The future is always different to what is expected, but as most experts try to finetune their crystal balls and predictive models, others decide to go all-in on creativity.
Every year, as end-of-year outlooks are released, Saxo Bank publishes its ‘outrageous’ predictions, which no matter how far removed from the truth they seem, can come true – the most recent example being that in 2022 the plan to end fossil fuels would get a rain check.
This time around, chief investment officer Steen Jakobsen said the world will enter an inflection point in 2024 and reach “the end of the road”.
"The smooth road the world has travelled on since the great financial crisis, with stable geopolitics, low inflation, and low interest rates, was disrupted during the pandemic years," he said.
But the disruption could continue. Below are a few points as to how this might happen and what the knock-on effect could be on markets.
Generative AI deepfake triggers national security crisis
An artificial intelligence (AI)-generated deepfake where a high-ranking official is seen handing over top-secret state information will lead to a national security crisis and trigger a crackdown on AI technology, with governments implementing stringent regulations. This marks a turning point in the perception and use of generative AI, as concerns over misuse and security risks come to the forefront.
Traditional, government-approved media companies will see a surge in value, as trust shifts away from unregulated AI-driven content. On the other hand, companies involved in the creation of deepfake technology, such as Adobe, will face severe backlash and a decline in share prices.
Tax-free treasuries mark the end of capitalism in the USA
Facing a financial crisis, the US government will take the drastic step of making income from government bonds tax-free to stabilise borrowing costs, blurring the lines between public and private capital allocation.
US Treasuries will rally across the board, causing the yield curve to aggressively flatten. Conversely, the stock market will experience a significant downturn, except for a select group of cash-rich companies that could benefit from lower borrowing costs and an inverted yield curve.
Saudis buy Champions League franchise
Oil will reach $150 a barrel, emboldening Saudi Arabia to make a move on the international stage by buying the UEFA Champions League franchise and creating a World Champions League. This will be seen as part of Saudi Arabia's strategy to diversify its economy beyond oil and aiming to become a global hub for tourism, leisure and entertainment. This acquisition will lead to a doubling of Manchester United’s stock price.
Robert F. Kennedy Jr. wins the US presidential election
Running as a third-party candidate, Robert F. Kennedy Jr. will garner support from both traditional Democratic voters and disenchanted Trump supporters, promising to end “forever wars” and combat drastic inequality and injustice.
Defence, drug and healthcare companies will experience a significant decline in their stock prices due to Kennedy’s pro-peace stance and promises to reform healthcare and challenge corporate power. Internet and information technology monopolies could also trade nervously, with concerns about potential anti-monopoly actions and broader regulatory changes.
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EU introduces wealth tax, impacting luxury market
As a response to growing social unrest and perceived tax inequalities among the ultra-wealthy in Europe, the European Union will introduce a 2% wealth tax on billionaires to fund climate change mitigation, healthcare and education.
Shares of luxury brands such as LVMH, Porsche and Ferrari will plunge by 40% as market expectations for luxury goods demand plummet.
Obesity drugs work too well
The widespread adoption of GLP-1 obesity drugs will lead to a decrease in public interest in maintaining healthy lifestyles. People will begin to rely on the drugs instead of diet and exercise, increasing global obesity rates and related health problems. This trend is exacerbated by supply shortages of these drugs, leading to a significant health crisis and a decrease in global productivity.
This scenario will lead to a surge in demand for processed food industries, with companies such as McDonald's and Coca-Cola benefiting. Their stock prices could outperform the broader markets by 60%.
Deficit countries form trade coalition
In response to unsustainable long-term current account imbalances, a group of deficit countries including the US, UK, India, Brazil, Canada and France will form a ‘Rome Club’, an alliance aiming to cooperate on reducing deficits by collectively negotiating new world trade terms with surplus countries.
Faith in the fiat money system will plummet and spark significant gains for alternative stores of value including gold, silver and cryptocurrencies.
Japan booms
Japan will experience an unexpected economic boom, resulting in a 7% GDP growth rate driven by increased domestic demand, wage growth and technological advancements.
The Bank of Japan will abandon its yield curve control policy, leading to a significant adjustment in global bond markets as Japanese investors repatriate funds back home. The yen will strengthen against major currencies, pushing the dollar-yen below 130, euro-yen below 140 and Australian dollar-yen below 88.