Saxo Bank Denmark says "Ron Paul"

Denmark-based Saxo Bank last year predicted equity markets in 2007 would take their cue from “the desolate spiral of US home sales, but could find relief in M&A deal flow”. Come 2007, the equity markets in the West stand battered by the sub-prime mortgage crisis and home builders in the US are looking for white knights to bail them out.

Saxo’s tradition of annual “Outrageous Predictions” has had a high rate of bull’s-eyes in the past. The bank’s analysts said in 2006 they’re oil bulls “given the raft of alarming geopolitical scenarios with alarming implications for global supply”. Crude this year tested an all-time high of more than $99 per barrel and looks set to cross the $100 mark.

1. World oil prices to hit $175 even if growth slows
2. UK economy likely to go into a nosedive
3. S&P500 falls 25% from its 2007 high to 1,182
4. Grain prices to double again as demand rises
5. Many of the big US home builders to go bankrupt
6. Chinese equities likely to see correction next year
7. Ron Paul elected President of the United States

The most outrageous! One would imagine a party with the least popular president to inhabit the White House – ever – wouldn’t stand a snowball’s chance in Texas of getting a new candidate elected to the presidency. But Ron Paul is no George W Bush, even if he is a Republican like Bush and is from Texas like Bush. His libertarian, anti-war platform is about three standard deviations away from the platform of any other republican candidate — or even Hillary Clinton, for that matter. Paul’s share in the Republican candidate polls has rocketed from one to six per cent in the space of a few months and there is the best part of a year to go until the election. As should be clear from this year’s outlook, we are quite negative on the US economy in 2008. A general slowdown and stock market turmoil must increase the odds of a Ron Paul nomination as he has been the only candidate to speak about the budget, account deficits and the dollar crisis.

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