Surprise No. 5: Under political, economic and stock market pressure, Obama begins to move back toward the center, but it is too late.
By midyear (after failed budget deficit debate) it will be clear to the president that his legacy is in serious jeopardy. In response, Obama takes a surprising move to the center. His administration's team is turned upside down, and the president, in search of economic growth and a more vibrant jobs market, will approve legislation to allow fracking on federal lands. In addition, he completely turns around on his previous Keystone Pipeline stance and green lights the project. Several previously somnolent regional bank stock prices positioned in areas of potential fracking activity revel in the administration's move. For example, Northwest Bancshares ( NWBI), a bank holding company right smack in the middle of Pennsylvania's fracking sites, rises by 25%. The move fractures the Democratic Party and emboldens the Republicans. For both the president and the Republicans, it is too little and too late, as the approval ratings of both plummet to all-time lows and the aforementioned third party (led by Bloomberg) gains popularity (see surprise No. 3). By year-end the People's Party is estimated to have as much as 20% of the national vote. Strategy: Buy NWBI.