The world is at an inflection point, with the familiar road of the past decade coming to an end, according to Saxo Bank’s annual Outrageous Predictions report for 2024.
The Danish investment bank’s list of eight events that are unlikely to occur in 2024 – but would send shock waves through global financial markets if they did – include the EU introducing a wealth tax, the US making government bonds tax-free, deficit countries forming a “Rome Club” to negotiate new world trade terms and Japan’s surprise economic surge leading to a policy shift by the Bank of Japan.
“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,” says Steen Jakobsen, chief investment officer at Saxo, indicating a shift towards a future filled with unpredictability.
Over the years, Saxo Bank’s Outrageous Predictions report has gained recognition for its uncanny ability to forecast developments that initially seemed improbable.
For example, the bank predicted a massive rally in Bitcoin in 2017, the postponed plan to end fossil fuels in 2022 and a country’s ban on meat production for 2023.
The Covid-19 pandemic era of near-zero interest rates and fiscal and monetary stimulus came to an end in March last year, when record-high inflation, a supply chain crunch and the war in Ukraine forced the US Federal Reserve and other central banks around the world to raise interest rates to cool their economies amid a cost-of-living crisis.
In October, the International Monetary Fund said it expected global inflation to decline steadily, from 8.7 per cent in 2022 to 6.9 per cent in 2023 and 5.8 per cent in 2024. This is still well above the preferred 2 per cent target of central banks.
Here are Saxo Bank’s eight outrageous forecasts for 2024:
Outrageous prediction: As the EU needs more funding for various policy goals, including climate change mitigation, health care and education, and the population realises how little in tax billionaires are paying, the EU Commission implements a law that annually taxes 2 per cent of wealth.
What Saxo says: The law sends shock waves through Europe’s luxury industry, with the luxury behemoth LVMH plunging 40 per cent.
Market impact: LVMH shares plunge 40 per cent on the EU Commission’s new wealth tax and the share prices of other parts of the luxury segment, including Porsche and Ferrari, suffer badly.
Outrageous prediction: Generative artificial intelligence becomes a national security threat after a daring AI deepfake heist against a high-ranking official in a developed country.
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