Saxo Bank ‘Outrageous Predictions’ Tip Drastic Downturn In ‘08

The Copenhagen-based online investment bank’s ‘outrageous predictions’ are compiled as part of the 2008 Outlook, are an annual attempt to predict ‘black swan’ sightings in the global markets, and this year present an ominous view. Black swan events are high impact, rare occurrences that are beyond the realm of normal expectations.

Saxo Bank’s Outrageous Predictions for 2008

1. Ron Paul elected as President of the United States in 2008
2. S&P500 falls 25% from its 2007 high to 1182
3. At least 3 of the largest 10 US home builders will go bankrupt
4. Chinese stock market falls 40% by late summer
5. Grain Prices to double – again!
6. World oil prices accelerate to $175
7. UK growth turns negative
8. EURSEK falls to 8.8000 (now 9.4000)
9. USDSGD falls to 1.4000, but then rises to 1.6000 (now 1.6000)
10. EURHUF rises to 275

“There are already signs that some of the World’s biggest economies could be tipped for a recession in 2008. While it is unlikely to escalate to that point, there are early indicators of rising inflation and we have only just begun to see the unraveling of the credit market,” says David Karsbøl, Head of Strategy at Saxo Bank.

But adding weight, and concern for the greater economy, is the historical accuracy of at least some of Saxo Bank’s annual ‘outrageous predictions.’

“Some key predictions for 2007 were close to or 100% accurate. We forecast that the Federal Fund Rate would reach 4% in 2007. By this last quarter it reached 4.25%, so our ‘outrageous prediction’ was in fact only 25 basis points off the mark – something not many market commentators foretold at the outset of 2007,” says Karsbøl.

“We were also very bearish from the outset on the US housing and building sector in 2008. We predicted the S&P1500 Home Builders Index would reach 795 and quite drastically drop back to 521 by year end. We came close, but the downturn was more severe that even our ‘outrageous predictions’ claimed, plummeting from a high of 751 back to 252.”

A number of Saxo Bank’s Forex predictions also looked more like realistic than outrageous claims as the year’s volatile conditions took its toll on currencies.

“We predicted the AUDJPY would surge to a high of 100 then fall to a low of 85, in fact it rallied to 107.8 and fell back to 86.04 so we were very close on that. Most notably, our ‘outrageous’ call on the USDNOK plummeting to 5.40 came true, and kept on falling,” says Karsbøl.

“Our outrageous predictions are not a science, but are meant to incite thought and debate in the market,” says Karsbøl. However, the predictions are far from implausible, he adds.

Contacts:

Kate Hage, Financial Writer - PR manager, London
kah@saxobank.com
+44 (0) 2071512025

Kasper Elbjørn, Senior Manager media and PR, Copenhagen
kel@saxobank.com
+45 30654300

Alex Clelland, Associate Director, Penrose Financial, London
alexc@penrose.co.uk
+44 (0)20 7786 4866

About Saxo Bank A/S

Saxo Bank A/S is a modern investment bank specializing in online investments in international Capital Markets. Saxo Bank enables clients to trade currencies, shares, CFDs, futures, options and other derivatives, as well as providing portfolio management via our online trading platform, SaxoTrader. SaxoTrader has been developed by Saxo Bank and is available to today's investor directly through Saxo Bank or through one of our global partnerships, where it forms an integral part of their infrastructure.

One of Saxo Bank's significant areas of business is White Labelling. This involves the bank’s online trading platform being customized and branded for other financial institutions and brokers. Saxo Bank has more than 100 White Label Partners and boasts thousands of clients in over 177 countries.

The bank's website www.saxobank.com receives approximately 65,000 visitors every day. Saxo Bank currently employs almost 1,200 employees from 58 different countries.

Saxo Bank has its headquarters in Copenhagen, with offices in London, Geneva, Zürich, Singapore and Marbella. It also runs a representative office in Beijing and an IT development centre in St. Petersburg.