{"id":131,"date":"2010-02-16T23:52:56","date_gmt":"2010-02-17T04:52:56","guid":{"rendered":"http:\/\/blogs.law.harvard.edu\/abrahamtiamiyu\/?p=131"},"modified":"2010-02-19T13:45:16","modified_gmt":"2010-02-19T18:45:16","slug":"top-10-predictions-for-2010","status":"publish","type":"post","link":"https:\/\/archive.blogs.harvard.edu\/abrahamtiamiyu\/archives\/131","title":{"rendered":"Top 10 predictions for 2010"},"content":{"rendered":"

At the beginning of each of the last 25 years, Byron Wien, the renowned investment strategist, has prepared a list of his top ten political and economic predictions for the year. Last year, he correctly predicted rallies in the S&P 500, gold and oil. Take a look at his 2009 predictions<\/a> and you will be amazed at how many calls he got right!\u00a0In January 2008<\/a>, Wien also predicted Barack Obama’s\u00a0victory in the U.S. presidential election as well as the Democratic Party’s majority in both houses of Congress. His most famous call: the interest rate cuts and recession of 2001.<\/p>\n

Last month, Wien released his top ten surprises for 2010<\/a> (01\/04\/2010). Two months into the year, some of his predictions are already coming true. In number 7 of this year’s list, he predicts Washington’s funding of the first nuclear power plants in the U.S. \u00a0since 1979. Earlier today, President Obama pledged $8 billion in loan guarantees to help build the first U.S. nuclear reactors in nearly three decades. See this article<\/a>.<\/p>\n

For those interested, here are Wien’s Top 10 predictions for 2010:<\/p>\n

\n

The Surprises of 2010<\/strong><\/p>\n

1.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 The United States economy grows at a stronger than expected 5% real rate during the year and the unemployment level drops below 9%.\u00a0 Exports, inventory building and technology spending lead the way.\u00a0 Standard and Poor\u2019s 500 operating earnings come in above $80<\/p>\n

2.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 The Federal Reserve decides the economy is strong enough for them to move away from zero interest rate policy.\u00a0 In a series of successive hikes beginning in the second quarter the Federal funds rate reaches 2% by year-end<\/p>\n

3.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Heavy borrowing by the U.S. Treasury and some reluctance by foreign central banks to keep buying notes and bonds drives the yield on the 10-year Treasury above 5.5%.\u00a0 Banks loan more to corporations and individuals and pull away from the carry trade, thereby reducing demand for Treasuries.\u00a0 Obama says, \u201cThe suits are finally listening\u201d<\/p>\n

4.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 In a roller coaster year the Standard and Poor\u2019s 500 rallies to 1300 in the first half and then runs out of steam and declines to 1000, ending where it started at 1115.10.\u00a0 Even though the economy is strong and earnings exceed expectations, rising interest rates and full valuations present a problem.\u00a0 Concern about longer term growth and obligations to reduce leverage at both the public and private level unsettle investors<\/p>\n

5.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Because it is significantly undervalued on a purchasing power parity basis, the dollar rallies against the yen and the euro.\u00a0 It exceeds 100 on the yen and the euro drops below $1.30 as the long slide of the greenback is interrupted.\u00a0 Longer term prospects remain uncertain<\/p>\n

6.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Japan stands out as the best performing major industrialized market in the world as its currency weakens and its exports improve.\u00a0 Investors focus on the attractive valuations of dozens of medium sized companies in a market selling at one quarter of its 1989 high.\u00a0 The Nikkei 225 rises above 12,000<\/p>\n

7.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Believing he must be a leader in climate control initiatives, President Obama endorses legislation favorable for nuclear power development.\u00a0 Arguing that going nuclear is essential for the environment, will create jobs and reduce costs, Congress passes bills providing loans and subsidies for new plants, the first since 1979.\u00a0 Coal accounts for about 50% of electrical power generation, and Obama wants to reduce that to 25% by 2020<\/p>\n

8.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 The improvement in the U.S. economy energizes the Obama administration.\u00a0 The White House undergoes some reorganization and regains its momentum.\u00a0 In the November Congressional election the Democrats only lose 20 seats, much less than expected<\/p>\n

9.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 When it finally passes, financial service legislation, like the health care bill, proves to be softer on the industry than originally feared.\u00a0 There is greater consumer protection, more transparency, tighter restriction of leverage and increased scrutiny of derivatives, but the regulatory changes for investment bankers and hedge funds are not onerous.\u00a0 Trading volume and merger activity increases; financial service stocks become exceptional performers in the U.S. market<\/p>\n

10.\u00a0\u00a0\u00a0 Civil unrest in Iran reaches a crescendo.\u00a0 Ayatollah Khomeini pushes out Mahmoud Ahmadinejad in favor of a more public relations adept leader.\u00a0 Economic improvement becomes the key issue and anti-Israel rhetoric subsides.\u00a0 Talks with the U.S. and Europe begin but the country remains a nuclear threat.\u00a0 Pakistan becomes the hotspot in the region because of the weak government there, anti-American sentiment, active terrorist groups and concerns about the security of the country\u2019s nuclear arsenal<\/p>\n<\/blockquote>\n

Abraham Tiamiyu<\/span><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

At the beginning of each of the last 25 years, Byron Wien, the renowned investment strategist, has prepared a list of his top ten political and economic predictions for the year. Last year, he correctly predicted rallies in the S&P 500, gold and oil. Take a look at his 2009 predictions and you will be […]<\/p>\n","protected":false},"author":2328,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[127],"tags":[],"class_list":["post-131","post","type-post","status-publish","format-standard","hentry","category-general","post-preview"],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/archive.blogs.harvard.edu\/abrahamtiamiyu\/wp-json\/wp\/v2\/posts\/131","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/archive.blogs.harvard.edu\/abrahamtiamiyu\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/archive.blogs.harvard.edu\/abrahamtiamiyu\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/archive.blogs.harvard.edu\/abrahamtiamiyu\/wp-json\/wp\/v2\/users\/2328"}],"replies":[{"embeddable":true,"href":"https:\/\/archive.blogs.harvard.edu\/abrahamtiamiyu\/wp-json\/wp\/v2\/comments?post=131"}],"version-history":[{"count":29,"href":"https:\/\/archive.blogs.harvard.edu\/abrahamtiamiyu\/wp-json\/wp\/v2\/posts\/131\/revisions"}],"predecessor-version":[{"id":141,"href":"https:\/\/archive.blogs.harvard.edu\/abrahamtiamiyu\/wp-json\/wp\/v2\/posts\/131\/revisions\/141"}],"wp:attachment":[{"href":"https:\/\/archive.blogs.harvard.edu\/abrahamtiamiyu\/wp-json\/wp\/v2\/media?parent=131"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/archive.blogs.harvard.edu\/abrahamtiamiyu\/wp-json\/wp\/v2\/categories?post=131"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/archive.blogs.harvard.edu\/abrahamtiamiyu\/wp-json\/wp\/v2\/tags?post=131"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}