“Our Outrageous Predictions are not exactly news and not exactly real – at least not yet. And 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 Bank said.
Trump 2.0 blows up the US dollar. As the new Trump administration turns the global financial system on its head with huge tariffs, the world scrambles to find alternatives to the dollar. “If Trump 1.0 was the warm-up act for deglobalisation, Trump 2.0 will prove the main event, with all of its consequences for the US dollar.”
The globalised system that formed in the ashes of World War II was built on the combination of a US security guarantee to protect trade routes for the “Free World” and the use of the US dollar as the chief currency for transactions and as a store of value. Even after the greenback’s link to gold was broken by US President Nixon in 1971, the US dollar continued its domination in the globalised economy.
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).
Instead, safety valves are found, as global financial actors scramble for alternatives. 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. Gold-linked crypto stablecoins add to the mix, as this dramatic new chapter in global financial markets begins.
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. US exporters advantaged.
Nvidia balloons to twice the value of Apple. Armed with its revolutionary AI chips, could tech giant Nvidia grow to twice Apple’s size and become the most profitable company of all time? In 2025, Nvidia’s success is supercharged further with the availability in volume of its revolutionary 208-billion transistor Blackwell chip, a chip that drives up to a 25-fold increase in performance of AI calculations per unit of energy consumed relative to the prior H100 generation.
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 Outrageous Predictions 2025 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. It handily surpasses Apple’s record USD 105 billion of profits next year, and with far faster growth baked into expectations, its market cap nearly doubles again, making it twice the size of Apple. This sees it tower above all other companies in the world at a value of USD 7 trillion, or 10% of the global equity market. Apple and other tech giants’ valuations suffer in relative terms, as their profitability is weighed down by the need to build titanic data centres to keep up in the AI gold rush.
Potential market impact: Nvidia shares trade well north of USD 250, before the market begins to question its potential to grab an ever-greater share of corporate profits, and as unwelcome regulatory scrutiny on its monopoly status tempers the outlook.
Electrification boom ends OPEC. As electric vehicles become more affordable, could oil-rich OPEC become irrelevant in 2025 and find itself on the ash heap of history? “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.”
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. Schroders, a nearly trillion-dollar asset manager, touted growth potential for Chinese EV production back in early 2021, projecting that EV sales might reach close to 5 million vehicles by the end of 2024 and a market share of 15%. The ensuing reality blew the roof off these projections, as Chinese EV registrations rose above 8 million already in 2023. And by September of 2024, EV market share of new car sales was reaching north of 45% in China, as overall EV sales growth rose above 40% year-on-year. This is some six years quicker than expected.
China is showing the way in the transportation electrification boom. As other countries join China in rapidly building out exponential growth in production capacity, battery prices will deflate further, making EVs cheaper than their petrol-burning counterparts, with a crossover point in costs within 12 months, even on an unsubsidised basis. With an exponential adoption rate curve dead ahead, it brings forward projections of peak oil to as early as 2025 and the anticipation of an accelerating decline in demand in the years ahead.
In 2025, with the writing on the wall on the forward demand picture since two-thirds of oil ends up as gasoline or diesel in cars and trucks, OPEC finds its relevance shrinking further and its multi-million barrel per day production limits irrelevant. 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. Former members max out production to ensure market share, driving a large drop in oil prices.
Potential market impact: Crude oil slumps in price, a boon for airlines, chemical, paint and tire manufacturers and freight and logistics companies. But the market balances quickly and oil prices stabilise, as higher cost suppliers, especially in North America, shut down expensive shale oil production. Japanese carmakers find themselves in a desperate race to catch up with other EV players.
/Saxo Bank/