Looking Forward

As is standard practice in the New Year, many people enjoy writing about what they think will happen in the coming year ahead. It’s not something I’ve ever done before and so instead of just quickly throwing together a quick list and publishing it, I thought it would be better to look at a few important developments taking place in the world and see where they may be heading. So here are my thoughts on the four spaces that could have an impact on the global economy.

  • Emerging markets are going to go through quite a bit of pain due to the price of many commodities falling to earth. China seems to be going through a bit of turmoil within its economy which can have a negative ripple effect across the global economy as a whole. The country is beginning to really experience a huge amount of pain brought on from the large debt that has been built up in some of its industries. For example, since the price of steel and iron ore have fallen so much since early 2015, the construction boom has slowed down and claimed many jobs in Europe. In response, fiscal and monetary stimulus will be used as best it can in order to help bring back demand. Doing this could hinder the exchange rate for yuan which is already feeling a large amount of pressure from the outflow of capital. If the yuan is benchmarked against a basket of currencies, its value could decline which could lead to a serious erosion of value in market valuations in much of Asia. What should be watched for is just how much China’s economy and market movements effect the rest of the worlds markets. As China grows bigger, the countries presence will begin to be felt in countries that it has invested in or have invested in it, for better or for worse.

  • Bitcoins presence will also begin to be felt in both currency markets and some products and services in the financial industry. It is the easiest way to store and send monetary value using the internet and the bigger it gets, the more people will learn about it. Many venture capitalists and industry players still talk about finding that killer app that will bring it further into the mainstream, but it still may be slow going on that front. Many banks and financial institutions including Visa and Goldman Sachs are starting to use the underlying technology, called the Blockchain, with the help of many fintech startups that have built a product or service that these companies will find useful. The use of technology by these companies will help push it towards a larger consumer base to use. There should also be more massive market movements expected for two reasons: 1) the community is still divided over the block size and (with a major core developer leaving rather loudly) and 2) its presence has been felt in China with the price popping when there are problems with the market and traders reacting by quickly moving resources in Bitcoin. Big things could make some headway this year provided there are some creative uses of the technology and the community does not remain split.

  • Security and privacy will remain on everybody’s radar as important subjects to understand what is going in. Security, already a huge geopolitical issue, will become a subject that effects more and more people as technology rapidly advances. We walk around with devices that can be tracked at all seconds of the day so it should be fully expected that more security related services and products will make their way to the market. Nobody wants their phone hacked into since it carries such a great amount of details about our lives and there will be many companies that answer that concern. But the other side of that coin is the subject of privacy; a slippery slope due to so many differing opinions of how to define privacy. Right now, most people don’t understand cryptography or the mathematics behind what makes it work; nor do they know to what extent companies and states can track their every move and search query and place all that information into a large context about our lives. On the business side, in the case of retail and advertising, I side with giving the consumer the choice of whether to do or don’t want to be tracked and sold to. If they do, to what level of privacy are they willing to forgo their privacy? And in the case that consumers aren’t given that choice, tools should be made available for anyone to use to give them the privacy they expect. And in the case of security, companies and states should work together to come to a middle ground that gives both what they need. This being the year of a presidential election, it should be expected to hear this subject brought up quite a bit.

  • Lastly, Artificial Intelligence (or machine intelligence) will become a bigger part of our lives; probably even in ways that we aren’t fully expecting to happen. But where it will remain most important to us will be in our working lives. As more and more rote work is able to be automated easily by computers, we will find them working by our side and helping us achieve things we didn’t thing possible to an even greater degree than they already are. The use of machine learning will help with completing sets of tasks and jobs more efficiently. Large tech companies like Google, Facebook, Baidu, Alibaba, Amazon, and Microsoft will help pave the way to a greater use of AI by making their products more intelligent and useful. These same companies will also go a step further (some already have) by open sourcing their code so that more researchers, smaller companies, and independent developers will have access to the same tool sets, thereby producing new products and creating a healthy ecosystem. It can even be thought that these same smaller companies or products will be purchased by the larger players and seamlessly integrated since the underlying technology will be the same. It’s exciting to think about what kinds of new products can be made.

These four developments will have a large impact on the global economy and marketplace whether positive (AI related products, Bitcoin, Privacy) or negative (Commodity prices crashing, Security) and it’s interesting to think about what lays ahead for us. There are a few developments I left out that will definitely have a large impact on the world and those include the price of oil ($28), augmented and virtual reality, and a U.S. Presidential race. Should be an interesting year that lays ahead.