Saxo's Outrageous 2022 Predictions Are Nothing Short of "Revolting"

It's that time of year again, when Saxo Bank releases its annual Outrageous Predictions, allowing the bank's experts and money managers to blend probable events with a few mythological liberties. This year's theme is “Revolution.”

Saxo Bank, online trading and investment firm, has made revealing its 10 Outrageous Predictions an annual tradition. The top two items on the list this year put climate change initiatives in the crosshairs, with the forecast that phasing out the use of fossil fuels has taken a “rain check,” and Facebook is on the verge of a “faceplant” as it loses younger users.

The list is classified by the Danish investment bank as “unlikely yet undervalued occurrences that might send shockwaves throughout financial markets” if they materialize. The list is prepared with enough believability and bravado to be entertaining, but with serious overtones regarding how we are collectively doing to better our planetary status.

Steen Jakobsen, Saxo's chief investment officer, said that the firm picked revolution as a theme this year because “there is so much energy building up in our inequality-plagued society and economy.”

“Add to that the present system's failure to solve the problem, and we need to look into the future with the basic understanding that it's not a matter of if we have a revolution, but rather when and how,” Jakobsen added.

With those provocations in mind, here is a high-level overview of what Saxo predicts for next year:

1. The plan to phase out fossil fuels is postponed.

Summary: Policymakers postpone climate objectives and boost fossil fuel investment to combat inflation and the danger of civil unrest while reconsidering the route to a low-carbon future.

Market impact: The iShares Stoxx EU 600 Oil and Gas ETF gains 50% as the whole energy sector rebounds.

2. Facebook's take on the young exodus

Summary: The youth flee Facebook's platforms in protest against the harvesting of personal information for business; Facebook parent Meta's effort to entice them back with the Metaverse fails.

Market impact: Meta, Facebook's parent company, is struggling, down 30% vs the wider market, and is being pressured to break out its components as independent firms, destroying Zuckerberg's monopolistic fantasies.

3. The midterm elections in the United States cause a constitutional crisis.

Summary: A stalemate over the certification of close Senate and/or House election results in the United States leads in the 118th Congress being unable to convene on time in early 2023.

Market impact: Extreme volatility in US assets as US Treasury rates increase and the US dollar falls as a result of hedging against the world's biggest economy and issuer of the world's reserve currency.

4. Inflation in the United States exceeds 15% due to a wage-price spiral

Summary: Wages for the lower half of US incomes will rise at an annualized 15 percent rate by the fourth quarter of 2022 as companies scramble to find willing and qualified workers who are increasingly selective due to a rising sense of entitlement as jobs are plentiful relative to the meager availability of workers at all skill levels.

Impact on the market: Extreme volatility in the US equities and credit markets. The JNK high-yield ETF falls up to 20%, while the VIXM mid-curve volatility ETF rises to 70%.