Saxo Bank Publishes its Investment Outlook for Q4 2014

Copenhagen, Denmark (ots/PRNewswire) -

The US, China and Europe are all headed for another Minsky moment
but this challenging environment for investors can also be a fertile
trading environment.

According to Saxo Bank [http://www.saxobank.com/?noredirect=true
], the online multi-asset trading and investment specialist, the
flipside of quantitative easing has been the mountain of debt that
the globe has accumulated over the last few years.

In its latest Quarterly Outlook report for the financial markets,
the bank said Asia's foreign debt has soared to $2.5 trillion from
$300 billion in a decade, and China is spending a fortune just to
manage a debt service cost that stands at 39% of GDP. The US is not
faring that much better where interest on US government debt costs 6%
of the budget in 2013 despite neglible interest rates and the debt
load has nearly doubled to 80% of GDP in 10 years. The bank said that
the western world continues to ignore the need for the kind of
fundamental structural reform that will enable private
entrepreneurship to flourish and grow.

Chief Economist Steen Jakobsen commented: "It's time we talked
about debt. It is the elephant in the room that no-one wants to
discuss, but it has now grown so large that the foundations are
shaking. Whatever the timing, the US, China and Europe are all headed
for another Minsky moment.

"Never has the gap between the reality and the perception of the
present economic situation been greater. Yet, never have the
opportunities to trade this been better. The world is not ending,
it's getting ready for a new beginning where we must address the
elephant in the room - debt."

Saxo Bank's Chief Economist says that debt only gets reduced two
ways: by writing it off or through superior growth. Neither is
politically or practically feasible during the next quarter which
means that interest rates globally must remain unchanged-to-lower
while we play pretend-and-extend one more time before Minsky gets his
proper place in the limelight.

As we head into Q4, the markets aren't going to get what they
want: the US is not on an easy and smooth path to better days
accompanied by a gentle Fed tightening. As the US recovery hits the
low ceiling amid a raging USD bull, we will see uncertainty and
volatility rise sharply about what comes next. Bonds will rally one
last time and volatility will rise as well.

Commodities

Looking at gold priced in other currencies, Ole S. Hansen, Head of
Commodity Strategy, finds that most of the weakness has been related
to dollar strength, with gold measured in euros up almost 10%
year-to-date and around half that against the Japanese yen.

Ole S. Hansen added: "We view a continued rise of the dollar in
the final quarter as being gold and silver's main challenge with the
current slowdown in China, Europe and elsewhere potentially leading
to less aggressive expectations for how hawkish the US Federal
Reserve can and will be."

The energy sector will struggle during the early part of the final
quarter with the seasonal slowdown in US refinery demand leading to
the usual rise in inventories. Additional price weakness is
eventually expected to be met by a response from OPEC, if not before
then during the next meeting, which is planned for November 27. The
downside risk could be extended if OPEC fails to show unity with
Iraq, Libya and eventually also Iran. All will be looking to increase
market share at a time of falling demand for the cartel's oil.

FX

As commodities are weak and bond yields are already low, to John
J. Hardy, Head of FX Strategy, this suggests that the market is very
concerned about global demand and growth potential - not to mention
the potential for disinflation/deflation. Among currencies, it seems
that the market has been very late in discovering that we are near
multi-year lows in major commodities indices as we enter Q4 and that
there is a considerable degree of further downside potential for
commodity currencies on the weak commodity theme next quarter.

John J. Hardy said that his favourite question for Q4 is what if
the ECB fails to move straight to QE (as the market has fallen all
over itself to anticipate)?

He commented: "There is a strong anti-QE contingent within the
ECB, led by the German Bundesbank. There is also strong German
political resistance to direct central bank purchases of sovereign
debt because this funds fiscal shortfalls by EU member governments.
Along the same lines, then, what if the ECB targeted long-term
refinancing operations and asset-backed securities

purchases prove smaller than the market hopes, while the
realisation dawns that the barriers to QE will likely take
considerably more time to overcome?"

According to John J. Hardy, a slower than expected expansion of
the ECB balance sheet could slow the euro's decline, and even see it
grow stronger against the weaker corners of the market if
disappointed euro carry traders see rising volatility (which tends to
negatively correlate with carry trades). Elsewhere, he expects
continued USD strength to remain a prominent theme.

Equities

Equities are still fairly valued globally and are by no means in
bubble territory. Based on the low interest rate environment and a
still growing global economy, equities still remain the most
attractive asset class.

Peter Garnry, Head of Equity Strategy, commented: "In our Q4
outlook, we present three trade ideas on equities that fit into our
overall picture of the world, but also to direct your interest
towards countries, sectors and stocks that would normally come to
mind. We recommend being long the US natural gas segment following a
21% crash from the highs in June, short India on unjustified high
valuation and bet on negative economic surprises, and finally long
Goldman Sachs on a pickup in the US economy and capital markets
activity."

Link to report:
https://www.tradingfloor.com/publications/quarterly-outlook

About Saxo Bank

Saxo Bank is a leading online trading [http://www.saxobank.com/fo
rex?csref=b1744_Link_boilerplate_pressrelease ] and investment
specialist. A fully licensed and regulated European bank, Saxo Bank
enables private investors and institutional clients to trade FX,
CFDs, ETFs, Stocks, Futures, Options and other derivatives via three
specialised and fully integrated trading platforms; the browser-based
SaxoWebTrader [http://dk.saxobank.com/lp/webtraderdemo?csref=b1748_L
ink_boilerplate_pressrelease_danish ] , the downloadable SaxoTrader
[http://www.saxobank.com/demo-account?csref=b1746_Link_boilerplate_pr
essrelease ] and the SaxoMobileTrader
[http://www.saxobank.com/trading-platforms/saxomobiletrader ]
application available in over 20 languages. Saxo Bank also offers
professional portfolio and fund management through Saxo Asset
Management who accommodates high-net worth private clients and
institutional investors and provides banking services and advice to
retail clients through Saxo Privatbank. The Saxo Bank Group is
headquartered in Copenhagen with offices throughout Europe, Asia,
Middle East, Latin America and Australia.

ots Originaltext: Saxo Bank (Switzerland) SA
Im Internet recherchierbar: http://www.presseportal.de

Contact:
Media enquiries: Kasper Elbjørn, Head of Communications,
+45-3065-4300, press@saxobank.com