Trump's comeback: End of dollar era and tech upheaval 2025

The authors of the report predict that the year 2025 will bring a fundamental reevaluation of the global financial and economic system. For the first time in history, the dominant position of the U.S. dollar will be challenged, a dramatic shift in the balance of power in the tech sector will occur, and the OPEC era will end. It's important to note that in "Shocking Predictions," Saxo Bank sketches the most extreme scenario rather than the one that is most likely; nevertheless, within the accepted convention, they write about it in the present tense, as if we were already experiencing these events.

Saxo Bank's forecasts are not the bank's official predictions, but an attempt to draw attention to potential, albeit unlikely, scenarios for developments in the global financial markets. Nonetheless, as history shows, it is often the events initially considered impossible that later shape economic reality.

The most serious consequences for global markets are expected to result from Donald Trump's return to the White House.

The new Trump administration overhauls the entire nature of the US relationship with the world, slapping massive tariffs on all imports, while slashing deficits with the help of an Elon Musk-run Department of Government Efficiency (DOGE), speculate Saxo Bank analysts in their report.

According to experts, "the implications for the US dollar are dire for trade around the world, as it cuts off the needed supply of dollars to keep the wheels of the global USD system turning, ironically risking a powerful spike higher in the US dollar" Importantly, there is a risk of a massive increase in the value of the US currency, but instead, "safety valves" are activated.

"China and the BRICS+ transact with gold-backed digital money and, to a degree, directly in a new gold-backed offshore yuan. Europe rebases its trading relationships increasingly in the euro," analysts predict. They add that gold-linked cryptocurrencies complement this mix.

Equally groundbreaking changes are expected in the technology sector. Analysts predict unprecedented success for Nvidia, which will become the most profitable company in history. "The success will be further strengthened by the mass availability of the revolutionary Blackwell chip with 208 billion transistors," the report reads.

A key factor will be a 25-fold increase in AI computation efficiency per unit of energy consumed compared to the previous generation of H100 chips. "With the intensifying AI arms race as no giant or even government wants to be left behind, and as AI data centre electricity costs have soared, the insatiable demand for the more powerful and yet less power-hungry Blackwell chips sees Nvidia taking the crown as the most profitable company of all time.," argue the experts.

Another key forecast concerns China's unprecedented actions. Analysts predict that "In 2025, China makes a bold bet that reflation is the only answer and thinks it can manage the inflationary risks as it unleashes a gargantuan set of fiscal initiatives that add up to promises of more than CNY50trn (about $7trn)."

The programme will have a unique character. "Much of the spending goes directly into consumers’ pockets via e-CNY digital currency, so that it will be injected straight into the economy rather than to pay off debt. China also adds heavy doses of social engineering in its stimulus, incentivising companies to reduce working hours to improve quality of life. This boosts leisure time, consumption, company formation, family formation and childbearing," experts point out.

Revolutionary changes are also expected in the oil market. In the space of just a few years, China has made a mockery of all prior assumptions about the potential scale of both EV production and adoption," analysts write. They note that electric vehicle registrations in China exceeded 8 million already by 2023, and by September 2024, EVs accounted for over 45 percent of new car sales.

This trend is expected to lead to a fundamental breakthrough in the oil market. "With some members already cheating production quotas to grab what income they can and export demand falling, a majority of members quickly realise the jig is up. Amidst the bickering and in-fighting, key members leave. This consigns OPEC to the ash heap of history," experts predict .

According to analysts, former OPEC members "maximise production to secure their market share, leading to a significant drop in oil prices." However, "the market quickly finds its balance, and oil prices stabilise, as suppliers with higher costs, especially in North America, close costly shale oil production."

Saxo Bank also presented other intriguing scenarios. In the field of medicine, analysts predict a groundbreaking achievement - researchers will 3D-print a fully functional human heart using advanced bio-printing technology. "Starting with high-resolution CT scans, scientists create an intricate digital model capturing every minute detail of the heart's complex structure" the report reads.

Another forecast concerns the energy market in the USA. According to experts, "US power prices spike higher in several populated US areas, as the largest tech companies scramble to lock in baseload electricity supplies for their precious AI data centres." In response, "many local government representatives begin protecting their constituents by imposing high taxes on the largest data centres."

In the insurance sector, analysts predict unprecedented events. "Catastrophic storm and rainfall event in the US catches the insurance industry unprepared, inflicting damage stretching into many multiples of the USD 40 billion in claims linked to Hurricane Katrina in 2005. " As a result, "one of the largest insurers in the USA significantly underestimated the insurance risk resulting from climate change."

In the currency market, analysts expect the strengthening of the British currency. "sterling rises through 1.27 versus the euro, the level it traded ahead of the Brexit referendum, thus erasing its entire post-Brexit vote discount," they forecast. The support comes from the new Labour Party government's policy, which "avoids the most economically harmful income tax hikes."

- The Saxo Outrageous Predictions are not exactly news and not exactly real—at least not yet - emphasises John Hardy, Saxo's Chief Macro Strategist. - [However, they] are just as promised: outrageous - he adds.