Saxo Bank: oil prices can make drastic return to $100 per barrel

Saxo Bank: oil prices can make drastic return to $100 per barrel

Baku, Azerbaijan, Dec.16

Trend:

Saxo Bank, the online multi-asset trading and investment specialist, has today released its annual set of 'Outrageous Predictions' for the year ahead.

These are 10 unlikely, yet perhaps underappreciated, events that could have significant consequences on the financial landscape as we venture into 2016.

As ever, the predictions span the length and breadth of markets and geographies; ranging from oil making a drastic return to $100 a barrel to Silicon Valley's much vaunted unicorns returning to myth. Other claims include the Russian rouble rising 20% versus the US dollar/euro basket, the Olympics turbo-charging a Brazilian recovery and a meltdown in corporate bonds.

Steen Jakobsen, Chief Economist at Saxo Bank, commented: "We are nearing the end of the paradigm paralysis that has dominated the policy response to the global financial crisis. Quantitative easing and other forms of intervention have failed. China is transitioning, and geopolitical tensions are as complex as ever. The marginal cost of money is rising, and so is volatility and uncertainty. It is against this backdrop we have set this year's predictions."

"Saxo Bank's Outrageous Predictions remain an exercise in finding ten relatively controversial and unrelated ideas which could turn your investment world upside down. It is rewarding to see how the Outrageous Predictions catch our clients' imagination and fuel ongoing debate; it is this process of discussion and anti-herd thinking that is at the heart of Saxo's now established tradition of attempting to draw attention to the unfathomable" Steen Jakobsen added.

Please see below for Saxo Bank's Outrageous Predictions 2016

1. EURUSD direction? It's 1.23...

Europe is running a massive current account surplus and its weaker inflation should, in macroeconomic logic, mean a stronger currency, not a weaker one. The race to the bottom has gone full circle, meaning we are back to a weaker US dollar again as the direct outcome of US interest rates policy.

2. Russia's rouble rises 20% by end-2016

By the end of 2016, a surge in oil demand and the Fed raising rates at an inappropriately slow pace causes the Russian rouble to rise some 20% versus the US dollar/euro basket in 2016.

3. Silicon Valley's unicorns brought back down to earth

2016 will resemble 2000 in Silicon Valley with more startups delaying monetisation and tangible business models in exchange for adding users and trying to achieve critical mass.

4. Olympics to turbo-charge EM's Brazil-led recovery

Stabilisation, investment spending on the Olympics, and modest reforms will see sentiment rebound in Brazil, with EM exports helped by cheaper local currencies. The result: EM equities to have a great year - outperforming bonds and other equities.

5. Democrats retain presidency, retake Congress in 2016 landslide

The Republican Party goes from strength to dramatic weakness as the rifts from an internal struggle on its future direction play out. This leads to a landslide victory for the Democratic Party as they successfully execute a get-out-the-vote campaign with Millennials coming out in droves having been frustrated by the political stalemate and weak job prospects of the last eight years.

6. OPEC turmoil triggers brief return to $100/b oil

OPEC's crude oil basket price drops to the lowest since 2009 and unease among weaker as well as wealthier members of the cartel over the supply-and-rule strategy continues to grow. The long awaited sign of an accelerated slowdown in non-OPEC production finally begins to flicker. Suitably buoyed, OPEC catches the market on the hop with a downward adjustment in output. The price mounts a quick recovery with investors scrambling to re-enter the market to the long side - once again bringing $100/barrel prices onto the horizon.

7. Silver breaks golden shackles to rally 33%

2016 will see a renewed confidence in silver. The political drive towards reducing carbon dioxide emissions by supporting renewable energy will add to increased industrial demand for the metal, given its use in solar cells. As such, silver will rally by a third, leaving other metals behind.

8. Aggressive Fed sees meltdown in global corporate bonds

Late 2016 will see Fed chief Janet Yellen embark down a hawkish path with a series of aggressive rate hikes, triggering a huge selloff in all major bond markets as yields start to rise. As the portions of bank and broker balance sheets allotted to bond trading and market making have almost disappeared, one of the vital parts of a functioning market is simply not there. This realisation sinks in too late and the entire buy-side flee into a panic selling one-way street, as highly advanced risk models lurch into a symmetric red alert.

9. El Niño sparks inflation surge

Next year's El Niño will be the strongest on record and will cause moisture deficits in many areas of southeast Asia and droughts in Australia. Lower yields across agricultural commodities will curb supply at a time when demand is still increasing on the back of global economic expansion. The outcome will be a 40% surge in the Bloomberg Agriculture Spot Index, adding some much-needed inflationary pressure.

10. Inequality has last laugh on luxury

Faced with rising inequality and unemployment of over 10%, Europe is considering the introduction of a basic universal income to ensure that all citizens can afford to meet their basic needs. In a more egalitarian society where other values are promoted, demand for luxury goods decreases sharply - the sector collapses.

To join to the conversation and for updated insights, don't forget to follow Trading Floor and Saxo Bank.

The whole publication "Outrageous Predictions for 2016" can be found here: http://cy.saxobank.com/campaigns/outrageous-predictions-2016

About Saxo Bank

The Saxo Bank Group (Saxo) is an online multi-asset trading and investment specialist, offering a complete set of trading and investment technologies, tools and strategies.

A fully licensed and regulated bank, Saxo enables private and institutional clients to easily trade multiple assets from a single margin account on multiple devices seamlessly.

Saxo's award winning trading technology platforms are available in more than 20 languages and form the technology backbone of more than 100 financial institutions worldwide.

Saxo also offers traditional banking services through Saxo Privatbank in select markets.

Founded in 1992 and headquartered in Copenhagen, Saxo employs 1500 people in 25 offices across the five continents.

Construction of Chabahar-Zahedan railway line developing – İran's minister
Construction of Chabahar-Zahedan railway line developing – İran's minister
Uzbek industrial, construction bank eyes opening credit line for new projects
Uzbek industrial, construction bank eyes opening credit line for new projects
Total cost of completed construction works in Uzbekistan in 1Q2021 increases
Total cost of completed construction works in Uzbekistan in 1Q2021 increases
Loading Bars
Latest
EU medicine regulator starts rolling review of Sinovac COVID-19 vaccine
Qatar reports 645 new COVID-19 cases, 208,877 in total
Central Bank of Iran shares data on impact of oil exports on economic performance
UK records another 2,144 coronavirus cases, 27 deaths
Turkish president, German chancellor discuss bilateral ties, regional issues
OSCE Minsk Group Co-Chairs welcome release of Armenian detainees
Ombudsman prepares report on hate crimes, hostile approach towards Azerbaijanis
Egypt will bring a royal mummy to Expo 2020 in Dubai
Uzbekistan’s 1Q2021 vegetable production revealed
Uzbekistan notes threefold increase in balance of mortgage loans repayment
Georgia sees increase in imports of buckwheat in 1Q2021
Review of regulations to improve Iran home appliances production - official
President Sadyr Zhaparov signs decree on Cabinet of Ministers of Kyrgyzstan
Austria interested in participating in projects in Turkmenistan
Azerbaijani, Georgian peoples live in peace and friendship - PM
Azerbaijan approves renewed make-up of joint commissions with several countries
Azerbaijan to hold webinar on "New Opportunities for Startup"
Azerbaijan discloses data on construction work carried out by private enterprises in Baku
Russian, Turkish presidents discuss issues related to Karabakh
Iran’s Bahar Azadi gold coin price falls
Azerbaijani Finance Ministry places medium-term bonds on auction
Iran's Energy Exchange announces products to be on sale on May 8
Azerbaijan has very responsible approach to ensuring cybersecurity - Kaspersky Lab
Georgian organic farm begins production of sunflower oil
Iran approves projects on establishment of trade zones
Azerbaijani minister names amount of government spending to restore Karabakh in 2021
Canada reveals volume of bilateral trade with Georgia
Georgian Minister of Agriculture talks success of German businesses
Hungarian airline Wizz Air to resume flights from Georgia's Kutaisi International Airport
European Parliament acting unfairly by calling Armenian terrorists "POWs" - MP
Eurostat names amount of petroleum oils imports by EU countries from Turkmenistan
Activities of trade markets between Iran, Pakistan to contribute to trade –Deputy Minister
Kazakhstan investing in Georgian ports, specifically in Batumi oil terminal
Georgia expects increase in low-cost airlines during summer season
Georgia NCC and NATO-EU Information Center to implement joint projects
Iraq commits to return Iran's debts
US welcomes Azerbaijan’s release of three Armenian detainees
Iran's TEDPIX index sees gains
Volume of raw silk cocoon to be produced in Iran revealed
Shameful monument to fascist Nzhdeh in Karabakh must be demolished - Russian media outlet
Shekel weakens after Yellen rate remarks
Flydubai expands network to over 80 destinations, resumes flights to Russia and Iran
Azerbaijan wraps up investigation on Lebanese mercenary who fought in Karabakh on Armenian side
Blue Origin to begin space tourism ticket sales Wednesday
Navoi Mining and Metallurgical Combine leads among Uzbekistan’s taxpayers
Meeting between Azerbaijani, Georgian foreign ministers being held
Azerbaijan shares data on number of vaccinated citizens for May 5
Relations between peoples of Azerbaijan, Georgia based on long history - President Aliyev
Azerbaijan confirms 1,080 more COVID-19 cases, 2,074 recoveries
Georgian, Azerbaijani people are interlinked, interdependent on each other - Georgian PM
UAE to launch flights to Uzbekistan’s Tashkent
Austrian chancellor urges European drug regulator to fast-track Sputnik V’s registration
Azerbaijan continues to be one of biggest investors in Georgia’s economy - President Aliyev
Georgia's prime minister visits grave of Azerbaijan's National Leader Heydar Aliyev (PHOTO)
Azerbaijani IT company to locally launch smartphone app for accepting non-cash payments
Iran's NISOC ready to increase oil extraction
Silk production campaign underway in Turkmenistan’s Dashoguz region
Azerbaijan's PulPal payment system to add cryptocurrency wallet
Geostat unveils statistics on Georgia's oil imports
Azerbaijan reveals funds to be allocated for student tuition
Uzbekistan, S. Korea preparing for buyout of state share of mining and processing JV
Uzbekistan’s textile export to grow in 2021 - German expert
IMF predicts higher oil prices and better COVID-19 response for Iran by second half of 2021
Georgian parliament adopts new law regarding National Bank of Georgia
Georgia to face double-digit inflation if lari continues to plunge in value - TBC-Bank
Turkey reveals 4M2021 data on chemicals exports
Germany, France, Spain reach general agreement over fighter jet
Average monthly salary in Baku down
Turkey's export value of clothes up in 4M2021
Significant amount of funds to be invested in Georgian Poti port dev't - Deputy minister
Russia reports nearly 8,000 daily COVID-19 cases
Electra Consumer Products signs Yeinot Bitan acquisition deal
SOCAR Turkey subsidiaries awarded zero waste certificates
Increasing manufacturing of household appliances in Iran can guarantee exports - ICCIMA
Cost of chargeable services rendered to Baku's population in 1Q2021 dips
Georgia sees increase in potato imports
Georgian PM invites Azerbaijani president to Georgia
1Q2021 turnover of catering sector in Baku disclosed
Baku Stock Exchange holds auction on placement of CBA's short-term notes
Georgia reveals prices of fuel for May 4
Iran hopes Gorgan-Aktau flight to boost its tourism industry
Azerbaijani payment system offers B2B and C2B services in domestic market
Saudi Arabia considers barring overseas haj pilgrims for second year
Khazar Consortium in Turkmenistan opens tender to purchase of hygienic products
SOCAR Turkey’s petrochemical unit increases recycling by over 30%
Details of Iran’s face mask trade disclosed
Iran reveals COVID-19 data for May 5
Uzbekistan, Turkmenistan, Iran talk pilot train transportation
Most transactions on government securities in Azerbaijan fall on primary market
Azerbaijan, Turkey, Uzbekistan plan to ink MoU on audit sphere
Czech sees opportunities for co-op with Uzbekistan in industry and agriculture – Ministry
Turkmen Health Ministry extends tender for medical supplies purchase
Iran sees reduction in reliance on oil exports - Iranian president
Iran's Golestan Province to work on more agricultural projects
Iran expects sanctions to be lifted soon - President Rouhani
Azerbaijan seeks to expand its capabilities in mechanical engineering - expert
Azerbaijani president receives Georgian PM (PHOTO/VIDEO)
Georgia, US highlight importance of COVID-19 vaccination
Turkey sends batch of new engineering machinery, equipment to Azerbaijan (PHOTO/VIDEO)
Twitter, Google, Facebook facing new fines for refusing to remove banned content
All news