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Notes -
In what’s becoming an annual ritual, I’m putting together a list of predictions for the year to come to share with some like-minded friends, mostly for fun and discussion. They’re still a work-in-progress, mostly cobbled together yesterday on the toilet, so I’m keen to tweak them. Format is straightforward.
<5% chances
Four things that you are extremely confident will not happen, the less obvious the better (no points for “the sun goes supernova”). To get top score, none of these should happen.
(1) Chinese invasion or full-scale blockade of Taiwan.
(2) Domestic terror attack in Western country killing >500 people
(3) Major housing price collapse (>25% YOY fall) in any G7 economy
(4) Nuclear weapons used outside Ukraine
~25% chances
Four things that you think are fairly unlikely to happen in 2023. For perfect calibration, exactly one of these should happen.
(5) At least one nuclear weapon used in Ukraine.
(6) Trump declares he will not/cannot run in the 2024 election.
(7) New serious COVID variant triggers new serious round of pandemic (more than 30 days of national lockdowns in UK)
(8) Average OPEC oil price for 2023 >$110
50% chances
Here I’m shooting for 2/4 to come true.
(9) BTC price recovers to at least $25k within first six months of 2023.
(10) Twitter announces bankruptcy.
(11) Western-made jets supplied to Ukraine
(12) Erdogan to win June 2023 Turkish national elections
75% chances
Shooting for 3/4.
(13) No new UK General Election.
(14) Vladimir Putin still President of Russia.
(15) A free Open Source LLM available by December 2023 with equivalent functionality to ChatGPT and no hard content restrictions.
(16) UK economy experiences net negative growth in 2023
>95% chances
Shooting for 4/4 here, but again, less credit for extremely obvious stuff.
(17) Joe Biden still President of USA at end of 2023
(18) SCOTUS overturns Regents of the University of California v. Bakke
(19) Xi Jinping remains Chairman of Communist Party
(20) SpaceX has first successful orbital flight of Starship.
Would love to hear your thoughts!
Nukes seem overrated even in Ukraine. I’d still put used in Ukraine at the under 5% bucket.
Housing price collapse >25% in real terms seems guaranteed. But my guess is it happens over 5 years. So 25% for one year seems close.
Ukraine is expected to get F-16 by the experts. Alperovitch expects Ukraine to get full Nato weapons in time. Maybe not 2023 but there coming when the west has a game plan for post war and are ready to speed up victory.
Joe Biden president at end of 2023 is close to right. I’d go lower. Biggest risks imo is health. He’s old enough that 5% chance of a health issue seems plausible. Plus any risks something gets pinned on him with Hunter.
I’d have to do more analysis but 75% seems high for UK negative growth.
Twitter bankruptcy seems high for next year. Musks can bail them out. And I think they have some cash on balance sheet to get thru the year. Without Musks having cash it might be 50%. Musks might even just buy out the debt at a discount personally. If Twitter was pe owned etc then the finances might be closer to 50-50. But for reputatational risks he’s got enough money to fix them.
It would be a tactical bankruptcy. Twitter already survived a decade and the stock price was at $45 despite losing money, so imminent bankruptcy seems very unlikely, especially with Musk's cost cutting. Musk would not buy a company for $43 billion at risk of imminent bankruptcy. He would wait for the stock to crash and then buy it.
No clue if you understand bankruptcy. You cant just go bankrupt. Need to wipe out your equity which wouldn’t exists now. You can’t change the balance sheet without completely wiping out the current equity.
Musks loses control of twitter if he declares bankruptcy. The debt currently owned by banks becomes equity and they can sell the debt out to the highest bidder as new equity.
Musk would still be the CEO during bankruptcy and retain ownership if after emerging from bankruptcy, being that he's the debtor-in-possession. If it went chapter 7 then he would lose everything. This occurs when there is no way to rectify the situation, but twitter still earns $600 million/year. Twitter has $18 billon in debt. bankruptcy would allow twitter to renegotiate the terms of this debt on more favorable terms. Asbestos and tobacco companies have filed chap 11 bankruptcy when faced with litigation, to reduce of the burden of this debt. When emerged from bankruptcy, the old holders simply get new stock , they don't lose everything. Musk would not float the idea of bankruptcy if it meant irrevocably losing the $25 billion he put into it.
The debtors wouldn’t take a write down on their debt without taking over the equity. The debtors would be the equity.
He would need to own the debt to maintain control.
right but musk would still own part of twitter too after it emerges . It would make no sense for companies to ever go chapter 11 if it meant the owner losing everything.
No that’s normal. You go bankrupt the equity goes to zero. And the debt takes over.
Litigation might be a bit different with unlimited liability. But debt taking over equity is completely normal and the standard.
You are 100% correct companies don’t go bankrupt because they want to. They go bankrupt because they had a bill to pay and their bank account say 0.
I could see Musk buying some of the debt that seems discounted from face about 40 cents on the dollar. Buy the debt to make sure you retain some control post bankruptcy.
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Not necessarily. That is what a strategic bankruptcy is. Chapter 7 means twitter is worthless and the assets that remain sold off to pay off creditors, and musk loses everything. Chapter 11 allows twitter to reorg while giving Musk an opportunity to retain some of his wealth and run the company. Creditors would prefer to get paid than not, so reorg is better than defaulting. let's say twitter is worth $30 billion. $18 billion is debt. that $12 billion does not go away. It does not go to the creditors. unless twitter becomes worthless then musk loses everything . If it thrives, Musk's stake could be worth more when it reemerges. https://www.fool.com/investing/general/2009/06/02/3-bankruptcies-that-actually-helped-investors.aspx
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