Macro Alert: Crude to test 85/88 $ WTI?

It's not my role to run Saxo's official view on Crude. That job I leave to my expert Ole S. Hansen, who by the way is doing an excellent job – if interested he keeps his commodity client very smartly informed on: http://www.tradingfloor.com/traders/ole-hansen

 

…but….as part of our JABA model – our predictive economics model, energy is key component. This is how we see the rest of 2014 using our data:

 

 

This is "brave" call but when you consider the speculative size of the market – you get the "potential" on the downside. Furthermore as our model have said all along:

 

 

·         Asia is driving global growth down led by China (see our Q1 Quarterlook) – due to the desperate need for rebalancing away from topline growth

·         Q1 and Q2 will be disappointing on growth. No, it's not the weather – it's the economy stupid! – this will drive demand down..

·         Deflation will be fought – wrongly- but policy makers over the summer, exactly at a time, where our JABA models shows us its turning up again. Fed and policy makers despite their 1000s of PhD's remains focus on linear analysis in real time, despite the fact that the economy LEADS by three month – or put differently. The weaker data right now will create policy response in three months… deny facts, deny facts and deny facts are the first three rule of central banking…

 

The one risk remains escalation of geopolitical risk but supply from LatAM, Africa and US/Canada/Mexico will flow more richly, Ole S Hansen even tells me that the supply/demand function should dictate lower oil prices.

 

We are long APR-16, 95.00 strike puts (0.55 cents vs. price of 1.25 now)

 

Safe travels,

 

Steen

 

 

Med venlig hilsen  |  Best regards
Steen Jakobsen  |  Chief Investment Officer

 

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

 

Research: http://www.tradingfloor.com/traders/steen-jakobsen

Please visit our website at www.saxobank.com

 

This email may contain confidential and/or privileged information.
If you are not the intended recipient (or have received this email
by mistake), please notify the sender immediately and destroy this
email. Any unauthorised copying, disclosure or distribution of the
material in this email is strictly prohibited.

Email transmission security and error-free status cannot be guaranteed
as information could be intercepted, corrupted, destroyed, delayed,
incomplete, or contain viruses. The sender therefore does not accept
liability for any errors or omissions in the contents of this message
which may arise as a result of email transmission.