(News Bulletin 247) – Like every year, the Danish bank has delivered its “black swan” forecasts which have very little chance, if any, of coming true. Some are very amusing, others chilling.

It is a now well-established tradition: at the end of each year, the Danish bank Saxo Bank delivers “shock” or “black swan” forecasts, the probability of which will come true is very close to zero. Although it has happened in the past that these predictions fall very close to reality. For example, in 2015, the establishment was counting on an electoral success of the United Kingdom Independence Party (Ukip) which would have resulted in a coalition with David Cameron’s Conservatives with a vote on Brexit in 2017. Remember that this vote, which resulted in the United Kingdom leaving the European Union, occurred a year earlier, in 2016.

But apart from a few rare examples, Saxo Bank’s shock forecasts are mainly there to be “outrageous”, as the establishment indicates on its site. “These forecasts constitute an intellectual exercise which aims to consider all possible scenarios, even if they have little chance of coming true,” explains the bank more prosaically in a press release this Tuesday. “These forecasts do not constitute Saxo’s actual predictions of what will happen in 2024, but all major market movements come from shock events because it takes a major surprise to cause a large market movement,” she insists. We can also think that these projections have a playful character.

And the 2024 vintage turns out to be somewhat spicy. Overview.

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> Oil at 150 dollars and Saudi Arabia buying the Champions League

Perhaps the funniest of the bank’s predictions this year. A number of high-class players, such as Karim Benzema, Sadio Mané and Jordan Henderson, have joined the Saudi football championship in the summer of 2023, and speculation is rife about a potential ticket for the Champions League which would be granted to Saudi clubs.

But why not buy the competition directly? This is the scenario that the Danish bank imagines by assuming that oil rises sharply, to 150 dollars per barrel of Brent, against less than 80 dollars currently. “Now holding the keys to the much-loved football competition, the Saudis are immediately working to transform it into a global club competition,” anticipates Saxo Bank.

> Generative AI creates a security crisis with impacts on the stock market

Generative artificial intelligence (AI), the fuel of ChatGPT, has generated an impressive stock market frenzy this year as evidenced by Nvidia’s more than 200% rise. But this form of artificial intelligence also raises questions from the point of view of regulation and security issues.

Saxo Bank paints a disastrous and worrying scenario: “a criminal group deploys the most deceptive generative AI deepfake the world has ever seen, by phishing a senior official of a developed country into handing over information from top secret state. This maneuver creates a security crisis not seen since the Second World War, causing a regulatory tightening. “In a historic initiative to combat the catastrophic side effects of generative AI, the United States and the European Union declare that all content produced by generative AI must be marked ‘Made by ‘AI'”. And the public then becomes extremely suspicious of content published on the internet.

The most amusing part remains the stock market repercussions that the bank projects following this national security crisis. Media companies recognized by governments for the reliability of their information would see their prices jump, with the shares of the New York Times company doubling. Conversely, Adobe would collapse because the company would be penalized by governments, the “deepfake” having been carried out via its software.

> Luxury plunges due to tax on the rich in the European Union

Many NGOs are calling for a tax on large fortunes, such as Oxfam, regularly denouncing that the richest would monopolize most of the creation of wealth in the world.

Saxo Bank imagines a scenario where the European Commission commits to the European citizens’ initiative of July 2023 (which does indeed exist and is notably initiated by Thomas Piketty). Which leads Brussels to introduce legislation that taxes 2% of the wealth of billionaires annually.

For what impact on the markets? “LVMH shares plunge 40% due to the new wealth tax proposed by the European Commission, and other companies in the luxury sector, such as Porsche and Ferrari, are seeing their stock prices seriously affected,” theorizes Saxo Bank .

> Japan sees growth jump and gives up control of the yield curve

Not necessarily the most unrealistic forecast from Saxo Bank, at a time when the Bank of Japan remains the only major central bank to practice negative key rates, that Japan’s growth should reach 2% this year according to the IMF, and that the yen is at historic lows against major Western currencies.

Saxo Bank raises the hypothesis that the Japanese economy is overheating, with growth of 7%. “With a yield curve control policy in place, the Japanese economy is over-stimulated as real rates fall, nominal yields are capped but inflation expectations rise. The Bank of Japan is therefore constrained to end its policy of controlling the yield curve in 2024. This is causing a rout on the global bond markets, because Japanese investors are repatriating their money,” explains the Danish establishment. As a result, the yen is strengthening, with the dollar-yen exchange rate falling below 130 and the euro-yen below 140 (compared to around 150 and 160 currently).

> Government bonds exempt from income taxes in the United States

Saxo Bank even describes this forecast as “the end of capitalism in the United States”. In this disaster scenario, the United States dramatically increases budgetary spending before the elections at the end of 2024 to “maintain the economy and avoid social unrest”.

“Due to persistent inflationary pressures and the repatriation of capital by foreign investors, demand for U.S. Treasuries remains sluggish, causing yields to rise. In a desperate attempt to normalize borrowing costs, the U.S. government exempts income from government bonds from tax”, imagines the establishment. This is causing a flattening of the US yield curve as investors can benefit from the highest returns in decades without tax burdens. “The stock market is collapsing, but a select group of cash-rich companies benefit from an inverted yield curve,” extrapolates Saxo Bank.

> Controversial nephew Kennedy wins US presidential election

While the American presidential election will be held at the end of 2024 and a new duel between Donald Trump and Joe Biden seems to be looming, Saxo Bank could hardly avoid an unusual forecast on this theme.

The Danish bank imagines an outsider winning the vote, namely Robert Francis Kennedy Jr, nephew of “JFK”, and son of Senator Bobby Kennedy, who intends to run under the “independent” banner in the election. Although classified as a Democrat, his controversial positions have repeatedly caused embarrassment in his political camp, leading him to be disowned by both his families (the Kennedys and the Democrats). This anti-vaccine environmentalist tends to put forward conspiracy theories as discussed by NPR.

“His populist agenda against hawkish Democrats and corporate elites resonates with disaffected mainstream Democrats and Trump supporters. A new political era is dawning in the United States with the dramatic pivot away from plutocracy, as voters demand an end to inequalities and drastic injustices and an end to forever wars,” anticipates Saxo Bank.

As for market impacts: “Kennedy’s message of peace and his promise to end abuses of the U.S. health care system and break down excess corporate power sees defense, drug and pharmaceutical companies health care nosedive. In addition, the Internet and info-technology monopolies are nervous, because they fear that a broader war against monopolistic companies will ensue,” explains the bank.

> And also…

Without going into detail about each of them, let’s mention the other shocking ideas from Saxo Bank. The bank also mentions a revolt of countries (including France and the United States) which are running chronic deficits to redefine new financial conditions, thus creating “club of Rome”.

Another extreme scenario: the rise of anti-obesity drugs is forcing consumers to stop exercising and increase their purchases of junk food, which is causing a major health crisis. “The processed food industry is seeing a significant increase in demand, with the stock prices of McDonalds and Coca-Cola each outperforming the broader markets by 60%,” the bank projects this latest worst-case scenario.