Equities

Byron Wien’s 10 surprises for 2011

Blackstone Group LP's Byron Wien, who called the bottom for U.S. stocks in 2010 while failing to predict the ensuing rally, said economic growth and 10-year Treasury yields will approach 5 percent this year and gold will surge above $1,600 an ounce.

Blackstone Group LP’s Byron Wien, who called the bottom for U.S. stocks in 2010 while failing to predict the ensuing rally, said economic growth and 10-year Treasury yields will approach 5 percent this year and gold will surge above $1,600 an ounce.

The price of corn will surpass $8 a bushel, wheat will top $10 and soybeans will exceed $16, while housing starts climb past 600,000, said Wien, chairman of Blackstone’s advisory services unit, in his annual “Ten Surprises” list published since 1986. He reiterated a forecast that the Standard & Poor’s 500 Index will advance above 1,500.

“The continuation of the Bush tax cuts coupled with the extension of unemployment benefits has put all working Americans in a better mood,” Wien wrote, according to a statement today on Business Wire. “Real gross domestic product rises close to 5 percent in 2011 driven by improved trade and capital spending in addition to stronger retail sales. Unemployment drops below 9 percent.”

Wien said in June that rising pessimism in options markets signaled it was time to buy stocks. His forecasts at the beginning of last year were less prescient. The former senior strategist for Morgan Stanley said yields on 10-year Treasury notes would top 5 percent, Democrats would lose 20 seats in Congress and that equities would finish 2010 unchanged.

Missed Mark

The Democrats lost 63 House seats and six in the Senate, the Fed didn’t raise rates and the benchmark U.S. equity index finished 2010 at 1,257.64, a 13 percent advance. Yields on 10- year Treasuries peaked at 3.99 percent on April 5.

Commodity prices beat stocks, bonds and the dollar last year as China, the biggest user of everything from cotton to copper to soybeans, led the recovery from the first global recession since World War II. At the same time, crops were ruined by Russia’s worst drought in at least a half century, flooding in Canada and parched fields in Kazakhstan, Europe and South America.

The Thomson Reuters/Jefferies CRB index of 19 raw materials gained 17 percent in 2010. Global bonds returned 4.88 percent, based on Bank of America Merrill Lynch’s Global Broad Market Index. The U.S. Dollar Index, a gauge against six counterparts, added 1.5 percent. The CRB outpaced the other measures for the first time since 2007.

In 2009, Wien, who was chief investment strategist for the Pequot Capital Management Inc. hedge fund, correctly predicted rallies in equities, gold and oil.