Saxo Bank Publishes its Investment Outlook for Q3 2014

Copenhagen, Denmark (ots/PRNewswire) - As we enter the third quarter,
despite general complacency, investors
continue to face bleak macro imbalances that need correcting, while
energy's shadow looms large as the conflict in Iraq rages.

Saxo Bank [http://www.saxobank.com/?noredirect=true ], the online
multi-asset trading and investment specialist, has published its
third quarterly insight for 2014 looking across the macroeconomic
environment and individual asset classes.

Saxo Bank predicts a relatively positive third quarter. The Bank
remains positive that US growth will return after a primarily
weather-related disastrous Q1 (-2.9%). It also sees stocks
outperforming bonds and forecasts that further USD weakness will
likely be limited. Volatility should pick up from record lows as we
near the end of the Fed's QE3. Finally, the bank believes oil will
remain elevated but within a fixed range.

Nonetheless, Steen Jakobsen, Chief Economist, says that a permanent
imbalance in the market whereby only 20% of the economy - listed
companies and banks - receives 100% of the available credit and
political capital, is suffocating the remaining 80%, namely the SMEs.
Stock market valuations appear 'reasonable', but only because of the
resultant lower cost of capital for the select 20%, enforced further
by a pervasive belief in QE and a widespread preference for investing
in equities.

Further threats to the anticipated recovery include China's property
market and its high refinancing needs, growth in France or Germany
plummeting thanks to lower exports to Asia and continued elevated
energy prices. Higher energy prices have a negative impact on
consumption by contributing to a broader erosion of consumers'
disposable income.

Jakobsen commented, "Without a transfer of money from the 20% back
into the 80%, we will face a decade of 'Japanisation'. A correction
of this imbalance is essential to reset the world economy. The
consensus that a little bit of growth is enough is worrying, and
ignores the bigger picture.

"In January the IMF, the World Bank, ECB, FED and most bank
economists were falling over themselves to proclaim 2014 as the year
of recovery, but as we enter H2, Europe looks vulnerable, budget
deficits are rising and political backroom deals are being struck to
buy more time. The US needs 2.9% annualised growth in Q2 to just
register zero growth for the first half of 2014 - and Asia continues
to believe it can engineer a "soft landing", something I see as
equivalent to an attempt to turning a super tanker around in a
river."

Equities

Peter Garnry, Head of Equity Strategy, underlines the continuing
importance of holding equities to see any meaningful capital growth.
The relative repricing between equities and bonds has continued in
2014 as total return in equities relative to bonds remains below the
equity risk premium line since 1995. He commented: "Equities are
still the most attractive asset class, they are now fairly valued and
are by no means in bubble territory."

FX

There has been a considerable jump in oil prices on destabilisation
in Iraq, but this jump in percentage terms is still relatively
modest. The most negatively affected currencies in the event of a
further surge higher in oil prices are those that both rely heavily
on energy imports and are the most energy-intensive in terms of units
of GDP. India, South Korea and South Africa appear especially at risk
from energy intensity of GDP, while Turkey, Poland and Hungary are
emerging market currencies extremely reliant on imports for the vast
majority of their consumption.

John J. Hardy, Head of FX Strategy, added: "We have just emerged from
a period of unprecedented calm in oil prices, so the move will likely
have to stretch much further for us to witness wider fall-out and
spill-over into currencies."

Saxo Bank's top FX trading themes for Q3 2014 include short EURJPY,
short AUD vs. USD and CAD, long NOKSEK on dips, and long MXNTRY.

Commodities

Despite the recent outperformance of commodities, conflict in Iraq is
casting an ominous shadow over the global oil supply. If the march of
Sunni militants cannot be halted, an elevated oil price is inevitable
heading towards 2015.

The energy market must deal with the possibility of global crude oil
supply exceeding demand for the first time in recent memory, thanks
in part to the rise in non-OPEC production, and the average price of
Brent crude is likely to move lower towards USD 105/barrel. After
2013 saw gold's first annual loss in 13 years, Saxo Bank is
cautiously optimistic for its prospects later in 2014 after averaging
1,225 USD/oz during the first quarter.

Ole S. Hansen, Head of Commodity Strategy, added: "Iraq's targets now
look unreachable which raises even further the pressure on Saudi
Arabia to increase production and avoid oil markets from becoming too
tight."

Link to report:
https://www.tradingfloor.com/publications/quarterly-outlook

About Saxo Bank

Saxo Bank is a leading online trading [http://www.saxobank.com/forex
?csref=b1744_Link_boilerplate_pressrelease ] 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 [http://dk.saxobank.com/lp/webtraderdemo?csref=b1748_L
ink_boilerplate_pressrelease_danish ] , the downloadable SaxoTrader
[http://www.saxobank.com/demo-account?csref=b1746_Link_boilerplate_pr
essrelease ] and the SaxoMobileTrader
[http://www.saxobank.com/trading-platforms/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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