In the next 12 months, the S&P 500 will dip towards 2300 and the price of oil will surge above $80 a barrel, according to a list of “surprise” predictions for 2018 prepared by Byron R. Wien, vice chairman of Blackstone’s Private Wealth Solutions group, on Tuesday. However, Wien also said the S&P 500 would end the year above 3,000, indicating he expects volatility to return this year after doing a disappearing act in 2017.
Investors should also add inflation, political turnover, cybersecurity and technological disruptions to their list of 2018’s potential surprises, he said.
Wien defines a surprise as an event that the average investor would only assign one-in-three chance of taking place, but which Wien believes has a more than 50 percent likelihood of actually happening.
Blackstone notes that, after joining the firm in 2009, Wien continued a decades-old tradition of listing several potential surpirses for the coming year. His first such list was pubished in 1986, when Wien was the chief U.S. investment strategist at Morgan Stanley.
According to Wien, 2018 will bring a number of probable surprises:
10. China joins an international fuel and food embargo on North Korea over the latter’s nuclear ambitions. The embago leads to capitulation by the North Korean regime, which will agree to suspend its research of nuclear weapons while retaining its current arsenal.
9. Populism, tribalism and unrest spread around the world. Jeremy Corbyn becomes the next Prime Minister of the United Kingdom, while Spain still struggles to contain the Catalonian independence movement. In response, the European Union’s member states will become more cooperative with each other, leading to faster growth.
8. Repatriation of corporate assets held abroad leads to a surging dollar. Real growth exceeds 3 percent in the U.S. Investors flock to dollar-denominated assets, and the euro drops to 1.10 and the yen to 120 against the dollar.