Blackstone’s 10 Surprises for 2023

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Tuesday, February 28, 2023
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As every year, the investment fund for alternative assets with close to $951 billion, Blackstone, published its report on the 10 surprises expected by 2023.

In this sense, Blackstone considers a surprise as an event to which the average investor would assign a one-third probability of occurrence, but Blackstone believes that it has at least a 50% probability of materializing.

  1. Different candidates from both sides organize campaigns to secure the support of their parties; Such that we will see new names for the ballots in 2024.
  2. The Fed maintains an arduous fight against inflation, which will lead the reference rate to remain above the personal consumption expenditure index (PCE Index), 4.7% in November. This would lead to real interest rates (net of inflation) turning positive, a good environment for fixed income and a rare event in the last 10 years.
  3. While the Fed is successful in damping inflation, the tightening stance remains longer than necessary, so spreads are squeezed in a mild recession.
  4. Despite the Fed tightening, the market bottoms out mid-year and begins a recovery comparable to 2009.
  5. Every significant market correction has been accompanied in the past by a financial “crash.” Cryptocurrencies had a major correction, and that turned out not to be a systemic event. This time, Modern Monetary Theory is completely discredited because deficits have been shown to be inflationary.
  6. The Fed continues to be more hawkish than other central banks, and the US dollar remains strong against all major currencies, including the yen and the euro. This creates a generational opportunity for dollar-based investors to invest in Japanese and European assets.
  7. China is moving towards its 5.5% growth target and working aggressively to restore strong trade relations with the West, with positive implications for real assets and commodities.
  8. The United States becomes the largest oil producer. The price of crude oil falls mainly as a result of a global recession, but also due to the increase in hydraulic fracking and higher production from the Middle East and Venezuela. The WTI price touches $50/bbl this year, but there is a $100/bbl mark sometime beyond 2023 as the world recovers from said recession.
  9. The bombing, destruction and deaths in Ukraine demonstrated during the first half of 2023. In the second half, the combination of human and economic cost to both sides leads to a ceasefire and negotiations on a territorial division begin.
  10. Despite the unwillingness of advertisers to continue supporting the site and the skepticism of bondholders about the credit quality of the company, Elon Musk puts Twitter back on the path of late recovery anus.

It is important to mention that this weekly commentary is informative in nature and does not reflect an investment recommendation by our Investment Committee.

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