Saxo’s Annual Outrageous Predictions: Which ones came close to hitting the bullseye over the years?
Each December fintech specialist Saxo unveils its annual Outrageous Predictions for the upcoming year led by its Global SaxoStrats team.
These predictions don’t reflect Saxo’s primary expectations for the year ahead. Instead, they serve as a series of unlikely events which, if they were to occur, would send shockwaves through financial markets.
The predictions are never intended to be accurate but rather daringly unconventional. Yet, occasionally, reality aligns itself in an unexpectedly outrageous manner, making some predictions surprisingly accurate.
The countdown is on for the 2023 Outrageous Predictions due for release this evening at 6pm (AEDT). But before this year’s predictions are released, with the help of Saxo we’ve delved into their archives to uncover the Outrageous Predictions that proved to be somewhat close to reality and the ones surpassing initial expectations.
Market strategist Charu Chanana’s prediction about a country agreeing to ban all meat production by 2030 felt like a bit of a stretch.
However, on a global scale, meat emerged as a significant aspect in addressing climate change and was included in discussions at the UN-organised COP28, focused on climate change, which is now underway in Dubai.
The UN is anticipated to release a roadmap for worldwide food systems, emphasising the reduction of meat consumption.
“While we didn’t see any country banning meat production, we did see a growing recognition that meat (and the consumption of it) needs to be in focus when talking about climate change. So, picking a topic that turns out to get attention and taking it a step further than reality is really what this exercise is about,” says Chanana.
In 2022 gold failed to rally with any conviction, even as inflation surged to a 40-year high. In its 2023 Outrageous Prediction Saxo said central banks realise the idea that inflation is transitory is wrong, and that prices will remain higher for longer, gold is sent through the roof, hitting a price tag of US$3,000/ounce.
“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,” Saxo head of commodity strategy Ole Hansen predicted.
“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.
“Gold slices through the double top near US$2,075 as if it wasn’t there and hurtles to at least US$3,000 next year.”
So 12 months on Hansen told Stockhead central banks did realise inflation wasn’t transitory with a series of hikes in 2023.
And while gold looks like having a Christmas rally, hitting record highs of US$2092.98/ounce yesterday and is up ~18% YTD, it is unlikely to hit US$3,000/ounce by the end of 2023.
“What we’re waiting for now is still a change in the direction of interest rates in the US, where the focus is still on hiking rates to combat inflation,” Hansen says.
“As we move deeper into 2023, into 2024, we’ll see that focus shift, the economic slowdown in Europe spread to the US, and also we’ve seen that in Asia already.
“That will start to see a change of focus towards cutting rates, and that peak in rates, together with inflation remaining reasonably elevated, we see as a trigger for higher gold prices – perhaps not to US$3000, but at least up toward record highs.”
Furthermore, China did pivot away from its zero-covid policy and approved its own vaccine.
China officially ended its zero-covid policy on January 8, 2023 and in March the country approved a a new mRNA vaccine, developed by CSPC Pharmaceutical Group.
As cryptocurrencies, notably Bitcoin, gained traction SaxoStrats foresaw a substantial surge in its value. The rationale behind this surge was attributed to the overspending of the US President Donald Trump’s administration, resulting in increased national debt and soaring inflation along with a global inclination to move away from central bank currencies.
Saxo says the Outrageous Prediction not only came true but exceeded expectations, with Bitcoin’s price nearly reaching $20k at its peak in 2017.
However, circumstances surrounding the prediction were not entirely precise. The meteoric rise of Bitcoin was less driven by the macroeconomic trends of the Trump era and more by speculative investment.
Saxo says a retrospective view of the subsequent surges in cryptocurrencies, especially Bitcoin in 2021, validated the justifications outlined in its 2017 Outrageous Prediction.
In the Outrageous Predictions for 2015, SaxoStrats forecasted that the UK Independence Party (UKIP) would secure 25% of the national vote in the British general election on May 7, 2015, creating a sensational shift as the third largest party in parliament.
It was envisaged that UKIP would later form a coalition government with David Cameron’s Conservatives, consequently initiating the planned referendum on Britain’s EU membership in 2017. This scenario would lead to a notable spike in UK government debt yields.
Saxo CIO Steen Jakobsen said while the timing was slightly askew, the underlying circumstances were remarkably accurate. A referendum on continued EU presence was held in 2016 with the official Brexit taking place at 11pm GMT on January 31, 2020.
“We had a very strong sense that ‘protest votes’ would be coming both in the US election and also ultimately in a vote on Brexit,” Jakobsen says.
“We, to some extent, correctly talked about the ‘social-contract being broken’ – meaning society no longer benefitted as a whole from monetary policy, which created an increased gap in equality.
“This call was too early, but the context and reasoning was spot on.
“The split in the Tory Party could not be healed and the modus operandi of ‘talking down to the voters’ was a blatant mistake, which we used for this call.”
At Stockhead, we tell it like it is. While Saxo is a Stockhead advertiser, it did not sponsor this article.