A Danish bank's list of outrageous predictions for 2022 include NFTs tanking Spotify stock, 15% inflation, and an army of women on Reddit taking on corporations
- Danish asset manager Saxo Bank has released its Outrageous Predictions list for markets in 2022.
- They include Spotify stock sliding as musicians use NFTs to build revenue share.
- Another prediction sees US inflation soaring to 15% and the Fed moving too late in hiking interest rates.
NFTs taking over the music industry from Spotify, US inflation soaring to double-digit rates, and women traders banding together to put an epic squeeze on "patriarch companies" are among Saxo Bank's outrageous market predictions for 2022.
The Danish asset manager's annual list has a theme of revolution this year and includes some far-fetched scenarios as well as more plausible ones.
"As culture wars rage across the world, it's no longer a question of if we get a socioeconomic revolution, but a question of when and how," Saxo Bank said.
A revolution in the music industry may take hold as more musicians embrace NFTs, or non-fungible tokens, to sell their songs, a move that could threaten streaming platforms such as Spotify and Apple Music, the bank said. The NFT market has boomed to a $15 million capitalization this year on the rapid growth in sales of the digital assets.
The bank sees an NFT-based music service backed by notable artists sinking Spotify stock by 33% in 2022, as the challenger portends a "bleak" future for the streaming giant. Spotify during 2021 has already dropped by about 28%.
"[By] leveraging NFTs, more specifically via 'smart-contract' blockchains, artists could distribute music directly to listeners without centralized intermediaries taking a cut, while tracking their income in real-time—even getting paid in real-time—with listeners enjoying the knowledge that the money they are paying is going straight to the artist," wrote Saxo's cryptocurrency analyst Mads Eberhardt.
Labels and streaming platforms capture 75% to 95% of revenue paid for listening to streamed music, Eberhardt said. Musicians have already started backing crypto-driven ventures. Singer Katy Perry, rapper Nas, and electronic music duo The Chainsmokers this year contributed to a $5 million fundraising round for Audius, a blockchain-based music platform.
The US consumer price index in October climbed to 6.2%, its highest rate since 1990. Saxo Bank predicts a further spike in the rate next year, reaching beyond 15% for the first time since World War II, largely because of the labor shortage in the US workforce.
Soaring inflation would prompt a "too-little, too-late move" by the Federal Reserve to tighten monetary policy, leading to "extreme volatility" in US equity and credit markets, said Christopher Dembik, Saxo Bank's head of macro analysis. "The JNK high-yield ETF falls as much as 20% and the VIXM mid-curve volatility ETF soars as much as 70%," he wrote.
The coronavirus pandemic has "fueled a great awakening of workers," Dembik added. "Across sectors and income classes they realize they are now more empowered than ever. They demand a better experience: better job conditions, higher wages, more flexibility and a sense of purpose from work."
Another outrageous prediction from Saxo Bank sees women on the social media platform Reddit using tactics employed by the so-called Reddit Army on meme stocks to tackle gender inequality issues at corporations. Such issues include women earning 20% less than men on average in the same positions, leaving them with less disposable income to invest.
The "Women's Reddit Army" would see women traders coordinating a long squeeze by shorting stocks of selected "patriarch companies," said Althea Spinozzi, senior fixed-income strategist at Saxo Bank. The group would also direct funds to companies with the best metrics on female representation in middle management and among executives, she added.
"The movement gets real results as the broader market catches on to the theme and joins in, forcing targeted company prices sharply lower, which sees companies scrambling to change their ways. It marks the beginning of a gender parity renaissance in markets," Spinozzi said.
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