Transcript Saxo Bank A/S - TradingFloor.com

Steen Jakobsen, Chief Economist
Currency Wars – the new extend-and-pretend?
2013
The Perception vs. Reality Gap
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‘Illusion’ vs. reality
Stock market vs. Unemployment rate
ECB ‘succes’ vs. Rising debt/gdp levels
Optimism vs. Crisis management
Momentum vs. Fundamentals
Economic crisis vs. Political crisis
30 years of experience in a few lessons
Macro
Micro
John Maynard
Keynes
Joseph Schumpeter
Denial
Protest
Mandate for change
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Dominating Trends for 2013/14
Monetary Policy: QE replaced by currency manipulation and more ‘overt
monetary financing’
Macro trends: 2013 will see the crisis evolve from an economic crisis to a
full blown political crisis
Macro inputs: Lower energy costs, reshoring to the US, lower contribution
from growth from EMG due to ‘Middle Income Trap’ and inflationary
pressures, global lower disposable income and higher net tax levels.
Investment: Flat stock markets at best for balance of 2013, better fixed
income performance(low growth+ tension), and rising agriculture prices. FX
exposure will make up bulk of attribution to return for balance of 2013
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Investment themes for 2013/14
Beta exposure: 70% in Permanent Portfolio
Alpha exposure: 30% in directionals
Alpha risk:
FX Shorts:
FX Longs:
Futures Long:
Futures short:
Neutral:
GBP, ZAR, SEK, HUF, PLN, AUD(fromQ3),CAD
USD(50%), EUR (vs. EEA), SGD, NOK
Soybeans, Timber, Gold, Bunds, 10Y Notes, AUD bonds
BTP, OAT, CAC-40 and DAX (both in options)
JPY, Credit, Outright stocks
Opportunistic: Sub-Sahara excl. S-Africa, Aluminium, Gold miners,
Insurance companies, energy trading
Political plays: France to underperform, Italy being non-compliant to OMT,
Germany election, Eastern Europe in deep
recession,Tyrkey: Middle East safe haven
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Currency manipulation the new Extend-and-Pretend
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FX Manipulation: Shades of grey
Open manipulation:
Switzerland & Japan
Semi-open manipulation:
UK, South Africa, Poland, Hungary, Taiwan, South
Korea, China
‘Needs to intervene’:
Sweden, Canada, Australia, New Zealand
‘Agnostic’
Europe, Singapore, Norway
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Middle Class can’t save us now…
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Need a war? We are ”at war”….economically
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The Italian job
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The Germany – another paradox
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Growth? Where? EMG slowing down….
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Eurozone indicators point towards more gloom
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China – Bad growth – Middle Income trap
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France – the new “weak”
Germany – the new “spender”
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Macro Overview
Slower growth, but is Spring coming?
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Game changer: US shale gas
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The wonders of micro economy and markets
(All sources are from external news sites)
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Demographics are not a drag compared to peers
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CEO’s buying back stocks but privately selling….
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Valuation
Hope vs. Reality
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Abe-nomics & JPY
(Data as of 2012-11-22)
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(All sources are from external news sites)
Investors needs to be ”agnostic” on economics
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Allocation
Allocating risk vs. Allocating asset
Stocks:
SPY US (18.75%)
EM Bonds:
EMB US (14.50%)
Commodities:
DBC US (10.00%)
GLD (4.50%)
Corp. Bonds:
LQD US (6.25%)
Treasuries:
IEF US (25.00%) Government
IPE US (21.00%) TIPS
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Allocation
Allocating risk vs. Allocating asset
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Housing – Better and better
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GBPUSD
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GBPUSD – lowest monthly close since 1985: 1.4100
USDZAR
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USDZAR – recent upside despite strong risk appetite…
AUDUSD
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AUDUSD – coiling for a big move?
Thank you!