this is "nightly business good evening, everyone, and happy new year. i'm sue herera. tyler mathisen is off tonight. how many of you began 2018 with a resolution? did you resolve to get fit? spend more time with loved ones? we can't help you with every promise. but we can help you learn more about your money. we'll work to get financially fit for 2018. we'll begin with the stock market, coming off a record year, and the economy, which has proved to be on solid footing. the question investors want to know is, what might happen pis.

but we begin with steve liesman. >> reporter: here's what could happen. first, growth in the u.s. could average 2 1/2 to maybe as much as 3% as the u.s. gets a lift from overseas gross, better domestic demand, and stimulus bill. the question is whether those gains can last or if they're just one-time events. second, the u.s. budget deficit is likely to r and we'll need better growth to pay the tax cut bill. the ten-year yield nears 3%. finally, the fed is likely to hike interest rates three times as new chairman jerome powell takes the he steers a course along the lines of predecessor janet yellen. of the fed could consider a fourth hike if the economy really takes off. i'm steve liesman for "nightly busi" > ipos and women in

leadership. three predictions for 2018. first, get ready for a much stronger ipo market. 2016 was a terrible year. 2017 was better. 2018 will be much better. big names will likely go public including sandwich shop pret a manger. finally there's a shot that saudi oil gian aramco may list in the u.s. as well. 2018 will see one or more major banks create a platform to use digital currencies to bring small companies to market. the bank would own the platform and provide advisory services. yes, there's oversight issues, but regulators are looking to work with the industry to put more oversight into this market. finally, expect investors to wake up to the fact that there's not enough women in leadership positions in corporate america. there's only 26 women ceos in the s&p 500, about 5% of the total. that number will double to over 50 by the end of 2018.

for "nightly business rep bus a stocexchange. here is sarah hunt, portfolio manager at alpine funds. good to see you, sarah, welcome back. >> thank you. >> first on your list is the trajectory of interest rates. the fed is expected to raise rates. what effect do you think it will have on the market? >> it depends on very much on what's going on with th economy. the fed will still be somewhat data-dependent if the fed things the economy is doing well enough to raise rates, i think you will have seen some growth and expect to have more growth. i think that that will actually be an okay thing for the stock market. the problem would be if they decide to raise rates but you don't se a good amount of data on the growth. i think that's one of the reasons that having a new fed chairman means that if it looks like we don' the growth, maybe we won't raise them so much. if we do see that growth, raising them will be okay. i think that's going to be the big question for equities across the globe, which is what our

central bank is doing, and what's going on in europe and japan, and are you getting enough growth to offset any taking away of monetary policy. >> what about the global stock markets? this h been the first couple of years in a long time that we've seen growth in terms of equity performance, anyway, not just in the u.s. but also in europe. >> you're seeing a better global economy. so the u.s. is the first out of the great recession. and then you have the european economies lagging behind. their monetary policy caught up. you're now seeing global growth, which is something that we haven't seen in the last several years. you've seen pockets of it where the u.s. was growing albeit somewhat slowly. the u.s. growth is a little bit better. europe has gone from being negative to flat to actually positive. asia economies are doing pretty well. with that backdrop of very low interest rates, and negative interest rates across a number of countries outside the u.s., that's where you're seeing such good response to global equities. >> what about the tax reform proposals that are going

through, and we've already seen a number o >> i think that's one of those questions where we have to see now how it takes effect, because i think that those announcements actually were quite positive today. i think that that's one of those places where you see that if companies are actuall going to act on that, it's going to be positive for the economics going forward. if the don't, then it may be that we've had a great buildup to the tax reform but in effect, it's not as helpful as people were expecting it to be. so i think if you continue to see companies make announcements that are positive, that will push people's general economic feelings, which sometimes the psychology of it is as important as anything else. you can see high consumer confidence, you wt to see that continue. w pitfalls might be out there? obviously we don't until they're up us, but is there anything you're watching for? >> well, i think the big question is, as global central banks ease off on monetary accommodation, can fiscal changes like the tax reform in

the u.s. and can global growth make up for the fact that monetary policy is not going to be as accommodative. and for a long time, we've had very low interest rates, so people have been pushed out of fixed income and into equities. as interest rates start to rise, do people make that tradeoff? i think the concern is what happens as we reverse some very unusual monetary policy over the last several years and can we do that without triggering either corrections and/or just lack of growth in equities. and i think that's the biggest question for the markets going forward over the next year or tw here's to a good 2018. sarah, thank you so much for joining us, sarah hunt with alpine funds. as we saw this past year, what happens in washington affects wall street. so what's next on the d.c. agenda? eamon javers is in our nation's capital. >> reporter: first, we could see a much different group of white house aides advising the president in 2018. insiders are watching for any signs of departure from national

economic director gary cohn, who publicly split with the president earli this year. also closely watched is marc short. keep an eye on the president's son-in-law jared kushner and daughter ivanka trump. some believe the power couple may want to return to new york. second, the special counsel's investig will continue to haunt the trump administration in 2018. already robert mueller has obtained guilty pleas and cooperation from former national security adviser mike flynn and foreign policy adviser george papadopoulos. no o outside the special counsel's office knows exactly where he's going next. three possibilities. more indictment, an impeachment reveal to the house of repres or a full exoneration of th president and his team. and third, the white house will try to capture legislative moment after the tax debate. president trum say one focus will be on welfare reform. he argues some unemployed people make more in welfare benefits than workers struggling with two

jobs. that suggests he would like to reduce benefits. but a senior administration offi told me the plan involves getting people back in the workforce and increase job training, suggesting an increase in certain benefits. either way, the white house will try to get legislation through congress early before midterm election year politics makes progress impossible. for "nightly business r i'm eamon javers at the white house. technology stocks were hot last year. bank stocks also rallied in bits and spurts. given that these two groups make up the biggest sectors of the market, what happens in those industries matters to your money. josh lipton examines the tech sector. we begin with wilfred frost on financials. >> reporter: a big tailwind for banks in 2018 and a few risks too. first, reregulation. investors are excited about deregulation actuay arriving now that key positions are filled including jerome powell as fed cha. the key things to watch for are

changes to capital returns, changes helping trading revenues, and overall reduction in regulatory expenses. second, rates. expect interest rate hikes to continue to help. much of the recent focus has been on flattening of the yield curve. there remains an immediate positive earnings impact to every fed funds rate hike that we s. f risk, keep an eye at the rate at which banks compete and pay depositors more as rates go up. also credit policy. while still low by historical standards, it's shown signs of rising recently, especially in the subprimeou reform. bank share prices may have already risen sharply on hopes of tax reform given that they pay a high disproportionate rate of tax. but expect the benefits to flow through to etfs in 2018. for "nightly business r

tech is the best performing sector in the s&p 500 this year. with new products and increased competition expecte in 2018, here are three things to watch. first, retailers rush to microsoft and google cloud. as retailers decide to move to cloud computing, some are writing big checks to microsoft and google and avoiding amazon which makes sense. why spend millions of dollars to your most serious rival so kroger, walmart, and target have all decided that aws won't be the vendor handling their massive workloads. that trend is going to accelerate in 2018 with microsoft and google sweetening the deals they offer retailers. second, apple reaches a $1 trillion market cap. since apple's initial public offering in december 1980, its market value has surged more than 63,000%. this year alone it skyrocketed

up more than 45% to $900 million. the stock needs to touch $194.77 for apple's market cap to hit that $1 trillion mark. it will get there in 2018, as tim cook's company benefits from a wave of global upgrades to the iphone 8 line and iphone x. third, fewer private tech companies take that public market plunge. 2 tech ipos, five more have than in 2016. but get ready for a drop next year. a few unicorns are rumored to be considering a public debut such as spotify and dropbox. but they appear to be the exceptions. startups are still right sizing after years of raising money in what many now consider unjustifiably hig valuations. some well-known companies that did but public blue apron are trading well below their ipo prices. for "nightly business r so what other trends can we

expect to see play out in the tech sector next year? joining us to discuss that and more is a.b. mendez, senior research analyst at frost invest advisers. welcome back and happy new year. >> good to be here, happy new year to you too, sue. >> do you think tech will continue that performance in 2018 or is it time for a little cooling off? >> it's very interesting, tech had a great run in 2017, 2016 as well. but as strong as tech was in 2017, as we look at our favorite valuation metrics, price to earnings, price to cash flow, tech really has -- the cash flows have grown so rapidly, the companies have delivered so much value, that a lot of that run has been justified and on a valuation basis they haven't really becom meaningfully more expensive. if anything, some of them have become less expensive relative to the broader market.

2018, one of the things i'vees been following, and apparently you agree, is the rise of the personal assistants, consumer technology versus business technology. >> absolutely. three of the key things we're focused on are internet of things, and there's a lot in there, machine learning, artificial intelligence, and consumer devices. it's fascinating, the rate of change we're witnessing in the last decade. the home assistance, it's interesting, on the one hand, that apple is kind of missing out. their home pod was not ready for this holiday season. amazon is doing a tremendous job with the echo and google home is doing very well. these are kind of in our y life, examples of how artificial intelligence and machine learning can make things easier and more efficient, perform simple tasks for us. but at the same time, for apple, i would also say that while they're missing the home assistance holiday season, the iphone super cycle is upon us,

and numerous large companies with this tax cut are saying we're going to give every employee an extra $1,000 bonus, that doesn't hurt while you're waiting for the x's to make delivery. >> what about e-commerce, where do you see pockets of opportunity or growth in that particular sector? >> well, it's interesting, the sort of combination of amazon and whole foods. i think this has been viewed negatively for a lot of consumer packaged goods companies, to the extent there's more price deflation, the competition between walmart and amazon. to answer your question, i would say the subscribe and save feature from amazon, walmart has an analogous feature, subscribing to things that we tend to restock on a regular basis. it saves time, it engenders more consumer loyalty from those e-commerce platforms. for leading indicators, i always look to china, because consumers in china tend to purchase goods

across every category online at a higher rate than consumers in the u.s. they kind of skipped desktop and went straight to mobile. companies like alibaba continue to innovate very rapidly, in some cases are adding new features that you'll see amazon or ebay or the u.s. companies follow, where is in the past they were always copying the u.s. companies. now there's more of an ply there. >> thanks so much. still ahead, from real estate to retail. what 2018 may have in store for these cr

2017 was a rough year for retail, with the number of retail bankruptcies topping 2008 highs. thousand of store closures. and sales the norm for many. with the holiday season showing signs of live, 2018 may not be worse, but it will be different. mall m&a. more stores will close and the weakest malls will shutter. no one thinks physical retail will entirely disappear, but in the age of amazon, only the strongest will survive, which means malls may find strength through consolidation. amazon buys another retailer. when amazon bought whole foods, the price of its stock went up enough in the first day to cover the cost of the deal. and while the full extent of the takeover hasn't been seen yet, now that the online behemoth sees the value in physical retail, it could buy another well-known name, possibly one

that targets consumers. kiley cosmetics gets bought. the youngest manner of the kardashian/jen family has sales and a following that cosmetics companies can only dream for "nightly business r" m courtney reagan. and from retail to health care. this is a sector that touches all of our lives from the doctors we see to the medicines we take. and the tremendous change in that industry shows no sign of letting up. meg terrell on the new innovations being made by pharma and biotech companies. but first, bertha coombs. >> reporter: i'm bertha coombs. 2018 will be another year of change and uncertainty in health care. here's what to watch. one, m&a, as in mergers and antitrust scrutiny, will be front and center. regulators flocked to the big

insurance mergers saying they would hurt consumers. will they block cvs's deal to buy aetna? nonprofit hospita are gearing up for big deals too. they've approved more mega mergers as other play defense. two, amazon will impact the health care supply chain, whether or n the online giant gets into the pharmacy business. the scrutiny over price willing keep pressure on pharmacy benefit firms to hold down costs and prove their value. three, obamacare won't go away. doug jones' win in alabama makes the math even tougher for republicans to get enough votes in the senate for full repeal. but the trump administration can still make big changes at the edges, especially through state waivers on plan benefits. the lead-up to 2019 change in

enrollment will likely be rocky again with uncertainty over participation. i'm bertha coombs for "nightly busine new york. >> reporter: medicine is changing. from the way we think about treating disease to how we may pay for it. here to are three predictions for pharma and biotech in 2018. drug pricing in focus. there's been no major government moves on drug prices since trump took office. but 2018 brings new challenges. new treatments offer new hope to patients but will carry price tags of hundreds of thousands or even a million dollars. the focus will turn to how we pay for those medicine. second, immunooncology dominance. drugs that use the power of our own im systems are improving the way we relate to cancer. on wall street, 2018 brings key data that could move stocks in astrazeneca and roche. finally, a return to m&a. investors hope 2018 sees corporate tax reform, spurring acquisition of biotech companies, marking a turnaround from a relatively slow 2017.

for "nightly business rep meg terrell. your house is likely your biggest asset. so we asked diana olick to tell us what's ahead for real estate. >> reporter: 2017 saw a big slowdown in the housing market. not in prices, but in home sales, because there was just nothing to buy. 2018 will not be much better. sales slow more. sales could become even more sluggish as the supply situation worsens. yes, homebuilders will continue to increase activity. that could squeeze would-be buyers to the sidelines. all that demand without much supply will keep the heat on home prices and affordability will become a bigger issue, especially now that the republican tax plan wipes out valuable d prope taxes and mortgage interest in high cost areas. mortgage reform. the biggest move in 2018 could be in the mortgage market.

and the elephait, namely fannie mae and freddie mac. talk is heating up in congress to reform the system. and private investors seem not only ready but eager to get back in the mortgage game. as for mortgage rates, most predict they will move higher. but most predicted that for the past two years and were wrong. for "nightly business r" m diana olick in washington. coming up, we're going to take you on the road and into the ai

the auto and airline industries are preparing to fly high in 2018, thanks to strong demand and consumer confidence that remains robust. what can we expect in the new year on the roads and in the air? phil lebeau takes a look. >> reporter: after three straight years with sales topping 17 million vehicles annually, the auto business will slow down in 2018. sales are expected to fall 3 to 5% next year due mainly to a slight pullback in demand. still, trucks and suvs will remain popular picks in showrooms thanks to relatively low gas prices. meanwhile, you can expect sales of electric cars to charge up in 2018, thanks to two high profile vehicles. fit there's tesla's model 3, which will be seen around america more often as the automaker ramps up production. meanwhile, gm expects sales of the chevy bolt to increase due to a full year of nationwide sales. finally, expect to see plans for

self-driving cars to expand in the next year. waymo will start its self-driving ride sharing service in arizona and grow it from there, while gm's self-driving chevy bolt will go from the streets of san francisco to new test drives in new york. and other automakers expect their autonomous drive programs to kick into a higher gear next year, setting up 2018 to become a crucial year for an auto industry going through a technological transformation. the airline industry is soaring as it flies into 2018, thanks to strong demand in the world's key markets. from the u.s. to china to europe, airlines are expecting near record passenger levels in 2018. that's one reason why global profits for carriers are forecast to top $38 billion, which would be an all-time high. one reason profits will increase is because airline fees and revenues will keep climbing higher in 2018.

from checked bags to changed reservations, airlines are projected to rake in more than $57 billion in revenue from those fees. as much as passengers may complain about the fees, they are not going away. finally, expect to see low cost carriers continue to expand in 2018. spirit and frontier see more routes they here in the u.s. as they expand domestically. carriers like norwegian air will continue to add routes from europe to the u.s., setting up 2018 to become a busy and profitab for an airline industry poised to climb higher. phil lebeau, "nightly business . a big surprise in 2017 was the growing interest in bitcoin. the controversial cryptocurrency went from obscurity to a hot topic. its price hit a number of new highs and bitcoin contracts even began trading on the futures

market. much skepticism still surrounds it. seema mody reports the new currency could gain more buzz this year. >> reporter: with cryptocurrency capturing the attention of investors from wall street to main street, here is what to watch as they go more mainstream in 2018. first, for investors, that means more options to invest in the cryptocurren ecosystem. expect a boom in everything from exchanges to new trading platforms that will make it easier for the everyday investor to get exposure to cryptocurren witho owning the underlying coin. second, expect bitcoin's rise to be challenged by alternative coins. bitcoin's rapid rise has given birth to over 1300 digital currencies as bitcoin gets more expensive. traders are looking to its competitors for opportunity. watch ethereum, ripple, and litecoin, which live on blockchain but offer different functionality than bitcoin.

the sec has a newly-midnight cyber unit that's tasked with finding bad actors that are using digital currencies for money laundering and funding terrorist activities. regulations could ultimately add more credibility to the space, and perhaps even pave the way for bitcoin exchange rate funds to be approved. for "nightly business r i'm seema mody in new york. thank you for watching this special edition of "nightly busine i'm sue herera. happy new year. have a great evening, everybody.

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