There’s trouble ahead for the economy, according to the well-known investing guru Byron Wien’s read on investor sentiment. In an essay, Wien draws this conclusion from a series of high-end individual investor lunches he held this summer, each attracting around 100 people.
While these gatherings may or may not be a representative sampling of investor opinion writ large, such lunch series in previous years have tracked what is on people’s minds. Last summer, for instance, the lunch goers were optimistic that the advent of vaccines would finally rid the world and the economy of COVID-19. Then came the variants.
At 89, Wien still is revered by many as a Wall Street sage, with frequent appearances on CNBC and in other media, opining on everything from small market moves to the U.S. gross domestic product. For many years he was the chief investment strategist at Morgan Stanley. Now he’s the vice chair of Blackstone Advisory Partners, a subsidiary of the Blackstone Group, the private equity and real estate titan.
“Recent economic data—from GDP to inflation—continue to signal trouble, and geopolitical turmoil, from Ukraine to Taiwan, was top of mind for all of the attendees,” he wrote in his essay, summing up investor consensus.
The pandemic was a big item of discussion, he said. Participants, previously optimistic about the virus, now are resigned to the belief that it is here to stay, he reported.
The coronavirus has been one big force in keeping office attendance down, he said, but many believed that would change—and not for a positive reason. An economic slowdown would make employees more willing to show up at the office, the thinking went. As he put the matter, “Some participants noted that tight labor markets incentivized employers to make concessions as they tried to attract and retain talent. With labor markets beginning to cool off, workers may have a bit less bargaining power.”
Nobody was optimistic about the war in Ukraine, he wrote. “There was not much optimism about Russia’s war of aggression in Ukraine. Many thought that a ceasefire was unlikely before year-end,” he found.
Meanwhile, the economy remains iffy, many felt. “The labor market remains historically strong, but unemployment is more of a lagging indicator (one participant thought it would be the result of, not the cause of, a recession),” Wien wrote. “While top-line revenue growth for many companies continues to rise, margins are being pressured by surging costs.”
Although the lunch bunch tended to think inflation had peaked, the also felt problem likely would stick around. They figured that wages and housing prices still are surging, more than offsetting falling items such as energy costs, Wien said.