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A State of FluxSteen Jakobsen,

Chief Investment OfficerSaxo Bank A/S

May 2014

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Ockham’s Razor

Stock Market lags real economy by three months

Interest rates leads real economy by nine months

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What did happen 9-12 month ago?

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What did happen 3 month ago?

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Germany the negative surprise….

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Germany the negative surprise….

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No more “easy money….?”

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The Classic correlation S&P & FED BS

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Tapering – marginal change?

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Valuations becoming real issue in the US

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Inflation is now unanchored…

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Forward guidance false?

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Our JABA model says…low in 2015-Q1

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Our biggest call: Yields will go to new lows..

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Global imbalances – global balances

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US rates to the rescue?…….

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China: Friend or foe for growth?….

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Iron ore leading growth…….

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Weaker global growth will hurt BRL & AUD

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The worlds growth engine is sputtering…

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Market Calls…..Earnings based projection..

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Will equity finally pay the price..?

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Macro Outlook in headlines

Positions: Mega long fixed income (Q3-2013) – See new lows in yield FX: Short AUDUSD(.8000 sub target),EURUSD(sub 1.2500) Sell ZAR, TRY and IDR soon (all basket cases….w. no reform) Equity: Long Israel + Russia vs. SPX (CAPE <10 vs. CAPE >24 (avg

13/14 – waiting for catalyst to short SPX & DAX (plus Club Med)

Monetary Policy: ECB will disappoint – they love to talk…too much… BOJ is cornered (USDJPY 92/93 FED will taper the taper….. Fight will be on deflation…..now unanchored

Economics: Germany will go towards negative growth in Q4/Q1-2014/2015 Fragile Eight: No reforms, elections – it’s time to sell….. 2014: Another lost year 2015 H2: The true recovery

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Thank you!