Tags: Wien | Oil | S&P | 500

Wien Sees Oil Falling to $85, S&P 500 Topping 1,400 in 2012

Tuesday, 03 Jan 2012 01:17 PM


Blackstone Group LP’s Byron Wien, whose prediction for the U.S. economy and stock market in 2011 proved too optimistic, said oil will slip to $85 a barrel this year and the Standard & Poor’s 500 Index will exceed 1,400.

U.S. economic growth will top 3 percent while the nation’s unemployment rate will drop below 8 percent, Wien, chairman of Blackstone’s advisory services unit, said in his annual “10 Surprises” list published since 1986. His forecast for crude oil implies a 14 percent slump from last year’s closing level, while the S&P 500 forecast would require an 11 percent gain.

“The drop in the price of oil and the rise in the stock market improve both consumer confidence and spending patterns,” Wien wrote in an e-mailed statement today. “Recession fears and even ‘the new normal’ view of prolonged slow growth are called into question.”

Wien said in January 2011 that U.S. economic growth and 10- year Treasury yields would approach 5 percent in the ensuing 12 months, while the S&P 500 would approach 1,500. Gross domestic product expanded 1.8 percent last year, according to the median economist projection, rates on the 10-year securities peaked at 3.77 percent and the stock index’s high point was 1,363.61. Wien was correct in predicting a drop in the U.S. unemployment rate and a surge in gold and oil prices.

More Than 50%

Wien says his list is made up of events that investors assign 1-in-3 odds of happening but that he says are more than 50 percent likely to occur.

The former senior strategist for Morgan Stanley said a year ago that the nation’s unemployment rate would drop below 9 percent, which happened in November. He forecast gold would surge above $1,600 an ounce and the price of oil would climb to $115 a barrel. The precious metal rose to a record $1,923.70 an ounce while crude futures advanced to $114.83 a barrel.

In 2009, Wien, who was then chief investment strategist for Pequot Capital Management Inc., predicted rallies in equities, gold and oil. From 2005 to 2009, he worked at Pequot, which closed in 2009 amid an insider trading probe by the U.S. Securities and Exchange Commission.

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