Ten Prediction For 2009
by Evan Newmark
There is only one activity more thankless than predicting the future and that's publicly sharing your predictions.
But Christmas is the season for sharing, so here's my list of predictions for 2009. Caveat lector, of course, so much of this is bound to be wrong.
But I'd be willing to bet my Harvard MBA that at least three of them are correct. Okay, maybe two of them.
Prediction #1: GM will file for bankruptcy by the end of April
Will the TARP money tide GM over until 2010? Not a chance. Bondholders and the UAW will fight. Rick Wagoner will get the sack. And the "car czar" will get fed up. In the end, Congress will balk at forking over the $50billion GM really needs.
Prediction #2: Bernie madoff will plead insanity at his trial, but lose anyway.
In this age of excuses, why shouldn't Madoff try and get off. He'll surround himself with the finest lawyers money can buy-and they'll concoct a doozy of an insanity plea. But it won't matter. The verdict? Guilty as charged.
Prediction #3: Goldman Sachs will buy E*Trade and make a big push in internet banking.
CEO Lloyd Blankfein makes a big show of defending the old Wall Street business model. But he knows the gig is up. Expect Goldman to acquire E*Trade by June. How else will Goldman get the platform for internet banking and retail brokerage that it needs? Of course there's Charles Schwab, but at $18billion, that's almost half the value of mighty Goldman.
Prediction #4: Wall Street will shrink another 25%
Wall Street will discover to its horror that it indeed was "different this time." By April, there will be more job cuts. By late autumn, yet another round. In all, a quarter of the jobs on Wall Street will go in '09. Come year end. Bonuses will be even skimpier than 2008 and Harvard MBAs will pour into consulting - or dare I say it, government.
Prediction #5: Apple will get a new CEO
No shocker here. Eventually Jobs and the Apple board will tire of the ceaseless questioning and distraction. Jobs will stay as chairman, an Apple insider will be named CEO - and the company will do just fine, thank you.
Prediction #6: Bloomberg will buy the New York Times
Another tired rumor that finally comes right. It's not the fear of losing the dividend that will panic the Sulzbergers. It's the fear of losing it all. Finally, the family will revolt against CEO Arthur Jr. In a bidding war, Bloomberg will win out to give him influence in Gotham beyond this third mayoral term.
Prediction #7: Oil will trade at around $30 a barrel for most of 2009
OPEC's not happy with $30-a-barrel oil. But it will be even more unhappy if Obama goes ahead with all this nutty anti-fossil fuel schemes, So OPEC will keep oil prices low until America is lulled into again thinking that $1.50 gas will last forever. That should take about a year. Oil will close 2009 back at $50 a barrel.
Prediction #8: The worst-performing global market in 2009 will be the contemporary art market
It will be a race to the bottom for the frothiest luxury markets like Hampton beach homes and downtown NYC condos. But the contemporary art market will be the stand-out closer. It will nearly evaporate as money art investors of the last couple of years realize they've been Madoff-ed. Don't expect to see the sale of too many Damien Hirst formaldehyde cows or sheep next year.
Prediction #9: The S&P 500 will close 2009 at 1200, up 30%
In this weekend's Barron's, 11 of 12 "savvy" Wall Street strategists targeted the S&P to close 2009 between 975 and 1100. The consensus is nearly always wrong. By late summer, third quarter earnings will turn up, investor greed will replace resignation and a late year rally will take the S&P to 1200.
Prediction #10: President Obama will have the single most successful inaugural year in Presidential history
There's nothing like somebody else's failure to make you look good. By early 2010, with the economy on the mend, the country will be measuring Obama for a spot on Mount Rushmore.