Okay, it’s time to get out the old crystal ball (or rather my arrogant little brain) and make a few economic predictions for 2015. Note: these are not set in stone; instead, they are simply my opinion of what will happen.
Some likely economic news stories for 2015 include:
- The price of gold will continue to fall. Gold was trading around $1200 a troy ounce in December. Gold trading at under $1,000 an ounce is likely in 2015. If that happens, expect a big sell off and a bankruptcy of a major gold company.
- Expect to see more death and pain in the retail sector as more and more major retailers go down in flame. There will be lots of store closings and layoffs at chains like Sears (NYSE: SHLD), Office Depot/OfficeMax (NASDAQ: ODP), Radio Shack, Kohl’s (NYSE: KSS), and Family Dollar Stores (NYSE: FDO). Expect to see at least one major chain disappear completely. Once the euphoria from the holiday shopping season wears off, expect to see major drops in stock value and major contractions.
- There will be major contractions in the dollar store and category killer sectors, as chains like Toys ‘R’ Us, Office Depot, Family Dollar, and Big Lots (NYSE: BIG) get hit by economic reality. Expect to see store closings and lesser chains go down. One dollar store operator, Alco, has already completely liquidated itself. A likely contender is Big Lots.
- There will be some resolution to the imbecilic battle over Family Dollar between Dollar Tree and Dollar General. Whatever happens, stockholders will be the losers because one of three things will happen: Dollar Tree will be left on its own to collapse, or Dollar Tree Stores (NASDAQ: DLTR) or Dollar General (NYSE: DG) will buy Family Dollar and that company’s stock will be destroyed by the expense of acquisition. A Dollar Tree/Family Dollar or Dollar General/Family Dollar combination will not be the new Walmart; it’ll be the new Sears/Kmart, a clumsy combination doomed to failure.
- Speaking of Wal-Mart Stores (NYSE: WMT), it will do better in 2015 as ecommerce picks up and more neighborhood markets open. Expect to see shopper visits fall at super centers and some of them close or get cut back. I also predict that Walmart might begin reducing the size of its Canadian operations.
- Target (NYSE: TGT) will struggle in 2015 and have to make a decision about its Canadian adventure. Expect to sales decline and store closings in 2015. I wouldn’t be at all surprised to see a Target share price collapse later this year.
- There will be a major restructuring at Sears Holdings (NYSE: SHLD) this year. Expect more store closings and Eddie Lampert to spin Kmart off into a separate division or sell Kmart. Another likely development is that Sears will drop businesses like its auto centers. Expect Sears to pull completely out of some regions.
- Costco Wholesale (NASDAQ: COST) and Kroger (NYSE: KR) will continue to grow and grow at Walmart, Safeway and Target’s expense. Costco’s TTM revenue will probably hit $120 billion at some point this year and could be approaching $130 billion. Kroger’s TTM revenue will definitely exceed $110 billion by the end of the year and possibly exceed $115 billion by October.
- Amazon’s (NASDAQ: AMZN) TTM revenue will approach $100 billion by the end of the year. It was around $85.25 billion in September 2014. Despite this growth, Amazon will still have lots of troubles and not show a profit. Expect to see a major rise in Amazon’s share price early in the year and a drop later on.
- Alibaba Holding Group (NYSE: BABA) will fizzle and suffer a major drop in share price, unless it demonstrates some real revenue growth.
- The Tesla Motors (NASDAQ: TSLA) bubble will finally collapse, and its share price will fall well below $100.
- The price of oil will continue to fall. It could hit $40 a barrel, but begin to rise probably in the summer as the supply contracts. A similar development will occur with natural gas.
- Apple Pay (NASDAQ: AAPL) will continue to grow, but it will meet stiff resistance from retailers and banks.
- Other electronic payment solutions, like Venmo and Current C, will begin to compete with Apple Pay.
- Current C could be unveiled in 2015 and shake up the payment industry. Current C could quickly grow bigger than Apple Pay if Walmart and Kroger get behind it.
- PayPal will start disrupting the financial services industry as soon as it gets spun off by eBay Inc. (NASDAQ: EBAY). Expect PayPal to unveil its version of Apple Pay in the form of a souped-up Venmo and enter the banking industry, possibly by buying a bank.
- Income inequality will continue to be a major political issue in 2015 and possibly get worse. Expect to see growing social unrest and increasing political polarization as a result of income inequality.
- The U.S. real estate market will be crazy in 2015 with collapses and falling prices in some areas and bubbles in others. Expect to see one of the hot markets like L.A. or Denver collapse and new bubbles pop up in places like Las Vegas or Austin. If recovery continues, expect to see money pouring into some markets like Florida, especially if stocks collapse.
- Oh, and as for the stock market, that’ll do fine. Expect the Dow and the S&P to rise to new heights, but don’t expect a correction until 2016.
- One person who is likely not to survive 2015 is Vladimir Putin. He’s likely to suffer the fate of another bombastic Russian leader, Nikita Khrushchev, and be quietly put out to pasture in a Kremlin coup as Russia’s economy collapses.
One thing’s for certain, 2015 is likely to be a year of economic turmoil that will claim a lot of casualities.
The author is long on Kroger (NYSE: KR) and eBay Inc. (NASDAQ: EBAY).