Everybody is doing list of events which will happen in 2010. Boring. I decided to do a list of events which will not happen. These events have some probability of happening, but my hunch is they won't.
1. Fed will not raise rates. The only reason for Fed to raise rates is inflation or the threat of it. Inflation is nowhere to be found and economy is still in shambles. I don't see any reason for higher rates.
2. Chinese bubble will not pop. I'm still sure that China is in a huge bubble. China makes more than half steel in the world, there is a city for a million people staying empty etc. Eventually, it will pop. But I feel that there is still enough room for this bubble to grow.
3. Israel will not attack Iran. This is a tough one. I might be wrong.But there are very serious reasons for Israel not to attack. Iran is in disarray, and attack can consolidate society. USA is absolutely against such attack. Attack can't reach main objective: destroy all major nuclear facilities.
4. Gold will not hit $2000. Follows from number 1. No high inflation, no bubble in gold. It might reach $1500 at some point, but with the same probability it might drop to $600.
5. There will be no commercial real estate crash. Here I'm completely agree with Jim Cramer. Occupation rate is still very high, we didn't have many bankruptcies. Yes, Linen'n'Things and Circuit City went bust, but those were long time in the making.
6. Not more than one EU country will default. There is some probability that some EU countries will default on government debt. Candidates: Hungary, Greece, Spain, Latvia. But I don't think EU would allow default in more than one. They shouldn't allow even one, but if that happens, we'll have panic similar to the one happening after Lehman Brothers collapse. Will be huge buying opportunity.