Episode 9: The 2016 Predictions Episode

Ed Hammond (0:17)

So, if you believe the bankers, it's always something to think about. I know, I think we missed a lot of figs.

Joe Weisenthal (0:25)

All right, everyone, welcome to the Predictions episode of Odd Lots. We're going to be talking about what the big stories are going to be in 2016 and what we think is going to happen.

I'm Joe Weisenthal, managing editor at Bloomberg Markets.

Tracy Alloway (0:40)

And I'm Tracy Alloway, executive editor at Bloomberg Markets.

Joe Weisenthal (0:43)

So once again, we've assembled an ace team of Bloomberg News reporters and editors. Last week, we discussed what their favorite stories were for the year.

Chris Nagy (0:53)

As sort of a connoisseur of Armageddon scenarios, I sort of have to say that the August 24th, the late August, sell off in the stock market is my favorite story.

Ed Hammond (1:04)

So Valiant is sort of the bad boy of Pharma.

Tracy Alloway (1:08)

Wait a second.

Ed Hammond (1:10)

I know, I was just thinking they've been replaced slightly by cheering recently, but they were bigger and in some ways badder.

Tracy Alloway (1:16)

So your favorite story is essentially the end of a story.

Joe Weisenthal (1:19)

Yeah, I think so.

Dan Moss (1:21)

This story about Furious 7 really did strike me as encapsulating.

Joe Weisenthal (1:25)

This week, I think it's going to be a little more challenging because we're going to put them on the spot and ask them what they think is going to happen in 2016 And prediction is harder than looking back.

Tracy Alloway (1:35)

And then presumably at the end of 2016, we're going to ridicule them mercilessly for getting everything wrong, right?

Joe Weisenthal (1:40)

We're getting it right. But yeah, we're definitely getting meat here exactly on this date again, one year from now to look back at the predictions and we'll see how they did. Let's have everyone introduce themselves.

Chris Nagy (1:52)

I'm Chris Nagy, the managing editor for Stoxx at Bloomberg News.

Matthew Boesler (1:56)

I'm Matthew Boesler. I cover the Federal Reserve.

Ed Hammond (1:59)

I'm Ed Hammond. I cover deals for Bloomberg News.

Matt Levine (2:01)

I'm Matt Levine. I'm a columnist for Bloomberg View.

Joe Weisenthal (2:04)

All right, so everybody wants to hear from the Stoxx guy about what's going to happen. Chris Nagy, you said last week that your favorite story for 2015 was the flash crash of August 24th with markets cratered.

What's your big prediction for 2016?

Chris Nagy (2:21)

So at the risk of embarrassing myself, I mean, there's no doubt in my mind that the most variant view you could have right now coming into 2016 is that Stoxx are going to go up. So what I did was try to fashion some kind of thesis, sort of back, reverse engineer, so that I could say that that was my opinion. I mean, I have no idea what's going to happen. But one thing that occurred to me over the weekend, two things struck me. One was that everyone on Twitter was saying how much they loved The Big Short. And I was back with my family in Boston, and a few people up there were talking about it, went to a little party, and they talked about rereading it. And then I watched the Democratic debate with my mom, and they were just going after Wall Street in a huge way. My mother at one point turned to me and said, they hate you.

That word from Bloomberg, she just meant sort of white males, I think.

But one thing that could happen as a result of the big election year, obviously, and whatever, this sort of a cultural event around The Big Short, kind of, is that sentiment towards Wall Street and the stock market is probably not going to improve a great deal in 2016 I think that there's a lot of opportunity for grandstanding against banks and just sort of commerce in general. They'll probably be unable to resist.

And in my opinion, that's the best thing that could happen to the stock market. This has been true since 2008 that the easiest thing in the world is to turn around and bash American commerce and markets and banks and things like that. And what's happened since then is markets have staged one of the biggest rallies in their history. And I think anyone staring at it every day the way I do, the way you guys do, is aware that that's part of the reason stocks have been able to go up, is because this incredible wall of worry exists politically against them. It's almost seen as immoral that the market do well. And as a result of that, I think it has done. It's been able to sort of convince lots of people periodically. Everyone's basically a non-believer.