Amazon to “buy” Cyprus and move its HQ there, Germany to bail out debt-riddled France and tech breakthroughs to deliver abundant clean energy.
Yep, it’s that time of year when Saxo Bank puts out its 10 outrageous predictions for the 12 months ahead. They’ve gathered a cult following and although not all entirely serious, they are designed to make investors think about the leftfield tail risks that could affect markets.
That said, anyone predicting a global pandemic and recovery, and the shenanigans in the White House, last December would probably have been dismissed as a crank.
The Danish bank’s chief investment officer Steen Jakobsen said: “We’ve seen the fastest bear market and recovery in history, as well as central bank balance sheets and fiscal deficits exploding at an unprecedented pace.
“So our not-so-outrageous prediction is that 2021 will bring the beginning of a reality check to the idea that “extend and pretend” can stretch to infinity and beyond, even as markets have been pricing in that very expectation.”
Here are the bank’s outrageous predictions for 2021.
1. Amazon “buys” Cyprus
Wary of regulatory intervention, Amazon redomiciles its EU headquarters in Cyprus and helps the country rewrite its tax rules to benefit the tech giant. This provides a financial windfall to heavily indebted Cyprus, but pushes the EU to harmonize tax rules among its members.
2. Germany bails out France
Already suffering one of the highest debt to GDP ratios in the EU at 140% after Covid, a series of corporate bankruptcies push France’s finances to the brink. A massive sell-off of its banks force Paris to beg Germany to force the European Central Bank to bail it out.
3. Blockchain tech kills fake news
Amid the mounting threat of disinformation, established news companies and social media platforms fight back, moving news onto a blockchain network that is verifiable.
4. China’s new digital currency leads tectonic shift in capital flows
The digital yuan opens up access to Chinese capital markets and improves efficiency, resulting in a newfound stability. The yuan increasingly rivals the U.S. dollar as a reserve currency.
5. Green tech breakthroughs spark energy abundance, but kills wind
An advance A.I. algorithm solves the riddle of commercial fusion energy, remodelling M.I.T.’s SPARC fusion reactor and driving a quantum leap forward in energy technology. This sees every home become energy independent, but kills off the wind energy sector.
6. Universal basic income drives flight from big cities
As technology advances spark rising numbers of redundancies and growing inequality, societies recognize they need to shift to a universal basic income model. Automation leaves most city office real estate redundant, crushing property values and prompting people to leave cities altogether.
7. Citizens Technology Fund to pay disruption dividend to the masses
With technology decimating jobs in several sectors, a fund is created paying a so-called disruption dividend to try and share out some of the gains from these productivity advances.
8. A successful Covid-19 vaccine kills off zombie companies
The economic disruption of the pandemic saw many companies take on massive amounts of debt to survive. As the economy booms post-vaccine, the weight of stimulus pumped into markets, results in the economy overheating, sending inflation surging. Rising interest rates in response result in a wave of defaults.
9. Silver prices double on solar demand
Rising inflation in 2021 fuels strong demand for precious metals. As the U.S., China and the EU pursue green deals, this drives a surge in demand for silver in industrial applications, resulting in a supply crunch.
10. Next gen tech to supercharge frontier markets
Advances in satellite-based internet delivery, such as SpaceX’s Starlink, will massively increase internet coverage in frontier and emerging markets. This will cause a revolution in education and business productivity, as well as fintech.
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