Saxo’s 'Outrageous' Forecast Sees Trump Blowing Up the Dollar
Dec 6, 2024
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John Hardy, Chief Macro Strategist at Saxo Bank, shares his insights on outrageous economic forecasts. He predicts a surprising revival of Trump potentially destabilizing the US dollar and discusses Nvidia's ascent in the tech world. Hardy examines the dynamic shifts in energy markets due to the rise of electric vehicles, and delves into China’s economic hurdles, including its digital currency future. Their forecasts challenge conventional thinking, provoking thought on how these events could reshape global financial landscapes.
The podcast discusses how a potential return of Trump-like policies could lead to a significant decline in the U.S. dollar's value.
It predicts a burgeoning cryptocurrency market as an alternative to the dollar, possibly reaching over $10 trillion amid currency declines.
Deep dives
The Future of the U.S. Dollar Amid Nationalist Economics
The idea that a return of a Trump-like figure could lead to a significant decline in the U.S. dollar is explored, highlighting a potential shift in global financial dynamics. Factors such as tariffs and the weaponization of the dollar could encourage major trading partners to seek alternatives, leading to a more multipolar currency landscape. The economic implications of a self-interested U.S. economy are also discussed, indicating that nationalist policies might weaken the dollar over time. This situation is further complicated by discussions around alternative currencies that could emerge among major global players, particularly if the dollar continues to lose ground.
A Booming Crypto Market and Diminishing Dollar Value
The podcast predicts a significant surge in the cryptocurrency market, potentially quadrupling in value and surpassing $10 trillion. This rise is attributed to a weakening U.S. dollar, expected to drop by 20% against major currencies and 30% versus gold due to inflation pressures and production resource re-shoring. The connection between the declining dollar and a booming crypto market is emphasized, suggesting that cryptocurrencies might become an attractive alternative. The conversation notes that while such a scenario appears optimistic, the reality of economic conditions could heavily influence these outcomes.
The Electrification Boom and Its Impact on OPEC
A prediction is made regarding the potential decline of OPEC as electric vehicles (EVs) become increasingly affordable and integrated into the global market. The discussion outlines how countries that successfully build the infrastructure for EVs may see rapid adoption rates, particularly in China, where EVs have already captured over half of new passenger vehicle sales. This could signal a peak in oil demand, raising questions about OPEC's future relevance in the global economy. As oil prices stabilize due to decreased demand, industries dependent on oil may face significant challenges while those geared towards EV production thrive.
AI Data Centers and Energy Demand Challenges
The conversation shifts to the potential conflict between the increasing demand from AI data centers and existing residential energy needs, suggesting a new AI data center tax could arise as utility bills escalate. The expected growth of AI technology is raising concerns about energy resource availability, necessitating urgent attention to energy infrastructure, including advancements in nuclear energy. As tech companies push for cheap energy solutions, the call for greater investment into power infrastructure becomes vital. The discussion suggests that this could lead to substantial shifts in energy markets, with implications for pricing and availability over the coming years.
It’s that time when analysts unveil their forecasts for 2025. But every year, Saxo Bank releases a different type of prediction—not of events likely to happen, but rather those that probably won’t. But if they do—they would send shockwaves across financial markets. So it’s good to start talking about the possibility.
Saxo Chief Macro Strategist John Hardy joins this week’s Merryn Talks Money to discuss the list, which includes Nvidia ballooning to twice the value of Apple and Donald Trump crushing the US dollar.