Saxo Bank publishes “shocking predictions” for 2022

Moscow. December 2nd. INTERFAX.RU – Saxo Bank’s “shocking predictions” for 2022 suggest events such as the emergence of a female army of investors dissatisfied with gender inequality, a new arms race and the Cold War, as well as the decline of the popularity of Facebook and Spotify.

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“The main theme of Shocking Predictions for 2022 is revolution,” said Steen Jacobsen, chief investment officer at Saxo Bank. “In our society and economy, suffering from inequality, tension is increasing, and the inability of the existing system to solve this problem” in an evolutionary way makes the possibility of revolution inevitable, he believes.

“We are betting that in 2022 the rate of evolution will increase by several steps – up to” revolutionary “values ​​- as a new cycle begins.” Change is good “should be a new mantra,” he said.

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Many investors and experts hoped that after the COVID-19 pandemic, everything will return to normal, but the increasingly distant prospect of its end is melting these hopes and increasing volatility.

“There is likely to be much less hope for the markets in 2022, but there will be much more volatility as revolutionary movements intensify,” Jacobsen said. “Some of these movements will lead to positive developments, some vice versa, but the process needs to be started. must change if we are to achieve zero emissions, reduced inequality, sustainable energy and, importantly, high productivity. ”

In such an environment, governments in some areas, such as monetary policy, need to release the reins a little, but tighten regulation to prevent even greater inequality, such as overly strong monopolies, added Jacobsen.

The Bank traditionally emphasizes that “Shocking Predictions” are not its baseline scenario or official forecast, but at the same time, any of these events, if it happens, will have a very noticeable impact on the financial landscape or global politics.

Plans to phase out fossil fuels will have to be delayed

Policymakers will backtrack on climate change targets and support investment in fossil fuels to tackle inflation and the risk of social unrest.

The International Energy Agency predicted that in order to achieve the goal of zero harmful emissions by 2050, it is necessary to reduce the consumption of oil and natural gas by 29% and 10%, respectively, by 2030, followed by a sharp decline. World oil and gas companies have already begun to do this, which has led to a shortage in the market and, accordingly, an increase in the price of energy resources.

In addition, this event led to an increase in prices for industrial metals, most of which are needed in significant quantities for the green transformation, as well as for diesel and, in particular, for fertilizers – an integral part of agricultural costs, and this is starting to raise concerns about about the production of basic food crops.

Meanwhile, environmental, social and governance (ESG) criteria will become an increasingly popular way of allocating investment capital to investors and banks.

Falling popularity of Facebook

Youth will leave platforms Facebook Inc. in protest against the company’s use of personal data for profit. The attempt of the “parent” company Meta to bring them back using the “metaverse” will not be crowned with success.

The situation will be similar to the one when many tobacco companies suddenly entered the market, creating strong competition for a single well-known brand. These new platforms will have a more interesting style and a different approach to privacy and information management – without the use of algorithms that serve only personalized advertising messages.

US midterm elections could turn into constitutional crisis

The U.S. midterm elections will face a stalemate over confirmation of the final election results for the Senate and House of Representatives, leading to a scenario in which the 118th Congress will not be able to start work on schedule in early 2023.

The events of the 2020 presidential election were a daunting moment for many American institutions. Ardent supporters of former President Donald Trump stormed the Capitol, inspired by his call to “stop the attempted election theft,” that is, to prevent the official release of the results on January 6, 2021 – an unprecedented event in US history.

Saxo Bank does not rule out that a similar situation could happen during the next year’s congressional elections, when one or both sides oppose the confirmation of the voting results. As a result, the new Congress will not be formed on time and will not be able to start meetings on January 3. Thus, in early 2023, a full-blown constitutional crisis is brewing.

Strong rise in wages

By the fourth quarter of 2022, wages for half of the low-income US population will grow at a double-digit annual rate. Companies will try to find motivated and qualified employees, who will become increasingly selective due to the growing sense of self-esteem amid an oversupply of vacancies compared to a meager supply of labor at all skill levels.

In the late 1960s, the Federal Reserve misjudged how far it could accelerate the US labor market without fanning inflation. Over the next decade, this mistake pushed inflation expectations out of control and led to massive wage increases.  Only after the 1980-1982 recession. and a strong increase in interest rates, inflation was finally stopped.

In 2022, the Fed will repeat the same mistake, as the economy after the outbreak of the coronavirus and especially the labor market is severely limited in supply.  But this is completely wrong, analysts at Saxo Bank say.

Some Americans have retired early because of the crisis and left the American workforce permanently. Combined with persistent inflationary pressures, an energy crisis and labor shortages by the fourth quarter of next year, this will result in unprecedented year-on-year wage growth.