Byron Wien's Prediction Track Record: Zero Out Of Ten

Tyler Durden's picture

Instead of wasting time with Byron Wien's Top 10 "predictions for 2011" we have decided to skip this latest and greatest worthless charade in prognostication, and instead we believe that presenting the list of what the man whose retirement age has come and gone, thought would happen in the past year, is a great example of why all these so called institutional Wall Street experts are nothing but two bit hacks. As may be expected, somehow Wien got exactly zero out of ten correct! The man is the contrarian indicator on Wall Street. Also keep in mind: it takes a lot of skill to be this bad.

Byron Wien Announces Top Ten Surprises for 2010

New York, January 4, 2010 Byron
R. Wien, Vice Chairman, Blackstone Advisory Services, today issued his
list of the Ten Surprises for 2010. This is the 25th year Byron has
given his predictions of a number of economic, financial market and
political surprises for the coming year. He started the tradition in
1986 when he was the Chief U.S Investment Strategist at Morgan Stanley.
Byron joined The Blackstone Group in September 2009 as a senior advisor
to both the Firm and its clients in analyzing economic, political,
market and social trends.

The Surprises of 2010

  1. The United States economy grows at a stronger than expected 5% real
    rate during the year and the unemployment level drops below 9%. 
    Exports, inventory building and technology spending lead the way. 
    Standard and Poor’s 500 operating earnings come in above $80
  2. The Federal Reserve decides the economy is strong enough for them
    to move away from zero interest rate policy.  In a series of successive
    hikes beginning in the second quarter the Federal funds rate reaches 2%
    by year-end
  3. Heavy borrowing by the U.S. Treasury and some reluctance by foreign
    central banks to keep buying notes and bonds drives the yield on the
    10-year Treasury above 5.5%.  Banks loan more to corporations and
    individuals and pull away from the carry trade, thereby reducing demand
    for Treasuries.  Obama says, “The suits are finally listening”
  4. In a roller coaster year the Standard and Poor’s 500 rallies to
    1300 in the first half and then runs out of steam and declines to 1000,
    ending where it started at 1115.10.  Even though the economy is strong
    and earnings exceed expectations, rising interest rates and full
    valuations present a problem.  Concern about longer term growth and
    obligations to reduce leverage at both the public and private level
    unsettle investors
  5. Because it is significantly undervalued on a purchasing power
    parity basis, the dollar rallies against the yen and the euro.  It
    exceeds 100 on the yen and the euro drops below $1.30 as the long slide
    of the greenback is interrupted.  Longer term prospects remain
    uncertain
  6. Japan stands out as the best performing major industrialized market
    in the world as its currency weakens and its exports improve. 
    Investors focus on the attractive valuations of dozens of medium sized
    companies in a market selling at one quarter of its 1989 high.  The
    Nikkei 225 rises above 12,000
  7. Believing he must be a leader in climate control initiatives,
    President Obama endorses legislation favorable for nuclear power
    development.  Arguing that going nuclear is essential for the
    environment, will create jobs and reduce costs, Congress passes bills
    providing loans and subsidies for new plants, the first since 1979. 
    Coal accounts for about 50% of electrical power generation, and Obama
    wants to reduce that to 25% by 2020
  8. The improvement in the U.S. economy energizes the Obama
    administration.  The White House undergoes some reorganization and
    regains its momentum.  In the November Congressional election the
    Democrats only lose 20 seats, much less than expected
  9. When it finally passes, financial service legislation, like the
    health care bill, proves to be softer on the industry than originally
    feared.  There is greater consumer protection, more transparency,
    tighter restriction of leverage and increased scrutiny of derivatives,
    but the regulatory changes for investment bankers and hedge funds are
    not onerous.  Trading volume and merger activity increases; financial
    service stocks become exceptional performers in the U.S. market
  10. Civil unrest in Iran reaches a crescendo.  Ayatollah Khameini
    pushes out Mahmoud Ahmadinejad in favor of a more public relations
    adept leader.  Economic improvement becomes the key issue and
    anti-Israel rhetoric subsides.  Talks with the U.S. and Europe begin
    but the country remains a nuclear threat.  Pakistan becomes the hotspot
    in the region because of the weak government there, anti-American
    sentiment, active terrorist groups and concerns about the security of
    the country’s nuclear arsenal

h/t Atierny1 and nolsgrad