Outrageously plausible: Steen Jakobsen, chief investment officer at Saxo Bank, tells Spear’s to brace for a bumpy year
From Russia’s invasion of Ukraine to a British prime minister being ousted after six weeks, it has been a year of shocking events.
More volatility lies ahead if Saxo Bank — whose previous annual list of ‘outrageous predictions’ did not see those two coming — is accurate with its prophecies for 2023, which include the reversal of Brexit and the end of dollar dominance.
The greenback era fades
Some of Saxo Bank’s predictions are more outrageous than others, admits Steen Jakobsen, chief investment officer, who has been overseeing the annual project for more than 20 years.
He says the most likely prediction of Saxo’s 10 for 2023 could see the US dollar’s dominance assailed by concerted action among non-Western countries.
Russia’s invasion of Ukraine led to the ‘US weaponising the US dollar,’ as part of the sanctions response, says Jakobsen. ‘If I was a strategic thinker in the non-western world I would be thinking about what to do with my US dollar reserves going forward.’
Oil-producing nations could agree with large consumers such as China and India to do deals in a new reserve asset, leaving the dollar behind. Saxo’s possible scenario sees non-US allied countries create an international clearing union (ICU) and a new reserve asset.
Based on an idea by economist John Maynard Keynes after the Second World War, the idea would make the purchasing price for oil more stable in currency terms. ‘Why would Saudi Arabia and China do deals in dollars?’ adds Jakobsen.
He believes it would be a natural move ‘at a time when the US has stepped back from being a world policeman.’
‘Un-Brexit’ on the cards
Saxo’s predictions suggest a splintering world in which national economies ‘shift into War Economy mode, where sovereign economic gains and self-reliance trump globalisation.’
But closer regional links are also foreseen, most notably in the UK, which votes to ‘un-Brexit’ and rejoin the EU in the wake of economic turmoil and political demonstrations.
Jakobsen does not think Rishi Sunak’s more measured approach as prime minister will be any more effective than predecessor Liz Truss’s attempts to create a laissez-faire economy.
‘Neither is going to do anything for the debt or inflation (problems) in the UK,’ he says. ‘Maybe this leads to dissatisfaction, demonstrations and ultimately an election which will see Labour come in. Maybe the Liberal Democrats show up as a Europe-friendly party, (popular) with young people in particular.’
After seven years without seeing clear benefits of Brexit, the British people then vote to re-enter. After recent UK political events, it would be unwise to rule anything out.
Macron bids adieu
Politics is no calmer across the Channel in Saxo’s predictions. President Emmanuel Macron, who won a second term this year but saw his power limited by French parliamentary elections, decides on a dramatic exit.
‘At best he’s a lame duck, at worse he’s somewhere he doesn’t want to be,’ says Jakobsen. ‘If Macron really wants to achieve something maybe he has to step down to get more power. Right now he is caught between far left and far right.’
He would plan to return in years to come, when the country is tired of extreme politicians promising much and delivering little, to rule with power as a centrist. Any such return would mirror the act of Charles de Gaulle, who returned to power in 1958 after a 12-year absence.
Axe to meat production
Jakobsen says Saxo’s most outrageous call for next year will see a country, most likely Sweden, moving to ban meat production by 2030.
The Scandinavian country has pledged to reach carbon neutrality by 2045 — in just 23 years time — and, given the emissions involved, cutting meat production would go a long way toward that aim.
Jakobsen sees the 2045 pledge as an aspiration without hope of delivery at the moment, but that ‘may change as young people are very focused’ on the issue.
Will Wainewright is founder of hedge fund and private market news website Alternative Fund Insight