If oil breaks through past $100 a barrel, it could set up some interesting market movements. Saxo comes up with some out-of-the-box possibilities. Image Credit: Shutterstock

Dubai: Forget about forecasts about whether the global economy will slow down in 2024, or whether the US stock markets – after enjoying a power packed November – will tank once the New Year settles in.

It may or may not happen, but that’s not what Saxo Bank, headquartered in Denmark and with offices in Dubai and Singapore, is interested in. It’s December and it’s time for Saxo to come up with some ‘extreme’ forecasts. The emphasis is clearly on extreme.

Sample this for size – Oil prices hit $150 a barrel and which will see Saudi Arabia gunning for – and buying – the Champions League franchise.

“Saudi Arabia’s radical restructuring of its economy away from its dependency on oil revenues towards becoming a tourism, leisure, and entertainment powerhouse, receives an added boost from a meteoric rise in oil prices, which reach $150 per barrel around mid-year on stronger-than-expected demand,” is Saxo’s take on the subject.

And a possible outcome? The Man U stock doubles…

Or how about the world gets hit by a ‘major health crisis’ as obesity drugs will have people doing away with exercises. “GLP-1 obesity drugs are seen as a solution to the world’s obesity epidemic, but the ease of taking a pill makes people stop exercising and increase their intake of junk food,” is Saxo’s spin on the fast—expanding demand in the US for anti-obesity meds.

Of course, AI – and Gen AI – has to be there. Saxo’s extreme forecasts reckons it will lead to a ‘deep-fake heist’, and which will lead to governments cracking down with new regulations. This will end up ‘puncturing the AI hype as VCs flee the industry’.

As to what happens next, Saxo says: “Traditional media companies approved by their governments for disseminating public news soar in value, with shares in The New York Times Company doubling.”

How about this scenario?

The EU bloc decides to implement a stringent wealth tax, and immediately hitting luxury brands, their sales, and share prices.

“As the EU needs more funding for various policy goals, including climate change mitigation, healthcare and education, and the population realises how little in tax billionaires are actually paying, the EU Commission implements a law that annually taxes 2 per cent of wealth,” says Saxo.

“LVMH shares plunge 40 per cent on the EU Commission's new wealth tax and other parts of the luxury segment see their share price suffering badly…”

There are other far-out forecasts too. 

The US government will be ‘forced’ to increase fiscal spending exponentially. “Due to lingering inflation pressures and foreign investors repatriating capital, demand for US Treasuries remains sluggish, provoking a spike in US Treasury yields,” the Saxo ‘forecast’ says.

"In a desperate attempt to normalise borrowing costs, the US government makes income from government bonds tax-free.”

What happens next?

“US Treasuries rally across all tenors, and the yield curve bull-flattens as investors can lock in the highest yields in decades without tax burdens. The stock market tumbles, but a selected group of cash-rich companies benefit from an inverted yield curve.”