Since mid March 2017, US stock indices have been moving sideways in a slow meandering phase. There’s more to go before this phase completes. This sets up a pattern or determinacy that leads to a clear outcome and conclusion.
You can expect the market to continue consolidating and moving sideways burning time. Its frustrating and slow. A balance of forces has emerged on the back of the so called ‘Trump Rally’. Volume and activity will continue to shrink. We don’t expect the DJIA to go below its 20553 lows (18/05/17). At some stage over the next 2 to 8 weeks stock markets will explode on the back of a ‘surprise’ news announcement.
The coming stock advance will be swift and carry the DJIA 750 to 2000 points (S&P500 150 to 400 points) higher on high volume and bullish sentiment. Suitable targets put the DJIA at 21560 to 22800. Once the rally gets underway we might be able to sharpen our targets.
Our patterning also calls for a complete retracement of the rally. Anticipate on completion of the advance, a rapid pullback on the DJIA to at least 20553 (S&P 2352). The thrust and pullback will catch a lot of people by surprise.
Going into the final round of the French Presidential election we see heavy media bias for Macron to win over Le Pen. Polls indicate Macron should win by a comfortable margin. The Law of Contrary Opinion in 2016 had indicated another upset due.
There are mitigating factors at play however. Having correctly picked the Australian, Brexit and US Presidential elections, we point out that the shock results shown in those elections all occurred after lengthy social and political trends had been underway for sometime. We see there is a lower probability that contrary opinion may affect the outcome. We had predicted in 2016 that Le Pen would receive the presidential mandate. We still hold to that view which would have an immediate negative impact on financial markets whichever candidate wins. Markets appear poised for a fast corrective move to the downside before resuming their longer term trends.
Longer term, if Le Pen happened to win, there would be a soft EU awakening and resolution. Macron’s win will have the effect of bringing on a hard EU awakening and resolution.
Housing affordability is attracting the attention of politicians as concern rises that a housing bubble has made homes too expensive. So far, none of the discussions have really addressed the problems. Several key points can be made here from a futurist perspective.
The housing problem…..
Sitting on the left wing agenda is the view that negative gearing of investment properties is a necessary step to making housing more affordable. Government is short of cash. You can see this happening in most liberal democratic countries around the world and should merely be seen as another tax grab. For this reason alone politicians will close the negative gearing window.
Cancelling negative gearing will have the long term effect of driving up rents causing a severe shortage of rental properties. That wont affect the politicians however who vote for the negative gearing “reform” as they will have disappeared into retirement.
Pre-2016 election talk suggested a grandfather clause to existing investment property holders. The time between initiating the legislation to when it goes into effect creates a window for people to grab up properties for investment purposes. The short and sharp buying frenzy in conjunction with this kind of policy or news would be typical of a major long term top for Australian property markets. This kind of event is common in financial markets when changes of trend occur at the end of a long term market. Policy or news has caught up too late. It always results in a major reversal. We might anticipate the peak of the Australian property market would last decades.
Other proposed measures include first home owners being allowed to access superannuation to form a deposit. When first home owner grants were introduced in 2000, property prices for new homes jumped by multiples of the $7000 grant. This reflected the increased purchasing power an extra $7000 had on loan to valuation ratios. If super is allowed into the equation we’ll see property prices once again jump higher as builders respond to improved loan ratios.
Part of the affordability solution……..
One issue that never gets discussed is the supply related issues created by government themselves. In many capital cities around the world, including Australia, housing affordability is often the unintended consequence of regulatory bottlenecks where zoning, building regulations and permits choke the flow of new supply and drive up the cost of housing. Clearly this needs to be addressed and would go a long way towards addressing the affordability issue.Another issue under the microscope where investors hold a property seeking only capital gains by leaving the property untenanted. If governments must be seen to be doing something, a tax on properties untenanted for longer than say 3 months would take the heat off buyers as they realize the benefits renting over buying bring in an overheated property market.
Suffice to say the long term direction of Australian property values are coming to a head in conjunction with other Australian and global social, political and economic issues. Housing affordability is just another issue along with many others whose origins lie decades in the past and whose solution cannot be answered by politicians or central planners
We anticipate US stocks have entered a consolidation phase lasting a minimum of several months.
Stocks have performed strongly off the back of the Presidential election. This has served to clarify where things are heading. Any short term ambiguity has now been cleared away. The recent top and pullback also coincides with the topping phase of the eight year stock market cycle that has continued for over 50 years. Note while March 2017 is the month time window for the peak, cycles of this length can take 1-2 years to complete their cycle top. Take the stock market top in 2000. While the highs occurred by March 2000. This was well before the 8 year cycle high of 2001. The then markets chopped around for another year close to the all time highs before pealing way into their 2003 lows.
The next 8 year cycle low will occur some time in 2025 and by that time stock market will be equal to, or lower than 2009 stock market lows. A lot will have changed by then – politically, economically and socially.
We note the growing political, social and economic cross-currents that have been building over the last 2 decades. This is typical of major tops and is reflected by the difficulty investors and business people have in making business and investment decisions.
So anticipate US stocks pulling back between now and May to August of this year. into the consolidation lows. The pullback should be quite steep and volatile with potential targets of DJIA 19500 – 19900, SP500 2000 – 2100. We note US money supply growth is declining rapidly which underpins the softening stock market.
Following the pullback we will see, once again, markets rise to new highs. The nature of the rise we foresee being accompanied by extremely bullish news. Typically, major corporate tax cuts would fit with this picture, rising money supply growth and a rising, extremely bullish euphoria. This coming run should take the DJIA above 23000 to 25000.
We believe this is the last gasp of The End of the Long Game 2009-2018 and there is a high probability that it is ending in a 1929 style stock market blow off. Ironically the same factors that caused the 1929-1933 Great Depression are also causing the current bull market rally. This will be the peak in a 230 year cycle of human endeavor. We are witnessing history, a history that will stand for generations to come.
It’s all going to go rather quickly from here. We list our predictions for 2017 and beyond as crisis presents both opportunity and danger.
Political confidence and will eroding in the USA and other liberal democratic countries. In the US, economic confidence will start to fail as the new Trump administration starts rolling out its agenda. That could happen as early as March 2017 but most likely will not be felt until later in 2017. When political confidence fails, economic confidence falls soon after.
2017-18 is all about the coming shocks. Building on Brexit and the US presidential elections in 2016, markets are setting up for surprises. So called ‘black swan events’ always have tell-tale warning signs before they actually happen. A combination of factors are coming together to create the so called ‘perfect storm’. At the heart is the implosion of global markets that has started and cannot be stopped. While this may be slow at first, it will pick up speed over the next few years.
We see inflationary forces gathering in the US and the potential for this to get out of hand quickly is real. We believe inflation in the US will jump quickly above 4% and has the potential to run up as high as 10%. So in 2017 we have the bursting of this massive interest rate bubble that is the result of a decade of unfettered easy monetary policy. The immediate effects of this should quickly be felt in stock markets, commodities and real estate and in the longer term, the broader economy itself. In effect, with its own particular flavours, our current situation is identical to the ‘Roaring 20’s’. The set up for a last gasp spike in stocks exists before the plunge. If however, the weight of uncertainty continues to build, then that spike could be nipped in the bud leading to the next big downturn.
The US Federal Reserve is always playing catch up to the market. It will not be able to respond quickly enough to the sudden jump in official inflation rates. This will have a disastrous effect on US and global interest rate markets. The Fed will be unable to reign in money supply quickly enough to correct the torrent of money that has flooded the system over the last decade.
The effect is like holding a big ball underwater then letting go. The decade of artificially low interest rates will ‘normalise’; i.e., move toward market value and this has the potential to cause major eruptions in every other asset class.
And then there are the political shocks. The wave of reaction that was Brexit and Trump will continue into 2017 with French and German elections. Rising nationalism and disgust with the political elites will see Merkel gone and the right brought to government in France. The EU will continue to blunder from crisis to crisis and we can expect with certainty other nations to begin their exit process.
In the US, Trump is busy getting his agenda off the ground. Some of his ideas have merit such as deregulation (always a good thing), downsizing US federal government and lowering corporate taxes. Many of his ideas however threaten future economic viability. In particular, the threat of trade sanctions against China, Mexico and Germany risks a global collapse in trade. Bastiat, the 18th century French economist summed it up nicely by saying when ‘goods stop crossing borders, boots start marching’.
Trump and Russia is another political flash point. We anticipate that Trump will use that relationship to build trade, especially around oil while strengthening domestic oil production and weakening reliance on middle eastern oil.
Fortunately we don’t have to worry too much about major wars in the immediate future. War risk will only emerge after a prolonged economic downturn (at least 13-50 years away). The risk over the next 10-15 years in the US is civil disruption and violence. Trump’s presidency will have finished long before but the consequences will still be being played out a generation or two later.
One fact worth observing is that most liberal democratic governments are broke. Politicians have squandered the seed capital of their nations. We will see two things occurring. Firstly, the grab for cash by governments will continue to escalate. And the erasure of cash as a payment medium will accelerate. Secondly, governments will move to sell off any available assets to maintain the status quo. If the economy holds on for another year or two, watch the asset sales.
For now, the status quo will remain unchanged even though a new era of uncertainty and political chaos lies before us. Real, lasting meaningful change will not happen until after 2028 or 2032. Around then an important political 50 year cycle low will occur and then the US will emerge with a new destiny and a renewed sense of self.
In 2017 however, liberal democratic nations will see increasing segmentation of the left – right spectrum into smaller segments and more diverse viewpoints. The polarization occurring in liberal democratic countries will continue to deepen in 2017 before any easing occurs. In the US, Trump serves as the perfect focal point for this polarization and civil unrest and disturbances may very well break out this year. In the US we see the accumulation of decades of bad policy and a deteriorating social mood is threatening the very fabric of the US. For 2017 we do not see individual states seceding but civil disturbances that turn violent and later we will see risk civil war.
Since the 1930’s we have witnessed the growth of US Presidential Executive Orders. Since Ronald Regan Executive Orders have been used more extensively. Anticipate Trump to exceed that of Obama (275 orders) by heavily relying on Executive Orders over the life of his presidency. This is important as it further breaks down the separation of powers of government and moves government towards an imperial style of governance by Trump who is already isolated, like an emperor.
Along with the demise of cash as one of the last privacy barriers to fall, liberal democratic principles continue to crumble. Another aspect of liberal democratic government being eroded slowly and surely is the separation of powers of government. Politicians’ need to be seen to be doing something, namely creating legislation. The separation of powers between the executive, legislature and judiciary has become increasingly imbalanced against the judiciary. Soon that imbalance will extend to the legislature as the role of executive order escalates.
Depth of prevailing social mood is already at cross purposes. A soaring stock market in 2017 along with a surging economy and disenfranchised people on both sides of the political spectrum is a perfect set up for the down phase of what we call the ‘Industrial Revolution Cycle’. This is part of the topping process of a cycle of human endeavour that began in 1783. That downward phase we expect to last some 38 to 62 years. At this stage our view is leaning more towards the 38 year time span. It will be steep and deep. This is based on technical considerations before the next cycle of growth gets underway. The key point is the setup has already been underway for a long time now and we are merely on the receiving end of this progression. Despite the hubris of politicians and bureaucrats who believe they control nations and economies, the cycles of endeavour continue to unfold bringing eternal change.
Ultimately there will need to be some sort of release of pressure before any normalization of political environments. Expect upsets is the modus operandi. If the violent moves predicted, starting in 2017-2018 occur in markets this would align well with our forecasts. Typical events that might bring about such political and economic shifts include Presidential declarations involving other countries (trade wars, trade treaties, embargoes), political assassinations, new alliances EU breakdown.
All of this takes place in an environment of failing political and then economic confidence. Behind that, the social mood of the people of great nations will turn dark and inwards. An end of an era is taking place. This will translate into stock market tops as they finish their last upward phases.
Here are some of the market predictions we make for 2017:
US Stock Markets
As early as March 2017 we will see the final tops in US stock markets. This completes a long term trend and cycle top that started in 1783. The roll over process has been underway fro some time now and could still however take months to years to complete. This is typical of major tops and is often accompanied by a lot of confusing cross current activity. We discuss this long term trend in our lead article The End of the Long Game 2009 – 2018
They are rallying on expectation that Trump will lead the economy to new levels of prosperity. Supporting this idea we see forecasts of Dow Jones at 25,000, 33,000 and even 55,000 reflecting the emerging bullish mood for US economic prospects. These kind of calls only ever occur when sentiment is skewed and it never ends well.
Small cycles driving the 8 year stock market are due to make a top in March 2017 and has had an excellent history going back over the last 50 years. Cycles have their own rhythm however and they do go out of sync from time to time. Another scenario calls for several months of consolidation (Feb – May) in US stocks before moving up in a surge not dissimilar to the 1929 stock market peak. Obviously this would extend the stock market top and evidence of inflation and Trump’s policies having a positive effect would enable this path. We rate this path with a higher probability at this time. A smart strategy might be if you saw DJIA 21000, 22000, 23000 it might be prudent to take the money off the table.
We anticipate the next 8 years starting in 2017 to be a down phase for all asset classes including shares.
Accompanying stock we will also see a top in the US dollar. At time of writing we estimate a 25% probability of the US$ having already peaked. There is often a ‘right fit’ to a market and one more major spike on the US$ would complete that ‘right fit’. If we get this spike then we could see EurUSD to 1.00 – 1.03, GbpUSD to 1.10 – 1.00, AudUSD to 0.50 – 0.60 and Yen move to 125 – 140. If however, then anticipate the EurUSD moving to1.60, Yen to 80, GBP to 1.60 and AUD to above 1.10 as the next major long term trend gets underway.
Gold is still completing a major consolidation phase. We see gold hovering between US$1180 – $1300 for several months before moving up to around the US$1500 – $1535. Following that comes a solid move down to below US$800. Typical targets include US$770 and $450 before the next long term uptrend begins.
Australian Stock Market
The ASX SP200 will begin its long slide to below 3000 this year. Note this could come as a divergent action to US stock markets as Australian economic risk to weighted more to Asia.
We will not see oil prices rise above US$140 per bbl before 2065. A new era is dawning where cheap, abundant, low polluting energy is available.
Over the next 25 years we will see people die of starvation because of crop failure caused by a cooling climate. In that same time frame we will see climate change as an issue in the minds of the public disappear.
We have reached an interesting juncture with this US stocks update. In the next few trading days – maybe as early as Monday 28/11, we anticipate stocks to open higher and then reverse to the downside. Failure to follow through with new highs within 5 trading days would indicate a major top has been made and a quick test of DJIA 15370 (SP500 1810) is due.
DJIA 3rd QTR 2012 to Present
It may be that the so called Trump rally is part of a larger consolidation phase and an even bigger rally is due to get underway after a sharp down move to shake out complacent longs.
Sentiment has become extremely bullish despite gathering storm clouds on the horizon (interest rate normalization, EU bank health, Trumponomics, US economic health). Stocks in the short term have become overbought so we anticipate corrections as a normal part of the process.
Quite likely we will see a low in gold and a high in the US dollar occurring near to this time. The Euro should take out its 1.04 -1.05 lows and gold should complete a low in line with our previous post around US$1180. Again, whether this is just a breather or something more substantial we shall have to wait for further clarification.
The pendulum of government overreach has peaked in most liberal democratic countries around the world (for now). The major political events of 2016 have shown increasing resistance to government given the rising number of breaches in civil liberties and failure of government to identify and respond to the disenfranchised members of their societies.
Many segments of society have felt themselves becoming impoverishment. At the same time they have watched the hubris, greed and failure of politicians to deliver solutions to resolve the various politically made crises. One of the recurring questions that will emerge is the role of government in the lives of people.
By the time politicians’ hubris has completely evaporated, the nature of liberal democratic countries will have changed. We see major risk of political, economic and social upheaval occurring between now and 2028-2033 This phase may extend before social, political and economic stability becomes the norm. As always the pendulum will one day swing again towards increasing government involvement in the lives and affairs of ordinary people.
Gold fell overnight onto major support between US$1180- $1200. We anticipate a spike in gold prices to the US$1370 – $1525 level from near current levels. The time frame for the rally should be relatively short.
We called the US Presidential election (27/07/2016 & 29/10/2016) saying Trump would win. We called the Australian federal election and while we didn’t quite get what we thought would happen, we got second best with the Australian people being the winners (16/06/2016, 28/06/2016 & 24/07/2016).
Expect further political upsets in 2017 with elections falling due in France and Germany.
If US stock markets hold to these levels to slightly lower we can anticipate the birth of a large rally taking markets to new all time highs. Relatively speaking we would expect this coming rally to be weak. We view this as being the last gasp before the conclusion of The Long Game.
All the elements are in place for a political meltdown with the coming election. The circumstances of this election are very similar to the Brexit vote that caused an earthquake.
There is a large disenfranchised portion of the US electorate.
Establishment seeks to maintain the status quo.
Widespread disgust at both presidential candidates.
Media is holding a heavily biased standpoint on the outcome of the election result.
Financial markets are coiling in preparation for a large move based on the result.
Fears of vote rigging, mudslinging by both candidates, the focus is on personalities rather than issues leaving a gridlocked political system.
Most of these points were present in the Brexit vote.
The underlying social mood is one pointing to a political meltdown. If Trump wins, Democrats have rumored to be plotting some sort of nullification of the election result. It is also unacceptable to the establishment that Trump would win as he has threatened to tear down the status quo. If Clinton wins, all the corruption scandals will be brought before the courts and her presidency will be mired by political, legal & criminal scandals.
The social environment is volatile and ripe for serious political disruption as people seek to express the powerful social mood that has been building for several years. We consider the election will serve as the catalyst for the start for a political meltdown lasting many years. Following in quick attendance will be the subsequent loss of economic confidence.
We still predict a spike to the upside following the election – being the last gasp of the stock markets. This will be followed in 2017 by a surge in inflation and a devastating shift in US interest rates.
All of this is characteristic of a major top that is forming in economic, social and political terms. It is akin to the rise and peak of an empire. We are witnessing a major turning point in history and a completion of a long term cycle of human endeavor. This is covered in our main article theme the End of the Long Game 2009 -2018.
In an interview with the Washington Post, Amazon CEO Jeff Bezos reveals what he thinks will be the future of humanity when we eventually colonize space. He talks about a plan for colonizing our solar system with nuclear reactors in space, populations in the millions, and more.
While Elon Musk’s SpaceX is the public face of the private space industry, there are other major players trying to bring humanity closer to the stars. Richard Branson’s Virgin Galactic has been working on its own rocket technologies, and Jeff Bezos, CEO of Amazon, has been revealing more on the work they’re doing over at Blue Origin.
The previously secretive Blue Origin has been announcing more of its milestones in its space ambitions. It successfully landed the same rocket four times in a row, with the end goal of reusable rockets that will lower space travel costs.
The company has unveiled its own rocket, the “New Glenn,” which dwarfs any of the rockets being developed today. Bezos announced that the Glenn will be ferrying astronauts by the end of the decade.
Along with the engineering developments Blue Origin has announced, Bezos has also shared his predictions on human colonization of space, in an interview with The Washington Post.
Human colonization of space
In the interview, Bezos sees humans spreading out across the Solar System. He envisions “millions of people working and living in space.” But to do this, Bezos notes that we will have to figure out how to extract and manage the resources we can get from space, since Earth alone won’t be able to provide the materials for space colonization.
Bezos also says we will have to figure out how to harness nuclear technology in space, citing it as a viable alternative to solar power that will dim out as you move farther from the Sun. In fact, moving out into space would not just be a dream, but an imperative. We will have to move heavy industry outside of Earth, in order to preserve it. He envisions the Earth being “zoned” as residential and light industrial.
But does he think we will see space colonization in our lifetime? “Not in the near term… Eventually Mars might be amazing. But that’s a long way in the future.”
How many things do we own, that are common today, that didn’t exist 10 years ago? The list is probably longer than you think.
Prior to the iPhone coming out in 2007, we didn’t have smartphones with mobile apps, decent phone cameras for photos/videos, mobile maps, mobile weather, or even mobile shopping.
None of the mobile apps we use today existed 10 years ago: Twitter, Facebook, Youtube, Instagram, Snapchat, Uber, Facetime, LinkedIn, Lyft, Whatsapp, Netflix, Pandora, or Pokemon Go.
Several major companies didn’t exist a decade ago. Airbnb, Tinder, Fitbit, Spotify, Dropbox, Quora, Tumblr, Kickstarter, Hulu, Pinterest, Buzzfeed, Indigogo, Udacity, or Jet.com just to name a few.
Ten years ago very few people were talking about crowdfunding, the sharing economy, social media marketing, search engine optimization, app developers, cloud storage, data mining, mobile gaming, gesture controls, chatbots, data analytics, virtual reality, 3D printers, or drone delivery.
At the same time we are seeing the decline of many of the things that were in common use 10-20 years ago. Fax machines, wired phones, taxi drivers, newspapers, desktop computers, video cameras, camera film, VCRs, DVD players, record players, typewriters, yellow pages, video rental shops, and printed maps have all seen their industry peak and are facing dwindling markets.
If we leapfrog ahead ten years and take notice of the radically different lives we will be living, we will notice how a few key technologies paved the way for massive new industries.
Here is a glimpse of a stunningly different future that will come into view over the next decade.
Also known as additive manufacturing, 3D printing has already begun to enter our lives in major ways. In the future 3D printers will be even more common than paper printers are today.
1. 3D printed makeup for women. Just insert a person’s face and the machine will be programmed to apply the exact makeup pattern requested by the user.
2. 3D printed replacement teeth, printed inside the mouth.
3. Swarmbot printing systems will be used to produce large buildings and physical structures, working 24/7 until they’re completed.
4. Scan and print custom designed clothing at retail clothing stores.
5. Scan and print custom designed shoes at specialty shoe stores.
6. Expectant mothers will request 3D printed models of their unborn baby.
7. Police departments will produce 3D printed “mug shots” and “shapies” generated from a person’s DNA.
8. Trash that is sorted and cleaned and turned into material that can be 3D printed.
The VR/AR world is set to explode around us as headsets and glasses drop in price so they’re affordable for most consumers. At the same time, game designers and “experience” producers are racing to create the first “killer apps” in this emerging industry.
9. Theme park rides that mix physical rides with VR experiences.
10. Live broadcasts of major league sports games (football, soccer, hockey, and more) in Virtual Reality.
11. Full-length VR movies.
12. Physical and psychological therapy done through VR.
13. Physical drone racing done through VR headsets.
14. VR speed dating sites.
15. For education and training, we will see a growing number of modules done in both virtual and augmented reality.
16. VR and AR tours will be commonly used in the sale of future real estate.
Drones are quickly transitioning from hobbyist toys to sophisticated business tools very quickly. They will touch our lives in thousands of different ways.
17. Fireworks dropped from drones. Our ability to “ignite and drop” fireworks from the sky will dramatically change both how they’re made and the artistry used to display them.
18. Concert swarms that produce a spatial cacophony of sound coming from 1,000 speaker drones simultaneously.
19. Banner-pulling drones. Old school advertising brought closer to earth.
20. Bird frightening drones for crops like sunflowers where birds can destroy an entire field in a matter of hours.
21. Livestock monitoring drones for tracking cows, sheep, geese, and more.
22. Three-dimensional treasure hunts done with drones.
23. Prankster Drones – Send random stuff to random people and video their reactions.
24. Entertainment drones (with projectors) that fly in and perform unusual forms of live comedy and entertainment.
Driverless technology will change transportation more significantly than the invention of the automobile itself.
25. Queuing stations for driverless cars as a replacement for a dwindling number of parking lots.
26. Crash-proof cars. Volvo already says their cars will be crash-proof before 2020.
27. Driverless car hailing apps. Much like signaling Uber and Lyft, only without the drivers.
28. Large fleet ownership of driverless cars (some companies will own millions of driverless cars).
29. Electric cars will routinely win major races like the Daytona 500, Monaco Grand Prix, and the Indy 500.
30. In-car work and entertainment systems to keep people busy and entertained as a driverless car takes them to their destination.
31. In-car advertising. This will be a delicate balance between offsetting the cost of operation and being too annoying for the passengers.
32. Electric car charging in less than 5 minutes.
Internet of Things
The Internet of things is the network of physical devices, vehicles, and buildings embedded with electronics, software, sensors, and actuators designed to communicate with users as well as other devices. We are currently experiencing exponential growth in IoT devices as billions of new ones come online every year.
33. Smart chairs, smart beds, and smart pillows that will self-adjust to minimize pressure points and optimize comfort.
34. Sensor-laced clothing.
35. “Print and Pin” payment systems that uses a biometric mark (fingerprint) plus a pin number.
36. Smart plates, bowls and cups to keep track of what we eat and drink.
37. Smart trashcan that will signal for a trash truck when they’re full.
38. Ownership networks. As we learn to track the location of everything we own, we will also track the changing value of each item to create a complete ownership network.
39. Self-retrieving shoes where you call them by name, through your smartphone, and your shoes will come to you.
40. Smart mailboxes that let you know when mail has arrived and how important it is.
Even though healthcare is a bloated and bureaucratic industry, innovative entrepreneurs are on the verge of disrupting this entire industry.
41. Hyper-personalized precision-based pharmaceuticals produced by 3D pill printers.
42. Ingestible data collectors, filled with sensors, to give a daily internal health scan and report.
43. Prosthetic limbs controlled by AI.
44. Real-time blood scanners.
45. Peer-to-peer health insurance.
46. Facetime-like checkups without needing a doctor’s appointment.
47. Full-body physical health scanners offering instant AI medical diagnosis, located in most pharmacies
48. Intraoral cameras for smartphones for DYI dental checkups.
Artificial Intelligence (AI)
Much like hot and cold running water, we will soon be able to “pipe-in” artificial intelligence to any existing digital system.
49. Best selling biographies written by artificial intelligence.
50. Legal documents written by artificial intelligence.
51. AI-menu selection, based on diet, for both restaurants and at home.
52. Full body pet scanners with instant AI medical diagnosis.
53. AI selection of movies and television shows based on moods, ratings, and personal preferences.
54. Much like the last item, AI music selection will be based on moods, ratings, and musical tastes.
55. AI sleep-optimizers will control all of the environmental factors – heat, light, sound, oxygen levels, smells, positioning, vibration levels, and more.
56. AI hackers. Sooner or later someone will figure out how to use even our best AI technology for all the wrong purposes.
Future transportation will come in many forms ranging from locomotion on an individual level to ultra high-speed tube transportation on a far grander scale.
57. Unmanned aviation – personal drone transportation.
58. 360-degree video transportation monitoring cameras at most intersections in major cities throughout the world.
59. Everywhere wireless. With highflying solar powered drones, CubeSats, and Google’s Project Loon, wireless Internet connections will soon be everywhere.
60. Black boxes for drones to record information in the event of an accident.
61. Air-breathing hypersonic propulsion for commercial aircraft. Fast is never fast enough.
62. Robotic follow-behind-you luggage, to make airline travel easier.
63. Robotic dog walkers and robotic people walkers.
64. Ultra high-speed tube transportation. As we look closely at the advances over the past couple decades, it’s easy to see that we are on the precipices of a dramatic breakthrough in ultra high-speed transportation. Businesses are demanding it. People are demanding it. And the only thing lacking is a few people capable of mustering the political will to make it happen.
As I began assembling this list, a number of items didn’t fit well in other categories.
65. Bitcoin loans for houses, cars, business equipment and more.
66. Self-filling water bottles with built-in atmospheric water harvesters.
67. Reputation networks. With the proliferation of personal information on websites and in databases throughout the Internet, reputation networks will be designed to monitor, alert, and repair individual reputations.
68. Atmospheric energy harvesters. Our atmosphere is filled with both ambient and concentrated forms of energy ranging from sunlight to lightning bolts that can be both collected and stored.
69. Pet education centers, such as boarding schools for dogs and horses, to improve an animal’s IQ.
70. Robotic bricklayers. With several early prototypes already operational, these will become common over the next decade.
71. Privacy bill of rights. Privacy has become an increasingly complicated topic, but one that is foundational to our existence on planet earth.
There’s a phenomenon called the Peltzman Effect, named after Dr. Sam Peltzman, a renowned professor of economics from the University of Chicago Business School, who studied auto accidents.
He found that when you introduce more safety features like seat belts into cars, the number of fatalities and injuries doesn’t drop. The reason is that people compensate for it. When we have a safety net in place, people will take more risks.
That probably is true with other areas as well.
As life becomes easier, we take risks with our time. As our financial worries are met, we begin thinking about becoming an entrepreneur, inventor, or artist. When life becomes too routine, we search for ways to introduce chaos.
Even though we see reports that billions of jobs will disappear over the coming decades, we will never run out of work.
As humans, we were never meant to live cushy lives of luxury. Without risk and chaos as part of our daily struggle our lives seem unfulfilled. While we work hard to eliminate it, we always manage to find new ways to bring it back.
Yes, we’re working towards a better world ahead, but only marginally better. That’s where we do our best work.
Its clear we are in a cycle of increasing political chaos and uncertainty. This is continuing to escalate. Its happening in liberal democratic countries. National elections are due in these countries (Germany, France 2017), UK (2018). We can anticipate major upheavals along with the US. We are seeing the death throes of the liberal democratic tradition. Worsening economic inequality, the self interest of political elites, political coverups, politicians unable to deliver on their promises, vote rigging, dodgy economics, disenfranchised voters, unaccountable rogue police are just some of the issues to be seen in newspapers and television. Democracy, a human system, like all systems before, is failing.
Next US President
Given the increasing political chaos we anticipate Donald Trump will be elected as the 45th US President of the United States of America. Between now and November we should see a marked swing towards Trump. Viewing the US situation through the lens of cycles analysis we step beyond the character and reputation of US Presidential nominees to see the fabric of a society and economy being eroded through self interest.This process has been underway for over 5 decades.Trump’s election should be seen as the response to a disenfranchised electorate. That’s both within the parties and without. Its an increasingly angry social mood. Voters are angry and one of their few options is to respond at the ballot. Electoral horror at the status quo has emerged with a dual society – the haves and have nots, cronyism, hidden interests, corporatism, the endless wars, spurious economics, indebtedness………..
Like Brexit and many of the problems we are witnessing nightly in the news (EU refugee crisis, police and citizen shootings, etc), many crises have been manufactured by governments themselves.
We witness the unfolding political, social and economic drama of the USA and by extension the global stage since the US ascended to become the global hegemon after WWII. Most people acknowledge things have gone terribly wrong over the last 20 years but nobody knows what to do. There is little or no confidence in the political class, or their technocrat advisors, government institutions, the economy and society at large. We anticipate the continuing breakdown of the status quo an Trump’s election to the presidency is merely a reflection of the zeitgeist of our time. Yet this is perfectly understandable when you step back from the noise of daily media and observe the cycles of history evolving before our eyes.
An historical example of a time when a large scale breakdown of society occurred on this scale was during the phase 1740-1792 leading to the French Revolution. This time however, with globalization, it spans over many countries. At that time we saw increasing political instability with its attendant corruption, economic decay and the polarization of the people against the political elites (king and government). It’s happened many times before as any student of history will testify, is happening now and will happen again as humans consistently fail to learn from their past.
Understanding Cyclic History
We are witnessing in our lifetime the completion of large scale cycles of human endeavor and activity with the attendant dislocation and reallocation of social, economic and political activity and resources. An understanding of the broad brush strokes economically, socially and politically may serve to enhance your perspective on what emerges next. The scale of forces at work in liberal and democratic societies and economies is so huge that the current drama is taking decades to unfold.
This is the topping and completion process of an economic cycle that has been going on for around 224 years. By the time this top and the ensuing drama is finished, it may well have spanned generations of people. On a historical note, we are witnessing the completion of the growth phase of the industrial revolution cycle that began around 1783-5.
And so what does Trump have to do with economic cycles?
The current political chaos will continue to intensify and this will give way eventually into economic chaos. The impending signs for that economic chaos are clearly to be seen and once again it centers on the incapacity of central planners and bureaucrats to perceive the unintended consequences of their mischief. Trump has nothing to do with these economic cycles. He merely reflects the zeitgeist of the times. Like someone surfing a wave, they ride the wave for a period of time then disappear into the footnotes of history. Trump has often appeared at major tops of economic cycles in the last 30 years in US history. Its not surprising then he has reappeared surfing the zeitgeist wave as the US completes the topping phase of this huge cycle of human endeavor.
Trump’s ability to ride the social mood of the time we believe will help him to take the presidency. Whether he will have the power to change the status quo, like Obama who promised major change yet found himself caught in the entrenched self interest of Congress, Wall Street, Big Pharma and the military. Trump may well ride the last vestiges of prosperity in this cycle. Given the growing political and economic storm Trump may well find himself the target of assassination attempts in the next four years. He will be remembered as the President that reigned at the time the US and world peaked in economic activity for many decades to come.
Whether we have a few more months or years of twilight before the downside comes home to roost, suffice to say, from now on we can expect increasingly tough times punctuated by phases of optimism. The current political chaos will continue to intensify and this will give way into economic chaos. The impending signs for that economic chaos are already clearly seen and once again it the focus centers on the incapacity of central planners and bureaucrats to perceive the unintended consequences of their mischief. Will people in future times learn from our mistakes and mistakes of the past? We think not.
In our Australian election forecast of 28/06/16 and 16/06/2016 we forecast the risk of a ‘hung parliament’ or an outright win to the ALP. This was based on the principle of ‘Contrary Opinion’.
It took two weeks to resolve the final outcome of the national election. It left a Liberal government in power but without a majority in the Senate. The result has continued the ongoing risk element in Australian politics. Should government fail to deliver or introduces any form of controversial legislation, we may expect blocking in the Senate. Not quite the ‘hung parliament’ suggested but a second best – with a kind of severe arm lock if government steps beyond its mandate.
The voters got what they wanted. Through the mysterious spontaneous ordering process, the electoral process has communicated the deep level of cynicism Australians have towards politicians. It also reflects that no politician really has any clear solution or way forward for society and economy. And so voters have ensured that politicians can’t get away with too much. Little has been said by politicians that offers any resonance with voters.
Economic, social and political restructuring is needed to set Australia on course for its next phase. The electorate is exhausted by the constant personality bicker of politicians and their inability to tackle the big issues. Politicians have delivered a consistent message for over a decade that political self interest is more important than the people. Accordingly, many believe the economic and social decline experienced by Australians is set to continue.
Unfortunately, without a clear vision from government and a high risk of being blocked by the Senate, Australia remains in an entropic state with a continuing risk of stagnation. This trend may start to accelerate as capital outflows intensify over late 2016/2017 into US dollars. We anticipate inflation in the USA will climb rapidly over the next 1-2 years. Capital will be sucked from the EU and periphery including Australia. This will indeed be the last gasp of the ‘end of the long game.’
One of the most intriguing public discussions to emerge over the past year is humanity’s wrestling match with the threat and promise of artificial intelligence. AI has long lurked in our collective consciousness — negatively so, if we’re to take Hollywood movie plots as our guide — but its recent andvery real advances are driving critical conversations about the future not only of our economy, but of humanity’s very existence.
In May 2014, the world received a wakeup call from famed physicist Stephen Hawking. Together with three respected AI researchers, the world’s most renowned scientist warned that the commercially-driven creation of intelligent machines could be “potentially our worst mistake in history.” Comparing the impact of AI on humanity to the arrival of “a superior alien species,” Hawking and his co-authors found humanity’s current state of preparedness deeply wanting. “Although we are facing potentially the best or worst thing ever to happen to humanity,” they wrote, “little serious research is devoted to these issues outside small nonprofit institutes.”
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Let’s review. Two years ago, the world’s smartest man said that ungoverned AI could well end humanity. Since then, most of the work in the field has been limited to a handful of extremely powerful for-profit companies locked in a competitive arms race. And that call for governance? A work in progress, to put it charitably. Not exactly the early plot lines we’d want, should we care to see things work out for humanity.
When it comes to managing the birth of a technology generally understood to be the most powerful force ever invented by humanity, exactly what kind of regulatory regime should prevail?
Which begs the question: When it comes to managing the birth of a technology generally understood to be the most powerful force ever invented by humanity, exactly what kind of regulation do we need?
Predictably, last week TheEconomist says we shouldn’t worry too much about it, because we’ve seen this movie before, in the transition to industrial society — and despite a couple of World Wars, that turned out alright. Move along, nothing to see here. But many of us have an uneasy sense that this time is different — it’s one thing to replace manual labor with machines and move up the ladder to a service and intellectual property-based economy. But what does an economy look like that’s based on the automation of service and intellect? TheEconomist’s extensive review of the field is worthy reading. But it left me unsettled.
“The idea that you can pull free physical work out of the ground, that was a really good trick.” That’s Max Ventilla, the former head of personalization for Google, who left the mothership to start the mission and data-driven education startup AltSchool. In an interview for an upcoming episode of ourShift Dialogs video series, Ventilla echoed TheEconomist’s take on the shift from manual labor to industrialized society and the rise of the fossil fuel economy. But he feels that this time, something’s different.
“Now we’re discovering how to pull free mental work out of the ground,” he told me. “(AI) is going to be a huge trick over the next 50 years. It’s going to create even more opportunity — and much more displacement.”
Hawking’s call to action singled out “an IT arms race fueled by unprecedented investments” by the world’s richest companies. A future in which super-intelligent AI is controlled by an elite group of massive tech firms is bound to make many of us uneasy. What if the well-intentioned missions of Google (organize the world’s information!) and Facebook (let people easily share!) are co-opted by a new generation of corporate bosses with less friendly goals?
As you might expect, the Valley has an answer: OpenAI. A uniquely technological antidote to the problem, OpenAI is led by an impressive cadre of Valley entrepreneurs, including Elon Musk, Sam Altman, Reid Hoffman, and Peter Thiel. But instead of creating yet another for-profit company with a moon-shot mission (protect humanity from evil AI!), their creation takes the form of a research lab with a decidedly nonprofit purpose: To corral breakthroughs in artificial intelligence and open them up to any and everyone, for free. The lab’s stated mission is “to advance digital intelligence in the way that is most likely to benefit humanity as a whole, unconstrained by a need to generate financial return.”
OpenAI has managed to convince a small but growing roster of AI researchers to spurn offers from Facebook, Google, and elsewhere, and instead work on what might best be seen as a public commons for AI. The whole endeavor has the whiff of the Manhattan Project — but without the government (or the secrecy). And instead of racing against the Nazis, the good guys are competing with … well, the Valley itself.
One really can’t blame the big tech companies for trying to win the AI arms race. Sure, there are extraordinary profits if they do, but in the end they really have no choice in the matter. If you’re a huge, data-driven software business, you either have cutting-edge AI driving your company’s products, or you’re out of business. Once Google uses AI to make its Photos product magical, Facebook has to respond in kind.
Smart photostreams are one thing. But if we don’t want market-bound, for-profit companies determining the future of superhuman intelligence, we need to be asking ourselves: What role should government play? What about universities? In truth, we probably haven’t invented the institutions capable of containing this new form of fire. “It’s a race between the growing power of the technology, and the growing wisdom we need to manage it,” said Max Tegmark, a founder of the Future of Life Institute, one of the small AI think tanks called out in Hawking’s original op-ed. Speaking to the Washington Post, Tegmark continued: “Right now, almost all the resources tend to go into growing the power of the tech.”
Who determines what is “good”? We are just now grappling with the very real possibility that we might create a force more powerful than ourselves. Now is the time to ask ourselves — how do we get ready?
It’s not clear if OpenAI is going to spend most of its time on building new kinds of AI, or if it will become something of an open-source clearing house for the creation of AI failsafes (the lab is doing early work in both). Regardless, it’s both comforting and a bit disconcerting to realize that the very same people who drive the Valley’s culture may also be responsible for reigning it in. Over the weekend, The New York Times op-ed pages took up the issue, noting AI’s “white guy problem” (it’s worth noting the author is a ( female researcher at Microsoft). Take a look at the founding team of OpenAI: A solid supermajority of white men.
“It’s hard to imagine anything more amazing and positively impactful than successfully creating AI,” writes Greg Brockman, the founding CTO of OpenAI. But he continues with a caveat: “So long as it’s done in a good way.”
Indeed. But who determines what is good? We are just now grappling with the very real possibility that we might create a force more powerful than ourselves. Now is the time to ask ourselves — how do we get ready?
Can a small set of top-level researchers in AI provide the intellectual, moral, and ethical compass for a technology that might well destroy — or liberate — the world? Or should we engage all stakeholders in such a decision — traditionally the role of government? Regardless of whether the government is involved in framing this question, it certainly will be involved in cleaning up the mess if we fail to plan properly.
Back when AI was in early development, its single most powerful critique was its “brittle” nature: it didn’t work because it failed to be aware of all possible inputs and parameters. Now that we stand on the brink of strong AI, we’d be wise to include a diversity of opinion — in particular those who live outside the Valley, those who don’t look and think like the Valley, and those who disagree with our native techno-optimism — in the debate about how we manage its impact.
Air combat veterans proved to be no match for an artificial intelligence developed by Psibernetix. ALPHA has proven to be “the most aggressive, responsive, dynamic and credible AI seen to date.”
No Luck Beating ALPHA
Retired United States Air Force Colonel Gene Lee recently went up against ALPHA, an artificial intelligence developed by a University of Cincinnati doctoral graduate. The contest? A high-fidelity air combat simulator.
And the Colonel lost.
In fact, all the other AI’s that the Air Force Research Lab had in their possession also lost to ALPHA…and so did all of the other human experts who tried their skills against ALPHA’s superior algorithms.
And did we mention ALPHA achieves superiority while running on a $35 Raspberry Pi?
Saying that Lee is experienced when it comes to aerial combat is a remarkable understatement. He is an instructor who has trained with thousands of U.S. Air Force pilots. he is also an Air Battle Manager who has been fighting against AI opponents in air combat simulations since the 1980s.
Yet, he was not successful in winning against ALPHA. Not even once. Indeed, not even when the researchers deliberately handicapped ALPHA’s aircraft, impeding it in terms of speed, turning, missile capability, and sensor use.
“I was surprised at how aware and reactive it was. It seemed to be aware of my intentions and reacting instantly to my changes in flight and my missile deployment. It knew how to defeat the shot I was taking. It moved instantly between defensive and offensive actions as needed,” Lee said.
ALPHA makes decisions using a genetic fuzzy tree system, which is a subtype of fuzzy logic algorithms. It can calculate strategies based on its opponent’s movements 250 times faster than a person can blink—a speed that gives it an undeniable advantage in an arena where a mix of advanced skills in aerospace physics and intuition are required.
The Future of Air Combat
The development team says ALPHA would be a valuable asset to team with a fleet of human pilots, as it can can quickly map out accurate strategies and coordinate with a team of aircraft.
UC aerospace professor Kelly Cohen said: “ALPHA could continuously determine the optimal ways to perform tasks commanded by its manned wing man, as well as provide tactical and situational advice to the rest of its flight.”
This raises some concerns, as it may be ushering in an era of autonomy in battle aircraft. Eventually, a team of completely Unmanned Combat Aerial Vehicles (UCAVs) could be deployed to accomplish missions, further eliminating the chances of human error, but also operating without any human input.
Nick Ernest, who founded the company Psibernetix to develop ALPHA, says they intend to develop ALPHA further. “ALPHA is already a deadly opponent to face in these simulated environments. The goal is to continue developing ALPHA, to push and extend its capabilities, and perform additional testing against other trained pilots. Fidelity also needs to be increased, which will come in the form of even more realistic aerodynamic and sensor models. ALPHA is fully able to accommodate these additions, and we at Psibernetix look forward to continuing development.”
As political risk increases in all liberal democratic countries we can expect to see the contrary opinion factor playing a greater role in evaluating risk in elections and other important events.
One example is of course Brexit, while a close call, consensus opinion was that the UK would remain. Similarly, the Australian election consensus has continuously been that the Liberal Party of Australia would prevail. However, as previously posted (16/06/16), the Australian electorate is deeply cynical of its politicians and none of the contenders for the 2016 federal election are offering a way forward.
Economic, social and political reform is needed to set Australia on course for the next phase of its 100 year odd history. Its clear that the electorate is exhausted by the constant personality bicker of politicians and their inability to tackle the big issues. The consistent message for over a decade is that political self interest is more important than the people. Accordingly many believe the economic and social decline experienced by many Australians is set to continue.
Little has been said by politicians that offers any resonance with voters. So with this dissonance there is room for the Law of Contrary Opinion to operate. The law suggests “if everybody thinks one thing then bet the other way.” This law works well at times of extremity. For example, consensus thinking at elections, stock market highs and lows, etc, etc. Traders of financial markets use this tool when market sentiment is strongly biased.
Based on contrary opinion then, expect an upset on July 2nd with either a hung parliament or an outright win to the Australian Labor Party.
Should the “leave” vote win the coming UK referendum you can expect the impact to have global consequences. It will challenge the survivability of the EU. At the same time it will create massive flights of capital around the world as investors seek refuge for their money. Anticipate the USD being strongly bid. This will have a huge impact on US stock markets at the expense of peripheral markets and their currencies. The nature of global economics has been apparent for some time, though not obvious. Brexit will cause this to accelerate.
What is clear is the counter-intuitive nature of the Brexit situation. The narrative being promoted by the “in” vote is not what it seems. Democratic processes to do with EU politics have earned a reputation for not being so straight forward with several countries having the “will of the people” overturned in the last decade or so.
Should the UK decide to remain in the EU, we anticipate this will only serve to delay the inevitably. Namely the demise of the EU itself. A reading of history itself should remind that all political systems fail and a political system built on faulty premises to begin with, fail sooner. Thus, human nature expresses itself in a cyclical manner again and again.
It seems Australian voters want another “hung parliament”. The main parties are both doing their best to lose winning government. Little they say offers any resonance with voters.
The Australian electorate is deeply cynical of its politicians and none of the contenders for the 2016 federal election are offering anything offering a way forward. Economic, social and political reform is needed to set Australia on course for the next phase of its 100 year odd history. Its clear that the electorate is exhausted by the constant personality bicker of politicians and their inability to tackle the big issues. The consistent message for over a decade is that political self interest is more important than the Australian people. Accordingly many believe the economic and social decline experienced by many Australians is set to continue.
Confirming this, we see a lethargic economy and a growing sense of unease many Australians feel about their prospects. This reflects a deteriorating social mood. It won’t be long before this translates into a declining economy. Indeed, capital flows into and out of Australia indicate the tide is definitely running out and despite the best attempts of the RBA, we may soon see the downside of the business cycle in full flight. A good barometer highlighting this is the Australian stock market which remains stalled around the 5300 level ( ASX/SP 200) whilst US stock markets hover relatively near their all time highs.