OIL PRICE at $35.30 NOW :This outrageous prediction says oil will hit $100 a barrel in 2016
Published: Dec 17, 2015 3:17 a.m. ET
How does oil rebounding to $100 a barrel in 2016 sound? Or the euro surging to $1.23? Or maybe even Brazil staging an Olympic Games-driven comeback out of recession?
Sound outrageous? Well, while most analysts keep their crystal-balling for next year in tight ranges, Saxo Bank has complied 10 unlikely events that could rattle the financial markets in 2016 if they were to happen. Of course, they aren’t Saxo Bank’s official calls for 2016.
The Copenhagen-based bank has made a tradition out of publishing outlandish outlooks each year, but chief economist Steen Jakobsen notes that the predictions this season particularly stand out for being, well, not outrageous enough.
“The irony in this year’s batch of outrageous predictions is that some of them are ‘outrageous’ merely because they run counter to overwhelming market consensus. In fact, many would not look particularly outrageous at all in more ‘normal times — if there even is such a thing,” he said in the release.
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“In other words, it has become outrageous to suggest that emerging markets will outperform, that the Russian ruble will be the best-performing currency of 2016, and that the credit market will collapse under the weight of yet more issuance,” he added.
So will any of his outrageous predictions come true in 2016? Wait and see...
1. Oil briefly rebounds to $100
While oil prices CLF6, -1.01% are under a lot of pressure heading into 2016, they will soon rally and bring $100 a barrel back onto the horizon. This will happen as OPEC — after struggling with the economic pain of weak oil prices — decides to cut production and break the downward price spiral, triggering a quick recovery with investors rushing to re-enter the market.
2. Ruble climbs 20%
As oil prices stage a surprise rebound, Russia’s energy-driven economy experiences a boom. This means flows from international investors start finding their way back to Russia, lifting the ruble 20% against the dollar/euro USDRUB, +0.5334% basket.
3. Euro jumps to $1.23
The U.S. dollar has peaked around the first interest rate hike in four of the last five Federal Reserve hike cycles, indicating that the greenback is inversely correlated to the tightening cycle. That means that the dollar is likely to fall — not rise — in the new year, pushing the euro USDEUR, +0.6056% up to trade as high as $1.23. This will catch traders off guard, as consensus is for euro/dollar parity in only a matter of time. more