Investing Legend Byron Wien Reveals 10 Surprise Predictions For 2013

Byron Wien

Photo: Bloomberg

Byron Wien started predicting surprises in 1986 when he was the Chief U.S. Investment Strategist at Morgan Stanley.He continues the tradition today as Vice Chairman at Blackstone.

His “10 Surprises for 2013,” which he believes have a better than 50 per cent probability of happening, have a bearish slant from the perspective of the U.S. investor.  He sees stocks falling while commodity prices rise.

His prediction for Iran may scare some people, but he is a bit more hopeful for immigration reform in the U.S.

Without further ado …

Iran gains nuclear capabilities.

'Iran announces it has adequate enriched uranium to produce a nuclear-armed missile and the International Atomic Energy Agency confirms the claim. Sanctions, the devaluation of the currency, weak economic conditions and diplomacy did not stop the weapons program. The world must deal with Iran as a nuclear threat rather than talk endlessly about how to prevent the nuclear capability from happening. Both the United States and Israel shift to a policy of containment rather than prevention.'

Source: Blackstone

The S&P 500 declines to below 1300.

'A profit margin squeeze and limited revenue growth cause 2013 earnings for the Standard & Poor's 500 to decline below $100, disappointing investors. The S&P 500 trades below 1300. Companies complain of limited pricing power in a slow, highly competitive world economic environment.'

Source: Blackstone

Financial stocks tumble after a strong 2012.

'Financial stocks have a rough time, reversing the gains of 2012. Intense competition in commercial and investment banking, together with low trading volumes, puts pressure on profits. Layoffs continue and compensation erodes further. Regulation increases and lawsuits persist as an industry burden.'

Source: Blackstone

Crude oil falls to $70 a barrel.

'In a surprise reversal the Democrats sponsor a vigorous program to make the United States independent of Middle East oil imports before 2020. The price of West Texas Intermediate crude falls to $70 a barrel. The Administration proposes easing restrictions on hydraulic fracking for oil and gas in less populated areas and allowing more drilling on Federal land. They see energy production, infrastructure and housing as the key job creators in the 2013 economy.'

Source: Blackstone

The GOP makes a major push for immigration reform.

'In a surprise reversal the Republicans make a major effort to become leaders in immigration policy. They sponsor a bill that paves the way for illegal immigrants to apply for citizenship if they have lived in the United States for a decade, have no criminal record, have a high school education or have served in the military, and can pass an English proficiency test. Their goal for 2016 is to win the Hispanic vote, which they believe has a naturally conservative orientation and which put the Democrats over the top in 2012.'

Source: Blackstone

The Shanghai Composite shoots up over 20%.

Commodity prices rise as climate change produces another poor crop season.

'Climate change contributes to another year of crop failures, resulting in grain and livestock prices rising significantly. Demand for grains in developing economies continues to increase as the standard of living rises. More investors focus on commodities as an investment opportunity and increase their allocation to this asset class. Corn rises to $8.00 a bushel, wheat to $9.00 a bushel and cattle to $1.50 a pound.'

Source: Blackstone

Gold spikes up to $1,900 an ounce.

'Although inflation remains tame, the price of gold reaches $1,900 an ounce as central bankers everywhere continue to debase their currencies and the financial markets prove treacherous.'

Source: Blackstone

The Nikkei explodes while the yen plummets.

'The Japanese economy remains lackluster and the yen declines to 100 against the dollar. The Nikkei 225 continues the strong advance that began in November and trades above 12,000 as exports improve and investors return to the stocks of the world's third largest economy.'

Source: Blackstone

European equities decline 10% amidst continuation of austerity.

'The structural problems of Europe remain largely unresolved and the mild recession that began there in 2012 continues. Civil unrest subsides as the weaker countries adjust to austerity. Greece proves successful in implementing policies that reduce wasteful government expenditures and raise revenues from citizens who had been evading taxes. European equities, however, decline 10% in sympathy with the U.S. market.'

Source: Blackstone

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