2018: Goldilock or Frankenstein

Transcription

1 2018: Goldilock or Frankenstein Steen Jakobsen Chief Investment Officer March 2018

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3 Macro Theme & Consensus Four Essential Questions for your return in 2018 Direction of US$: - De-dollerization - Fed hike cycle China: - Credit Impulse (~ 40% of global growth & credit) - Trade War w. the US Recession risk: - Only real risk investors lose 35-55% in recessions - Market says <10% - Saxo Markets > 60% Technology/Monopolies: - FANGS makes money because they are monopolies but destroys productivity - Facebook is game changer for valuations - Chinese Monopolies will growth Western one not

4 The Q1/2018 narrative was wrong very wrong: Reflation, wages, superior US growth and synchronized global growth are illussions

5 The Q1/2018 narrative was wrong very wrong Market and FED wish for higher rates positioning is extreme Open record high!ed (36 millioner lots = $900 mln per basis points)

6 The Q1/2018 narrative was wrong very wrong Fed likely to do policy mistake, growth is tanking Recession / Capital preservation!

7 Direction of US$ US Fixed Income trades up against 30Y trend line: 3% or 0% next?

8 Direction of US$ Normalising a 2018 or 2019 story?

9 Direction of US$ Our best indicator is flashing RED Alert

10 Direction of US$ Our global indicator also flashing RED Alert

11 China Taking its proper role as #1

12 China Credit Impulse is > 0.6 R^2 w. economic activity w mth lead

13 China vs US President Trump is inconsistent on all issues except one - trade!

14 China Time-line leading to 2018

15 China vs US A trade war has been in place for years!

16 China vs US Trade war: No one wins

17 Recession Risk The volatility Risk Recession kills

18 Recession Risk US is very late in business cycle, Europe mid-way only

19 Technology/Monopolies Winter is coming for technology regulation, bad behavior and anti-market monopolies

20 2018 Big risk for IT- platforms? Monopoly: The worst since Big Oil in 1920s/1930s Saxo Bank The legal definition of monopoly: Market share of 25% FREE TO SHARE

21 2018 The Year of MIST AEKS`? A Technology Winter coming? Peter Garnry: But even before this event self-driving car technology was over-hyped. Recent consensus at NIPS (the biggest AI conference) was that deep learning etc. where only deemed good at narrow applications and Hinton, the father of backpropagation igniting deep neural networks, has even hinted that self-driving cars are not around the corner. Based on yesterday s event I m revising up the probability that we will see a new AI winter like the one in the 1970s and 1980s. Saxo Bank

22 2018 The Year of Change Global Macro themes (Long term) The US dollar has peaked and started a multi-year cycle lower as both US and world growth can t work without a weaker dollar (a stronger dollar kills growth through debt service, emerging markets, and commodities). The credit impulse peaked in late 2017/early 2018 leaving global growth vulnerable in Q through Q3 US interest rates are headed to 0% or 3% end of 2018 direction of break will dictate markets (70/30 chances) New call: Energy prices to fall by 50% over the next 10 years. Electrification could be biggest game changer since internet on R&D, CAPEX, the race is on.. Big social changes coming: Politics Loss of centre politics, women will rise, social media will be regulated Gold biggest conviction for H2018 followed by US long-term fixed income Trade War is catalyst & US leaving NAFTA is >50% Saxo Bank

23 2018 Goldilock or Frankenstein? Trumpenstein!