Saxo Bank's Q1 2018 Quarterly Outlook

Get expert insights into global financial markets and discover potential trade ideas, with the #SaxoStrats’ Quarterly Outlook.

Our expert strategists have come together to offer you unrivalled analysis, getting to the heart of economic forecasts, policy horizons, asset prices and more. This publication focuses on financial bubbles and how to identify them, and looks at why this could be a crucial quarter for assets that became overextended after a low-volatility 2017.

Download Quarterly Outlook (PDF)

Insights from the #SaxoStrats


Steen Jakobsen
Chief Economist & CIO / Saxo Bank
"There are a great many bubbles afoot right now"
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Anders Nysteen
Quantitative Analyst / Saxo Bank
"Nothing is certain until after the pop"
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Peter Garnry
Head of Equity Strategy / Saxo Bank
"This is the most important year for equities since 2008"
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John J Hardy
Head of FX Strategy / Saxo Bank
"We see clear factors directly ahead that are quite likely to disrupt the one-way complacency seen in 2017"
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Simon Fasdal
Head of Fixed Income / Saxo Bank
"Take a look at the 10-year Treasury yield... Q1 is a time to be cautious"
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Ole Hansen
Head of Commodity Strategy / Saxo Bank
"Our trade idea for Q1 is to be long gold against WTI crude oil"
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Jacob Pouncey
Cryptocurrency Analyst / Saxo Bank
"Cryptocurrencies are behaving similarly to the dot-com stocks of the late 1990s"
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Dembik Christopher
Head of Macro Analysis / Saxo Bank
"Once the bubble inevitably bursts, it will lead to a huge loss of wealth for homeowners"
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Download Quarterly Outlook now to read our #SaxoStrats’ analysis in full, and discover what this quarter holds in store for macro, equities, forex, fixed income, commodities, cryptos and more.

How to spot a financial bubble

Former Federal Reserve chair Alan Greenspan once stated that it’s “very difficult to definitively identify a bubble until after the fact”, but he was wrong. It is certainly possible to identify a bubble, even if it’s not so easy to time its burst.

A bubble is a specific mathematical formation in which super-exponential growth causes a departure from fundamentals. It is this departure that triggers the eventual sharp correction.

Saxo Bank’s strategy team sees a great many bubbles in world markets right now. Some are fully formed and some are still forming, but all require investors to see them for what they are and maintain a good grasp on the fundamentals below.

It is time to talk about how financial bubbles form and not how they end. The continued contraction of the credit impulse as well as central bank policy normalisation, inflation expectations, fiscal deficit expansions, cross-asset correlations, and a lack of political reforms all point to a slowdown sometime in 2018.

The most successful investors will be those who see it coming.