- Brendan McDermid/Reuters
Blackstone Vice Chairman and ace investor Byron Wien has unveiled his list of 10 surprises for 2017.
Wien believes these things have a better-than-50% chance of happening, but the average investor anticipates a less than 30% likelihood of occurring.
Wien started this tradition in 1986, when he was Morgan Stanley’s top investment strategist, and he continued it when he joined Blackstone in 2009.
The predictions range from political (President-elect Donald Trump will step away from extreme positions) to financial (the 10-year yield will approach 4%).
Here they are:
1. Trump softens his tone considerably.
- AP/Andrew Harnik
“Still brooding about his loss of the popular vote, Donald Trump vows to win over those who oppose him by 2020. He moves away from his more extreme positions on virtually all issues to the dismay of some right wing loyalists.”
“He insists, ‘The voters elected me, not some ideology.’ His unilateral actions throw policy staffers throughout the government into turmoil. Virtually all of the treaties and agreements he vowed to tear up on his first day in office are modified, not trashed. His wastebasket remains empty.”
2. US economic growth tops 3% again.
- Jeff J Mitchell/Getty
“The combination of tax cuts on corporations and individuals, more constructive trade agreements, dismantling regulation of financial and energy companies, and infrastructure tax incentives pushes the 2017 real growth rate above 3% for the US economy. Productivity improves for the first time since 2014.”
3. The S&P 500 rises to 2,500.
- Thomson Reuters
“The Standard & Poor’s 500 operating earnings are $130 in 2017 and the index rises to 2500 as investors become convinced the U.S. economy is back on a long-term growth path. Fears about a ballooning budget deficit are kept in the background. Will dynamic scoring reducing the budget deficit actually kick in?”
4. The euro falls below parity against the dollar.
- Toby Melville/Reuters
“Macro investors make a killing on currency fluctuations. The Japanese yen goes to 130 against the dollar, stimulating exports there. As Brexit moves closer, the British pound declines to 1.10 against the dollar, causing a surge in tourism and speculation in real estate. The euro drops below par against the dollar.”
5. The 10-year yield approaches 4%.
- YouTube screencap
“Increased economic growth, inflation moving toward 3%, and renewed demand for capital push interest rates higher across the board. The 10-year U.S. Treasury yield approaches 4%.”
6. Angela Merkel loses the German election in October as populism sweeps Europe.
- Thomson Reuters
“Populism spreads over Europe affecting the elections in France and Germany. Angela Merkel loses the vote in October. Across Europe the electorate questions the usefulness of the European Union and, by the end of the year, plans are actively discussed to close it down, abandon the euro and return to their national currencies.”
7. Oil stays below $60 per barrel and the global supply glut increases.
- Thomson Reuters
“Reducing regulations in the energy industry leads to a surge in production in the United States. Iran and Iraq also step up their output. The increased supply keeps the price of West Texas Intermediate below $60 for most of the year in spite of increased world demand.”
8. “Donald Trump realizes he has been all wrong about China.”
- REUTERS/Thomas Peter
“Donald Trump realizes he has been all wrong about China. Its currency is overvalued, not undervalued, and depreciates to eight to the dollar. Its economy flourishes on consumer spending on goods produced at home and greater exports.”
“Trump avoids punitive tariffs to prevent a trade war and develops a more cooperative relationship with the world’s second largest economy.”
9. Japan’s economy and stock market surge.
- Kim Kyung-Hoon/Reuters
“Benefiting from stronger growth in China and the United States, real growth in Japan exceeds 2% for the first time in decades and its stock market leads other developed countries in appreciation for the year.”
10. ISIS becomes a much smaller threat.
- Reuters/Omar Sanadiki
“The Middle East cools down. Donald Trump and his Secretary of State Rex Tillerson, working with Vladimir Putin, finally negotiate a lasting ceasefire in Syria. ISIS diminishes significantly as a Middle East threat. Bashar al-Assad remains in power.”
And here are the also-rans: forecasts that Wien does not think are “probable.”
- Andrew Kelly/Reuters
- “Having grown weary of Washington after a year in the presidency, Donald Trump moves the White House to New York from April to December and to Palm Beach from January to March.” “The Democratic Party is sharply divided on strategy, with Bernie Sanders and Elizabeth Warren arguing for a shift to the left and others wanting to remain in the center. A lack of leadership gives rise to widespread speculation about sharp losses in the 2018 congressional elections.” “Donald Trump’s intimidation tactics prove effective in discouraging companies from moving some US manufacturing abroad, but he fails to bring jobs back. The wage differential is just too great. This becomes his biggest first-year disappointment.” “Trump’s first major international confrontation comes, not unexpectedly, from North Korea. Kim Jong-un threatens to set off a nuclear bomb in the mid-Pacific, calling it “a test.” Trump’s advisors try to restrain his desire to punish the country severely.” “India comes back into the investment limelight. Its economy grows at 7% and corporate profits for established companies are strong. Its stock market leads other large emerging countries, along with China.” “Trump’s efforts to get out of the Iran deal fail. The other countries signing the agreement believe Iran’s weapons-grade nuclear production has been restrained and force the U.S. to remain a participant.”
- REUTERS/Toby Melville