Some have dreamt of it, others have only imagined it. Now Saxo Bank, the online multi-asset trading specialist and investment advisor has released its ‘Outrageous Predictions’ for 2014. They fully admit that the probability of any of them coming to fruition is rather low. But, that hasn’t stopped them making them. Be outrageously provocative and it can be predicted that as sure as eggs are eggs the crystal ball will go cloudy on you. But, it makes for light-hearted reading along the rocky road of fortune-telling. The saving grace is that if any one of them does actually hit the truth on the nose, Saxo Bank will be saying ‘I told you so’. If they don’t come true, Saxo’s drivel will be forgotten in the mass of pages on the internet.
- Soviet-Style Economy in EU: This one comes from Steen Jakobson, Chief Economist and CIO at Saxo Bank. It tops the list. The Soviet-Union will be back in force in style at least in the EU, when deflation causes panic amongst the leaders of the EU. Wealth Taxes will be introduced across the Union in the attempt to reduce inequalities in society. Europe will at last move into the final stages of totalitarian government from Brussels.
- Fat-Five Tech Companies: Amazon, Netflix, Twitter, Pandora Media and Yelp are all trading at about 700% above market valuation. That’s while the rest of the information-technology sector is 15% under market value. The bubble will burst in 2014 for the fat five. Some of that flab just has to come off.
- US Deflation: It’s only the US government and the Federal Reserve that are saying that the US economy is doing better. January will see the FOMC dealing with deflationary pressure on the economy as consumer confidence gets a whacking and employment and investment take a beating after Congress ends up ‘disrupting the US economy’ again.
- Brent to Fall to £80/Barrel: Sanctions against Iran are going to ease. This coupled with the problems that will seem to abate in Libya will see the price of oil fall drastically. Non-Opec supply is predicted also to increase by 1.5 million barrels per day.
- CAC40 to Drop 40%: They don’t call it the 40 for nothing. The French economy will fall like pigeons being shot out of the sky. The investors in France will be scrambling for the way out as the French government ends up taking a lashing.
- Fed Tapers: March-time will cause widespread panic on the financial markets. Apparently the prediction is that Yellen will resign and that Bernanke will be called back. Oh, there is a Hollywood film too of what happens when Yellen gets kicked out of the comfy bed.
- Germany to Need Bailout: Germany will fall into recession and end up asking to be propped up by the European Central Bank. Let’s hope the Greeks agree to that one.
- Spain to Recover: Spain is set to become the strongest economy in the EU.
- Russia to Turn Tails: Russia will turn to the Western world and end up crying in mummy’s skirts as there are escalating costs of the Olympics and plunging oil prices. Russia will give up on Syria and will cave in to Europe on energy prices.
- China to Revolt: The Chinese will become emboldened and empowered in the face of their government as the one-child policy is loosened and the residency program comes to an end. Urban cities will see demonstrations and the government will change its policies bring the country into modernity.
Steen Jakobsen, Chief Economist at Saxo Bank states “This isn't meant to be a pessimistic outlook. This is about critical events that could lead to change - hopefully for the better. After all, looking back through history, all changes, good or bad, are made after moments of crisis after a comprehensive failure of the old way of doing things. As things are now, global wealth and income distribution remain hugely lopsided which also has to mean that significant change is more likely than ever due to unsustainable imbalances. 2014 could and should be the year in which a mandate for change not only becomes necessary, but is also implemented”.
That’s all well and good except for the fact that looking back in history, changes rarely happen even at the crossroads of a crisis. Things carry on as they always did and it’s just business as usual. The banks haven’t changed the way they do business and governments haven’t changed the way they do theirs.
Apparently, the idea behind the predictions is to make people think of the worst-case scenarios that might possible happen in the world and to be in a position to adjust investments accordingly. Hype or outlandishly canny laughable material?
How many of the predictions do you go along with?