- Bitcoin will break $60,000.
Sounds incredible but when you look back at 2017 it stops seeming so crazy. Back in January 2017, analysts were amazed when Bitcoin broke $1,000. Not many people understood what it was or what enormous potential blockchain technology and blockchain-based currencies have. It’s only when two major US future exchanges decided to list Bitcoin that it became mainstream and that’s when its value started to skyrocket.
Independent cryptocurrency pundit, Ronnie Moas, forecast the December 2017 spike. When asked what the ultimate value of Bitcoin would be, he reckoned it could reach as much as $400,000 per coin. Sounds astounding, right? Well, the currency has a production limit of 21 million coins coded into its design. Any limited commodity has the potential to become highly prized. Bitcoin may have no physical form, it may not be supported by any national government or regional bloc but it has exclusivity and supposedly unbreakable design features. You can fake a Da Vinci, but you can’t fake a bitcoin.
Many of the same analysts that see the meteoric rise continuing also see a massive bubble bursting with prices reducing back to ‘production cost levels’ of around $1000. With so few understanding what cryptocurrency is, what effect blockchain will have on global industries or how to fit commodities like Bitcoin into the existing trading framework, it really is anybody’s guess.
- US stock markets will rise by 20%
Or 5% depending on who you’re talking to. It’s the time of year for banks and analysts across the world to lay down their predictions for where markets will go in 2018. When you consider that global equities look set to return 20% or more at the end of 2017, the market tide is rising high and plenty see that good fortune continuing in 2018.
Now that Trump’s tax bill has ploughed through the Senate, corporations are luxuriating in their reduced outgoings. Trump’s bill is slashing rates from 35% to 21% benefitting shareholders and owners. There is a risk that inflation will take off, and the Fed is likely to raise interest rates 3 times in 2018. But these costs will be offset by the tax reduction so corporations have more room to manoeuvre – but only if the bill kicks in during the 18/19 tax year.
Many analysts are saying that 2017 was a great year for the markets with growth not seen for over a decade, but some reckon 2018 will be even better. Brian Belski at BMO Capital Markets believes a 2950 S&P 500 with 11% earnings growth is likely, while Fortune magazine reckons we should all be psyched about where global markets are heading and forecast 13% S&P 500 growth if the tax cuts kick in.
Doom-sayers disagree. Morgan Stanley strategist Michael Wilson uses a different argument. He reckons the S&P 500 will only rise to 2750 in 2018. But he also thinks it’s a good time to sell U.S. corporate bonds, because their valuations have been stretched by persistently low interest rates.
Whoever you agree with, you won’t find many people predicting a crash. But then again, they rarely see that coming.
- A flash crash of 25%
Some analysts forecast the S&P 500 dropping by 25% in 2018 due to a flash crash like the one in 1987. They see over-levereged volatile funds, high levels of banking debt and markets that have extended themselves too far. It won’t take much of a push to send the house of cards crashing down.
Possible shoves that could send the markets over the edge could include doubt about the strength of the US economy leading to widespread selling, war and other geopolitical dangers or even risk parity funds. These cheeky chaps are blamed for the mini flash crash of August 2015 and they remain highly unstable.
On the plus side, there is every chance the markets would rebound and the interim action could yield smart Tiql players some serious returns.
- China pegs oil to the yuan
What better way to annoy Trump and display a global cold-shouldering of the US ‘superpower’ than to separate the value of oil from USD? China is already the world’s biggest oil importer and many producers already sell in yuan as a result. It isn’t really an enormous leap of imagination to see the Shanghai International Energy Exchange declaring a new oil contract in yuan in 2018 and cutting the dollar out of the equation.
The yuan would rise against the dollar, possibly as much as 10%, and the geopolitical ramifications would ricochet widely.
- Oil will rise by 30%
The Middle East is looking even less stable than usual bolstered by the US’s ham-fisted diplomacy around its decision to relocate its Embassy to Jerusalem and the infamous “taking names” bully tactics of the US Ambassador to the UN, Nikki Haley.
The ongoing crises in Yemen, Lebanon and Palestine and spats between oil producing countries could cause simmering local tensions to erupt and global conflict to become more likely.
For oil, this would disrupt supply and increase demand pushing up prices. Japanese bank Nomura has tested various scenarios and sees $80 a barrel as a realistic possibility in these circumstances.