Blackstone’s Wien, Strategist Discusses Global Growth Concerns, Market Rebound

Blackstone’s Wien, Strategist Discusses Global Growth Concerns, Market Rebound
  • Dow Jones tumbled more than 500 points Friday amid economic concerns.
  • Blackstone veteran and Vice Chairman Byron Wien brushed off any recession concerns.
  • Market technician Katie Stockton said the selloff can be "worked off very quickly."

Blackstone Vice Chairman Byron Wien said in a CNBC interview Friday morning this is an “important time” in the market and a lot of people are nervous.

Wien is an economic, social and political trends expert and combines all three disciplines to better assess the direction of financial markets. During the CNBC interview, he said there are too many unknowns related to the Coronavirus and the “uncertainty is causing markets to sink.”

Global Growth Impact

The “uncertainty” could present itself in a quantifiable way, Wien said. As it stands today, global growth is expected to come in north of 3% for 2020. But if the Coronavirus isn’t contained and resolved, global growth would come in south of 3%.

Meanwhile, China’s economic growth projection has been lowered from 6% to 5% and this impact is notable enough to be “felt around the world.”

What, Me Worry?

Goldman Sachs economists and analysts projected in a Thursday note the Coronavirus will impact U.S. economic growth by 0.4 percentage points in the first quarter. However, any impact in the first quarter will merely be recovered in subsequent quarters.

In fact, the Coronavirus will impact full-year U.S. economic growth by a mere 0.05 percentage points.

Few if any are suggesting at this point that a recession will be seen in 2020. Byron, in particular, said any concern the Coronavirus will result in two quarters or more of negative growth is “too extreme.” He said he would “get shaky” about his stance if the Coronavirus continues to spread in three months from now.

Byron continued that Friday’s harsh pullback in stocks is also nothing to worry about. He said the market was in overbought conditions prior to the outbreak and he was expecting a 5% pullback.

“It was due for a correction,” he said, referring to U.S. stocks. “A correction is healthy.”

Fast And Furious Pullback

Katie Stockton, a market technician with Fairlead Strategies, separately told CNBC the market remains in an upward trend, despite Friday’s notable selloff. As such, the pullback looks to be “fast and furious” but should be “short-lived” as it is counter to the trend.

The current selloff is no different from those seen over the past year and if history is any indication it will be “worked off very quickly” in weeks — not months, she said.

While there is no “magic number” to predict when the selloff will end, the initial support level which may usher in a rebound is around 3,150 on the S&P 500 index, she said. Secondary support under a worst-case scenario is 3,030 in the index.

“I don’t think it’s going to get that bad based on the relief that we have already seen on the overbought conditions,” Stockton said. 

By Jayson Derrick
Jayson Derrick has been writing professionally about stocks since 2011. He is particularly interested in alternative investments, hedge funds, and activist investing. He is a big fan of NHL hockey and lives in Montreal, Canada with his wife and four year old daughter.
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