The Probability of US recession just gone from 60% to 70% over next 12 months....

 

https://twitter.com/Steen_Jakobsen/status/969535037074001922

 

 

 

 

In my 30+ years of trading & economics I have NEVER seen more wrong assumptions and premises than the ones presented by the US Administration on trade.

 

·         Peter Navarro is single handed the biggest  risk to growth in this cycle ….

·         Tariffs will increase the prices for US consumers – effectively it's a tax on consumption – (Something like 40% of all goods sold @ Wal-Mart is China or Asia produced)….

·         Stop trading will reduce deficit for the US but it will mean lower growth – the US voters will go from spending money they don't have (current account deficits) to underspending  to adjust to both higher prices and less growth.

 

This is a NEW AREA in trade and unfortunately an extension of a slow-down in cross country trade witness last decade..

 

IMPACT:

 

US dollar will weaken further – I remain structurally, tactically very negative on US Dollar.

US FI will come down in yield – growth will soon show its late cycle rather than a new cyclw.

Inflation – topline – not structural inflation will remain high…

 

We are risking STAG-FLATION Light…in the US and recession like growth as we enter 2019

 

US Credit Impuse vs. Final Domestic Demand

 

Source: Saxo Bank – Chris Dembik

 

 

This is my "favorite" indicator of inflation – structural – the NET DEMAND on banks (velocity of money) vs. US Credit Impulse

 

 

 

 

 

TACTICAL:

 

Very long JPY – only true "safe haven currency left" – Short US vs. ZAR, GBP, JPY

Starting to go long US FI again..

Stock market feels like 2007/08 & 2000 but lets see the present attack on 100 SMA confirmed:

 

NQ Future @ 6487-00

ES Future @ 2665.00  (Breaking while I write this)

DAX – already significantly below!

SHCOMP – already significantly below!

 

 

 

 

 

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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