Top 10 Tuesday — Top 10 Trends to Watch for 2017

Tuesday, January 3, 2017

Hello my Lovlies — for Cynthia's Top 10 Tuesday I thought I'd share some of the top 10 trends to watch in 2017. 

I found these trends on Investor's Business Daily News

1. Good Trump / Bad Trump

Donald Trump promises an ambitious agenda: a 15% corporate tax rate; repealing ObamaCare, Dodd-Frank and other regulations; and a $1 trillion infrastructure program. The U.S. economy has been stuck in second gear for years, with businesses reluctant to invest. The prospect of a Trump administration already has revived "animal spirits," and the IBD/TIPP Economic Optimism Index and other business surveys show soaring confidence.
But the populist president-elect has a zeal for conducting ad hoc industrial policy in public. He's used Twitter and TV to target United Technologies (UTX), Boeing (BA) and Lockheed Martin (LMT) as well as drug prices.
And his protectionist instincts could have serious consequences, given a president's broad authority on trade. Trump could adopt a few anti-dumping duties on China, expanding on actions by Presidents Bush and Obama. Or he could withdraw from Nafta or trigger a full-blown trade war with China that roils the global economy.
So far investors are betting that Trump's pro-growth, low-tax agenda will carry the day. Stocks have rallied strongly since Election Day. But some sectors — banks, steel, mining — have fared better than others.

2. Fed Plays Traffic Cop

Before the election, the Federal Reserve worried that slow growth had become a chronic condition for the U.S. economy. In 2017 the Fed will shift to the role of traffic cop, trying to keep the economy from blowing past its speed limit.
If Trump's fiscal fuel sparks inflationary pressures, the Fed could raise rates by more than the three quarter-point hikes that the central bank is predicting. But a positive scenario could play out if Trump's policies boost productivity, essentially raising the speed limit so the economy can drive faster without an upsurge in inflation.
The Fed will likely follow financial markets' lead. In recent years, the Fed has spoken loudly but carried a Wiffle bat. Policymakers' goal of four rate hikes in 2016 was whittled down to one quarter-point move at year-end, in large part due to concerns about global markets.
The Fed in 2017 will include two new Trump appointments to fill vacancies. Trump's appointees may be especially open to the idea that his deregulation and corporate tax cuts can help revive productivity growth and increase labor-force participation. And by year-end Trump likely will nominate his choice for Fed chief; Janet Yellen's term ends in February 2018.

3. Obama Care Repeal and Delay

Republicans appear intent on kicking off 2017 with a vote to repeal ObamaCare but may delay actually replacing the system for years.
The health exchanges have been struggling, with younger and healthier people declining to sign up, even with the individual mandate. Republicans can get rid of the law's sweeping tax and spending provisions. But with only 52 votes in the Senate, GOP leaders couldn't overturn coverage mandates without at least some Democratic support.
Republicans could repeal ObamaCare's Medicaid expansion, perhaps via block grants that would give states much more flexibility over federal funds.
Yet many health policy experts and industry players have warned that a repeal without replacement could blow up the individual insurance market operating under ObamaCare rules. Many health insurers such as UnitedHealth (UNH) and Aetna (AET) are already pulling out of most exchanges, tired of suffering losses.
They and their peers may throw in the towel entirely if the law is largely repealed without a long-term replacement. If wide swathes of the country lack an individual market insurer for 2018, what will the government do?
Trump, GOP Face Huge 'Now What?' ObamaCare Moment

4. Biotech Drug Pipeline Flow 

After a rough 2016 with drug prices under the campaign spotlight, a slew of potential FDA approvals and big trial data, particularly in the cancer arena, could catalyze biotech stocks.
The FDA is slated to examine PARP inhibitors from Tesaro (TSRO) and Clovis Oncology (CLVS) to treat ovarian cancer. The duo will compete in a multibillion-dollar market with already-approved Lynparza from AstraZeneca (AZN). Celgene (CELG) has a multiple myeloma drug under FDA priority review. The FDA will also look at Ariad Pharmaceuticals' (ARIA) brigatinib, which fights non-small-cell lung cancer.
Kite Pharma (KITE) is expected to seek approval for its refractory non-Hodgkin lymphoma drug, an early CAR-T treatment. Seattle Genetics (SGEN) aims to change traditional Hodgkin lymphoma therapy when it unveils phase-three data.
Meanwhile, Axovant Sciences (AXON) and Biogen (BIIB) each have data on Alzheimer's treatments due in 2017. Drugs that significantly slow cognitive decline would be huge blockbusters.
Some biomed companies may make announcements about drugs or financials at the annual JPMorgan Healthcare Conference in January.
Seattle Genetics CEO Angles For Hodgkin's Lymphoma Eureka

5.  Will Shale Revival Offset OPEC Output Cuts?

Oil stocks have rallied since crude prices bottomed in early 2016, and the industry has reason for cautious optimism. After a two-year effort to drive out U.S. shale producers largely failed, the Organization of the Petroleum Exporting Countries — along with top non-OPEC producers — agreed to cut production by nearly 1.8 million barrels per day starting in January to prop up oil prices. But cartel members have a history of breaking production quotas.
Russia already has said that it will only gradually lower production, and analysts expect Iraq to be the first OPEC member to cheat on its output target. Even if OPEC's plan fails, the International Energy Agency sees oil markets balancing in the second half of 2017, helped by rising demand.
But will crude prices, which more than doubled from early 2016 lows, continue to climb? That may depend on how quickly U.S. shale production revives. U.S. crude output started to climb as the number of oil rigs in use rose sharply in recent weeks and months. Many shale players have cut their costs and can profit at lower oil price levels.
Trump's pick for secretary of state, Exxon Mobil (XOM) CEO Rex Tillerson, is another bullish sign for U.S. oil companies headed into 2017, given Tillerson's experience with international energy trade deals.

6.  Apple Looks To Regain Mojo With iPhone 8

A lot rides on Apple's 11th-generation smartphone due out in the fall. Unofficially called the iPhone 8, the 10th anniversary model could sport a radical redesign, with a glass sandwich look, borderless OLED display, invisible home button and wireless charging.
Bullish analysts believe the iPhone 8 could create a "supercycle" of upgrade activity after three generations of similar-looking iPhones. IPhone shipments fell 8% in Apple's fiscal 2016 ended Sept. 24 vs. a 4% decrease for the overall premium smartphone market.
Many analysts see Apple returning to smartphone sales growth next year, thanks to the iPhone 8. Apple's fast-growing services business — which includes Apple Music, Apple Pay, iCloud and more — is another expected bright spot for 2017.
Others are more pessimistic. Oppenheimer analyst Andrew Uerkwitz has predicted that "Apple is about to embark on a decadelong malaise." Apple's fortunes are over-reliant on the iPhone, and the company "lacks the courage to lead the next generation of innovation (AI, cloud-based services, messaging)," he said.

7.  Will IPO Market Be Back, Or Gone In A Snap?

Initial public offerings are expected to rebound in 2017 from a seven-year low. Among the first high-profile new stocks is likely to be Snapchat owner Snap, one of the widely watched tech "unicorns" valued above $1 billion. Snap's IPO, expected in the first quarter, could raise $4 billion and value the company at $25 billion.
Snapchat is growing rapidly, but the parent company has struggled to turn a profit. And it faces competition from Facebook (FB), whose photo-sharing Instagram site is adopting Snapchat-like features.
Other unicorns expected to go public in 2017 are music service provider Spotify, software maker AppDynamics and data analytics company Palantir. Uber, valued at $68 billion, is not expected to IPO in 2017. Neither is Airbnb.
Renaissance Capital believes activity will pick up significantly in 2017, "breaking the long IPO recession" that started in August 2015.
In 2016, 105 IPOs raised $18.8 billion. Both the number and dollar value fell 38% from 2015. The top-performing IPO of 2016 was optical components supplier Acacia Communications (ACIA), which is up 168.5% from its May IPO price of 23. But it has lost more than half its value since early September, ending the year at a five-month low.
The overall stock market trend will be critical to IPO activity and success. If the postelection rally continues, more companies will go public and will likely fare well. But if the stock indexes move sideways or correct, unicorns will be rare.
IPO Outlook For 2017: Amid Mixed Predictions, Focus On The Chart Action

8.  Tesla's Model 3 Approaches Crowed Electric Avenue 

The electric-car race will intensify when Tesla Motors introduces its long-awaited Model 3 in the second half of 2017. It will be Tesla's most affordable car, with a base-model cost of about $35,000, far less than the more-upscale Model S sedan and Model X crossover SUV.
Tesla is on track to deliver about 80,000 vehicles in 2016 and aims to ramp up auto production to 500,000 deliveries a year by 2018.
Tesla has a history of missing deadlines and cutting production targets, though CEO Elon Musk will strive to get at least some Model 3 vehicles out the door next year. Musk also will be busy integrating recently acquired SolarCity as well as completing Tesla's battery Gigafactory.
Meanwhile, General Motors (GM), Ford (F), Mercedes-Benz, BMW, Toyota (TM) and Volkswagen (VLKAY) are selling or planning to introduce all-electric vehicles that target many of the same potential buyers as the Model 3. Like the Model 3, they will have self-driving features.
Tesla also faces threats from tech giants such as Alphabet (GOOGL) and Apple. Alphabet has spun out its self-driving car efforts into its own unit, Waymo. But the Google parent has backed off plans to create vehicles with no steering wheel or pedals in favor of partnerships with existing carmakers.
Apple, which has never acknowledged its Project Titan efforts, reportedly has shifted from making a self-driving electric car to developing operating systems for autonomous vehicles.
Mobileye (MBLY) and Delphi (DLPH) will showcase their turnkey autonomous-driving technology at CES 2017 in early January.
It's still unclear if electric cars are ready for mass adoption. They are more expensive than gas-powered vehicles — and federal tax credits will soon expire for new Tesla buyers. And charging takes far longer than filling up the tank.

9.  Pay TV IS Afraid, But Cords Aren't Cut Yet

Fears of cord-cutting — pay-TV subscribers canceling their cable packages — continue to abound in the media space. But a recent PwC survey, which found that 76% of respondents were pay-TV subscribers in 2016 vs. 79% the year before, suggests that "cord-cutting may continue at a much slower rate than predicted."
Still, subscriber losses at ESPN, owned by Walt Disney (DIS), raise concerns about the power of live sports programming to discourage viewers from dumping their all-inclusive cable packages.
Hulu — owned by Disney, 21st Century Fox (FOXA), Comcast (CMCSA) unit NBCUniversal and Time Warner (TWX) — plans to roll out a live-streaming service in the new year that will include broadcast and cable networks. Google's YouTube is also said to be working on a streaming TV service that could go live in 2017.
The two players would join a crop of over-the-top TV competitors including Sling TV (Dish Network (DISH)), PlayStation Vue (Sony (SNE)) and DirecTV Now (AT&T (T)).

10.  Make Bank of America Great Again?

After a long slog through years of low rates, weak economic growth and post-crisis regulation, banks appear set for a better 2017. Trump's transition team has said the incoming president will "dismantle" Dodd-Frank. His tax-and-spending programs could boost demand but also lift inflation, triggering more Federal Reserve rate hikes. Wider yield spreads should expand banks' net interest margins.
All this sent bank stocks soaring along with Treasury yields in late 2016, especially after the presidential election. Bank of America (BAC) is seen as the most U.S.-exposed of the big banks, meaning it is most likely to benefit from any rate hikes from the Fed and faster U.S. economic growth.
Meanwhile, Citigroup (C) still has significant international operations that could be hurt if Trump sets U.S. trade deals ablaze.
Dozens of smaller banks have hit multiyear highs. Bank investors are pricing in aggressive Fed and Trump moves in 2017 with bond yields continuing to climb. But if those actions do not occur, bank earnings and stocks may disappoint.

There it is my Lovlies, 10 trends to watch in 2017. 

Your Turn:  Comment below and let us know what you think will be the top trends to watch in 2017.

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