FLASH FRIDAY is a weekly content series looking at the past, present and future of capital markets trading and technology. FLASH FRIDAY is sponsored by Instinet, a Nomura company.
It is time of year for decorations, mince pies, parties, carols and also for firms to make their predictions for 2025.
Saxo, the online trading and investment firm, has taken the approach of making annual Outrageous Predictions. These are a series of events that, while highly unlikely, could just happen. If they did, they would send shockwaves across financial markets.
John Hardy, chief macro strategist at Saxo, said in a statement: “The Saxo Outrageous Predictions are not exactly news and not exactly real—at least not yet. While we don’t know which stories will drive the global economy in the coming year, our 2025 predictions, from Nvidia trouncing its Mag 7 peers to the fall of OPEC, from a bold bet on reflation in China to a great leap forward in biotech, are just as promised: outrageous.”
Saxo’s first outrageous prediction is that Trump 2.0 blows up the US dollar:
“In 2025, 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). “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. Instead, safety valves are found, as global financial actors scramble for alternatives.
Potential market impact: The crypto market quadruples to more than USD 10 trillion, the US dollar falls 20% against major currencies and 30% versus gold. The US economy continues to reflate, but wages keep up with goods inflation, as production resources reshore to the US, giving US exporters an advantage.”
A16z, the venture capital firm has dropped its Big Ideas List for 2025.
The list consists of “big ideas” tech builders may tackle in the year ahead. For example, one idea is that ‘unconventional’ assets may start being tokenized. Aaron Schnider, technical operations specialist, wrote:
“Just as fracking unlocked oil reserves once considered unreachable, tokenizing unconventional assets could redefine income generation in the digital age. Seemingly sci-fi scenarios become more possible as a result: For instance, individuals could tokenize their own biometric data; and then lease the information through smart contracts to companies. We are already seeing early examples of this through DeSci companies bringing more ownership, transparency, and consent into medical data collection using blockchain technology, for instance.”
BlackRock published its 2025 Global Investment Outlook
The asset manager said: “We are not in a typical business cycle. Mega forces like AI are transforming economies, breaking historical trends. We stay risk-on as we look for transformation beneficiaries – and go further overweight U.S. stocks as the AI theme broadens out. We have more conviction inflation and interest rates will stay above pre-pandemic levels.”
State Street Global Advisors, the asset management business of State Street launched its 2025 Global Market Outlook: Finding the Right Path.
The firm expects rate cuts and macroeconomic resilience to continue in 2025, and its long-standing forecast of a US soft landing to materialize.
Jennifer Bender, global chief investment strategist, said in a statement: “While spreads across both investment grade credit and high yield debt are near historic lows, we are optimistic about prospects for fixed income assets next year, and see a generally favourable environment for advanced economy sovereign debt. Market sentiment swings and volatility could potentially create opportunities for investors to manage or extend duration.”
BofA Global Research expects 2025 to be a year of further equity market strength amid macro uncertainty
The bank’s global research economists and strategists expect US economic and earnings growth to outpace that of other developed economies, while US equities should start the year off strong and end 2025 with the S&P 500 at 6666. As the year progresses, international opportunities should present themselves: European stocks are forecasted to slow but rebound to current levels by year-end 2025, and in China, domestic stimulus measures should offset any slowdown brought on by changes to trade policies.
Candace Browning, head of BofA Global Research, said in a statement that in 2024, growth surprised to the upside and inflation moved in the right direction, allowing central banks to start easing, risk assets to perform well, and global equities to reach new high.
“But as we head into 2025, policy uncertainty has increased substantially,” she said. “Many of the expected policy shifts should be positive for US equities, but a lot depends on their timing and how the rest of the world responds.”
Morgan Stanley Sustainable Signals survey shows institutional investors expect continued growth in sustainable investing
The survey said the majority of fund managers (78%) expect assets under management in sustainable funds to increase over the next two years, due to both new mandates and higher allocations from existing clients. Similarly, 80% of asset owners expect the proportion of their assets allocated to sustainable investment options to increase during the same period.
Jessica Alsford, chief sustainability officer and chair of the Institute for Sustainable Investing at Morgan Stanley, said in a statement: ”Institutional investors see a growth trajectory for sustainable assets globally in the coming years to meet increasing client and stakeholder demands in a more mature sustainable investing market.”
