Like sands through the hourglass, these are the days of our lives. Is that show even on TV anymore? And if it is, are Bo and Hope still together? (Note to self: ask Mom.) Meanwhile, on to another long-running melodrama, the madcap saga we call the market. Where will the Street lead us in 2013? One thing seems certain: it’s going to be a bumpy ride. It always is. Herewith, a few predictions for the year ahead.
Lloyd Blankfein, CEO of Goldman Sachs, will retire and be replaced by Gary Cohn.
You heard it here first. Actually, no you didn’t.But let’s put a date on it just to show that the Up and Down the Street team has predictive powers that go beyond the norm: the firm’s annual meeting will be in May, so Mr. Blankfein will announce the succession on April 15. Any questions?
Steve Cohen, overlord of SAC Capital, will take his leave too.
He knows the Feds are coming for him. He also knows that SAC’s code of employee omertà is beginning to crumble. It won’t take too many 10-year jail sentences to make those canaries start singing. If Mathew Martoma wants to go down as a martyr, that’s his choice, but as more indictments come out of the U.S. Attorney’s office, as seems likely, you can be sure that someone is going to find a plea bargain mighty attractive. Time to claim victory and retire, Stevie. (He also hates that journalists use the name “Stevie,” another motivation to hang up his spurs. My brother Steve, on the other hand, likes the name Stevie. More from him later.)
One who will hang on: Jamie Dimon.
The naive among us thought that whole “London Whale” episode might signal the end of Mr. Dimon’s grip on JPMorgan Chase. Not a chance. He’s a charming guy, that’s for sure, but Mr. Dimon can still throw underlings overboard with the best of them. Happy retirement, Ina Drew! There was a time when he wanted to be Treasury secretary. That time has passed. He’s going to stick around JPMorgan Chase for a while. Did I mention that my 2009 book about Mr. Dimon was called Last Man Standing? And that once Lloyd retires, he will be exactly that? Just saying. (I was informed by my periodontist the other week that his favorite teacher was Ina Drew’s husband. I promised to send him a copy of the book if he took it easy on my gums. No such luck for me. And no book for him.)
Wall Street and corporate America will finally get over their pouting and get back to the business of making money.
There is perhaps nothing I am looking forward to more in 2013 than a quieting of all the whining and moaning from the some of the richest people in this country about Barack Obama’s willingness to throw them under the rhetorical bus whenever it came time to rally the faithful. (Chrystia Freeland said it best.) It’s almost as if they’d never experienced a campaign season before! What’s more, his actions belied the strongest of his words. The president backed unprecedented government bailouts, which kept both Wall Street and the economy itself in business. He also kept global bond investors calm enough about the state of corporate hegemony in the U.S. that borrowing money on a large scale has never been cheaper. And the IPO market remains open, if not necessarily robust. So what’s the problem? Nothing but the hurt feelings of a bunch of people whose self-pity is nothing short of grotesque. I mean, seriously, Leon Cooperman. WTF? I hereby predict that everyone is going to take it down a notch over the next 12 months. Obama doesn’t need to demonize them anymore, and fractional tax hikes won’t take away their hard-earned piles of money. (Bonus prediction: the term “job creators” will be retired forever. Actually, that’s not a prediction but a wish. Pretty please?)
Gun control will go nowhere in Congress, but the market will speak.
As demonstrated incontrovertibly by the batshit–crazy Wayne LaPierre, the NRA will spend 2013 using its lobbying power to keep ridiculous weapons on the streets of America. And Obama will chicken out on serious gun control. But I see some cause for optimism. Although capitalism has showed more than enough of its dirty underside in the last half-decade, the market can also be a force for good. Consider this: With the surprising news that private equity powerhouse Cerberus Capital Group intends to unload its stake in gun maker Freedom Group (a wonderfully exasperating name), there is hope that a more powerful force than the NRA—i.e., the profit motive—could turn against our out-of-control gun culture. If big money shuns big gun makers, those gun makers will find their cost of capital on the rise. Investments in future production will drop, and maybe the next generation of schoolkids will be a little safer. Sure, somebody will fund the Masters of War. But it’s still going to be more expensive for them to do business. Which is change on the margin—probably all we can ask for.
Walmart and the Justice Department will collide for real.
I don’t know about you, but I find the sestoriesabout Walmart and the bribing of Mexican officials pretty shocking. And I don’t shock easy, especially when it comes to the morality of the Beast from Bentonville. According to recent news reports, both the Justice Department and the Securities and Exchange Commission are looking into whether the company violated the Foreign Corrupt Practices Act. Here’s my guess: yes, they did. But I’m no lawyer. Walmart has been reassigning various lawyers internally to show that it’s taking the investigations seriously. But things won’t get really interesting until some actual charges are filed … this year.
The value of Facebook will remain a matter of hot debate, along with the value of you and me.
Remember the Instagram scandal in December? When everyone lost their minds over the possibility that Instagram was considering using their photos as advertisements—and usage droppedby 25 percent? While I do understand the outrage from a pure privacy standpoint, I think people really do need to get a grip. Did you really think that your photos were going to be sold as ads? Sorry, Fabio. At some point, delusional technology investors are going to realize that the fact that every aspect of our lives is being collected bit by bit doesn’t necessarily mean there’s any value in your status update or the number of “likes” elicited by some picture of a baby. Because really, people, what’s a digital life worth anyway? I asked my brother, an artist who lives in rural Ontario, what price he’d place on his own. “Anyone can have everything I have ever posted or will ever post on Facebook for $5,000,” he offered. (Ping me for his contact information.) Sure, I get the whole targeted advertising thing. And yes, I get that some people actually do click on banner ads, although I don’t think I’ve ever met anyone who didn’t do so by mistake. But at some point people will realize that the value of Facebook and its ilk has been one big digital hustle.
Apple will do something in 2013. And the stock market will do something else.
What? You want more specifics? Please. Despite my own recent rantings on the subject, Apple is a hothouse of creativity and market power, it has an almost unsurprising ability to surprise us. It will do it again. And the stock will rise as a result. And then it will fall for some other reason. Or something like that. Given the company’s bellwether status, that means that the stock market itself will also rise at points during the year and fall at others. I can’t offer you more details than that, because I save those for my $2,500-a-year investment newsletter, which I send out right after I finish this column. Actually, no I don’t. But if you really want a stranger’s advice, there are plenty of those newsletters eager for your business. (Ancillary prediction: investment newsletter sales will remain robust despite an utter lack of value within.)
The money will start flowing again.
There is more than a trillion dollars of cash sitting unused on the balance sheets of U.S. companies. If you don’t believe me, believe Lloyd Blankfein, who wrote about it in a November Wall Street Journal editorial. But the election is over. The time for whining has passed. Our swan dive over the fiscal cliff will have a surprisingly soft landing. Corporate paymasters are going to start spending again in 2013, if only for the simple reason that they’re bored with not doing so. Well, that and the fear that everyone else will, which is the greatest motivator of all. (Only don’t expect Mr. Blankfein to be around to help Goldman’s clients figure out how to spend their money. He’s retiring on April 15, remember?) So things are going to pick up this coming year, both for employment and the economy as a whole. Call me crazy, but I say I’m just an optimist. Happy New Year!