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Saxo bank forecasts: double inflation in the U.S., green energy transition, and the fatal risks for Spotif

Saxo bank forecasts: double inflation in the U.S., green energy transition, and the fatal risks for Spotif

The analysts from the Danish Saxo bank have made a list of the most shocking events that could happen in 2022. Almost half of the 2021 events confirmed their predictions for last year, including China's own cryptocurrency release, rising corporate securities defaults, and rapid growth in developing economies.

1. U.S. inflation will rise to 15%

According to experts, the U.S. government made the same mistake as in the 1960s, when the inflation rate rose sharply because of the excessive market stimulus. Initially, the expectation was that following financial assistance to the unemployed and the end of the COVID-19 epidemic, they would get one of the 10 million jobs, but that did not happen. 

The Fed's delayed response won't roll back things - stimulus programs, the energy crisis, and the ongoing pandemic will push the inflation rate from 6% to 15%, and possibly more. 

2. Green energy transition is postponed

Deadlines for the green energy transition are unlikely to be met due to high inflation and the energy crisis in the European Union and China. Despite the growing popularity of ESG investments, i.e., investing in green companies, national governments more often address the question of returning to the use of coal and oil as energy sources. This calls into question whether all signatory countries can implement the Paris Agreement.

3. Spotify's music business is under threat

Blockchain and NFT are developing rapidly, making music streaming services like Spotify, Apple Music, and others vulnerable to bankruptcy. Analysts predict that an NFT service allowing music stars to sell their music directly without intermediaries will soon emerge. It will bring artists much higher profits and help them interact directly with their audience. So, Spotify's stock could be down 33% by the end of 2022. 

In the future, this may affect all streaming services that distribute podcasts, movies, and videos but are not involved in their creation. 

4. Hypersonic weapons will boost the space race

Recently, China demonstrated a unique technology to use weapons at hypersonic speeds. Such a breakthrough would increase confrontation with the U.S. since the doctrine of nuclear deterrence no longer works. At the same time, there will be a race in space technology, raising the level of tension between all the leading states, including the EU, Israel, and Russia. 

Analysts believe that such confrontation will sharply increase government funding for all companies involved in such fields.  

5. Facebook's stock will decline due to a drop in traffic

Facebook will face the fate of an obsolete social network soon. The company's research shows that the new generation of teens prefers TikTok over Instagram more often. Another Facebook asset, the Messenger chat app, is also losing users. Instead, Snapchat is becoming popular.

Analysts say investors also perceive such trends so that they will pay less and less attention to Mark Zuckerberg's stock. Although he is trying hard to remedy such a situation by creating a new Metaworld, still, according to experts, he won't take out new assets in separate companies because of the monopoly's collapse. This will lead to the fact that loss-making assets along with profitable ones will reduce the stock price by 10-15%.

A solution to such a situation could be adopting Metaworld's own cryptocurrency. To recall, Mark Zuckerberg previously tried to implement his Libra payment technology project in Facebook and Messenger, but the U.S. Congress stopped him. Although the project still hasn't been launched, the work is ongoing, with new features and name - Deim.   

6. The EU will create a new fund financing only defense, climate, and energy

U.S. military and economic guarantees seem to shrink under the pressure of China's economic strength and Russia's energy potential. This means that more and more EU countries will face the need to consider the regional and global security issues on their own. 

Saxo Bank experts believe that this will lead to French President Emmanuel Macron's proposal to create a new EU fund, which will finance only three areas, namely, defense, pure energy development, and protection projects against global climate change. Italian Prime Minister Mario Draghi will support him. Most likely, the fund will receive money from the pension contributions of working citizens over 40 years old, but other forms of fund raising cannot be excluded. 

This marks the rapid development of all European companies associated with green energy as well as the military and industrial complex, so their shares will go up as well. 

7. Increased influence of the female "Reddit army" on the stock market

Every year more and more women become interested in the stock markets. They consolidate on social networks and websites, including the well-known Reddit. As a result, an increasing number of female voices are pressuring companies that have been previously caught up in sexist, abusive, racist, and other discriminatory practices. Such pressure causes investors to reject stocks of such companies and redirect them to the companies where women occupy the best managerial and executive positions. They are supported by politicians worldwide, forcing well-known companies to abandon the patriarchal corporate structure. 

Thus, along with the ESG investment criteria aimed at developing environmentally friendly companies, there are new ones aimed at restoring gender equality. 

8. India starts a new era of cooperation with Arab countries

The confrontation between China and the United States intensifies. Each country attempts to create its own alliances against one another, including more and more staes. At the same time, there is an emerging trend of new independent alliances that will seek to move away from the confrontation between the two superpowers.

In 2022, India will try to join the Cooperation Council for the Arab States of the Gulf. Despite the U.S. insistence on including India in its alliance, it is likely that the New Delhi government will try to remain neutral. Cooperation with Arab states will help the country increase its energy security, as well as attract foreign investment to develop new industries and, consequently, the national economy. 

For the Arab states, India is an ideal partner for developing the future of their own countries once the oil era is over. Its vast territory and population will facilitate the mutual development of agriculture and industry, while the territorial proximity will increase trade between the countries. All this will lead to a sustainable post-carbon future. 

9. Life expectancy will increase by 25 years

Next year, medicine will make a huge breakthrough in rejuvenating the human body. A range of therapeutic agents will be invented that will help regulate the biological process at the cellular level, which will make it possible to improve human health, prolonging life by an average of 25 years.  

In part, the breakthrough will involve two "victories" for scientists: eliminating most known diseases (or creating effective treatments) and DNA editing, where unneeded or dangerous particles will simply be rewritten. However, to achieve such things it will be necessary to overcome several obstacles, among which are moral and ethical prohibitions on interfering at the genetic level.  

However, extending life expectancy will pose two new problems for mankind, namely, who exactly will get the cure to extend life and whether mankind will be able to provide resources for a longer lifespan. It is likely that such a cure could cause new wars and confrontations between rich and poor countries. 

10. The Constitutional Crisis in the United States

The particularities of the last U.S. presidential election in 2020, when former President Donald Trump refused to cede power to his successor, suggest that the next House and Senate elections in 2022 will also be fiercely contested.  

No matter the outcome of the vote, the two major parties, Republican and Democratic, are predicted to declare non-recognition of the results. Eventually, this will cause a failure to form a new Congress and launch its work in 2023. The current U.S. president, Joe Biden, will continue to be in power by special permission, only exacerbating the constitutional crisis. In such an environment, there may be another takeover of the Capitol. 

The lack of stability will cause U.S. assets to collapse. This will lead to dollar devaluation, a decline in the country's global role in world politics, and an outflow of investment funds. China can take advantage of this, using U.S. weakness to establish hegemony in Asia and then worldwide.

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