Shocking Saxo Bank Predictions… that turned out to be not so shocking

This week Saxo Bank traditionally publishes his Shocking Predictions for the coming year. The purpose of this publication was never to make predictions that would come true - they were primarily intended to be "shocking". Still, sometimes real life catches up with the predictions and becomes so shocking that the predictions turn out to be true. We've gone through our archives to see which Shocking Predictions so far have turned out to be much closer to the truth than predicted.

“All major market movements are triggered by factors that exceed expectations – sometimes to a shocking degree. Foretelling with this mindset is at the heart of our annual Shock Predictions, as we try to suggest which events that currently seem unlikely could have major repercussions and shock the world and financial markets - while forcing us to think ahead less orthodox way says John J. Hardy, Head of Foreign Exchange Strategy at Saxo Bank.

We thought it would be interesting to go back in time and see which of the predictions so far have come true, even though truth is not a measure of the success of these predictions: “The Shocking Forecasts are not our base predictions for what will happen in the coming year. It's more of a thought-provoking exercise about what unforeseen events could shake the world and financial markets," explains Hardy.

Shocking 2013 Forecast: Gold Correction to $1 an Ounce

– At the time of writing, our $1 forecast signaled a one-third drop in price – says Ole S. Hansen, commodities strategy director, who in 2013 formulated the first correct Shock Forecast.

– In 2013, the price of gold corrected to $1 an ounce, and actually fell below that level as investors became increasingly focused on equities and the dollar as central banks supported the recovery of global economic growth after the global financial crisis. The main factor was breaking the key support at $200 in April 1 - a move that we believe has increased the risk of a bear market driving the price down towards $525 Says Hansen.

Shocking Forecast for 2015: Brexit in 2017

In Shocking Forecast 2015, our team of analysts wrote that the UK Independence Party (UKIP) would win 25% of the national vote in the UK General Election on 7 May 2015, unexpectedly becoming the third largest party in Parliament. UKIP was to become a coalition partner of David Cameron's Conservative Party and announce the planned referendum on UK membership of the EU in 2017. Yields on British government bonds were to soar.

We didn't quite hit the deadline, but the forecast regarding the circumstances turned out to be quite accurate.

“We had a very strong feeling that the 'vote against' phenomenon would come up both in the US election and ultimately in the Brexit vote. - recalls Steen Jakobsen, Investment Director at Saxo Bank. – To some extent, we correctly predicted the "breaking of the social contract" - which meant that society as such no longer benefited from monetary policy, so that the equality gap widened.

“The timing turned out to be premature, but the context and reasoning were completely correct. It was not possible to mend the split in the Conservative Party and the modus operandi of treating the electorate in advance was a glaring error on which we based our forecast.

Shocking Forecast for 2017: Huge Bitcoin Gains and a Cryptocurrency Rally

When kryptowalutyAs bitcoin, in particular, began to gain public attention, our team of analysts predicted that the then-leading cryptocurrency would significantly appreciate in value. The justification was the overspending of the Trump administration, causing an increase in the already high national debt and soaring inflation. Combined with the fact that the world wanted to move away from central bank currencies, bitcoin would become the preferred alternative. The shocking prediction turned out to be all too accurate: at its peak in 2017, the price of bitcoin reached almost $20. USD.

However, the forecast did not fully correctly determine the circumstances of this event. This was due not so much to the macroeconomic changes during the Trump era, but to the speculation surrounding bitcoin that fueled its initial surge. However, given the subsequent increases of cryptocurrencies, especially bitcoin in 2021, the reasoning presented in the Shocking Forecast for 2017 turned out to be accurate.

Shocking Forecast for 2018: Volatility Spikes After Flash Crash in Stock Markets

– We did not have to deal with a one-time decrease by 25%, as it was in 1987, but with two dramatic events in 2018, which confirmed our assumptions – says Peter Garnry, director of equity markets strategy.

– We came up with this Shocking Forecast in late 2017 as the year was expected to end with surprisingly low volatility, with bitcoin strengthening from just under $1 at the end of 000 to around $2016 in November 10 ( the price of bitcoin eventually soared to almost $000 by the end of the year). Everyone was speculating bitcoinieand the sale of currency volatility and stocks was promoted as easy, predictable money. This is why we began to have a strange feeling that all this euphoria and these kinds of positions could have dramatic effects if conditions changed even in the slightest.

Garnry says the volatility started in February and ended dramatically around Christmas: Volmageddon in February 2018 almost wiped out short volatility strategies funds from the market, including some famous publicly traded funds, because VIX index it exploded from 13,64 to 50,30 in just two trading sessions. This event changed the approach to the short volatility strategy in the following years. Later in 2018, the market tried to tell the Fed that it was making a political mistake by raising interest rates because the economy was deteriorating. This led to a 20% sell-off from the October high to the low in one session on December 26, 2018, with the most dramatic trading sessions occurring around Christmas when liquidity fell. These dramatic events paved the way for a crazy bull run in 2019 as investors once again forgot all about risk.

Shocking Forecast for 2022: Fossil fuel exit plan set aside

With 2022 looming, Ole S. Hansen, director of commodity markets strategy, wrote that politicians will push climate goals into the background and support investments in fossil fuels to fight inflation and the risk of social unrest, while rethinking the path to a low-carbon future.

This overarching prediction has also come true – unfortunately more than enough due to Russia's unforeseen invasion of Ukraine.

– Last November, we could not have predicted that the world was galloping towards an energy crisis caused by Russia's war in Ukraine – says Ole S. Hansen, Head of Commodities Strategy, explaining how he concluded that fossil fuels will become more important again in 2022.

– The lack of investment and the increasingly urgent need to support gas at the expense of coal led to a forecast titled "Plan Defossil fuels put aside", which basically envisaged a more investor-friendly environment in relation to the (so far) disgraceful investments in the so-called dirty energy production. This action supported the EU's decision to classify gas and nuclear energy as green investments Says Hansen.

How will the Shocking Predictions for 2023 turn out?

Not all the predictions of our team of analysts come true, but you can be sure that they will be interesting. The latest Shocking Forecasts will appear on the Saxo Bank website this week.