Every year in December, fintech specialist Saxo launches its 10 Outrageous Predictions for the ensuing 12 months.

These predictions do not constitute Saxo’s baseline forecasts for what will happen in 2023.

But in a world full of chaos and uncertainty, this thought experiment from Saxo’s Global SaxoStrats team helps investors consider what is possible, even if not necessarily probable.

“All large market moves are brought about by something outrageous because a big market move requires a big surprise,” it says.

“In a world where central banks and governments are set to lose their battle with inflation, the risk is that markets will prove as outrageous as ever in 2023 and beyond.”

Occasionally, Saxo says, “the world catches up and becomes just the right amount of outrageous” for the predictions to become true.

Here are our favourite outrageous predictions for 2023, and how ASX investors could be impacted … if they come true.

You can read the full list here.

 

#1 Gold rockets to $US3,000 as central banks fail on inflation mandate.

Who could benefit? All the gold stocks.

This year, many investors have been left frustrated by gold’s inability to rally with any conviction, even as inflation surged to a 40-year high.

Gold traditionally has been used as a hedge against high inflation. What gives?

“It turns out that the key in holding down gold’s potential was the market’s mistaken consensus bet that inflation would prove transitory,” Saxo Head of Commodity Strategy Ole Hansen says.

“Central banks largely anticipate that inflation will fall back to target within a mere couple of years, and even the market’s own forward pricing of inflation risks predicts the same.

“And how was gold supposed to rally in 2022, especially in strong USD terms, if you can get well over 4.0 percent on a 5-year US treasury at a time when 5-year forward inflation rates are priced to drop below 2.5 percent?”

Gold finally finds its footing in 2023 when the market discovers that inflation is set to remain ablaze for the foreseeable future.

“… with the arrival of spring, China decides to pivot more fully away from its zero-COVID policy, touting effective treatment and maybe even a new vaccine,” Hansen predicts.

“Chinese demand unleashed again drives a profound new surge in commodity prices, sending inflation soaring, especially in increasingly weak USD terms as the Fed’s new softening on its stance punishes the greenback.

“Under-owned gold rips higher on the sea-change reset in forward real interest rate implications of this new backdrop.”

Meanwhile, the geopolitical backdrop of an increasing war economy leads to a mentality of self-reliance and minimising holdings of foreign FX reserves, preferring gold.

“Gold slices through the double top near USD 2,075 as if it wasn’t there and hurtles to at least USD 3,000 next year,” Hansen predicts.

“The VanEck Junior Gold Miners index [also] quadruples in value.”

 

#2 Billionaire coalition creates trillion-dollar ‘Manhattan Project’ for energy.

Who could benefit? All the ASX hydrogen and uranium stocks.

Energy consumption is soaring.

At the same time, energy’s growth potential looks highly constrained by the phasing out of legacy fossil fuels and the “frustratingly diffuse and intermittent” alternatives like wind and solar, Saxo analysts Peter Garnry & Anders Nysteen say.

“In 2023, owners of major technology companies and other technophile billionaires grow impatient with the lack of progress in developing the necessary energy infrastructure that would allow them to both pursue their dreams as well as address the needed energy transition,” they predict.

“Teaming up, they create a consortium code-named Third Stone, with the goal of raising over a trillion dollars to invest in energy solutions.

“It’s the largest research and development effort since the original Manhattan Project that developed the first atomic bomb.”

This energy project could cover things like nuclear fusion, small modular nuclear reactors, and large green hydrogen developments.

Nuclear fusion is called the “holy grail” of energy for a reason; if it works, it means vast amounts of clean energy and zero emissions from a near inexhaustible fuel source.

Fusing atoms together in a controlled way releases nearly four million times more energy than burning coal, oil or gas, and four times as much as nuclear fission reactions.

Meanwhile, the buzz around cheaper, scalable and safe small modular nuclear reactors (SMRs) is growing.

Factory built SMRs would be manufactured in easy-to-transport ‘modules’ and then brought to site for assembly.

Like putting together a complex jigsaw puzzle.

SMR’s — used in ships and submarines for many years — could ultimately be much cheaper than gigawatt-scale nuclear power plants precisely because they are modular and easily scalable.

Then there’s green hydrogen, where companies at the big end of town with financial resources are already making waves.

Fortescue Metals (ASX:FMG), for example, is currently throwing huge amounts of cash at research and development through its green arm Fortescue Future Industries (FFI) with the goal of producing 15Mt per year of green hydrogen by 2030.

READ: The green hydrogen hype has come and gone – these ASX stocks are left standing

 

#3. A country agrees to ban all meat production by 2030.

Who could benefit? Plant protein companies. Probably not ASX meat stocks.

On a global scale, food production is responsible for one-third of all planet-heating emissions, with the use of animals for meat accounting for twice the pollution from producing plant-based foods, Saxo says.

To meet the target of net-zero emissions by 2050, one report estimates that meat consumption must be reduced to 24kg per person per year, compared with the current OECD average of around 70kg.

“In 2023, at least one country looking to front-run others in marking out its lead in the race for most aggressive climate policy, moves to heavily tax meat on a rising scale beginning in 2025,” Saxo market strategist Charu Chanana predicts.

“In addition, it plans to ban all domestically produced live animal-sourced meat entirely by 2030, figuring that improved plant-derived artificial meats and even more humane, less-emissions intensive lab-grown meat technologies will have to satisfy appetites to help save the environment and climate.

“Market impact: Equities like traditional “ESG-lite” Tyson foods suffer steep drawdowns until they begin investing in sustainable and even lab-grown meat.”

It also sounds like good news for plant-based meat stocks, which have struggled for momentum over the past few years.

While Australia lacks the giant pure play companies of the US, like Beyond Meat (NDQ:BYND), stocks like Wide Open Agriculture (ASX:WOA) are still heavily leveraged to the plant-based protein thematic.

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