"We publish "outrageous predictions" for more than ten years, and we believe the list this year, one of the best of all time, because it forces us to think beyond the conventional. It is important that the "Shocking forecasts" should not be taken as official forecasts Saxo, talking about special events and the movements of the market with a huge potential for the destruction of conventional wisdom," commented chief economist and investment officer at Saxo Bank Steen Jakobsen.
Chief currency strategist at investment Bank Saxo Bank's John hardy notes that a year ago many thought: 2017 will be very volatile because of the seemingly impossible ascent trump and shocking Brexit. "Instead we waited a year amazingly relaxing swim, in which even high-risk assets were hit by the storm. But in 2018, the pendulum again swings in the direction of the obvious risks, because the irony of long periods of peace and carelessness in asset markets is that they sow the seed of future volatility, as investors underestimated the risks of rare events and put everything on the line, relying on the continuation of this cycle," he says.
Nevertheless, our predictions for next year are not only the concern of the collapse of the market. We call shocking everything from the loss of the Central banks policy, giving them the advantage of the new political crisis in the EU and ending with undermining the status of the US dollar (as a reserve currency by China) and a new political source, which abounds in South Africa. The point is not whether it's true or not. Our task is to provoke discussion and reflection on the possible shocking directions of development of the situation in the crucial moments, which inevitably will bring in 2018.
The fed loses its independence, as the Ministry of Finance takes responsibility
On the eve of the midterm elections in the U.S. Congress, Republicans and Democrats compete in populism in the absence of budgetary discipline and tax cuts the Republican party, leading to a significant drop in income and, in the future, to plunge the country into recession. Weak economy, higher interest rates and inflation will not leave the Federal reserve system selection in the sphere of monetary policy. From the fed made a scapegoat and accused of the assumption of poor economic performance, panic in the bond market and increased inequality. The U.S. Treasury again, as after the Second world war, takes the reins in your hands and limits the yield of long-term government bonds at 2.5% after a sharp jump in profitability.
The Bank of Japan is forced to relinquish control of the yield curve
Policy for the control of the yield curve, implemented by the Bank of Japan depends on the world of flexible interest rates and low profitability, and in 2018 to rely on them is just unreasonable. The growth of inflation will increase and incomes that will lead to catastrophic depreciation of the yen. In the end, the Central Bank will have to turn to the measures of quantitative easing, but not before the dollar the yen will hit 150, and then it quickly drops to 100.
China moves to nefteyuani
China is the undisputed leader in oil importers, and many States exporters already willing to make deals in RMB. The weakening of the global influence of the US and the success of commodity futures in yuan, the decision of the Shanghai international energy exchange on the beginning of trading in crude oil futures in yuan was doomed to success from the beginning.
Thanks to the introduction of nefteyuani, the Chinese currency will exceed the dollar by more than 10%, and the dollar to the yuan for the first time will go down from 6.0.
The spike in volatility after the collapse of the equity markets
Global markets are full of secret signs and surprises, and a sharp decline in volatility in different asset classes in 2017 is no exception. The historic lows of the indices VIX and MOVE were accompanied by a record of share prices, and high prices in the real estate market. The result was a powder keg ready to explode and effectively, and harbinger of the explosion was the loss of 25% of the value of the securities in the S&P 500, reminiscent of the 1987 crash. Assets with low volatility disappear as a class, and an unknown trader in the long position earns a profit of 1000% and in the blink of an eye turns into a legend.
Americans will quicken in the elections of 2018
Demographic changes in the United States will have a huge impact on politics in 2018: according to estimates, the number of Millennials under 35 years already exceeds the number of postwar baby boomers. The aversion of young voters to person trump, growing inequality, which only compounded the cynical tax reform Republicans and a new generation of democratic candidates, does not shy away from populism in the style of the Sanders - signs that in November, the Millennials will flood the polls. Democrats are pushing the discussion of tax reform to promote mass consumption. True populism means a willingness to open the national "money-box" to meet the needs of 90% of the population, including financial incentives and, as a result, a huge deficit. The yield on the 30 year U.S. Treasury bonds exceeds 5 %.
The Austro-Hungarian Empire threatened to capture EU
In 2018, the split between "older" EU members and the new sceptical members of the Union will turn into an insurmountable abyss. For the first time since 1951, the center of power in Europe shifted from the Franco-German axis to Central and Eastern Europe. Institutional conflict in the EU will soon affect the financial markets. Reaching new heights currency relative to B10 and developing countries, by the end of 2018, EUR will weaken sharply relative to the U.S. dollar.
Bitcoin is doomed
The appreciation of bitcoin and other cryptocurrencies have become one of the most significant events in the financial markets in recent years. The rate of bitcoin will continue to grow - and grow rapidly - throughout the greater part of 2018, but Russia and China will ultimately cause its collapse by their actions.
In 2018, the rate of bitcoin will peak and will exceed the 60 000$, and the market capitalization of the currency will be more than 1 trillion dollars because an active entering into futures contracts on bitcoin in December 2017 will attract the attention of huge number of investors and funds that feel more comfortable trading futures and not investing in cryptocurrency exchanges.
But very soon, the phenomenon called "bitcoin" will cut the ground from under the feet of Russia and China quickly leave the game, and even prohibit themselves from unauthorized cryptocurrencies. Russia is becoming an official player in the field of cryptocurrencies, to influence the development of protocols, and shifts the focus from bitcoin to deter Russian capital in the country. Ditto and China: trying to cause the collapse of cryptocurrencies, China prohibits the production of the most popular types of cryptocurrency in China and describes the energy losses and environmental considerations as reasons for this ban. On the other hand, China realizes that bitcoin can be used as a mechanism of capital flight, and fears.
In parallel China enters officially secured cryptocurrency mining which involves less expenditure of energy. More efficient work of the state protocols to make payments and price stability, and active state intervention leads to a decrease in interest in the cryptocurrency. Despite the technological future of the block chain, bitcoin and other cryptocurrencies are completely removed from the stock market game.
After the stunning rise in 2018 bitcoin expects the rapid decline in 2019 to the level of basic cost of $ 1,000. USA.
"African spring" will lead to the revival of Africa
In 2018, the result of completely unforeseen events democratic processes will be running throughout Central Africa. The forced resignation of longtime Zimbabwe President Robert Mugabe at the end of 2017 to catalyze political change in other African countries, dissatisfied with the ineffective and divorced from the reality of control of their leaders. Not to mention the forced resignation of Jacob Zuma in South Africa and Joseph Kabila in the Congo, which as a result of unprecedented popular unrest was forced to flee the country. But South Africa gets the most: the South African Rand is a leader among the currencies of developing countries and is growing by 30% against the dollar, the Euro and the yen. As a result, in South Africa have the highest growth rates in the world and becomes a centre of attraction for the advanced economies of the region.
Tencent bypasses Apple becomes the largest company in the world
China opens its capital markets, and the huge size of the country and the rapidly growing standard of living attract investors from all corners of the planet. This is reflected in technology stocks, Chinese companies that are very popular: for example, shares of market leader, Tencent in 2017 has increased by 120 %. At the end of 2017, the company Tencent entered the top five leaders in terms of market capitalization, reaching almost $ 500 billion dollars. The United States, and even at some point bypassed Facebook. But in 2018 Tencent will erase other giants in the powder, even if Apple's market capitalization after the release of the hugely popular iPhone X will reach 1 trillion U.S. dollars.
It was time for them: women "break" the glass ceiling
Today's generation of women often has a higher level of education than men, and from U.S. universities with a bachelor's degree now produced almost 50% more women than men. In addition, almost half of all graduates, specialized in business today - women. In 2017, among the CEOs of Fortune 500 women represented only 6.4%, although on average they earn more than their male counterparts.
Change is coming, and it's not justice, and that women are aware of their desired capacity - the latest way to expand the economy without increasing the population in low-productivity and aging in developed countries. In 2018 chauvinists will have to make room at the top of Olympus under the influence of the shareholders or the result of his own enlightenment and to give women leading positions in more than 60 companies from the Fortune 500.
Tags: Russia , China , bitcoin