21-04-23

Saxo Bank A/SOutrageous Predictions

2014

2

EU Commission introduces 5-10% wealth tax proposal

“Many bad decisions will be made in the name of inequality and deflation”

3

Anti-EU alliance will become largest group in parliament

“May 22-24th EU Parliament Election becomes a cry for less Europe”

4

Deflationary pressure is a new name of the game

Barclays have estimated the chances of European deflation as 50/50 chance using inflation linked products, but being more subjective we will say that next three to six month almost certainly will push more and more European nations close to zero inflation. Greece and Ireland already in deflation, Spain, Sweden, Denmark very close, and even Germans saw inflation decline from 1.4 to 1.2.

HSBC Global Research, 6 December 2013 piece: ‘Lacking demand’ have two great charts to illustrate this point - through looking at the GDP growth and the Investment-to-GDP ratio. Good growth is linear correlation indicating investment return is positve and creating growth. Bad growth is rising Investment to GDP ratio while growth trails.... 

there is an ETF which tracks the deflation risk called:

Powershares DB US Deflation.

Asia experiences lower growth as reducing the shadow economy now takes centre stage and the current account deficit nations are all looking for weaker currencies, lower import and lower growth.

5

Germany in recession?

“The German miracle turned out to be a mirage…..”

6

Saxo Banks ‘Black Swan’ Trades for OP-2014

#1: Germany in recession•Buy ComStage Commerxbank ETF (5x60:xetr @ 128.62) or buy bunds

#2: US 10 Yr. to retest all-time low•Buy IEF:arcx @ 100.65 (Target: 110)

#3: US Housing market tanks in 2014 => QE 100% mortgage•Sell Vanguard REIT CFD (VNQ:arcx) @ 66.00$)

#4: French Luxury is vulnerable•Sell equal weight basket of Hermes(HRMS:xpar)@ 250.65€, Louis Vuitton(MC:xpar)@129.65€ and Sotheby’s(BID:xnys)@ 51.91$ (Target: -50%)

#5: Fragile Five weakens 25%•Sell equal weight basket of fragile five vs. USD (BRL: 2.3250), (ZAR: 10.33), IDR(11974), INR(61.14) and TRY(2.0330)

7

Stock picking is where the capital goes..

Split of GE CapitalIncreased revenues from the serivicesToo much pessimism in 2013Growth potential of 14.1%

2013 proved very well for equities. Our view for 2014 remain the same for the companies with strong fundaments. Tapering and overall reduction of support from CBs is already priced in. Unless unexpected shocks appear, we remain positive on the US and EU stocks.

The reccord number of orders in 2013Expected margins improvementToo much pessimism in 2013Growt potenial of 7.3% Very stable growth

Strong sales figures from H2 2013Solid number of Patents registrationsGrowt potenial of 22.9%

Still very low valuationReplacement of CEO = new potentialSolid growth in 2013Growt potenial of 28.9%

French banks should kick backBNP is the best of themGood earnings potential Growt potenial of 8.3%

8

Tech’s ‘Fat Five’ may wake up to a nasty hangover in 2014

“The US information technology sector is trading about 15% below the current S&P 500 valuation, however, a small group of technology stocks trade at a huge premium of about 700 percent above market valuation, almost defying the “Newtonian laws” of financial markets”

9

Commodities under pressure due to a high production

Oil needs to be cheaper•High inventories•Mexico, Lybia and Iran•Shale gas

Metals in a tight range•Precious Metals •Copper up 13%+ in 2013•Will China & India continue their imports?

Agriculture negative momentum •HFs don’t like them in 2014•High inventories •Flexible Production in place•Hard times for Grains•Good times for meet & coffee?

10

Brent crude may drop to USD 80/barrel

“The global market will be awash in oil”

Thank you!

21-04-23