Thursday, December 30, 2010

Mean Streets' 2011 Forecasts (GM; F; NFLX)

My eyes were getting a bit blurry looking at all the forecasts out there, much less figuring out how to make money off those that might be right; will I be reduced to prop bets on a Lindsey Lohan relapse? Puhleeeze.
Then a reader sent me this week's Deal Journal Mean Streets column:

Mean Street: GM, Netflix, Chris Christie–Predictions for 2011
Where’s a good end-of-the-world crisis when you need one?

As I draw up my predictions for 2011, I’m afraid the coming year will end up pleasant and distinctly uneventful like say 1996 or 2006.
That’s good news for most Americans and stock market investors, eager to forget the tumult of the past three years.
But it’s bad news for me trying to invent headline-grabbing 2011 predictions to wake you from your post-Christmas stupor.
Looking back at my 2010 predictions there were a few good eye-openers like controversial AIG CEO Robert Benmosche getting CEO of the Year honors. Of course, most turned out entirely wrong.
GM did get its IPO off. Chrysler didn’t hit the skids. Thanks to the Abacus hearings, Goldman Sachs was not quickly forgotten. And the 10-year Treasury isn’t yielding anywhere near 5%.
But my calls on the rebound at AIG and on the S&P500 finishing the year at 1300 are looking pretty good. And I’ll take credit for calling President Obama’s move to the center, even if it was later than I foresaw.
Now, onto 2011 -– and remember, Caveat Lector!
GM and Ford will be among the worst performing U.S. stocks in 2011.  Forget a Chrysler 2011 IPO.
Any sector that Wall Street is so overwhelmingly bullish on today is destined to disappoint tomorrow. By the summer, higher gas prices, continued industry overcapacity and a newly restive UAW will overwhelm Detroit’s profits once again.
Speculative highflying stocks including LuluLemon, Netflix and will finally get their comeuppance.
Common sense caught up with the Crocs rubber shoe –- and eventually will catch up with yoga gear and streaming DVDs. It can’t be a good sign that Netflix, Salesforce and LuluLemon insiders are all dumping shares as year-end approaches.
In a further blow to Wall Street, 2011 will be another year without big and dumb M&A deals.
Where is an AOL-Time Warner merger or a TXU LBO  when Wall Street bonuses really need them? In 2011, takeover activity will pick-up, but CEOs will continue to resist “industry-changing” “transformational” deals despite the urgings of their fee-hungry bankers.
In the deal shocker of the year, Henry Kravis and George Roberts will cash out by selling KKR to Blackstone.
Following the messy back-door IPO, the KKR founders will finally decide it’s better to quit than fight the slow decline of private equity. An extra billion or two in Kravis’s pocket will make selling out to Steve Schwarzman just barely bearable.

By year-end, even Ron Paul will hail Fed Chairman Ben Bernanke as America’s greatest ever central banker
The Fed will wind down its QE2 program just as the economic recovery picks up speed and the risk of widespread deflation recedes. Even Bernanke’s harshest critics will concede that since the collapse of Lehman, he has gotten just about everything exactly right.