Saxo Bank's 10 Outrageous Predictions For 2013

Tyler Durden's picture

Exceprted from Saxo's Steen Jakobsen's 2013 Extreme Complacency,

Our biggest concern here on the cusp of 2013 is the current odd combination of extreme complacency about the risks presented by extend-and-pretend macro policy making and rapidly accelerating social tensions that could threaten political and eventually financial market stability.

Before everyone labels us ‘doomers’ and pessimists, let us point out that, economically, we already have wartime financial conditions: the debt burden and fiscal deficits of the western world are at levels not seen since the end of World War II. We may not be fighting in the trenches, but we may soon be fighting in the streets.

To continue with the current extend-and-pretend policies is to continue to disenfranchise wide swaths of our population - particularly the young - those who will be taking care of us as we are entering our doddering old age. We would not blame them if they felt a bit less than generous. In other words, the kind of confrontation we risk is not a military one, but rather a struggle between the mistreated young generation and the old fogies, who think they are entitled to all of a society’s wealth and to do everything to defend the status quo.

All of this leads us to believe that society will tilt increasingly towards more radicalism in Europe in 2013, where the far left and far right will both gain ground by appealing to the desperately disenfranchised voters who have very little to lose in responding to their messages.

The macro economy has no ammunition left for improving sentiment. We are all reduced to praying for a better day tomorrow, as we realise that the current macro policies are like pushing on a string because there is no true price discovery in the market anymore. We have all been reduced to a bunch of central bank watchers, only ever looking for the next liquidity fix, like some kind of horde of heroin addicts. We have a pro forma capitalism with de facto market totalitarianism. Can we have our free markets back please?

As we leave 2012, the consensus call is for the S&P 500 to rise 10 percent next year, and not a single analyst sees the market down in 2013 – I do not remember a similar level of complacency since the year 2000, when everyone I knew quit their job in the hope of making a fortune day trading. One of the things we can learn from history is that we rarely ever take its lessons to heart.


10 Outrageous Predictions

1. DAX plunges 33 percent to 5,000 (Peter Garnry)

The leading German stock market index DAX was one of the world’s best performing stock markets in 2012 as Europe’s economic juggernaut continued to fare better than most Eurozone countries, despite the crisis on the continent and weaker activity in China. This will all change in 2013 as China’s economic slowdown continues, thereby putting a halt to Germany’s industrial expansion. This causes large price declines in industrial stocks due to stagnating revenue and declining profits at major industry players such as Siemens, BASF and Daimler. This market stress deflates consumer confidence and as a result domestic demand, highlighted by weak retail sales. With domestic demand failing to offset weakening exports, approval ratings for Chancellor Angela Merkel plunge ahead of the German election in the third quarter, and ultimately the deteriorated economic situation obstructs her re-election attempt. With a weak economy and uncertainty about a new government, the DAX index declines to 5,000, down 33 percent for the year.

2. Nationalisation of major Japanese electronics companies (Peter Garnry)

Japan’s electronics industry, once the glory of the ‘Land of the Rising Sun’, enters a terminal phase after being outmatched by the roaring South Korean electronics industry, with Samsung the winner. The core driver of the industry’s decline is a too domestically oriented approach which has led to a high fixed cost base due to Japan’s extreme living costs, pensions and the strong yen. With combined losses of USD 30 billion in the last twelve months ending September 30, 2012, for Sharp, Panasonic and Sony combined, creditworthiness deteriorates greatly and the Japanese government nationalises the electronics industry in déjà-vu style - similar to the government bailout of the US automobile industry. There has been no nominal growth in Japan’s gross domestic product in eight out of the last 16 years and as a consequence of the bailouts, the Bank of Japan formalises nominal GDP targeting. The BoJ expands its balance sheet to almost 50 percent of nominal GDP to spur inflation and weaken the yen. As a result, USDJPY goes to 90.

3. Soybeans to rise by 50 percent (Ole S. Hansen)

Bad weather during 2012 caused havoc to global crop production and we fear this will continue to play an unwanted role during the 2013 planting and growing season. The US soybean ending stock, which improved slightly ultimo 2012, is still precariously tight at a nine-year low. This tightness leaves the price of new crop soybeans, illustrated by the January 2014 contract on Chicago Board of Trade futures, exposed to any new weather disruptions, either in the US or South America (which is now the world’s largest producing region) or in China (the world’s largest consumer and biggest importer). Increased demand for biofuel, in this case soybean oil to cover biodiesel mandates, will also play its part in exposing the price to spikes should worries about supply resurface. Speculative investors, who reduced their soy sector exposure by two-thirds towards the end of 2012, will be ready to re-enter and this combination of technical and fundamental buying could potentially push the price higher by as much as 50 percent.

4. Gold corrects to USD 1,200 per ounce (Ole S. Hansen)

The strength of the US economic recovery in 2013 surprises the market and especially financial investors in gold, who in recent years have come to dominate the market thereby making the yellow metal extremely sensitive to expectations for the global interest rate environment. The changed outlook for the US economy combined with a lack of pick-up in physical demand for the precious metal from China and India, which both struggle with weak growth and rising unemployment, trigger a major round of gold liquidation. This is particularly a result of the US Federal Reserve’s decision to reduce or completely cease further purchases of mortgage and treasury bonds. Hedge funds move to the sell side and once the important USD 1,500 level is broken a massive round of long liquidation follows, especially by investors in Exchange Traded Funds who have been accumulating record holdings of gold. Gold slumps to USD 1,200 before central banks, especially in emerging economies, eventually step in to take advantage of lower prices.

5. WTI crude hits USD 50 (Ole S. Hansen)

US energy production continues to rise beyond expectations, primarily brought about by advanced production techniques, such as in the shale oil sector. US production of West Texas Intermediate crude oil rises strongly and with inventory levels already at a 30-year high and export options limited, WTI crude oil prices come under renewed selling pressure and slump towards USD 50 per barrel. Weaker than expected global growth compounds this process triggering a surprise drop in global consumption of oil and the price of Brent Crude, the global benchmark. The supply side, led by the Organization of the Petroleum Exporting Countries and Russia, reacts too late to this challenge as its members - desperate for revenues to pay for ever increasing public expenditure - hesitate to reduce production, so the supply glut rises even further.

6. USDJPY heads to 60.00 (John J. Hardy)

The Liberal Democratic Party comes back into power with its supposedly JPY-punishing agenda. But the reality of office, an uncooperative parliament and resistance from the Bank of Japan, mean that only half-measures are introduced. Meanwhile, the market has become over-enamoured with the potential for LDP leadership to bring about change and over-positioned for JPY weakness. As the market loses its enthusiasm for global quantitative easing and risk appetite retrenches, the yen vaults to the fore again for a time as the world’s strongest currency due to deflation and repatriation of investments, and carry trades find themselves turned on their head. USDJPY heads as low as 60.00 and other JPY crosses head even more violently lower, ironically paving the way for the LDP government and the BoJ to reach for those more radical measures aimed at weakening the yen.

7. Hong Kong unpegs HKD from USD – re-pegs to RMB (John J. Hardy)

China deepens its political commitment to turn away from its managed peg to the US dollar. A big step in this direction is taken as Hong Kong moves to unpeg the Hong Kong dollar from the US dollar and repeg it to the Chinese renminbi. Other Asian countries show signs of wanting to follow suit in recognition of Asia’s shifting trade patterns and as national policies of accumulating endless USD reserves begin to erode. China also takes steps to increase RMB convertibility to grab a larger share of global trade – part of its large ambition to hold more sway over developing and frontier economies and commodity producers. This starts a process of wresting some of the advantages of holding a major reserve currency away from the US currency. RMB volatility increases as China loosens its grip on the currency’s movements, and Hong Kong quickly grows to become a major world currency trading centre and the most important centre for trading the RMB.

8. EURCHF breaks peg, touches 0.9500 (John J. Hardy)

European Union tail risks are re-aggravated – perhaps by the Italian election – or over the nature of Greece’s exit from the European Monetary Union and the worry that Spain and Portugal will follow suit. This sends capital flows surging into Switzerland once again and the Swiss National Bank and Swiss Government decide it is better to abandon the Swiss franc’s peg to the euro for a time, rather than let reserves accumulate to more than 100 percent of gross domestic product after they more than doubled to nearly two-thirds of GDP over the course of 2011 and 2012. Punitive measures and capital controls eventually brake the franc’s appreciation, but not until EUR CHF has touched a new all-time low below parity after having neared parity in 2011.

9. Spain takes one step closer to default as interest rates rise to 10 percent (Steen Jakobsen)

The market ignores the strains on the social fabric at the European Union periphery as input to EU systemic risk. This is particularly the case for Spain, where disposable income for over 1.8 million people is now less than EUR 400 a month and only 17 million out of a population of 47 million are employed. The unemployment rate is 25 percent and youth unemployment is alarmingly over 50 percent. On top of this, Catalonia is threatening to break away from Spain. While the European Central Bank and the EU are busy ‘selling the success’ of lower interest rates, Spain has seen total debt (public and private) explode to over 400 percent of its gross domestic product. Only Japan is in a worse state. With social tensions so high, the public sector simply cannot cut its public outlays further. In 2013, Spanish sovereign debt is downgraded to junk and the social strain pushes Spain over the edge, seeing Spain reject the extend-and-pretend policies of EU officialdom. Yields rapidly increase after the downgrade and as an inevitable default is priced in.

10. 30-year US yield doubles in 2013 (Steen Jakobsen)

The 30-year US Treasury bond tells us that the expected return over the next 30 years is a real return of 0.4 percent (2.8% yield minus a break-even inflation of 2.4%). This cannot last in a world of forced inflation via infinite monetary printing and a possible downgrade of the US - if we fail to get structural fiscal reforms. The Federal Reserve is expected to keep rates low for longer but in 2013 this could be challenged by the zero interest rate policy which forces investors to leave fixed income to attain any yield. The global bond markets is USD 157 trillion versus a stock market valuation of USD 55 trillion (Source: Mapping global capital markets 2011 - McKinsey & Company). This means that for every one dollar in equity there are three in fixed income. With no return or even negative return (after costs) the substitution of bonds with stocks is appealing. For every 10 percent the mutual funds reduce their bond weightings the equity market will see 30 percent on net inflow – this could not only lead to higher US rates, but also be the beginning of decade-long outperformance by stocks over bonds, which is long overdue.

Source: Saxo Bank

 

Full presentation below:

Outrageous Predictions 2013

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denny69's picture

11. Hilary Clinton tracks down the key to Fort Knox, opens it up and begins distributing reserves to the poor while Pink and Lady GaGa sing a duet on the loading dock.

mjcOH1's picture

That's the plan for 2016....not 2013.

chubbyjjfong's picture

Saxo.. Sounds like a name for a back, sac and crack wax.  

 

Fong

Rathmullan's picture

probably a cute psuedonym (think the fed's "maiden lane") for some corrupt goldman (redundant) subsidiary. Except this shit stopped being cute 4 years ago.

Pretorian's picture

I have question, who the fuck is Saxo bank? Is commercial bank or look like broker want to exploit "trust" through word bank.

 

NEOSERF's picture

Here is outrageous:  World bankers and politicians focus on nothing but printing and unicorn PR statements so the S&P climbs another 15% in 2013 while the GDP and profit growth tend towards recession.

drivenZ's picture

pretty sure these two are mutually exclusive events. Ole's really hedging his bets isn't he. 

 

WTI crude hits USD 50 (Ole S. Hansen)

Gold corrects to USD 1,200 per ounce (Ole S. Hansen)

Fred Garvin's picture

My not-so-outrageous prediction for 2013 is that Saxo Bank will get 80% -100% of it's predictions proved incorrect as has been the case for years.

Iam Yue2's picture

A clear case of attention seeking. Their research is so crap, that I would not tweet a link to it, if they paid me...

The Master's picture

Do Saxo Bank employees get unlimited amounts of Super Silver Haze as part of their contracts?  That's the only explanation I can think of for the majority of these "predictions"

Hammerabi's picture

I want to talk Mercury! Fly me to the moooon

Relentless's picture

You're all ignoring the fact that these aren't predictions that they actually believe, just far end of the curve "what ifs". Ask yourself as a prepper, are you prepared for the possibility that they mange to kick the can for another year?

Element's picture

Wouldn't it be crap but if you prepped for a nuclear war for 20 years and just had to pop down to the shops to get a few can openers ... and it happened right then and there.

Prep that!

Element's picture

You train for 14 years to rise to the top of your field as a high-achieving experienced paramedic. Then one early spring morning you walk out to the mailbox and rashly tear-open the crisp stiff paper. And just then a fly lands on your neck, so you reflexively swat at it with the end of the utility bill. But the dry stiff edge of the envelope gives a swift but very deep paper-cut through your carotid artery, and you bleed-out right then and there.

Prep that!

lasvegaspersona's picture

 


This is particularly a result of the US Federal Reserve’s decision to reduce or completely cease further purchases of mortgage and treasury bonds.

ha ha 

you mean they will let the government go broke? where will the USG get its funding? Taxes? ha ha

In a sensible world these guys could be right ....but that is not the world we live in. Paper gold could get sold off in a panic yes...but the Fed stop buying the governments paper? I DON"T THINK SO!

The_Euro_Sucks's picture

This outragious? Come on, I expected more fireworks

 

1) The US federal governement introduces 2 paralell currencies to the FED reserve note. Gold and silver

2) A free energy source is made ready for mass production

3) The EU decides to dissolve after their admission it doesnt work

4) The global police state is condemmed and starts to unwind seriously

5) There isnt a single war, not even a civil one.

6) All are equal to the law and a serious cleanup on the 0.05% is being done

7) Free banking is allowed

8) Real education is offered at the Web on a massive scale for very little

9) 1st contact is made

10) MSM wows and shows that it always brings unbiased news as they get it

 

There, fixed it, this is really outragious.

IridiumRebel's picture

...as I read this, John Lennon was playing "Imagine" in my head....

The_Euro_Sucks's picture

Nice to hear, did you caught this one post with lots of credits to Pink Floyd? http://www.zerohedge.com/news/2012-12-17/hey-you

Black Forest's picture

11) I will be richer by USD 2.5 million.

Why? Read this e-mail that popped up a few minutes ago:

Greetings from the United Nations (UN) Office.

Dated 19th December 2012.

I write to notify you officially that after due verification on your payment file, a total of US2.5 million which was originally meant to be released to you through a certified bank draft or ATM Card have been converted to a payment via Wire Transfer, since all the previous attempt to pay you through other methods failed. Your total fund is now with the Reserve Bank Of India(RBI), therefore you are advised to contact the Director International Remittance for the transfer update of your fund.

I have tried to reach you on phone severally to no avail before I write this email to update you about the latest situation about your fund total sum of 2.5 million USD. Your fund is in a bond account therefore, I urge you to contact the remittance officer with below information.
...

The_Euro_Sucks's picture

I already got $10.000.000 coming my way via the Nigerian central bank. Can you believe his dad in law works at a high position at the central bank there? It only costed me $10.000.

Got to say I find it strange that the $$ inflates faster in Nigeria then at the UN. A well your bad luck :D

Savyindallas's picture

The Nigerian Central Bank owes me $3.5 million. I only had to send a check for $364 to claim my prize. I hope it gets here before Christmas.

Be careful, as there are scams out there. To a certain extent , we can all sleep well, as we know the SEC is ready to send an army of agents to protect us if we get conned. They sure nailed Madoff, didn't they?

CPL's picture

See if you can get them to send you money...here, try this one.

 

Dear Sir or Madame;

 

Thank you for your time in bringing this important information to my attention.  I would send you the given information but in recent times the banking regulations and hardships of our western countries surrounding terrorism is more restrictive now with government processing fees.  Please be assured that I would like to forward this information post haste, but it requires $150 dollars to purchase the proper government forms to allow for the processing of wire transfers especially of such great value.  If at all possible could the amount be in bills to this address.

<address here>

 

Sincerely;

William Iggypop the Third, ESQ

President, CEO of Gilette and Chief Science Officer.

Black Forest's picture

'William Iggypop the Third' sounds trustworthy to my wife.

Savyindallas's picture

Congratulations! You won too? The UN is great! Where can I send my check to get my 2.5 mil?

Dr. Engali's picture

I hope gold hit's $1200 an oz...That would mean markets are starting to spiral out of control and the fed's medicine would have to be kicked up a notch. $1200 would be a nice steal before evrything vaporizes.

CPL's picture

You can buy paper gold at 1200.

 

Physical might be a problem.

blunderdog's picture

This looks like it's missing the "humor" tag.

tooriskytoinvest's picture

DoubleLine's Gundlach: When You Raise Taxes And When You Cut Spending, Whatever The Combination Is Going To Be, You Will Have Headwinds For The Economy. There Will Be A Recession. Investors Should Hold Cash In This Environment.

http://investmentwatchblog.com/doublelines-gundlach-when-you-raise-taxes...

Thisson's picture

Gundlach is wrong.  GDP = C+I+G+X.  Reducing G just increases C and I.  Increasing I is the only way to grow an economy.

s2man's picture

WTF is a Stargate doing on the cover of their doc?  Are they predicting interstellar travel in 2013? (intergalactic if you hook up a naquida reactor to the gate).   Sheesh, I doff my tin-foil hat to them.  That's outrageous.

Radical Marijuana's picture

My macabre sense of humour was tickled by how a mainstream Danish investment bank expresses its concerns:

Can we have our free markets back please?

The chances of getting free markets back are similar to those of there ever being a proper investigation into the events on 9/11/2001, i.e., practically zero. The biggest gangsters, the banksters, are already almost totally in control. There is NO way that anything like a "free market" is ever coming back in the foreseeable future.

vote_libertarian_party's picture

Dudes, if the 30yr yield doubles in 2013 the stock market is not rocketing higher.

Black Forest's picture

If the 30 yrs yield doubles in 2013, I will triple in 2014, quadruple in 2015, octuple in 2016, and so on. Never forget that truth.

 

americanspirit's picture

1. A certified moron will become the leader of a great nation

2. Somewhere in the Northern hemisphere someone will withdraw their head from their anus

3. Mass numbers of people will discover they actually like the taste of shit; Asian food exports will triple.

4. China will announce that it has purchased Nebraska and will give residents 30 days to vacate

5. A nuclear weapon will be used against a population center. Cnn will cover it - er - live.

6. Finally, at last, somebody will shoot a banker. Then another. And another. A trend will emerge.

7. People under 30 around the world will form a mass movement and flush every toilet in every building in every city simultaneously.

8. Somebody will respond to riot police firing tear gas by throwing back glass bottles of ammonia and bleach duct taped together.

9. "Take this job and shove it" will be adopted as the official US anthem.

10. Reading Zero Hedge will be made a capital offense.

Savyindallas's picture

Great predictions. It will take all my wit and energy to match those predictions. I'm not ready yet -will check back later

mjcOH1's picture

9. "Take this job and shove it" will be adopted as the official US anthem.

 

You're too late on that one.   Romney said, "When I'm elected, I will put Americans back to work."   And 51% said, "F*** that!"

chump666's picture

I kinda like Saxo bank, they, with Citi they are the quintessential doomer banks (frustrated by playing the tail risk trades that have been suppressed by QE/Fed and HFTs).  But...

Hong Kong unpegs HKD from USD – re-pegs to RMB (John J. Hardy)

I doubt it.  The crushed Shanghai a few weeks back (now overbought via goverment intervention) was imo due to Yuan, HKD selling and USD buying and hording.  I think the Chinese are getting a inflation/stagflation beat-down and are saving in USDs.  Screwed with their stock indexes as the sold out and went into USDs.  There is also a huge black market in USDsSomething is seriously wrong within the Chinese economy.

Also they missed the coming skirmish between Japan and China in 2013, Japan needs a conflict to issue war bonds.  Note the recent military fly over the disputed Islands by Japan http://post.jagran.com/japan-scrambles-fighter-jets-over-disputed-island...

David99's picture

ZH is only doing good job and reporting correctly. Tyler is a real true person though I have never met him. FED+BOE+ECB+BOJ are the biggest manipulators and JPM +GS +20PD's act on their behalf in this Ponzi Casino. It is all rigged Ponzi Casino. JPM & GS do maximum manipulations from London as no regulators are looking what is going on daily. London is the best place to manipulate Ponzi Casino as no regulators as they are watching porno. Manipulations of highest order without any regulations as every one has been purchased and regulators watching porno. In last 10 trading days, Rio Tinto manipulated by +25% gain and regulators watching porno. JPM doing it. It is just Casino and nothing else. Regulators are watching porno, don't know how Rio Tinto is manipulating daily. On LSE, there is no checks and balances and maximum manipulations daily by Rio Tinto. The market is Casino and the biggest manipulated stock is Rio Tinto and JPM is pulling up daily and no regulations for Rio Tinto in London

rodocostarica's picture

1) Obama will take a vacation at huge taxpayer expense. (probably 2 more but at least one).

2) Boner will play many rounds of golf paid for by lobbyists

3) Other CONgress people will enjoy favors and envelopes with cash

4) Harry Ried will die suddenly.

5) Nancy P. will be clapping at Obamas state of the union address

6) The national debt will continue its trajectory north

 Ok so I can do six more that are 100% sure. But so can you. #4 is dicey but sure hope for it. 

Glad I am where I am at. Good luck to all ZHers. 

Pura Vida

Jam Akin's picture

The paper and physical gold markets make their final divergance as paper gold moves well below $1200/oz while physical blasts off over $2000.

AllWorkedUp's picture

 Here's one:

   The USD loses reserve currency status as the BRIC's introduce a currency backed by gold.

   Probably not outrageous enough for them.

Likstane's picture

#14 Uncle Buffet catches Chuckie Munger banging Becky in Warrens tub.   Warren gets pissed and slips in a rage while throwing a roll of eagles at Mungers head.  Uncle Warren cracks his skull on the golden shitter while Munger has a heart attack trying to put on his gold coin laden clothes.  Becky escapes with the eagles and slips out the back with an extra suitcase full of Berkshire certificates. The authorities discover the two old timers days later and deduce they succumbed to injuries incurred in their homosexual tryst. 

honestann's picture

the US Federal Reserve’s decision to reduce or completely cease further purchases of mortgage and treasury bonds.

---

What have you been smoking?

And who, prey tell, buys the $1,500,000,000,000 in admitted government debt in 2013 ?????