Monday, October 14, 2019

Blackstone's Byron Wien: "Recession Fears Are Overblown"

Mr. Wien is Vice Chairman of Blackstone's Private Wealth Solution. It was either him or "Explaining recessions via interpretive dance".
Oh God, now he's gonna put out a contract on me. Dude's a stone cold killer.
I meant no disrespect sir.
First up, from Advisor Perspectives:
When the yield curve inverted earlier this year, Blackstone’s economic model predicted a recession in the next 20 months. But Byron Wien cautioned against relying on that forecast

Wien is the vice chairman for private wealth solutions at Blackstone. He spoke to investors yesterday via webcast, along with Joe Zidle, who is Blackstone’s chief investment strategist. The slides from their presentation are available here. The two spoke in a debate-style format, with Zidle presenting arguments aligned with the conventional wisdom and Wien taking a contrarian position.

They noted that the predictive value of the yield curve is that it inverts ahead of a recession. At those inversion points, generally economic conditions have been good, as they are now, or even improving.
The following chart, from their presentation, shows the inversion points (with red arrows) approximately 20 months ahead of recessions (with grey bars):
Wien said that the yield curve, using Blackstone’s preferred measure of the two-year to 10-year spread, has only “flirted” with inversion. Usually an inversion is caused by the Fed raising short-term rates. But this time it has been because long rates dropped below short rates, which Wien attributed to “too much liquidity” in the bond market.

“That argues that maybe we are not going to have a recession as soon as you think,” Wien said....MORE
And from Blackstone, October 10:
Blackstone Quarterly Webcast: The Timing of the Next Recession

We’re pleased to offer our fourth-quarter webcast, “The Timing of the Next Recession,” featuring Chief Investment Strategist Joe Zidle and Vice Chairman of Private Wealth Solutions Byron Wien.
If you are unable to access YouTube, click here to watch the webcast.
In this quarter’s webcast, Joe and Byron discuss the latest trends in economics, policy, and the markets. Hear the strategists share their perspectives on major macro themes including low and negative interest rates around the world, yield curve inversion, and the timing of the next recession.

To download the webcast slides, please click here.
For Blackstone Strategy’s full Q4 2019 slide pack, please click here.

To follow Joe and Byron’s views on the markets, subscribe to their newsletters below.

Joe Zidle

Byron Wien (click “Sign up for Insights”)
If interested see also:
July 23, 2019
Blackstone Quarterly Webcast: The Case Against a Melt-up (Or Meltdown)
December 7, 2018
Blackstone's Byron Wien Seems Chipper, Almost Jolly
He's Vice Chairman of the Private Wealth group, BX doesn't pay him to be jolly.
Interesting, no?
note: the above was written before the 2's/5's or 3's/5's or whatever the fashionable bit of the curve that makes the inversion case, inverted.
At the moment the curve doesn't matter, if and when we think it does, you can rest assured we'll go "curve, curve, curve" 24-7.
For now, as a commenter—I forget where—said: "I think the pundits just like saying 'inversion'".
Inversion. It's almost soothing, in a paradoxical kind of way.
Personally, I like paradoxical. More consonants. 
June 2018
Blackstone's Byron Wien: "No Recession in Sight"
Our best guess is market downturn in 2019 and recession in 2020.*
But more new highs first.
Mr. Wien seems a bit more optimistic.
*(since we first went public with this prognostication the Nasdaq hit another new all-time high, the S&P and Dow = not yet)

July 2015
Blackstone's Byron Wein On The Only Way to Make Serious Money
It means stepping outside of one's comfort zone.
Back in the day you could maybe out-analyze the crowd on the home-team utility or some Graham and Dodd net-net but no more. You must have some exposure to growth.

On the other hand if you are just trying to keep the loot you've already plundered you have a few more options.
But that's a story for another post....
And many more, use the 'search blog' box.