A State of Flux
Steen Jakobsen,
Chief Investment Officer
Saxo Bank A/S
May 2014
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Ockham’s Razor
 Stock Market lags real economy by three months
 Interest rates leads real economy by nine months
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What did happen 9-12 month ago?
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What did happen 3 month ago?
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Germany the negative surprise….
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Germany the negative surprise….
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No more “easy money….?”
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The Classic correlation S&P & FED BS
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Tapering – marginal change?
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Valuations becoming real issue in the US
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Inflation is now unanchored…
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Forward guidance false?
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Our JABA model says…low in 2015-Q1
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Our biggest call: Yields will go to new lows..
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Global imbalances – global balances
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US rates to the rescue?…….
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China: Friend or foe for growth?….
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Iron ore leading growth…….
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Weaker global growth will hurt BRL & AUD
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The worlds growth engine is sputtering…
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Market Calls…..Earnings based projection..
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Will equity finally pay the price..?
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Macro Outlook in headlines
Positions:
 Mega long fixed income (Q3-2013) – See new lows in yield
 FX: Short AUDUSD(.8000 sub target),EURUSD(sub 1.2500)
 Sell ZAR, TRY and IDR soon (all basket cases….w. no reform)
 Equity: Long Israel + Russia vs. SPX (CAPE <10 vs. CAPE >24 (avg
13/14 – waiting for catalyst to short SPX & DAX (plus Club Med)
Monetary Policy:
 ECB will disappoint – they love to talk…too much…
 BOJ is cornered (USDJPY  92/93
 FED will taper the taper…..
 Fight will be on deflation…..now unanchored
Economics:
 Germany will go towards negative growth in Q4/Q1-2014/2015
 Fragile Eight: No reforms, elections – it’s time to sell…..
 2014: Another lost year
 2015 H2: The true recovery
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Thank you!
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