Equities, oil, bonds, gold. But also nuclear, ESG, Omicron. Blackstone’s Byron Wien presents the Top 10 Surprises of 2022

Stocks, bonds, gold, oil. But also ESG, inflation, nuclear energy, the real estate market in China. And again, the pandemic factor, with the various variants of Covid-19. Byron R. Wien and Joe Zidle, respectively vice president and chief investment strategist of Blackstone’s Private Wealth Solutions Group division, have just pitted the list of what they believe will be the Top Ten Surprises of 2022.

1. 1. “The first is that the S&P 500 index” will not rise in 2022, as the strength of corporate America’s earnings will collide with the rise in interest rates (from the Fed). Value stocks will do better than growth stocks. Volatility will continue to be high, ahead of an approaching correction that will be equal to, but not greater than, -20%“.
   2. “While the prices of some commodities will fall, wages and rents will continue to rise, leading the consumer price index and other widely monitored inflation metrics to rise 4.5% year-on-year. The decline in energy and transport prices it will encourage those who believe that inflation is ‘transitory’, but persistent inflation will become the dominant theme ”.
   3. “The bond market it will begin to respond to rising inflation and Fed tapering, with 10-year Treasury rates rising to 2.75%. The Fed will complete its tapering and raise rates four times in 2022 ″. The view of Wien and Zidle is therefore more hawkish than that which emerges from the Federal Reserve dot plot by Jerome Powell, who expects three squeezes over the course of the year. It must be said that US bond rates are in fact discounting a more hawkish Fed: yesterday two-year US bond rates have jumped up to 0.796%, to the highest values ​​since March 2020, or since the alarm of the Covid-19 pandemic rang out all over the world. The leap is remarkable, if we consider that the low of 2021 was reached around 0.105%.
   4. “Although the Omicron variant, the frequency of meetings and conventions will return to Covid-hour levels by the end of the year. Although Covid will remain a problem for both developed and less developed countries, conditions of normalcy in the United States will have largely been restored. People he will spend between three and four days a week in the office and will return en masse to cinemas, attending concerts and sporting events “.
   5. “The Chinese authorities will respond to the recent turmoil that has hit the country’s real estate markets by cutting speculative investments in the sector. The result is that Chinese families will have more capital that will need to be invested. The asset management industry it will begin to flourish in China, creating opportunities for Western societies ”.
   6. “Gold prices will rally 20% leaping to the new all-time record. Despite strong US (economy) growth, investors seek the perception of gold’s security and hedge against inflation in a context of rising prices and volatility. Gold will take back the title of safe haven for the new billionaires, even if cryptocurrencies will continue to gain market share ”.
   7. “While the main oil producing countries they will conclude that high oil prices will accelerate the implementation of alternative energy programs, allowing US shale gas producers to become profitable again, their production increases will not be sufficient to meet demand. WTI oil prices will wreak havoc on forward curves and among analysts, when they rise above $ 100 a barrel“(Similar to view at Goldman Sachs)
   8. “Suddenly, the nuclear alternative for the production of electric energy will enter the arena (hot topic in Europe victim of the Global Energy Crunch). Sufficient security measures have in fact been developed to allay fears about its danger, and thenuclear energy as a source of electricity it is widely recognized. A large nuclear site will be approved in the US Midwest. Nuclear fusion technology will emerge as a possible future source of energy ”.
   9. “L’ESG it will evolve beyond the official statements of the corporate world. Government agencies will develop and strengthen new standards that will require US listed companies to publish information documenting progress on several parameters considered crucial in the new era. The Federal Reserve governors will lead the implementation of stress tests to assess the vulnerability of financial institutions to scenarios relating to climate change ”.
   10. “In what will be a step backwards in green energy programs, the United States will find it will not be able to buy sufficient quantities of lithium batteries to power electric vehicles (EVs), the production of which has been planned. China, which controls the lithium market, as well as the cobalt and nickel markets, used for the production of aluminum rods, will decide to divert most of the supply of these commodities for domestic use“.