Saxo Bank Unveils “Shocking Predictions” for 2020
On December 3, economists at Danish investment bank Saxo Bank published a list of “shocking predictions” for the global economy for next year.
The “shocking predictions” from Danish investment bank Saxo Bank relate to unlikely and underestimated events, due to which, however, financial markets can be covered by a “very powerful shock wave”. In 2020, bank researchers threaten the world with Hungary’s exit from the EU, the loss of control over the global situation, the new pan-Asian currency and the loss of the election by Donald Trump by central banks and governments.
Moscow double win
According to analysts at Saxo Bank, in 2020 the Russian economy will receive double support due to a sharp rise in the price of oil and industrial metals. According to experts, the countries participating in the OPEC + deal will again reduce oil production. As a result, the supply of energy in the global market will decline, and world oil prices could rise to $ 90 per barrel.
The excess profits from the sale of hydrocarbons Russia will be able to channel to the financing of national projects. Saxo Bank chief economist Steen Jacobsen said this in an interview with RT.
Steen Jacobsen on a possible increase in world oil prices
Russia can also benefit from a record increase in palladium prices. Since the beginning of 2019, scarce metal has risen in price by more than 50% – up to $ 1820 per troy ounce. As expected, the demand for raw materials will continue to grow thanks to global automakers – palladium is used in the catalysts of gasoline vehicles for burning exhaust gases. At the same time, Russia remains the largest supplier of precious metals in the world (with a market share of more than 40%).
“The growing focus on climate policy around the world continues to increase long-term interest in electric vehicles and vehicle emissions controls. Russia is benefiting as the world’s largest supplier of palladium, ”says a study by Saxo Bank.
When publishing its “shocking predictions”, Saxo Bank emphasizes each time that they are not official bank forecasts for investors and other market participants. But the bank does not exclude that “many investors may be mistaken in evaluating the probability of occurrence of the above-mentioned events as negligible.” “This is an attempt to explore the limits of the possible, if not always probable. Naturally, the most destructive (and therefore shocking) events are most unexpected, ”recalls Saxo Bank.
The leading theme of “shocking predictions” for next year, Saxo Bank has designated “undermining the foundations.”
“The current state of things will inevitably change. Not because we want it, but simply because continuing the trends of the last decade would plunge society into a war with itself: markets would be replaced by governments, monopolies would become the only business model, and public discussions would be extremely polarized, fragmentary and completely biased … ”- said the chief economist of the bank, Steen Jacobsen.
What were the “shocking predictions” from Saxo Bank for 2019
Saxo Bank does not exclude that the ECB could make a sharp turn and abandon the policy of ultra-low rates. Due to the difficult situation faced by European banks due to ultra-low rates and the tightening of regulation under the Basel IV rules, the new ECB chairman Christine Lagarde will announce at the beginning of the year that monetary policy has exhausted its capabilities. She will point out that long-term maintenance of negative deposit rates can seriously damage the European banking sector. To force the governments of the Eurozone countries, especially Germany, to switch to fiscal stimulation of the economy, the ECB will deploy its monetary rate, bringing the discount rate to zero, and by the end of the year even a small plus.
No less radical events await Europe in the political sphere.
Saxo Bank does not exclude Hungary from withdrawing from the EU, which is already in conflict with the European Commission.
The EU previously launched a procedure against Hungary under Article 7 of the Union Treaty, citing the country’s increasingly stringent restrictions on the freedom and independence of the press, the court, science, minorities and human rights defenders. The Hungarian leadership responds that the country is only protecting itself – first of all, its culture from mass immigration. This situation is unstable, and in 2020, as the procedure for Article 7 moves slowly through the EU bureaucratic system, it will become even more difficult for the parties to agree. Prime Minister Viktor Orban will openly talk about a “blood brotherhood” with Turkey, as opposed to the rest of Europe, and this sharp change in tone will coincide with minimizing European tranches over the next two years.
Dramatic events can also unfold in Asian markets. The new Asian reserve currency, supported by the Asian Infrastructure Investment Bank (AIIB), will lower the US dollar index by 20%, and bring the dollar down by 30% relative to gold. Due to the deepening trade conflict and vulnerability to threats, the US will turn the dollar (and control over global finances) into a weapon, AIIB will create a new reserve asset called “Asian Drawing Right” – Asian Drawing Right, or ADR, with one ADR equal to two US dollars, which will make it the world’s largest currency unit. This step will obviously be aimed at eliminating the US dollar from regional trade. Local economies will conclude a multilateral agreement to transfer all trade in the region to ADR only.
Major oil exporters – Russia and the OPEC countries – will gladly join the agreement, realizing their growing dependence on the Asian market. The renaming of a significant share of international trade from the American dollar to another currency will leave the United States even less than the inflow of money needed to finance both deficits – both trade and budget. In just a few months, USD is weakening by 20% relative to ADR and by 30% – relative to gold, so the spot price of the latter in 2020 will significantly exceed $ 2000.
Can the world do without American money
A change in the balance of power will not be able to bypass the United States. Even though there may be a truce in a trade war between China and the United States, the US economy will begin to choke, and the trade deficit…