Technological innovation transformed a variety of business operations in 2019, and there's no sign of that changing in 2020. As disruptive tech brings about major shifts for auto, retail and manufacturing businesses, several sectors could be bracing for impact.
In the year ahead, investors can expect retail to remain under pressure, said Kevin Bliss, IMTC's in-house investment expert. Bloomberg notes that with the democratization of e-commerce comes hyper-competitive pricing as the industry succumbs to the “Amazon effect.” The efforts to attract customers result in traditionally low pricing being pushed even further down.
A reckoning could also be in store for auto manufacturers. Bliss noted that as companies like Tesla deepen their foothold, Ford, GM and Chrysler will have to grapple with debt burdens, meeting capacity and preparing for the inevitable day when hybrid vehicles become the standard. Traditional auto manufacturers could end up shuttering their plants and scaling back production.
Beyond overhauling these types of business operations, innovative technologies will also continue to transform the way investors work in 2020. Among major trends to watch for in the year ahead, Greenwich Associates forecasts that “meaningful automation” will take the fixed income markets by storm. In fact, the firm reported that one indicator—electronic trading levels—spiked significantly YoY: last year, electronic trades in the US corporate market increased by $2bn per day compared to 2018.
Spending related to investment technology, and "regtech" specifically, is also slated to skyrocket. Greenwich estimates that spending on compliance technology will peak next year despite many firms slashing budgets. Greenwich largely attributes this to more stringent regulations and increased reputational risks associated with public scrutiny.
Still, there’s a tradeoff here, as Greenwich indicates that “firms may be pulling back the reins on compliance budgets, but many are doing so by taking a more proactive approach toward technology investment in lieu of personnel expenditures.”
One Bloomberg Op-Ed made the case that “other peoples’ money” was the real tech innovation of the decade—after all, without it, disruptive tech companies can’t disrupt. Innovation will likely continue resulting in the overhaul of both broad industry operations and the intricacies of investor workflows alike. As investors free up cash flow by utilizing "InvestTech," they can redeploy funds back into the disruptive technologies that will enable market-wide transformations in 2020 and beyond.
We saw the continuation of higher yields this week as inflation concerns, positive vaccine news, and a faster recovery remain at the forefront of fixed income markets.
The flash move for Treasuries this week shows the jitters of fixed income investors, worried of the impact of stimulus and potential inflation.