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Vendredi 4 Mai 2012

A crisis has been avoided for now but policies continue to inflict harm

Saxo Bank, the online trading and investment specialist, believes a reasonably positive economic momentum barring a geopolitical crisis is likely during Q2 2012. The eventual return of QE seems inevitable as central banks try to keep the crisis at bay and the compounding of policy errors failing to address the solvency problem and growing social and geo-political friction will potentially lead to an explosive outcome.

According to the Bank's analysts, Europe will continue on the path of flat growth despite the Eurozone having entered recession at the tail-end of last year. However the rebound in economic growth in the US will eventually spill over into Europe, and Asia will continue to aid its growth through imports. If the recovery in the US fails to provide enough jobs momentum a return of QE some time in Q3 may be a possibility. In Asia, the critical question is China, as losses on investments continue to accumulate and eventually need to be realised.

Also, Saxo Bank predicts that commodities will face a bumpy road ahead as geo-politics have intensified the unpredictable nature of oil markets. Grain prices risk rising sharply and gold is expected to consolidate during the early part of Q2. Volatility will return to the equity market in Q2 as stimulus is withdrawn and safer, dividend paying stocks will outperform. The Australian dollar is the least favourite of the major currencies with the most to lose relative to the Chinese landing and its current valuation and the Chinese Yuan could also lose steam as China's terms of trade shift and on reduced capital inflows.

Steen Jakobsen, Chief Economist at Saxo Bank, comments: "The financial experiment initiated by policy makers post Lehman is now in its fourth year with very little to show for it.

"The world central banks are in a race to print the maximum money possible in order to weaken its currencies vis-a-vis the other struggling countries, a beggar thy neighbor premise as a solution and ultimately the market will have to start pricing in that we have seen the low in interest rates as unconventional measures disappear and get replaced by low rates and weak growth as long as the eye can see."

The full Q2 2012 Outlook includes the following analyses:
- Equities
- FX Outlook
- Monetary Policy: Central Banks
- Asia Outlook: China - a different (re-)balancing act
- Commodity Outlook: Oil markets looking for right balance

Please visit our Quarterly Outlook page or download the Q2 Outlook 2012 (PDF 28 pages):

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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