14 outrageous investing predictions to get your tongue wagging
In a market full of garden-variety outlooks, these two stand out like bright needles in a haystack.
Late November and early December is the season for year-ahead outlooks. Every investment house does one and it always makes for fascinating reading - even if they are often out of date already by March because of external factors few investors saw coming.
But because every investment house does one, they all end up sounding same-same after a while. There's usually a giant foreword, then a series of asset class outlooks, sometimes there's a Q&A-style section where frequent investor questions are answered, then another 10 pages of (inevitably) disclaimers, appendices, and legal notes that make for less-than-thrilling bedtime reading.
So it's always a treat to come across two outlook papers that throw out all the normal rules and just go for the jugular. The two papers I am referring to are Saxo Bank's "Outrageous Predictions" and Nomura's "Grey Swans" publications. In this wire, I'll give you a peek inside these two outlandish yet interesting sets of arguments.
But before we start, I need to stress something important - these are outrageous predictions and not promises. The content in these two publications are also specifically not house calls (or official investment calls.) They are positioned more as thought starters and topics designed to spark debate about a specific issue that investors are facing. And with that said, if you have any thoughts on the ideas that are mentioned here, please leave them in the comments!
Saxo Bank's 8 Outrageous Predictions for 2025
Note: The predictions and market impacts are sourced directly from the Saxo report, unless otherwise stated.
1) Trump 2.0 blows up the US dollar
The prediction: As the new Trump administration turns the global financial system on its head with huge tariffs, the world scrambles to find alternatives to the dollar. If Trump 1.0 was the warm-up act for de-globalisation, Trump 2.0 will prove the main event, with all of its consequences for the US dollar.
Potential market impact: The crypto market quadruples to more than US$10 trillion, the US Dollar falls 20% against major currencies and 30% versus gold. The US economy continues to reflate, but wages keep up with goods inflation, as production resources re-shore to the US.
2) Nvidia balloons to twice the value of Apple
The prediction: Armed with its revolutionary AI chips, could tech giant Nvidia grow to twice Apple's size and become the most profitable company of all time? As AI data centre electricity costs have soared, the insatiable demand for the more powerful and yet less power-hungry Blackwell chips sees Nvidia taking the crown as the most profitable company of all time.
Potential market impact: Nvidia shares trade well north of US$250 - before the market begins to question its potential to grab an ever-greater share of corporate profits and unwelcome regulatory scrutiny on its monopoly status tempers the outlook.
3) China unleashes CN¥50 trillion in stimulus to reflate its economy
The prediction: Having created history’s most epic debt bubble, China boldly bets that fiscal stimulus to the tune of trillions of Chinese Yuan is the only answer. In 2025, China makes a bold bet that reflation is the only answer and thinks it can manage the inflationary risks as it unleashes a gargantuan set of fiscal initiatives that add up to promises of more than CNY 50 trillion (about US$7 trillion) in 2025 and the following years.
Author's Note: For context, the Chinese government has issued roughly two trillion Chinese Yuan in the last 12 months. These efforts have previously been focused on infrastructure spending, real estate stabilisation, and to a lesser extent, consumer incentives.
Potential market impact: A strong reflationary impact in China and the world would mean outperformance of emerging markets assets relative to developed markets. It would also mean higher commodity prices globally and a stronger Chinese renminbi.
4) First bio-printed human heart ushers in new era of longevity
The prediction: It’s alive! Fusing bioengineering and medical science, scientists successfully bio-print a human heart, promising to extend the lives of millions. This breakthrough paves the way for extending human longevity by replacing failing organs with custom-made, fully compatible ones.
Potential market impact: Most companies in this space are in the start-up phase, but watch for a rash of IPOs. More broadly, this surge in innovation and investment could reshape the healthcare industry, leading to improved patient outcomes and significant economic growth.
5) Electrification boom ends OPEC
The prediction: As electric vehicles become more affordable, could oil-rich OPEC become irrelevant in 2025 and find itself on the ash heap of history? As of September 2024, EV market share of new car sales was reaching north of 45% in China, as overall EV sales growth rose above 40% year-on-year. This growth has happened some six years quicker than expected.
Potential market impact: Crude oil prices slump, causing a boon for airlines, chemical, paint and tire manufacturers, as well as freight and logistics companies. Japanese carmakers find themselves in a desperate race to catch up with other EV players.
6) The US imposes AI data centre tax as power prices run wild
The prediction: The AI revolution is a power-hungry one. The tech giants see that current electricity supply falls far short of what is required to power the massive new AI data centres they hope to build. But these are all long-term projects - for 2030 and beyond. What about the energy needs right here and now, as the AI arms race reaches new white-hot intensity already in 2025?
Potential market impact: A massive boom in US investment in power infrastructure. Companies like Fluor rise on signing massive new construction deals. Tesla’s accelerating Megapack gets increasing attention. Long-term US natural gas prices more than double, which would be a significant contributor to a more inflationary outlook.
7) A natural disaster bankrupts a large insurance company for the first time
The prediction: After a year of wild weather in 2024, a catastrophic storm hits the US in 2025, sinking a large insurer that has underestimated climate change risks. With insufficient reserves to cover claims and inadequate reinsurance to mitigate the costs of this extreme event, panic spreads across the entire industry. Such a disaster forces a reset in natural disaster pricing, profoundly marking down real estate values in many housing markets.
Potential market impact: Berkshire Hathaway shares rise as Warren Buffett’s company has enough capital to weather the panic and the company gains market share.
8) The Pound Sterling erases post-Brexit discount versus the euro
The prediction: The UK outlook is as constructive as ever in the post-Brexit era. On the European continent, the situation couldn't be more different. In 2025, sterling could rise through 1.27 versus the Euro, the level it traded ahead of the Brexit referendum, thus erasing its entire post-Brexit vote discount.
Potential market impact: Encouraging domestic investment and a more robust growth outlook support sterling versus the flailing euro, seeing the Euro/Sterling rate fall as low as 0.7500, below the rate the day before the Brexit vote at 0.76. The UK FTSE 100 posts a strong performance.
Nomura's 6 grey swans for 2025
As the team so succinctly explains:
"Grey swans are close cousins of black swans - high-impact events that no one expects. Yet, to predict a black swan lands you in something of a paradox. By definition, they are almost impossible to predict. So, we prefer grey swans - a low probability, high impact event that few expect."
Note: The predictions and market impacts are sourced directly from the Nomura report, unless otherwise stated.
1) Unlike Saxo's second Outrageous Prediction, could Nvidia's share price actually crash?
The prediction: What if tech CAPEX and AI spending from companies dramatically slows? Or if there are issues with the rollout of its Blackwell product? Could accounting questions surface? Or, most pertinently of all, what if earnings growth comes out slower than what is priced in?
Potential market impact: Extreme market concentration in the US would flow through to a sharp drawdown in equities. Low index volatility means hedges remain cheap.
2) Could there be another carry trade unwind?
The prediction: In August, the Japanese Yen carry trade unwind shook markets alive for 24 hours in a relatively unprecedented bout of volatility. (Author's Note: We covered this in an episode of Signal or Noise earlier this year.) The Japanese Yen has been the biggest funding currency for the past 30 years but the start of the Bank of Japan's interest rate raising cycle ends this. Is there to be another massive deleveraging episode in the making?
Potential market impact: Given a massive risk-off scenario is possible, investors could be bullish Yen and gold. Sophisticated investors could also take out hedges on the Nikkei 225 and/or the Topix (Japan's two major stock exchanges).
3) The US 10-Year yield could hit 6%
On the most recent episode of Signal or Noise, GSFM's Stephen Miller explained why he was concerned about the prospect of a significant rise in bond yields. His reasoning was fourfold: the prospect of a full-blown trade war, increased fiscal spending, a blown-out budget deficit in the US, and reduced demand from China for US Treasuries (especially in a trade war).
Nomura is voicing the same concerns in this grey swan prediction:
The prediction: Huge fiscal deficits mean bond vigilantes demand a higher term premium (the excess return that an investor obtains in equilibrium from committing to hold a long-term bond instead of a series of shorter-term bonds). Trump 2.0 reaccelerates inflation and the Fed makes the same mistake they did in the 1970s.
Potential market impact: Long US Dollar Index vs emerging markets currencies would be the attractive trade here (see the 'Dollar Smile' theory)
4) US growth shock
The prediction: Consumer spending cracks and the unemployment rate inches higher while the federal government is forced to cut spending.
Potential market impact: Buy long duration bonds, gold, and hedges against equities and high yield bonds would also be attractive.
5) Geopolitical tensions continue to escalate
The prediction: The Russia-Ukraine war and the Middle East both remain in turmoil. Escalations in existing or newer conflicts may also arise.
Potential market impact: Bullish gold, Japanese Yen, and select commodities (Note: Nomura didn't say which commodities specifically in their report)
6) Chinese stimulus announcements may disappoint
The prediction: Fiscal policy remains the key when it comes to China with consumer spending and confidence so weak. So what if the government's announcements disappoint... again?
Potential market impact: Bearish Chinese Yuan and Chinese equities
Did any of these outrageous market calls raise your eyebrows? Let us know in the comments below.
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Hans is one of Livewire's senior editors. He is the creator and moderator of Livewire's economics series "Signal or Noise". Since joining Livewire in April 2022, his interview record includes such names as Fidelity International Global CIO Andrew McCaffery, JPMorgan Asset Management Global CEO George Gatch, and Lazard Chief Market Strategist Ron Temple just to name a few. He has a double degree in economics and journalism.
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Hans is one of Livewire's senior editors. He is the creator and moderator of Livewire's economics series "Signal or Noise". Since joining Livewire in April 2022, his interview record includes such names as Fidelity International Global CIO Andrew...
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Hans is one of Livewire's senior editors. He is the creator and moderator of Livewire's economics series "Signal or Noise". Since joining Livewire in April 2022, his interview record includes such names as Fidelity International Global CIO Andrew...
Expertise
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