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$80 oil and 9 other surprises that Byron Wien is bracing for in 2018

MarketWatch logo MarketWatch 2018-01-03 William Watts

a man with a beard: Labour leader Jeremy Corbyn will become U.K. prime minister in 2018, predicts Byron Wien.© Provided by Dow Jones & Company, Inc. Labour leader Jeremy Corbyn will become U.K. prime minister in 2018, predicts Byron Wien.

Blackstone’s Byron Wien is back with his annual list of 10 potential market shockers that could bushwhack investors in the year ahead.

Continuing a tradition he began in 1986 as chief U.S. investment strategist at Morgan Stanley, Wien sized up potential surprises, which he defines as events the average investors would assign a one-in-three chance of occurring, but which he sees as having a better than 50% chance of being realized.

Read: The big calls for 2018 from Josh Brown, Raoul Pal and other Twitter finance pundits

But first, how did Wien’s 2017 calls turn out? He did call for the S&P 500 to rise to 2,500—a level it surpassed to end the year shy of 2,700. Among misses, however, he called for the 10-year Treasury yield (BX:TMUBMUSD10Y) to near 4%. Instead, it topped out below 2.6%. Read Wien’s 2017 list of surprises.

For this year, Wien fears the spread of “populism, tribalism and anarchy” around the world, with Labour Party leader Jeremy Corbyn becoming the U.K.’s next prime minister and continued turbulence in Catalonia. On the plus side, turmoil will serve to bring continental Europe together with more economic cooperation and faster growth, he says.

As for the S&P 500 (SPX) Wien sees speculation reaching “an extreme” that results in a 10% correction. Higher interest rates will help trigger a decline toward 2,300 but the index will end the year above 3,000, he said, as earnings continue to expand and economic growth heads toward 4%. The S&P 500 started the year on a positive note, rising 0.6% to 2,691.

Check out: What should investors worry about in 2018? Here’s a big, fat list of risk factors

He also calls for West Texas Intermediate crude (CLG8) to top $80 a barrel due to continued world growth and unexpected demand from developing markets. On the production side, he expects shale production to disappoint, diminished inventories, discipline on output by the Organization of the Petroleum Exporting Countries, and only modest production rises by Russia, Nigeria, Venezuela, Iraq and Iran.

You can check out Wien’s complete list of potential 2018 surprises here.


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