Byron R. Wien, vice chairman of Blackstone Advisory Partners, on Wednesday disclosed his top 10 surprises for 2012.
The new list of forecasts by the former U.S. chief investment strategist for Morgan Stanley marks his 27th year of annual predictions. While Wien says the average investor would assign each event a one-out-of-three chance of it occurring, the vice chairman believes the probability is better than 50 percent. He also noted that the character of his surprises is generally positive. In addition to the top 10, he included a list of four “also-rans,” those that either were not as important as the ones he chose for investors or because his probability for each was below 50 percent.
1. Significant extraction of oil and gas from shale and rock could be a game changer, which would lessen U.S. reliance on supply from the Middle East and drop the price of oil down to $85 a barrel.
2. The Standard & Poor’s 500 rises above 1,400, and stocks in general do better in 2012.
3. The U.S. economy gets a second wind, boosted by the decrease in the price of oil and rise in the equity markets, resulting in real gross domestic product growth at better than 3 percent and unemployment falling below 8 percent.
4. An anti-incumbent wave has Democrats taking back the House of Representatives and Republicans taking back control of the Senate as President Obama dukes it out with Republican presidential challenger Mitt Romney.
5. The European Union survives, as does the euro.
6. Eastern European and Asian hackers hit the banking system and force some bank closures for days.
7. Investors favor the currencies of countries deemed able to manage their economies: the Scandinavian countries, the Australian and Singapore dollar and Korean won.
8. Congress actually acts before the presidential election in November to reduce the federal budget by $1.2 trillion over 10 years.
9. Bashar al-Assad’s rule in Syria ends, with implications of a weakening effect on Hamas and Hezbollah and Iran becoming further isolated.
10. Emerging markets perform, with growth continuing in China, India and Brazil, albeit at a slower pace.
11. Housing starts to pick up, after bottoming last year.
12. The yield on 10-year U.S. Treasury notes rise to 4 percent.
13. Gold continues its rise, hitting $1,800 an ounce.
14. Municipal bonds are a good place to invest, as state and local governments become more fiscally responsible.