Late at this point, but perhaps there's still time to join the 2006 projections bandwagon.
1. Charles Schwab will be acquired by Citigroup. With Citi's approx. market cap of $250 billion versus Schwab's of $20 billion, a little overpayment can be risked to add to Citi's U.S. market presense. While Schwab is a strong brand with an extensive customer base, their internet trading and reporting technology remains second tier and the goal of building a high net worth business has not come close to being reached. And Citi follows the path of its Legg Mason trade leading to direct access to another tier of the U.S. retail investor market.
2. Unfortunately a continuation of the status quo will continue in Iraq with some gains in stability offset by primarily foreign insurgent actions and minimal if any economic revival.
3. A failure of at least one large and well known hedge fund will occur as a leveraged search for yield in the fixed income markets backfires. Everyone is scared briefly as the new Fed chairman gets his first big test of calming global markets, but Bush and Snow stay quiet and markets calm quickly. Bernanke is no Brownie.
4. Dictator Musharraf of Pakistan finally does not escape an assassination attempt. A vicious retaliation by the military creates greater unrest. The old corrupt ruling families vie for uncertain control while the tension increases. The U.S. sends in Marines to protect the U.S. embassy and consulates, and India's military is put on high alert.
5. A highly volatile U.S. equity market tests investors' stomachs and trading room trash baskets serve a dual purpose. For the full year, however, the U.S. market, after many significant zigs and zags, is up 5%, carried by natural resources, technology, and a 25% rebound in big pharma.
6. European equity markets trudge upward with less severe swings and less volume than the U.S., Asian markets move10% higher but with volatility at times like the U.S. market, and Latin American equities give back half of their 2005 gains, falling almost 20%.
7. A clandestine anti-pornography hacker organization launches a highly effective global internet viral assault on paid subscribers to pornographic websites. The damage is massive, with as many as 200 million personal computers disabled globally. Estimates put the U.S. loss at 15% of all personal computers, while Germany is hardest hit and the government declares a technology disaster relief plan. The DAX plunges, offset slightly by a significant rise in the stock of Dr. Mueller, the company whose sex shops are ubiquitous in train depots, airline terminals, and upscale seedy districts of the country.
8. Shortly thereafter, Dictator for Life Kim Jong Il's dictatorship ends in North Korea, as he dies of a reported heart attack. Rumors also attribute internet stress, a drug overdose, or poisoning as possible causes. China quickly establishes heightened diplomatic, economic, and security relations with North Korea and takes advantage of the opportunity to propel its leadership in the region and also have the opportunity to exploit deeply impoverished but talented labor.
9. Argentina takes a dramatic leftward turn, having finally become prosperous enough to destroy itself again. This leads to a summit of the leaders Venezuela, Bolivia, Cuba, and Argentina that attracts global attention. Mexico is widely viewed to be most vulnerable to the rhetoric of the summit, and its endlessly corrupt government and corporate leaders move money to Switzerland, Caymans, anywhere else, at a much faster pace than usual.
10. Vintage clothing becomes a national obsession among the nation's youth. Goodwill opens its first Madison Ave. store, Goldman Sachs is engaged to advise on an IPO of the Salvation Army's clothing operations, and young entrepreneurs around the country team with local Starbucks to offer $5 slightly worn 1950's handbags with $3.75 green tea frappuccinos.