Predicts socialists to hold American capital (5)
I believe the answer is:
reads
'predicts' is the definition.
(reading is a kind of predicting)
'socialists to hold american capital' is the wordplay.
'socialists' becomes 'reds' (red is a kind of socialist).
'to hold' indicates putting letters inside.
'capital' suggests taking the first letters.
The first letter of 'american' is 'a'.
'reds' placed around 'a' is 'READS'.
(Other definitions for reads that I've seen before include "Scans" , "Peruses" , "Studies (at university)" , "Understands written language" , "Looks at and undertsands the written word" .)