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Byron Wien Sticks to 4,500 Target for S&P 500, Shuns Bitcoin

·3 min read
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(Bloomberg) -- U.S. stocks will break out of a two-month slumber and resume their record-breaking rally as the economy recovers and inflation stays in check, according to Byron Wien, who favors gold over Bitcoin as a store of value.

The vice chairman of Blackstone Group Inc.’s private wealth solutions business reiterated his target for the S&P 500 Index to reach 4,500 at some point this year, a projection made in January that represents a roughly 6% advance from the index’s closing level on Tuesday.

In a departure from the Federal Reserve view that rising consumer prices are “transitory,” Wien expects inflationary pressure to persist and push 10-year Treasury yields above their current level of around 1.5%.

“I know there are a lot of people that side with the Federal Reserve and say inflation is transitory but that’s not my opinion,” Wien said in an interview on Bloomberg Television with Matt Miller. Inflation “will be between 2% to 3% and the market can deal with it.”

The rally that lifted the S&P 500 more than 10% this year has stalled in recent weeks as traders gauged the prospect of growth against the threat of inflation. A surge in input costs from oil to lumber has transpired with supply chain bottlenecks and a tightening labor market to spur anxiety over inflation running too hot.

While price pressures may continue, Wien says he doesn’t anticipate them to get out of control and derail the economic expansion.

“I don’t think inflation is going to get so high that the Fed really has to be tough,” he said. In coming years, “the Fed will raise rates or stop accommodating but I think the economy can still move ahead.”

The Wall Street veteran says he’s reluctant to park money in Bitcoin because it’s too volatile and has no clear fundamentals to base an investment thesis.

Bitcoin has been on a wild ride this year as the largest cryptocurrency had more than doubled through mid-April before losing almost half of its value. The recent selloff was exacerbated by billionaire Elon Musk’s public rebuke of the amount of energy used by the servers underpinning the token. Increased Chinese regulatory oversight also soured the mood.

“I’m not a big fan of Bitcoin at this point,” Wien said. “I’ve been studying it and I wonder if it’s a geriatric thing I can’t bring myself to buy it.”

Wien, 88, a former Morgan Stanley strategist who’s put out his annual “surprises” list since 1986, has attracted a wide following for his assessment on the economy and financial markets.

In January, he predicted the S&P 500 would tumble almost 20% in the first half before staging a rally. The benchmark has yet to post a 5% peak-to-tough decline. His forecast for oil to exceed $65 a barrel has come true as crude prices just topped $70.

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