Blain’s Morning Porridge Dec 3^rd, 2025 – Pantomime, King Rat, and Outrageous Predictions

“It’s behind you, oh no it isn’t!”

What’s not to like about Panto? Saxo Bank’s excellent Outrageous Predictions for 2026 are out.. Lets dig into why Sir Keir Starmer might consider rejoining Europe to peeve Nigel Farage, how China will dominate trade through Tech and a gold-linked Yuan, and why SpaceX is unlikely to be the first $1 trillion IPO.

Link to Podcast

Yesterday two of the best things that define Christmas occurred.

She-who-is-Mrs Blain and I went to see our village Pantomime. It was Dick Whittington this year – a “boy” (played by a very pretty girl in tights) with a talking cat comes to London in search of fame and fortune, meets girl (real one), falls in love, gets shipwrecked in Morrocco, fights King Rat, rids North Africa of rodents, comes home as Lord Major… Makes perfect sense in these markets. Absolutely brilliant, funny and full of wicked innuendos delivered absolutely dead pan! Panto is the very soul of an English Christmas.

Dick Whittington was almost as daft is this morning’s rant in the Torygraph, or Daily Pravda as some now call it. Headlined as More Dishonesty from Rachel Reeves, Sir John Ratwood (someone must have opened the crypt and pulled out the stake through his chest), has discovered a £1.3 trillion “debt mountain” in the UK’s finances…

Gosh… that’s a shocker…

Apparently when the UK borrows money (as it has been doing with nary a default since 1694) it has to…. repay it back… Clever Sir John puts together the government’s planned borrowing over the next five years and adds it to the govt debt that is maturing to arrive at a £1.3 trillion numbers. Panic and horror… who knew?

Just to remind Sir John….

• 93% of the debt to be repaid in the next five years was raised under the previous Tory government…
• Spending and funding by Labour is largely a continuation of previous planned Govt funding and spending policies…
• The Debt Management Office will fund over £300 bln this year, and has done so with record oversubscriptions on syndicate deals, and a bid to cover ratio of over 3, meaning investors are willing to finance 3 times as much as the Govt has borrowed!

But hey-ho, nothing like King Ratty RatWood trying to undermine the govt!

However, another great Holiday moment of Festive Fun that happened y’day was the release of SAXO Bank’s Outrageous Predictions for 2026. As always they are clever, funny and all possible. They are all definitionally No-See-Ums, things that might happen but we just didn’t ever think they would. Saxo describes them as Low probability/High-impact events. The most import rule of No-See-Ums is not to look for them – definitionally they happen right where you are not watching!

This year’s Outrageous Predictions are all possible. That’s what makes them so scary. What happens in Tech and Crypto if Quantum Q-Day arrives, triggering a (further) collapse in Crypto and surge in Gold? Could Taylor Swift’s wedding trigger a global consumption boom? The Swiftie Put! What if the US Mid-terms see a peaceful transfer to the Democrats as US voters demand a return to normality, leaving Trump to bloviate meaninglessly in the background?

Some of the predictions merit a quick deeper dive.

I’m intrigued at SAXO raising the possibility the UK does a backdoor deal to scramble back into a de-facto EU membership. While the chances of the timid Starmer Govt (which remains terrified of its own shadow) ever doing such a thing is 99.9% unlikely – Brexit has been an unmitigated disaster in terms of a growth blocker, trade-stopper and inflation impulse snorter. (FYI, Sir John Ratwood was writing in his Brexit Facts4EU manifestation… )

Can you imagine the noise if Premier Starmer tries to make it happen, or sneaks it through Westminster. The Brexit monoglots would call such a shift the biggest betrayal ever, and there would be political mayhem!

Could it happen? Well perhaps… Starmer may finally grow a pair and see a BrEntry vote (see what I did there) as offering distinct political advantages, and prove his best choice of a hill to plant his standard on (although he would still likely die on it..)

A UK general election is not necessary till 2029, but based on current UK polling, Reform is likely to be the largest party in Parliament with 35% of the votes and 310 seats. That would not give them an outright majority – they would be 15 seats short according to a recent YouGov poll. That means doing a deal with the rump Tories (which may explain why Nigel Farage suddenly tacked into a discussion about merging with them yesterday.)

However, does Farage really want to be surrounded by Tories who will expect to lead Reform? A poll published in the Torygraph last month suggests the Conservatives could be cut to just 14 seats (well behind the Greens and SNP), meaning a Reform led coalition would be a very fraught position vs a Labour/Liberal/Green/Nationalist opposition. It could give the Irish Nationalists, Sinn Fein the potential of the swing vote… and that’s not a recipe for UK success!

While Reform may poll 35% in a general election, in a binary referendum on a new relationship with Europe, current polling suggests 65% of Brits would be likely to say yes to a new European relationship – even if the deal meant the UK accepts EU rules but with no actual seat at the party! (I would also bet good money the French will seek to scupper any deal.) Such a division between Reform vs BrEntry could make for very interesting but increasingly polarised politics in the UK in the run towards 2029! What we know about Nigel Farage is that getting him angry will cost him votes. Thus it’s maybe not a bad course of action for Labour.

Next up on the SAXO list sounds more likely – what would happen if the Chinese Yaun begins to replace King Dollar in global trade. Its already happening. SAXO ponder what might happen if the Chinese decide to back their currency it with Gold? And offers gold-for-yuan swap lines for favoured nations in the Gulf and ASEAN. Many nations/business partners may opt to take Chinese bonds instead of gold in order to receive interest. A consequence would be a softer US treasury market (rising yields) to reflect fewer global dollar flows. Saxo don’t expect the gold backed Yuan to replace the dollar – but it will end its current monopoly.

The stronger Yaun is going to become inevitable in coming years if China continues to make the kind of strides across Global Tech leadership that we’re seeing happening now. My AI chum Michael Power showed me data yesterday showing Chinese Technology now leads the ASPI Critical TECH Tracker in 8/10 new categories – Cloud and Edge compute, Digital Twins, Extended Reality, Computer Vision, Grid Tech, Precision Agriculture, Brain Interfacing and Generative AI. China now leads in 66 of the critical 74 Tech categories!

15 of the Top 25 Research Universities on the Nature 2025 list are now in China. Every single one of them has been rising up the list. Every tired old Western learning hub has fallen. The Chinese Academy of Sciences replaced Harvard (where I once did park my car in the yard) as No 1!

It doesn’t matter if 1 bln European and North American consumers continue to purchase US Tech – 7 plus billion consumers in the rest of the World will likely be buying China.

2026 is the Year of the Fire Horse – the most potent and portentous 12 months in the 60-year Chinese Zodiac, says Power. Fire Horses are energetic, smart and enthusiastic, full of creativity and passion, but also headstrong. It means transformation of the landscape, unstoppable collective force, and a likely new international order. It means Chinese AI like Qwen 4, DeepSeek v3.2 and a host of other cheaper and better Chinese Tech could leave the USA behind. Once these consumers paid in dollars making US tech firms so profitable – which was ultimately invested in US Treasuries. Now it will be into Yuan and China bonds!

Third up from SAXO is their prediction Space X could will mount the first $1 trillion IPO in 2026. Saxo is not the only firm speculating SpaceX might go public, but my personal view is the Starship Rocket is not the wonderous thing Elon Musk would have us believe. I very much doubt Musk can sell it….

If I’m wrong, Musk will send them into orbit by cracking the assent stage refuelling problem. SAXO speculates that if there are fleets of Musk’s Starships in high orbits, and he’s close to building lunar bases, that will trigger such interest that a $1 trillion valuation will be possible. And they reckon Musk will take the first trip in 2029 – eventually moving all his businesses to Mars where he can be President for life and pay no taxes…

But, but and but again.

Starship does not work. (That might be qualified with a “yet”.) It has gone ballistic and flew from Florida to a sort of landing in the Indian Ocean (before exploding). I am told it reached orbital insertion, but it did not orbit. The issue is power. The Raptor engines are underpowered (apparently one reason is because all rocket booster nozzles have been designed since NASA days to fit on a standard size rail truck!) And they need refuelling in flight. Jeff Bezos’ Blue Origin Rockets have solved both problems with solid-state fuel tech and a slower progress into space – Tortoise and Hare stuff…. but Bezos may get to the Moon first.

Until the Starship power issue is resolved, and SpaceX cracks the problem of fuelling a rocket during its ascent stage (never ever been attempted before), then it will not achieve Orbit with a cargo. If the Starship needs a complete redesign with new engines – as some rumours suggest – it could take years, no matter how Musk whips his serfs to fail faster.

And going to Mars would be financial madness. According to Google’s AI, (surprisingly Grok gave me similar numbers) it will take 10 Starship Tankers to fuel a single Starship mission to the Moon. Because Mars has an atmosphere to allow “air-breaking”, it may need just 10 to send a Starship to Mars – where it will need to make more fuel on the Red Planet for the return mission. That will require robotic missions to Mars to deliver the refinery materials and extract oxygen. Say five starship loads and each needing 10 tankers – say $8 bln spent even before a manned mission sets off.

If Space X can’t make the fuel…. then the project becomes even more prohibitively expensive. Let’s assume there will need to be 15 odd Starship tanker rockets prepositioned with fuel for the return journey (at a cost of $2 billion) from Mars. To get to Mars, each of them will need 10 tankers to exit low Earth orbit to Mars (an additional cost of $15 billion)…

Musk will not see much change from $30 bln for a single Starship to get to Mars…. And maybe come back.

Heck… $30 bln is chump change for Musk….

Out of time, and back to the day job…

Bill Blain

CEO – Windshift Capital

Author – The Morning Porridge

Partner – Shard Capital

Special Advisor – Spitfire Strategic Capital