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Outrageous Predictions 2013

Outrageous Predictions 2013

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Published by nstenberg
Saxo Banks Outrageous Predictions for 2013
Saxo Banks Outrageous Predictions for 2013

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Published by: nstenberg on Dec 19, 2012
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12/19/2012

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Deceme 2012
Ouageous Pedicions
 
- OutrageOus PredictiOns 2013 -- OutrageOus PredictiOns 2013 -
2013: extreme complacency
this ’s ougus pdiis   gi  si f i giv vs,  f whih 
chane the nancia andscape and in some cases even the poitica stats o.It is aways temptin when makin pedictions to ca fo adica chanes to the maket andscape, bt havinpodced this pbication now fo ove 10 yeas, we hope the ea vae on offe to eades is to identify majoevents and isks that seem ot of the box and “otaeos”, bt ae actay fa moe pobabe than appeciated
 
and cod have sinicant (mosty vey neative) conseences on investment etns in the New Yea.O biest concen hee on the csp of 2013 is the cent odd combination of exteme com
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pacency abot the isks pesented by extend-and-petend maco poicy makin and apidyacceeatin socia tensions that cod theaten poitica and eventay nancia maket stabiity. O ecentcas fo a foest e-stye cisis that wod be shot and scay, bt aso estabish heathy conditions fo mov
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in fowad, have been met with the histoicay coect esponse: Any ea chane has ony come abot as aest of the exiencies of wa.Befoe eveyone abes s ‘doomes’ and pessimists, et s point ot that, economicay, we aeady havewatime nancia conditions: the debt bden and sca decits of the westen wod ae at eves not seensince the end of Wod Wa II.We may not be htin in the tenches, bt we may soon be htin in the steets. To contine with thecent extend-and-petend poicies is to contine to disenfanchise wide swaths of o popation - paticay
 
the yon - those who wi be takin cae of s as we ae entein o doddein od ae. We wod notbame them if they fet a bit ess than eneos. In othe wods, the kind of confontation we isk is not amiitay one, bt athe a ste between the misteated yon eneation and the od foies, who thinkthey ae entited to a of a society’s weath and to do eveythin to defend the stats o. In a way, it is the1960s a ove aain, thoh a deepe ste ooted in economics as mch as poitics - the 1 pecent vessthe 99 pecent, to boow the most common way to daw the batte ines. Occpy Wa Steet was a mee
amuse bouche
and distant eay wanin of this phenomenon. The appetises and main coses wi soonaive if we do not chane o ways.A of this eads s to beieve that society wi tit inceasiny towads moe adicaism in Eope in 2013,whee the fa eft and fa iht wi both ain ond by appeain to the despeatey disenfanchised voteswho have vey itte to ose in espondin to thei messaes. Cent mainsteam Eopean poiticians aennin on ideooica empty. And they have neve shown that they ndestand the ‘epesentative’ potionof a epesentative democacy.The maco economy has no ammnition eft fo impovin sentiment. We ae a edced to payin fo a bette
 
day tomoow, as we eaise that the cent maco poicies ae ike pshin on a stin becase thee is note pice discovey in the maket anymoe. We have a been edced to a bnch of centa bank watches,
 
ony eve ookin fo the next iidity x, ike some kind of hode of heoin addicts. We have a pofomacapitaism with de facto maket totaitaianism. Can we have o fee makets back pease?As yo ook at o ist of 10 ‘pedictions’, they may not ook paticay otaeos in some cases, btemembe that we have extemey ow voatiity in a asset casses de to the ack of ea pice discovey.In sch an envionment, it means that amost any move otside of two standad deviations is becominotaeos, as it sests that the totaitaians ae osin thei ip.As we mst do evey yea, we aso need to ndeine that these 10 events ae not Saxo Bank’s ofcia cas fo2013. Ionicay, thoh, they cod pove fa moe eevant fo investos becase of the he impact if anyone of the 10 sees the iht of day in the New Yea. Befoe tadin o investin, we a mst know the wostcase scenaio - capita pesevation is a mst and yo potfoio needs to be abe to weathe a pefect stom,o fo that matte any stom.As we eave 2012, the consenss ca is fo the S&P 500 to ise 10 pecent next yea, and not a sine anaystsees the maket down in 2013 – I do not emembe a simia eve of compacency since the yea 2000, when
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eveyone I knew it thei job in the hope of makin a fotne day tadin. One of the thins we can eanfom histoy is that we aey eve take its essons to heat.
Bs wishs f 2013,
 
Steen Jakobsen
chif eis
 
- OutrageOus PredictiOns 2013 -- OutrageOus PredictiOns 2013 -
DAX PluNgES 33 PErCENT TO 5,000
The eadin geman stock maket index DAX was one of the wod’s best pefomin stock makets in 2012 asEope’s economic jenat contined to fae bette than most Eozone conties, despite the cisis on thecontinent and weake activity in China. This wi a chane in 2013 as China’s economic sowdown contines,theeby pttin a hat to gemany’s indstia expansion. This cases ae pice decines in indstia stocksde to stanatin evene and decinin pots at majo indsty payes sch as Siemens, BASF and Daime.This maket stess deates consme condence and as a est domestic demand, hihihted by weak etaisaes. With domestic demand faiin to offset weakenin expots, appova atins fo Chanceo AneaMeke pne ahead of the geman eection in the thid ate, and timatey the deteioated economicsitation obstcts he e-eection attempt. With a weak economy and ncetainty abot a new ovenment,the DAX index decines to 5,000, down 33 pecent fo the yea.
NATIONAlISATION OF MAJOr JAPANESE ElECTrONICS COMPANIES
Japan’s eectonics indsty, once the oy of the ‘land of the risin Sn’, entes a temina phase afte be
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in otmatched by the oain Soth Koean eectonics indsty, with Samsn the winne. The coe diveof the indsty’s decine is a too domesticay oiented appoach which has ed to a hih xed cost base deto Japan’s exteme ivin costs, pensions and the ston yen. With combined osses of uSD 30 biion in theast tweve months endin Septembe 30, 2012, fo Shap, Panasonic and Sony combined, ceditwothinessdeteioates eaty and the Japanese ovenment nationaises the eectonics indsty in déjà-v stye - simiato the ovenment baiot of the uS atomobie indsty. Thee has been no nomina owth in Japan’s ossdomestic podct in eiht ot of the ast 16 yeas and as a conseence of the baiots, the Bank of Japanfomaises nomina gDP taetin. The BoJ expands its baance sheet to amost 50 pecent of nomina gDP tosp ination and weaken the yen. As a est, uSDJPY oes to 90.
SOYBEANS TO rISE BY 50 PErCENT
Bad weathe din 2012 cased havoc to oba cop podction and we fea this wi contine to pay annwanted oe din the 2013 pantin and owin season. The uS soybean endin stock, which impovedsihty timo 2012, is sti pecaiosy tiht at a nine-yea ow. This tihtness eaves the pice of new copsoybeans, istated by the Janay 2014 contact on Chicao Boad of Tade ftes, exposed to any newweathe disptions, eithe in the uS o Soth Ameica (which is now the wod’s aest podcin eion)o in China (the wod’s aest consme and biest impote). Inceased demand fo biofe, in this casesoybean oi to cove biodiese mandates, wi aso pay its pat in exposin the pice to spikes shod woiesabot sppy esface. Specative investos, who edced thei soy secto expose by two-thids towadsthe end of 2012, wi be eady to e-ente and this combination of technica and fndamenta byin codpotentiay psh the pice hihe by as mch as 50 pecent.
gOlD COrrECTS TO uSD 1,200 PEr OuNCE
The stenth of the uS economic ecovey in 2013 spises the maket and especiay nancia investos inod, who in ecent yeas have come to dominate the maket theeby makin the yeow meta extemeysensitive to expectations fo the oba inteest ate envionment. The chaned otook fo the uS economycombined with a ack of pick-p in physica demand fo the pecios meta fom China and India, whichboth ste with weak owth and isin nempoyment, tie a majo ond of od iidation. This ispaticay a est of the uS Fedea reseve’s decision to edce o competey cease fthe pchases ofmotae and teasy bonds. Hede fnds move to the se side and once the impotant uSD 1,500 eveis boken a massive ond of on iidation foows, especiay by investos in Exchane Taded Fnds whohave been accmatin ecod hodins of od. god smps to uSD 1,200 befoe centa banks, especiayin emein economies, eventay step in to take advantae of owe pices.
WTI CruDE HITS uSD 50
uS eney podction contines to ise beyond expectations, pimaiy boht abot by advanced podctiontechnies, sch as in the shae oi secto. uS podction of West Texas Intemediate cde oi ises stonyand with inventoy eves aeady at a 30-yea hih and expot options imited, WTI cde oi pices comende enewed sein pesse and smp towads uSD 50 pe bae. Weake than expected oba owthcomponds this pocess tiein a spise dop in oba consmption of oi and the pice of Bent Cde,the oba benchmak. The sppy side, ed by the Oanization of the Petoem Expotin Conties and rs
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sia, eacts too ate to this chaene as its membes - despeate fo evenes to pay fo eve inceasin pbicexpendite - hesitate to edce podction, so the sppy t ises even fthe.
OLE S. HANSEN
SENIOr COMMODITY STrATEgIST
 
oh@saxobank.com
PEtEr GArNry
EquITY STrATEgIST
p@saxobank.com

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