Macro notes EU Commission report (total waste of time), PLN, ZAR, AUD new lows, Yield in stocks now LOWER than in Fixed income, and JGB sending warning signal

EU Commission report today:

 

Expect: Nothing – this is futile exercise of pretend-and-extend. Spain, Netherland and France will get another two years to adjust their deficit below 3.0%

 

Slovonia will NOT get penalized due to political reasons. How can EU Commission name "small country" and not big ones? Clearly not.

 

The Six Pact (Five regulation and one directive) is good in concept. Having two major channels: A preventive and a corrective side.

 

The EU Summit of 2011 instituted this change and the main new thing being the countries, the political master of EU, needs to reverse with qualified majority the decisions taken, but…. No as with anything in the EU – it's all talk and no action.

 

If Spain failure to meet 3% for now fifth year running is not enough to get them under Excessive Deficit Procedure what is?

 

The EU and ECB always thinks recovery is six month away despite the logic of Bermuda Economic dictates things are getting worse quarter by quarter.

 

S&P Dividend yield is now below 1o Y US rates (1.93% vs. 2.19%)

 

 

 

Why own stocks at lofty PE of 18 when you can get better yield and a "free put option via fixed income" – I will increase my FI exposure here in classic mean-revertion trade.

 

Super cycle and growth hits South Africa, Austalia and Poland

 

All above has been success stories through the crisis now… they all have much weaker currencies. EURPLN this morning followed USDZAR and AUDUSD weaker…breaking 4.2100:

 

 

JPY sending warning signal – will USDJPY reverse soon

 

 

 

 

Med venlig hilsen  |  Best regards
Steen Jakobsen  |  Chief Economist

 

Saxo Bank A/S  |  Philip Heymans Allé 15  |  DK-2900 Hellerup
Phone: +45 39 77 40 00  |  Direct: +45 39 77 62 23  |  Mobile: +45 51 54 50 00

 

Please visit our website at www.saxobank.com

 

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