Tumble In Health And Eco Stocks Among Saxo’s “Outrageous” Calls

Tumble In Health And Eco Stocks Among Saxo’s “Outrageous” Calls

about 4 years ago2 mins

As the year draws to a close and the days get ever shorter, here comes Danish investment bank Saxo with some financial hygge to get investors through the winter: 10 “outrageous” market predictions for 2020.

What does this mean?

Saxo isn’t playing it safe with these predictions. Instead, the bank aims to spark debate with “consensus-smashing forecasts” that would “send shockwaves through the markets” were they to prove correct 🌊

From the Democrats winning the US presidency and both houses of Congress to Hungary leaving the European Union, these contentious calls are long shots that would have serious impact on investors.

What’s the bigger picture?

Let’s run through some of Saxo’s calls:

1️⃣ The UK economy slows dramatically due to Brexit. The government steps in with a massive spending boost, driving up Britain’s economic growth from 3.5% to a massive 8% (including inflation). UK stocks are among the best performers in Europe 🙃

2️⃣ A combination of declining oil production and rising Asian demand pushes up the shares of fossil-fuel companies, just as investors come to recognize the “terrible” return on capital offered by clean energy companies. The ratio of the Vanguard Energy ETF to the iShares Global Clean Energy ETF jumps from 7 to 12 🛢️

3️⃣ A recession in the US forces the Federal Reserve to buy bonds and grow its balance sheet “beyond imagination”. Wages and prices rise sharply, the dollar drops, unemployment rises, and growth stagnates. The misery index (unemployment plus inflation) climbs to the highest since the 1980s. This “stagflation” pushes stock-market investors toward value companies with solid profits and dividends and away from growth companies, like FAANGs.

Inflation plus unemployment equals misery
Inflation plus unemployment equals misery

4️⃣ A Democrat wins the US presidency in 2020, and – even more surprisingly – the party also wins control of the House and Senate. A shakeup of health insurance and cuts to drug prices cause a 50% tumble in healthcare and pharmaceutical stocks 🚑

Find all 10 of Saxo’s “outrageous predictions” here.

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