Saxo Bank Quarterly Outlook Q3 2011: Maximum Uncertainty in the World

By Saxo Bank, PRNE
Monday, June 27, 2011

HELLERUP, Denmark, June 28, 2011 -

Uncertainty and erratic moves will be the norm rather than the
exception reports Saxo Bank, the online trading and investment
specialist, in its economic outlook for the third quarter of 2011.
The second half of 2011 will be volatile and the uncertainty almost
as great as during the financial crisis.

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The most probable outlook for Q3 is that the world extends
monetary stimulus across the global economies. This will bring
marginal higher growth but also increase the burden on fiscal
payments and a need for structural changes. Any long-term solution
needs to be forward looking and involve an agenda for dragging
Europe out of the low growth stalemate. A solution based on buying
more time will only take us closer to the feared full blown Crisis

With this in mind three major themes are identified:

  • The EU and US debt issue: time is up and decisions are
  • Asia/China growth slows down as they turn to fighting inflation
    in earnest
  • Social tension needs addressing - otherwise not only do we lose
    the young generation but we also fail to provide a sense of unity,
    the very basis for sustainable growth, peace and prosperity.

Commenting on the outlook, Steen Jakobsen, Saxo Bank’s Chief

“The financial crisis was an opportunity missed for the
policymakers and politicians alike. Only in times of distress are
there consensuses for change but world leaders instead chose to
pile more debt onto debt, merely transferring risk from the
financial sector to the public sector. Two years later, and almost
to the day, such policy and economic errors have compounded with
almost nothing to show in terms of key parameters for long-term
economic growth, like housing and employment.”

“Demonstrations in the centres of Madrid, Athens, Lisbon and
MENA are clear signs that something needs to be done to realign
implemented policies with the required need for structural change.
What the world needs to move forward is an agenda on growth and
jobs, not on how to buy more time. The final six months of 2011
will be volatile and the only guarantee we can and will give is
that uncertainty and erratic moves will be the norm rather than the

The Quarterly Outlook Q3 2011 focuses on the following

General Market Comment

As the Saxo Bank Strategy Team expect the world to extend,
stimulus across the global economies is the most likely outlook for
Q3. This will result in acceptable growth but also an increased
burden on fiscal payments and a need for structural changes.

Macro forecast

Saxo Bank comments that the recent batch of weaker-than-expected
economic data at the end of QE2 has jolted the markets into
risk-off mode. Uncertainty is running high, but from a fundamental
perspective the analysts’ views are mostly unchanged since the Q2
Outlook. Saxo Bank stated then that slower growth was ahead, but
not a new recession.

FX Outlook

Saxo Bank likens the outlook for the major economies for the
next couple of quarters to a horse race in which the horses have
all been maimed or sickened. Picking the winner is a choice between
which horse looks the least likely to collapse before the finish
line. The U.S. economy headed south while the Federal Reserve must
honour its QE2 exit deadline at the quarter end. Europe’s periphery
is still a festering sore in need of fresh bailouts, Japan’s
economy has been desperately disrupted by a natural disaster, and
China is headed for a landing of one kind or another as it faces
down inflationary overheating and a property bubble.

Equity Outlook

The hangover for equities over the last three months, following
the disaster in Japan, has turned into disappointment over economic
data. Concerns about Europe’s sovereign debt situation with Greece
on the verge of default further fuel anxiety. These events have
reduced short-term visibility for stocks but the upward trend still
prevails. Despite the Bank’s slight downward revision to global
economic growth, the ever benign valuation in equities means that
it continues to be modestly optimistic about this asset class. The
analysts expect it to emerge from the fog as the economy picks up
speed in the second half of the year.

Commodity Outlook

Oil markets will be watching economic developments closely due
to concerns about OPEC’s recent failure to address a potential
shortfall during the second half of the year. OPEC seems to be
split between those who have spare capacity and those who do not.
Apart from political differences, Saudi Arabia was looking to
increase supplies amid autumn forecasts of a two million
barrel-per-day deficit. The other bloc, led by Iran, which needs
high prices and is already operating at full capacity, argued that
demand for oil is set to soften due to weaknesses in the U.S. and
other economies.

Policy rates

The futures markets have now come round to Saxo Bank’s belief
that rates will be on hold well into H2 2012 and probably 2013.
Saxo still feels QE3 is a distinct possibility in Q4 2011 or Q1
2012 - sooner, rather than later, in the event of dramatically
weaker equity markets.

About Saxo Bank

Saxo Bank is a leading href="">online trading and
investment specialist with a worldwide client base. The three
specialised and fully integrated trading platforms; the
browser-based href="">
SaxoWebTrader, the downloadable href="">
SaxoTrader and the SaxoMobileTrader application are available
in over 20 languages. Saxo Asset Management accommodates high-net
worth private clients and institutional investors. In 2010 Saxo
Bank continued the diversification of its business with
acquisitions of Saxo-ETrade Bank, a specialist in online
investment, and Brørup Sparekasse, a Danish savings bank. The Saxo
Bank Group is headquartered in Copenhagen with offices throughout
Europe, Asia, Middle East and Australia.

Media enquiries: Kasper Elbjorn, Head of Group Public Relations, Saxo Bank, Mob: +45-3065-4300, press at

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