Byron Wien Is Betting $1M on These 10 Market ‘Surprises’ Happening in 2020

Yes. Look, I think the country is drifting left, and that means higher taxes.

In the technology sector, you predict that certain FAANG stocks [Facebook, Amazon, Apple, Netflix and Google] will underperform and that “a proposal to break up the largest social media platforms and increase regulation and government oversight [will] gain popularity.” Please explain.

They’ll be more regulated than they have been in the past. The public is concerned that their privacy is being invaded, that Facebook and others will sell their information — that the use of the internet is revealing too much personal information that will be used in a pernicious way by social media companies and that the government will get involved.

The “bond bubble starts to leak,” is another of your Surprises. What will prompt that to occur?

We’re going to be issuing more bonds than we ever have before. There are four big buyers: the Social Security Administration, Federal Reserve, China and Japan. Social Security will definitely do some buying. But the Fed may not because they’re trying to shrink their balance sheet. China and Japan are both upset with our trade policy and have already shown little enthusiasm at bond auctions. If they’re even less enthusiastic, who’s going to buy these bonds? It’s a lack of buyers that causes rates to rise – not inflation, economic activity or any other factor.

“U.S. economic co-dependence with China erodes,”; that is, there’ll be “a gradual decoupling of the U.S. with China.” Please explain.

We’ve had Phase One of the China deal, but there’s no provision [for] surveillance and enforcement. We’re not limiting China’s ability to support state-owned enterprises. Those two things were left out. So I think it was an imperfect agreement. It took two years to get it. It probably will take at least two years to get a Phase Two agreement. I think China did what it needed to do to prevent us from raising tariffs on Dec. 15, and that’s what went through.

“Iran steps up acts of hostility against Israel and Saudi Arabia. The Strait of Hormuz will close, and the price of oil soars to over $70 [WTI] a barrel.” That will be another Surprise, you say. Please comment.

We took out the second most-important person in Iran, and the Iranians weren’t going to let that stand. Right after that, they downed a Ukrainian airliner flying out of Tehran, and I think they put retaliation [against the U.S.] on hold. But I don’t think they’re done. What they’ll do to retaliate further is unclear. But one of the things could be closing the Strait of Hormuz. That would be the most powerful thing, and it would cause the price of oil to go up 40%.

As of Jan. 31, the U.K. officially left the European Union. You’re forecasting that it will be “the winner in its divorce: It benefits from a long transition period, and growth exceeds 2%, as foreign direct investment resumes.” So you’re clearly upbeat about the U.K.

I feel good about that one. It looks like it’s working. The pound is strengthening, and the market’s doing better. People are making capital investments.

You forecast that the problems with Boeing’s 737 Max planes will be fixed and that deliveries will begin this year. Consequently, airlines will “operate more efficiently and increase profits,” [making] their stocks “market leaders,” you say. Comment?

The plane is very fuel-efficient. All the airlines were buying it, and they were really optimistic about it. If they can fix [all] the software problems, get the planes [back] in the air and make passengers feel they could fly in them safely, it would improve the profitability of the airlines.

The “prospect of a self-driving car is going to be pushed further into the future” because “a series of accidents with experimental vehicles will cause a major manufacturer or technology company to [announce that] it’s no longer developing self-driving technology.” So you forecast. Do you know which one?

Oh, no! I’m just saying it’s going to be later rather than soon.

Let’s talk about a few surprises that didn’t make the list. For example: “In spite of serious differences, China and Russia appear prepared to face off against Europe and the U.S,” you say.

That’s happening. There are important differences, obviously, that we have with Russia and China and important views that we have in common with Europe. I think [President Vladimir] Putin is weak because his economy isn’t in great shape. He needs an ally to strengthen his position in the world arena. China is most sympathetic with his objective.

You predict that “North Korea agrees to suspend its nuclear development program after another meeting with Trump but doesn’t give up its existing stockpile.” What are the implications?

A lot of countries have nuclear weapons. We don’t feel comfortable with them [North Korea] having nuclear weapons and having long-range missiles. If Trump could negotiate the suspension of long-range missiles-development on the part of North Korea, that would be an important achievement.

Concerning artificial intelligence, you predict: It “begins to be viewed as a paper tiger. The AI jobs apocalypse fails to materialize.” That would be a big surprise since so many sectors of the economy are using it or are planning to do so.

[What I’m forecasting] is already occurring. Artificial intelligence isn’t something that just happened. It’s been around for three years — and we still have unemployment at a 50-year low.

But won’t AI be used extensively in manufacturing, medicine, biotechnology and many more sectors of the economy? 

I think artificial intelligence is a win-win. [Still], it isn’t going to put too many people out of work. Already, our labor force is being strained. So a little relief on that front may be a good thing.

You didn’t mention gold at all. Why?

I’m bullish on gold. But I never use any one [event] two years in a row. Last year I said gold would go down, and it went up. That was one of the things I got wrong in 2019.

Why will gold continue to go up this year?

Because there’s so much geopolitical turbulence.

Has it been harder to make predictions in the last few years because, perhaps, the world has become more complex?

I’ve been doing these for 35 years, and I can’t remember an easy year. I start the process in October, and I work on it for three months. It always seems hard. My marriage almost broke up over it.

Goodness! Why?

When I was taking the job at Blackstone, my wife said to me: “I hope they don’t want you to do the “10 Surprises.” I said, “I don’t know — we haven’t talked about it in the interview process. Why?” She said, “I’d sure like to get Christmas back. For the last two weeks of the year, while all our friends are in Palm Beach, the Caribbean, Vail and Aspen, we’re huddled up in New York because you’re working on those goddamn “10 Surprises” — and you don’t know I’m alive!”

How did you respond to that?

I said, “I’m sorry, but it’s very important that I get these right.” She said, “I know. That’s why I don’t want you to do them anymore.” So that was 10 years ago. I’m still doing them — and my marriage didn’t break up.

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