MONACO (Reuters) - Blackstone’s veteran Wall Street strategist Byron Wien sees a bottoming in stock prices and the possible return of $10 billion-sized buyouts, as Europe’s rescue package averts a deterioration in the sovereign debt crisis.
Wien, who is well known for his annual predictions and who correctly called the rebound in China in 2009, said he was not as bullish as at the start of the year but nevertheless thinks a deterioration in the sovereign debt crisis will be avoided.
Euro zone countries and the IMF agreed a 750 billion euro (620 billion pound) deal in May intended to save the euro by providing countries with an emergency package if they need it.
“I think the programme they came up with was pretty good...(it) will not only solve Greece’s problems for this year but for the next three years and deal with the problems of Spain and Portugal,” Wien told Reuters in an interview on Monday on the sidelines of the GAIM hedge fund conference in Monaco.
“I’m optimistic Europe will engage in a services austerity programme.”
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Wien said he has cut his forecast for Europe’s economic growth to 0-1 percent from 1-2 percent as a result of southern Europe’s sovereign debt crisis, and for U.S. economic growth to 3.5-4 percent from 5 percent.
However, he said the current mood of investor pessimism presented an opportunity for equity investors.
“Right now there’s a negative mood you can take advantage of. I think the market is making a bottom,” he said.
“We’ve had some pretty negative news with the employment report... (But) I think next month will be good for private employment... Retail sales were disappointing but I’m pretty sure they wil recover.”
He is also positive on gold, one of his correct calls in 2009.
“I’m very bullish on gold. It’s the best insurance, I think it will go to $1,500 over the next two years,” he said.
Wien, who is vice chairman of Blackstone Advisory Services, a unit of Blackstone Group, also said that mega private equity deals of more than $10 billion are being talked about by private equity bosses again.
“I was on the morning call (with Blackstone executives). We’re not doing any, but big deals are being talked about (in the industry),” he said.
He also said that while leverage in private equity deals is rising, levels are still not “frothy” and are well short of levels seen at the height of the boom in 2006 and 2007.
“We’re still able to do deals and we’re able to do them at reasonable leverage. Maybe a year ago it was 2-4 times, now it’s more than that ... (at) 4-6 times. Banks have the money for it for established private equity houses. It’s not frothy.”