Nineteen Predictions for 2019

Our predictions for 2018 were by no means perfect, but we did get some things right. Economic growth accelerated, inflation bounced off historic lows, the Bitcoin bubble burst, and the Warriors won the NBA title. Tiger Woods also won his first tournament in five years – unfortunately we were a year early, predicting it would happen in 2017 when his ranking dropped to 1,199th in the world.

We know we can’t predict everything – acknowledging this serves us well – and we recommend that investors hedge where they have less than a 50% chance of being correct and invest where they have a clear, repeatable edge.

For considerations outside of the investment process, our predictions for 2019 are listed below. We wish you great health, happiness, and luck in what could be another unpredictable year.

1. The economic expansion will continue, albeit at a slower pace
   The Federal Reserve will pump the brakes on hiking and the US will avoid a recession, setting a record for the longest economic expansion in the process. This will not be without stock market volatility, however, as the impact of corporate tax reform fades and higher wages cut into the profitability of companies.
2. Financial assets will outperform cash
   A growing number of Wall Street strategists now recommend cash as an investment, but over the long-term investors take risk to outperform cash. In the past 30 years, cash outperformed both stocks and bonds only once – in 1994, when the Federal Reserve surprised investors by starting to raise rates. While we’re now on track for this in 2018, a repeat is unlikely, and one way or another, investors will be compensated for taking risk in 2019. Wavelength Insights December 31, 2018
3. A wave of female leaders will rise to power at companies
   With a record number of women winning elections for political office in 2018, the business world is next. After revelations about misconduct at the top of companies, corporate boards will move on from men and shift the balance of power to the next generation of female leaders
4. The Phillips curve will not be broken and US inflation will increase
   A decade of falling unemployment and stagnant prices raised questions over the Phillips curve’s validity, however, a tight labor market will now flow through to higher wages and answer those questions with higher inflation.
5. Amazon will get ahead of regulators and spin off AWS
   The time is now as investors seek a pure play option on the cloud that only Amazon can deliver. With the Trump administration looking into antitrust issues, Jeff Bezos will be pro-active and spin a jewel out of Amazon’s crown.
6. Location tracking will become a major problem for tech companies
   Privacy issues from data breaches are widely recognized, but when people start to realize the creeping effects location tracking has on their lives, they will opt out en masse.
7. President Trump will face legal issues but avoid being impeached
   President Clinton became more popular after being acquitted by the Senate, and with elections a year away, House Democrats won’t take this risk. As a result, their political motivations, ironically, will prevent impeachment proceedings.
8. South America will become more competitive
   Moving in the opposite direction of US trade policy, the Union of South American Nations is expected to eliminate additional tariffs, bringing members closer to free trade.
9. A Star is Born will win the Academy Award for Best Picture
   The fourth time is a charm for this reimagined classic about the tragic realities of a relationship between a young, rising singer and the past-his-prime musician who discovered her.
10. Growth of the eSports industry will disappoint
    Twitch and other platforms have rocketed expectations for eSports to new heights. While exciting for some, video games will never match the real thing, and the hype cycle for eSports will fade.
11. Time Magazine will be resurrected by Marc Benioff
    The number of billionaires buying aging media empires continues to grow, and with this, iconic brands like Time will be reengineered for the future of media.
12. New crimes will be solved using gene databases
    After successfully tracking down the Golden State killer through his family tree, it’s now open season on solving crimes through the millions of DNA samples on ancestry websites.
13. Farming will see a renaissance of growth in urban areas
    Demand for local produce continues to rise and climate change is putting increased pressure on major production areas like California’s central valley. As a result, factories left vacant by the Wavelength Insights December 31, 2018 decline of urban manufacturing will be reconfigured for a greener future with technology-driven vertical farms.
14. The US will win the 2019 FIFA Women's World Cup
    20-year-old Mallory Pugh will become a household name, leading the US to their fourth championship in eight tournaments since 1991.
15. Gun manufacturers will get caught in the cross-hairs of a new US Congress
    Already under pressure, further legislation will push the firearms industry to the financial brink.
16. Millennials will begin their migration to the suburbs
    Motivated by rising urban home prices and advances in work-from-home technology, millennials, who historically have shunned the suburbs, will make the move to houses outside of cities.
17. An explosion of customer data will lead to innovation in the insurance industry
    We already see how Facebook, Instagram and other social networks use our personal data to predict which products we might buy. Using similar technology and analytical techniques, the insurance industry will improve the way it assesses our risk, offering more cost-effective products to new customers.
18. Humans will grow closer to a cyborg future
    While pacemakers have been around for decades, the inefficient connection between people and their phones is relatively new. Neuralink and other companies will make progress towards solving issues of connectivity with technology to efficiently bridge this gap.
19. Oat milk will become the next obsession for hipsters and health-conscious gourmets
    It may sound nuts, but almond milk is out.