In its annual report of “outrageous predictions” for the new year, Saxo Bank is predicting 2023 will be a wild ride, with wartime economic policies, Britain voting to rejoin the EU, French President Emmanuel Macron resigning, a Chinese revolt of the people, and India and OPEC working together to counter the “weaponization” of the dollar.
Saxo chief investment officer Steen Jakobsen said in a statement on the release, “Any belief in a return to the disinflationary pre-pandemic dynamic is impossible because we have entered into a global war economy, with every major power across the world now scrambling to shore up their national security on all fronts, whether in an actual military sense, or due to profound supply-chain, energy and even financial insecurities that have been laid bare by the pandemic experience and Russia’s invasion of Ukraine.”
According to the Danish investment bank, as inflation surges, there will be widespread price controls by countries such as the US and Britain, and that will drive the price of gold to $3,000 per ounce. Jacobsen noted, “In a war economy, the government hand will expand mercilessly as long as price pressures threaten stability.” He added that efforts to constrain the Russian bear by capping the price of Russian seaborne crude are destined to fail.
The bank also predicted that as the UK sees a recession take hold, the Labour Party will take power in the third quarter in the UK, and that will precipitate a referendum on reversing Brexit. After the “Rejoin” vote wins, the pound will soar.
The bank noted some predictions, such as its assertion the EU would form an “EU army,” were based upon similarities between Europe’s state in the early 20th century, and today. It added, “The Ukrainian invasion has brought a war economy mentality to Europe on a scale not seen since 1945. And it’s not just about the woefully inadequate military capabilities in Western Europe, but also about an industrial, Germany-centered model that has been rendered existentially challenged by Europe cutting itself off from cheap and plentiful Russian oil and gas.”
The bank also predicted China, India, and OPEC would join forces to create a new reserve asset and international clearing union which would counter the US dominance of the global money system. It noted the “shockwaves” which reverberated across nations which were not militarily allied with Washington as being a prime motivation.
In other predictions, Japan will reset its financial system by pegging the yen at 200 per dollar, by 2030 at least one country will establish an outright ban on meat production, and there will be a push globally to eliminate tax havens and close tax loopholes for hedge funds by reworking financial laws.
Saxo’s predictions are often bold, but not entirely without merit. In 2022, the bank predicted there would be a new cold war which would break out on multiple fronts. As the US engages in a proxy war with Russia in Ukraine and the West imposes a continually increasing list of economic sanctions on Russia, and the US-China relationship deteriorates over Taiwan, it is hard to deny that was accurate.
The bank also predicted the green transition would be delayed. As Europe unshutters coal-fired electricity plants, it is hard to argue with that. And in its most accurate prediction, the bank saw a fall in the stock price of Meta Platforms, predicting Facebook was dying among the newer generation. Facebook shares are presently down two-thirds for the year.
Photo of Saxo Bank courtesy of Wikipedia.
The Daily Financial Trends