It’s that time of the year where Saxo Bank’s research team gives us the annual list of 10 Outrageous Predictions. For 2018 the Saxo team will focus on China and Tencent, sniff out the independence of the US Fed and share their view on the future of the South African economy, among other things.
Below is a little background on the fuel behind some of the outrageous predictions for 2018:
2017 was supposed to be the year of volatility. We entered the year with existential concerns in Europe ahead of key national elections, US policy concerns due to bull-in-the-china-shop President-elect Donald Trump, and Chinese policy concerns as markets eyed October’s 19th Party Congress. All in all, it seemed as if this would be the year we would see more a more rambunctious monetary policy impulse and more dramatic gyrations in global markets.
Instead, the EU elections went off smoothly on balance while the European Central Bank’s supply of quantitative easing morphine kept Continental equities on a pleasant high despite a sharply stronger euro.
In the US, Trump floundered from one scandal and gaffe to the next, entirely failing to pull any policy levers that impacted markets even as he took personal responsibility for a stellar year in equity markets with record low volatility.
In Asia, China’s desire to keep everything orderly until at least the other side of the Party Congress kept fears of a renminbi devaluation on ice and the economy in reasonable shape even as the country’s dangerous credit bubble inflated further.