Market Commentary

by Byron Wien

Blackstone is pleased to offer the following Market Commentary by Byron Wien to share his thinking on global economic developments, market insights and other factors that may influence investment opportunities and strategies.

Byron Wien is a Vice Chairman

  • Apr 09, 2010

    The Healing

    On the political front the passage of the health care bill was important. Almost everyone in favor would agree that it is not what we once hoped it would be, and many believe that it is a step backwards because of its cost, but for those who had lost confidence in the ability of the American legislative system to get anything done, it was a step forward. The cleavage between the Republican and Democratic representatives in Congress had become so sharp that it seemed to observers abroad that our system of government was dysfunctional.
  • Mar 12, 2010

    A Crisis In Confidence

    And the problems were not confined to the United States. Greece, with $400 billion in national debt, threatened to default on its bonds, which would throw the European Union and the euro into turmoil. As soon as austerity measures were proposed to deal with the problem the whole country went on strike. The fear was that even if the problems of Greece were temporarily solved, Spain, particularly, and other marginal European countries would follow with similar problems.
  • Feb 01, 2010

    The Market is Ahead of the Economy

    Deciding on this year’s Ten Surprises was not easy. While I had developed a list of many alternatives, coming up with the final ten proved to be difficult. It was harder to identify the consensus on some of the issues and I thought other potential entries, while of great interest to investors, were not really surprises. The final ten are generally positive on the economic outlook but reflect my thinking that the market itself may already discount the favorable fundamentals. Last year was the best ever in the twenty-five year history of The Ten Surprises in terms of accuracy. As I have often said the goal is to step back and stretch your thinking about what could happen. Doing that can help you invest more creatively. I try not to worry about how many will be right. I listed the Ten Surprises last month. Now let’s take a look at them in more detail.
  • Jan 04, 2010

    The Surprises of 2010

    For the past 24 years I have prepared a list of ten investment-related surprises that I believe are likely to happen in the New Year, but to which the average investor would only assign a one out of three probability to the event taking place. I started doing this in the 1980’s because I thought short term thinking was the curse of effective money management. Investors were too concerned about quarterly earnings, monthly sales, the latest unemployment report and other economic data. Once a year I wanted to take a longer view and reflect on what non-consensus (not necessarily contrary) events could have a major influence on the investment environment.
  • Dec 03, 2009

    Wondering About 2010

    What has caused economists to abandon historical precedents, one of the most cherished tools of their trade, is the belief that a series of circumstances have made this cycle different. To cite a few examples, consumers entered the recession carrying a heavy burden of debt which they are now unwinding and which is holding back their spending. Because of the decline in home values and the stock market consumer net worth is down $7 trillion. Manufacturing competition from abroad has discouraged capital spending. A heavy inventory of unsold homes and high mortgage delinquencies have dimmed the prospects for residential construction. Office vacancy rates of 17% have slowed commercial real estate projects. Finally the U.S. government itself is running a budget deficit of 10% of GDP, the highest ever in peacetime, raising the prospect of higher interest rates and inflation.
  • Oct 06, 2009

    Short Term Optimism: Longer-Term Fear

    Every August I organize two Friday luncheon discussions for serious investors who spend their summer weekends in Eastern Long Island. We focus on the major issues which will influence the world economy and its financial markets during the coming year. It is a broad constituency which includes more than a handful of billionaires, chief executives of public companies, private equity leaders, hedge fund managers and former government officials. There are about twenty five at each session. Called the “Benchmark Lunches”, they represent an opportunity to reflect on what is likely to happen with a group of successful and hopefully knowledgeable people. Since I write up the discussions, each participant can look back and assess whether the group was able to see future events clearly. As you might expect, their skill in doing this is not notable for its accuracy.
  • Sep 16, 2009

    Good News Coming Soon

    The August unemployment report carried both good and bad news. Those who were looking for jobs and couldn’t find them, rose to 9.7% of the work force, the highest in 26 years but only 216,000 jobs were lost which was an improvement compared with recent months. We all expect the unemployment level to stay high for two reasons. First, it is a lagging indicator and may remain near 10% even if the economy continues to recover. Second corporations know that increasing revenues is difficult in the current economic environment and are slow to add workers even as business improves. You can see that in the impressive increase in productivity.