background image

Saxo's 2019 Outrageous Predictions

Steen Jakobsen
Chief Investment Officer

Summary:  Welcome to the 2019 edition of Saxo's Outrageous Predictions, our annual tongue-in-cheek collection of events and occurrences that are unlikely to materialise but which could have huge consequences for the investment outlook if they did. Remember, these do not in any way represent the official Saxo Bank outlook or forecast but do read them anyway – and enjoy.

Please note: Outrageous Predictions should not be considered as Saxo Group’s official market outlook. It is instead the events and market moves deemed outliers with huge potential for upsetting consensus views. See the full list here.



A world containing Donald Trump as the US president makes outrageousness a cheap commodity in the daily news cycle, but we won’t let that keep us from this year’s Outrageous Predictions: our yearly task of conjuring unlikely – but not impossible – events that may just come to life in the new year.

This year’s edition has a unifying theme of “enough is enough”. A world running on empty will have to wake up and start creating reforms, not because it wants to but because it has to. The signs are everywhere. Valuations are overstretched, political shifts are sudden, and even seemingly minor cultural developments like the rise of the celebrity chef appear to point to a society stretched to its peak.

Does that last one look like a step too far? Well, the great documentary The Four Horsemen cited it as a sign of overreach, noting that “during the final decades of their own empires, the Romans, the Ottomans and the Spanish all made celebrities of their chefs.” Are we, too, nearing the end of our own imperial moment?

Having done this job for more than 30 years, I am struck by how unaccountable our society has become at the political, corporate, and even the individual level. Greed is the new black and it’s met by complacency rather than a cry for fairness and productivity. The focus is instead on marginal improvement and avoiding mishaps rather than making bold decisions to change the world towards better, faster, fairer and more equal.

“If we can just avoid the pain today” is the new mantra, or more despairing still: “things may not be great, but they could be worse!”

We think 2019 will mark a profound pivot away from this mentality as we are reaching the end of the road in piling on new debt and next year will see us all beginning to pay the piper for our errant ways. The great credit cycle is already showing signs of strain in late
2018 and will rip through developed markets next year as central banks are sent back to the drawing board. After all, their money printing efforts since 2008 have only dug a deeper debt hole, and it has now grown beyond their mandate to manage.

We have no idea whether any of our fresh crop of predictions will come true. The point is to provoke debate and to expand our awareness of what might go wrong in 2019. Through this process, we can prepare for potentially earth-shaking challenges to our
portfolios and even our livelihoods.

Looking down the list of Outrageous Predictions, it strikes me that if some of these see the light of day, we might finally see a healthy shift towards a less leveraged society, with less focus on short-term gains and growth, and a new focus on productivity and a new economic revolution back toward globalisation with a fairer playing field after the immediate moment of crisis. On the negative side, our calls include a considerable weakening of central bank independence, a credit crunch, and big losses in the asset where everyone is too long: real estate.

Before you dive in, please remember the ground rules for Saxo’s Outrageous Predictions: these do not in any way represent the official Saxo Bank outlook or forecast. Instead, they are unlikely risks which are still underappreciated and could radically change the investment outlook and economics over the next 12 to 24 months if they do indeed see the light of day.

2018 was an unusual year. Much of the year saw US markets going it alone, but once the juice from buyback programmes ran out, the economic gravity of a weakening credit impulse and higher prices of money and anti-globalisation were felt, and we face a rocky
end to 2018. Looking into 2019, the best we can imagine for financial markets is rough sailing, and our worst fear is the Perfect Storm.

We want to use this opportunity to thank you for all the great engagements and events we have shared in 2018. It was a very interesting year and I have the feeling that the next five years will be the most defining in my long career.

I look forward to the changes we predict if only because the outcomes could yet prove extremely positive. Only through a productive society can we deal with debt, immigration, populism and inequality. Studies show that the best and most efficient way to become
more productive is simple: education and basic research.

That’s the positive news, the bad news is that not everyone will appreciate the roller coaster ride ahead. To paraphrase the great Mick Jagger, we can’t always get what we want – but we might just get what we need.

Quarterly Outlook 2024 Q3

Sandcastle economics

01 / 05

  • Macro: Sandcastle economics

    Invest wisely in Q3 2024: Discover SaxoStrats' insights on navigating a stable yet fragile global economy.

    Read article
  • Bonds: What to do until inflation stabilises

    Discover strategies for managing bonds as US and European yields remain rangebound due to uncertain inflation and evolving monetary policies.

    Read article
  • Equities: Are we blowing bubbles again

    Explore key trends and opportunities in European equities and electrification theme as market dynamics echo 2021's rally.

    Read article
  • FX: Risk-on currencies to surge against havens

    Explore the outlook for USD, AUD, NZD, and EM carry trades as risk-on currencies are set to outperform in Q3 2024.

    Read article
  • Commodities: Energy and grains in focus as metals pause

    Energy and grains to shine as metals pause. Discover key trends and market drivers for commodities in Q3 2024.

    Read article

Disclaimer

The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
- Full disclaimer (https://www.home.saxo/en-gb/legal/disclaimer/saxo-disclaimer)

Saxo
40 Bank Street, 26th floor
E14 5DA
London
United Kingdom

Contact Saxo

Select region

United Kingdom
United Kingdom

Trade Responsibly
All trading carries risk. To help you understand the risks involved we have put together a series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. Read more
Additional Key Information Documents are available in our trading platform.

Saxo is a registered Trading Name of Saxo Capital Markets UK Ltd (‘Saxo’). Saxo is authorised and regulated by the Financial Conduct Authority, Firm Reference Number 551422. Registered address: 26th Floor, 40 Bank Street, Canary Wharf, London E14 5DA. Company number 7413871. Registered in England & Wales.

This website, including the information and materials contained in it, are not directed at, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in the United States, Belgium or any other jurisdiction where such distribution, publication, availability or use would be contrary to applicable law or regulation.

It is important that you understand that with investments, your capital is at risk. Past performance is not a guide to future performance. It is your responsibility to ensure that you make an informed decision about whether or not to invest with us. If you are still unsure if investing is right for you, please seek independent advice. Saxo assumes no liability for any loss sustained from trading in accordance with a recommendation.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the U.S. and other countries. App Store is a service mark of Apple Inc. Android is a trademark of Google Inc.

©   since 1992