Blackstone's Wien sees strong 2010 U.S. GDP, profits

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U.S. economic growth as measured by real gross domestic product will top 5 percent in 2010 and the unemployment rate fall below 9 percent, said longtime Wall Street strategist Byron Wien.

Wien, who correctly called the commodities rally and rebound in China in 2009, said in his Ten Surprises for 2010 on Monday that he expected exports, inventory building and technology spending to lead economic growth.

He sees Standard & Poor's 500 <.SPX> operating earnings coming in above $80 a share. The Thomson Reuters analysts' estimate for 2009 S&P 500 operating profits is $59.83.

Wien is vice chairman of Blackstone Advisory Services, a unit of Blackstone Group LP , the private equity firm. Wien joined Blackstone in September 2009 from Pequot Capital Management.

His 2009 record shows a number of successful calls for last year.

In January 2009 Wien predicted that gold prices would rise to $1,200 an ounce, the price of oil would return to $80 a barrel and that China's growth would exceed 7 percent, helping revive its stock market.

Gold prices rose as high as $1,214.55 an ounce in early December and U.S. crude oil hit an intraday high of $80 a barrel for the first time since November on December 31.

This is the 25th year Wien has given his predictions.

In a roller coaster year the S&P 500 rallies to 1,300 in the first half and then runs out of steam and declines to 1,000, ending where it started at 1,115.10, Wien said for 2010.

Even though the economy is strong and earnings exceed expectations, rising interest rates and full valuations present a problem, he said, adding concern about longer term growth and obligations to cut indebtedness at both the public and private level would unsettle investors.

In a series of successive hikes beginning in the second quarter, the U.S. federal funds rate should hit 2 percent by year-end, he said.

Commenting on the U.S. dollar, he said because the greenback is significantly undervalued on a purchasing power parity basis, it will rally against the yen and the euro.

The dollar exceeds 100 on the yen and the euro drops below $1.30 as the long slide of the greenback is interrupted.

Longer term, the prospects remain uncertain, he added.

He said Japan would stand out in 2010 as the best performing major industrialized market in the world as its currency weakens and exports improve, taking the Nikkei 225 <.N225> above 12,000.

Wien also predicted that heavy borrowing by the Treasury and some reluctance by foreign central banks to keep buying notes and bonds would drive the yield on the 10-year Treasury above 5.5 percent.

(Reporting by Ellis Mnyandu; Editing by Kenneth Barry)

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