1. The Fed will raise rates.
Even though demand will remain weak and unemployment elevated in 2010, the Fed will (mistakenly) anticipate a return to potential growth in 2011, demonstrate its commitment to price stability and try to return to normal policy rate levels. Dollar carry-traders will get caught without a chair when the music stops.
2. Congress will fail to pass climate change legislation.
In the midst of a slow-growth, high-unemployment environment, passing an expensive, regressive climate change bill will prove too risky for too many members of Congress facing difficult mid-term elections in November. The Obama Administration will be forced to relearn that all politics is local and go back to the drawing board.
3. Emerging markets will soar.
Shrug off the long-expected debacle in Dubai; it will not spread contagion to other emerging markets. Large emerging market nations are stable and are better-positioned than ever to take advantage of a global economy that will return to trend growth, even as growth in the U.S., Europe and Japan remains tepid. The global economy will be driven by demand from the growing consumer classes in China, India, Brazil and other emerging markets. The US will play catch-up.
Tony Fratto is a CNBC on-air contributor and most recently served as Deputy Assistant to the President and Deputy Press Secretary for the Bush Administration.