As is my typical practice I "score" last year's predictions first, and then make some new ones. I'm probably my own worst critic in this regard but scoring is critical; poor reflection on the past leads to bad decisions forward, and we should all strive to improve.
So with that said here we are:
- Inflation will not calm down. Bullseye.
- The Democrats are going to get obliterated in the midterms. Clean miss; I didn't even hear the whizz of that one going by. No, the narrow margin in the House isn't worth even a fraction of a point.
- The Fed will be force into draining liquidity. Bullseye. They didn't like it, they tried to avoid it, but they're doing it.
- The USSC will split the abortion decision. Miss. They instead overturned Roe, which was not what I expected. I expected a decision confirming the first trimester Roe holding and underlining it.
- The equity market is extremely vulnerable. Bullseye. How's your 200.5k doing? It didn't move the election, however.
- There is no short-term supply chain relief coming. I'll take a 50% credit on that one although there is a cogent argument both ways. Since there is, fine, half-point.
- Business is going to get it in both holes. Bullseye. Between labor productivity which I correctly predicted would be hammered as a result of what firms did with mandates and similar, along with inflation and uncertainty of supply, has hammered businesses in all corners.
- The blue hives are in particularly-serious trouble. Bullseye. This data showed up directly in the midterm elections and continues. Detroit-style crime and breakdown conditions did indeed manifest all over the blue hives this year.
- Significant geopolitical trouble. Nuclear bullseye. If it was legitimate to give myself two points I would, but it isn't. Ukraine anyone?
- Ghislaine. Miss. And not a close call either. Since this is on the "not-censured" side I'll leave it at that.
- Biden is finished. Miss. Surprising, but miss.
- Business uncertainty lifts in the back half. Miss. If anything its gotten worse. More on this below.
- Housing, as a bubble, is done. Ding-ding-ding-ding. Buckle up Buckwheat, this is just getting started. More below.
- The medical complex has a serious problem. Nuclear bullseye. More below and I thought we might not get it this year about Septemberish, but I was vindicated. "Here it comes."
- The credentialism of the so-called top-schools will deteriorate / collapse. Miss. Not yet, at least not visibly. I think it is happening but it doesn't count if its not evident to the common man, so nope.
- Trump is done, along with Trumpets. Half-point. He demonstrably ruined several seats in both the House and Senate, and likely cost the GOP the Senate with who he backed in the primaries, leading to unwinnable races in the general. But, it wasn't the collapse I expected, at least not yet. I do, however, have to take the half-point that DeSantis was the winner of that because whether you like it or not he was.
Ok, so how's this all add up?
16 predictions were made, and of them I score it as 9 points, for 56%. All-in I call that not bad for predictions over a year's time. As I also pointed out in last year's entry I intentionally omitted anything related to a specific virus because the Google censors had deemed my views and predictions on same to be "misinformation" even when what was being cited were formal, published scientific studies. We now know, of course, that they were not "misinformation"; in fact they were decent prognostications and deductive reasoning that in nearly every case has been vindicated, and further it is now proved that the government stuck its foot on the scale and violated the First Amendment in doing so, specifically with Twitter and, it must be assumed, all other social and electronic media organizations.
Those of you who read the -NAD side of the site know that I haven't shut up about such things, just removed them from places where so-called "advertisers" and "big tech" can complain about and attempt to levy punishments based on same. That will continue in the coming year and likely beyond but the reasons for that form part of the next prediction series, so with that said here we go.
- The virus "response" is collapsing -- and will continue to. The pattern is ridiculously nasty, so far beyond any sort of statistical burying (despite the CDC trying to do so) and, in other nations, the same data is evident. Indeed its an unbroken pattern with no exceptions that I've been able to find. People can point fingers and call you a nut only until their loved ones start being disabled or worse because they followed the narrative, and the side effect profile starts to show up beyond the virus and its effects. All of this is happening and will continue. This spells bad news in a number of related areas because the destruction of trust within the medical system, which they earned and deserve, is going to get people killed for other reasons. While what was done was statistically unsupportable and relied on unproved claims, essentially all of which have now been disproved, that does not mean everything in the past was also disproved. Semmelweis anyone? This is going to suck, in short, but the medical industry has only itself to blame for it.
- That collapse and the wild cost increases it is bringing will accelerate the detonation of the federal budget via CMS. I've predicted this for a long time and in fact in the 1990s put a mid-to-late 2020s timeline on it, then revised that to 2024 about 10 years ago. We crossed the $2 trillion threshold in spending this last fiscal year, close to a third of all federal dollars spent and that's not all of it because Medicaid is a federal/state combined program and getting accurate data on state spending is difficult. The Federal Government is studiously trying to avoid any sort of debate on this but at a certain point that the curtains are on fire and avoiding the checks bouncing means inflation cannot be tamed comes into full view and demands a response. I am not predicting that collapse will come this year to get the point on this prediction, but that it is wildly evident will become clear and said debate will ensue (or I have to score it as a "miss.")
- Other schemes and BS peddled as "medical advice" will be increasingly explored. There is already evidence in the scientific papers that the mad push to vegetable oils and similar was basically underwritten by... you guessed it -- the people who made those products. In 2011 I discarded the oft-repeated claims of what you "should" eat for what my own research said was a better and sustainable choice. It was; I lost 60lbs, it has stayed off and, at least as importantly, my athletic performance skyrocketed and even today, at 59, I'm faster than I was when it comes to cross-country road running at the age of seventeen. I require and consume no prescription meds and unlike most men of my age "everything still works as its supposed to in a man" if you get my meaning. I'm not predicting that all of this will disappear, of course, but the prediction of the general view that "Beyond Meat" is the answer to anything is going in the dust bin along with said companies will, if it occurs, give me said point.
- The consequences of corporate and government mandates will manifest in severe dislocations through industry. We're already seeing it. Southwest and their flight disruption is not just Southwest; it is not only a "oh we have a system engineered to remove all unnecessary cost" (which then has no redundancy in it so when something goes wrong it all goes to Hell immediately) it's everywhere in the airline industry and elsewhere. It has been known for a decade that there's a problem coming with qualified pilots and part of the entire nonsense with increasing automation and such in cockpits, along with pressure to reduce qualifications. Rather than make the investments in both training and pay to incentivize people to take that path the choice was made to lower standards and press existing employees. That never turns out poorly, right? Uhhhhh.... yeah, ok. Health care is another example; people are screaming about shortages of beds and similar but there are beds -- just no staff, so entire wings are shut down because you need the staff to run that wing, and you don't have said people. Management has gotten awfully arrogant, often with government backing (e.g. jab mandates) when it comes to employees and the bill for that will become increasingly critical this coming year. All-in this is probably a good thing for society as a whole as labor/management balance is just that, but it won't come without pain and adds further inflationary pressure.
- The cost-shift game in "online shopping" will crack. This is a late one that I didn't previously have on the list but I truly believe it now. Amazon, in particular is in trouble. This is probably not specific to them either, but is most-acute there. They have, for years, evaded what amount to net operating losses in their online marketplace through AWS sales. But cloud is not a panacea; its just someone else's computer, and overhead is never free. The more people who deal in a transaction the more it costs, always for the simple reason that nobody ever works for free. There are already clear signs of this, where the "non-Prime" shipping that used to be a three or four day affair (2 with Prime) is now often quoted as close to two weeks. Obviously the company is moving inventory around when they don't have everything in one place so as to avoid multiple shipments. That's an indication of stress and its present. We'll see how bad it gets, but if you're used to the "order it today, have it tomorrow" game I think you're in for a big surprise. That squeeze is not local to one company and leads to.....
- The market is not done going down. Yeah, you didn't like that decline did you? It's not over. Trust me, I know both sides of this argument having been both an employee and a CEO, but what's happened over the last three years is egregious and outrageous -- and has consequences. I'll be specific: We'll see at least another 10% decline from prices as of 12/31 sometime during the year, and a 20%+ decline is not off the table, or I won't take the point.
- The Omnibus insures inflation is not over either. Remember that inflationary pressures take six to twelve months to go through the system. There was an indication of this relaxing in the last few months of the PPI but the Omnibus is going to reverse that. Thus the odds are very high of a "false dawn" in that regard.
- Rates are not done going up. If you invest as if they are you're going to get it in every hole you have. There are hundreds of firms, especially in the tech space but certainly not limited to there, that have survived and had their stock prices go to the moon over the last ten years specifically because of ever-decreasing rates. This year is the second after that ended and short-term debt is going to roll over. What you see this year in terms of that impact on balance sheets and earnings is nowhere near the full depth of it and you will hear repeated claims that it is. These claims are knowing lies because corporations have been taking their revolvers and similar short-term facilities and issuing debt out the curve for a long time precisely because they could borrow at 2% or in some cases less. That paper now is frozen and has to be held to maturity by whoever bought it lest they take a huge capital loss, but when it rolls, and it will, it will be at double or higher the previous rate. This is going to go on for the same 10 years the original trend did and there's nothing that can be done about it. If you think this won't translate directly into stock prices and cause a bunch of bankruptcies you're wild-eyed crazy.
- Business is going to have return to employees actually being functional, and if you're not you're going to get fired. The Twitter example is going to play out nationally. For those who haven't been paying attention Musk fired more than half the staff and the site still functions just fine. This is proof positive that said half were not doing anything that keep the lights on and this is common through industry. More in the next point.
- DEI and ESG will be increasingly recognized as resulting in DIE. This won't play out entirely in one year, but it will start in earnest this year. There are plenty of people who think they can double down on this and force it to not only continue but expand. They're wrong and they're about to get a very expensive and personal lesson starting with the loss of their job and recognition that their lavish lifestyle does not square with the income that can be generated in the fast-food industry. Refusal to recognize that the end of "free money" means you must actually produce and that means meritocracy wins and all else loses will lead you directly to the nearest Federal Bankruptcy Court.
- Russia isn't going to be "beaten"; that is, Ukraine can't win -- and their support will vanish. This year is my prediction for that. Whatever side you're on for this makes no difference when it comes to outcome. There is simply no path for Ukraine to force Russia to give up. The one wild-card in the mixture is the possibility (much-rumored) that Putin is very seriously ill with cancer and may succumb. The odds of it all going sideways, if that occurs, are very high. In short the last thing you want is for him to drop dead as he is likely far more reasonable than whoever might replace him. If Putin is indeed terminally ill as some claim the odds of this issue escalating into a no-bullshit real war that involves the entire Eurasian land mass are very high.
- The impact of the Omnibus passed in the waning hours of 2022 will be historic, and nasty. A fundamental tenet of our Constitutional government is that no Congress can bind the next one. Never before has Congress even attempted to circumvent that constraint, having respect for the institution above all else. That seal has been broken now and its going to get ugly. Neither party can claim to be above this since the threshold to begin debate in the Senate on the bill was 60 votes and they got them, so trying to pin this entirely on the Democrats (which has already started) will fail. Yes, the House majority is slim, but a majority is a majority and as with votes one vote is as good of a margin as one million. Those are the rules of the game and everyone knows it. I'm expecting a severe reaction as the more-egregious provisions in that 4,000 page monstrosity come to light but while technically it can be repealed it won't be as the Senate is in Democrat hands, like it or not.
- Green energy is headed for the dustbin and the firms in same are in serious trouble. We'd all like a planet that is not despoiled but the fact remains that alleged "green" energy is unsustainable, cannot meet America's needs (or anyone else's) and the capacity for smaller-scale storage and use (e.g. EVs and similar) doesn't exist in terms of the resources necessary to make and maintain them as a displacement of existing ICE vehicles rather than as "sports cars" and other niche products. Further, the projections of an ever-warming planet that will produce "catastrophic" outcomes unless we cut carbon use to zero are fantasies as has been and will become increasingly clear. There are multiple decade-long-period climate-related oscillators well-recognized in meteorology and the pattern is clear -- they're turning. The claims that the recent cold snap were "unprecedented" are nonsense; Nashville, for example, in 1985 took a winter storm hit that was worse than what we just went through in terms of temperature -- by a lot. In fact the daily mean temperature during that event was -5F, wildly worse than the single-digit figures we just put up. The entire premise of shutting down all the coal plants was that this would never happen again because the planet is getting hotter and thus that capacity wasn't needed, even though we told people to stop installing gas furnaces and rely on heat pumps. Wrong. I very distinctly remember the late 1970s and early 80s weather patterns and the winters were nasty. That cycle (yes, its a cycle Marge!) appears to be coming back around much to the chagrin of Greta and her adherents. If you can't engineer a power grid to supply that plus a reasonable margin in addition, including provision for all the people added to the state since 1985 you have no business being involved in public policy when it comes to critical infrastructure -- period. Essentially all of the companies in the "green energy" space continue to operate only as a consequence of massive direct and indirect subsidy, including putting their toxic waste in other nations such as China. As this shifts and tolerance there wanes (and it will!) the economic capability to continue this scheme will end. Further, if you think this recent storm in Buffalo was bad contemplate what it will be like with no natural gas allowed for heating, particularly when the power goes off and all that's left are small personal generators sufficient to run a circulating fan but definitely not a heat pump, strips or electric space heaters. If the people let this happen and do not force governments to cut that crap out there will be major waves of death that result in future winter seasons. NY and other states have banned natural gas as fuel-fed heat sources in new construction and intend to force everyone off existing plant. I predict you'll see the start of a serious pushback on all that this year and to get a point, that's what has to happen.
- Ron DeSantis will either basically cement his front-running RNC position or self-destruct; no middle ground. He recently asked for and got a Grand Jury to investigate any materially false statements related to the Covid vaccines by their manufacturers and the medical industry. There are state fraud laws that bear on this and this is a rather high-stakes gamble on his part along with that of his state Surgeon General. I am reasonably sure what the record shows if it surfaces. If the Grand Jury whitewashes (or worse, stalls) and fails to produce a work product the political damage to DeSantis will be severe. However, factual findings, however they go, likely vindicate and seriously help him politically. Either way I expect a resolution this coming year and will take a point for either extreme but not if Trump is still materially in the game but he isn't politically finished (whether he admits it or not doesn't matter.)
- Political shifts are going to increase in ugliness; there is no "reconciliation" in the new Congress. Two points have already come into focus on this -- the first being the Lake fiasco in Arizona where clear human action had to have taken place that did implicate the results -- this was proved -- and under Arizona law intent, that is malice, is not necessary for a contest to win. The Judge ignored the law and ruled only on intent, ignoring the actual standard in the Statute. That's going to get appealed, obviously. But what might actually be worse is what has come out about Santos (R-NY) in his recent "win"; he essentially fabricated huge parts of what he presented as his personal history to voters. He flipped the district too so this really is an election that mattered. Of course we all know politicians lie and trade on information as well; indeed that sort of game is so well-established that it makes professional wrestling look honest and thus one has to wonder if all the strum and furor is just noise. Whether these two incidents go anywhere or not my prediction is for more of it, more strife and more nastiness, not less, and I'll put a stake in the ground: At least one eye-popping egregious event that reaches into the realm of undeniable criminality that even the most-partisan cannot deny will occur this year by at least one of these clowns in the House or Senate.
- The economic and political disparity between "blue" and "red" area will grow and start to produce actual fractures in supply lines and cooperation. The number of pundits who have ignored what is clearly in the data from the last election stun me, frankly. I've never seen more stupidity in that regard in my 59 orbits around the flaming ball responsible for all of global warming (and indeed life) on this rock. The "Red" states where middle fingers went up to mandates to any degree at all (none of them sufficient) gained population and thus their "Red" voting percentages increased. Those places that played lockdown mania and worse lost people, and disproportionately they lost productive, high earning people who pay taxes in size. Those people moved to the Red states and it is clearly visible in the Governor's races in this last election. The pundits all refuse to deal with the fact that in politics a win is a win and thus what happened actually decreased those "blue" races that can in the future be flipped "red" because once you win by one vote siphoning off more votes from some other jurisdiction does not help your victory but damages the capability for the other state or locale to flip red as well. The same of course applies in reverse. A pluralistic society cannot function reasonably if the various factions refuse to get along and while you can pass all the laws mandating "full faith and credit" you'd like (I remind you said is in the Constitution) you can't force someone to like someone else and as we've seen full faith and credit isn't worth the paper its printed on when it comes to many areas already, including but certainly not limited to areas such as immigration and marijuana. To be clear -- I'm not predicting a revolutionary-style event between states, but I am predicting substantial trouble that reaches into supply lines and interstate cooperation. So far, with the exception of lots of noise and a few states banning "official travel" this hasn't happened so for it to start would be a major shift.
- Illegal immigration forces policy change this year. Buried in the Omnibus just passed is a provision that bans the use of any additional federal funding to secure the border. A quarter million people attempting to enter this nation a month without prior authorization is not a "humanitarian" situation, it is an invasion as these are intentional acts taken with knowing disregard for the law. This is not only not sustainable its already well beyond the point that one or more states with said border should have declared what's going on an invasion and acted on their own, as the Constitution requires the Federal Government to do and in the absence of same they can indeed step in, with doing so being entirely Constitutional. The odds of this setting off a political crisis approach 100% and thus I'm reasonably sure this one will score.
- Housing is nowhere near done going down. If you haven't sold yet you're not at the bottom. If you're holding on thinking you missed the window -- you're wrong. I'm starting to see the cracks here and Real Estate is always local to a large degree but deals are falling apart at a much-accelerated rate and sellers are increasingly forced to cut prices bigly or nobody buys. Its always true that a properly priced house will sell but "properly" might be 20% off what you see in the other listings, none of which have moved in the last two months! If you think this trend has bottomed and thus property taxes are stable and will be able to be raised on a net collection basis IMHO you're nuts.
- Auto prices, specifically used car prices, are going to massively collapse. Some of the practices I'm hearing about are unbelievable and almost-certainly wind up as frauds perpetrated into the securitized markets for car loans. These unsound practices in the face of ratcheting inflation will result in repos headed through the roof and there will be plenty of supply by this time next year in the used market, which means dealer capacity to play games with "market adjustments" on new cars will evaporate. The squeeze in that business will get quite-acute, blunted only by the shortage of new cars and as a result floor lines are likely basically non-existent so the debt won't kill them. That's the good news, but hunger for business has a way of fixing inflated prices when supply is plentiful, and I expect it to. Indeed, I'm looking forward to quite-possibly being able to do such a transaction myself in this coming year. If you think Carvana's 52-week stock performance is a one-off you're about to get a rude surprise.
I hope everyone enjoyed the relative "salad days" of the last 10 or so years; they're over and this isn't one of the predictions since it isn't something that will be a 2023 event in particular. Rather, the new way to look at it is "embrace the suck" much as it was in the early 1980s and didn't really start to clear up and improve until the middle of the decade. If we're lucky things will start to get better in about five years -- if not, well, the 1930s might in fact be the best fit for how bad it will get and how long it will last.
As always I reserve the right to add or revise prior to 12:01 AM January 1st 2023, and will exempt this thread so it will remain available through the year for commentary and review.