As is his custom, Blackstone sage Byron Wien, late of Morgan Stanley, has opened the new year with a set of predictions for 2018. These guesses—he calls them “surprises,” although no one will be surprised if, for instance, the Democrats seize control of both houses of Congress in November or if populists continue to make gains in Europe—can make for interesting, if somewhat dry, conversation. But given that this is the 33rd edition, it is inarguable that reviewing the 32nd will be more fun, especially since many of this year’s predictions are implicit acknowledgements of last year’s failures. And boy oh boy, were there failures.
Let’s start with the 236-pound gorilla in the room, President Donald Trump. Wien has been getting things wrong about Trump for some time now, having predicted at the beginning of 2016 that Hillary Clinton would trounce Ted Cruz on account of the Trump-led extremism of the G.O.P. and that Chuck Schumer would be ruling the roost on the north side of Capitol Hill. This trend continued apace last year: Wien said Trump would move away from his more extremist positions and work to win over the majority of the country who rejected him in 2016 and that he would realize “he has been all wrong about China,” as if the president has ever admitted to being wrong about anything. In fairness to Wien, he was right to note that Trump would still be “brooding about his loss of the popular vote” and that Trump’s friendship with Vladimir Putin would lead to a de-escalation of the Syrian crisis, as well as in his also-ran predictions that the president wouldn’t be able to escape the Iran deal and that his first major international confrontation would come from North Korea.
The wrongness did not end with The Donald: Wien said U.S. GDP would rise 3%. It didn’t. Productivity also defied Wien’s predictions that it would rise for the first time since 2014. Earnings per share for the S&P 500 would be $130; it wasn’t. Global currencies were supposed to plummet against the greenback; they didn’t. Inflation and Treasury yields were supposed to rise; they didn’t. Angela Merkel was supposed to lose October’s election. She kinda did, but also very much didn’t. Japanese growth was supposed to hit 2%; it didn’t.
Even when Wien was right, à la Merkel, he was sort of wrong. Wien said the S&P would jump to 2500. It did—and then kept going another 200 points. He made an easy bet that oil would stay below $60—but it wasn’t because of the surge in U.S. production he foresaw.
So where does that leave Wien at the dawn of this foul year of our lord 2018? He’s reversing positions on populism, oil and the Democrats: Jeremy Corbyn will be prime minister, crude will top $80 and—having made a bitter divide in the party an “also-ran” prediction of 2017—Democrats will sweep the midterms. And he’s stubbornly sticking to some others: Stocks will keep rising (after a big-ass correction), the dollar will rise, inflation will rise. Also maybe AI and cyberattacks begin to overwhelm humanity, which fights back by seeking to rein in the FANGs and bitcoin. About all of which we express at least a 50% certainty that Wien will be right about one of them.
Byron Wien Announces Ten Surprises for 2018 [Blackstone]