2019 (outrageous) predictions!

14 Dez 2018

Dear investors,

There was a small rally towards the end of November, which caused the stock market to offset its earlier losses and even close the month on a 1.5% gain. Yet, with the benefit of hindsight, it is becoming clear that as we move towards the Christmas periods Santa Claus and stock markets alike may be draped in red. Of course, the question on everyone’s mind is how 2019 will turn out. While some look for the past as a roadmap, where 2016’s volatility was followed by an impressive rally, others state that the current situation is very different from back then. Of course, there is some truth to this statement… As we see the federal funds rate inch towards 3% in the United States it is clear that the monetary stimulus on the other side of the ocean has ended and the Fed will no longer provide the support it once did. In addition, equity valuations are also more inflated now than they were in 2016 and due to a real yield alternative in the United States, TINA (= there is no alternative) is slowly turning into TIARA (there is a real alternative). All perfectly good reasons to be slightly less bullish on equity.

Yet, both of predictions are well within the realm of possibilities and therefore perhaps a bit boring?! If you’re looking for something slightly more special, we urge you to read Saxo Bank’s 2019 “Outrageous Predictions”. Here, bankers discuss some black swan events that, while unlikely to occur, may have a profound impact on your portfolio. The following scenarios are discussed:

  1. EU announces a debt jubilee

  2. Apple “secures funding” for Tesla at $520/share

  3. Trump tells Powell “you’re fired”

  4. Prime Minister Corbyn sends GBPUSD to parity

  5. Corporate credit crunch pushes Netflix into GE’s vortex

  6. Australian central bank launches QE on housing bust Down Under

  7. Germany enters recession

  8. X-Class solar flare creates chaos and inflicts $2 trillion of damage

  9. Global Transportation Tax (GTT) enacted as climate panic spreads

  10. IMF and World Bank announce intent to stop measuring GDP, focus instead on productivity

An interesting read, which can be accessed via this link.

We wish you happy holidays.

Nils, Thierry and Werner