May 30, 2023

Byron Wien is back with his 2022 list of 10 surprises for the year

Byron Wien photo

What would a new year be without 10 new surprises from Blackstone’s Byron Wien, who now makes the list with chief investment strategist Joe Zidle.

To start, here is his list for last year:

  1. China A shares lead emerging markets higher as Biden restores constructive diplomacy
  2. The US returns to ‘normal’ by Memorial Day
  3. Depressed hospitality and airline stocks become strong performers
  4. We begin the longest positive economic cycle in history
  5. Gold rallies and cryptocurrencies gain more respect during the year as the Fed embraces MMT
  6. Energy stocks are among the best performers in 2021 with WTI hitting $65
  7. The market corrects almost 20% in the first half, but the S&P 500 trades at 4,500 later in the year
  8. Surge in economic growth causes the 10-year Treasury yield to rise to 2%
  9. The US dollar slump reverses on better US growth
  10. Tesla acquires a major global auto manufacturer

I’ll give him 2 out of 10. He defines ‘surprises’ as events that a normal investor would only assign a one-in-three chance of taking place. I certainly wouldn’t put all of the ones on last year’s list in that category, nor this year’s list. But whatever, I write about these every year and I’m not stopping now

  1. The combination of strong earnings clashes with rising interest rates, resulting in the S&P 500 making no progress in 2022. Value outperforms growth.
  2. The CPI rises 4.5% for 2022 and persistent inflation becomes the dominant theme
  3. The yield on the 10-year Treasury rises to 2.75%.
  4. In spite of the Omicron variant, group meetings and convention gatherings return to pre-pandemic levels by the end of the year.

  5. Chinese policymakers respond to recent turmoil in the country’s property markets by curbing speculative investment in housing. As a result, there is more capital from Chinese households that needs to be invested. A major asset management industry begins to flourish in China, creating opportunities for Western companies.

  6. The price of gold rallies by 20% to a new record high, cryptocurrencies continue to gain market share

  7. The price of West Texas crude confounds forward curves and analyst forecasts when it rises above $100 per barrel.
  8. The nuclear alternative for power generation enters the arena. Enough safety measures have been developed to reduce fears about its dangers, and the viability of nuclear power is widely acknowledged. A major nuclear site is approved for development in the Midwest of the United States
  9. ESG evolves beyond corporate policy statements. Government agencies develop and enforce new regulatory standards that require public companies in the US to publish information documenting progress on various metrics deemed critical in the new era. Federal Reserve governors spearhead implementation of stress tests to assess financial institutions’ vulnerability to climate change scenarios

  10. In a setback to its green energy program, the United States finds it cannot buy enough lithium batteries to power the electric vehicles planned for production. China controls the lithium market, as well as the markets for the cobalt and nickel used in making the transmission rods, and it opts to reserve most of the supply of these commodities for domestic use

These are some vanilla surprises. He does add a few more interesting ones in the ‘also rans’, picking Puerto Rico as a new retirement destination of choice and says Jamie Dimon will embrace crypto.

Here’s the full list.

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