Byron Vienna sees the market bottoming out by the middle of the year, positive real interest rates

The US stock market will bottom by mid-2023 if the Federal Reserve reins in inflation without causing anything worse than a “mild” economic recession, according to Byron Wien’s annual list of surprises.

Fed policymakers will not focus on rate cuts and will keep them in a restrictive zone longer than necessary, wrote Wien, vice chairman of Blackstone Group Inc.’s private wealth solutions business, and the firm’s chief investment strategist Joe Zidle shared in a statement Wednesday. The tightening will lift the central bank’s policy rate above the consumer price index and lead to positive real yields, a rarity over the past decade. The dollar will outperform major currencies like the euro and yen because the Fed will remain more hawkish than its global peers, they said.