Prediction for 2013

DOUG KASS 2013 -

Below are my 15 surprises for 2013. This year I have reduced the surprise list from 20 to 15. As I did last year, following each surprise, I have included a specific strategy that might be employed in order for an investor to profit from the occurrence of these possible improbables.

Surprise No. 1: The U.S. economy disappoints relative to consensus expectations.

Amid contentious and hyperpartisanship of political debate, consumer and business confidence sours, adversely impacting personal spending, job growth and capital spending plans:

* U.S. real GDP growth expands by only +1.5% (or less) in 2013. * There is no grand bargain, as the debt ceiling and budget issues are kicked down the road. * The only real development in the budget debate is that a financial transaction tax is adopted in exchange for a one-year increase in Medicare eligibility. * By midyear either Janet Yellen or Alan Blinder replaces Ben Bernanke as Fed Chairman and the administration's entire economic advisory team is turned over.

Question: How many politicians does it take to screw up our economy?

Answer: 537 (436 members of the House, 100 members of the Senate and one president)

The consensus view is that while the upcoming budget debate will likely get ugly and go down to the wire, a 10-year, $2 trillion agreement will be negotiated.

Unfortunately, the last meaningful agreement (in 2013) between the Republican and Democratic parties was the twenty-fourth-hour fiscal cliff compromise on Jan. 1, 2013.

The squabbling and enmity of the recent fiscal cliff debate poisons all future budget talks. The Obama administration is unwilling to make spending concessions anywhere that is needed to make substantive progress on our fiscal deficit. The Republicans are equally entrenched in policy view.

"This subcommittee has demonstrated in hearings and comprehensive reports how various schemes have helped shift income to offshore tax havens and avoid U.S. taxes.... The resulting...