Blackstone’s Byron Wien releases his 38th annual list of the top surprises for the year just begun.
Elon Musk has made a hash out of his Twitter purchase so far.
He fired about two-thirds of the company’s staff, only to find that he needed to hire back some workers. He started, stopped, then started again a paid subscription service.
And Musk has criticized some of Twitter’s advertisers for pausing their ads. Given that advertising accounts for 90% of the company’s revenue, that criticism might not have been such a good idea.
The question of whether the Tesla chief executive can succeed in righting Twitter’s struggling finances remains open. Many experts have expressed doubts.
But the esteemed veteran investment strategist Byron Wien, now vice chairman of private-equity titan Blackstone, isn’t one of them.
Wien has released his 38th annual list of top 10 economic, financial and political surprises for the year just begun.
He defines a “surprise” as an event that the average investor would assign only a one-out-of-three chance of taking place but that he sees a better than 50% likelihood of happening.
Wien formed the list with help from Joe Zidle, chief Investment strategist in Blackstone’s Private Wealth Solutions group.
Here are some of Wien’s most interesting picks, including one about Musk and Twitter.
“While the Fed is successful in dampening inflation, it overstays its time in restrictive territory,” Wien said. So a “mild” recession ensues and profit margins are “squeezed.”“Despite Fed tightening, the [stock] market reaches a bottom by midyear and begins a recovery comparable to 2009,” Wien said.“The Fed remains more hawkish than other central banks, and the U.S. dollar stays strong against major currencies, including the yen and euro,” he said. “This creates a generational opportunity for dollar-based investors to invest in Japanese and European assets.”“The U.S. becomes not only the largest producer of oil, but also the friendliest supplier,” Wien said. “The price of oil drops primarily as a result of a global recession, but also because of increased hydraulic fracking and greater production from the Mideast and Venezuela. The price of West Texas Intermediate crude touches $50 this year [compared to $73 recently]. But there’s a $100 tick out there sometime beyond 2023, as the world [economy] recovers.”“The bombardment, destruction and casualties in Ukraine continue for the first half of 2023,” Wien said. “In the second half, the combination of suffering and cost on both sides necessitates a ceasefire, and negotiations on a territorial split begin.”As for Musk and Twitter, “in spite of the reluctance of advertisers to continue to support the site and the skepticism of creditors about the quality of the firm’s debt, he gets Twitter back on the path to recovery by the end of the year.”Wien also included three also-ran picks. These are ideas Wien and Zidle don’t find as relevant or don’t see as likely as the 10 picks on the list. Here’s an also-ran selection. “Because of medical breakthroughs across the board, many people decide on a cryogenic burial, expecting to be defrosted when a cure for the disease that caused their demise is discovered,” Wien said. “Funeral homes across the country advertise that ‘it’s nice to be on ice.’”