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

  • Nov 30, 2015

    Exploring the Mysteries of Productivity

    The attacks in Paris on November 13 could have a significant effect on the world economy going forward. Geopolitical factors played a role in the Federal Reserve’s decision not to raise short-term interest rates in September. Similarly, the fear of further terrorism, resultant retaliation and the possible negative impact on economic activity may hold the Fed back in December. There is also the concern that both businesses and consumers will reduce their spending until they become more confident about future world stability. Finally, with ISIS striking targets beyond the Middle East, there is the clear option that a major coordinated military effort might be organized to subdue its forces in the Middle East. This could involve troops on the ground from a number of nations, including the United States, although to date President Obama has ruled that out.
  • Nov 03, 2015

    Uncertainties Holding the Market Hostage

    Before August 11, the popular perception was that the United States economy was growing at about a 2% annual rate and the Standard & Poor’s was locked in a trading range between 2040 and 2125. After the Chinese revalued the renminbi by 2%, the trading range was lowered to 1875–2025. Perhaps the key reason for the equity market’s inability to work its way higher is the belief that earnings for the index are likely to be flat in 2015 compared with last year (the view that we are in an earnings recession). The strong dollar and lower oil prices have contributed to this situation.
  • Oct 07, 2015

    Better Times are Ahead

    While most Americans, Europeans and many people in finance were enjoying their annual break from the intensity of their jobs, the world seemed to change in the middle of August.
  • Sep 08, 2015

    Unfazed by the Turmoil

    For the past several decades I have organized a series of lunches on summer Fridays for serious investors who spend their weekends in eastern Long Island. There are hedge fund activists, long/short heroes, corporate chiefs, venture capitalists, private equity stars and others. Many are well-known and there are more than a few billionaires. The goal is not to see how much net worth I can cram onto a shaded terrace, but how much wisdom I can focus on the key investment issues facing all of us. As Howard Marks of Oaktree wrote last year, the danger of this type of gathering is that a consensus of peers has a tendency to be wrong. I think it's fair to say that last year nobody anticipated the sharp drop in the price of oil, the Greek crisis or the Chinese devaluation, but over the years there have been a number of impressive insights.
  • Jul 28, 2015

    Dark Clouds Clearing

    At the beginning of the year I had a rosy view of how 2015 would play out:
  • Jun 30, 2015

    The Smartest Man is Wild about Innovation

    For the past fifteen years I have written annually about a person I have come to call “The Smartest Man in Europe.” For new readers, he is a finance person in his 80’s who has built his reputation by identifying important trend changes early and putting serious money behind his conclusions. Descended from a mercantile family that operated canteens selling food and weather protection along the Silk Route, he was educated in Europe, trained in New York and returned home to take advantage of the wealth-creating opportunities resulting from the post-war recovery. Listening to conversations around the dinner table, he was encouraged to focus on the major events early, and his success is a product of this skill. That success is reflected in his homes and other comforts he enjoys. His art collection spans centuries, from Canaletto to Koons, but what keeps him vibrant is ideas.
  • Apr 28, 2015

    Population and Productivity

    We were all lucky to be born at the right time. Over the past fifty years, world GDP growth has been averaging 3.6%, driven by employment increases and productivity improvements in roughly equal proportions. An exhaustive and important study by the McKinsey Global Institute concludes that over the next 50 years population growth will decline to .3% annually. If productivity continues to contribute 1.8%, overall growth will decline to 2.1%, a rate 40% less than during the past half-century. The implications of this slowdown on global changes in the standard of living and investment opportunities could be enormous.
  • Mar 30, 2015

    Exploring Four Myths

    In talking with investors, I find four concepts prevail among the consensus that I believe may be wrong. In the interest of full disclosure, it is fair to say that at various points in time I have subscribed to each of these ideas. They are:
  • Mar 02, 2015

    Focusing on the Three D’s

    Looking forward several years, there will be three important factors that will determine the economic and investment outlook. They are decoupling, deflation and demand. The decoupling concept is based on the question, “Can the United States economy expand at about 3% if the rest of the world is in recession or experiencing diminished growth?” The deflation concept is supported by the decline in the price of oil and other commodities, plus the willingness or necessity of the unemployed throughout the world to take a job at almost any level of compensation. Less discussed, but possibly most important, is whether sufficient demand for goods and services exists throughout the world to produce at least modest growth and enough jobs in the major industrialized countries. Right now, various estimates for world real GDP growth this year are just under 3%, but deflation could bring nominal growth lower.
  • Jan 08, 2015

    The Surprises of 2015

    Last year, my results were on the favorable side of average for The Ten Surprises. I got six of the Surprises mostly right, but I basically missed two of the more important Surprises – the year-end drop in oil and the decline in interest rates. At the beginning of the year, almost every observer (including myself) expected the price of oil to rise as a result of increasing demand from the emerging markets. The United States was consuming 21 barrels per person per year while India was using less than two and China less than three. The expanding middle class in these countries would be acquiring motorized vehicles and using more gasoline. Even with hydraulic fracking, few expected production to increase enough to meet the demand, and so the price of oil was expected to rise. On interest rates, the U.S. economy was likely to gather momentum through the year and everyone knew the Federal Reserve was anxious to move away from its low rate policy. As a result, short-term rates would be increased and longer-term rates would rise in sympathy. Or so the consensus held.