On Tap for 2017: Tech, the Fed, a Lot of Trump

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I was not sure whether I would do one of these lists this year after reading so many outlandish calls (positive and negative) made by the gurus, pundits and swamis over the years. However, I find there is value to these lists only if one is able to sift through the outlandish calls made to garner attention and/or face time on the boob tube. 

There are many lists that have been excellent every year but those are the ones that are clearly, concisely written without the accompanying shouting designed to predict doom and gloom and/or extreme euphoric predictions. So, without further ado, let's jump right in. Please note that I will be sticking to my overall theme from my 2016 top 12 list ... pretty much. 

  1. Yet again there will be no getting away from the price we pay for the rapid pace of technology we undergo on an almost daily basis. Not only will we see even higher-profile cyberattacks, but I predict this year will also bring a few high-profile drone-related accidents/incidents, which will raise a hue and cry in the public eye but will die down equally quickly as, except for the oddballs, most consumers will realize drone delivery will ultimately lower costs going forward. 
  1. This year I am taking the other end of the spectrum regarding U.S. GDP growth and I think under Donald Trump's fiscal and business initiatives, GDP will not come in under 2% in any of the four quarters and will hit an annualized rate of 2.5% going into the second half of 2017 as the initiatives take hold and make their way through the financial system. 
  1. The Fed dot plot released last month showed that the Fed is thinking about three rate hikes in 2017. The Fed will be able to raise rates three times, maybe even a fourth time, if the fiscal spending plans and corporate and income tax rates are lowered by Trump, which could lead to higher-than-expected inflation in 2017. 
  1. For 2017, I think both Indian and Chinese GDP growth rates will hover around 7% and the two countries will be in a fight to the finish to win the title of the world's fastest-growing economy (size adjusted) for 2017. Both countries are dealing with specific issues that could trip things up. India is grappling with the effects of demonetization and the Chinese are struggling with a potential housing crisis and the relative unknown of what Trump does about current trade relations with the country. 
  1. Trump backs off all his radical and some say rambling tough trade talk. Not only does he not end tearing up NAFTA but just makes modifications that will be more palatable to both sides of that agreement. As far as all that mad-dogging about the Chinese, both sides come to their senses and make concessions and all is well on that front. I have said it from the day Trump won: He said everything his voters wanted to hear and that will be amply borne out as we move through 2017. 
  1. With stronger economic growth here at home, things moving fairly well in global trade (see above) and despite a rising rate environment (No. 3 above), our indices again finish the year fairly well given the doom-and-gloom predictions. This time the Nasdaq does lead the three major indices with a gain of 12%, followed by the S&P at 11% and the Dow with 10%. That is not to say we will not have any shocks to the system. The shocks that we could have will more than likely come from across the pond, but as in 2016, the noise surrounding events like Brexit will be more Wall Street/perma-bear-created events designed to instill panic among naive and uninitiated investors. Total shame, but that's the game created by Wall Street and that's the playing field we have chosen to play on, so to speak. In addition, given the president-elect's penchant for making outrageous statements via his tweets and in front of the press, I expect volatility in 2017 in the markets to be even greater than in 2016. It will truly be a year for picking stocks more than just throwing darts. Actually, it's been that way for at least a decade now. 
  1. 2017 will turn out to be the year of technology stocks, especially if Trump comes through on his promise to allow for cheap repatriation of money held overseas by U.S. companies, the majority of which is held by the technology giants. Trump has also promised corporate tax cuts, which will be another tailwind in favor of equities in general and techland in particular. 
  1. Cyberattacks continue unabated with another year of very high-profile hacks globally. This year, HACK finishes as one of the best-performing ETFs, bar none. 
  1. FANG -- Facebook (FB) , Amazon (AMZN) , Netflix (NFLX) and Google (GOOGL) -- all report stellar earnings for the December quarter and see their stocks pop to all-time highs (yes, all four) but then spend the next quarter or so range-bound before finishing the year at new all-time highs. This year techland breaks the four years in a row of moribund year-end performance. (Amazon is part of TheStreet's Growth Seeker portfolio.) 
  1. Indian markets end at all-time highs over 30,000 with a 2017 return in the 13% range for the calendar year. (India is on a fiscal year ending in March 31.) 
  1. Apple (AAPL) does not reach trillion-dollar market capitalization but has a good year nonetheless with a return of around 20% for 2017 as the new iPhone 8 (or whatever they choose to call it) breaks sales records in the back half of the year. Finally, CEO Tim Cook reveals a new product that is somewhat revolutionary and the company sees the services side of the business pick up the pace faster than the current growth rate. In addition, the repatriation tax law change will add over $200 billion to Apple's coffers, which will take away a major dark-side argument about the value (or lack thereof) of the money held overseas. (Facebook, Apple and Google are part of TheStreet's Action Alerts PLUS portfolio.) 
  1. Trump will continue to roil global markets now and then with his tweets. Tweet-watching will become the new buzzword in 2017.
  2. The Federal Reserve continues to see its influence wane as Trump versus the Fed becomes a bigger event than actual Fed watching. 
  1. Finally, my Dallas Cowboys, which find themselves atop the NFL elite, end up winning Super Bowl LI and/or Super Bowl LII to begin, at least, a half-decade (dare I say decade? Not with free agency-led parity in the NFL) or so of dominance. 

May all of your trades in 2017 and beyond always be in your favor. 

Finally, wishing Happy New Year to all the subscribers/readers/editors, management and staff here at TheStreet/Jim C, Poppa Kass, Rev and all my colleagues on the site all the success in the world in 2017. 

Original Link
http://realmoney.thestreet.com/articles/01/04/2017/tap-2017-tech-fed-lot-trump