Saxo Bank Q3 Outlook 2012: Decision time – A real change or more denial?

Real action is needed – and will be triggered by the current lack of action

Copenhagen, 24th July 2012/PRNewswire/ — Saxo Bank, the online trading and investment specialist, today releases their Q3 outlook that views Europe as insolvent, in a phase of denial of the actual problems and without a credible path forward. The Bank’s analysts also predict that growth in China will decrease to 6.5 percent, marking the next quarter as the low point for China and for world growth in general.

For the current crisis, Saxo Bank operates with a three-phase model that includes; Denial (which prompts policy-makers and central bankers to rely on quantitative easing and financial stimulus); Protest (where the public votes new governments which still fail to address the real problems) and; Mandate for Change (which forces policy-makers to take real action). According to the Bank, the EU has remained embedded in the first and second phases, having yet to arrive at a mandate for change. Saxo Bank predicts that this will come most likely before the end of this year, however it will be a result of a break-down of the system rather than enlightenment.

Saxo Bank also predicts that the current combination of fiscal stimulus, central bank balance sheet expansion and lower interest rates may lead to the realisation that this policy will not work, paving the way for a new political agenda with focuses on the strongest side of the economy, the micro-economy.

Peter Garnry, Equity Strategist at Saxo Bank, comments: "A real mandate for change should be a good thing, as it would likely bring about a strong and sustainable recovery from the current low point. The main participants in the current crisis – Asia, Europe and the US – continue show a complete lack of action which ultimately increases the likelihood of this happening as the doubling down on extend-and-pretend will soon exhaust itself.

"From a macro perspective, this crisis has a simple solution: Give the micro-economy incentives to invest and produce and recognise that a growth plan needs to be backed by security, educational opportunities, a fair healthcare system, liquid capital markets and reasonable taxes. Right now, policy makers are doing the opposite: increasing regulation, taxes, and austerity and reducing spending on healthcare and education. I hope that the mandate for change arrives soon for our beleaguered economies and societies, because delaying it would be the ultimate form of denial."

The full Q3 2012 Outlook includes the following analyses:

  • Equities: The most unloved asset class
  • FX: Back to the strong USD future
  • Monetary Policy: Major Central Banks
  • Bonds: Nordic yields reflect sheer madness
  • FX Options: Buying opportunity?
  • Asia: Will Australia or China ever reach the denial stage?
  • Commodities: Battle between weather, geo-politics and slowing growth

Please visit our Quarterly Outlook page or download the Q3 Outlook 2012 here

About Saxo Bank

Saxo Bank is a leading online trading and investment specialist. A fully licensed and regulated European bank, Saxo Bank enables private investors and institutional clients to trade FX, CFDs, ETFs, Stocks, Futures, Options and other derivatives via three specialised and fully integrated trading platforms; the browser-based SaxoWebTrader, the downloadable SaxoTrader and the SaxoMobileTrader application available in over 20 languages. Saxo Bank also offers professional portfolio and fund management through Saxo Asset Management who accommodates high-net worth private clients and institutional investors and provides banking services and advice to retail clients through Saxo Privatbank. The Saxo Bank Group is headquartered in Copenhagen with offices throughout Europe, Asia, Middle East, Latin America and Australia.

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Kasper Elbjørn
Head of Group Public Relations
Saxo Bank