Quick note on Monetary easing hysteria ...

We came very long and hard into Q4 long EM and risk, but now things how run its course. This week we had the main move on ECB's further easing and now also a China RRR cut.

 

Remember the majority(80%) of impact from QE and QE like changes comes on "announcement" – this according to staff paper from Bank of England.

 

Furthermore the market is hysterically on "how positive…" this is for the market – many of the same voices calling more pain on downside t- minus two month …..

 

But…. The main point: QE, negative yield, RRR cut will do ZERO difference to a market stuck in a permanent down-ward spiral of more debt, more printing of money, and less and less growth and productivity.

 

The theory in simple terms for central banks at zero bound and zero forever growth is to make sure is that the stock market goes up in order to balance out the massive debt. Yes it's that simple…

 

The last two days action have made US Dollar 2% dearer in DXY terms – and the one thing we do know is a stronger USD is the last things this market needs – furthermore any directional change in US dollar – will work opposite for asset risk on/off inside one week…in other words… caution and neutral market stance is my view from here…even into Q4 manipulation "always higher" markets.

 

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.