Stress Indicators - What stress?

 

Crisis update: Russia CDS slight down but Greek yield continues higher – although a far cry from "Crisis 1.0" in 2011/2012.

 

 

Greek stocks down 33% YTD vs. 3.0% for STOXX50.

 

 

Interesting divergence between the US and World Markets – US making new highs but Global markets is considerable below prior highs (Late summer)…also stuck below 50 SMA, but January and new money is soon arriving. Listening to CNBC US show it seems its only a matter of how high the market goes next year J

 

 

 

Saxo's Euro growth predictor – new low (meaning biggest stimulus in years!) – the lead/lag is NINE month – i.e prepare for July/September European rebound in growth…

 

This is THE problem for markets and FED in 2015: Inflation and its "leading indicators" continues to make new lows……Fed's dual mandate is under attack from dis-inflation now…..

 

Meanwhile in Central Bank-land – Balances are shrinking not rising if you exclude BOJ – Again – The world "perceives" marginal cost of capital as low to lower, while reality  is high to higher…..

 

 

 

Since April US Real rates risen from -1.50 to -0.80 – or 70 bps rise – Hmm… but that's fact – who needs facts?

 

Another fact – Inbound containers is for some reason falling hard in the US after steep rise in Q2 and Q3 – indication Q4 is going to be tough?

 

Finally,

 

A full PDF attached. I wish you all a Great Happy New Year and I got feeling 2015 is getting really exciting if you like volatility.

 

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

 

Putin's Annual Outlook speech - v. interesting....

Putin classic... he is making seriously good initiatives (I think he has been listening to my speeches in Moscow!) on...

SME focus
Start up tax benefits..
Tax amnesty ....
Better tax regime..

But then...

Foreign policy comparing opponents to Hitler....
Crimea Temple mountain for Russia
"respects" Ukraine sovereignity

Call on TAX on fx... No doubt we are getting close to CAPITAL restrictions in Russia but v. interesting speech..

LIVE FEED: http://rt.com/on-air/

Subject: (BFW) *PUTIN CALLS FOR `HARSH' MEASURES TO FIGHT RUBLE SPECULATO

(BFW) *PUTIN CALLS FOR `HARSH' MEASURES TO FIGHT RUBLE SPECULATO RS

+------------------------------------------------------------------------------+

BFW 12/04 09:32 Russia Won't Opt for Isolation, Putin Says in Annual Address

BFW 12/04 09:27 Putin Says U.S., EU Support for Ukraine's 'Coup' Was Cynical

BFW 12/04 09:13 Putin Says Russia Showed It's Able to Defend Compatriots This Yr

BFW 12/04 09:44 *PUTIN CALLS FOR `HARSH' MEASURES TO FIGHT RUBLE SPECULATORS

BFW 12/04 09:43 *PUTIN CALLS ON CENTRAL BANK, GOVT TO COORDINATE CLOSELY ON RUB

BN 12/04 09:42 *PUTIN CALLS TO DECREASE INFLATION TO 4% IN MID-TERM

BN 12/04 09:42 *PUTIN CALLS FOR ECONOMIC GROWTH ABOVE WORLD AVG IN 3-4 YRS

BN 12/04 09:39 *RUSSIA SHOULD TURN `OFFSHORE' PAGE IN HISTORY, PUTIN SAYS BFW 12/04 09:38 *PUTIN CALLS FOR FULL AMNESTY FOR REPATRIATING CAPITAL

BN 12/04 09:35 *PUTIN CALLS FOR FULL AMNESTY FOR CAPITAL RETURNING TO RUSSIA

BN 12/04 09:34 *PUTIN CALLS TO FIX TAX REGIME FOR NEXT 4 YRS

BN 12/04 09:33 *PUTIN SAYS BUSINESS NEEDS MORE FREEDOM FROM BUREAUCRACY

BN 12/04 09:30 *PUTIN: SANCTIONS ARE STIMULUS FOR RUSSIA TO REACH GOALS FASTER

BN 12/04 09:28 *RUSSIA REMAINS OPEN TO INTL INVESTORS, COOPERATION: PUTIN

BN 12/04 09:27 *RUSSIA DOESN'T PLAN TO CUT OFF RELATIONS W/ U.S., EU: PUTIN

12/04 09:26 *RUSSIA WON'T OPT FOR ISOLATION, PUTIN SAYS

BN 12/04 09:25 *RUSSIA WON'T BE PULLED INTO ARMS RACE, PUTIN SAYS

BN 12/04 09:25 *NO ONE WILL GAIN MILITARY SUPERIORITY OVER RUSSIA: PUTIN

BN 12/04 09:24 *PUTIN SAYS OPPONENTS OF RUSSIA WILL FAIL LIKE HITLER DID

BN 12/04 09:21 *PUTIN: U.S., EU SANCTIONS AIMED AT CURTAILING RUSSIAN ECONOMY

BN 12/04 09:20 *PUTIN: U.S., EU WOULD HAVE SANCTIONED RUSSIA W/OUT UKRAINE

BN 12/04 09:18 *RUSSIA PROVIDED $32.5-$33.5B TO AID UKRAINE ECONOMY, PUTIN SAYS

BN 12/04 09:16 *U.S. INFLUENCES RUSSIA'S RELATIONS WITH NEIGHBORS:

PUTIN BFW 12/04 09:15 *PUTIN SAYS U.S., EU SUPPORT FOR UKRAINE 'COUP' WAS CYNICAL

BN 12/04 09:15 *PUTIN SAYS U.S., EU SUPPORT FOR UKRAINE `COUP' WAS CYNICAL

BN 12/04 09:13 *RUSSIA RESPECTS ALL COUNTRIES' SOVEREIGNTY, INCL UKRAINE: PUTIN

BN 12/04 09:12 *CRIMEA IS RUSSIA'S TEMPLE MOUNT, PUTIN SAYS

BN 12/04 09:11 *CRIMEA HAS SACRED MEANING FOR RUSSIA, PUTIN SAYS

BN 12/04 09:10 *CRIMEA IS `SPIRITUAL' SOURCE OF RUSSIA'S STATEHOOD: PUTIN

BN 12/04 09:10 *CRIMEA IS STRATEGICALLY IMPORTANT FOR RUSSIA: PUTIN

BN 12/04 09:08 *PUTIN: RUSSIA SHOWED ABLE TO DEFEND COMPATRIOTS THIS YR

BN 12/04 09:06 *RUSSIAN PRESIDENT VLADIMIR PUTIN STARTS ANNUAL ADDRESS


+------------------------------------------------------------------------------+

Putin Calls for Full Amnesty for Repatriating Capital to Russia
2014-12-04 09:41:57.569 GMT


By Olga Tanas
Dec. 4 (Bloomberg) -- Capital being repatriated to Russia shouldn't be subject to claims by tax and security authorities, President Vladimir Putin says in annual speech to parliament, officials in Kremlin.
* Putin offers one-time capital amnesty, proposes 4-year
moratorium on increasing tax burden


Link to Company News:{4458Z RU <Equity> CN <GO>}

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Macro Digest: ECB is about to do biggest policy mistake in its history & FED is 1-1 on dual mandate

FOMC has a dual mandate: Employment & inflation. On employment they seem to be doing well, on the inflation less so:

This is non-farm with 12-mth average – US has created just north of 200K job on average in this "non-lift-off" business cycle, but looking at employment to population the US has gone NOWHERE since 2010. Call it a success, but then on inflation:

 

 

 

Whether measured and projected against 5Y5Y forward or 5Yr break-even the incoming "alert" is that US inflation will come off further, and hence far away from its intended 2% PCE target. The actual mandate reads:

 

 

 

So….. why this e-mail? Well similar to Europe, the 2015 projection of expected return will be driven by whether market takes the "success" of the labor market as being more significant than the "failure" on inflation / dis-inflation. As stated in my latest Steen's Chronicle I think it's the dis-inflation/undershooting of inflation which will be the main driver, and as such negate the positive input to disposable income from lower energy….in other words inflation expectations will bottom in Q1 EXACTLY when ECB is most likely to ignite their too late, too desperate move to full QE.

 

I firmly believe European growth will come back in H2-2015 and strongly so: A combination of easier monetary policy, lower energy, lower EUR will add up to significant boost to spending and investments 9-month from now, co-inciding with weaker stock markets as money will be moved from non-productive paper investment in the 20% of economy into the 80% (SME's) ending in capacity and industrialization of mainly PIIGS and Eastern Europe. The biggest play in 2015 will be finding the entry point for long Emerging Europe: Polen, Bulgaria, Romania, Hungary and Czech. Fact is production is coming back to the mentioned names as seen here in difference between German and Hungarian Industrial Production. Micro prevails – again!

 

 

 

This is how the JABA model sees 2015 – low in Q1/Q2 follow by 9-month rule impulse from low rates….

 

 

Note the LOW in early 2015 is REPLACED by recovery in H2. The ECB is about to make the biggest timing and policy mistake in its history – instead they should continue to do what they do best: Nothing….keep talking doing nothing.. the economy heals through supply side and micro, not macro.

 

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
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incomplete, or contain viruses. The sender therefore does not accept
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Macro: Stress Indicators - Sign of ?

It's been a while since I ran the Stress Indicator batch, which was borne under the financial crisis. It's remarkable and true reflection on how perverted our monetary system has become, but look for yourself here is few interesting chart from the selection:

 

US Real Rates: Let's talk about hike in US rates – It's alrady happened (Please don't tell the stock market) Result: 65 bps higher than beginning of the year.

 

Europe vs. US.

 

I was pretty much alone in calling for near German recession this time last year, and now I am it seems again on the other side: I think Europe will surprise to upside in 2015, mainly in H2-2015, and I think US will disappoint…again its already happening (Please don't tell EURUSD & Stock market). I have seen "considerable" improvement in Club Med + Eastern Europe's competititveness on my travels in November. Germany and France will big losers, Rest of Europe will pull ahead next year as Germany finally lose its net gain from introducing the EURO.

 

 

Japan CDS – maybe the most important chart this morning: How ANYONE can believe that exporting a countries problem through its currency to other countries will solve anything is a mystery to me! Japan is diplomatically put "borrowing" growth from a world growth which is tanking. No one can afford someone else's growth that was 2014 challenge, 2015 will be final chapter in currency manipulation and it will end in years like in 1997/98:

 

 

Biggest USDJPY moves:

 

 

Gasoline prices collapsing. We know this is key ingredients of consumer surveys: I.e: explains why SURVEY data better than real data in the US:

 

 

Europe will see low in Q1/Q2 – this has been reliable indicator:

 

This week sees nine central banks calling for lower yields – deflation now the new issue for all involved. Ironic as less than 2Q ago everyone was in denial. The end of macro policy is fortunately close……

 

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