How to Capitalize on Top 10 Blackstone Predictions for 2023

January 17, 2023

6 min read

The strategists at Blackstone are like a competitive sports team. Every January since 1986, they’ve come up with a list of “ten surprises” that could turn the markets upside down in the year ahead – but to be a real shocker, it has to satisfy their criteria. So, without further ado, here are their ten surprises for this year – and how you can take advantage if they do come to pass!

How Is the List Made?

The Blackstone team must come up with a surprise which they think has at least a 50% chance of happening, but which the average professional investor sees as having a maximum of a 33% chance. Repeating the same prediction from year to year in the hope of eventually being proven right is not an option. For instance, in 2022, the team forecast a 20% rise in gold prices, yet it only rose 14%. Therefore, a gold rally cannot be included in this year’s surprise, even though its prospects remain positive.

What’s Surprising about Blackstone’s vision of 2023?

The Federal Reserve (the Fed) is locked in a tug-of-war with inflation, leaving the words “pivot” and “transitory” on the shelf. To combat this, the central bank may be compelled to push interest rates beyond the inflation rate, which could lead to the emergence of a new, positive real rate – a very rare occurrence in recent years. Blackstone is fearful that wage inflation could remain persistent and thus hamper deflation. This is a nightmare scenario for stocks and bonds owners, so we must do our best to avoid it. If it does transpire, you might want to consider investing in the iMGP DBi Managed Futures Strategy ETF (ticker: DBMF US; expense ratio: 0.85%), of which I wrote extensively about in this article.
As Fed rate hikes persist beyond the desired period, inflation could be successfully dampened, however, keeping interest rates too high for too long could result in company margins being squeezed and a mild recession occurring. In this situation, investors should look to both government and corporate bonds to protect their portfolios – the iShares 7-10 Year Treasury Bond ETF (IEF; 0.15%) and the iShares iBoxx $ Investment Grade Corporate Bond ETF (LQD US; 0.14%) are excellent options. If the recession is moderate, the daring iShares iBoxx High Yield Corporate Bond ETF (HYG; 0.45%) could possibly see strong results as well. There are numerous UCIT-qualified ETFs for every situation discussed here.
The stock market may be headed for a downturn, but even with the interest rate increases, there’s a chance it could reach a low point by the middle of the year and bounce back like it did in 2009. That’s a rather optimistic outlook which could be great news for SPY US and QQQ US!
Although cryptocurrencies had a major correction last year, it was luckily not a systemic event. However, Blackstone points out that any major market correction in the past has been accompanied by a financial “accident”, and with the coordinated ‘tightening’ of interest rates in the global economy, there is always a risk that unexpected consequences could arise – Things could break.”
In times of crisis, US government bonds tend to deliver strong performance, so it’s reasonable to assume the iShares 7-10 Year Treasury Bond ETF would fare well. Predicting where accidents may happen or how severe they may be is impossible, but you can count on this exchange-traded fund for stability.
China is determined to make a roaring comeback, striving for a 5.5% growth target and re-establishing close ties with the West. With the promising outlook, savvy investors could benefit from investing in ETFs such as the iShares MSCI China ETF (MCHI, 0.57%) or the Kraneshares CSI China Fund ETF (KWEB US; 0.7%) to access a diverse range of investments in China. Why not invest in a diversified metals and mining company such as BHP Group (BHP) or even an ETF like the brand Bloomberg All Commodity Strategy K-1 Free ETF (BCI; 0.25%) for a pleasant surprise that could benefit commodities as well?
The United States is poised to become the world’s leading supplier of oil, according to predictions. With hydraulic fracking and higher production from the Middle East and Venezuela, the cost of West Texas Intermediate (WTI) crude is projected to drop to $50 per barrel – not just because of a global recession, but also because of increased supply. While this would be a blow to energy stocks that enjoyed success in 2022, it could be a boon to the world’s largest economy. If an economic downturn is the primary cause of the drop in oil prices, it stands to reason that government bonds (e.g., those found in the iShares 7-10 Year Treasury Bond ETF) could be an excellent investment opportunity.
If the rumored ceasefire between Russia and Ukraine is approved in the second half of this year, as the experts from Blackstone have predicted, European equities that have been adversely affected by the ongoing conflict and energy crisis could receive a welcome boost. Investors may want to consider adding the iShares Core MSCI Europe ETF (IEUR, 0.09%) to their portfolios.
By the end of this year, Twitter, under the vigilant leadership of CEO Elon Musk, could be well on its way to recovery – much to the delight of Tesla shareholders. Musk’s commitment to getting Twitter back on its feet might provide him with the time to redirect his attention to Tesla (TSLA), reducing the likelihood that more of its shares need to be sold to support Twitter. Therefore, investing in Tesla (TSLA) might be an attractive option if Twitter stabilizes. It’s off to the races once more! With numerous contenders from both the Democratic and Republican parties vying to be their respective party’s presidential nominee in the United States, this shouldn’t come as a shocker. However, it’s best to just sit back and watch the events unfold to see how this will all play out!

What’s The Angle?

The predictions are laid down for you, and although the year is still fresh, you might want to use the next period to analyse what bets you are ready to make. Our team is always happy to chat about similar opportunities. Feel free to reach out.

Otherwise, some of the ideas we will be trading on our Flagship managed account. As always, you are welcome to join.

Safe Trading
Team of Elite CurrenSea 🇺🇦❤️