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Crude Oil Has Peaked, Facing Game Changer: Byron Wien

Fast Money Portfolio
Fast Money Portfolio

Famed for his many years as a top-ranked strategist at Morgan Stanley, Byron Wien is among the most followed names on Wall Street.

Currently Wien is vice chairman of Blackstone Advisory Partners the world's largest private-equity firm with $190 billion under management.

Wien has garnered a lot of attention lately after he issued a note saying he expects the S&P to print 1500 by year’s end. (It’s something we first told you about in a post titled "Bull Market to Continue Rest of Year: Byron Wien")

And in a live interview on CNBC's Fast Money we asked Wien to expand on his forecast. He cited a wide range of factors, but perhaps the most intriguing was his belief that the price of oil had peaked. And he didn't seem to feel the catalyst that's about to send oil lower was getting nearly the attention it deserved.

Oil

“There’s a game changer going on,” he says and few people seem to be talking about it. That game changer is the Bakken Shale which stretches from Canada down into North Dakota – it could hold 4 billion barrels of oil reserves.

In fact, the Bakken fields may be the largest US oil discovery next to the oil fields in Alaska.

“500,000 barrels a day will be produced by the end of this year out of the Bakken oil fields in North Dakota. Are you aware that North Dakota will become the second largest oil producing state in the entire country?”

And he says, “And if the Bakken oil fields produce that kind of volume, oil prices will come down."

Improved Economy

As we said above, Wien's comments about oil were made in the context of a larger markets conversation. In addition to lower oil prices, Wien is bullish on the recovery.

“I think the economy is going to be better than the consensus expects. I know the 2.2% GDP number (was disappointing) but the private sector was 2.8%. Isn’t that what we want, the government to pare back and the private sector to forge ahead?"

And to support his thesis Wien points to the latestISM data which showed the pace of growth in the U.S. manufacturing sector picked up in April to its highest level in 10 months. “That’s a sign the economy has momentum in it,” he says.

Rotation

Also, Wien expects a reallocation from bonds into stocks.

In the wake of Japan’s nuclear accident, the Arab Spring, China’s real estate bubble and Europe’s sovereign debt woes Wien tells us, “money came into the US and parked itself in Treasurys.”

But he also says, “as the world grows more comfortable (with risk) they’ll start buying US equities. It's yet to come.”




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Trader disclosure: On May 1, 2012 , the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Keith McCullough is long GLD; Joe Terranova is long VRTS; Joe Terranova is long MCD; Joe Terranova is long JNPR; Joe Terranova is long NXPI; Joe Terranova is long JPM; Joe Terranova is long JOY; Joe Terranova is long HPQ; Joe Terranova is long LQD; Tim Seymour is long BAC; Tim Seymour is long SBUX; Tim Seymour is long FCX; Guy Adami is long C; Guy Adami is long GS; Guy Adami is long INTC; Guy Adami is long MSFT; Guy Adami is long NUE; Guy Adami is long BTU; Guy Adami is long AGU; Steven Weiss is long AIG; Steven Weiss is long QCOM

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