#1 THE U.S. ENERGY BOOM
U.S. Energy Information Administration
Commodities garnered substantial attention this year after natural gas and coal prices collapsed amid an unusually warm winter. But forecasts for future energy generation in the U.S. remain surprisingly robust.
The U.S. Energy Information Administration projects that the country could halve its reliance on total energy imports under the best scenarios, and under higher consumption scenarios could lower imports from 24 percent today to 17 percent in 2035.
FOCUS: Natural gas is one of the highest growth areas
U.S. Energy Information Administration
The EIA estimates that most of the gains will come from increases in natural gas and renewable energy production as a portion of total energy generation. In fact, the EIA sees the U.S. becoming a net liquefied natural gas exporter in 2016 and an overall net exporter of natural gas in 2012.
Liquid reliance, which depends heavily on auto use and miles driven, is also seen declining as consumption needs by U.S. consumers remain below pre-2008 crisis levels.
FOCUS: The green movement has become unstable
U.S. Energy Information Administration
On the green front, state rules impacting electricity generation and federal laws on ethanol blending will have the greatest impact on the country's shift to renewable resources.
However, the recent investment by the federal government in a number of green technologies has fallen under scrutiny; the failure at Solyndra and continued difficulty at First Solar have put the survivability of the U.S. solar industry into question.
First Solar is now betting its future on the move by American and foreign utilities to large scale solar generation prompted by state regulations. By 2016 First Solar is targeting some 3 gigawatts in sales through these solar fields.
#2 THE END OF THE BIG BOX RETAILER
Business Insider Intelligence
Retailers are finally emerging from the doldrums of the 2008 recession, which radically changed the makeup of malls and big box stores. Luxury department stores like Saks, electronics retailers like Best Buy, and mass specialty chains like Abercrombie and Fitch are shuttering stores as consumers begin to shift to new channels as they open up their purse strings again.
But this time, some of those channels are not controlled by the retailer, including the shift to flash sale sites and online distributors.
FOCUS: The move online
Business Insider Intelligence
Retailers have mostly embraced the digital shift, rolling out online and mobile sales sites. Consumer pickup has been noticeable, with Urban Outfitters, American Eagle Outfitters, and J.Crew all reporting more than 10 percent of sales driven through direct-to-consumer channels.
"With managements typically commenting that company websites achieve the dual benefit of contributing to sales and also promoting and fostering brand equity, we expect this channel to represent one of the greatest avenues for growth and management focus going forward," Bank of America's Brian Tunick says.
FOCUS: Flash sales!
Business Insider Intelligence
This shift is exacerbating issues with physical storefronts—where retailers employ the majority of their workforce. Many stores, like the Gap, are retooling with smaller storefronts to bolster margins, while others, like Best Buy, are conceding defeat and shifting product mix.
While Circuit City and Borders fell to online behemoth Amazon, clothiers generally went unscathed. The flash sale is the first real threat to luxury specialty shops and department stores like Macy's, Bloomingdales brand, Neiman Marcus, Saks, and Nordstrom.
Business Insider Intelligence projects flash sales could hit $6 billion by 2015, fueled by HauteLook, Rue La La, and Gilt Groupe.
#3 A LIMITED FOOD SUPPLY
FAO - United Nations
Just last year we saw the geopolitical and market impact of food scarcity and rising prices. There were many causes of the "Arab Spring" but one catalyst was a ramp up in food prices beginning in 2009, part of larger trend interrupted only by 2008's global recession. The U.N.'s FAO Food Price Index reached its highest ever level in 2011.
The Middle East and North Africa import more than 50 percent of their food, leaving them particularly sensitive to food price shocks. Global trends in food supply and demand mean that food scarcity will be a greater problem in the future.
FOCUS: Blame it on emerging markets
Nomura
A principal driver of food scarcity will be global population growth, particularly in the developing world. The global population has doubled since 1970, and is projected to reach 9 billion.
As populations in developing nations are lifted out of poverty they consume a higher calorie diet with more meat and dairy. A 10 percent rise in a Chinese family's income is associated with an 11.5 percent increase in spending on meat. It takes 3 kilograms of grain and 16,000 liters of water to produce just 1 kilogram of meat.
Water scarcity will be increasingly problematic as agriculture accounts for 70 percent of water consumption worldwide. Demand pressures in China and India have led to increasing over-pumping of aquifers, significantly reducing their water tables. Soil depletion from unsustainable agricultural practices is estimated to have reduced productivity in one third of the world's croplands. Finally, it is estimated that 85 percent of fish stocks are under pressure or depleted.
FOCUS: Prices are going higher and higher
Nomura
One thing investors have been looking towards is the price of oil, which is closely correlated with food prices. That results from the energy and fertilizer costs associated with modern agriculture, and increasing demand for biofuels as oil prices rise.
On the supply side, increasing global temperatures have the potential to create drought and reduce crop yields. One example: the 2010 heat wave in Russia reduced crop yields by 40 percent, causing a global price spike.
#4 THE GROWTH OF BIG DATA
BAML
Big Data has arrived. The McKinsey Global Institute, in a report on the subject authored in 2011, wrote, “Data have swept into every industry and business function and are now an important factor of production, alongside labor and capital.” The New York Times recently heralded our time as “the Age of Big Data.” Clearly, it has become all the buzz.
So what is Big Data, exactly? Danah Boyd and Kate Crawford, researchers at the University of New South Wales who wrote the popular essay entitled “Six Provocations for Big Data,” describe it as “information from Twitter, Google, Verizon, 23andMe, Facebook, Wikipedia, and every space where large groups of people leave digital traces and deposit data.” IBM has noted that at present, the amount of such data produced every two days on the web is more than all of the data available prior to 2004.
FOCUS: A $16.9 billion industry by 2015
BAML
To address all of this emergent size and complexity in modern data sets, new technologies are rising to the occasion to manage and analyze this data for various uses. Market intelligence firm IDC sees Big Data as a $16.9bn market in 2015—that’s up from $3.2 billion in 2010 (which represents a 40 percent compounded annual growth rate—a near doubling in market size every two years).
Relational database management is a key component of the Big Data market. Bank of America estimates it to be 27 percent of the total market, by far the largest share of any single sub-sector. Who are the key players? Many easily accessible publicly traded names like Oracle, IBM, and Microsoft lead the way.
The explosive growth in data usage and the outstanding demand for new technologies to address this growth make this industry an investment one is wise not to ignore in the coming decade.
#5 THE CENTRAL BANK HANGOVER
FT/Reuters
Central banks have flooded markets with liquidity through QE 1, QE 2, QE 3, and LTRO. What's going to happen when they stop?
Given the current state of the recovery in the States, another round of quantitative easing is uncertain, but if we believe the Fed's forward guidance, we can't expect tightening until 2014. Europe's recovery may take even longer, and if Greece exits, further recapitalization of banks may be required. The rampant inflation that some expected after large balance sheet expansion hasn't occurred, a consequence of a lower money multiplier and the "liquidity trap." But how central banks exit will be very important.
FOCUS: They're out of bullets
Federal Reserve
One consequence of continued low interest rates and easing is an inability to respond to further shocks. The second round of quantitative easing was less effective than the first, and less effective in general due to intense demand for liquidity and treasury bonds. It is unlikely there will be much room for rates to move downward for years to come.
This, coupled with debt concerns and government unwillingness to act, suggests that both monetary and fiscal response to future crises will be constrained. The other consequence is inflation. Expectations for inflation are still very low, but any rise would constrain central banks, especially those like the Bank of England with a single mandate to maintain price stability.
FOCUS: An intense demand for safe assets
FRED
These policies, coupled with increased regulation, have had a profound effect on the financial system. Central Banks have traditionally expanded the monetary supply by making open market purchases of government bonds. Intense demand for liquidity and safe assets has pushed rates to historic lows, but they are increasingly scarce, and it is more difficult for banks to comply with new risk requirements.
This chart of the rate on 10-year treasury bonds reveals how intense the demand for "safe assets" is. Those requirements may constrain growth in the future if banks must divert so many resources to safe assets. If central banks start to end their provision of liquidity, it is unclear how banks will effectively respond to shocks.
#6 UNMANNED WAR
jamesdale10 on flickr
“On the battlefield of the future, enemy forces will be located, tracked, and targeted almost instantaneously through the use of data-links, computer-assisted intelligence evaluation, and automated fire control. With first-round kill probabilities approaching certainty, and with surveillance devices that can continuously track the enemy, the need for large forces to fix the opposition physically will be less important.”
That was U.S. Army General William C. Westmoreland in 1969, and his words turned out to be quite prophetic. Unfortunately, in 2012, the world is still embroiled in several major armed conflicts. Nations like the U.S. are increasingly turning to drones to carry out surveillance and strike operations in the Middle East—the U.S. military now possesses more than 7,000 units, and you can count on other militaries following suit to adapt to the ever-changing theatre of war.
FOCUS: Drone use could increase by 90%
Department of Defense
How large is the U.S. military’s commitment to this new form of combat? Digging down into the defense budget produces telling results. The chart below originally appeared in the Department of Defense’s long-term Aircraft Procurement Plan that was submitted with the FY2012 budget. It shows a 90 percent increase in investments in unmanned aircraft over the next decade.
The MQ-9 Reaper, with a sticker price of $30.3 million per aircraft, represents a sizable portion of the increase. The Reaper is manufactured by General Atomics, a private defense contractor in California. The RQ-4 Global Hawk, manufactured by the publicly traded defense contractor Northrop Grumman, will be a significant addition to the U.S. arsenal as well.
This sort of investment should leave no question with regard to where the future of defense spending is headed, and the companies that can adapt and innovate in the unmanned, electronic warfare space will be poised to win big when other countries upgrade their forces in size as well.
#7 CHINA AGES
Harvard Initiative For Global Health
Bolstered by strong demographic shifts, a young population, and little regulation, China was able to grow its manufacturing base into a powerhouse.
But that young population is now rapidly aging—by 2030 the median age is expected to increase to 42.5, up from 34.5 today—and is forecast to peak in 2025, nearing 1.4 billion. This will lead to a steadily declining workforce beginning in 2015. Starting that year, China will lose some 36 million people from its workforce over the next decade and a half.
FOCUS: Blame it on low fertility rates
Deloitte Consulting
Compounding issues include China’s controversial one-child policy and low female fertility rate of 1.56—below the 2.0 replacement rate necessary to keep a country steady. All together, this will put a massive strain on the already burdened social security system, particularly as the 4-2-1 support network is challenged (four grandparents, two parents, one child).
The insurance and healthcare industries are set for substantial growth as chronic conditions become more preval
FOCUS: This is great for the healthcare industry
Deloitte Consulting
The $300 billion healthcare industry in China could accelerate by more than 20 percent per year this decade alone. The pharmaceutical industry is just one of the healthcare sub-sectors poised for growth.
In 2001, China represented the 10th largest pharma market. By 2020 it is expected to be the second largest. And U.S. and European companies will not be shut out of this rapid ascent. A snapshot of sales in 2008 showed Siemens, Philips, GE, and Toshiba all winning orders for medical equipment.
#8 FOR-PROFIT EDUCATION
Center for College Affordability and Productivity
Between 1986 and 2008, enrollment in for-profit educational institutions swelled from little more than 300,000 to almost 1.8 million. Market share of for-profits in the higher education industry over the same time period rose from 2.4 percent to 9.2 percent.
Now the industry is seeing volatile times. Recent allegations of fraud perpetrated by individuals taking advantage of federal aid money through the for-profit education system have raised worries about somewhat overstated enrollment numbers. As higher education undergoes a sea change, however, for-profit education is poised to continue gaining share in the market.
FOCUS: Blame it on the jobs crisis
Center for College Affordability and Productivity
When people can't find work, they head back to school.
The burst of the housing bubble and the subsequent recession that led to the financial crisis of 2008 had a profound and lasting impact on unemployment in the United States. The unemployment rate bottomed out in May 2007 at 4.4 percent. It rose as high as 10 percent in October 2009 before beginning its descent to 8.1 percent, where the official number stands today.
However, in the past two years, the labor participation rate has plummeted, which somewhat understates the headline figure. A recent estimate from an economist at National Bank put the number at 3.4 million people who could potentially re-enter the labor force when the labor market improves.
FOCUS: Blame it on the new job market
Center for College Affordability and Productivity
Sustained high unemployment rate is not merely cyclical, but structural. Many who were employed in various capacities before the crisis, like those in jobs related to the housing boom, will not be able to find work in their former professions going forward.
For-profit education is poised to address this issue. A report by the Center for College Affordability and Productivity pointed out that the majority of students over the age of 25 usually utilize for-profit educational institutions as opposed to private non-profit or public institutions (see graph). As people go back to school and re-educate themselves in order to re-join the labor force in new capacities, the for-profit education sector will benefit in a big way.
#9 THE MOBILE REVOLUTION
Business Insider Intelligence
Mobile phones have become the most ubiquitous personal-computing technology in the world —surpassing the personal computer—as cellular devices have penetrated previously unreachable landline geographies.
And the "dumbphone conversion cycle"--the replacement of regular cell phones with smartphones--is only about one-fifth of the way done.
Internet-connected smartphones are rapidly becoming the most important computing platform. This is disrupting the traditional PC and technology industries and creating a huge new opportunity for global entrepreneurs.
太多... 挑重點
FOCUS: Watch out for China
FT/Unctad
China has been aggressive with commodities investments, from copper mines in Zambia, to oil in Sudan, and gold and uranium in South Africa. It has also been actively building infrastructure required to fully exploit resources. This could signal a growing geopolitical trend of countries attempting to secure commodity supplies. We are seeing this with agricultural land as well, as China and Gulf States have made significant land purchases in Africa and elsewhere to secure food supplies.
Watch out especially for rare earth metals. China controls 95 percent of the world's supply which are used primarily to manufacture electronics. Other sources are beginning to be exploited, but China will still maintain an outsized share. They maintain strict export quotas, which have been challenged at the World Trade Organization. China has also been accused of using its near-monopoly to pressure other governments, notably with Japan in 2010.
Increasing competition for commodities could be a source of conflict, or a driver of more sustainable energy policy. China is betting on both outcomes, investing heavily in both renewable technology and commodity projects. Given how much oil prices alone affect economies and equities, this will be an area of long term concern.
FOCUS: States love investing in energy
Deutsche Bank
Typically the sectors in which natural monopolies are prevalent are ones with many state-owned enterprises in the countries that engage in public ownership and governance, like utilities and telecoms. Oil is also a major state-controlled industry in many emerging economies (see graph). Keep these things in mind when investing in emerging economies and it could help you avoid a costly stumble.
#12 THE AFRICAN FRONTIER
Deutsche Bank
Frontier and emerging markets are some of the few bright spots of growth in the world, and there is a growing consensus that the BRICs will be surpassed by a new region: sub-Saharan Africa.
The eight countries that make up the specific area expected to grow at a breakneck pace include Angola, Ghana, Kenya, Nigeria, Senegal, Tanzania, Uganda, and Zambia.
The eight nations represent 45 percent of sub-Saharan Africa and 61 percent of its economic output. Combined, their GDP is roughly equivalent to that of Poland. Over the last ten years, real-GDP growth has increased from 3.0 to 6.6 percent, rivaling BRIC expansion at 6.6 percent, and topping the 4.9 percent growth seen in emerging Asia.
#13 ROBOTICS
Daiwa Capital
Robotics and automation will be in greater demand over the next several decades. As populations age, standards of living and wages rise, and technology improves, demand will dramatically increase. The benefits are obvious; robots can work 24 hours a day, seven days a week, are incredibly consistent, and can take over dangerous work.
The sort of robots that already exist are industrial robots. The potential growth in this sector is enormous. They allow manufacturers to have high productivity factories with much lower wage and other overhead. This could potentially mean the end of trends that have seen companies move overseas for cheap labor.
FOCUS: Sales are surging
Daiwa Capital
Sales were 118,337 in 2010, and around 1 million total units were in operation. Those numbers are expected to rise to 166,700 and 1.3 million in 2014. So far the automobile and electronics industries have been the principle buyers, accounting for 60 percent of demand. There is significant room for growth in the chemical, machinery, and food and beverage sectors.
Looking to the future, service robots will become increasingly common. Consumer, cleaning, and surgical robots already exist. These range from relatively simple consumer robots like the Roomba to increasingly sophisticated tools for heart surgeons. Scientists have also begun to develop robots that can improve the lives of those who are paralyzed or have lost limbs.
FOCUS: Industrial demand is high
Daiwa Capital
Demand is expected to double to 4 million by 2014. The abilities and market availability of most of these robots is quite limited, but as they improve they will become more common. Military robots—primarily drones—already see significant use by the United States. As countries look to reduce military cost, the use of robotics is an appealing option.
It is currently rare to encounter robots in day-to-day life, that will change over the next 20 years. The industry represents a possibility of a cheaper, more energy efficient, and safer work force. There's a balance to be struck by those attempting to enter or profit from the industry.
There are still high entry and technology barriers, and those who adopt inferior technology too early will end up having to replace it. When it is not just industry giants that produce and use this technology, but small firms and consumers, the global economy will transform.
#16 A U.S. MANUFACTURING RENAISSANCE
BofA via Financial Times
For years as China rose and U.S. manufacturing declined, people said those jobs were gone for good. The U.S. had a competitive disadvantage; developing nations had lower wages and looser regulation. It has surprised many that one of the most positive forces during the recovery has been a resurgence in U.S. manufacturing—growing payrolls, increased exports, and improving productivity.
FOCUS: 489,000 new manufacturing jobs already
BofA via Financial Times
U.S. manufacturers have added some 489,000 jobs since 2010. Gains are coming from improved competitiveness, which could bring as many as two to three million jobs back to the United States, touted by President Obama as "reshoring." U.S. manufacturing unit labor costs declined 10.8 percent between 2002 and 2010, an decrease matched only by Taiwan.
Auto manufacturing has been an area of strength, accounting for 1.12 percent of GDP growth last quarter, about half of total growth. Other strong areas in U.S. manufacturing are computer and electronic products, food and beverages, and chemicals.
#19 GENOMICS
National Human Genome Research Institute
The first Human Genome Project cost $3.8 billion and took 15 years. It's one of the best investments the U.S. government has ever made. The project and the industries it has spawned have had an estimated $796 billion worth of economic impact. Sequencing a human genome will soon cost $1,000 dollars—unthinkable just a few years ago.
The principal impact of genetics is in the pharmaceutical and healthcare industries. Beyond sequencing, genetic engineering has allowed for commercial production of insulin in modified bacteria and other bio-pharmaceuticals. One of the real frontiers will be personalized medicine, targeting the right treatments at the right people.
Genetic differences make certain drugs more effective for certain people. Knowing what diseases people are susceptible to will allow doctors to practice preventative medicine and treat things earlier. The implications for development are myriad. Finding genetic causes of diseases is the first step towards finding targets to attack a disease, and genetically modified animal models allow for study of diseases and treatments.
FOCUS: China could be a huge market
Dunne & Co.
Large auto manufacturers like GM, BMW, and Audi are also working on semi and fully autonomous vehicles as well. Alan Taub, the R&D head at GM who retired last month, expects that driverless cars will be available for purchase en masse by the end of this decade.
What will the market for automated vehicles be like? A recent J.D. Power and Associates survey asked respondents whether this is something they would want to buy. The results; 37 percent said they were interested. Those are the first adopters: one can imagine how this number might rise in the next 10 years, especially when the neighbors pull up in a nice, new, driverless car. And given the size of the market for vehicles in the U.S. as well as in developing nations like China, automated vehicles seem like a pretty good bet.
Read more: http://www.businessinsider.com/the-global-20-2012-5#focus-china-could-be-a-huge-market-53#ixzz1vzl0YwJf
Read more: http://www.businessinsider.com/the-global-20-2012-5#19-genomics-49#ixzz1vzktg3zz
Read more: http://www.businessinsider.com/the-global-20-2012-5#focus-489000-new-manufacturing-jobs-already-42#ixzz1vzkhpXe2
Read more: http://www.businessinsider.com/the-global-20-2012-5#16-a-us-manufacturing-renaissance-41#ixzz1vzkcBley
Read more: http://www.businessinsider.com/the-global-20-2012-5#focus-industrial-demand-is-high-35#ixzz1vzkJsq9X
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