Danish Investment Firm: The Odds Of A Global Recession Within 18 Months Stand At 60%

More likely than not, there will be a global recession within the next 18 months. According to a CNBC report, economists at the Danish investment firm Saxo Bank believe the likelihood of a global recession stands at more than 60 percent.

Saxo Bank's chief economist Steen Jakobsen was a guest on CNBC Monday morning and explained why the "Trump-mania" era has come to an end for a few key reasons. First, President Donald Trump's meeting with China's President Xi Jinping is being viewed as a "missed opportunity" for China as the country "got nothing" out of the meeting.

"One thing is absolutely clear: Asia is not going to contribute anything in 2017 to growth. China is on total standstill," Jakobsen said. "They don't know what to do with Trump and I think Trump again showed his hand over the weekend that he is not to be relied on in terms of a set-out path for how they conducted themselves."

There's More Worries

Meanwhile, political tensions surrounding North Korea and Syria remain heightened, which may imply that for the first time ever geo-political risk matters for investors in 2017. Add into this the uncertainty of the Federal Reserve's balance sheet changes and what moves are ahead for the European Central Bank.

For all these reasons, Saxo Bank told its clients in a research report that it is "more likely than not" that a global recession will occur within 18 months. This contrasts to the market at large, which the bank believes is pricing in just a 10 percent likelihood of a recession.

Finally, Jakobsen argued that the stock market's current valuation is based on "hope" and the upcoming earnings season won't be a blowout and this will add further pressure to stocks.

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