Saxo Bank publishes its investment outlook for Q3 2014

Saxo Bank publishes its investment outlook for Q3 2014

As we enter the third quarter, despite general complacency, investors continue to face bleak macro imbalances that need correcting, while energy's shadow looms large as the conflict in Iraq rages.

Saxo Bank, the online multi-asset trading and investment specialist, has published its third quarterly insight for 2014 looking across the macroeconomic environment and individual asset classes.

Saxo Bank predicts a relatively positive third quarter. The Bank remains positive that US growth will return after a primarily weather-related disastrous Q1 (-2.9%). It also sees stocks outperforming bonds and forecasts that further USD weakness will likely be limited. Volatility should pick up from record lows as we near the end of the Fed's QE3. Finally, the bank believes oil will remain elevated but within a fixed range.

Nonetheless, Steen Jakobsen, Chief Economist, says that a permanent imbalance in the market whereby only 20% of the economy - listed companies and banks - receives 100% of the available credit and political capital, is suffocating the remaining 80%, namely the SMEs. Stock market valuations appear 'reasonable', but only because of the resultant lower cost of capital for the select 20%, enforced further by a pervasive belief in QE and a widespread preference for investing in equities.

Further threats to the anticipated recovery include China's property market and its high refinancing needs, growth in France or Germany plummeting thanks to lower exports to Asia and continued elevated energy prices. Higher energy prices have a negative impact on consumption by contributing to a broader erosion of consumers' disposable income.

Jakobsen commented, "Without a transfer of money from the 20% back into the 80%, we will face a decade of 'Japanisation'. A correction of this imbalance is essential to reset the world economy. The consensus that a little bit of growth is enough is worrying, and ignores the bigger picture.

"In January the IMF, the World Bank, ECB, FED and most bank economists were falling over themselves to proclaim 2014 as the year of recovery, but as we enter H2, Europe looks vulnerable, budget deficits are rising and political backroom deals are being struck to buy more time. The US needs 2.9% annualised growth in Q2 to just register zero growth for the first half of 2014 - and Asia continues to believe it can engineer a "soft landing", something I see as equivalent to an attempt to turning a super tanker around in a river."


Peter Garnry, Head of Equity Strategy, underlines the continuing importance of holding equities to see any meaningful capital growth. The relative repricing between equities and bonds has continued in 2014 as total return in equities relative to bonds remains below the equity risk premium line since 1995. He commented: "Equities are still the most attractive asset class, they are now fairly valued and are by no means in bubble territory."


There has been a considerable jump in oil prices on destabilisation in Iraq, but this jump in percentage terms is still relatively modest. The most negatively affected currencies in the event of a further surge higher in oil prices are those that both rely heavily on energy imports and are the most energy-intensive in terms of units of GDP. India, South Korea and South Africa appear especially at risk from energy intensity of GDP, while Turkey, Poland and Hungary are emerging market currencies extremely reliant on imports for the vast majority of their consumption.

John J. Hardy, Head of FX Strategy, added: "We have just emerged from a period of unprecedented calm in oil prices, so the move will likely have to stretch much further for us to witness wider fall-out and spill-over into currencies."

Saxo Bank's top FX trading themes for Q3 2014 include short EURJPY, short AUD vs. USD and CAD, long NOKSEK on dips, and long MXNTRY.


Despite the recent outperformance of commodities, conflict in Iraq is casting an ominous shadow over the global oil supply. If the march of Sunni militants cannot be halted, an elevated oil price is inevitable heading towards 2015.

The energy market must deal with the possibility of global crude oil supply exceeding demand for the first time in recent memory, thanks in part to the rise in non-OPEC production, and the average price of Brent crude is likely to move lower towards USD 105/barrel. After 2013 saw gold's first annual loss in 13 years, Saxo Bank is cautiously optimistic for its prospects later in 2014 after averaging 1,225 USD/oz during the first quarter.

Ole S. Hansen, Head of Commodity Strategy, added: "Iraq's targets now look unreachable which raises even further the pressure on Saudi Arabia to increase production and avoid oil markets from becoming too tight."

Link to report:

Media enquiries

Kasper Elbjørn, Head of Group Public Relations

+45 3065 4300

[email protected]

About Saxo Bank

Saxo Bank is a leading online trading 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, the downloadable SaxoTrader and the 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.

Russia to directly participate in efforts to unblock economic, transport ties in S. Caucasus - Lavrov
Russia to directly participate in efforts to unblock economic, transport ties in S. Caucasus - Lavrov
Russia and Iran open to discuss Karabakh issue
Russia and Iran open to discuss Karabakh issue
Some statements by Armenian officials cause tension - Lavrov
Some statements by Armenian officials cause tension - Lavrov
Loading Bars
Kazakhstan's GDP decreases as of 2020 less than global decline - National Bank
Israel reports 7,889 new COVID-19 cases, 613,286 in total
New coronavirus cases rise in France, third national lockdown feared
Anglo Asian Mining plc to pay out dividends for 2020
Uzbekistan cancels number of restrictions introduced to counter spread of COVID-19
Volume of overdue loans up in Georgia
Kazakhstan Development Bank eyes supporting several modernization projects in 2021
Iranian Energy Exchange announces products to be on sale on January 27
Azerbaijan International Telecom company signs contract to buy software
In upward revision, IMF sees Turkey growing at 6% in 2021
Kyrgyzstan's Institute of Business Ombudsman, Economy Ministry sign memorandum of cooperation
Georgian Foreign Minister tests positive for Covid-19
Iran's foreign trade balance hits $59 billion in 10 months
Cities, villages to be established in liberated areas should be based on concept of “smart-city”, “smart-village" - President of Azerbaijan
War has shown many what Azerbaijan's potential is - President Aliyev
Internet in Azerbaijan is free – there is no censorship, no restrictions - President Aliyev
Reforms going on everywhere, reforms are inevitable, country faces new challenges - President of Azerbaijan
Government agencies, ministries and state-owned companies must follow my instructions to end - President Aliyev
We must always build our policy in such way that Azerbaijan's military potential and defense capabilities are always at high level - President Aliyev
We must create conditions for our talented young people to work in Azerbaijan - President Aliyev
When we launched satellites into orbit, some people asked why this was necessary - President Aliyev
Azerbaijan plays central role in region in field of communications and high technologies - President Aliyev
Heydar Aliyev International Airport in Baku is five-star airport - President of Azerbaijan
PACE rejects Armenia’s request on progress of monitoring procedure
We have largest fleet in Caspian Sea - President of Azerbaijan
As result of measures taken, Azerbaijan today is one of world's leading countries in field of transport - President Aliyev
Russia's Charge d'Affaires in Azerbaijan summoned to Azerbaijani MFA
Azerbaijan's Ecology Ministry talks development of entrepreneurship
FAO to start developing agriculture in liberated Azerbaijani lands soon
Demining of Azerbaijan's liberated lands continues (VIDEO)
Russia to directly participate in efforts to unblock economic, transport ties in S. Caucasus - Lavrov
Economy minister discloses share of non-oil sector in Azerbaijan's GDP
Azerbaijan starts preparation work on laying gas lines to liberated lands
Azerbaijan shows footage from Gubadly district's Damirchilar village (PHOTO/VIDEO)
Iran welcomes interaction with Saudi Arabia
Iran can increase oil and gas extraction - National Iranian Oil Company
Bahar Azadi gold coin price continues to fall in Iran
Oxford Institute for Energy Research names ways to improve oil, gas sector in Turkmenistan
Azerbaijani, Turkish FMs discuss regional co-op issues
Bulk of Kazakhstan’s imports of green vegetables falls on Uzbekistan
Georgia sees decline in COVID-19 cases since imposing restrictions
Uzbekistan, Kazakhstan plan to start construction of high-speed railroad
Ukrainian air company returns on Georgia's aviation market
Ministry discloses number of mines neutralized by Azerbaijani, Russian sappers in Karabakh (VIDEO)
Uzbekistan’s GDP per capita down in 2020
Oxford Institute for Energy Research talks options for Turkmen gas sector's development
Uzbekneftegaz reveals number of investment projects on increasing production efficiency
Kazakhstan’s QAZAQ AIR airline launching flights on one more route
Georgian aviation plant working on creation of military drone
Uzbek-Korean JV announces tender for installation and assembly services
GGF deepens its engagement with Georgian financial institutions
Number of passengers using railway transport in Azerbaijan increasing after eased quarantine
Kazakhstan to continue decreasing import dependence in food industry
Azerbaijani business entities modernize digital financial services amid COVID-19 pandemic
Lending to Azerbaijan’s Nakhchivan Autonomous Republic increases
Iranian trucks start cargo transportation to Azerbaijan without transshipment
Azerbaijan confirms 551 more COVID-19 recoveries
Kazakhstan taking targeted measures to enhance investment competitiveness
Iran and Russia sign memorandum of cooperation on cybersecurity
Azerbaijan reveals volume of electricity generation from renewable energy sources in 2020
Russia and Iran open to discuss Karabakh issue
Number of bank accounts in Azerbaijan’s Nakhchivan increased in 2020
Microsoft earnings in spotlight for signs of business recovery, Xbox growth
French engineering company involved in replacing Uzbekistan’s standards in electricity field
UNDP implements new grant program in Georgia
Azerbaijan's former minister of transport appointed to new position - Decree
Company of Turkmenistan’s SC announces volume of oil produced last year
Iran's South Pars gas production increases
Johnson & Johnson promises vaccine data "soon"
Azerbaijan discloses number of servicemen of engineering troops martyred in second Karabakh war
Kazakhstan to continue work on fishing industry development
Iran plans to use domestic ship building capacities
Iranian minister suggests parliament merge Energy and Oil Ministries into one
Azerbaijani delegation to participate in Iran Plast exhibition in Tehran
Clearing of mines, unexploded ordnance continuing in Azerbaijan's liberated Fuzuli district (PHOTO/VİDEO)
Iran's Rouhani opposes any changes to budget bill
"Great Responsibility" At Republic Day Parade: Bangladesh Contingent Chief
Direct air routes between Cambodia, India on the cards
`Vaccine Maitri' helps strengthen bilateral ties with Myanmar, says Indian envoy
COVID-19 vaccine developer CureVac plans five million share sale
EU exec to propose vaccine export registration by end of week
Azerbaijani ministry talks on nanotechnological innovations
Meeting of the Foreign Ministers of Russia and Iran being held
Rates for some excisable goods increasing in Azerbaijan
All tobacco products may be included in list of excisable goods in Azerbaijan
Tax exemptions on wheat imports, sales may be extended in Azerbaijan
Colonel talks restored and built roads in liberated lands of Azerbaijan
FIG cancels holding Artistic Gymnastics World Cup in Azerbaijan’s Baku
Thousands of hectares of cultivatable lands demined in Azerbaijan's liberated districts
Azerbaijani banks buy more foreign currency at CBA's auction
Iran reveals COVID-19 data for January 26
Sale of gold, silver in Azerbaijan may become tax-free
Azerbaijan Airlines increases flights number on Baku-Nakhchivan route
Access Bank eyes creating bank branches in Azerbaijani lands liberated from occupation
Azerbaijan's Nakhchivan discloses revenues from 2020 agricultural export
Azerbaijani Nakhchivan's revenues from communication services rise
President Aliyev receives French Minister of State attached to Minister for Europe and Foreign Affairs (PHOTO)
Uzbekistan’s largest flow of tourists falls on Kyrgyzstan
Georgia sees increase in Domestic Producer Price Index for Industrial Products
Armenian Armed Forces blew up bridges, destroyed roads retreating during second Karabakh War
All news