“For several decades I have organised a series of “Benchmark” lunches on Fridays in August for serious investors who spend their summer weekends in eastern Long Island,” writes Blackstone’s Byron Wien in his latest market commentary.”About 75 attended the three sessions, including leaders in hedge funds, private equity, real estate and venture capital. here were many billionaires and many others whose net worth hasn’t quite gotten there, but whose views are widely respected throughout the investment community.”
Here’s a summary of the what they said about the markets and the world:
On Stocks: “At all three sessions, most of the group thought the Standard & Poor’s 500 would hit 1500 before year-end. A few even thought 1600 was possible by next August. A small minority saw the index returning to 1250 (where it started the year) within twelve months.”
On Europe: “I was surprised that most participants believed the European Union would remain together over the next year. The ECB would continue to provide the liquidity necessary to keep 10-year yields for Italy and Spain below 7%. It would also be there to enable Greece and Portugal to meet their obligations, keep their governments running and pay their employees.”
On China: “There was again great concern over the economic situation in China. In the past two years this focused on the overbuilding of apartments and office buildings, but those familiar with the situation were less worried about that now. What did trouble them was that the slowdown in the economies of Europe and the United States had reduced demand for Chinese manufactured products. Inventories were piling up and production schedules had been reduced.
“The group overall believed that the risks of a hard landing were too great for the government to allow it to happen, and China had both the fiscal and monetary tools to prevent a serious slowdown. There were already thousands of incidents of social unrest and if the economy did not grow at 7% or more, these were likely to increase.”
On The Elections: “Naturally there was plenty of controversy over the coming election in the United States. While most of the participants were going to vote for Romney, the majority at all three sessions thought Obama would win in November.”
On Israel-Iran: “Many believed the Israelis would bomb Iran if they thought the country was close to developing a nuclear weapon, although they would probably wait until after the U.S. election to do it.”
On Gold: “On other issues, there was general feeling that gold had become overextended at $1900 and was consolidating now. At some point in the next several years it would resume its rise because monetary policy was easy and currencies in the developed world were being debased.”
Read the whole note at Blackstone.com.
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