Top 10 Surprises For 2009

Former Morgan Stanley strategist Byron Wien puts out his Top 10 surprises for the upcoming year about this time of the year, which always makes for fun reading this time of the year for the Wall Street crowd. Mr. Wien bases his surprises on events that are outside the consensus thinking at the time, but ones he believes have a better than 50-50 chance of happening. Looking back, it’s amazing how some of his out-of-the-consensus calls turn out to be correct. To see Mr. Wien’s Top 10 Surprises for 2008, go to the following link: (http://www.portfolio.com/views/blogs/daily-brief/2008/01/02/byron-wiens-10-surprises-coming-in-2008). His calls focus almost exclusively on the economy and financial markets. Mine are more inclusive. However, I do not claim that any of these have a better than 50-50 chance of happening. Some will even require a miracle of biblical proportions in order to happen.

1. The credit crisis gets worse, not better. Despite over $1 trillion in rescue and bailout money, housing defaults continue to rise throughout the year. The government essentially becomes powerless to stop the tide of foreclosures. Housing prices continue to tumble throughout the year.

2. Interest rates continue to go lower. The 10-year US Treasury note, now trading at 2.55% as I write this, will drop below 2% in 2009. The possibility of an inverted yield curve starts to come into play, which is amazing considering the fed funds rate is below 1% and the 2-year T-Note is trading below 1%.

3. The price of oil will stabilize at $70/barrel. Oil current trades at $49/barrel, and many analysts expect the price of oil to go lower as the world economies sink into a recession. However, OPEC will actually cut its production so that oil prices may rise.

4. Unemployment reaches double digits. There have been whispers of double digit unemployment in the investment community, but no one wants to admit that this may actually happen.

5. Consumers will actually de-leverage their own balance sheets. In fact, I think this could be a defining event for several years, as consumption is reduced and debt payment increased.

6. Entertainment will be marked by the “Year of the Comeback.” Who will lead the way? Britney Spears. I wouldn’t be surprised to see a wiser, more mature Britney. Then again, she is still capable of the Trainwreck Britney of 2007.

7. At least 5 congressmen will get caught up in a scandal involving financial or sexual impropriety. Do these people ever learn?

8. A breakthrough hybrid car will be announced by either GM or Ford that promises to get at least 100mpg. The car will be promised by 2015. We will never see the car.

9. Oklahoma will win the BCS championship game, UConn will win the NCAA men’s basketball championship, Pittsburgh will win the Super Bowl, the LA Lakers will win the NBA championship, and New York will win the World Series…the Mets, that is.

10. I will get married. That would be the biggest surprise of all.