Outrageous predictions for 2023

Welcome to 2023 - and Happy New Year everyone!

Keeping up with a well-established tradition, and with the usual few days' delay, here are my outrageous predictions for the year ahead:

1. Before you ask: no, the Ukraine war will not end in 2023. Putin will be too busy playing ice hockey to notice that being an international pariah state is no good long-term strategy for Russia. And three warm meals and a well-heated home in winter is all that is needed to keep the vast majority of Russians supporting the war - being self-sufficient in food and energy does wonders to win political support in a mostly poor country. Sorry to disappoint the well-travelled among you, but Moscow and St. Petersburg are not Russia.

2. Another year, same story: Germans will not freeze and the German industry will not have to shut down in winter. With alone the two new LNG terminals already in operation as I write, 20% savings in natural gas consumption across the board will be enough to get comfortably through the 2023 winter months. The German industry - via efficiency measures and switching to other fuels - can easily save more than the required 20% (with the exception of the glass and ceramics industry), as shown in 2022. Turning down the thermostat by 3 degrees Celsius is all that is needed for households to save 20% in their nat gas consumption. Given that the average room temperature in German houses pre-Ukraine war was 20-22 degrees Celsius during winter time, living with 17-20 degrees is hardly an unbearable sacrifice to make in order to defeat Putin. Fleece jackets will become the most fashionable piece of clothing in Germany. Again.

3. Following the successful first steps in the “Energiewende” (i.e. in terminating the dependence on Putin’s gas), Robert Habeck will be Germany’s most popular politician by the end of the year. Again. The same can’t be said about Macron in France following his reform of the retirement age & public pension system. C’est la vie, Monsieur le Président.

4. History repeats itself not. With the experience gained in 2022, there will be no panic reaction neither in the European nat gas (Dutch TTF) nor the global LNG market ahead of the winter 2023/24. So, no: nat gas peak prices 2022 will not be seen again in 2023. Scaremongers will have to find a new field of activity.

5. It will look like a space invasion. Feel like a space invasion. But relax, it will not be one. With covid restrictions fully lifted by the end of 1Q2023, Chinese will start to travel again around the world. And especially to the west. Chinese revenge traveling will be pure joy - for duty-free shops at airports and luxury brand shops in the west's major cities. Who said that globalisation was over?

6. Elon Musk still holds around 11% of Tesla's shares worth around USD 39bn. To finance its acquisition of Twitter, Elon needs to raise additional USD 13bn in cash (for a total of Eur 21bn equity financing). This means cutting down its Tesla stake. The more Tesla's share price falls, the more shares does he have to sell, which in turn will force the share price further down. The market knows it. Hedge funds know it. They will keep short-selling the stock. In the end, Elon will hold less than 5% of the company. Swapping the world's leading EV firm for 140 characters - legend!

7. In the UK, political stability will finally be back. Charles III (ex-prince Charles for the uninitiated in British royal affairs) will still be King at the end of the year.

8. The annual inflation in USA and the EU will come down quickly in the first three months of the year - basis effects are a beautiful thing. The expectation of a US soft landing triggers a rally in equity and credit markets. In the second half of the year, however, US inflation becomes sticky. "Higher (interest rates) for longer" becomes the new investor mantra and equity markets give up all their gains for the year. The rapidly increasing probability of an US recession does the rest: equity markets crash. The S&P 500 finishes the year 20% below its December 2022 closing level. Financial markets are never boring, are they?

9. Here we go again: at some point in 2023 markets will start to price in an Italexit and break-up of the Euro. I could now start arguing that Italians are strongly pro-EU and Euro and that the shambolic state of British politics post-Brexit only reinforced this sentiment. As a reminder: the "Italexit for Italy" party, who has Nigel Farage as strategy advisor, captured less than 2% of the vote in September's Italian general elections (get over it, Nigel). I could further argue that the country's economic fundamentals are much better than general perception has it: a country running current account surpluses for at least 9 out of the last 10 years (2022 numbers have not yet been published) is surely not a weak Euro member. I could add that the ECB is a superpower able to keep Italian credit spreads under control, at any time. And that Nigel Farage doesn't speak Italian. Then again, drawing on the experience from his Brazilian exile during World War II Stefan Zweig would put it better: "Italy is the future European crisis. And always will be." ("O Brasil é o pais do futuro. E sempre o será.").

10. The western European extreme right is more loud than powerful. Spain will prove it once more: the Vox party will not pass the 15% popular vote threshold in the country’s general elections.

11. Led by German coach Roger Schmidt, Benfica will be the big surprise of the current edition of the Champions League. It will reach the final - and win it. Happiness galore in the streets of Lisboa! For the European Union's north-south combination of talent, knowledge, and skills, not even the sky is the limit.

12. The next edition of my outrageous predictions will reach you in January 2024. After a phenomenal 2023. Enjoy - life is good!