran to retaliate with a missile attack on two U.S. bases in Iraq. This fueled fears the conflict could erupt into all-out war, but they subsided after both sides signaled no desire to escalate further. Either way, markets were quick to shrug off the news. U.S. and foreign stocks both ended the week in positive territory, with U.S. stocks hitting brand new highs. Gold was also up, while bonds and real estate were relatively flat.

Weekly Returns

S&P 500: 3,265 (+1.0%)
FTSE All-World ex-US (VEU): (+0.7%)
US 10 Year Treasury Yield: 1.83% (+0.03%)
Gold: $1,561 (+0.6%)
EUR/USD: $1.112 (-0.3%)

Major Events

  • Monday – Hundreds of thousands of Iranians marched through Tehran in a funeral procession for General Soleimani who was killed by a U.S. airstrike.
  • Monday – U.S. auto sales fell slightly in 2019, but still topped more than 17 million total vehicles.
  • Tuesday – The U.S. trade deficit contracted 8.2% in November as imports from China declined.
  • Tuesday – Iran struck two U.S. military bases in Iraq with a barrage of ballistic missiles. The attack was retaliation for the killing of General Soleimani.
  • Wednesday – A Ukrainian jet carrying 176 passengers crashed shortly after taking off in Iran, leaving no survivors. Western governments believe an Iranian missile attack was responsible.
  • Wednesday – An ADP report showed that U.S. private payrolls rose by 202,000 in December, well ahead of estimates.
  • Friday – The U.S. Labor Department reported additional job growth in December, with the unemployment rate remaining steady at 3.5%.

Our Take

The 2010’s were certainly an interesting ride, and a lucrative one for investors. But those years are now behind us. As we kick off the new decade, we thought it would be fun to ponder what the next 10 years could hold for the world at large. So, here are some interesting questions to consider as we move into the 2020’s:

Will China surpass the United States in technological supremacy?

This is somewhat of a gray area, as it depends on the technology. But in growing industries such as artificial intelligence and predictive analytics, China has one major competitive advantage: more data. With a population of almost 1.4 billion and minimal privacy rights, there is a much larger pool of data that companies can use to better predict human behavioral patterns. Could this mean Chinese technology firms eventually dethrone some key players in U.S. mega cap tech? Hard to say, but anything is possible.

Will the world finally wean itself off fossil fuels?

This is one is a long shot, at least over the next 10 years. It is true that in many nations around the world, renewable energy such as solar and wind is now cheaper to produce than coal and fossil fuels. This is a massive achievement, but it takes time to transition. And there are still technological challenges such as energy storage. As a result, a Bloomberg energy study estimates renewable energy will make up roughly 50% of global power generation by the mid 2030’s. That said, a breakthrough in battery and storage technology would likely accelerate this timeline. The next logical question becomes: what happens to big oil and the broader energy sector as this transition gains momentum? And will we witness the death of the internal combustion engine?

Will self-driving cars finally become a reality?

This one is certainly possible. As 5G networks are increasingly rolled out worldwide, the infrastructure should be in place for faster adoption and advancement of autonomous vehicles. These speedier networks will allow more effective communication between cars, which in turn should improve safety and performance. This could have a hugely positive impact on society. It could help alleviate traffic jams, reduce the number of deaths and injuries from car accidents, and potentially bring down the cost of an on-demand Lyft or Uber. But there are downsides. Lyft and Uber employ a lot of drivers who would suddenly see that income disappear. There are also about 3.5 million truck drivers in the US whose jobs could be at risk. And how will this impact automobile manufacturers if large swaths of the population no longer need to buy a car?

Will there be a major social media backlash?

We’ve already seen social media companies come under fire for data breaches, concentration of power, misinformation, and even adverse health effects. The real question is whether the public will eventually reach a boiling point. One thing is for sure, the more powerful big tech becomes, the more it will fall into governments’ crosshairs. An eventual breakup is possible, but the most likely outcome will be heavier regulation. At this point, the exact nature of the regulation remains unknown.

Will all forms of genetic disease be curable?

In theory this is possible. A gene editing technique called CRISPR has advanced to the point of allowing humans to change a single letter of genetic code. If you remember from biology class, there are four primary letters (chemicals) in DNA: A, C, G, and T. This means it should be possible to “edit out” almost any genetic disease, which is just a misspelled sequence of letters. There is even potential for this technology to treat cancer and AIDS. The implications for society, as well as the healthcare industry, are tremendous.

Will scientists confirm the discovery of a new planet in our very own solar system?

Clearly this question is less impactful for investors, but it’s still fascinating to think about. Researchers at Caltech have found mathematical evidence that a giant planet exists in the far reaches of our solar system. “Planet X”, also called “Planet Nine”, is estimated to be the size of Neptune, and would be well beyond the orbit of Pluto. In fact, if it exists, researchers estimate it could take 10,000 to 20,000 years to orbit the sun. This would be quite a discovery. Or maybe we find something even bigger, like evidence of life outside our planet?? You never know what the 2020’s could bring…..

Of course, these are just a few things to think about. What do you see happening in the next 10 years?

The content contained in this blog post is intended for general informational purposes only and is not meant to constitute legal, tax, accounting or investment advice. You should consult a qualified legal or tax professional regarding your specific situation. Keep in mind that investing involves risk. The value of your investment will fluctuate over time and you may gain or lose money.

Any reference to the advisory services refers to Personal Capital Advisors Corporation, a subsidiary of Personal Capital. Personal Capital Advisors Corporation is an investment adviser registered with the Securities and Exchange Commission (SEC). Registration does not imply a certain level of skill or training nor does it imply endorsement by the SEC.

Brendan Erne serves as the Director of Portfolio Management at Personal Capital. After several years as an equity analyst covering the technology and communication sectors, he joined Personal Capital in 2011, just before its official launch to the public. He helped create and manage the firm’s investment portfolios and build out the broader research team. He also co-authored Fisher Investments on Technology, published by John Wiley & Sons. Brendan is a CFA charterholder.
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