In 2020, we saw a global pandemic, a surge in stock prices, and unprecedented oil prices; events that were once considered far-fetched. This article, providing a retrospect, discusses the outlandish financial and economic surprises of 2020 and their potential implications. Investors face changes and surprises due to the unanticipated consequences of the pandemic, which have disrupted established economic models. The blog rolls out the plausible surprises of leading banks like Saxo Bank, Standard Chartered and predictions by Morgan Stanley’s emerging markets team, with a focus on its impact on the international financial markets.
Revisiting the Financial Year vs. Surprising Predictions
The year 2020 marked a slew of unexpected events that left the world on edge. No one could have predicted that a once-in-a-century global pandemic would close businesses but still result in a 15% higher stock market. Equally surprising, the cost of a barrel of Brent crude oil dipped into the negative for the first time in history due to market fluctuations.
These extreme scenarios were not only impactful; they challenged the outlandish financial forecasts by Saxo Bank, Standard Chartered, and others. As bizarre as past events were, future ones could be even more surprising.
Reality Overthrows Fiction
During the pre-COVID and pre-2008 phase, also known as the ‘Great Moderation’ age of low inflation and macro volatility, investors would scrutinize these unpredicted scenarios. These evaluations were to get a better understanding of the potential risk factors for the upcoming year.
However, the financial reality turned out to be less shocking than anticipated. The possibility of the unexpected happening has raised more questions about the relationship between economics, policies, and markets.
Potential Surprises: Saxo & Standard Chartered
Saxo Bank’s Outrageous Predictions included Japan experiencing boom growth due to the extraordinary stimulus, the GBP sliding below 130, and the Fed considering a 25 basis point rate hike to manage inflation. While Morgan Stanley’s emerging markets team predicted that Argentina, under newly-elected President Javier Milei, could potentially be the world’s top-performing emerging market.
These are not official forecasts, but they are reminders for investors to consider all potential outcomes.
Possible Outcomes and Predictions
Even though not all these scenarios might take place, they broaden the scope of investors’ imagination, preparing them for any eventuality. These predictions include oil hitting $150, major health crises due to obesity drugs, the collapse of capitalism in the US, and Robert F. Kennedy Jr. winning the 2024 U.S. presidential election.
This section also outlines Standard Chartered’s forecast about the potential fall in Brent Crude oil prices, dollar decline below 120 yen, and large-scale stimulus programs from China.
Impact on Forex and Trading
In conclusion, the unpredictable financial climate can significantly impact forex or trading. Unforeseen developments regarding inflation, rate hikes, and oil prices may significantly affect assets like gold or even bonds.
(Edited by Richard Chang)