Wednesday, January 04, 2012
Byron Wien's annual predictions for the "top ten surprises" for the coming year are a Wall Street tradition. Herewith, this year's edition. Interesting that he predicts a change of control in both the Senate and the House.
I'm no financial genius but....
I don't see how the economy picks up, and starts to run again... and oil drops $15. Really? Not with Obama in charge of the EPA. I'd bet it goes up $15 or more.
How in the world can an anti-incumbent wave cause the Republicans to lose the House? The (R) House has passed budgets, spending reductions-in-the-rate-of-growth (I can't call them cuts, more like shaving nicks), while the (D) Senate has been a complete and total fiasco.
8) Actual farm subsidy payments are about as low as they've been in ages (remember, subsidies mainly occur when crop prices are low, when the farmers are most likely to go bust, and crop prices are pretty pricey now). Spending in USDA is down a bit, but food stamps have skyrocketed while the "Farming" agencies have been hammered pretty good. Any economic recovery will cause food stamp payments to go down, and great cries of "Look how much we cut the budget" to emit from Washington.
Agree with Georgefelis,
I can see Obama winning in '12, in a very close election. I can't see for a moment the Dems taking back the House, and I don't see unemployment dropping substantially in the next 12 months. Many retailers got completely hosed this holiday season. As I type this one of my [former] clients just closed up shop leaving 40 more Americans out of work, the demand simply isn't there.
Byron's been pumping these things out for 30-40 years, originally and for most of his career at Morgan Stanley. I am aware of no evidence that he is any more accurate than anybody who does these things, but he sort of made a tradition out of it very early. Most people who make "top ten" predictions for purposes of media hype are following Byron, I believe. At least in the financial world. So if you are of a certain age these predictions are sort of traditional. Otherwise, they are just like any other dart board.
It is really interesting.
Thanks for the posting.
Happy New Year.
It seems to match a theme presented by Democratic Partisans, who are trying to sell the "economy is getting better" theme.
I feel the problem with this facade, is it does't overcome the ineptitude of the Obama Team's offering for the first term. If the GOP runs a Candidate like Romney, who won in Iowa (surprisingly), Americans may believe rightly they can do much, much, much better.
There are numerous problems with the Obama - Democratic Partisan offering, manifest in the dreadful economy which their policies are largely responsible for creating. Much of it is even beyond the economy, such as the Obama Team wanting to release dangerous terrorists from GITMO to appease the Taliban. This matches the insane characterization of the Fort Hood attack as merely a "work" environment accident.
In many ways, the damage is done. There will be an enormous manipulation to play the Republicans as being obstacles, attempts to sell the idea things are improving, etc. But it is a desperate stretch.
Perhaps the most vivid folly, was Obama's foolish withdrawal from Iraq for his own petty political gain. It matches the gross exploitation of foreign policy for personal interest, coupled with enormous failure.
The real question remains, the sound side continues to play a very dysfunctional game. The voices seeking acceptance, ratings, readers, etc., are still undermining their own interests which enables the Democrats. We see it in the primary, even Fox now is overtly selling Mr. Santorum who we all know quite well from his 17 years in Washington.
If OUr conservative arena continues to self destruct, say weaken the House GOP with mindless equations to Pelosi, we may indeed lose a great opportunity to keep the House, take the Senate, and the win the Executive.
The fashion amongst us is clearly self destructive. The recent push for another disastrous Beltway Insider named Gingrich was a prime example.
Ann Coulter is way ahead of the curve again, leading, while others seem to only want to follow the folly:
'The wild swings -- at least in the polls -- from one populist right-winger to another suggested that some Republicans were determined to change the meaning of "conservative" from "normal person who wants to protect what's best in mainstream America" to "perpetually indignant, restless carper against everything, obsessed with symbolic issues, determined to punish the country for its impurities."
When the once mighty EIB started using populist terms like "Blue Blood" after 2004, we were in trouble. In 2008, the fashionable gaming only enabled a very weak McCain for the Nomination, taking out the more sound offering. Today we see the same delusional obsessions. One has to ask if the dysfunction being coddled amongst us, will take us all down again.
It is apparent, some are foolishly more interested in debasing Mr. Romney, than they are interested in defeating Obama or the disastrous Democratic Party. The question is, will these small vocal elements take us all over a cliff yet again?
1. The economy continues to limp along. 1.5-1.8% growth.
2. Shale oil might be the future. Just not until Ibama leaves office. In conjunction with the Obama/Islamist Spring, oil prices will remain over $90 a barrel.
3. Until events force the hands of our political class, the deficit will not be addressed.
4. Never underestimate the Republican ability to snatch defeat from the jaws of victory.
Okay, my take:
1. Oil prices drop due to suppression of demand as a worldwide recession returns.
2. Earnings for S&P 500 companies continue to be revised downward until the moment of release, resulting in a continuation of “positive earnings surprises.”
3. The American economy slows to barely above recessionary levels. As Europe slips into a deep recession, the 15 percent of American corporations that derive large portions of their revenues and earnings from Europe also slip. The S&P 500 hits 800 or lower some time during the year.
4. The declining recovery exacerbates already intractable unemployment. An ever smaller percentage of working age Americans remain in the workforce, and this continues the ongoing suppression of the true unemployment rate. Non-working Americans continue to draw down their savings and tax collections at all levels of government continue to be “unexpectedly” lower.
5. Europe finally runs out of ideas for salvaging their monetary union and begins printing Euros. Greece, Spain, Portugal, and Ireland all either default or receive massive debt restructurings that finally expose German and French banks as being irretrievably insolvent. These banks continue to muddle through by receiving inputs of cash from the Federal Reserve through arcane and hidden processes such as currency swaps.
6. Financial terrorists continue to be elected to the US Congress. They continue to flout both their own rules and the laws that apply to all other US citizens (e.g., insider trading).
7. Currency wars increase. In a race to the bottom, protectionism and de facto devaluations become rampant. Cross border currency controls are increasingly imposed by governments worldwide.
8. Congress remains dysfunctional, as no politician can possibly tell the truth to the financially illiterate masses of Americans who have not bothered to educate themselves as to the true fiscal state of their country. This combination of voter ignorance and political cowardice and corruption makes meaningful reductions in spending impossible. The can is kicked, but the road dead ends.
9. The Arab Spring is fully revealed for what it really is: an Islamist Spring. The Muslim Brotherhood and other murderous, highly-motivated groups bypass the usual “one man, one vote, one time” and cut straight to the chase, crafting sharing arrangement backroom negotiations with military leaders. American weaponry undergirds their grip on power.
10. Stock markets finally begin to reflect the underlying economic reality. Record numbers of Americans are not working and can no longer consume because they’ve run out of savings. Government assistance swells as those who cannot find work continue to ‘retire’ onto Social Security and Medicare in larger numbers. Emerging markets are revealed to be one-dimensional economies that are too dependent upon extracting natural resources and providing cheap labor—neither of which are supported by demand anymore. Chinese, Indian, and Brazilian economies recede and their inadequate social support systems are overwhelmed. Investors will get slaughtered and traders will prosper.