Given that we're all Keynesians now, it's worth remembering that bonds can stay bid longer than shorts can stay in business.

4) Oil (defined as the second WTI contract) will NOT trade at either $25 or $100 in 2009. The bone-crushing recession will keep demand limp enough to ensure that we don't get a 100% rally this year from the 2008 close of 48.59. Yet ironically enough, the collapse in oil could, in the long run, be a terrible thing for the global economy. It discourages investment in future production and indeed renders some current projects unviable should crude trade at $40 for the long-term. All of which means that when demand finally does recover, there will be insufficient supply to meet it, and we'll live through H1 2008 all over again. Meanwhile, the decline in energy prices has removed the incentive for Americans in particular to trade in their dreadnoughts for more energy-efficient cars. Macro Man read one investment website a few days ago wherein one contributor proudly announced that he had bought a Chrysler station wagon (retail price: > $30k)for his wife. This is a car that gets 14/22 mpg. That's lower than a Porsche 911 turbo, one of the fastest cars that you can buy....and for a family runaround! It boggles the mind.

On a shorter-term basis, Macro Man reckons (unscientifically, admittedly) that oil in the 30's will take enough production off-line that crude doesn't get into the 20's, no matter how tepid demand is. Indeed, if anything, crude looks like it wants to break higher, technically.
5) VIX will post a higher average in 2009 than 2008 but will NOT reach 2008's peak. Quick! What was the average level of the VIX last year? 45? 50? 60? No, 32. That's only a couple of percentage points above the average from mid-01 to mid-02. And that's despite a much bigger financial crisis and a much deeper recession. While the former may wane this year, the latter will not. Given that Macro Man looks for new lows, it seems reasonable to expect VIX to remain elevated. However, the battery of Fed programs should see that financing conditions do not reach the level of last year's panic, and it also seems reasonable to expect that the authorities learned their lesson with Lehman. As such, Macro Man doesn't expect to see 80 again on the VIX.
Tune in tomorrow for the second half of the list.