Blackstone Vice Chairman Byron Wien said he thinks that a bottom for financial markets will arrive by mid-2023, followed by a drastic rebound, as the Federal Reserve’s battle against inflation would lead to only a mild recession. The Wall Street veteran published his much-anticipated annual surprises list Wednesday. Wien started the tradition in 1986 when he was the chief U.S. investment strategist at Morgan Stanley, and his list of surprises became a must-read on Wall Street. He now co-writes the list with Joe Zidle, chief investment strategist for Blackstone’s private wealth solutions group. Wien defines a “surprise” as an event that the average investor would assign only a 1-in-3 chance of happening but that he believes is “probable” with a more than 50% likelihood of taking place. “Despite Fed tightening, the market reaches a bottom by mid-year and begins a recovery comparable to 2009,” Wien said. The S & P 500 just suffered its worst year since 2008 with a near 20% loss and snapped a three-year win streak. The Fed has raised its benchmark interest rate to the highest level in 15 years and has signaled more hikes could come to bring soaring inflation under control. Wien said that while the Fed is successful in dampening inflation it “over-stays” its time in restrictive territory. Margins are squeezed in a mild recession, he said. The investor said the Fed’s tightening could push the fed funds rate above the personal consumption expenditures price index and result in positive real interest rates — a rare phenomenon in the last decade. Another Fed-related surprise Wien predicted is that the U.S. central bank will remain more hawkish than its global counterparts, causing a strong dollar against major currency pairs, including the yen and euro . “This creates a generational opportunity for dollar-based investors to invest in Japanese and European assets,” Wien said. On other topics, Wien said he expects a cease-fire in the war in Ukraine in the second half of 2023 as negotiations on a territorial split begin. He said he thinks China will edge toward its growth objective of 5.5% and work aggressively to reestablish strong trade relationships with the West. The market veteran also expects that Elon Musk will have Twitter “on the path to recovery” by the end of the year.