Blackstone Group LP’s Byron Wien said the Standard & Poor’s 500 Index (SPX) is likely to rally on corporate earnings in 2012 after the Federal Reserve raised its economic growth forecast.
Wien, chairman of the advisory services unit of the world’s biggest private-equity firm, said he expects S&P 500 companies to report earnings this year of $100 a share, with the measure trading for 15 times that. That would push the index to 1,500, or 7.9 percent above yesterday’s closing level of 1,390.69, Wien said today in an television interview on “Bloomberg Surveillance” with Tom Keene.
“I think the U.S. economy is going to grow faster than people think, so I think we’re going to not have a recession,” Wien said. “The Fed notes yesterday suggested that growth is going to be better than expected. Earnings are going to be good.”
Fed policy makers said yesterday that the economy is forecast to expand at a 2.4 percent to 2.9 percent rate this year, compared with a previous forecast for 2.2 percent to 2.7 percent. They also repeated the view that borrowing costs are likely to remain “exceptionally low” at least through 2014.
Europe’s sovereign debt crisis, the nuclear disaster in Japan and overbuilding in China have prompted investors to view the U.S. as a “safe haven,” and interest rates are staying low as money flows into the world’s biggest economy, Wien said.
Wien said the combination of the European Central Bank loans and other facilities probably will hold the European Union together “at least for the next two or three years,” even as the crisis worsens.
Wien, 79, predicted oil prices will decline in 2012, the first time in his career that he has forecast a single-year drop in the commodity. Production will be greater than investors expect and the premium caused by tensions with Iran “is going to come out of the price,” Wien said.
Oil rose to a one-week high today after the dollar decreased against most major currencies. Futures have climbed 5.4 percent in 2012, through yesterday.
Wien said investors should put “at least a significant portion” of their money into large-capitalization, multi- national growth stocks.
“You get reasonable yields, multiples in the teens, well- known brand names, markets all over the word,” Wien said. “You get an awful lot for your money.”
To contact the reporters on this story: Joseph Ciolli in New York at firstname.lastname@example.org; Tom Keene in New York at email@example.com
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