U.S. stocks will sink in coming months before resuming their record-setting rally and faster growth will spark inflation and higher yields in Treasuries, according to Byron Wien’s annual list of surprises.

The S&P 500 will tumble almost 20% in the first half of 2021 and then advance to 4,500, according to a statement co-written by Wien, vice chairman of Blackstone Group Inc.’s private wealth solutions business, and Chief Investment Strategist Joe Zidle. U.S. economic growth will exceed 6%, causing the 10-year Treasury yield to rise to 2%, they forecast.

The S&P 500 fell 1.9% on Monday to 3,685 as of 1:15 p.m. in New York, while the 10-year yield hovered near 0.9%.

“The success of between five and 10 vaccines, together with an improvement in therapeutics, allows the U.S. to return to some form of ‘normal’ by Memorial Day 2021,” they predicted. “We begin the longest economic cycle in history, surpassing the cycle that lasted from 2010 to 2020.”

Wien, 87, a former Morgan Stanley strategist who’s put out his “surprises” list since 1986, is one of the most widely followed analysts on Wall Street. A year ago, he predicted the S&P 500 would extend its record-setting rally, eclipsing 3,500 at some point, and subdued economic growth would prompt the Federal Reserve to lower its benchmark interest rate to 1%. To combat the economic fallout from the Covid-19 pandemic, the central bank cut rates to almost zero. The equity gauge finished the year at an all-time high of 3,756.07.

Some of his forecasts for 2020 didn’t come true, including a rally in oil above $70 a barrel and a jump in 10-year Treasury yields toward 2.5%. Pessimism over tech giants such as Apple Inc. and Amazon.com Inc. losing market leadership also proved misplaced.

For the coming year, Wien and Zidle expect the Fed and the Treasury will continue their accommodative policies to bolster the economy. Faster inflation, while still modest, is set to fuel gains in gold and boost the allure of cryptocurrencies, they say. The duo also project a reversal in the U.S. dollar’s decline as a strengthening economy and financial markets lure investors “disenchanted” with the rising debt and slower growth of Europe and Japan.

Wien says his surprise list is made up of events that investors assign 1-in-3 odds of happening but that he thinks are more than 50% likely. Below are his other calls for 2021:

• The Fed extends the duration of bond purchases in order to prevent higher rates at the long end of the curve
• Former President Donald Trump starts his own television network and plans his 2024 campaign
• Chinese shares to lead emerging markets as President Joe Biden begins to restore trade relationships with China
• Cyclical shares lead defensives, small-caps beat large-caps. Big-cap tech, likely the source of liquidity, will lag for the year
• The Justice Department softens its case against Google and Facebook, persuaded by the argument that the consumer actually benefits from the services provided by these companies
• The price of West Texas Intermediate oil rises to $65 a barrel amid a return to normal economic activity. Both energy bonds and stocks rally

This article was provided by Bloomberg News.