Saxo’s traditional “Outrageous predictions” for 2021 were right on target, suggesting an extreme rise in inflation in 2021. For next year, the bank is betting on a 15 per cent inflation rate in the US through wage-price spirals. What other self-styled outrageous, striking, bizarre predictions does Saxo have in store for next year?
In 2022, a medical breakthrough will increase average life expectancy by 25 per cent. Meanwhile, policymakers decide to end their boycott of fossil fuels and a massive hypersonic arms race develops between the great armies.
Unlikely but under-appreciated events, Saxo agrees. “But if they were to occur, they could cause a shockwave across the financial markets”, the bank explained the reason for publishing these Outrageous Predictions once again. “They are predictions with a wink and therefore not part of Saxo Bank’s official market forecasts. But at the same time, for everyone who follows the stock markets, they are a clear warning. Although many of the predictions seem rather unlikely, there is always the chance that one or more of them will occur unexpectedly. It is an exercise in considering the full extent of what is possible and particularly relevant in the context of this year’s unexpected Covid-19 crisis.”
The theme for the 2022 predictions is revolution, wrote CIO Steen Jakobsen in announcement. “There is so much energy building up in our inequality-plagued society and economy. Add to that the inability of the current system to address the problems. It is not a question of if we will have a revolution, but more a question of when and how. In every revolution, some win and others lose, but that is not the point. If the current system cannot change but must change, a revolution is the only way forward.”
Postponing the end of fossil fuels
This is why the bank’s first prediction is to postpone the plan to end fossil fuels. “Policy makers are distancing themselves from their climate goals and supporting investments in fossil fuels,” Saxo described. “They want to fight inflation and the risk of social unrest. The path to a low-carbon future is being reconsidered.”
The consequence of such a development, according to the bank, is that the iShares Stoxx EU 600 Oil & Gas ETF will shoot up by 50 per cent, as the whole energy sector gets a strong boost from such an event.
Inflation up to 15 per cent
In light of high US inflation, the bank forecasted it will exceed 15 per cent in 2022 due to wage-price spiral. “In the fourth quarter of 2022, wages at the bottom half of US incomes will rise by 15 per cent year-on-year,” the bank described. “Companies are looking for motivated and well-qualified workers. Those workers are becoming more selective because jobs are plentiful. There is a low availability of workers at all skill levels.”
Consequence for the market? Extreme volatility in the US equity and credit markets. The JNK high-yield ETF goes down as much as 20 per cent and the VIXM mid-curve volatility ETF is up 70 per cent.
Cold War
Finally, attention to Saxo’s prediction that new hypersonic technology will drive a space arms race and a new Cold War. “The latest tests of hypersonic rockets are leading to a growing sense of insecurity as this technology makes conventional and even nuclear military hardware obsolete,” the bank explained. “In 2022, a huge hypersonic arms race is developing between the major armies because no country wants to feel left behind.”
10 Outrageous Predictions for 2022
- The plan to end fossil fuels is postponed
- Facebook is hit by the exodus of young people
- US mid-term elections bring constitutional crisis
- US inflation rises above 15 percent due to wage-price spiral
- EU super-fund for climate, energy and defence announced, to be financed by private pensions
- Women take on the patriarchy of business
- India joins Gulf Cooperation Council as non-voting member
- Spotify disrupted by NFT-based digital rights platform
- New hypersonic technology drives space arms race and new Cold War
- Medical breakthrough extends average life expectancy by 25 years