Investors 'Oblivious' to Market's Risks: Blackstone's Byron Wien

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The stock market has become too excitable and investors are ignoring disappointing fundamentals, Byron Wien, Blackstone Advisory Partners vice chairman, told CNBC's "Closing Bell" on Wednesday.

"The economy is going to disappoint. Earnings are going to disappoint," said Wien, an investment strategist.

With the sequester set to kick in Friday and consumers seeing less money in their paycheck from the end of the payroll tax cut, Wien expects both government and consumers to spend less, which will hit the economy.

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Wien added that people are "oblivious" to the end of the 2 percent payroll tax cut and it's impact on spending.

The other main worry is corporate profit margins are likely to get squeezed. "Revenue growth will be modest and some costs will increase, so I think earnings estimates will be trimmed down," he said.

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Although market fundamentals are more negative, "sentiment is beginning to verge on the euphoric and that's always a danger period," Wien said.

He isn't predicting a bear market, however. He expects stock returns in single digits this year, not double digits.

Wien also noted that the market posting a one- or two-day pullback and then surging ahead again is just another sign investors, who didn't participate in the January rally, are looking for a chance to get in.

While this pattern may continue for a while longer, Wien said "eventually the fundamentals, what's going on in Washington, the earnings disappointments will take over and the market will become a more reasonable place. But right now it's very excitable."