Blackstone's Byron Wien gives his 10 surprises for 2021, including two big swings for stocks

Published Tue, Jan 5 202110:11 AM ESTUpdated Tue, Jan 5 20211:13 PM EST

Jesse Pound @/in/jesse-pound @jesserpound

(This story is for CNBC Pro subscribers only). Blackstone Vice Chairman Byron Wien said he expects a volatile year in the stock market for 2021, with a stomach-churning drop in the first half followed by a dramatic rebound to record highs. The Wall Street veteran discussed his much anticipated annual surprises list on CNBC's " Squawk Box " on Tuesday, ranging from the best sectors for stocks to outgoing President Donald Trump's next move. "About seven of them are in the direction of the consensus, just more extreme. But there are three that are surprises," Wien said. Wien sees a nearly 20% pullback in stocks in the first half but calls for the S & P 500 rising to 4,500 by the end of the year. He predicts that cyclical stocks will lead defensives and small caps will beat large caps while tech stocks lag the broader. "I don't think we'll get quite to a bear market," he said. "We'll get almost there, but not quite there." The predicted rebound to 4,500 would exceed the year-end targets of every chief strategist at major Wall Street firms, according to CNBC's Market Strategist Survey . In the emerging markets space, Wien is bullish on Chinese stocks, saying that tensions with the U.S. will cool under President Joe Biden. He also predicts that the price of oil will rise to $65 per barrel, with energy stocks being among the year's best performers. Wien's list of surprises has become a must-read on Wall Street. He began publishing it while a strategist at Morgan Stanley in the mid-1980s, and he now publishes the list with Joe Zidle, chief investment strategist for Blackstone's private wealth solutions group. A surprise, as defined by Wien, is an event that conventional wisdom sees as having a less than 1-in-3 chance of happening but Wien deems to be a likely occurrence. In monetary policy, Wien predicts that the Federal Reserve and the Treasury Department will embrace of the frameworks of the controversial Modern Monetary Theory and remain accommodative. He also forecasts the 10-year Treasury yield, currently below 1%, to rise to 2%, and the dollar to strengthen. Some of the less quantitative predictions from Wien include the Department of Justice easing up in its pursuit of tech companies, and a "return to some form of 'normal'" from the Covid pandemic by Memorial Day. He also predicted that outgoing President Donald Trump will launch a television network where he interviews political and business leaders. Last year's list did manage to hit on a few true predictions, despite upheaval in the global economy from the pandemic. Wien projected rate cuts from the Federal Reserve and new record highs for the S & P 500. His forecast of rising oil prices and underperformance by tech stocks did not prove true, however. Wien also included a few "also rans" in his 2021 list, including guesses that he didn't feel confident enough to put in the top 10. One of those is that electric vehicle maker Tesla will buy a major global auto manufacturer and pledge to stop making cars with internal combustion engines by the end of the decade.

Byron Wien

Olivia Michael | CNBC

(This story is for CNBC Pro subscribers only).

Blackstone Vice Chairman Byron Wien said he expects a volatile year in the stock market for 2021, with a stomach-churning drop in the first half followed by a dramatic rebound to record highs.

The Wall Street veteran discussed his much anticipated annual surprises list on CNBC's "Squawk Box" on Tuesday, ranging from the best sectors for stocks to outgoing President Donald Trump's next move.

"About seven of them are in the direction of the consensus, just more extreme. But there are three that are surprises," Wien said.