10 Surprises for 2010

Those who work in the investment business anticipate a piece about this time every year from Byron Wien, former strategist at Morgan Stanley entitled "10 Surprises". His 10 surprises reflect events that he believes will happen in the upcoming year that, at the time of writing them, are well outside the consensus thinking. His events usually focus on financical market, economic and political events (for instance, he called Barack Obama's victory in 2008 while the consensus held that Hilary Clinton would be the Democrat's nominee for President). In that spirit I'll launch my top 10 surprises. I make no promises that my top 10 surprises are outside the consensus thinking. If you have any you'd like to add, feel free. Enjoy!

1. The economy will show a brief recovery before falling back into a "double dip" recession. Unemployment will stay persistently high, only dropping to about 9 percent before heading back up to 10 percent.

2. Inflation and interest rates stay at historically low levels. With the economy in the tank, bank assets continue to decline, easing any inflation fears and keeping interest rates in check. The price of gold will drop dramatically, while stock prices will decline 3 to 5 percent in 2010.

3. With opposition to health care reform high, moderate Democrats in the Senate will keep Congress from passing any meaningful health care reform, and the issue is essentially done for the remainder of President Obama's term.

4. At least one major department store chain will go out of business in 2010, likely a mid-range department store chain.

5. The American car companies, particularly GM, will show surprising strength in 2010, with sales coming in better than expected. Sales of imported cars will slow dramatically.

6. The U.S. housing market remains in the doldrums. Housing starts will rise slightly in the first half of the year, but housing prices will remain low. Housing starts will taper off again in the second half of the year.

7. The dollar will remain weak, the deficit will run at another record, and in the fall 2010, politicians, bankers and investors will be discussing the government's ability to borrow further, and fears of a government default on its debt will create a mini-panic on Wall Street.

8. The U.S. will remain mired in a stalemate in Afghanistan, with no discernible progress. President Obama will be pressured by his own party to get out, while the Republicans of all people will be supportive of his policy to remain in the worn torn country.

9. Republicans will pick up significant seats in both houses of Congress, but will fail to win a majority in either house. Republicans will pick up at least 25 seats in the house, and maybe 4 in the Senate.

10. Finally, 99 percent of us will break our New Year's resolutions within the first two weeks of the new year. But not to worry, for tomorrow is another day.