Macro Charts: SME spreads - Target for S&P 1814/16?

 

An interesting chart from IMF/Martin Wolf: How to better than the new mediocre

 

The chart confirms my theory that in 80/20 model – the 20% of the economy: The big business, listed companies and banks gets 95% of all credit and QE supports which makes their funding cost 200-300 bps lower than normal business cycle (and explains high P/E and valuations in stock markets) . Meanwhile the 80% (& 100% of all new jobs created) in the SME have funding costs which is 300-600 bps higher than normal business cycle.

 

Want to solve lack of jobs and productivity? Stop supporting the 20% and do nothing else for the next five years.(Last time Fed expanded the balance sheet like now was in the 1940s – the rotting only stop when they stopped QE…)

 

Doing nothing is the only viable solution to this crisis, but our politicians can't run on such a program….. Activating the SME is THE solution.

 

 

Maybe the "target" for S&P is 1810/20 1^st ?  When? Mid-November?

 

 

 

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.