Unpredictable predictions
As is now traditional, we celebrate Boxing Day with some out of the box thinking to make some unusual predictions in for the year ahead.
As ever, please share you're own interesting predictions in the comments. Ideally they should be relatively likely to happen, but unlikely to be listed in any other list of year ahead predictions.
Sports
Max Verstappen will not win the F1 world championship. To win in F1 requires ruthlessness and a willingness to take risks that others won't. That's why the experts would always pick Senna.
Verstappen certainly has Senna's ruthlessness (unlike say Norris), but this season will be his first as a father, which might take the edge off his risk taking.
However being the best driver is less important than having the best car, and the best predictor of that is which car won the last constructors championship. This year that was McLaren.
That is all beside the point though. The only relevant thing for 1992 was that Mansell was driving the Adrian Newey designed FW14b. With Newey now at Aston Martin, we can expect the Red Bull to lose a step, which should be enough for someone else to win.
Spurs will lead the league in adjusted away attendance. Premier league games are generally played to capacity crowds, but there's always going to be a few people who miss games. For Tottenham it is the players who are missing games due to injury, especially on defense. The manager has decided to attack, resulting in lots of goals for both sides. That's a game you're not going to want to miss.
If you look at raw figures for average away attendance then Man Utd is near the bottom because their average doesn't include playing at Man Utd. We adjust this by adding 1/19x the average home attendance for each team, essentially giving each team one game at each ground. After this adjustment, last year Man Utd was 1st and Man City were 2nd. Spurs were 5th. Both Manchester teams are terrible this year so top place should be more up for grabs.
Juan Soto will play fewer than 100 games due to injury. In his 8 MLB seasons, Soto has played in 116, 150, 47, 151, 101, 52, 162, and 157 games.
Okay so the 47 was in a covid shortened season, but a pattern is a pattern. He also just signed a mega-contract to play for the Mets, so something bad seems likely to happen.
Again, with Cohen's money these are not your father's Mets, but still.
The real reason is that I think he will try too hard. He famously bet on himself by turning down a $440m contract from Washington. Having won his bet, I think he'll feel able to push his body to the limit, and end up going over it.
No NFL players will be suspended for betting on sports. NFL players often seem to get into trouble. I think the combination of short average careers and repeated head trauma that clouds their judgement might make them more susceptible. However, after a spate of betting related suspensions in 2023, there were none this year. This could mean that players now know they are being monitored so it isn't worth it. More likely though is that there just isn't much money in it any more. Interest in sports betting has stagnated recently. The new growth plan appears to be focused on in-game wagers. These are micro-transactions designed to extract as much money as possible from the current set of addicts. The value of inside information from players is almost nil in such an environment, so I think the people who might seek to tempt players have probably moved on to something else.
Technology
Two delivery drones will crash into each other. Mid-air collisions are rare. The chance that two random flight paths intersect in a 4-dimensional space is close to zero. On the other hand, if you put enough random flight paths in the same area then it can happen.
AMZN is restarting their drone delivery service after the FAA clarified their stance on drones. They are probably smart enough not to have their drones hit each other (and we'll probably never find out about it even if they do)
but they are not the only game in town. AI route planners from different companies could well arrive at similar trajectories to avoid obstacles on their path to and from similar locations.
A big tech company will launch a robo-psychology service. Predictions of a mass psychological breakdown on a Trump victory appear to have been wrong. In fact google searches for 'psychologist' were relatively low on 6th November. However, mental health is still a significant issue in modern society, and relatively few people seek help. The main obstacle for the robo-psychology industry has probably been cleared in that people are becoming more comfortable in talking to an AI. Self-hypnosis might be another similar application.
An EV charging company will go bankrupt Elon Musk fired his entire Supercharger team earlier this year. And they were supposedly profitable. Who is going to fund these companies if not the government?
The point here is that the world has plenty of raw materials and capacity for producing batteries. Battery storage is probably a better investment in power infrastructure than charging stations that almost no-one has a use for.
Apple will launch smart reading glasses
Apple's customers skew young, a failing they may have sought to redress by highlighting the hearing aid feature in their latest airpods. Meanwhile, their $3500 VR headset is failing. Meta's Ray-Ban smart glasses for about a tenth of that cost are a hit. Apple is planning to launch a cheaper version to compete. I think they'll come with magnification like reading glasses to appeal to the older audience.
Politics
Justin Trudeau will apologise for his party losing the election. To his credit, Trudeau at least recognizes that his only shot at a remarkable comeback is to try to learn from the master. Unfortunately, his trip to see Trump appears to have hurt him in the polling and with his party for now. I guess that's what happens if your supporters buy into your propaganda too much.
I'm not quite sure who he'll apologise to. Probably Klaus Schwab is top of his list. I don't think he'll go into denial and blame everyone he can think of like the Democrats though.
Trump will not create a bitcoin reserve on day 1. Okay I'll grant you this isn't much of a prediction since even the first 100 days is an underdog in the betting markets.
The point is twofold. First is that buying bitcoin isn't really a great idea for the US. The dollar's status as a reserve currency brings many benefits to the nation, and setting a precedent for the world that holding bitcoin in reserves is okay will only serve to undermine the dollar.
More to the point though, the people in charge in the new administration are markets people instead of politicians. The idea that price doesn't matter when spending taxpayers money is anathema to them. At the very least they will wait until bitcoin has a big correction before buying.
Trump will end 2025 with an approval rating below 50%. The optimist in me thinks that Trump's agenda to reshape the government and rejuvenate America will be a resounding success, as to think otherwise would mean betting against Elon Musk. However, to achieve success will mean taking difficult decisions that will create some short term pain as the country adjusts. As a second term president, Trump should not care what his approval rating is and so should be willing to take these decisions.
China will successfully meet their main goals for economic and social development. After trading steadily lower from 2.2% down to 1.4% over the first 11 months of 2024, Chinese 1y bond yields have collapsed below 1% in December. You might think that this is telling us that something bad is going on in China's economy - either recession or Japanification. However, I've read the Politburo statements this year and learned that they are making fine progress on their main goals. So long as Xi remains in power and they continue to take Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era as guidance, I have no doubt that they will tell us that this progress has continued.
In particular, to quote the 9th December statement, I think that they will "promote the sustained recovery" of an economy that is both stable and growing at about 5%.
Market correlations
All correlations are in return space of course.
1. The dollar will be positively correlated to SPY.
During large equity sell-offs, the dollar often benefits from a safe haven bid, as investors flock to the liquidity of treasuries. This is particularly the case when risk-off is triggered by geopolitics.
In 2025 however, US assets are likely to rise or fall according to the success or otherwise of Trump's domestic agenda. We enter the year with both the dollar and SPY looking extremely expensive and crowded, which will also cause them to trade together as risk sentiment falls.
2. Microsoft will be the most correlated to QQQ among the magnificent 7.
Windows 10 will stop getting supported in October 2025. Windows 11 is widely disliked, but 12 is not going to be coming out next year because Microsoft is too busy trying to integrate AI into 11. As an individual consumer I can easily choose to try a Mac or Linux instead, but corporations are pretty much stuck.
There are many tech companies waiting on this MSFT enforced upgrade cycle to begin. The vigour with which it takes place will therefore dictate the success of both MSFT and the Nasdaq as a whole.
3. INDA and ASHR will be positively correlated.
Another obvious prediction to improve my average you might think, but rather stunningly, this prediction would have been wrong for 2024.
We got a big rotation of international investors from a crowded Indian market to a deeply unloved Chinese market in Q4, and that pushed the correlation between the two markets negative.
That big rotation can't really happen again, so this prediction seems safe. In any case, I don't think Trump is interested in helping India at the expense of China. He wants to help America, and prefers to make win-win deals with other countries.
4. LMT will be negatively correlated to HEDJ.
HEDJ is an ETF that tracks European stocks with a currency hedge. Effectively this means that it is tracking the European stock index in its local currency, except that it trades in US hours so when I want to calculate a correlation with a US stock I don't have any issue with a timing mismatch.
Anyway, as the chart shows, the onset of war in Ukraine was good for LMT but bad for HEDJ. World peace under Trump 2.0 will be bad for LMT and good for HEDJ.
Miscellaneous
User ratings of video games will improve. This week the GTA community is abuzz with the prospect of another trailer for GTA6 being released on the 27th. We're not talking about the game here. We're talking about practise. The actual game is expected to be released late in 2025, and when it does, every other game is going to lose significant market share.
What this means is that other games developers are going to have to get better. It will no longer cut it to introduce updates to squeeze revenue from their player base. The easiest way to improve a game is to listen to the community and incorporate their suggestions. There is some evidence that developers have started to do exactly this. Happy players should start to show up in the ratings. (Currently the modal rating on steamDB is 76%.)
Polymarket will be banned in at least 1 country; TikTok will not be banned in the US. After Polymarket proved its effectiveness in predicting the US election, France moved to ban the site. I think that some other country will join them in an effort to maintain control. For similar reasons, I don't think TikTok will be banned. The deep state is not worried that TikTok is a national security threat due to Chinese influence. They just want to be able to control it to compensate for their huge error in allowing Twitter to be sold.
Dunkin Donuts will use more sugar in their hot chocolate. This can happen in more than one way. Cocoa is getting outrageously expensive so they might want to use less of it. Adding more sugar would be one way to compensate for the worse flavour. Alternatively, consumers might start to demand less usage of corn syrup under MAHA. Of course, if the same consumers actually look at the ingredients in Dunkin hot chocolate they might demand less of it entirely.
Cold plunges will become less popular. With Ozempic making weight loss possible for more people, a slim figure is now less desirable than a toned one, which still requires muscle development. Cold plunges have been gaining in popularity in recent years due to the health benefits. However, some research suggests that they actually reduce your ability to gain muscle. This research may or may not turn out to be true, but if there's any doubt in the matter, I think people will decide not to freeze their butt off. Remember, athletes may be fit, but not everything they do to maximise performance is healthy, so don't blindly copy what they do.
On 1st April the DOGE will announce tariffs for US trading partners that use the metric system. Vivek Ramaswamy has spoken about their intent to have fun at the DOGE. Trolling the French and Germans sounds like the sort of thing that they might do. After all, it would certainly make things more efficient for the US if everyone would stop using those silly French units. It will cause particular problems for the British of course where imperial units are different. I mean seriously, who thought it was a good idea to have different numbers of fluid ounces in a pint, and why on earth are the fluid ounces different? I'd like to see the Kremlin respond that they will tariff any country that does't use the Julian calendar.
Happy Julianuary everyone.
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