Continuing Blackstone’s tradition of releasing their list of 10 surprises for the upcoming year, Vice Chairman Byron Wien and Chief Investment Strategist Joe Zidle issued their list on January 3^rd for 2022 on Blackstone. Defining a “surprise” as an event that most investors would deem as having a one in three chance of happening, but that Byron views has having a greater than 50% chance of happening. Here is their list for 2022:

1. Value will outperform growth: the S&P 500 won’t make progress this year because of strong earnings clashing with rising interest rates. Volatility will continue to be high.
2. Wages and rents will continue to rise with the CPI and other inflation measures increasing 4.5%. The prices of transportation, energy, and some commodities will decline, but inflation will be persistent, not transitory.
3. Responding to rising inflation and tapering by the Fed, the bond market’s yield on the 10-year Treasury will rise to 2.75%. The Fed will raise rates 4 times this year.
4. In-person meetings and gatherings will be back in full pre-pandemic swing by the end of the year, with conditions mostly back to normal in the U.S.
5. Opportunities will abound in China as the major asset management industry there flourishes, and Chinese policymakers curb speculative investment in housing, creating more investment capital from Chinese households.
6. Gold will rally to a new high (20%), and U.S. investors will seek safe haven in the inflation hedge of gold in the midst of higher prices and volatility.
7. Major oil-producing companies can’t increase production enough to meet demand, even while conceding that high prices are increasing the use of alternative energy programs. Meanwhile, the price of West Texas crude will rise above $100 per barrel, confounding analysts.
8. With enough safety measures in place to reduce public fear, nuclear will enter the alternative energy arena, and fusion technology will be tapped into as a possible source. A new nuclear site will be approved for development in the Midwest.
9. There will be a greater push for ESG beyond corporate policy statements, and new regulatory standards will require public companies to be more transparent about their progress on various ESG metrics.
10. China will control the lithium market along with the cobalt and nickel used in making transmission rods, and keeps most of the supply for themselves, resulting in a lithium battery shortage for EV production and a setback to green energy in the U.S.