Byron R. Wien, vice chairman of Blackstone Advisory Partners, has disclosed his top 10 surprises for 2015.
The latest list of forecasts marks Wien’s 30th year of annual predictions. The former U.S. chief investment strategist began the annual tradition in 1986. He continued the tradition after joining Blackstone in 2009. Included in the annual list are his customary “also rans” that didn’t make the top 10. These are predictions that either aren’t as important or have a degree of probability that he deemed to be below 50 percent.
The top 10 surprises for 2015 are:
1. The Federal Reserve finally raises short-term interest rates, well before the middle of the year as the economic momentum starts to flag and this precipitates a correction in equities.
2. Hackers invade personal and corporate accounts of a major money center bank.
3. The year-end U.S. equities rally in 2014 continues for a strong performance in 2015.
4. Mario Draghi begins to expand the balance sheet of the European Central Bank aggressively by buying sovereign debt, mortgages and corporate bonds, but Europe fall back into a serious recession.
5. Shock and awe no longer works in Japan as the recession that began in the third quarter of 2014 continues into 2015.
6. China no longer grows at 7 percent and fiscal and monetary stimulus is needed to grow at even 5 percent, with the government acknowledging that it needs to rebalance the economy toward the consumer and away from credit-based investing in state-owned enterprises and infrastructure.
7. The drop in the price of oil has an impact on Iran, forcing a conciliatory attitude by its nuclear negotiators as they seek more economic opportunity.
8. The price of Brent crude oil drops to the $40s per barrel, having an impact on Russia. President Vladimir Putin’s approval rating plummets and he resigns by year-end.
9. The year-end 2014 meltdown in the high-yield market due to the drop in the price of oil creates a buying opportunity, with high yield becoming the best performer of the different asset classes as the U.S. economy continues to grow with no recession in sight.
10. Republicans position the party as one that can get something done in Washington, and see Jeb Bush as a winner for them.
The also rans:
11. Water becomes the central environmental issue of 2015, eclipsing carbon-causing air pollution.
12. Internet commerce runs into trouble, with hotels pushing legislators to make Airbnb pay the same taxes and fees they are required to charge customers, and Uber is asked by local authorities to prove that its drivers have commercial insurance to protect passengers.
13. Brazil again becomes a favorite of emerging market investors.
14. Hillary Clinton decides not to run for President, fearing that Jeb Bush would siphon off some of the Hispanic votes that otherwise would go to her.