Saxo News & Research - Videos

Big Tech earnings: Microsoft, Alphabet, Meta and Amazon put AI spending on trial

Wed, 29 Apr 2026 20:30:00 Z

Key takeaways

AI spending is no longer judged by ambition alone. Investors now want visible payback.
Alphabet had the clearest initial market reward, while Meta faced the toughest reaction.
Cloud and advertising are working, but cash flow pressure is becoming harder to ignore.

Artificial intelligence (AI) has been the market’s favourite growth story. It has also become one of its most expensive hobbies. On 29 April 2026, Microsoft, Alphabet, Meta and Amazon gave investors a fresh look at the same big question: is AI spending turning into revenue, margins and cash flow?

The answer is not a simple yes or no. It is more like: yes, but the receipt is getting longer.

The early market reaction showed that investors are becoming more selective. Alphabet was the only clear initial winner, helped by strong Google Cloud growth, resilient Search and better profitability. Meta had the weakest reaction, despite strong advertising growth, because investors focused on the company’s higher capital expenditure plan. In this AI cycle, good revenue is helpful. Good revenue with controlled spending is better.

The chart below puts the AI spending debate in one simple frame: capital expenditure is rising fast, but most Big Tech firms still generate strong free cash flow. Amazon is the clear exception in 2026, as its investment cycle is expected to push free cash flow negative. That is why investors are asking not only “can they spend?” but “which companies can turn that spending into revenue, margins and cash flow fastest?”

Source: Saxo Bank analysis. The 2026 figures are based on Bloomberg forecasts. Chart generated using ASKB by BloombergAI.

Cloud gives the first answer

Microsoft gave investors one of the cleaner AI payback signals. Revenue came in at 82.89 billion USD, ahead of expectations, while Azure and other cloud services grew 39% in constant currency. Its AI business also passed a 37 billion USD annual revenue run rate, up 123% year-on-year. That is the kind of line investors wanted to see: AI is not only a product demo, it is becoming a business line.

Still, the trade-off is visible. Microsoft said cloud gross margin was pressured by AI infrastructure and AI product usage. In plain English, customers are using the tools, but the tools are not free to run. Chips, servers and power do not accept stock options as payment.

Amazon told a similar story, but with a sharper cash flow warning. Amazon Web Services (AWS), its cloud business, grew 28% in constant currency, its fastest growth in 15 quarters. The company also said its chips business topped a 20 billion USD revenue run rate. That is encouraging for the AI demand story.

But Amazon’s trailing 12-month free cash flow fell to 1.2 billion USD from 25.9 billion USD a year earlier, mainly because property and equipment spending rose sharply, reflecting AI investment. This is the core tension: AWS is accelerating, but the infrastructure bill is absorbing much of the benefit for now.

Advertising still pays the rent

Alphabet and Meta showed that AI is already helping the advertising machine. Alphabet reported revenue of 109.90 billion USD, up 22% year-on-year. Google Search and Other revenue rose 19%, while Google Cloud revenue jumped 63% to 20.03 billion USD. Even better, Google Cloud operating income rose to 6.60 billion USD from 2.18 billion USD a year earlier.

That explains the positive initial stock reaction. Alphabet did not only spend more. It showed where the payoff is appearing: Search remains strong, Cloud is scaling, and AI usage is supporting demand rather than clearly damaging the core business.

Meta also delivered strong numbers. Revenue rose 33% to 56.31 billion USD, advertising revenue rose 33%, and operating margin stayed at 41%. For most companies, that would be a victory lap with a modest sandwich.

But Meta raised its 2026 capital expenditure outlook to 125 to 145 billion USD, from 115 to 135 billion USD. That changed the market conversation. Investors are not saying Meta’s AI strategy is failing. They are saying the spending bar has moved higher again, so the proof also needs to move higher.

The new test: useful growth

For long-term investors, this earnings round is useful because it separates AI excitement from AI economics. The strongest signals are not vague statements about transformation. They are concrete signs: faster cloud growth, better ad performance, stronger operating income and healthy free cash flow.

The infographic below turns the earnings season into a simple checklist. Each company has a different AI test, but the investor question is the same: where should the payoff appear, and which numbers will show whether it is real?

Source: Saxo Bank analysis and in-house framework. For illustrative purposes only.

Risks to watch

The first risk is overbuilding. If data centre capacity grows faster than customer demand, margins could suffer. Watch whether cloud growth keeps pace with capital expenditure.

The second risk is pricing. If AI tools become widely available and similar, customers may resist paying much more for them. Adoption is good. Paid adoption is better.

The third risk is investor patience. These companies can afford large spending plans, but even Big Tech does not get unlimited benefit of the doubt. The market is now asking for receipts, not just roadmaps.

Investor playbook

Watch cloud growth alongside capital expenditure, not in isolation.
Follow free cash flow, especially at Amazon and Meta.
Look for AI comments tied to paid usage, pricing or margins.
Treat one quarter as evidence, not a final verdict.

From promise to payback

This earnings round does not settle the AI debate. It sharpens it. Microsoft and Alphabet showed the clearest early evidence that AI spending is turning into measurable business momentum. Amazon showed strong demand, but also how quickly investment can swallow cash flow. Meta showed that even excellent advertising growth may not satisfy investors when the spending plan gets bigger.

For long-term investors, the lesson is simple: AI still matters, but the market is becoming less impressed by the size of the kitchen and more interested in the meal. Big Tech is cooking. Now investors want to know who can serve profitably.

This material is marketing content and should not be regarded as investment advice. Trading financial instruments carries risks and historic performance is not a guarantee of future results.

The instrument(s) referenced in this content may be issued by a partner, from whom Saxo receives promotional fees, payment or retrocessions. While Saxo may receive compensation from these partnerships, all content is created with the aim of providing clients with valuable information and options.

Ruben Dalfovo

Investment Strategist

Saxo Bank

Topics: Equities Highlighted articles Theme - Artificial intelligence Quarterly earnings

Oil, batteries and a cheaper Tesla: the next phase of the EV race

Fri, 17 Apr 2026 09:00:00 Z

Key takeaways

Tesla’s reported cheaper-car pivot looks like a return to EV basics, not a side story.
Higher oil prices help the EV case, but they do not fix weak margins.
Contemporary Amperex Technology Co. (CATL) shows that battery leaders may capture more value than many carmakers.

Tesla spends a lot of time being discussed as a robotaxi, software and artificial intelligence story. That is fair, up to a point. But the latest development says something simpler and, for investors, probably more useful. Tesla is reportedly working on a smaller, cheaper electric vehicle, after years of pushing the market to focus on autonomy and futuristic optionality. That matters because it suggests the old EV battle is back in charge: price, scale, battery cost and who can still make money when the shiny story meets a tired consumer.

That is the real hook here. Tesla is not just updating a product plan. It is admitting, indirectly, that the market has changed. In the first quarter of 2026, Tesla produced more than 408,000 vehicles but delivered just over 358,000, leaving a gap of more than 50,000 units. That is not a disaster, but it is a reminder that demand is no longer a one-way escalator. Tesla reports first-quarter earnings on 22 April 2026, so the next real test is whether management explains this as a temporary wobble or as part of a harder, more price-sensitive market.

Back to the driveway

Tesla’s reported cheaper model matters because it looks like a reality check. A lower-priced compact sport utility vehicle could help volumes, keep factories busier and give Tesla a better answer to Chinese rivals and to a more cautious buyer in Europe and the United States. It also comes with a catch the size of a showroom. Cheaper cars usually mean thinner margins, unless battery costs fall fast enough to compensate. That is why this is more than a Tesla story. It says the EV market is entering a phase where affordability may matter more than aspiration. Flashy launch events are nice. Monthly payments still tend to win arguments.

The broader electric vehicle backdrop is mixed rather than broken. Reuters reported that global EV registrations rose 3% in March 2026, with Europe up 37% to nearly 540,000 units, helped by higher petrol prices. North America, by contrast, fell 30% after the end of tax credits. That split is important. It shows that EV demand still responds to economics, but those economics now depend more on fuel prices, incentives and pricing discipline than on novelty alone. In other words, the market is growing up. Like all adults, it has started reading the energy bill.

Oil has entered the chat

This is where the current oil backdrop matters. Brent crude was around 94.93 USD a barrel on 15 April 2026, while West Texas Intermediate crude was around 91.29 USD, even after some cooling from earlier spikes. Physical oil grades briefly surged far above futures prices during the recent disruption around the Strait of Hormuz. For drivers, and therefore for carmakers, that means one thing: uncertainty at the pump is back. And when fuel becomes a headache, EVs and hybrids start looking less like ideology and more like maths.

That does not mean Tesla automatically wins. Higher oil prices can support EV demand, but they do not solve competition, financing costs or product fatigue. They simply improve the category’s pitch. For long-term investors, that is a useful distinction. Oil can lift interest in EVs, but only the right product mix, the right battery cost and the right manufacturing execution turn that interest into profits. This is one reason Tesla’s cheaper-car move matters now. It is a response to an EV market that may be helped by oil, but no longer rescued by excitement alone.

Why battery makers matter more now

If Tesla’s reported move is the reality check, CATL, or Contemporary Amperex Technology Co., is the second act. The Chinese battery giant beat first-quarter expectations this week, with profit up 48.5% year on year and revenue up 52.5%. Its share of the global electric vehicle battery market also climbed to 42.1% in early 2026, a reminder that more of the industry’s power is shifting toward the companies that control the battery bill. CATL’s own 2025 annual report said it held 39.2% of the global power battery market and 30.4% of global energy storage battery shipments. In February, it added another sign of where the market is heading, saying it would supply sodium-ion batteries for the world’s first mass-produced sodium-ion passenger car with Changan, due by mid-2026.

Why does that matter for Tesla and for investors looking at the wider EV chain? Because batteries are no longer a background component. They shape cost, charging speed, cold-weather performance, supply security and, increasingly, the balance of power in the industry. CATL is also reportedly considering another Hong Kong fundraising, which underlines a broader point: this industry still needs vast amounts of capital, and the companies providing the chemistry and scale may end up with more bargaining power than the brands selling the badge. Carmakers still sell the dream. Battery leaders increasingly control the economics.

The road can still get slippery

There are at least three risks to watch. First, Tesla’s cheaper-car pivot could help deliveries but pressure profitability if price cuts outrun cost savings. Second, oil could fall back quickly if geopolitics ease, which would soften one of the category’s current demand tailwinds. Third, battery leadership could make the EV market more unequal, with suppliers and low-cost manufacturers taking more value while premium carmakers fight harder for it. Early warning signs are straightforward: Tesla’s margin commentary on 22 April, inventory trends, battery pricing language from CATL, and whether Europe’s recent demand strength lasts once energy panic fades.

Investor playbook

Watch whether cheaper EVs expand demand, or simply move the same demand down-market.
Follow battery leaders as closely as car brands. The chemistry race now shapes the profit race.
Treat oil as a demand variable, not a magic wand. It can help adoption, but not fix execution.

Where the real EV battle sits

Tesla’s latest move brings the story back to the driveway. For all the talk of robotaxis, chips and humanoid robots, the near-term question is still whether Tesla can build a more affordable car that people want, at a margin investors can live with. That is why the CATL angle matters so much.

In this phase of the EV race, the winners may not be the companies with the loudest future story, but the ones with the best battery access, the lowest cost curve and the clearest answer to a simple customer question: why should I buy this now? In the electric age, the dream still matters. The battery bill may matter more.

This material is marketing content and should not be regarded as investment advice. Trading financial instruments carries risks and historic performance is not a guarantee of future results.

The instrument(s) referenced in this content may be issued by a partner, from whom Saxo receives promotional fees, payment or retrocessions. While Saxo may receive compensation from these partnerships, all content is created with the aim of providing clients with valuable information and options.

Ruben Dalfovo

Investment Strategist

Saxo Bank

Topics: Macro Highlighted articles Tesla Motors Theme - Electric vehicles

Saxo Market Compass - 16 March 2026

Mon, 16 Mar 2026 19:00:00 Z

Saxo Weekly Market Compass

16 March 2026 (recap week of 9 to 13 March 2026)

Headlines & introduction

Energy risk reshaped the macro narrative. Markets spent the week reacting to renewed Middle East tensions and a sharp rebound in oil prices, pushing inflation risks back into focus and triggering repricing across assets. Equities moved in waves of relief rallies and renewed risk aversion, while bond yields climbed and volatility stayed elevated.

Digital assets held relatively firm and options flows showed investors maintaining exposure but increasingly adding portfolio hedges. With oil volatility now feeding directly into inflation expectations and policy outlooks, investors ended the week cautious and focused on the next round of macro catalysts.

Equities

What happened

AI strength balanced oil-driven macro fears. US equities swung between optimism and caution. The S&P 500 rose early in the week before retreating as Brent crude moved back toward the $100 area and Treasury yields climbed.

Technology remained the strongest pocket of the market. Oracle rallied on AI-related guidance, while semiconductor names such as Nvidia, Intel and Micron benefited from continued demand tied to AI infrastructure spending.

Outside the US, European and Asian equities proved more sensitive to energy shocks. The STOXX 600 rebounded early in the week before oil-driven inflation fears returned. Semiconductor leaders such as ASML and Infineon rallied early, while energy majors including Shell and BP benefited from higher crude prices.

Market pulse: AI remains a structural support for equities, but oil prices are driving short-term sentiment.

Looking ahead

Equity markets now face a catalyst-heavy week. The Federal Reserve decision and Chair Powell’s press conference will influence rate expectations, while Micron’s earnings will test whether the AI investment cycle remains intact.

Investors will also watch consumer-facing earnings and global trade signals from companies such as FedEx and Dollar Tree. Together with oil prices, these developments could determine whether equities stabilise or remain headline-driven.

Volatility

What happened

Geopolitics kept volatility elevated. Market volatility remained firm as geopolitical risk drove trading behaviour. The VIX hovered near the high‑20s during the week, while short-dated volatility indicators stayed elevated as investors continued buying protection against sudden market moves.

Options pricing suggested sizeable expected index swings as markets reacted to oil price volatility and geopolitical uncertainty. Rather than fading, volatility remained structurally supported by macro risk.

Market pulse: volatility stayed elevated as geopolitics replaced macro data as the main market driver.

Looking ahead

The upcoming Federal Reserve decision could become the next volatility catalyst. Powell’s comments on inflation and energy-driven price pressures will likely influence volatility expectations across equities and rates.

If oil markets stabilise, volatility may gradually decline. Continued geopolitical uncertainty, however, could keep volatility elevated.

Options sentiment

What happened

Options flow prioritised portfolio protection. Options activity showed consistent demand for downside hedging across indices, financials and rate-sensitive ETFs. Institutional investors appeared focused on protecting portfolios against macro shocks rather than positioning aggressively for upside.

Commodity-related options presented a more balanced picture. Energy producers attracted selective upside positioning, while metals miners saw accumulation-style flows reflecting ongoing interest in precious metals.

Market pulse: investors stayed invested but layered systematic hedges across macro-sensitive sectors.

Looking ahead

Options positioning will likely react to upcoming macro catalysts. Central-bank communication and inflation data could influence hedging demand, particularly in rate-sensitive sectors.

If geopolitical risks persist, demand for downside protection across indices and financials may remain elevated.

Digital assets

What happened

Crypto proved resilient amid macro turbulence. Digital assets held up relatively well compared with equities. Bitcoin traded near the $70k range during much of the week before rising toward the mid‑$70k area late in the period.

Institutional demand remained a key driver. Spot Bitcoin ETFs recorded fresh inflows during the week, while Ethereum-linked products also attracted demand.

Market pulse: ETF demand continues to anchor institutional interest in crypto.

Looking ahead

Crypto markets will likely track broader liquidity conditions and risk sentiment. A more hawkish tone from the Federal Reserve or rising bond yields could pressure digital assets in the short term.

However, continued ETF inflows and institutional adoption remain supportive structural factors.

Fixed income

What happened

Bond markets repriced inflation risk. Government bond yields moved higher during the week as rising oil prices revived inflation concerns. US Treasury yields climbed as markets priced fewer near-term rate cuts.

European yields also rose as investors reassessed inflation risks linked to energy prices. Credit spreads widened briefly before stabilising, reflecting more cautious risk appetite.

Market pulse: bond markets are adjusting to a renewed inflation narrative.

Looking ahead

The Federal Reserve meeting will be the key driver for bond markets. Any signal that policymakers are concerned about energy-driven inflation could push yields higher.

Inflation data and economic indicators will also help determine whether markets continue to price fewer rate cuts.

Commodities

What happened

Oil dominated the commodity complex. Energy markets led commodity moves as supply disruptions near the Strait of Hormuz pushed Brent crude toward the $100–$105 range.

Strategic reserve releases were coordinated in response to the disruption, highlighting the scale of supply risks. Precious metals showed mixed performance as safe-haven demand competed with rising yields and a stronger dollar.

Market pulse: oil became the central macro variable for global markets.

Looking ahead

Energy markets will remain the key variable for commodities. Investors will closely monitor geopolitical developments and the impact of reserve releases on global supply conditions.

Gold and silver may continue reacting to interest-rate expectations and dollar strength rather than pure safe-haven demand.

Currencies

What happened

Dollar strength returned on safe-haven demand. Currency markets reflected rising risk aversion. The US dollar strengthened during the week, while the euro weakened as energy risks weighed on European sentiment.

The Japanese yen hovered near intervention-sensitive levels against the dollar, while commodity currencies showed mixed performance.

Market pulse: FX markets reacted primarily to energy risk and safe-haven flows.

Looking ahead

Currency markets will focus on the Federal Reserve decision and evolving interest-rate expectations.

Energy price developments may continue influencing currency performance, particularly for energy-importing economies such as Europe and parts of Asia.

Conclusion

The week demonstrated how quickly geopolitical shocks can reshape financial markets through energy prices. Oil’s rebound revived inflation concerns and triggered repricing across equities, bonds and currencies.

Investors have not abandoned risk assets, but positioning has become more cautious, with increased hedging across macro-sensitive sectors. With central-bank decisions, inflation data and major earnings ahead, markets enter the new week balancing structural growth themes with heightened macro uncertainty.

This content is marketing material and should not be regarded as investment advice. Trading financial instruments carries risks and historic performance is not a guarantee of future results.
The Author is permitted to wait at least 24 hours from the time of the publication before they trade the instruments themselves.
The instrument(s) referenced in this content may be issued by a partner, from whom Saxo receives promotional fees, payment or retrocessions. While Saxo may receive compensation from these partnerships, all content is created with the aim of providing clients with valuable information and options.
This content will not be changed or subject to review after publication.

The video featured on this page was generated using artificial intelligence. It is provided for informational and educational purposes only and reflects an automated interpretation of the accompanying article content.

Related articles/content
Saxo Market Compass - 9 March 2026 Global Markets are still only pricing for modest disruptions from Iran war (podcast) \| 9 March 2026 When markets look chaotic emotions matter more than portfolios \| 9 March 2026 Iran headlines market turbulence and options - a practical map of what to trade \| 4 March 2026 Oil, inflation, and a sudden “no thanks” to risky bets: Mr. market flips the sign \| 4 March 2026 Iran escalation The portfolio playbook \| 3 March 2026 Investor Q&A on the Iran-US conflict \| 2 March 2026 The Macro Take Iran conflict what to watch \| 2 March 2026 Saxo Market Compass - 2 March 2026 Iran escalation: Quick thoughts on markets \| 1 March 2026 Saxo Market Compass - 23 February 2026 Saxo Market Compass - 16 February 2026

Saxo Market Compass - 9 March 2026

Mon, 09 Mar 2026 18:00:00 Z

Saxo Weekly Market Compass –
the Iran shock rewrites the market narrative

9 March 2026 (recap week of 2 to 6 March 2026)

Headlines & introduction

A geopolitical shock became a macro shock.

The week of 2 to 6 March began as a geopolitical story and ended as a full market repricing. As tensions involving Iran escalated and disruption around the Strait of Hormuz pushed energy prices sharply higher, investors were forced to reassess inflation, growth and the path of central bank policy.

That shift was felt across asset classes. Equities swung between relief rallies and renewed selloffs, bond yields moved higher, volatility stayed elevated and the US dollar regained safe-haven support. By the end of the week, markets were no longer treating the conflict as a regional event, but as a potential global inflation and growth shock.

Timeline of market reactions to the Iran shock: equities weaken early in the week, oil and yields rise mid-week, volatility spikes by Friday, and markets enter the new week focused on the oil surge, US inflation data and key earnings catalysts. Source: Saxo

Equities

Equities traded less on fundamentals and more on the price of disruption.

In the US, markets spent the week reacting to oil, yields and geopolitics rather than following a clean earnings-led script. The S&P 500 was roughly flat on 2 March, fell 0.9% on 3 March, rebounded 0.8% on 4 March, and then lost momentum again as oil prices rose and the labour-market backdrop softened into week-end. Technology names still offered selective support, with AI-linked companies such as Nvidia, AMD, Broadcom and Marvell attracting buying interest on company-specific developments, but that leadership was not enough to stabilise the broader market.

Outside the US, the Iran shock was even more visible. European equities were hit by renewed concerns over imported energy costs, with the STOXX 600 falling 1.6% on 2 March and a further 3.1% on 3 March before a mid-week rebound. The FTSE 100 was relatively more resilient thanks to its energy exposure, while continental markets were weighed down by industrials, transport and cyclicals. In Asia, South Korea saw the most violent swings, Japan remained vulnerable as an energy importer, and Hong Kong held up better as large-cap technology names offset some of the wider pressure.

Market pulse: equities increasingly traded as a function of oil, inflation and geopolitical risk rather than company fundamentals.

Options sentiment

The options market pointed to protection first, conviction second.

Across the week, options activity showed a clear preference for downside protection. Broad market positioning leaned defensive, with persistent hedging in index exposure and a more cautious tone in high-beta growth areas. The message from the largest growth stocks also deteriorated through the week, as investors increasingly favoured defensive structures over straightforward upside participation.

The more nuanced picture appeared in energy and metals. In energy, investors still showed willingness to own upside in selected names, but broad sector exposure remained hedged. In metals, positioning stayed constructive, particularly in miners, but was paired with downside protection in the large precious-metals ETFs. Taken together, the signal was not capitulation. It was a market that remained invested, but wanted much more insurance.

Market pulse: investors did not abandon risk, but they consistently paid to protect against further instability.

Volatility

Volatility rose because oil turned geopolitics into policy risk.

The week’s volatility profile stayed elevated throughout. The VIX closed at 21.44 on 2 March, rose to 23.57 on 3 March, eased to 21.15 on 4 March, and then closed Friday at 29.49 as the weekend escalation drove another round of demand for near-term hedges. Short-dated volatility measures remained firm, and downside skew stayed in place, showing that investors were still more focused on protection than on chasing a rebound.

That matters because the rise in volatility was not simply about equity weakness. It reflected uncertainty over energy supply, inflation and central-bank reaction functions. By Monday 9 March, options markets were implying a weekly move of nearly 2.9% in the S&P 500, while downside options remained richer than upside exposure, consistent with a market still bracing for unstable headlines.

Market pulse: volatility stayed high because the market saw Iran as an ongoing macro event, not a one-day shock.

Digital assets

Crypto held up better than many risk assets, but did not decouple from macro stress.

Bitcoin and Ethereum were relatively stable through the week, with Bitcoin trading broadly between the high $67,000s and low $72,000s, while Ethereum held near the $2,000 to $2,130 range. Early in the week, ETF demand helped cushion the asset class, particularly in bitcoin exposure, but that support became less consistent as macro risk intensified.

By the end of the week, the tone had softened. Bitcoin ETF flows turned negative, while Ethereum exposure remained somewhat better supported. That left digital assets looking more resilient than some high-beta equity segments, but still sensitive to the same drivers affecting broader markets: oil, yields and risk appetite. The listed crypto ecosystem also remained under pressure as investors reduced exposure to more cyclical and momentum-driven pockets of the market.

Market pulse: crypto showed resilience, but ETF support softened rather than removed macro pressure.

Fixed income

Bond markets repriced inflation risk faster than recession risk.

US Treasury yields moved higher through much of the week as markets reassessed the inflation implications of rising oil and gas prices. The 10-year Treasury yield climbed from around 4.05% early in the week to roughly 4.14% by 6 March, while the 2-year yield moved back above 3.55%. That shift reflected a market becoming less confident that lower rates would arrive quickly if the energy shock proved persistent.

The same pattern appeared elsewhere. German Bund yields rose as Europe faced renewed imported-energy risk, UK gilt yields moved higher as inflation concerns returned, and Japan’s yield curve steepened as longer-dated government bonds came under pressure. Credit markets also reflected a more cautious tone, with high-yield spreads widening before partially retracing during the mid-week risk rebound.

Market pulse: fixed income markets treated Iran less as a growth scare and more as an inflation complication.

Commodities

Commodities were the clearest expression of the Iran shock.

Energy dominated the week’s macro narrative. Brent crude rose sharply through the week and then surged at the Monday 9 March open, briefly nearing $120 a barrel as markets confronted the scale of disruption around the Strait of Hormuz and the risk of tighter supply in crude, diesel, jet fuel and LNG. Reuters reported that oil rose roughly 25% on 9 March, its highest level since mid-2022.

Natural gas and refined products reinforced the same message. European gas prices spiked early in the week, while broader commodity markets began to price in the inflationary effects of higher energy costs. Gold’s performance was more complex. It initially softened as the dollar strengthened and deleveraging hit hard assets, but the underlying strategic case for precious metals remained intact as markets weighed the risk of a broader stagflationary backdrop.

Market pulse: commodities were not a side story; they were the mechanism through which the conflict reached global markets.

Currencies

The dollar regained its role as the cleanest liquid refuge.

Foreign-exchange moves were more orderly than those seen in equities or commodities, but the direction was still clear. The US dollar strengthened as investors sought liquidity and safety, with EURUSD falling toward 1.1530 during the week before stabilising near 1.1600. USDJPY also pushed toward the upper end of its recent range as higher energy prices and rising global yields complicated the yen’s safe-haven role.

Emerging-market currencies were more visibly pressured by weaker risk sentiment, while sterling also came under pressure as the oil shock raised questions for energy-importing economies. Reuters reported that sterling fell sharply on 9 March as the oil surge forced investors to reconsider the inflation outlook and the likely policy response.

Market pulse: in this phase of the shock, the dollar remained the market’s preferred shelter.

Key takeaways

Iran became the week’s dominant macro driver rather than just a geopolitical backdrop.
Oil, gas and shipping disruption were the key transmission channels into global markets.
Equities remained unstable, with Europe and energy-importing Asian markets hit hardest.
Options activity showed a clear preference for downside protection across broad markets.
Energy and metals positioning stayed selective and hedged rather than outright bullish.
Bond yields rose as markets repriced inflation risk more aggressively than recession risk.
Digital assets proved relatively resilient, though still sensitive to the same macro pressures.

Looking ahead (9 to 13 March 2026)

The key question now is whether the Iran shock remains an energy event or becomes a broader policy problem.

The coming week is heavy with macro and earnings catalysts, but the biggest issue is whether the oil spike proves temporary or starts to feed more deeply into inflation and rate expectations. That distinction matters because it will determine whether markets can continue to look through the conflict or whether earnings expectations and policy assumptions need to be revised lower.

The first major test is US CPI on Wednesday 11 March. That report arrives just before the next Federal Reserve meeting and will be watched closely for any sign that inflation was already proving sticky even before the latest energy surge. Later in the week, the PCE price index will offer a second important inflation checkpoint. If both releases stay firm, the market may conclude that the inflation problem is becoming broader than oil alone.

Earnings also matter. Oracle is due to report on 10 March and Adobe on 12 March, providing fresh read-through for AI spending, software demand and broader confidence in growth leadership. That matters because if core growth sectors start to wobble at the same time as oil stays elevated, the market backdrop becomes materially more fragile.

Housing, trade and consumer data will add texture, but the main checklist remains straightforward: oil, inflation, central-bank expectations and whether risk assets can continue to compartmentalise the conflict.

Market pulse: the week ahead will show whether this remains an energy shock or becomes a wider regime shift for markets.

Conclusion

The first week of March ended with a different market narrative than the one it started with.

What began as a geopolitical escalation involving Iran evolved into a broader repricing across oil, volatility, yields, currencies and equity risk. That matters because it changes how investors interpret every new headline. This is no longer only about regional instability. It is about whether the conflict injects a fresh inflation impulse into a market that was still hoping for lower rates and calmer conditions.

Markets did not respond with indiscriminate panic, but they did respond with a clear increase in hedging and a preference for selective exposure over broad conviction. That is usually what markets look like when investors still see opportunities, but trust the backdrop less with each passing day.

The video featured on this page was generated using artificial intelligence. It is provided for informational and educational purposes only and reflects an automated interpretation of the accompanying article content.

Related articles/content
- Global Markets are still only pricing for modest disruptions from Iran war (podcast) \| 9 March 2026 - When markets look chaotic emotions matter more than portfolios \| 9 March 2026 - Iran headlines market turbulence and options - a practical map of what to trade \| 4 March 2026 - Oil, inflation, and a sudden “no thanks” to risky bets: Mr. market flips the sign \| 4 March 2026 - Iran escalation The portfolio playbook \| 3 March 2026 - Investor Q&A on the Iran-US conflict \| 2 March 2026 - The Macro Take Iran conflict what to watch \| 2 March 2026 Saxo Market Compass - 2 March 2026 - Iran escalation: Quick thoughts on markets \| 1 March 2026 Saxo Market Compass - 23 February 2026 Saxo Market Compass - 16 February 2026

Saxo Market Compass - 2 March 2026

Mon, 02 Mar 2026 16:30:00 Z

Saxo Weekly Market Compass – 2 March 2026

(Recap week of 23 to 27 February 2026)

Headlines & introduction

AI volatility, shifting rate expectations and rising geopolitical tension shaped the final week of February.

Markets oscillated between earnings-driven optimism and renewed caution as policy headlines and sector narratives kept dispersion high. By Friday, bond yields had fallen to fresh cycle lows while equity momentum cooled, setting a more fragile tone into March.
Market pulse: confidence returned mid-week, but conviction faded into the weekend.

Equities

US: AI leadership tested, but breadth improved

US equities swung sharply through the week. After an early selloff on AI disruption fears (23 February), the S&P 500 rebounded to 6,946.13 on 25 February before easing back to 6,908.86 by 26 February as Nvidia fell 5.5% despite strong results. Microsoft (+3.0% on 25 February) and Palantir (+4.2%) supported the mid-week recovery, while sharp earnings reactions in Salesforce and Block underscored rising stock dispersion.
Falling Treasury yields provided valuation support, but widening high-yield spreads suggested investors were becoming more selective.
Market pulse: leadership remains tech-heavy, but earnings volatility is increasing.

Europe and Asia: resilience in Europe, divergence in Asia

European equities pushed to fresh highs mid-week, with the Euro STOXX 50 reaching 6,172.36 on 25 February and the FTSE 100 touching a record 10,910.55 on 27 February. Buyback announcements supported select UK names, while parts of continental Europe stayed sensitive to softer sentiment data.
In Asia, Japan and South Korea outperformed on chip strength, while Hong Kong remained more volatile ahead of China’s policy meetings.
Market pulse: Europe shows resilience, but Asia remains policy- and tech-sensitive.

Volatility

Volatility cooled mid-week, then stabilised

The VIX fell from 21.01 on 23 February to 17.93 on 25 February as equities recovered. By 26 February, it stood at 18.63, signalling that hedging demand had eased but not disappeared. Weekly implied moves narrowed from roughly ±118 points early in the week to ±42 points by expiry.
Elevated skew readings indicate investors still prioritise downside protection.
Market pulse: volatility has eased from stress levels but hasn’t returned to comfort.

Market sentiment based on options flow data

Positioning shifts from expansion to protection

Last week’s options activity painted a coherent picture across asset classes: investors largely stayed invested, but with a noticeably stronger emphasis on protection and structure. Broad index and ETF flows showed a clear preference for downside hedges and volatility overlays, signalling that portfolio insurance moved higher up the priority list. Within mega-cap leadership, positioning shifted from straightforward upside participation toward more buffered exposure, suggesting that even in core growth names, risk was being actively managed rather than expanded.

At the same time, metals continued to attract constructive interest as a diversification sleeve, while energy exposure was maintained but increasingly expressed through defined-risk structures. The overall message for investors is not one of panic or capitulation, but of recalibration: capital remains deployed, yet more deliberately hedged.
Market pulse: participation remains intact, but conviction is now expressed through protection rather than leverage.

Digital assets

ETF flows stabilise despite price swings
Bitcoin traded between roughly $63,100 on 23 February and $68,176 on 25 February before easing back below $68,000 into Friday. Ethereum followed a similar pattern. US spot Bitcoin ETFs recorded net inflows of +$254 million on 26 February after earlier outflows, with IBIT leading, while Ethereum ETFs also saw modest inflows.
Institutional participation therefore appears steady, even as prices react to broader macro shifts.
Market pulse: flows are constructive, but digital assets remain tied to macro sentiment.

Fixed income

Yields fall to cycle lows

US Treasuries rallied into week-end. The 10-year yield closed at 3.94% on 27 February, marking the first weekly close below 4.00% since mid-2024, while the 2-year yield touched levels below 3.41%. High-yield spreads widened to 291 basis points by Friday, the widest of the year.
In Europe, softer inflation readings reinforced expectations that tightening cycles are nearing completion.
Market pulse: bond markets are pricing slower growth and more cautious policy expectations.

Commodities

Gold steady, oil sensitive to geopolitics

Gold traded in a tight range near 5,200 per ounce during the week before breaking higher at the start of March. Silver showed sharper swings, briefly clearing 91 before consolidating.
Crude oil remained sensitive to developments around Iran and the Strait of Hormuz, trading near multi-month highs late in the week. Energy markets are now the clearest barometer of geopolitical risk.
Market pulse: commodities are increasingly driven by geopolitics rather than demand alone.

Currencies

Dollar mixed, sterling pressured by politics

The US dollar fluctuated around 1.1800 in EURUSD through most of the week, while USDJPY reversed sharply on shifting Bank of Japan signals. Sterling weakened after a UK by-election unsettled political expectations, with EURGBP moving above 0.8750.
Commodity-linked currencies stayed sensitive to oil’s move.
Market pulse: FX markets are balancing rate differentials against political risk.

Key takeaways

AI leadership intact, but earnings volatility rising.
European indices resilient; Asia more policy-sensitive.
US 10-year yield closed below 4.00% for first time since mid-2024.
Volatility cooled, but skew remains elevated.
Bitcoin ETF inflows resumed despite price swings.
Oil risk premium building amid Iran tensions.

Looking ahead (week of 2 to 6 March 2026)

Geopolitics takes centre stage

The US-Israeli strikes on Iran over the weekend materially raise geopolitical risk. Markets will focus on three transmission channels: oil supply and shipping through the Strait of Hormuz, insurance and freight costs, and second-round inflation expectations. If higher energy prices persist, they could complicate the recent decline in bond yields and alter expectations for central bank policy paths.

For deeper analysis on the conflict and its market implications, readers can consult our dedicated coverage published this weekend and Monday:

the equities note on the Iran conflict (1 March),
the macro take on what to watch (2 March),
the investor Q&A on the Iran-US escalation (2 March), and
the latest Saxo Market Call podcast (2 March).

These pieces explore cross-asset implications in greater detail.

US labour market in focus

Friday’s US employment report for February is the key macro catalyst. January showed job growth of 130,000, with earlier months revised lower. Markets will assess whether hiring momentum is stabilising or slowing further. ADP employment data mid-week, ISM surveys and the Federal Reserve’s Beige Book will provide additional context on growth and pricing pressures.

If payrolls surprise on either side, rate expectations and equity volatility could reprice quickly.

Earnings and consumer signals

After Nvidia’s volatile reaction, semiconductor earnings remain central. Broadcom and Marvell will be watched for AI demand commentary, while CrowdStrike provides a read on software resilience. Retail earnings from Target, Costco and Best Buy should offer insight into consumer demand trends as markets await updated retail sales data.

Market pulse: geopolitics sets the tone, but labour data and earnings will determine whether caution deepens or stabilises.

Conclusion

The final week of February highlighted a market still anchored by technology leadership but increasingly sensitive to macro and geopolitical crosscurrents. Falling bond yields and resilient European equities provide some stability, yet widening credit spreads and elevated skew signal cautious positioning beneath the surface.

As March begins, the combination of Middle East escalation, US labour data and heavyweight earnings could quickly reshape risk appetite. Staying diversified and attentive to cross-asset signals remains essential.

Related articles/content
Saxo Market Compass - 23 February 2026 Saxo Market Compass - 16 February 2026 Saxo Market Compass - 9 February 2026 Saxo Market Compass - 2 February 2026 Saxo Market Compass - 26 January 2026 - recap and insight Saxo Market Compass - 26 January 2026 Saxo Market Compass - 19 January 2026 Saxo Market Compass - 12 January 2026 The Saxo Weekly Market Compass - 15 December 2025

More from the author
Koen Hoorelbeke's articles on Saxo Follow and interact with me on X (Twitter) for more intraday content

Koen Hoorelbeke

Investment and Options Strategist

Saxo Bank

Topics: Macro Highlighted articles Equity Trading Macro ETF

Investor Q&A on the Iran-US conflict

Mon, 02 Mar 2026 10:30:00 Z

Key takeaways

This is an oil-and-shipping shock first, and a growth-and-earnings story second.
Higher oil can lift inflation and delay rate cuts, making bonds a less perfect hedge.
Long-term investors win by sticking to process, not by trying to trade the headline.

The weekend escalation involving the United States (US), Israel and Iran pulls markets back into “risk-off” mode. Risk-off means investors reduce exposure to shares and other risky assets, and lean into perceived safe havens.

Below is a Q&A built for long-term investors, focused on what matters most and what to watch.

The first domino is not oil, it is the cost of moving oil

Q: What just happened?
Reports point to a sharp military escalation and a jump in maritime risk around the Gulf, with tanker operations disrupted near the Strait of Hormuz. Even limited disruption matters because the strait is a narrow passage that carries a large share of global seaborne energy.

Q: Why do investors keep talking about the Strait of Hormuz?
Because it is a choke point. When a choke point gets risky, markets price two things at once: the barrel, and the delivery. Delivery costs include insurance, rerouting, delays, and “war-risk premia” which is the extra cost to operate in a war zone. Shipping stocks can pop if investors expect freight rates and war-risk surcharges to rise, even though disruption also raises costs and uncertainty.

The move is basically the market saying “rates and surcharges may rise faster than costs, at least at first”. When shipping lanes get risky, carriers often add war-risk and disruption surcharges, and global freight rates can tighten if capacity gets rerouted. That can be positive for large operators even though the situation is operationally messy.

Q: What does “sticky oil” change for a long-term investor?
It changes the inflation path more than it changes long-term demand. Higher energy costs behave like a tax on consumers and many businesses. Over time, that can squeeze profit margins, cool spending, and pressure earnings expectations, especially in energy-intensive sectors.

The second domino is inflation, and that is where the central bank headache begins

Q: Does higher oil automatically mean higher interest rates?
Not automatically. But it can slow the improvement in inflation and make central banks more cautious about cutting rates quickly. The risk is not just higher petrol bills today. The risk is higher inflation expectations tomorrow.

Q: Are government bonds still a safe haven in this kind of shock?
Sometimes, but less reliably than in a pure growth scare. If markets treat this mainly as an inflation shock, bond yields can rise even while shares fall, which weakens the classic “shares down, bonds up” cushion. That is why some investors diversify their hedges across several assets rather than expecting one instrument to do all the work.

A small example from the prior session: the iShares 20+ Year Treasury Bond ETF, ticker TLT, closed at 90.82 USD, up 0.4%. That is supportive, but it is not a guarantee of protection if inflation fears dominate.

The third domino is leadership rotation, not a permanent change in the rules

Q: Which areas tend to feel the pain first?
Usually the ones hit by a double whammy of higher fuel and weaker demand. Airlines and travel-linked businesses can face both, plus route disruption. Trade-exposed cyclicals especially industrials, consumer discretionary importers, and global manufacturers, often get hit early as delays and higher freight/insurance costs squeeze margins and disrupt supply chains.

Q: Who tends to look steadier, and why?
Energy-linked exposures can benefit from higher oil prices, but they also carry their own headline risk. Defence and security spending can reprice higher as governments focus on protection and resilience, although individual days can still be volatile.

In the prior close, the iShares US Aerospace & Defense ETF, ticker ITA, closed at 243.72 USD, down 1.0%. That looks counter-intuitive until you remember the market often sells broadly first, then differentiates later.

Q: What about gold, the dollar, and “safe-haven currencies”?
Gold often acts like portfolio insurance because it is less tied to any single country’s earnings outlook. The prior close fits that pattern, with GLD up 2.7%. Safe-haven currencies such as the Japanese yen and Swiss franc often strengthen in risk-off episodes too. As simple proxies, the Japanese yen trust ETF, ticker FXY, closed at 58.83 USD, up 0.2%, and the Swiss franc trust ETF, ticker FXF, closed at 114.88 USD, up 0.1%.

Risks to watch while the headlines churn

The main risk is escalation that keeps shipping constrained for longer than markets expect. Watch for signs like prolonged tanker queues, wider insurance surcharges, and more rerouting. The second risk is macro. If oil stays elevated, inflation can linger, and rate cuts can become harder to deliver. The third risk is policy surprise, including sanctions, export controls, or emergency measures that alter energy flows and supply chains quickly.

Investor playbook

Treat the first 24 to 72 hours as price discovery, not a verdict on the next five years.
Stress-test your portfolio for higher oil and higher inflation, not just lower growth.
Prefer diversification across regions and sectors over concentrated “war trades”.
Set simple triggers to review risk, such as oil staying elevated for weeks, not days, and inflation expectations rising.

Back to basics, with a side of turbulence

In the end, markets usually return to cash flows and fundamentals. But the path matters. This episode is a reminder that geopolitics can raise the cost of doing business, even when demand stays intact.

For long-term investors, the goal is not to predict the next headline. It is to build a portfolio that can handle several outcomes without forcing you to sell at the worst moment. In other words, keep your process boring. The news will do its best to be exciting for you.

Ruben Dalfovo

Investment Strategist

Saxo Bank

Topics: Macro Highlighted articles Equity Trading Macro ETF Stocks

Saxo Market Compass - 23 February 2026

Tue, 24 Feb 2026 06:02:00 Z

Saxo Weekly Market Compass – 23 February 2026

(Recap week of 16 to 20 February 2026)

Headlines & introduction

Rates, geopolitics and trade policy shaped cross-asset direction.

Global markets navigated a week defined by hawkish Federal Reserve minutes, resilient but slowing US growth data, renewed Middle East tensions and late-week US tariff headlines. Equities remained broadly resilient despite higher yields, while volatility stayed elevated but orderly. Commodities responded quickly to geopolitical developments, and digital assets tracked macro liquidity conditions rather than internal crypto narratives.

It was a week where policy tone mattered more than positioning, and markets adjusted accordingly.

Equities

US: resilience despite higher yields and policy crosscurrents.

US equities traded in wide intraday ranges but held firm overall. The S&P 500 rose 0.6% on 18 February and added 0.7% on 20 February, even as Fed minutes (19 February) signalled caution on rate cuts and Q4 GDP printed at 1.4% (20 February). Nvidia and Amazon advanced on 18 February, reflecting continued AI-related demand, while Deere surged 11.7% on 20 February after raising guidance. Walmart slipped 1.4% the same day after issuing a cautious outlook.

Europe and Asia: local strength, selective earnings pressure and softer Hong Kong tech.

In the UK, the FTSE 100 reached a record 10,556 on 18 February, supported by banks and defence shares including BAE Systems. On the continent, the STOXX 50 rose 1.2% and the STOXX 600 gained 0.8% on 20 February as luxury and industrial names led. France’s LVMH rose 4.4% and Hermès 3.6%, while Airbus fell 6.8% after trimming production targets. In Italy, Enel declined 3.6% following tax changes. Hong Kong’s Hang Seng ended down 1.1% on 20 February as technology stocks cooled ahead of Nvidia’s results.

Market pulse: equity markets rotated across sectors rather than retreating from risk.

Volatility

Elevated, but controlled.

The VIX hovered around 20 throughout the week, easing to 19.62 on 18 February before firming again into the PCE release on 20 February. Short-term volatility gauges cooled mid-week, then re-tightened as inflation and tariff headlines approached.

Options pricing implied weekly S&P 500 moves in a ±1–2% range into expiry, consistent with event hedging rather than systemic stress. Skew remained supported for much of the week, indicating persistent demand for downside protection.

Market pulse: investors are hedging events, not pricing crisis.

Market sentiment based on options flow data

Prudence without capitulation.

Across equities and metals, last week’s options activity pointed to disciplined risk management. In broad indices and mega-cap technology, confirmed opening flow leaned heavily toward near-term downside protection, signalling that institutional participants were unwilling to remain unhedged. At the same time, selective longer-dated upside positioning and structured call activity suggest exposure was being recalibrated rather than cut.

In gold and silver, upside participation was visible, but accompanied by hedges in mining equities and targeted downside structures. The aggregate message was not panic, but caution: investors appear to be staying invested while actively pricing in volatility in an environment where macro and headline risks remain elevated.

Market pulse: positioning reflects recalibration, not retreat.

Digital assets

Liquidity-driven consolidation.

Bitcoin traded largely between USD 67,000 and 69,000 during the week before slipping toward USD 65,700 on 23 February as tariff uncertainty resurfaced. Ethereum held near USD 2,000 before easing toward USD 1,880.

ETF flows showed divergence rather than broad withdrawal, suggesting reallocation within the space. Crypto-linked equities broadly tracked US risk sentiment, reinforcing the view that digital assets remain closely tethered to macro conditions and US rate expectations.

Market pulse: crypto continues to behave as a high-beta liquidity proxy.

Fixed income

Yields test and rebound around key levels.

The US 10-year Treasury yield approached the 4.00% threshold early in the week before rebounding toward 4.10% after hawkish Fed minutes and a weak 20-year auction on 19 February. Two-year yields backed up toward 4.47%, keeping “higher for longer” expectations in play.

In Japan, strong demand at a five-year JGB auction (17 February) pushed yields lower, while January CPI slowed to 1.5% (20 February), reinforcing a measured Bank of Japan path.

Market pulse: bond markets remain the primary transmission channel for macro shifts.

Commodities

Energy and precious metals reflect geopolitical risk.

Brent crude rose toward USD 70–71 during the week as US–Iran tensions intensified, before easing modestly. Gold traded within a USD 4,860–5,140 range and briefly moved above USD 5,100 late in the week as tariff uncertainty revived defensive demand. Silver rebounded after mid-week weakness, while copper softened amid rising inventories and seasonal disruptions linked to Lunar New Year.

Market pulse: geopolitical headlines are supporting defensive commodities, while growth-sensitive signals stay mixed.

Currencies

Dollar swings with rates and trade.

The US dollar strengthened mid-week following hawkish Fed minutes, with EURUSD dipping below 1.1800 and GBPUSD breaking under 1.3500 between 19 and 20 February. The tone shifted again on 23 February as renewed tariff headlines weighed on the dollar.

USDJPY traded in a 153–155 range as yield spreads fluctuated, while the Australian dollar outperformed following strong labour data on 19 February.

Market pulse: foreign exchange remains rate-led, with trade policy adding tactical volatility.

Key takeaways

US equities showed resilience despite hawkish Fed minutes and softer GDP.
European markets were supported by defence and luxury strength.
Volatility remained elevated but contained near 20.
US yields retested the 4% zone before rebounding.
Oil and gold reflected geopolitical risk rather than demand optimism.
Digital assets consolidated in line with macro liquidity conditions.

Looking ahead (23 to 28 February 2026)

Earnings in focus: AI, housing and corporate spending.

Nvidia reports on 25 February, a key test for the AI capital expenditure narrative and broader technology valuations. Home Depot reports on 24 February, with housing demand, pricing power and inventory commentary likely to be closely watched. Canadian banks and Dell later in the week extend the read-through to credit conditions and enterprise IT spending, while Berkshire Hathaway’s results on Saturday offer a broader barometer of conglomerate-level economic exposure.

Policy and macro catalysts.

President Trump delivers the State of the Union on 24 February, with trade policy and fiscal framing likely to influence market tone following recent tariff-related legal developments. Federal Reserve speakers, including Governor Waller, remain on the calendar, keeping rate expectations in focus ahead of March policy discussions.

On the data front, the Case-Shiller home price index, weekly jobless claims and January PPI are key releases. A surprise in producer inflation could quickly feed through to front-end yields and the US dollar, with knock-on effects for growth equities and digital assets.

For long-term investors, the emphasis remains on earnings durability in a higher-rate environment.
For active investors, event sequencing around earnings and macro data may create tactical volatility windows across sectors.

Market pulse: rates and forward guidance will likely determine whether resilience extends or risk is repriced.

Conclusion

The week of 16 to 20 February highlighted a market balancing firm macro data, cautious central bank messaging and renewed trade policy uncertainty. Equities absorbed crosscurrents through sector rotation, bonds reasserted their influence over valuations, and volatility remained elevated but orderly.

With major earnings and political communication ahead, positioning appears tactical rather than complacent. Diversification and disciplined risk management remain essential as markets navigate policy-driven crosscurrents.

Related articles/content
Saxo Market Compass - 16 February 2026 Saxo Market Compass - 9 February 2026 Saxo Market Compass - 2 February 2026 Saxo Market Compass - 26 January 2026 - recap and insight Saxo Market Compass - 26 January 2026 Saxo Market Compass - 19 January 2026 Saxo Market Compass - 12 January 2026 The Saxo Weekly Market Compass - 15 December 2025

More from the author
Koen Hoorelbeke's articles on Saxo Follow and interact with me on X (Twitter) for more intraday content

Koen Hoorelbeke

Investment and Options Strategist

Saxo Bank

Topics: Macro Highlighted articles Equity Trading Macro ETF

Saxo Market Compass - 16 February 2026

Mon, 16 Feb 2026 14:30:00 Z

Saxo Weekly Market Compass – 16 February 2026

(Recap week of 9 to 13 February 2026)

Headlines & introduction

Global markets navigated a week of shifting narratives, as AI optimism, earnings dispersion and softer US inflation pulled sentiment in different directions.

Early gains in US and European equities gave way to profit-taking and renewed technology-sector caution, while bond yields reset lower after a cooler CPI print. Volatility rose but remained orderly, and digital assets consolidated as ETF flows turned selective rather than one-sided.

Equities

US: data sensitivity and earnings dispersion dominate.

US indices opened firmer, with the S&P 500 at 6,964 on 9 February and the Nasdaq 100 up 0.8% (10 February) as AI-linked shares rebounded. However, flat retail sales (11 February) and mixed earnings guidance prompted selective risk reduction. A stronger-than-expected 130k payroll print (12 February) briefly lifted yields, before CPI reintroduced caution. By 13 February, the Dow had fallen 1.3%, the S&P 500 1.6% and the Nasdaq 2.0%.

Single-name dispersion was pronounced. Oracle rose 9.6% (9 February) and Spotify 14.8% (10 February), while Cisco fell 12.3% and AppLovin 19.7% (13 February). Softer CPI at 2.4% year-on-year (reported 16 February) steadied sentiment into the close.

Market pulse: US equities remain highly reactive to inflation and earnings guidance, with leadership rotating quickly.

Europe and Asia: records fade as stock selection drives returns.

European equities followed Wall Street higher early in the week, with the STOXX 600 touching 621.58 (11 February) before easing to 618.52 (13 February). Earnings divergence drove performance: Siemens Energy gained 8.4% (12 February) and Ahold Delhaize 11.5%, while Adyen fell 21.9% and DSV declined 10.5% (13 February). UK Q4 GDP rose just 0.1% (13 February), reinforcing a modest domestic growth backdrop.

In Asia, Japan’s Nikkei jumped 3.9% to 56,363 (9 February) before moderating later in the week. Hong Kong traded mixed into Lunar New Year closures, while mainland indices were steadier on policy support signals.

Market pulse: outside the US, performance reflects earnings dispersion and macro cross-currents rather than broad trend momentum.

Volatility

Elevated, but structured.

The VIX rose from 17.36 (9 February) to 20.82 (12 February) as CPI and payroll risks approached, closing at 20.60 into the US holiday (13 February data). Short-dated measures such as VIX1D moved above 21, indicating tactical hedging demand, while SKEW near 142–143 showed ongoing appetite for downside protection.

Options pricing implied weekly S&P 500 moves of roughly ±65 to ±82 points mid-week, expanding toward ±128 points into the next expiry. That reflects event risk rather than disorderly positioning.

Market pulse: investors are hedged, but volatility remains contained within defined ranges.

Market sentiment based on options flow data

Constructive engagement, framed by protection.

Options flow across indices and large-cap technology indicated continued participation in risk assets, accompanied by deliberate downside protection. Index-level hedging demand remained steady, while positioning in mega-cap technology combined selective upside exposure with near-term insurance.

In metals, particularly gold, flows were two-sided, blending upside participation with structured protection. The overall picture does not signal panic or wholesale de-risking. Instead, it reflects disciplined exposure management in an environment where macro catalysts and sector dispersion remain active drivers.

Market pulse: capital remains deployed, but increasingly through risk-defined structures rather than open-ended directional bets.

Digital assets

Consolidation amid selective ETF flows.

Bitcoin traded largely between the mid- and high-$60,000s during the week, while Ethereum hovered near $1,950–2,040. ETF flows were mixed: IBIT recorded both inflows (+$26.5m on 10 February) and later outflows, while ETHA saw net redemptions mid-week.

Crypto-linked equities experienced sharper swings, with Coinbase down 7.9% (13 February) before stabilising. The pattern suggests tactical repositioning rather than capitulation, with macro data and rate expectations guiding sentiment.

Market pulse: digital assets are consolidating, awaiting clearer macro direction to re-establish trend conviction.

Fixed income

Disinflation supports a yield reset lower.

Treasuries rallied into week’s end. The 10-year yield fell toward 4.05% (13 February), while the 2-year closed below 3.41%, its lowest since 2022. Earlier in the week, payroll strength had lifted the 10-year above 4.20%, underscoring rate sensitivity to data surprises.

In Europe, the German 2-year yield held near 2.07%, reflecting restrained expectations for rapid ECB easing. Japanese long-dated bonds saw strong demand mid-week before a modest curve steepening following softer Q4 GDP.

Market pulse: bond markets are cautiously leaning toward a slower easing path, conditional on sustained inflation moderation.

Commodities

Energy weakens, gold supported, agriculture diverges.

Brent crude slipped below USD 68 by week’s end after failing to sustain moves above USD 70, as inventory builds and ebbing geopolitical risk weighed. Gold remained supported near USD 5,000, benefitting from softer yields late in the week.

Sugar fell to 13.5 cents/lb amid improved supply prospects and weaker consumption trends, while wheat climbed to a three-month high on crop concerns and short covering. Commodity performance reflected positioning shifts rather than structural demand changes.

Market pulse: commodities are trading tactically, driven by macro sensitivity and flow dynamics.

Currencies

Yield differentials continue to anchor FX moves.

The yen strengthened early in the week, with USDJPY falling toward 152.27 (12 February), before rebounding above 153 as the dollar stabilised. EURUSD traded around 1.19, reflecting shifting US rate expectations.

Sterling was volatile following weaker UK GDP, while AUDUSD briefly tested 0.7150 before retreating. FX movements largely tracked bond market repricing rather than independent risk themes.

Market pulse: currency markets remain yield-led, with the yen a key volatility driver.

Key takeaways

US equities volatile as AI narrative shifts and CPI cools to 2.4%.
VIX elevated near 20, but positioning remains orderly.
US 2-year yield below 3.41%, lowest since 2022.
Bitcoin consolidates; ETF flows selective rather than capitulative.
Brent below USD 68; gold supported by softer yields.
Yen swings mirror rate repricing dynamics.

Looking ahead (16–20 February 2026)

A shortened week concentrates risk.
US markets are closed on Monday 16 February for Presidents’ Day, compressing liquidity into four trading sessions. Holiday-thinned conditions often amplify intraday moves when trading resumes.

Policy insight and inflation in focus.
The Federal Reserve releases minutes from its late-January meeting on Wednesday 18 February, offering insight into internal debate around inflation progress and the timing of potential rate cuts. On Friday 20 February, the Bureau of Economic Analysis publishes Personal Income and Outlays for December, including the PCE price index — the Fed’s preferred inflation gauge. Confirmation of moderating price pressures would reinforce last week’s yield decline; a surprise could quickly reprice the front end.

Earnings dispersion continues.
Walmart reports on Thursday, providing an important read on US consumer resilience and pricing power. Deere offers insight into agricultural and industrial demand. Analog Devices and Palo Alto Networks will test the durability of AI hardware and cybersecurity spending, while Airbus and Rio Tinto add a European industrial lens.

For active investors, event-driven volatility is likely to persist. For long-term investors, the trajectory of inflation and bond yields remains the primary anchor.

Market pulse: a compressed week with clustered catalysts raises the probability of sharper cross-asset reactions.

Conclusion

Last week demonstrated how quickly sentiment can pivot between growth optimism and disruption concerns. Softer inflation has steadied bond markets and offered tentative support to equities, yet volatility remains elevated as investors assess the durability of disinflation and earnings momentum. With PCE data and FOMC minutes ahead in a shortened week, markets are likely to remain reactive, range-bound and sensitive to policy nuance rather than headline optimism.

Related articles/content
Saxo Market Compass - 9 February 2026 Saxo Market Compass - 2 February 2026 Saxo Market Compass - 26 January 2026 - recap and insight Saxo Market Compass - 26 January 2026 Saxo Market Compass - 19 January 2026 Saxo Market Compass - 12 January 2026 The Saxo Weekly Market Compass - 15 December 2025

More from the author
Koen Hoorelbeke's articles on Saxo Follow and interact with me on X (Twitter) for more intraday content

Koen Hoorelbeke

Investment and Options Strategist

Saxo Bank

Topics: Macro Highlighted articles Equity Trading Macro ETF

Saxo Market Compass - 9 February 2026

Mon, 09 Feb 2026 12:00:00 Z

Saxo weekly market compass – 9 February 2026

Recap week of 2 to 6 February 2026

Headlines & introduction

February opened with sharp cross-asset swings before markets found a tentative footing into the end of the week. Equity sentiment oscillated between AI-driven sell-offs and forceful rebounds, volatility stayed elevated but orderly, and commodities experienced extreme, liquidity-led moves. At the same time, currencies and rates reflected a reassessment of central bank timing rather than a clear macro break.
Market pulse: investors are recalibrating risk, not abandoning it.

Equities – US: rotation, not capitulation

Earnings discipline returns as the key market filter.
US equities endured a volatile but ultimately stabilising week. Technology weakness early on, driven by concerns around AI monetisation and capital expenditure, gave way to a sharp rebound into Friday (3–6 February). Semiconductor stocks were central to both moves, selling off on cautious guidance before rebounding strongly as dip buyers returned. The Dow’s relative strength highlighted ongoing rotation rather than broad de-risking.

Away from chips, earnings dispersion remained pronounced. Amazon slipped after flagging a step-up in infrastructure spending, keeping margin discipline in focus, while healthcare outperformed as resilient earnings from large pharmaceutical names supported defensives (5 February).
Market pulse: US equities are rotating internally, with selectivity replacing blanket risk appetite.

Equities – Europe and Asia: local stories take the lead

Policy patience meets stock-level reality.
European markets were broadly rangebound, but index stability masked sharp stock-level moves. Germany and the Netherlands saw selective rebounds in industrials and technology, while healthcare sentiment remained sensitive after weaker medium-term guidance from Novo Nordisk earlier in the week (4–5 February). In the UK, equities faced a mixed backdrop as sterling weakness following a dovish Bank of England decision weighed on domestic names, even as exporters found support (6 February).

Asia outperformed on balance. Japan extended record gains following a decisive election outcome that reinforced expectations for fiscal support and pro-growth policy, lifting domestically focused stocks (6–9 February). China and Hong Kong remained more cautious, with tech shares sensitive to global risk swings despite improving services data.
Market pulse: outside the US, equity performance is increasingly shaped by local policy and earnings narratives.

Volatility – elevated, but controlled

Event risk keeps protection in demand.
Volatility remained a defining feature of the week, but without signs of disorder. The VIX fluctuated between the mid-teens and low 20s, peaking mid-week as technology stocks sold off before easing back as equities stabilised (6–9 February). Short-dated volatility stayed firm, signalling persistent demand for near-term protection rather than fear of a systemic drawdown.

Options markets consistently priced meaningful expected moves around key data and earnings, reinforcing a backdrop where timing risk matters. Volatility compressed into the end of the week, but did not fully unwind.
Market pulse: volatility is being managed, not ignored.

Market sentiment based on options flow data

Positioning favours resilience over conviction.
Last week’s options activity suggests investors are staying invested but becoming more deliberate about risk. Rather than stepping away from markets, positioning points to a preference for maintaining exposure while actively preparing for larger and more frequent price swings. This shows up in the increased use of protection and hedging alongside continued upside participation, a mix that typically appears when long-term confidence remains intact but near-term uncertainty is rising.

Across asset classes, this behaviour implies a market where direction matters less than resilience. Investors appear to be planning for uneven performance, sharp rotations, and headline-driven moves rather than a smooth, trend-led advance. The signal from options markets is not panic, but prudence: opportunities remain, yet the cost of being wrong is being taken more seriously.
Market pulse: investors are engaged, but risk management has become central to participation.

Digital assets – stabilisation without conviction

Crypto follows macro risk, not its own cycle.
Digital assets spent the week attempting to stabilise after sharp drawdowns. Bitcoin held a wide range between the mid-$60,000s and low-$70,000s, while Ethereum hovered near the $2,000 area, moving largely in step with equity volatility (4–6 February). Price action continues to reflect macro risk sentiment rather than crypto-specific drivers.

ETF flows reinforced the cautious tone. Spot bitcoin ETFs saw notable outflows mid-week before partial stabilisation, while Ethereum-linked products experienced selective selling rather than wholesale exits. Crypto-linked equities and miners remained more volatile than spot prices, highlighting ongoing deleveraging.
Market pulse: crypto is steadier, but confidence remains conditional on calmer equity markets.

Fixed income – labour data revives the hedge

Rates react sharply, then consolidate.
US Treasury yields fell sharply late in the week as weaker job openings, rising claims, and softer risk sentiment shifted focus back to growth risks (6 February). The 2-year yield briefly dipped below 3.45%, while the 10-year tested the 4.15% area before rebounding as equities stabilised. Credit spreads widened modestly, consistent with caution rather than stress.

In Europe, yields were steadier as the ECB reiterated a data-dependent stance. In Japan, government bond yields pushed higher earlier in the week on fiscal concerns before finding resistance.
Market pulse: bonds are regaining relevance as a portfolio stabiliser.

Commodities – leverage flush dominates price action

Liquidity, not fundamentals, drives extremes.
Commodities delivered the most dramatic moves of the week. Precious metals whipsawed violently after a historic sell-off, with gold recovering above USD 5,000 while silver remained vulnerable to liquidity gaps and forced de-risking (3–6 February). Positioning data showed aggressive reductions in speculative longs, amplifying price swings.

Oil prices eased as US–Iran talks reduced immediate supply risk, while natural gas remained exceptionally volatile after record storage withdrawals and weather-driven reversals.
Market pulse: commodity markets are clearing excess leverage, but stability remains elusive.

Currencies – central bank signals set the tone

Policy divergence, not growth, drives FX.
Currency markets reflected shifting rate expectations. Sterling weakened sharply after a dovish Bank of England hold brought forward expectations for rate cuts (6 February). The yen strengthened later in the week following Japan’s election and renewed official vigilance, while the US dollar traded unevenly as yields swung with risk sentiment.

Commodity-linked currencies were volatile, with the Australian dollar initially supported by an RBA hike before giving back gains as global risk appetite softened.
Market pulse: FX remains a clean expression of relative policy outlooks.

Key takeaways

Equity markets rotated sharply, led by technology volatility and earnings dispersion.
Volatility stayed elevated but orderly, with active use of short-dated protection.
Options flows point to engagement with tighter risk control.
Bonds reacted strongly to labour data, restoring their defensive role.
Commodities saw extreme, liquidity-driven price action.

Looking ahead – data and earnings converge

Macro releases and results may reset expectations.
The coming week brings a dense and potentially market-defining calendar. The delayed US January employment report is due mid-week, followed by the January CPI inflation print on Friday. Together, these releases will be critical for shaping expectations around the Federal Reserve’s next policy move, particularly after recent signals of cooling labour demand. Investors will look closely at wage growth, participation rates, and core inflation momentum to assess whether disinflation is progressing quickly enough to reopen the door to rate cuts later in the year.

US retail sales data will provide an additional lens on consumer resilience following the holiday period, helping investors gauge whether softer labour indicators are feeding through to spending. Alongside the data, a heavy slate of central bank speakers could influence rates and currency markets if guidance shifts.

Earnings remain an equally important catalyst. Technology investors will focus on Cisco for insight into enterprise and AI infrastructure demand, while consumer names such as Coca-Cola and McDonald’s will test defensive growth narratives and pricing power. Results from autos, pharmaceuticals, travel and digital platforms, including Ford, Moderna, Airbnb and Shopify, add further scope for sector rotation. Crypto-linked equities remain sensitive to both macro data and digital asset flows, keeping cross-asset correlations high.
Market pulse: with jobs, inflation and earnings clustered together, this week could crystallise the market’s next macro narrative.

Conclusion

Markets ended the week on firmer ground, but confidence remains conditional. Investors are staying engaged while demanding clearer earnings delivery, calmer macro signals, and improved liquidity conditions. With labour data, inflation, and a heavy earnings slate ahead, the balance between stabilisation and renewed volatility will be tested quickly. Staying diversified and flexible remains essential as February unfolds.

Koen Hoorelbeke

Investment and Options Strategist

Saxo Bank

Topics: Macro Highlighted articles Equity Trading Macro ETF

Saxo Market Compass - 2 February 2026

Mon, 02 Feb 2026 14:00:00 Z

Saxo weekly market compass – 2 February 2026

Recap week of 26 to 30 January 2026

Headlines & introduction

January ended with equities still resilient, but cross-asset stress shifted decisively into commodities.
Markets opened the week supported by earnings and steady growth signals, then turned more cautious as policy uncertainty and a violent reversal in precious metals tightened risk discipline. Equity indices held near record levels, but leadership narrowed and dispersion increased. The defining late-week development was the metals rout and the risk of spillovers into funding conditions and broader risk appetite.
Market pulse: risk stayed on, but conviction required protection.

Equities

US equities hovered near records as earnings optimism met rate sensitivity.
US indices oscillated around fresh highs, with the S&P 500 briefly trading above the 7,000 mark before easing into month-end. Early-week support came from AI-linked names and select mega-cap results, but tone shifted after the Federal Reserve held rates steady and attention turned to policy continuity and leadership risk. Rising yields and a firmer dollar weighed on long-duration growth late in the week, leaving the Nasdaq more exposed than the Dow as investors prioritised balance-sheet strength and earnings quality.
Market pulse: US markets stayed firm, but leadership narrowed and valuation discipline returned.

Europe and Asia saw sharper rotations as growth data met earnings reality.
European equities ended January supported by improving activity signals, with euro area GDP expanding 0.3% quarter-on-quarter in Q4, easing recession concerns and underpinning banks and cyclicals across core markets. Stock-specific earnings dominated performance. Luxury names sold off on cautious guidance, while technology diverged sharply after SAP’s cloud outlook disappointed. UK equities were steadier, helped by defensives and energy, while Nordic markets saw pronounced single-stock volatility. In Asia, Japan underperformed as yen strength weighed on exporters, while Hong Kong extended its January rally before a sharp pullback at week’s end as global risk sentiment cooled.
Market pulse: macro improved at the margin, but earnings and global risk set direction.

Volatility

Surface calm masked pockets of rising stress.
Equity volatility remained contained for most of the week, with headline measures anchored in the mid-teens. Short-dated volatility reacted to the Fed decision and major earnings rather than signalling systemic fear. Late in the week, stress migrated into commodities, where forced unwinds amplified price swings. That shift unsettled broader sentiment despite stable equity volatility readings.
Market pulse: volatility stayed low, but the stress point moved elsewhere.

Market sentiment based on options flow data

Positioning stayed constructive, but risk discipline clearly tightened.
Options activity suggests investors remained engaged while becoming more selective in how exposure was expressed. Broad index positioning indicates a willingness to stay invested, but this exposure is increasingly paired with protection, highlighting the elevated priority of risk management. Among large US technology stocks, flows favoured balanced structures that combine participation with defined outcomes, including income generation and capped upside. Overall, the options market points to confidence in market resilience, alongside a clear acknowledgement that near-term event risk warrants caution rather than unhedged optimism.
Market pulse: engaged participation, disciplined risk control.

Digital assets

Crypto tracked macro liquidity rather than crypto-specific news.
Digital assets softened into month-end, moving in line with broader risk sentiment. Price action suggested gradual deleveraging rather than panic, as a firmer dollar and sensitivity to real yields weighed on demand. ETF flows reinforced the cautious tone, with selective resilience earlier in the week giving way to broader outflows as policy uncertainty rose.
Market pulse: crypto stayed defensive, awaiting clearer macro signals.

Fixed income

Bonds quietly regained defensive appeal.
Rates traded in a relatively narrow range, but directionally investors leaned toward safety as commodities collapsed. US Treasuries attracted demand as leverage was reduced across other asset classes, while longer-dated yields eased back toward key technical levels. In Japan, government bond yields stabilised after softer inflation data and reduced near-term tightening pressure.
Market pulse: fixed income resumed its stabilising role.

Commodities

Metals broke first as leverage and margin dynamics flipped a record rally into a rout.
The week’s defining move was the collapse in precious metals following an extraordinary run. Gold and silver fell sharply after reaching record highs, with silver’s drawdown particularly severe as crowded positioning unwound. Exchange margin increases amplified the move, forcing deleveraging into thin liquidity. The impact quickly spread to listed miners and commodity-linked equities, while a firmer dollar added pressure across non-yielding assets. Energy and industrial metals also retreated, reinforcing the sense of a broad-based tightening in risk conditions rather than a single-market correction.
Market pulse: metals shifted from momentum to forced de-risking, and the aftershocks still matter.

Currencies

The US dollar found a floor after extreme weakness.
FX markets pivoted as the commodity shock and policy uncertainty drove renewed demand for the dollar. The euro held relatively firm on improving growth data, while the yen remained volatile. Commodity-linked currencies reversed earlier gains in line with falling metals and energy prices.
Market pulse: currencies moved from trend to consolidation as stress rose.

Key takeaways

Equities remained resilient, but leadership narrowed and dispersion increased.
Volatility stayed low in equities, with stress migrating into commodities.
Options markets signalled engagement paired with tighter risk control.
Bonds regained defensive appeal late in the week.
Precious metals experienced a historically violent reversal.
The US dollar stabilised after sharp early-week weakness.

Looking ahead (week of 2 to 6 February 2026)

Markets test whether the metals shock stabilises or spills further across assets.
The immediate focus is on whether gold and silver can find a base after margin-driven deleveraging, or whether further selling pressures miners, commodity-linked credit and broader risk sentiment. If metals volatility persists, investors will watch for knock-on effects via a firmer dollar, tighter financial conditions and rising cross-asset correlations.

Macro data then becomes the referee. The US calendar is dense, with ISM manufacturing, job openings and ADP employment early in the week, culminating in Friday’s January employment report. Labour-market surprises will be critical for rate expectations following the Fed’s recent hold.

Earnings remain central to index leadership. Results from Alphabet, Amazon, AMD, Disney and Palantir will shape views on AI investment, cloud demand and margins. In the current environment, markets are likely to reward visibility and balance-sheet strength over headline beats, especially if cross-asset volatility remains elevated.

Market pulse: containment first in metals, then in rates expectations.

Conclusion

January closed with equities near record levels, but the week’s message came from commodities rather than stocks. Leverage can unwind faster than narratives, and the metals rout has tightened risk discipline across markets. If stability returns quickly, risk assets may regain momentum. If not, spillovers into currencies, credit and volatility could keep investors cautious as February begins.

Koen Hoorelbeke

Investment and Options Strategist

Saxo Bank

Topics: Macro Highlighted articles Equity Trading Macro ETF

Saxo Market Compass - 26 January 2026 - recap & insight (video)

Tue, 27 Jan 2026 07:47:00 Z

This video summarises the key developments from the week of 19 to 23 January 2026, including shifts in equities, volatility, currencies and commodities. It highlights how policy signals, options positioning and headline risk shaped market moves, and what themes could drive markets in the week ahead.

For the full written analysis with data and detailed commentary, read the Weekly Market Compass article via the following link:

Saxo Market Compass - 26 January 2026

Koen Hoorelbeke

Investment and Options Strategist

Saxo Bank

Topics: Macro Highlighted articles Equity Trading Macro ETF

Webinar: the FX Outlook from here and Mastering FX

Fri, 20 Jun 2025 11:30:00 Z

Saxo Global Head of Macro Strategy John J. Hardy discusses the lay of the land for currencies in the Trump 2.0 era.

Note: This is marketing material.

In this webinar, Saxo’s Global Head of Macro Strategy John J. Hardy takes you through the important new features in the geopolitical and geoeconomic landscape that will shape markets for years to come, delves into the outlook for the major currencies in this context and, making a number of directional calls. As well, some observations on how he views technical analysis as well as John’s answering of a number of great viewer questions.

John J. Hardy

Global Head of Macro Strategy

Saxo Bank

Topics: Highlighted articles Forex Macro

Invest in themes with Saxo

Wed, 09 Apr 2025 11:47:00 Z

Check out our recent presentation on how thematic investing can help you capture future trends and align your investments with your passions.

Agenda:

Welcome & introduction
- Introduce thematic investing and its growing popularity, highlighting why it can be both profitable and engaging.
What is thematic investing?
- Investing in trends and sectors shaping the future, offering targeted exposure and diversification, and alignment with personal interests.
Why invest in themes?
- Capture transformative trends early, diversify portfolios, and combine passion with profit.
Introducing the different Saxo themes
- 20 themes grouped into categories like AI, Robotics, Defence, Electric vehicles, etc.
Deep dive into a few selected themes
- A closer look at selected high-potential themes.
Get Started with thematic investing
- How to get started with Saxo Bank
Q&A

Jacob Falkencrone

Global Head of Investment Strategy

Saxo Bank

Topics: Equities Theme - Artificial intelligence Theme - Defence Theme - Electric vehicles Theme - Clean energy Theme - Big pharma Theme - Luxury Theme - Robotics and automation Theme - Digitalization Theme - Dividend growth Theme - Emerging market growth Theme - Genomics Theme - Green metals Theme - Precious metals Theme - Agribusiness Theme - Green transition Theme Category - Equities Theme - Oil and gas majors Theme - Women in leadership Theme - Construction Theme - Cyber security

Here's why you shouldn't be scared about volatile markets

Wed, 19 Mar 2025 12:38:00 Z

Understanding volatility: a beginner's guide to navigating the market

Volatility in the stock market can feel intimidating, especially for new investors. However, understanding it is a crucial step towards becoming a confident and informed investor.

What is volatility?

Volatility refers to how much and how quickly the price of an asset, such as a stock, fluctuates over time. Think of it as the market's "mood swings." While the global stock market has historically delivered an average annual return of about 8%, these returns come with periods of ups and downs—some dramatic, others mild.

Why does volatility matter?

For investors, volatility represents both risk and opportunity. High volatility means prices can change dramatically in a short period, offering chances for higher returns but also increasing the risk of losses. Low volatility, on the other hand, indicates more stable prices but generally lower potential gains.

How to handle volatility

Navigating volatile markets requires strategy and patience. Here are three key tips:

• Don’t try to time the market

Timing when to buy or sell based on market movements is extremely difficult, even for seasoned professionals. Attempting to do so often leads to missed opportunities.

• Diversify your portfolio

Diversification—spreading your investments across different asset types like stocks, bonds, real estate, and commodities—is one of the best ways to manage risk. Think of it as a balanced diet for your portfolio: it ensures you’re not overly dependent on any single investment.

In this video, you can get tips on how to diversify your portfolio in a simple way

• Stay focused on long-term goals

Short-term market fluctuations can be unsettling, but keeping your eyes on long-term objectives helps you stay grounded during turbulent times. Looking at your portfolio from day to day might give you a false picture of the reality. Zoom out and look at the bigger picture.

Embracing volatility

Volatility is not something to fear—it’s an inherent part of investing. By staying informed, diversifying your portfolio, and maintaining a long-term perspective, you can turn volatility into an opportunity rather than a challenge.

Stay informed, stay diversified, and remember that volatility is just one part of the investment journey. So embrace the ups and downs—they’re all part of the ride towards financial success!

Topics: Macro Highlighted articles Equity Trading ETFs ETF ETF Inspiration MSCI MSCI World Index Equities

Saxo Welcomes J. Safra Sarasin Group as New Shareholder

Mon, 10 Mar 2025 08:14:00 Z

We are pleased to announce that Bank J. Safra Sarasin AG is set to become a major shareholder in Saxo Bank, acquiring a 70% stake by purchasing shares from Geely Financials Denmark A/S, a subsidiary of Zhejiang Geely Holding Group Co. Ltd and Mandatum Group.

Share the news and refer a friend:

Refer a friend in SaxoTraderGo
Refer a friend in SaxoInvestor

This strategic partnership underscores our commitment to providing exceptional service and innovative solutions to our clients and partners worldwide. With Kim Fournais continuing as CEO and maintaining his significant stake, Saxo Bank will remain an independent entity, ensuring stability and continuity for all our stakeholders, employees, partners, and clients.

By combining the strengths of Saxo and Safra, we aim to enhance our offerings and set new benchmarks for client experience and innovation in the financial industry. Thanks to Geely and Mandatum for the support throughout the past seven years, and thank you to all our clients and partners for your continued trust and support.

For more details, please find the press release on our website.

Saxo

Topics: Saxo Spotlight Financials Stocks Equity Trading Equities

Saxo Bank announces record 2024 results

Mon, 03 Mar 2025 08:00:00 Z

The Saxo Bank Group announces its financial results for 2024, achieving the best results in the company's history. The Group reported a net profit of DKK 1,005 million for 2024, compared to a net profit of DKK 260 million for 2023, corresponding to an increase of 287%. The adjusted net profit for 2024 ended at DKK 1,074 million.

In early 2024, Saxo Bank implemented favorable reduced pricing for clients as part of its new global pricing strategy. This reduction is part of the ongoing commitment to improve the value offered to clients and is closely linked to the ability to provide cost-effective solutions alongside the bank's award-winning platforms, products, and services.

By meeting the clients’ needs and becoming a price-leader across many markets, Saxo Bank experienced sustained growth and reached a record of almost 1.3 million clients by the end of 2024, with all time high client assets of DKK 853 billion.

2024 key figures at a glance (2023):

Total income: DKK 4,670 million (DKK 4,481 million)
Net profit: DKK 1,005 million (DKK 260 million)
Adjusted net profit: DKK 1,074 million (DKK 653 million)
Total equity: DKK 6,254 million (DKK 6,366 million)
Total client assets: DKK 853 billion (DKK 745 billion)
Total number of clients: 1,286,000 (1,159,000)
Capital ratio: 29% (32%)

Commenting on the results, Kim Fournais, CEO and Founder of Saxo Bank, said:

“I am very proud to report that 2024 was the best financial year in Saxo Bank’s history. This is clearly a very satisfactory result for us. The progress underscores our steadfast commitment to creating value for all our stakeholders and strengthening our foundation for sustainable growth. With almost 1.3 million clients and client assets reaching an impressive DKK 853 billion, these milestones showcase the trust and confidence placed in Saxo Bank. Our comprehensive trading and investment platforms have provided robust tools and resources, enabling our clients and partners to navigate the markets efficiently and build more resilient, diversified portfolios.

The result is naturally also a large testament to the collective efforts of our employees who have driven Saxo Bank's performance and achievements this year.

In 2024, we welcomed several new initiatives to make Saxo Bank attractive for even more people. A few highlights are the introduction of more competitive prices across products and the launch of our automated monthly investing account known as AutoInvest. We also introduced our Investor platforms to more markets, enabling more curious people to get invested in the world.

Moving forward, our strategic focus remains unchanged. We continue to focus on growing our number of clients and client assets, and on enhancing the product and platform offerings to the benefit of our clients while focusing on our core markets.

In our commitment to protecting our clients and upholding the integrity of our business, Saxo Bank has continued to make significant investments and improvements in compliance, anti-money laundering, cyber security, and risk management. This will remain a core priority as well.”

The full report is available here: https://www.home.saxo/about-us/investor-relations

Saxo

Topics: Saxo Spotlight Financials Stocks

Don't put all your eggs in one basket

Thu, 27 Feb 2025 11:36:00 Z

How to Build a Diversified Portfolio with ETFs

Diversification is a cornerstone of successful investing. It helps reduce risk by spreading investments across various financial instruments, industries, and regions. But how can you achieve this efficiently? Exchange-Traded Funds (ETFs) offer a simple, yet effective way to create a well-diversified portfolio, tailored to your goals and beliefs.

What is Diversification?
Diversification means not putting all your eggs in one basket. By investing in different asset classes, sectors, or regions, you minimize the impact of poor performance in any single area. This strategy smooths returns over time and reduces overall portfolio risk.

What Are ETFs?
ETFs are investment funds traded on stock exchanges, similar to stocks. They hold a collection of assets like stocks, bonds, or commodities and are designed to track the performance of specific indices or sectors. This makes them an accessible tool for both new and experienced investors.

Benefits of Using ETFs for Diversification

Broad Exposure: ETFs provide access to various asset classes and sectors. Whether you're interested in technology, healthcare, or emerging markets, there's likely an ETF that aligns with your interests.
Cost Efficiency: ETFs often have lower expense ratios compared to mutual funds, making them a cost-effective choice for long-term investors.
Ease of Use: Instead of buying individual stocks or bonds, you can invest in a basket of securities with one transaction. This saves time and reduces transaction costs.
Flexibility and Liquidity: ETFs can be bought and sold throughout the trading day at market prices, allowing investors to respond quickly to market changes.
Transparency: Most ETFs disclose their holdings daily, giving you clear insight into what you're investing in.

Building Your Portfolio with ETFs
To build a diversified portfolio using ETFs:

Choose Different Asset Classes: Include stocks, bonds, and possibly commodities.
Diversify Across Sectors and Regions: Invest in multiple industries and geographic areas.
Rebalance Regularly: Adjust your portfolio periodically to maintain your desired asset allocation as markets fluctuate.

Not sure how to rebalance your portfolio? This video will provide you with the answers:

Conclusion ETFs are a powerful tool for achieving diversification. They offer exposure to a wide range of assets while being cost-effective, flexible, and easy to manage. By incorporating ETFs into your investment strategy, you can build a resilient portfolio that aligns with your financial goals.

Topics: ETFs Highlighted articles Equity Trading Macro ETFs ETF ETF Inspiration MSCI MSCI World Index

Is it time to rebalance your portfolio?

Thu, 16 Jan 2025 15:14:00 Z

Revitalize Your Portfolio: A New Year’s Guide to Rebalancing

Now that 2024 turned into 2025, it's the perfect time to give your investment portfolio a fresh start. Much like the legendary investor Warren Buffett, who is known for his strategic moves in the market, investors are encouraged to take a closer look at their portfolios and consider rebalancing to align with their financial goals and risk tolerance.

The Importance of Rebalancing

Rebalancing is similar to maintaining a garden. Over time, market fluctuations can alter your asset allocation, potentially exposing you to unintended risks. By rebalancing, you ensure that your portfolio remains aligned with your investment strategy, providing stability even as markets fluctuate.

Strategies for Rebalancing

There are two primary approaches to rebalancing your portfolio: calendar-based and threshold-based strategies. The calendar-based method involves reviewing and adjusting your portfolio on a set schedule, such as semi-annually or annually. The threshold-based approach requires adjustments when asset allocations deviate from predetermined percentages. Choosing the right method depends on your investment style and time commitment.

Steps to Effective Rebalancing

To effectively rebalance your portfolio, follow these steps:

Assess Current Allocations: Evaluate your current asset distribution.
Compare to Target Allocations: Identify discrepancies between current and target allocations.
Adjust Holdings: Buy assets that are below target and sell those that exceed target allocations.
Document Changes: Keep a record of all adjustments for future reference.

Avoiding Common Pitfalls

Investors often face pitfalls such as emotional decision-making and neglecting to rebalance. It's crucial to maintain a consistent strategy and consider factors beyond asset classes, such as geography and sectors. Avoid trying to time the market, as this can lead to missed opportunities.

Conclusion: A Well-Balanced New Year

As we step into the New Year, take a cue from seasoned investors and ensure your portfolio is working as hard as you are. By avoiding common mistakes and implementing a robust rebalancing strategy, you can set the stage for a prosperous and well-balanced financial future. Remember, the key to successful investing is sticking to your long-term strategy and not making rash decisions based on short-term market movements. Here's to a prosperous New Year!

Topics: Macro Highlighted articles Equity Trading Equities

Will Elon Musk's alliance with Donald Trump help Tesla fast-track their technologies?

Mon, 30 Dec 2024 12:54:00 Z

The Musk-Trump Alliance: Tesla's Stock Soars

In the ever-evolving landscape of American politics and business, an unexpected partnership has emerged, sending shockwaves through the stock market. The alliance between newly re-elected President Donald Trump and Tesla CEO Elon Musk has not only captured headlines but also propelled Tesla's stock to unprecedented heights.

The Unlikely Partnership

Donald Trump, known for his skepticism of electric vehicles and green energy initiatives, has found an unlikely ally in Elon Musk, the eccentric billionaire behind Tesla and SpaceX.

This partnership has led to a significant shift in Trump's rhetoric on electric vehicles, with the President now stating, "I'm for electric cars".

Tesla's Stock Skyrockets

The impact of this alliance on Tesla's stock has been nothing short of remarkable:

Tesla's stock hit an all-time high of $488 per share
The company's market value surged by 73% in 2024
November alone saw a 38% increase, marking Tesla's best monthly performance since January 2023

The Musk Factor

Elon Musk's influence on this rally cannot be overstated:

Musk invested $277 million in Trump's campaign
He's been a constant presence at Trump's Florida resort, Mar-a-Lago
Trump appointed Musk to co-chair the new 'Department of Government Efficiency'

What This Means for Tesla

Investors are betting big on Tesla for several reasons:

Regulatory Relief: With Musk's influence in the White House, Tesla might face less scrutiny from federal agencies
Self-Driving Cars: There's hope for fast-tracked federal framework regulations on autonomous vehicles, potentially giving Tesla an edge
AI Advancements: Wall Street sees Tesla as an undervalued AI player, especially in the realm of self-driving technology

The Risks

Despite the optimism, there are potential pitfalls:

The possibility of eliminating EV tax credits could hurt Tesla's sales
State-level investigations into Tesla remain a concern
The Tesla brand could become associated with political alliance, reducing Tesla's market share potential

What's Next?

As we look to the future, the Musk-Trump alliance has undeniably reshaped the landscape for Tesla and the entire electric vehicle industry. Whether this partnership will continue to boost Tesla's fortunes or lead to unexpected challenges remains to be seen.

In the world of stocks, what goes up can come down. As with any investment, it's crucial to do your own research and consider your long-term strategy before making decisions based on short-term market moves.

This content is marketing material and should not be regarded as investment advice. Trading financial instruments carries risks and historic performance is not a guarantee of future results.
The instrument(s) referenced in this content may be issued by a partner, from whom Saxo receives promotional fees, payment or retrocessions. While Saxo may receive compensation from these partnerships, all content is created with the aim of providing clients with valuable information and options.

John J. Hardy

Global Head of Macro Strategy

Saxo Bank

Topics: Equities Highlighted articles Equity Trading Macro Tesla Tesla Motors Tesla Inc. EV Electric Vehicle Vehicle Artificial Intelligence

These commodities might be impacted by the US election

Tue, 08 Oct 2024 11:22:00 Z

This content is marketing material.

The outcome of the US election could potentially be a key factor in the price development of certain commodities. In this video we will take a closer look at potential winners and losers after the US election in November.

Trump win

If Donald Trump decides to introduce these tariffs on Chinese imports, that might lead to an increase in inflation, and potentially force China to add tariffs on US food commodities which will hurt the US farmers and their possibility to export products such as corn and soy beans.

Harris win

With a Harris win, an introduction of unfunded spending on social projects could potentially lead to higher inflation. Fossil fuel investments might take a hit as well, given the increased focus on green energy and electric vehicles.

Conclusion

No matter the outcome, an increased spending will need extra funding, and without a tax raise, the US debt level is likely to increase even more, which will add to the risk of an increased inflation level.

All of these factors might lead investors to look for safety and that has historically pointed towards investment metals where gold is likely to benefit from that increased focus.

This content is marketing material and should not be regarded as investment advice. Trading financial instruments carries risks and historic performance is not a guarantee of future results.
The instrument(s) referenced in this content may be issued by a partner, from whom Saxo receives promotional fees, payment or retrocessions. While Saxo may receive compensation from these partnerships, all content is created with the aim of providing clients with valuable information and options.

Ole Hansen

Head of Commodity Strategy

Saxo Bank

Topics: US Election 2024 Highlighted articles Commodities Equity Trading Macro

Jim Rogers' Investing Wisdom: Insights from Saxo Unfiltered

Fri, 04 Oct 2024 04:30:00 Z

Saxo’s Singapore team recently hosted the “Saxo Unfiltered: The Election” event, where legendary investor Jim Rogers captivated the audience with his timeless investing wisdom and candid views on the current economic landscape.

Mr. Rogers’ Views on Global Economy and Markets

The US Election & Market Outlook

Rogers emphasized that the upcoming US elections could trigger market turbulence. He believes the US is overdue for a bear market, and with prolonged financial challenges on the horizon, he has largely sold his US shares. Historically, he pointed out, whoever is leading in the polls at this stage often does not win the election.

Bets on China and Uzbekistan

In a contrarian stance, Rogers favors regions like China and Uzbekistan for growth opportunities, expressing caution about traditional giants like the US and Europe. He sees potential in these emerging markets, highlighting their capacity for significant transformation and growth compared to more established economies, which may have limited upside at present. Mr. Rogers sees the structural change in Japan as a positive but remains concerned about high debt levels there.

"Cheap and Change"

Rogers emphasized that the best opportunities lie in undervalued markets or assets undergoing significant transformation. He highlighted India and Indonesia as examples of countries currently experiencing major change. Though he regrets selling his Indian stocks too early, he doesn’t find the current levels attractive enough to re-enter.

Commodities

Known for his bullish stance on commodities, Rogers reiterated his belief that real assets such as silver, oil, wheat, and copper will gain value, especially as inflation returns due to excessive money printing.

Silver Over Gold

He highlighted silver as a particularly attractive investment now, with prices down 40% from its all-time high, while gold is trading at record levels. If he were to buy today, Rogers would choose silver over gold, given its relative value. However, over the long-term, he still plans to buy more of both the precious metals.

Electric Vehicles

Rogers anticipates that the global transition to electric vehicles (EVs) will boost demand for essential materials like copper and lead. As EV adoption accelerates, he sees these commodities as critical to the future.

Agriculture

Rogers painted a bullish picture for agriculture, pointing out that farming is becoming less competitive due to a declining number of new farmers worldwide. With the average age of farmers increasing—76 in Japan, 58 in Australia and the US—he sees the lack of competition leading to exciting and profitable opportunities in the sector. "The world is running out of farmers," he noted, suggesting that those who step in will reap significant rewards.

Mr. Rogers’ Investment Philosophy

In addition to his market views, Mr. Rogers also shared his investment philosophy, which reflects decades of experience navigating both successes and failures in the financial world:

Understand the Market

Rogers cautioned that even if you're right about the fundamentals, you can still lose money if you don't understand market dynamics and the behavior of other participants. He emphasized that investing is more than just knowing facts—it's crucial to understand how markets move and how other investors think.

Invest in What You Know

A key piece of advice Rogers offered was to never invest based on hot tips. He strongly advised against investing in anything until you know a great deal about it yourself, warning that blindly following tips can lead to costly mistakes.

Sticking to what you understand deeply is essential, according to Rogers. He warned against chasing hot trends and emphasized the need for patience and thorough knowledge of any investment.

Learn from Mistakes

Reflecting on his own career, Rogers advised young investors not to fear losing money, especially early on. He believes that making mistakes early can be a powerful teacher, helping investors become more resilient in the long term.

Be Boring

Rogers encouraged "boring" investing—focusing on sound fundamentals, not chasing the latest fads. His focus remains on steady, reliable strategies that deliver over time.

Jim Rogers' investment philosophy remains grounded in patience, deep research, and the belief that enduring value lies in real, tangible assets. For investors looking to navigate uncertain times, his insights offer timeless wisdom.

Charu Chanana

Chief Investment Strategist

Saxo Markets

Topics: Macro Equities Commodities Gold Silver India Indonesia China Europe Japan Copper

Cramer's Corner: Daily Technical Update with ASML

Wed, 17 Jul 2024 06:27:41 Z

Cramer’s Corner: Daily Technical Update

Kim Cramer Larsson hosts the Daily Technical Update, a daily 8-10 minute video with live charts.
Kim takes you through the latest technical developments in financial markets, covering everything from the major stock indices, widely traded single stocks, commodities, currencies and interest rates

In today’s Technical Update:

ASML top and reversal. Bearish. Key support at 898
S&P 500 reversal cancelled
Nasdaq Top and reversal still in intact
EuroStoxx50 struggling. Key support at 4,888
DAX. Back below 18,630
AEX25 key support at 918.50, pushing towards 950 ASML key
CAC40 key support 7,464. Key resistance at 7,725
SMI20 correction but uptrend intact
Time 4.37
EURUSD rejected at 1.0916
EURGBP around key support at 0.84
GBPUSD key resist at 1.30
USDJPY Support at 157.37 likely breaking lower
EURJPY correction 0.50 retracement
AUDJPY below 0.382 retracement, likely down to 105.20
GBPJPY at 0.382 retracement
AUDUSD reached 1.618 projection at 0.68, correction unfolding
USDCAD wide range 1.3785-key support at 1.3590
EURCHF rejected at 0.9755
USDCHF correction to 0.618 retracement at 0.8912
Dollar Index support at 103.68
Time 8.51
Gold new all-time high potential to 2,512
Silver rejected at 31,67
Copper sliding lower, support at 432.90
WTI testing 80
Brent Crude lower at 0.382 retracement
US 10-year T-yields below key support at 4.17

Follow me for more on SaxoTrader platforms, home.saxo and X (Twitter): Cramers_Corner

Kim Cramer Larsson

Technical Analyst, Saxo Bank

Saxo Bank

Topics: Technical analysis Cramers Corner

Cramer's Corner: Daily Technical Update - with Tesla and Cocoa

Wed, 27 Mar 2024 08:40:19 Z

In today’s Technical Update:

Tesla rejected at Gap resistance
Hang Seng key support at 16,095
S&P 500 closed gap. Correction now unfolding ?
Nasdaq 100. Top and reversal still intact. Needs to close above 18,417
EuroStoxx50 higher
DAX uptrend. Indicators pointing to higher levels 19K?
AEX25 key support at 837. Gap support at 872 is key
CAC40. Trading sideways
SMI20 rejected at 11,808 resist but likely to test again
Time 4.30
EURUSD could be caught range bound 1.08-1.09
GBPUSD key support at 1.2600. Bounce
USDJPY testing 2022 peak at 151.95
EURJPY retraced 0.382 at 163.39, could drop to 162.17 before rebounding
AUDJPY hit 100 then top and reversal pattern , bouncing fromat 98.20
EURCHF above 0.9775 resistance, could push to 0.9840-0.9860
USDCHF testing strong resist at 0.9050. Next resist is 0.91
Dollar Index key strong resistance at 104.24
Time 9.37
Gold failed to close above 2,195, key support at 2,146
Silver retraced to 24.50, could it slide back to 24 maybe even 23.60, uptrend intact potential to 26
Copper could slide to 0.618 retracement at 395
Cocoa could have topped after spiking above 10K
US 10-year T-yields likely to be range bound 4.20-4.35

Follow me for more on SaxoTrader platforms, home.saxo and X (Twitter): Cramers_Corner

Kim Cramer Larsson

Technical Analyst, Saxo Bank

Saxo Bank

Topics: Technical analysis Cramers Corner

Cramer's Corner: Daily Technical Update

Thu, 26 Oct 2023 06:57:20 Z

In today’s Technical Update with :

S&P 500 below support at 4,195
Nasdaq 100 below support at 14,505. 14K
Futures pointing to lower opening
Dow Jones still holding on above key support
EuroStoxx 50 could retest 3,980 support
DAX testing support at 14,675. Next 14,458
AEX25 finding support at 715. 710 support is key
BEL20 looking at 3,250
CAC40 bouncing from support at 6,795
Time 4.53
EURUSD rejected at 1.07. likely to resume downtrend towards 104. RSI is key
GBPUSD likely to test 1.20
USDJPY broken above resistance at 150.16. A close above potential to 152-154
EURJPY rejected at strong resistance at 159.75
AUDJPY rejected at 95.85
GBPJPY range bound
The dollar Index testing resistance at 106.57. Close above potential to 107.90
Time 7.50
Gold testing strong resistance at 1,985. Correction still possible to 1,945-1,925 but strong uptrend
Silver key resistance at 23.78
Copper once again bouncing from key strong support at 354.50
WTI and Brent oil sold off to Fibonacci retracement levels
10-year Treasury yields correction shorter than anticipated. Could move to 5.15-5.20

Follow me for more on SaxoTrader platforms, home.saxo and X (Twitter): Cramers_Corner

Kim Cramer Larsson

Technical Analyst, Saxo Bank

Saxo Bank

Topics: Technical analysis Cramers Corner

Cramer's Corner: Daily Technical Update

Tue, 29 Aug 2023 06:52:28 Z

In today’s Technical Update:

S&P 500. Shoulder-Head-Shoulder Top & reversal pattern could be unfolding. Key support at 4,340. Cancelled above 4,459
Nasdaq 100. In downtrend. Key support at 14,687. Next at 14,254
Hang Seng testing resistance at 18,562 resist. A close above could lead to 19K. But is likely to resume downtrend
DAX Key support at 15,482
AEX25 downtrend. key support at 731.Next support at 716. Resistance at 748
BEL20 downtrend. Key support at 3,550
CAC40 Downtrend. Key support at 7,083
EURUSD downtrend but could see a short-term bounce to 1.09
Dollar Index uptrend. Room to 104.82. Strong resistance at 105.80. expect short-term correction to 103.00
GBPUSD downtrend. Hovering around key support at 1.2590. Could bounce to 1.27-1.2750 before downtrend to resume
USDJPY uptrend intact. Strong resistance at 146.35. Below 144.50 expect correction to 143
EURJPY uptrend but short term range bound
Gold downtrend but bouncing from below 1,900. Strong support at 1,870
Copper rejected at 382 likely to resume downtrend
Silver Bullish but resistance at 24,50
Platinum short-term bullish but facing strong resistance
Palladium range bound 1,200-13,45
Brent correction ongoing. Likely to be range bound between 81.75 and 88.20
Dutch Gas Bullish sentiment but struggling for momentum
US 10-year Treasury yields top and reversal pattern could correct to 4.10-4.00
US 10-year Treasury future Doji Morning bottom and reversal

Follow me for more on SaxoTrader platforms, home.saxo and Twitter: Cramers_Corner

Kim Cramer Larsson

Technical Analyst, Saxo Bank

Saxo Bank

Topics: Technical analysis Cramers Corner

Q3 2023 Summary AI - The Good the Bad and the Bubble

Thu, 06 Jul 2023 06:00:00 Z

This outlook zeroes in on the launch of artificial intelligence. It looks at the technology as potentially groundbreaking, but also as a risk for stock markets.

In this Outlook, our chief focus is on the current market impact of the AI theme across markets and around the world. But Steen’s introductory piece also argues that market participants are making a mistake in believing that the current market cycle will play out like previous ones, as inflation is set to stay higher for longer than the market anticipates, which will eventually register as an enormous surprise, given that yield curves in most markets are pricing significant eventual policy easing starting early next year and a glide path to a soft landing. The complacency surrounding that disinflationary and soft-landing scenario have kept long yield anchored and allowed equity markets, and particularly AI-linked names, to inflate perilously.

Also on the AI theme that has dominated focus over the last quarter:

Equity strategist Peter Garnry argues that the emergence of advanced AI systems such as GPT-4 from OpenAI is by far the most surprising event this year, a phenomenon that has turned everything on its head. Further, he writes that the AI-hyped rally has pushed the US equity market to new extremes, even as the benefits and risks of this new technology are hotly debated. He predicts that we risk seeing US and China engaging in an AI arms race.

Our Greater China strategist, Redmond Wong, points to the challenges China faces in the field of generative AI as it navigates a global order of fragmentation. The success of generative AI breakthroughs in the US, coupled with limited computing power and geopolitical tensions, has threatened to break down China’s virtuous cycle of technology application, productivity enhancement and growth.

Macro strategist Charu Chanana highlights Japan’s expertise in semiconductor manufacturing and robotic integration, suggesting these could be the foundation of a very strong presence in AI. She notes that Japanese equities and artificial intelligence combine the two most powerful market themes of this year.

Cryptocurrency analyst Mads Eberhardt notes that AI fever has stolen the spotlight from blockchain technology and the cryptocurrency market generally, pushing the space further into speculative no man’s land. Despite the contrasting performance between crypto and AI-linked assets, there are striking similarities, especially the risk of bubble-like dynamics.

Investment Coach Hans Oudshoorn outlines in his piece how investors can gain exposure to AI via ETFs that provide considerable diversification, but still noting the risks from valuations that have become very elevated in places.

In addition to the AI focus, this report also delves into the outlook across major asset classes:

In currencies, FX strategist John Hardy notes that USD shorts could be set for a vicious reality check if the US economy remains resilient and core inflation remains sticky, possibly engaging both sides of the "USD smile" that drive USD strength: the Fed remaining on the warpath and market turmoil. John notes that the stakes are even higher for the Japanese yen if the longer yields of the major sovereign yield curves have to price in a new economic acceleration, as the BoJ will have to eventually capitulate on its yield-curve-control policy.

In commodities, commodity strategist Ole Hansen suggests that the commodity sector looks set to start the third quarter on a firmer footing after months of weakness saw a partial reversal during June. Ole notes that strong gains were at times driven by a weaker US dollar, but specific developments in each sector also weighed. Most concerning for is the risk of higher food prices into the autumn, as several key growing regions battle with hot and dry weather conditions sparked by the first El Niño weather pattern in years.

Fixed income strategist Althea Spinozzi argues that central banks face a troubling dilemma: if they really want to get ahead of inflation, they will need to burst asset bubbles created by a decade of quantitative easing (QE) and trigger a recession. But she asks whether they are willing to take policy tightening that far and ever win the inflation fight.

John J. Hardy

Global Head of Macro Strategy

Saxo Bank

Topics: Quarterly Outlook Monthly Newsletter

Summary Q2 2023 Outlook: The Fragmentation Game

Tue, 04 Apr 2023 06:00:00 Z

This Quarter's Outlook, "The Fragmentation Game", is our view on how a new world order forces you to reconsider your investment strategy. Read it today.

An Executive Summary

The sudden March advent of turmoil in US banks, and then a mere week later, the SNB-engineered weekend takeover of Credit Suisse by UBS, sent shockwaves through global markets in March. We scrambled to work through the consequences, as we were in mid-stream with the preparation of this Q2 Outlook. In this publication, we have endeavored to address this crisis, which will have important short-, medium- and long-term consequences for both banking systems and our economies. The crisis has sharply brought forward the coming recession, for example. In the intro to this publication, our CIO, Steen Jakobsen, leads readers through the implication of the sudden bank turmoil that unfolded late in Q1, noting that this is no 2008-09 solvency crisis, but the result of the spike in the cost of funding.

But we also touch extensively on the originally intended theme for this Outlook, which is The Fragmentation Game. This is our term for what many call “deglobalisation”, a term we find too vague. As Steen Jakobsen points out, the word fragmentation better describes how the process of deglobalisation works, as the world’s economic blocs have lurched into a profound realignment that will play out over coming decades. The game has begun for every nation to ensure that all critical supply chains, whether for medicine, energy, vital resources, technology or defense, are either completely at home or with a friendly trading partner, or ideally, both.

Our Hong Kong-based strategist, Redmond Wong, looks at the challenges China faces as it boldly carves out a more prominent role in multi-lateral global institutions, deepens strategic trade relationships and reduces its reliance on exports for the first time in the modern era. Securing technology, and especially resources, will be China’s chief challenges. Our macro strategist, Charu Chanana, focuses on Southeast Asia’s, and especially India’s, enormous potential in a fragmenting world. She weighs, for example, India’s strong demographic profile and huge upside potential in manufacturing against the nation’s traditional speed-limiters like protectionism and burdensome bureaucracy.

Our equity and quant strategist, Peter Garnry, looks into the equity market impact from the banking crisis after the year had gotten off to a roaring start for many pockets of the equity market, with Europe a strong performer on avoiding an energy crisis. He also delves into where the Fragmentation Game will provide both pain and opportunities in equities. The obvious sectors in focus include semiconductors, defence, renewable energy, logistics, larger companies, and especially quality companies with low debt and strong competitive characteristics.

Our macro strategist, Christopher Dembik, looks at the risk of where the banking crisis could take the US economy next, namely into recession eventually, but focuses readers’ attention on the heavy concentration of commercial real estate loans in smaller and regional US banks as a potential next-shoe-to-drop. The real estate angle is critical to watch in Europe and the UK as well.

In FX, strategist John Hardy notes that the interest rate cycle has now turned sharply and ponders the forward policy mix and jockeying among currencies as stimulus to soften the impact of further financial system turmoil, and eventually the incoming recession will have to take a very different form relative to the crises we have known over the last 25 years. Japan knows the playbook, as it will almost inevitably involve some form of yield curve control.

In commodities, Ole Hansen discusses how the China re-opening surge in commodities fizzled in Q1, but notes it is too quick to write off the potential for commodities: parts of the Fragmentation Game, like the electrification of much of our energy, are very metal-intensive, especially copper-intensive. And the traditional inflation hedge of precious metals has already revived in Q1, with gold posting a record high against several major currencies.

Finally, Investment Coach Hans Oudshoorn relays how investors can hedge downside in their equity positions using a popular approach: an options collar that involves buying a put that is at least in part financed by selling a call option, providing an example on an underlying S&P 500 future position.

We wish you a safe and prosperous Q2 and beyond. The stakes for investors for the remainder of this year and beyond have risen with the latest market turmoil, and the Fragmentation Game will require all of us to consider how the world is ordered and what its reconfiguration will mean for our investments for the coming quarters, years and decades.

Steen Jakobsen

Chief Investment Officer

Saxo Bank

Topics: Quarterly Outlook Monthly Newsletter

Saxo Spotlight: What’s on the radar for investors & traders this week?

Mon, 06 Mar 2023 02:30:00 Z

Macro on tap with central bank meetings from Australia's RBA, Bank of Canada and Bank of Japan. Fed Chair Powell's testimony and US jobs report for February will be key for yields and US dollar. China policy announcements remain on watch after modest growth target set for 2023.

Saxo Spotlight: What’s on investors & traders radars this week? US ISM, China PMI surveys, and Tokyo-area CPI

Powell’s testimony and US jobs data to keep markets wobbly

The next test of the US economy comes at the tail end of this week as the February jobs data is reported. Over the last few weeks, data out of the US has been far more resilient than expected, fueling bets that the Fed will have to raise rates beyond what was communicated earlier and rates will stay elevated for longer as well. Bloomberg consensus expectations point to another strong jobs report after the blowout report of January, with headline jobs expected to come in again at 200k+, but risk of disappointment remains given the scope of correction from +517k in January. The unemployment rate is expected to remain unchanged at 3.4%, while wage growth is projected to accelerate. Most early indicators such as the business surveys from S&P pointed to an acceleration in hiring, while applications for unemployment benefits remained historically low.

Ahead of Friday’s jobs report, investors will also be watching Congressional testimony from Fed Chair Jerome Powell on Tuesday and Wednesday. He is expected to keep a hawkish stance in light of the strong data over the last few weeks. US yields and the US dollar can continue to run higher in that case, but if the message from Powell remains neutral then equities could continue to rally again.

RBA expected to be more aggressive with its tone on Tuesday and Wednesday

The RBA is expected to hike rates again by 25bps. However, the key is to watch RBA commentary - and if the RBA continues with its more hawkish tone. Consider the RBA’s aggressive rhetoric of making further hikes has pressured the Australian equity market, with the market now expecting interest rates to peak at 4.2% in September, with potentially no rate cuts this year. Should the RBA maintain its aggressive shift, the Aussie dollar (AUDUSD) could knee-jerk higher. RBA Governor Philip Lowe speaks the next day, on Wednesday, at the AFR Business Summit.

Key agenda items to watch on China’s Two Sessions this week

The key events to watch on the agenda of the National People’s Congress (NPC) this week are the presentation of the state institution reform proposal on Tuesday and the announcements of the appointment of top leaders and senior officials from Friday to Sunday. The NPC will conclude next Monday morning, March 13.

China’s outstanding aggregate financing expected to rise as loans and bond issuance picking up

While seasonality may drive a fall in new aggregate financing in February from January, the year-on-year growth of the outstanding amount is expected to pick up steam due to increases in bank loans and government bond issuance.

The growth in CPI is expected to slow to 1.9% Y/Y in February from 2.1% in January and PPI to contract further to -1.3% Y/Y but the week’s highlight in the data front will be on the aggregate financing.

Bank of Japan Governor Kuroda’s final meeting

This week will be the last Bank of Japan meeting for its current Governor Kuroda, and there remain risks that he may part with sparks. Inflation and wage growth continue to pick up pace in Japan, even though growth signals have been bleak lately and are relying on a strong pickup in Chinese demand. Incoming Governor Ueda has also signaled policy continuity, with hints that he echoes Kuroda’s views on inflation being externally-driven and likely to come off soon. Tokyo CPI for February also came off its January highs, but mostly driven by PM Kishida’s subsidies that reduced the electricity price burden. If Kuroda ends his term with a very dovish tone, that could spell trouble for yen, especially if US yields continue their run higher this week.

Company news to watch this week

All eyes will be CATL - which is Tesla’s battery supplier and the world’s largest battery maker. The market is expecting revenue growth of above 80% and full-year EPS of 2.65. We think CATL’s results could be a pleasant surprise to the market, given it sold its $856 million stake in Australia’s biggest lithium company, Pilbara Minerals. CATL’s outlook will also be watched closely – as a guage of how much car makers battery costs could rise in 2023.

Adidas results will also be on watch. As reported in Saxo’s Quick Take on Friday, the company accrued a large amount of Yeezy sneaker-inventory after Adidas abruptly ended Ye’s partnership. After a poor string of results, analysts expect Adidas to report Q4 revenue of €5.2bn up 1% y/y and EBITDA of €-419mn.

Also on watch, are CrowdStrike (CRWD), Campbell Soup (CPB), JD.com (JD) and Oracle (ORCL) results. We cover what’s worth watching with these industry proxies in our Week Ahead report, which you can access here.

The world’s largest commodity miners go-ex-dividend; which could trigger a rise in volatility

Woodside goes ex-dividend on March 8, followed by BHP and Rio on March 9. For investors it means they will have a volatile week, while option holders of these stocks won’t see a change. For other investors implications and what else to know, click here.

Macro data on watch this week:

Monday 6 March

South Korea CPI (Feb)
Eurozone S&P Global Construction PMI (Feb)
Germany S&P Global Construction PMI (Feb)
United Kingdom S&P Global/CIPS Construction PMI (Feb)
Eurozone Retail Sales (Jan)
United States Factory Orders (Jan)

Tuesday 7 March

South Korea GDP (Q4, revised)
Australia Trade Balance (Jan)
China (Mainland) Trade (Feb)
Australia RBA Cash Rate (7 Mar)
Germany Industrial Orders (Jan)
Taiwan CPI and Trade (Feb)
United States Wholesale Inventories (Jan)
Fed Chair Powell’s Testimony Before Senate

Wednesday 8 March

Japan Current Account (Jan)
Germany Industrial Production and Retail Sales (Jan)
Eurozone GDP (Q4, revised)
United States ADP National Employment (Feb)
United States International Trade (Jan)
Canada Trade Balance (Jan)
United States JOLTS Job Openings (Jan)
Canada BoC Rate Decision (8 Mar)
Fed Chair Powell’s Testimony Before House

Thursday 9 March

Japan GDP (Q4, revised)
China CPI, PPI (Feb)
Malaysia Overnight Policy Rate
United States Initial Jobless Claims

Friday 10 March

Germany CPI (Feb, final)
United Kingdom monthly GDP (Jan)
United Kingdom Goods Trade Balance (Jan)
United States Non-Farm Payrolls, Unemployment, Average earnings (Feb)
Canada Unemployment Rate (Feb)
Japan BOJ Rate Decision (10 Mar)
China M2, New Yuan Loans, Loan Growth (Feb)

Earnings on watch this week:

Monday: Trip.com
Tuesday: Ashtead Group, Sea Ltd, Ferguson, Crowdstrike
Wednesday: Ping An Bank, Thales, Adidas, Geberit, Cathay Pacific
Thursday: CATL, Deutsche Post, JD.com, Prada
Friday: Daimer Truck, AIA Group, Oracle, DiDi Global

APAC Research

Saxo Group

Topics: Macro Equities APAC Market Digest Featured Market Update APAC APAC Macro Digest Macro FX Indices Balance of Trade Central Banks Commodity USDJPY China Japan Federal Reserve Forex Australia Iron Ore Bhp Billiton Tesla Tesla Motors Ford Motor Saxo Spotlight

Q1 2023 Outlook The Models are Broken

Tue, 07 Feb 2023 07:00:00 Z

Models are used everywhere in the financial world. But what do you do when the models you use don't work anymore? That's what this Quarterly Outlook is all about.

An Executive Summary

In the introduction to this outlook for early 2023, Saxo CIO Steen Jakobsen argues that our economic models and our assumptions for how market cycles are supposed to work are simply broken. And so should they be, as why should we even want to return to the ‘model’ of central banks engaging in moral hazard and bailing out incumbent wealth, rentiers and risk takers, the rinse-and-repeat we have seen in every cycle since Fed Chair Greenspan bailed out LTCM in 1998? This new post-pandemic and post-Ukraine invasion era we find ourselves in has brought an entirely new set of imperatives beyond bailouts and reinflating asset prices. Instead, we need to brace for the impact of higher inflation for longer as we scramble for supply chain reshoring and redundancy, and as we transform our energy systems to reduce reliance on fossil fuels and reduce our impact on the climate. And it won’t be all pain for all assets. Quite the contrary; it will bring a refreshing return of productive investment and a brighter future for everyone.

The return to more productive deployment of capital will have to mean investing more in the real, physical world to accomplish the new set of supply chain and resource access imperatives, not pouring money into digital platforms that capture excess profits by monopolising markets and user attention. On that note, our equity strategist Peter Garnry looks at whether the multiple decades of underperformance for equities dealing in tangible assets is ending, with intangibles and financials set to underperform after decades of excess financialisation. He also pokes into the geographies that look the most interesting as supply chains diversify.

Our macro strategist Christopher Dembik notes that the worst outcomes for Europe in the wake of the EU shutting itself off from cheap Russian energy were thankfully not realised. Danger and opportunity lie ahead for Europe, which faces the steepest challenges in the new world order, but where the sense of crisis will bring the needed change the quickest. As well, Europe is set to benefit from China, its largest trading partner, coming back online this year. Our market strategist for Greater China, Redmond Wong, looks at where the most potential lies in Chinese equities after China executed a seeming total about-face in its zero-Covid tolerance and other policies that cracked down on the property and technology sectors and were presumed to be the hallmarks of rule under Xi Jinping. Charu Chanana, our market strategist in Singapore, picks up on the rest of Asia, weighing the relative value across several Asian markets. She argues that India and also the traditional exporters will benefit both from renewed demand from China and from investment by both China and OECD countries looking to leverage production – and supply chain diversification potential.

In commodities, Ole Hansen looks at the potential for the extension of a bull market in industrial metals as China, the world’s largest commodity consumer, returns in force from lockdowns and not least, as the metal-intensive investment in green energy deepens. The end of China’s lockdowns will also boost crude oil demand by the most in years as China normalises air travel levels. On the supply side, the avoidance of Russian crude and the end of risky, massive drawdowns of much of the US strategic reserves will weigh. Gold could be set to thrive with a turn lower in the USD, but also as a growing roster of countries looks for alternatives to the greenback for maintaining reserves and conduction trade outside the USD system. Our strategist in Australia, Jessica Amir, breaks down what Australia has to offer as a formidable exporter of resources and list of Australian resource companies involved in everything from the EV-battery supply chain to iron ore and gold.

With the return of solidly positive interest rates after the seeming endless years of ZIRP and NIRP, especially in Europe, Peter Siks of our CIO office looks at a far better expected return for the traditionally balanced portfolio. This is somewhat ironic, given that 2022 offered the worst nominal returns for traditionally ‘balanced’ stock and equity portfolios in modern memory.

FX strategist John Hardy looks at the potential for a turn lower in the USD this year and the likelihood of a much stronger JPY in the first half of the year, chiefly driven by its late-comer status to the central bank tightening party and the exit. Finally, crypto strategist Mads Eberhardt sees the risk of more challenges ahead for crypto, particularly the smaller cryptocurrencies as retail participation risks continuing to wither, even as the longer term prospects will brighten in line with the deepening institutional participation in the space in coming years.

We wish you a safe and prosperous 2023. We strongly believe that markets and the global economy are entering a new era. It won’t be an easy transition, but all great transitions bring exciting new opportunities for those willing to walk away from the old assumptions and to look at how their investments and efforts can contribute to the new world taking shape before us.

Steen Jakobsen

Chief Investment Officer

Saxo Bank

Topics: Quarterly Outlook Monthly Newsletter

Saxo Spotlight: What’s on the radar for investors & traders this week? Powell’s speech, RBA meeting; Bank of Japan’s nominee submissions; UK GDP; and more earnings from Disney, Toyota, PepsiCo, Adani Green

Mon, 06 Feb 2023 03:00:00 Z

This week, markets will be digesting the slew of central bank meetings from last week, along with the bumper jobs report, as more Fed speakers including Chair Powell take stage. The Reserve Bank of Australia may likely stay in the chorus and hike rates by 25bps as well, but focus will be on guidance. Bank of Japan’s nominees for the new chief will likely continue to send market jitters, while UK GDP is expected to dodge a recession. China’s inflation and credit data may throw further light on the economic momentum, but US-China tensions will also be on watch. Earnings calendar stays in full force with reports due from Disney, PepsiCo, Toyota as well as Adani Green.

Powell’s speech, more Fed speakers on watch as the US dollar jumps

After a hotter-than-expected US jobs report on Friday, equities and the VIX index, and the US dollar are on notice. Fed Chair Powell and several Fed speakers are due to speak this week and they could disagree with the Fed’s dovish tilt last week, which could spark a reversal of the risk-off rally we have seen since the start of the year. Powell will be speaking in Washington on Tuesday (1am SGT on Wednesday for Asia), followed by Barr, Williams, Cook, Kashkaru, Waller and Harker over the course of the week. Flight to safety could take the US dollar higher, and shave down broad indices. USD is also likely to find some support this week amid the rising US-China tensions after a suspected Chinese spy balloon was shot down over the weekend.

RBA meeting ahead, putting AUDUSD and EURAUD on watch for a potential whipsaw

The Melbourne Institute Inflation gauge for Australia rose more than expected MoM & YoY, while Australian retail sales beat expectations. These indicators, coupled with building approvals seeing one of their biggest jumps in a decade, gives the RBA power to keep hiking rates. The RBA is expected to hike by 25bp on Tuesday, with the market pricing in another 25bp hike. However there is a small chance the RBA could keep hiking before pausing in July. The jury is still out. We are watching the AUDUSD and the EURAUD with the AUD having nose-diving as commodity prices fell from their highs, while the USD gathers strength. While the ECB hiked by 50bps last week. However, there is a risk the RBA could be aggressive in its commentary (more than prior meetings), which may perhaps trigger an AUD knee-jerk rally up. For more on FX, click here.

Bank of Japan’s nominee submissions and expectations for a policy pivot

Monday morning reports from Nikkei that the government has approached Bank of Japan Deputy Governor Masayoshi Amamiya as a possible successor to central bank chief Haruhiko Kuroda sent jitters. The week was supposed to bring possible BOJ chief nominations, as the nominees list has to be presented to parliament on February 10. However, FM Suzuki refused to confirm Amamiya’s nomination. Amamiya has helped Kuroda since 2013 on monetary policies, and is considered the most dovish among the contenders, which is thrashing hopes that BOJ policy normalization could progress under the new chief. As more names are likely floated this week, there will potentially be some volatility in the Japanese yen and equities, with markets continuing to weigh up the possibility of a shift in Bank of Japan’s yield-curve control policy.

German inflation on watch; Riksbank rate hike; UK GDP may confirm a delay in recession

After a technical delay last week, Germany’s inflation prints for January will be due this week. Spain and France printed higher-than-expected CPI for the month, while the region-wide printed was softer last week. This suggests Germany’s inflation likely eased due to energy price increases being more subdued than previously expected. Meanwhile, adjustments in the CPI basket could also likely result in a softer print.

Riksbank meeting next week is also likely to bring a 50bps rate hike, after a similar-sized hike by the Fed, ECB and Bank of England last week. While inflation still remains entrenched, the Governor has recently hinted at financial stability risks, limiting the scope of another 75bps rate increase this month.

Lastly, the key in UK will be the preliminary GDP report for the fourth quarter which is likely to dodge a recession. Bloomberg consensus expect GDP growth to be flat QoQ in Q4 after a negative 0.3% QoQ print in the third quarter, underpinned by a strong labor market and fiscal easing. However, it is still hard to conclude that UK could avoid a recession, but only likely suggest a potential delay. If growth comes in weaker than expected, pressure on sterling could start to mount.

China’s new loans expected to rise as banks frontloading lending

Chinese banks typically deploy proportionally a larger part of their annual loan targets at the beginning of the year. According to Bloomberg’s survey, economists are forecasting new RMB loans jumped to RMB 4,200 billion in January from RMB 1,400 in December which represent around 11% Y/Y growth in outstanding RMB loans, marginally below the 11.1% in December. While mortgage lending likely remained slow, corporate and government bond issuance increased in January. As corporate lending and bond insurance picked up, new aggregate financing is expected to rise to RMB 5,400 billion in January from RMB 1,310 billion in December, but the implied 9.3% Y/Y growth in total outstanding aggregate financing was below the 9.6% in December.

China inflation is expected to inch up

China’s Inflation may have accelerated as the headline CPI is forecasted to bounce to 2.2% Y/Y in January from 1.8% in December. A surge in in-person service consumption after the reopening may have underpinned some price increases but the upward pressure on the general level of inflation has remained moderate. Rises in vegetable and fruit prices were likely damped by a decline in pork prices. The decline in producer prices is expected to narrow to -0.4% in January from -0.7% in December as industrial metal prices bounced offsetting a decline in coal prices.

This week’s earnings focus: Walt Disney, Siemens, and Toyota

The Q4 earnings season is not over yet with 243 companies in the S&P 500 Index having reported earnings. This week’s earnings calendar will provide plenty of information for investors to chew on. The list below highlights the absolute most important earnings to watch and out of those the three most key earnings are from Walt Disney, Siemens, and Toyota.

The entertainment giant Disney is expected to report revenue growth of 7% y/y and EPS of $0.76 up 21% y/y and a lot of focus will be on Nelson Peltz, the activist investor that has gone into the company, and his quest for higher streaming profitability and potentially changing the asset portfolio of Disney. Siemens, one of Europe’s largest industrial companies, is expected to show revenue growth of 11% y/y and unchanged operating income compared to a year ago as cost pressures remain a key challenge for Siemens. Last quarter the order book and net new orders looked healthy, so the question is whether this will flow through into the outlook for 2023. Toyota is expected to report revenue growth of 19% y/y as demand for cars have come back, but the real interesting focus point on Toyota is further details on the new CEO’s aggressive move towards offering many more fully electric vehicles rather than hybrids. Toyota has recently indicated that they have made errors in their technology bet and looking to aggressively invest in battery EVs.

Toyota, Honda and Volvo company earnings are on watch and could disappoint like Ford

A bevy of EV and motor companies report this week including Toyota Motor, Honda Motor and Volvo Car. We think there could be a risk they report weaker than expected results, similar to Ford; which sent Ford shares 8% lower on Friday. Ford is struggling to make money on its EV business and blamed supply shortages. Metal commodities are a large contributor to car manufacturers costs. And we’ve seen components of EVs rise significantly in price, amid limited supply vs the expectation China will increase demand. For example consider the average EV needs about 83 kilos of copper- and its price is up 26%, 250 kilos of aluminium are needed - and its price is up 20% from its low. These are some headwinds EV makers are facing, in a market where consumer demand is restricted amid rising interest rates.

Australian reporting season ramps up; banks and property groups results are on watch

Financial results kick off with Suncorp reporting 8th Feb- this could be a good indication of what we can expect from big banks such as CBA that reports next week. Data last year showed loan growth in regional banks grew slightly more than the big four banks, so we could see earnings surprises in Suncorp and Bank of Queensland. The market expects 25% earnings growth from Suncorp, and flat growth from CBA next week. The Telco giant, Telstra reports on Tuesday, with a flood of property groups reporting such as Centuria on Tuesday, BWP Trust – the Bunnings landlord, as well as Dexus on Wednesday, followed by Mirvac and Charter Hall Long WALE REIT reporting Thursday. For defensive plays; the plastics giant Amcor reports Tuesday. While interest rate sensitive Australian Tech companies, which are not traded very much at Saxo; start to report this week with Megaport reporting Thursday, and real estate-tech business REA on Friday.

Adani Group companies start to report earnings this week

After over $100 billion in losses over the last two weeks, focus will remain with the Adani Group stocks this week in India as some of the companies start to report earnings. Adani Green Energy reports earnings this week, and investors will be looking out for comments on corporate governance, response to Hindenburg’s fraud allegations as well as the company’s financial position and debt trajectory. Adani Green is one of the most highly indebted companies in the group, and a big player for India’s net zero ambitions.

Macro data on watch this week:

Monday 6 February

New Zealand, Malaysia Market Holiday
Australia Retail Trade (Q4)
Germany Industrial Orders (Dec)
Germany Consumer Goods (Dec)
Eurozone S&P Global Construction PMI (Jan)
Germany S&P Global Construction PMI (Jan)
Eurozone Sentix Index (Feb)
United Kingdom S&P Global/CIPS Construction PMI (Jan)
Eurozone Retail Sales (Dec)
Germany CPI (Jan, prelim)
Indonesia GDP (Q4)

Tuesday 7 February

Japan All Household Spending (Dec)
Australia Trade Balance (Dec)
Australia RBA Cash Rate (Feb)
Malaysia Industrial Output (Dec)
Germany Industrial Output (Dec)
United Kingdom Halifax House Prices (Jan)
Taiwan Trade (Jan)
United States International Trade (Dec)
Canada Trade Balance (Dec)

Wednesday 8 February

Japan Current Account Balance (Dec)
India Repo and Reverse Repo Rate
United States Wholesale Inventories (Dec)

Thursday 9 February

Taiwan CPI (Jan)
United States Initial Jobless Claims

Friday 10 February

Australia RBA Monetary Policy Statement (Feb)
China (Mainland) CPI and PPI (Jan)
United Kingdom monthly GDP, incl. Manufacturing, Services and Construction Output (Dec)
United Kingdom GDP (Q4, prelim)
United Kingdom Goods Trade Balance (Dec)
Canada Unemployment Rate (Jan)
United States UoM Sentiment (Feb, prelim)
Taiwan GDP (Q4, revised)
India CPI Inflation (Jan)
China (Mainland) M2, New Yuan Loans, Loan Growth (Jan)

Earnings on watch this week:

Monday: Activision Blizzard, IDEXX Laboratories
Tuesday: Carlsberg, BNP Paribas, Siemens Energy, SoftBank Group, Nintendo, BP, Linde, Vertex Pharmaceuticals, KKR & Co, Fortinet, DuPont, Illumina, Enphase Energy
Wednesday: A.P. Moller – Maersk, Vestas Wind Systems, TotalEnergies, Societe Generale, Deutsche Boerse, Adyen, Equinor, Yara International, Walt Disney, CVS Health, Uber Technologies
Thursday: KBC Group, Brookfield, Thomson Reuters, L’Oreal, Vinci, Credit Agricole, Siemens, Toyota Motor, NTT, Honda Motor, AstraZeneca, Unilever, British American Tobacco, ArcelorMittal, DNB Bank, Volvo Car, Zurich Insurance Group, Credit Suisse, AbbVie, PepsiCo, Philip Morris, PayPal, Cloudflare
Friday: Enbridge, Constellation Software

APAC Research

Saxo Group

Saxo Spotlight: What’s on investors' & traders' radars this week? Fed/ECB/BOE meetings, US ISM and jobs report, China back from holiday and reports PMI, Megacap earnings

Mon, 30 Jan 2023 03:00:00 Z

Critical week for markets with the Fed, the ECB, and the BOE deciding on policy interest rates. The market has priced in a downshift by the Fed to a 25bp hike, bringing the Fed Fund target to 4.50%-4.75%, while the ECB sticking to its gun of a 50bp hike. The expectation for the BOE action is mixed with a slightly higher odd assigned to a 50bp increase. US ISM and job data will be pivotal for the direction of the next market movement, in conjunction with earnings announcements from the mega-caps Apple, Alphabet, Amazon, and Meta. Investors also have their eyes on China as it returns from a week-long holiday on the back of solid traffic and consumption data during the Lunar New Year.

The Fed is expected to downshift again

The expectations of a soft landing have picked up since the start of the year, relative to the rising recession bets seen in H2 of last year. Meanwhile, inflation has been on a steady downtrend in the last six months, which has allowed the Fed to downshift to a 50bps rate hike in December after a spate of rate hikes in 75bps increments before that. The consensus expects the FOMC will downshift again to lift its Federal Funds Rate target by 25bps to 4.50-4.75% on February 1, although some still expect the central bank to hike rates by a larger 50bps increment. Fed speakers have also broadly guided for a smaller hike at the next meeting. With economic data remaining volatile, there is some reason to believe that Powell and team may be aiming to lengthen the hiking cycle in order to buy more time to assess both the incoming data and the impact of their previous aggressive rate hikes. This warrants a smaller rate hike of 25bps at the February 1 decision. The key risk factor, favouring another 50bps rate hike, could be the financial conditions which are the easiest since April 2022 or the risks of another shoot higher in inflation due to China’s reopening and the resulting rise in commodity prices.

US ISM surveys and the jobs report to provide further input for the soft landing vs. recession fight

The ISM surveys are key to watch not just for activity data but also to understand if input and output price pressures are trending in the desired direction. For the manufacturing survey, the headline is expected to soften again and slip further below the 50-mark, while the ISM services survey is expected to return above 50. The jobs data can mean significant volatility for the markets as wage pressures likely soften further but the headline nonfarm payrolls still remain pretty robust and unemployment rate remains near record lows despite unending news of layoffs in tech and other sectors. All these data points will be keenly assessed by the markets which are now pricing in a soft landing. Stronger-than-expected data on growth with sustained slowing inflationary pressures will further boost the markets, while weaker-than-expected data can ignite some caution and profit taking.

China returns from buoyant Lunar New Year holiday, expecting pickups in PMIs

China returns from a week-long Lunar New Year holiday, during which, sales in consumption-related industries grew by 12.2% from the same lunar calendar period last year. Estimates of passenger traffic from various sources all pointed to a strong recovery of activities. The official NBS Manufacturing PMI and Non-manufacturing PMI, scheduled to release on Tuesday, are expected to bounce back strongly to the expansionary territory. The median forecasts from Bloomberg’s survey of economists call for the Manufacturing PMI to rise to 50.1 in January from 47.0 in December and the Non-manufacturing PMI to bounce sharply to 52.0 in January from 41.6 in December. Caixin China Manufacturing PMI, which has a bigger representation of SMEs in the eastern coastal regions, is however expected to improve only moderately to 49.8 in January from 49.0 in December. Caixin China Services PMI is forecasted to bounce to 51.6, back to expansion, from 48.0 in December. The in-person service sector, which had been hard hit during the pandemic, recovered strongly as the mobility and consumption data during the Lunar New Year holiday indicated.

ECB and BOE meetings likely to be pivotal this week for EUR and GBP direction

The European Central Bank (ECB) is expected to hike rates by 50bps to 2.50%, with the markets pricing in a 50bps rate hike at 86% with a 14% chance of a 75bps move. ECB speakers have been broadly hawkish, but even the most hawkish ones have hinted at multiple 50bps moves rather than another 75bps. Overall, about 140bps of rate hikes are priced in from the ECB until around mid-year, keeping ECB as the most hawkish G20 central bank. That reduces the scope of a potential hawkish surprise from this week’s meeting and means that EURUSD may have risks tilted to the downside.

The Bank of England market pricing is more mixed, with a 70% probability for a 50bps rate hike and 30% for a 25bps, and the potential for a split vote is also high. Therefore the bar for a surprise is higher, and will likely come from a revision in inflation forecasts. A steeper than expected cut in inflation forecasts could mean a sooner-than-expected end to the BOE’s tightening cycle, likely weighing on the GBP which seems to be ignoring the economic headwinds facing the UK economy for now.

Oil supply to shrink, will oil pop or see profit taking ahead of OPEC meeting, with oil equites to follow

Oil could be ready to pop with Chinese demand expected to rise, while supply concerns pick up, with the EU embargo on Russian seaborne fuel exports kicking in on February 5. However, traders may book in profits and play it safe ahead of the OPEC+ committee meeting on February 1 and ahead of the FOMC outlook on interest rates in the US on Wednesday. It is expected that the OPEC+ countries won’t boost production which could underpin prices at a time when diesel demand is rising amid travel picking up in the Asian pacific region (with aircraft travel almost back at 2019 levels). Traders have also been watching energy names such as Chevron- its share are up 27% from the September low, Occidental Petrolum is up 15%, Marathon Oil is up 35% from its September low. For more on oil’s fundamental, and other commodities, click here.

The China reopening drives the biggest monthly jump in Australian stocks since 2020

Australia’s share market, the ASX200(ASXSP200.I) is outperforming the S&P500 and Nasdaq, with a gain of 16% from its low - while also recording its biggest monthly gain since November 2020, (up 6.4%). Australia’s market - a dividend and commodity play, as well as being an investment proxy for China's reopening could also continue to outperform the US this year, given its heavy in materials such as iron ore, copper and aluminium, as well as financial companies - benefiting from higher interest rates. Mining giant BHP Group expects 17% dividend growth, Fortescue Metals sees higher sales in the first half of 2023 to China. Also consider, the iron ore price hit a new 2023 on the notion demand will rise. However, the iron ore (SCOA) price could be at risk of short-term correction, given it has rallied up almost 70%. So consider potentially taking profits given BHP shares are up 46% from their July low, Rio Tinto’s up 43%, Fortescue is up 53%. Although there is a risk of a short-term correction, as supply is lower than a year ago, the price over the longer term seems underpinned. Also consider sales to China have been increasing with Fortescue reporting greater buying of port side iron ore to 4.0mt (in the prior quarter), while guiding for H1 sales to rise to 9.3mt. Lastly, consider Australian insurers, banks and financials will likely benefit from the RBA’s rate hikes - QBE and WBC are expected to report profit jumps of over 30%.

Key U.S. corporate earnings

As of 27 January, 143 or 29% of the S&P 500 companies have reported Q4 earnings. Overall, 41% of those who reported results beat street estimates and 41% were in line with estimates. The information technology, healthcare, and materials sectors had the highest percentage of companies reporting positive surprises.

This week, Whirlpool (WHR) on Monday, General Motors (GM) and McDonald’s (MCD) on Tuesday, Amazon (AMZN), Ford Motor (F), and Starbucks (SBUX) on Wednesday will inform us of the latest state of U.S. consumers. Among them, the focus will be on Amazon, for which, the street consensus forecasts an 88% Y/Y decline in Q4 EPS to USD0.172. The business outlook from United Parcel Service (UPS), reporting on Tuesday, will be closely monitored for a glimpse of the health of global economic activities. Also reporting on Tuesday, Advanced Micro Devices (AMD) is expected to register a 27% Y/Y decline in EPS, reflecting the headwinds faced by the semiconductor industry as indicated in the poor results and downbeat guidance from Intel (INTC) reported last week. Investors will also watch Qualcomm’s results on Thursday closely for additional insight into the semiconductor and telecommunication equipment industries.

The most-watched results this week will be mega-cap names Meta Platforms (META) on Wednesday, and Alphabet (GOOGL) and Apple (AAPL) on Thursday. The median forecasts from street analysts are expecting the latest quarterly EPS to decline by 40% to USD2.22 at Meta, by 22% to USD1.20 at Alphabet, and by 7% to USD1.95 at Apple.

Monday: Whirlpool (WHR), GE Healthcare Technologies (GEHC)
Tuesday: Electronic Arts (EA), General Motors (GM), McDonald’s (MCD), NVR Inc (NVR), PulteGroup (PHM), Exxon Mobil (XOM), Marathon Petroleum (MPC), Phillips 66 (PSX), Amgen (AMGN), Pfizer (PFE), Caterpillar (CAT), United Parcel Service (UPS), Advanced Micro Devices (AMD), Corning (GLW)
Wednesday: Meta Platforms (META), T-Mobile (TMUS), Altria (MO), Metlife (MET), Boston Scientific (BSX), Thermo fisher scientific (TMO)
Thursday: Apple (AAPL), Alphabet (GOOGL), Amazon (AMZN), Qualcomm (QCOM), Ford Motor (F), Starbucks (SBUX), ConocoPhillips (COP), Intercontinental Exchange (ICE), Bristol-Myers Squibb (BMY), Eli Lilly (LLY), Gilead sciences (GILD), Merck (MRK), Honeywell (HON),
Friday: Cigna (CI)

Key economic releases & central bank meetings this week

Monday 30 January

Eurozone Economic, industrial & services confidence (Jan)

Tuesday 31 January

U.S. Employment cost index (Q4)
U.S. Chicago PMI (Jan)
Eurozone GDP (Q4)
Germany GDP (Q4)
France GDP (Q4)
JapanIndustrial production (Dec)
Japan Retail sales (Dec)

Wednesday 1 February

U.S. FOMC decision
U.S. ADP private employment (Jan)
U.S. ISM manufacturing (Jan)
Eurozone EU harmonized CPI (Jan)
Hong Kong GDP (Q4)

Thursday 2 February

U.S. Unit labor costs (Q4)
Eurozone ECB meeting
U.K.Bank of England rate decision

Friday 3 February

U.S. Non-farm payroll, unemployment rate, average hourly earnings (Jan)
Singapore Retail sales (Dec)

APAC Research

Saxo Group

Daily Dose of financial insights for investors and traders; retailers not exposed to China surge 20%, those pegged to Chinese demand crumble

Sun, 27 Nov 2022 22:30:00 Z

Six minute video insights for investors and traders; retailer shares not exposed to China surge 20%, while those pegged to Chinese demand such as Jd.com crumble. Here is what to watch this week that could be the next catalysts for equities from PCE data to jobs. Plus why commodities could be at risk with iron ore shipments falling ahead of the latest China lockdowns.

S&P500 is out of a bear market; retailers outperform, China exposed stocks cop a blow. Nasdaq 100 still in the bear woods, down 40%

The S&P 500 rose 1.6% last week with retailers shares rising the most; Best Buy rose 12%+, Ross Stores followed), while China’s Jd.com fell 12%. All in all; the S&P500 is up 12% from its October low and 16% away from its all-time high (meaning it’s officially out of a bear market). While the Nasdaq 100 is still in a bear market, down over 40% from its high, and up just 10% from its October low after gaining 0.7% last week. This shows tech investor are concerned as Chinese covid cases are rising and forward earnings is likely to be diminished again. A lot of tech companies are pegged to Chinese consumer demand, and a lot of tech companies make their products in China (Apple makes most of its iPhones in China). As for what to watch this week that could cause market volatility; America’s ADP employment data, GPD estimates, consumer confidence and the closely watched Personal Consumer Expenditures (PCE) are released. Given the Fed meets in just three weeks it will be watching for further clues inflation is slowing and that employment is waning (which is expected), as that gives it impetus to be less aggressive with hikes.

The Australian share market is just 5% off its all time high; but seems vulnerable

The Aussie share market has gained 12% from its October low, after rising 1.5% last week; with Virgin Money was up the most last week, about 23%, on upgrading its outlook, while gold company Ramelius Resources rose 15% on maintaining its production outlook. This week stocks exposed to China are vulnerable of a pullback given forward earnings are likely to be downgraded following further China lockdowns and protests. So be mindful investors could be looking to take profits or write options for downside protection on China concerns. It also means commodities, oil – iron ore, copper, lithium may see demand slow down and their prices fall – that’s important as its underpin some of our largest companies profits. Fresh data on Friday showed the major iron ore companies, BHP, Rio, Fortescue, will be shipping almost 6% less than last year in the final quarter of this year. So the risk is the situation in China worsens, iron ore shipments could continue to fall and hurt iron ore majors earnings and shares. Early Monday morning, iron ore trades 0.6% lower. Inversely; note that stocks not exposed to China could likely continue to rally given it’s the first Christmas with no global lockdowns (excluding China). Consider looking at retailers doing well following Black Friday sales and ahead of the likely Santa rally; Shares in JB Hi Fi, Harvey Norman, Premier Investments (owner of Jay Jays and Peter Alexander) are all trading up 20% from June. So they could be worth watching as examples.

Asian markets are on notice this week

All eyes are on Hong Kong’s Hang Seng and China’s CSI 300 which could be vulnerable of pulling back and trimming their 20% and 8% respective gains from their October lows, amid new lockdowns and unrest.

Commodities in focus; demand likely to slow from China, production increases

Oil (WTI) trades 0.3% lower in early trade Monday at $76.01 after falling 2% on Friday, losing almost 5% in total over the week. The bottom line is oil prices almost back at January levels on forward demand likely slowing, while production is rising. BP is restarting its Rotterdam refinery. Iraq plans to start increasing oil export capacity from its southern ports from 2023, adding up to 250,000 barrels a day next year and as much as 1.5 million by 2025. This is good for consumers and inflation though, and it also gives room for the share market to be supported higher as the Fed has ammunition to be less aggressive with rates (if inflation pressures from oil remain contained).

For a weekly look at what to watch in markets - tune into our Spotlight.

For a global look at markets – tune into our Podcast.

Jessica Amir

Market Strategist

Saxo Markets

Topics: Equities Featured Market Update APAC Equities Commodities Inflation InflationSG Asia Asia-Pacific Themes APAC Europe European Union (EU) Wheat Weekly Newsletter Weekly Outlook APAC Market Digest

Q4 2022 Outlook Winter is coming

Tue, 04 Oct 2022 06:00:00 Z

The macropolitical and economic landscape has sent freezing weather in over the financial markets. How will you navigate the cold winter?

An Executive Summary

Our outlook for Q4 2022 simply recognises the reality that winter is coming, in both the literal and figurative senses. First is the literal sense as Europe and the UK in particular brace for the impact of a winter season that will likely bring with it an economic winter. The power and gas crisis will reach peak impact due to the increased demand during winter heating season, even if prices have fallen considerably. Our macro strategist Christopher Dembik focuses on how Europe can absorb the tremendous headwinds of the energy crisis without turning the lights out entirely, with observers excessively pessimistic on the European outlook. This will include reducing demand through more efficiency, longer-term investments in nuclear, and better buildout of the necessary infrastructure for the green transformation.

In China, our market strategist Redmond Wong notes that the focus on renewables is far less intense. China has moved to secure coal supplies amidst the spike in oil and especially LNG prices in recent quarters, preferring to focus on more efficient use of its coal-fired baseload capacity and the most aggressive buildout of nuclear power of any major economy. For the rest of developed and emerging Asia, market strategist Charu Chanana notes that the soaring prices for LNG have altered the energy security for the region, to the detriment of weaker economies. The response will come in a variety of forms, from Japan’s renewed interest in nuclear despite the 2011 Fukushima disaster, to the intriguing prospect of energy increasingly trading in non-US dollar currencies, as already seen in India’s purchase of Russian crude with roubles. Our Australian market strategist Jessica Amir zeroes in on the factors driving a renaissance of interest in nuclear energy and looks at where to find the companies and ETFs in a rather difficult-to-navigate nuclear investment space.

Now on to the chief driver of asset valuations since the Fed’s dramatic pivot in November of last year: the trajectory of monetary policy. The coming quarter and first part of winter are likely to bring what Saxo CIO Steen Jakobsen dubs “peak tightness”. The market will finally manage to catch up to where the peak Fed rate is likely to rise by early next year, after getting it so wrong in hoping for a policy pivot toward decelerating tightening pressure in Q3. In turn, that policy tightness will lead to a recession, already on the way in Europe but spreading elsewhere next year, eventually even to the US, where the economy has proven far more resilient than the market expected.

In equities, the emphasis from the head of equity and quant strategy Peter Garnry is on how the coming winter will inevitably drive recession risks, as already seen with the pressure on consumer and discretionary stocks. He also explores how the extraordinary pressure on Europe can drive necessary innovation that should allow the continent to come out the other side with a far more competitive economy. Still, an overriding risk for growth and equity valuations is the cost of de-globalisation, which will reverse many of the trends in equities and the supply chains that companies have hyper-tuned over the last 12 years.

Head of commodity strategy Ole Hansen sees less drama for commodities relative to the intense volatility in the months since Russia invaded Ukraine, as ongoing supply concerns vie with shrinking demand concerns for supremacy. One interesting twist in Q4 will be how the crude oil market absorbs a halt of the Biden administration’s release of US strategic reserves if this proceeds according to plan in October.

In the FX outlook, John Hardy, the head of FX strategy, asks whether peak tightness in the anticipated trajectory of the Fed rate hike cycle will likely also bring peak US dollar, which has provided its own wintry pressure on global liquidity and asset prices for the last eleven months. Elsewhere in FX, will the market force the Bank of Japan to capitulate on its yield-curve-control policy, possibly setting up the yen for spectacular volatility this coming quarter? It’s also worth noting that this is the third quarter running in the massive divergence of the JPY weakness relative to Chinese yuan (CNH and CNY) strength, the latter still in relative terms despite the yuan being allowed to slip considerably lower versus the strong USD in Q3; it’s an important and tense situation that remains unresolved.

In crypto, the market failed to revive in the quarter even with a much-anticipated Ethereum platform shift to proof-of-stake from proof-of-work. As our crypto strategists Mads Eberhardt and quant strategist Anders Nysteen suggest, the risk of a “crypto-winter” continues as global liquidity dries up on the headwind of policy tightening, not to mention the fear of stricter regulation of the space. Still, there are plenty of bright spots, with burgeoning innovation in the industry finding new applications for crypto-related blockchain technology.

Finally, this outlook also features the usual rundown of the longer-term technical outlook for critical assets, as we revisit the critical US 10-year treasury yield chart, the US S&P 500 index and where the ultimate depths of this bear market may lie, and the EURUSD exchange rate after the symbolic parity level was reached—and then some—on the downside in Q3.

We wish you a safe and prosperous Q4. Given the stark challenges that lie ahead for asset markets in a world beset with grinding supply side challenges, and as policymakers clamp down to fight inflation, it’s a difficult time. At the same time, it’s worth keeping in mind that opportunity and longer-term market returns rise as a function of deteriorating current asset prices.

Explore products at Saxo

Steen Jakobsen

Chief Investment Officer

Saxo Bank

Topics: Quarterly Outlook

Saxo Spotlight: What’s on investors and traders radars this week?

Mon, 11 Jul 2022 01:30:00 Z

Market participants will closely scrutinize the CPI, University of Michigan Sentiment Survey and retail sales data scheduled to release this week to assess the probable path of the Fed’s policy actions beyond its July meeting at which the Fed is on track to hike by 75 basis points. While China is scheduled to release Q2 GDP, credit and activity data, the focus of the market is likely to be on how the resurgence of Covid-19 cases evolves.

The US inflation release will be a major catalyst; for two reasons

As the Fed has committed to an increasingly hawkish stance. But the question about a hard landing in is getting louder. The Fed’s stance will be tested this week if June’s inflation data is released (on Wednesday) shows inflation is easing. Firstly the release will show; which path the Fed may take with its target in the coming months. And secondly, it will either validate this latest equity market rally based on disinflationary pressures easing. However, if the numbers are hotter than expected, then markets will likely unwind the rally. Why? It will justify a 0.75% Fed rate hike at the Fed’s July meeting and more for longer beyond will be valid. Bloomberg consensus estimates expect June CPI 8.8% y/y, up from 8.6% y/y in May. June Core CPI at 5.7% y/y from 6.0% in May). As discussed in our Q3 outlook released last week, inflation is a runaway train and central banks will have to get aggressive to try get it under control, even if that means an economic derailment/slowdown. Wage pressures also remain on watch, especially as there have been reports of layoffs especially in the tech sector, and wage inflation needs to be curbed somewhat to ease price pressures.

Retail sales to show if US household consumption is rolling over

The U.S. nonfarm payrolls report shows US jobs growth is growing stronger than expected, with a gain of 372K jobs in June (vs Bloomberg consensus 265K). The report signaled that the U.S. labour market has yet to cool down materially. Average hourly earnings rose 5.1% YoY in June. With hourly earnings growth lagging behind CPI, the market will pay much attention to this week’s retail sales data to diagnose the strength of household consumption. Also coming out this Friday, the industrial production data will inform us further for the soft-landing or recession debate.

University of Michigan sentiment survey on watch

The U.S. recession rhetoric – which has gathered steam since the last inflation print – will also be tested further as the initial print of University of Michigan sentiment survey for July is released at the tail end of the week. On top of the headline sentiment index, market participants will focus on the 5-10-year inflation expectation in the survey (Bloomberg consensus 3%, 3.1% in June).

Downward earnings revisions could be the next disappointment for U.S. equities

Aside from CPI, our view is earnings will be one of the biggest focus points for markets this week. As mentioned previously S&P500 earnings estimates linger in record territory. The risk here is if companies don’t match or beat Q2 estimates, and if forward guidance levels are downgraded (which is highly probable), then the market will likely see a sell off. The focus on earnings will be business commentary and company’s outlooks. At Saxo, we think the same theme of Q1 will continue for Q2, energy companies be the standout, while other sectors will be likely to guide for margin squeezes, making downgrades and passing on higher costs. In Q2 metal commodities will also likely see huge drops in earnings, and disappointing guidance levels. Our view is interest rates sensitive sectors remains the most vulnerable (tech, consumer discretionary, real estate). Energy and defence may be bright spots, while other sectors will likely see downward revisions of 2022 EPS growth forecasts. Bloomberg EPS growth estimates currently stand at 20% for the S&P500. Figures will ex energy will likely be in single digits or even declines. And that will put downward pressure on stocks.

Companies reporting this week to watch to watch

In finance and banking; JPMorgan (JPM.xnys), Morgan Stanley (MS.xnys), Wellsfargo (WFC.xnys) and Citi (C.xnys) report which will be watched as for what they guide for 2022. We expect bad debt provisions to be announced. In health; UnitedHealthcare (UNH.xnys) reports. And in consumer business Pepsi (PEP.xnys) reports, along with Delta (DAL.xnys).

Europe gas supply issues to get a leg up

As Europe’s energy crisis continues to remain a key concern, we now have Russia shutting off gas supplies through Nordstream 1 on Monday for ‘maintenance’. There is increasing risk that this maintenance may become a more permanent shutoff as Russia aims to use gas supplies as a weapon in the current raging war. This could mean a further run higher in Dutch TTF gas futures, and may force more European utility companies to go for government bailouts and natural gas dependent industrial companies such as BASF to shut down some of their operations. All of this points to deeper recession concerns for the Eurozone, and a tougher task for the European Central Bank as it gets closer to its July policy meeting.

Asia’s inflation to continue to get hotter

Japan reports producer prices in the week ahead, which may cool off slightly as government support measures continue to help. Prime Minister Fumio Kishida increased fuel subsidies in a raft of measures announced in late April to ease the pain of rising prices ahead of key national elections which were held on Sunday. Still, the weaker yen and the still-high crude oil prices suggest upward pressure will remain and continue to challenge the Bank of Japan’s accommodative policy settings. Meanwhile, India’s headline inflation is set to remain above the central bank’s target range, and this will create more tightening pressures on the Reserve Bank of India.

China’s Q2 GDP expected to decline on a Qtry basis while June activity data set to recover

With much of the country, including the important industry and financial hub, Shanghai having been locked downed for 2 months, China’s Q2 real GDP is expected to decline (Bloomberg consensus -2.3%) on a seasonally adjusted quarter-on-quarter basis. On a year-on-year basis, Bloomberg consensus is calling for a rise of 1.0% for China’s Q2 real GDP. As most of the lockdowns were lifted in June, retail sales and industrial production are expected to rebound notably during the month. Aggregate financing and new loan data will likely bounce as well due to local government bond issuance and the Chinese authorities urging banks to lend. Lifting of lockdown and relaxation of property policies would have help lifted loan demand in June as well.

Singapore’s real GDP expected to grow in Q2

Singapore is scheduled to release advanced real GDP for Q2 this Thursday. A recovery in tourism related industries and still solid industrial production are expected to help to lift real GDP growth (Bloomberg consensus +1.0% SA QoQ; +5.4% YoY).

Bank of Korea is meeting this week

The market is expecting the Bank of Kore to raise rate by 50 basis points, brining its policy 7-day repo rate to 2.25% when they meet this Wednesday, as per Bloomberg survey.

Kuroda speaking on Monday and U.S. Treasury Secretary Yellen visits Japan on Tuesday

Governor Kuroda is making a speech on Monday at 11:00a.m. Tokyo time. The market will focus on Kuroda’s remarks, if any, on inflationary pressures. U.S. Treasury Secretary Janet Yellen will visit Japan on Tuesday and Wednesday ahead of the G20 Finance Ministers and Central Bank Governor Meeting in Bali, Indonesia on Friday. While it is unlikely that there will be any concerted action between the U.S. and Japan on currencies, market participants will scrutinize closely what the officials from both sides say.

Amazon Prime Day another sign the consumer is fatigued and is shifting their spending to necessities

Amazon will be launching Prime Day, 12 July, which is its biggest sales event. New sales records are made each year, but event we think will be its first slow down and show us where consumer spending is headed. Our analysis reveals; Monthly credit card spending in is now growing at half the pace it was across 2021 (as at May). Plus, the consumer is grappling with runaway record inflation. Rising food and energy costs prompted consumers to tighten their purse strings and change their spending patterns and we think this could continue YOY for as long as inflation persist. Necessity spending has seen the most growth. Fuel and convenience sales (+42.1% YOY) while Grocery spending rose 14% YOY in June. And e-commence spending only rose a mere 1.1% YOY (at June). Additionally, with freedom from lockdowns, spending on services, such as travel, leisure and dining, rather than online goods has increased. Airline spending jumped 18.2% YOY, while lodging/accommodation spending soared 33.7% YOY in June. And in store fashion forward sales in rose; Jewelry sales gained 16.2% YOY, department stores sales rose 8.6% YOY. Looking forward, consumers may also find sales offers far less attractive, which will likely further stunt consumer recessionary stocks.

Key economic releases & central bank meetings this week

Monday Jul 11

China: Aggregate social financing, new RMB Loans & money supply (Jun)
Japan: Machinery orders (May)

Tuesday Jul 12

Australia: Consumer confidence index (Jul)
Australia: Business confidence index (Jun)
South Korea: Money supply (May)
India: CPI (Jun)
India: Industrial production (May)

Wednesday Jul 13

U.S.: CPI (Jun)
Eurozone: Industrial production (May)
China: Exports, imports & trade balance (Jun)
South Korea: Bank of Korea meeting, Unemployment rate (Jun)
New Zealand: Reserve Bank of New Zealand meeting

Thursday Jul 14

Australia: Unemployment rate (Jun)
Japan: Industrial production (May final)
Singapore: Real GDP (Q2 Advance)
India: Exports, imports & trade balance (Jun)
India: Wholesale price index (Jun)

Friday Jul 15

G20: Finance Ministers and Central Bank Governor meeting
U.S.: Retail sales (Jun)
China: Real GDP (Q2)
China: Retail sales (Jun)
China: Industrial production (Jun)
China: Fixed asset investment (Jun)
Japan: Tertiary activity index (May)
New Zealand: Business manufacturing PMI (Jun)

Key earning releases this week

Tuesday Jul 12: PepsiCo (PEP.xnys)

Wednesday Jul 13: Delta Air Lines (DAL.xnys)

Thursday Jul 14: Fast Retailing (9983.xtks), JPMorgan Chase (JPM.xnys), Morgan Stanley (MS.xnys), Conagra Brands
(CAG.xnys), TSMC (2330/TSM.xnys)

Friday Jul 15: UnitedHealth Group (UNH.xnys), Wells Fargo (WFC.xnys), Charles Schwab (SCHW.xnys), BlackRock (BLK.xnys), Citigroup (C.xnys), US Bancorp (USB.xnys), Bank of New York Mellon (BK.xnys), State Street (STT.xnys)

]

APAC Research

Saxo Group

Topics: Macro Equities Macro FX Featured Market Update APAC APAC Employment Central Banks Indices China Australia Singapore Federal Reserve

Q3 2022 Outlook: The Runaway Train

Tue, 05 Jul 2022 00:00:00 Z

The market fails to understand that we have shifted into a new paradigm for the economy, inflation and the incoming policy response. Inflation will prove a runaway train that central banks can only chase from behind until the inflationary dynamics result in a crash into a hard recession.

An executive summary

Our outlook for Q3 2022, and really for the balance of the year, argues that the market fails to understand that we have shifted into a new paradigm for the economy, inflation and the incoming policy response. Inflation will prove a runaway train that central banks can only chase from behind until the inflationary dynamics result in a crash into a hard recession. But that eventual recession won’t mean that we are set for mean reversion back to disinflation and calm conditions. That’s because inflation is here to stay, driven by deglobalisation and supply-side shortcomings from decades of underinvestment in the physical world, as policy was overgeared toward pumping up leverage and ever greater financialisation of the economy. Over 40 years of falling yields and ever greater policy stimulus after every recession since the early 1980s, the final period was characterised by zero- and negative-policy rates and, even more importantly, negative real rates that drove tremendous malinvestment. Now, we have entered a new super cycle of greater volatility and a higher background inflation level. With monetary policy sidelined, fiscal dominance will mean that inflation is as much a feature as a bug, because it is the only option policymakers can take for deleveraging our over-indebted economies.

In equities, we argue that the market has undergone one of its largest sentiment shifts in the past 100 years in just six months. This was after it dawned on the market that the famed Fed put has been thrown out the window as the Fed finally realised it must focus single-mindedly on tightening conditions until inflation is reined in. Given our macro theme that the supply side of our economy has suffered underinvestment, the new landscape for equities should favour tangible assets such as logistics, commodities, renewable energy, infrastructure and defense. The energy sector is the only positive sector in US equities this year and, with its rising importance in equity indices, we foresee a potential crisis in environmental, social and governance (ESG) funds due to their significant underweight in oil and gas stocks. Elsewhere, we feature an equity focus piece on commodity-related stocks, naming names that offer exposure to a variety of commodities and noting the current risks to the green transformation theme.

Given our focus on inflationary risks due to the physical world being unable to keep up, it is interesting that our commodities outlook notes that commodities are fretting risks to the downside in the short to medium term as the market predicts an incoming recession due to the policy tightening and a demand adjustment after severe price rises over the last year. But for the longer term, decades of underinvestment in capacity and the need for the metal-intensive push for a more carbon-neutral future leave us convinced that commodities remain in a rising super cycle.

In currencies, we assess where we are in the strong USD cycle as the Fed is now forced into the position of continuing to tighten policy ‘until something breaks,’ with the USD possibly not peaking and turning over until we are clearly heading for a hard landing, even as other central banks are largely seen matching and even exceeding Fed policy tightening. The euro is in a tough spot as it tries to tighten while avoiding policy fragmentation due to the foundational challenges of the Economic and Monetary Union (EMU), as we discuss in a focus piece on Europe and the European Central Bank (ECB). We also feature a separate focus piece in currencies on the Japanese yen—the Bank of Japan has doubled down on its yield curve control policy that is seeing it lose control of its balance sheet as it intervenes to defend yield caps on Japanese government bonds. This could potentially mean that we are set for an explosion in JPY volatility if market forces and realised inflation in Japan become unbearable later this year.

Our European focus in this outlook is squarely on the ECB and the euro. The ECB is set to announce a new tool in Q3 to keep sovereign spreads under control. It may manage to do so, but what about the euro itself? Shortly put, the eurozone could well end up in crisis territory once again if the ECB lags too much behind its global peers in tightening policy. But that does not have to be entirely negative. From 2012 onwards, crisis has at every turn prompted new institutional reforms which have strengthened the eurozone framework. The second half of this year will prove critical for the eurozone.

The weakness in the Chinese economy due to the country’s zero-Covid policy has been an outlier this year. Our outlook focus piece on China judges the road ahead for the country to be likely bumpy through this winter and into early next year, as it appears intent on stopping any uncontrolled spread of the virus, with only hesitant offsetting stimulus measures. Still, long-term perspectives for China are in order as we look at the country’s huge initiative in transforming its economy away from the factory-of-the-world era to a new ‘dual-circulation’ paradigm led by high-tech prowess and increased self-reliance.

In our crypto coverage, we note that the crypto market has come under heavy pressure this year with the vicious tightening on global liquidity that has devastated risky assets of nearly every stripe. All parts of the crypto market are under pressure, from crypto traders to crypto service providers. Some claim this can serve as a healthy clean-up of the industry by removing overleveraged speculators and exposing unreliable and untenable crypto services. Going into Q3, cryptocurrencies are in limbo, awaiting changes in the general macroeconomic sentiment, regulation and breakthroughs in institutional adoption of crypto technologies.

Finally, this outlook also features a rundown of the longer-term technical outlook for critical assets, particularly the longer US treasury yield and Nasdaq-100 Index after US equity markets entered a bear market in Q2, as well as the USD Index and Brent crude oil.

Explore products at Saxo

Steen Jakobsen

Chief Investment Officer

Saxo Bank

Topics: Quarterly Outlook

Q2 2022 outlook: The End Game has arrived

Tue, 05 Apr 2022 00:00:00 Z

Our outlook for Q2 2022 argues that we are witnessing nothing less than the arrival of the end game for the paradigm that has shaped markets since the advent of the Greenspan put in the wake of the LTCM crisis of 1998. The twin shocks of the pandemic and Russia’s invasion of Ukraine have shifted priorities on all policy fronts, including fiscal, monetary and geopolitical. In the US, the imperative for the Fed to grapple with spiralling inflation risks has disrupted the traditional rinse and repeat of bailing out financial markets and the economy at the first ripple of trouble. Shortly put, the strike price of the “Powell put” is far lower than it was a year ago—the Fed must get ahead of the curve. In Europe, the Russian invasion of Ukraine has seen Germany tossing decades of fiscal and defence policy out the window, ushering in a new era of investment that should drive a strong rise in productivity. EU existential risks have disappeared as defence priorities soar above all other considerations. Helmets on, as 2022 will prove a wild ride for global markets.

Our macro outlook picks apart the argument that we are seeing a repeat of the 1970s as the world faces a supply shock unlike any it has previously seen. It’s one that risks a “great erosion” as negative real rates erode purchasing power on all levels and rising costs erode profit margins for corporations. Productivity must eventually improve to address this, but the prospects for productivity gains from the green transition are questionable.

In fixed income, the outlook focus is on the rapid flattening of the US treasury yield curve as an inversion threatens and points to rising recession risks. We also look at rising yields across Europe on a less accommodative ECB and, given the new fiscal expansion, what this could mean for EU peripheral spreads. In the credit space, central bank tightening will continue to turn the screws on credit spreads, possibly risking a tantrum at some point.

In equities, our focus is on equity valuations under siege from supply-side constraints, rising input costs and the prospect of far higher interest rates. Winners from here will be companies that can boast strong innovation, pricing power and profitability. In Europe, companies that absorb the enormous new fiscal push in defence, energy and other industries will likely benefit. We also present a special feature piece on cybersecurity, an industry that was already booming before Russia’s invasion super-charged focus on cybersecurity vulnerabilities on all levels—government and corporate.

In commodities, the focus is on the continued upside risk for oil that was already in place before the Russian invasion of Ukraine badly aggravated forward supply uncertainty. We also look into a supportive backdrop for industrial metals on the priorities of new military spending, the metal-intensive green transition and—as Russian supplies are disrupted—on sanctions. Elsewhere, rising food prices remain a risk as a corollary of rising energy prices, but also if this year’s Ukrainian wheat crop can’t get to market, as it is a major exporter. The gold story remains bullish as an inflation hedge and as long as real rates remain negative.

In currencies, the focus is on the potential comeback for the euro on the massive shift in fiscal outlays that has been triggered by the Russian invasion of Ukraine. This will keep more of EU savings in the EU and deepen capital markets there. We also break down how spiralling inflation and the sanctions against Russia’s central bank have likely accelerated the move away from USD primacy as the global reserve asset of choice.

Finally, this outlook features a rundown of the technical outlook for important assets from gold and crude oil to US equities, and in particular the remarkable multi-decade perspective on the Dow Jones Industrials.

Steen Jakobsen

Chief Investment Officer

Saxo Bank

Topics: Quarterly Outlook

Q1 2022 outlook: Fuelling the energy crisis

Tue, 25 Jan 2022 07:00:00 Z

Q1 2022 outlook: Fuelling the energy crisis

Executive summary

Our outlook for early 2022 explores the overriding risk of an energy crisis developing this year due to years of underinvestment in mission-critical baseload energy—the fossil fuels and nuclear energy that are still the overwhelming energy inputs into our economy. The climate agenda and focus on reducing CO2 emissions is the right one for the long-term future, but 2022 will be the year in which policymakers discover that the current roadmap toward long-term climate targets is out of touch with reality. Focusing excessively on EVs and the current menu of alternative energy options while neglecting baseload fossil fuel and nuclear will only lead to an energy crisis ahead. Europe is already at the heart of the baseload crisis and will continue to be so in the coming year. The EU will be the first major economic bloc forced to revamp its energy infrastructure and allow natural gas and nuclear back in from the cold.

In equities, we look at the incredible current under-representation of the energy sector in equities, which makes up a meagre 2.7 percent of the S&P 500 market cap at the end of 2021 versus more than 16 percent at their major peak in 2008 and 10 percent in early 1995. We have also drawn up an inspirational list of some 40 companies across the global fossil fuel, nuclear and new energy landscape. We expect the sector to deliver strong returns in coming years, as market valuations are very stretched in most of the sectors that did well last year.

In commodities, a strong focus in 2022, we look not only at the upside potential for oil and gas, but also nearly every industrial metal due to the metal intensity of alternative energy sources, from wind turbines to EV batteries. The underinvestment that has brought us to the current state of weak supply will continue until ESG standards for lending into mining and upstream oil and gas production are softened. Greenflation will persist as a buzzword in 2022 with further uncomfortable inflation in commodities possibly spreading to the major agricultural products as fertiliser prices are set to spike in the next growing season after this winter’s natural gas crisis. Many don’t realise that much of the fertiliser used to increase the crop yields that are our “food baseload” are produced by stripping natural gas atoms of their hydrogen to produce ammonia compounds; so we even “eat” fossil fuels, in a way.

In the fixed-income markets, the focus this year will be on central banks’ increasingly aggressive stance as they lean against the powerful inflationary pressures that worked up a head of steam in the second half of 2021. Yield curves will likely bear flatten, with policy rate hikes raising yields at the front end of the curve while longer yields struggle to keep pace. The latter will be held down by weak long-term real growth prospects. Long-duration bonds and assets will likely struggle in the year ahead. Investor interest in higher-yielding debt will persist. However, as central banks begin catching up with inflation in their policy moves, higher real rates could spark an eventual widening in credit spreads that dent returns for riskier debt.

In currencies, we look at the likelihood that the Fed will be more or less be forced down a path of hiking rates until something breaks down the road. The USD is likely to remain weak as long as the Fed’s perceived “terminal rate” remains anchored around 2 percent, and as long as the pace of the Fed’s rate increases is sufficiently sedate to avoid a liquidity panic. Elsewhere, we note that 2022 kicked off with extreme divergences in JPY weakness and CNY strength that haven’t been seen since China modified its exchange rate regime back in 2015, severely weakening the renminbi. With much of the world tightening while China seeks some form of domestic easing after crackdowns on the tech and property sectors, the divergence points to a softer renminbi.

Explore Saxo’s products

Steen Jakobsen

Chief Investment Officer

Saxo Bank

Topics: Quarterly Outlook

We need water. We need oxygen. We need win-win markets.

Thu, 20 Jan 2022 03:34:00 Z

Not a day has gone by in the history of humanity where we did not need each other. Capitalism is not an ideology – it is a system. And while it possesses the potential for humans creating win-win transactions among each other, then systems can be flawed. We need to mend and transform the system, but we cannot do it alone. Whether we call it humanistic capitalism or win-win markets, what matters is that we start to use the strength of the system to make the best possible impact on the most important thing we have: each other.

Sources referenced in the video:

“Capitalism and Its Impact on Global Living Standards”, Josh Swan, University of Birmingham
“The Cambridge History of Capitalism”, Cambridge University
“Exxon loses board seats to activist hedge fund in landmark climate vote”, Reuters

See all sources

Saxo Group

Topics: Money-matters

The plan to end fossil fuels gets a rain check

Thu, 02 Dec 2021 00:00:00 Z

Policymakers kick climate targets down the road and support fossil fuel investment to fight inflation and the risk of social unrest while rethinking the path to a low-carbon future.

See all predictions

Realising the inflationary threat from surging commodities prices and the risk of an economic train wreck due to the unrealistic timeline for the green energy transition, policymakers kick climate targets down the road. They relax investment red tape for five years for oil production and ten years for natural gas production, to encourage producers to ensure adequate and reasonably priced supplies that bridge the gap from the energy present to the low-carbon energy future.

According to the IEA, the ambitious goal to reach net zero emissions by 2050 would require that the consumption of oil and natural gas decline 29 percent and 10 percent respectively by 2030, with further steep declines thereafter. Faced with this outlook, suppliers of these traditional energies have already begun scaling back exploration and production to such an extent that supply is already slipping relative to demand, raising prices for the energy source that still feeds the bulk of our primary energy.

This development has already jacked up prices and price volatility, not only for energy, but also for industrial metals, most of which are needed in greater quantities for the green transformation push. On top of this, surging energy prices have spiked prices for diesel and especially fertiliser, important farming costs that raise concerns about the production of key food crops.

One of the key restraints on the investment needed to maintain, much less expand, mining and energy production has been the lack of lending interest from investors and banks. Environmental, social and governance (ESG) criteria have become an increasingly popular way for investors and banks to allocate investment capital to companies.

Faced with rapidly rising commodity prices and an increasingly impossible road to carbon neutrality, policymakers make a surprise and controversial move in 2022 to temporarily relax environmental restrictions on new upstream crude oil and natural gas investments for five and ten years, respectively. The plan is sold as the only pragmatic way to bridge the reality of our energy-consuming present with the desired low-carbon future, while also limiting the risk of social unrest caused by rising food and energy prices.

Market impact: The iShares Stoxx EU 600 Oil & Gas ETF (Ticker: EXH1:xetr) surges 50 percent as the whole energy sector gets a new lease on life

See next 2022 prediction:
Facebook faceplants on youth exodus

Ole Hansen

Head of Commodity Strategy

Saxo Bank

Topics: Outrageous Predictions Row 1 OP 2022

Facebook faceplants on youth exodus

Wed, 01 Dec 2021 23:45:00 Z

The young abandon Facebook's platforms in protest against their mining of personal information for profit; the attempt by Facebook parent Meta to reel them back in with the Metaverse stumbles.

See all predictions

Back in 2012, 94 percent of teens had a Facebook account, while surveys suggest that today only 27 percent of adolescents have an account. Facebook has gone from being a vibrant hub of young people, to a platform for older “boomers” as young people would say. Young people are increasingly turned off by Facebook’s algorithms turning their social media experiences into that of homogenous feedback loops of identical content, or even worse, hateful and disinforming content. Facebook’s own research suggests that teens spend 2 to 3 times longer on TikTok than on Instagram (which is Facebook’s youngest social media asset), and that Snapchat is the preferred way to communicate with friends.

In many ways, Facebook is suddenly in the midst of a cultural war between young people under 40 and adults over 40, with young people seeing Facebook representing the evil boomer generation of fake news and greedy corporations. Facebook was like the only meaningful cigarette brand and suddenly many new brands are joining the marketplace. These newcomers have a cooler style and a different take on data privacy and how information is controlled, without being minted in algorithms that serve highly individualised advertisement messages.

A new company name (Facebook is now called Meta) and brand identity to separate and shield Instagram (its most valuable current asset), together with creating a new product tailored towards young people, is the exact same playbook tobacco companies have used for years. But in 2022, investors will realise that Meta is rapidly losing the young generation and thus the future potential and profitability of the company. In a desperate move, Meta tries to acquire Snapchat or TikTok while throwing billions of dollars into building the creepy Metaverse, which is aimed at surveilling users more directly than ever before and getting young people back into Meta’s universe of social media platforms, in the perceived wisdom that being a first mover is always best in technology. The plan struggles to take off as the young generation fails to sign up.

Market impact: Facebook parent company Meta struggles, down 30 percent versus the broader market and is urged to spin off its components as separate entities, shattering Zuckerberg’s monopolistic dreams.

See next 2022 prediction:
The US mid-term election brings constitutional crisis

Peter Garnry

Chief Investment Strategist

Saxo Bank

Topics: Outrageous Predictions Row 1 OP 2022

The US mid-term election brings constitutional crisis

Wed, 01 Dec 2021 23:35:00 Z

The US mid-term election sees a stand-off over the certification of close Senate and/or House election results, leading to a scenario where the 118th Congress is unable to sit on schedule in early 2023.

See all predictions

The chaotic 2020 US Presidential Election was a scary moment for many US institutions. The sitting president Donald J. Trump initially refused to conceded defeat in the election and complained that the election was stolen, a claim that was never seriously challenged in a court of law but one which had widespread sympathy among the Trump base. A crowd of hard-core believers in the stolen election conspiracy was encouraged by the President’s rhetoric to a sufficient degree to storm Capitol Hill and “stop the steal”, i.e., to prevent the election result from being made official on January 6, 2021, in a scene unprecedented in US history.

Prior to this, and then again later in the hotly contested Senate run-off elections in Georgia, dedicated election officials—many of them Republican—were doing their duty to tally the real results while risking their life amidst threats—even death threats—from extremists. In 2022, the Republicans ensure that no such traditional duty-bound officials are in the “wrong” place, with all election-related positions filled by toe-the-line partisans ready to do anything to tilt the results to suppressing voter turnout. The unpopular and tone-deaf Democrats, meanwhile, wage an ineffective campaign of fearmongering that fails to gin up a popular brushback against the response as they are also not trusted due to their progressive cultural positions, a better-than-thou attitude to the masses, and incoherent support of populist causes while key Democrats are clearly in the pockets of lobbyists.

In the wake of the 2022 election, a handful of key Senate and House races come down to the wire and one or both sides move against certifying the vote, making it impossible for the new Congress to form and sit on its scheduled first day of January 3, 2023. Joe Biden rules by decree and US democracy is suspended as even Democrats also dig in against the Supreme Court that was tilted heavily by Trump. Indeed, as 2023 gets underway the stand-off sees a full-blown constitutional crisis stretching over the horizon.

Market impact: extreme volatility in US assets, as US treasury yields rise and the USD drops on hedging against the existential crisis in the world’s largest economy and issuer of the world’s reserve currency of choice.

See next 2022 prediction:
US inflation reaches above 15% on wage-price spiral

John J. Hardy

Global Head of Macro Strategy

Saxo Bank

Topics: Outrageous Predictions Row 2 OP 2021

US inflation reaches above 15% on wage-price spiral

Wed, 01 Dec 2021 23:25:00 Z

By the fourth quarter of 2022, US CPI inflation reaches an annualized 15% as companies bid up wages in an effort to find willing and qualified workers, triggering a wage-price spiral unlike anything seen since the 1970's.

See all predictions

At the end of the 1960s, the US Federal Reserve and the Fed chair then, McChesney Martin, misjudged how hot they could run the US labour market without fanning inflation. The miscue paved the way for inflation expectations getting out of control and a massive wage-price spiral the following decade. The official US CPI reached a peak at 11.8% in February 1975. It wasn’t until the recession of 1980-82 and brutal policy rate increases to levels as high as 20% that inflation was finally killed.

In 2022, the Federal Reserve and Fed chair Jerome Powell repeats the same mistake all over again as the post-Covid outbreak economy and especially the labour market are severely supply constrained, making a mockery of the Fed’s traditional models. Powell believes millions of Americans will return to work and fill some of the 10.4 million open job positions as Covid-19 fades. But this is plain wrong. Some have retired early due to the crisis and thus have permanently left the US workforce. The Federal Reserve Bank of St. Louis estimates the exodus of older workers to be about 3 million people. Others aren’t returning to poorly paid jobs after seeing huge handouts during the pandemic and seem to be waiting for better jobs and pay.

The big difference between today and yesterday is that the pandemic has fuelled a great awakening of workers. Across sectors and income classes they realise they are now more empowered than ever. They demand a better experience: better job conditions, higher wages, more flexibility and a sense of purpose from work. Coupled with persistent inflationary pressures coming from the production side, the energy crisis and labour shortage, this results in unprecedented broad-based double-digit annualised wage increases by Q4. As a consequence, US inflation reaches an annualised pace above 15% before the start of 2023, for the first time since WWII. This prompts the Federal Reserve into a too-little, too-late move to tighten monetary policy faster in a desperate effort to tame inflation. But the central bank has lost credibility; it will take time to regain it.

Market impact: extreme volatility in US equity and credit markets. The JNK high-yield ETF falls as much as 20% and the VIXM mid-curve volatility ETF soars as much as 70%.

See next 2022 prediction:
EU Superfund for climate, energy and defence announced, to be funded by private pensions

Christopher Dembik

Head of Macro Analysis

Saxo Bank

Topics: Outrageous Predictions Row 2 OP 2021

EU Superfund for climate, energy and defence announced, to be funded by private pensions

Wed, 01 Dec 2021 23:15:00 Z

To defend against the rise of populism, deepen the commitment to slowing climate change, and defend its borders as the US security umbrella recedes, the EU launches a bold $3 trillion Superfund to be funded by pension allocations rather than new taxes.

See all predictions

The security umbrella provided by the US during the Cold War and afterwards over much of Eastern Europe is rapidly fading and threatens to fail entirely in the years ahead as the US looks east at far more serious economic and military rivals. Signs of this were already clear with the popular and withering attacks on NATO allies by former president Donald Trump and his demand for them to pay more. Then the AUKUS submarine deal stiffed France’s attempt to sell new submarines to Australia, as post-Brexit UK, Australia and the US moved into a new security arrangement that left a very cool feeling down the back of continental Western Europe and the EU.

The EU knows it needs to move fast on all fronts to bolster its defences and is also looking for a way to jump-start flagging economies buffeted by the energy and power crisis of 2021-22. French President Macron, backed by Italian Prime Minister Draghi moving to stave off Italy’s own rise of the populists, rolls out a vision for an “EU Superfund” that will address the three-fold priorities of defence, climate and the related clean energy transition. Given the EU’s aging population and heavy tax burdens, policymakers know that it will be impossible to finance the Superfund with higher taxes on incomes or other traditional tax revenues. Instead, France has a light-bulb moment as it seeks to overhaul its pension system and looks at Europe’s enormous pensions. It decides that all pensions for all workers above the age of 40 must allocate a progressively larger portion of their pension assets into Superfund bonds as they age. This allows new levels of fiscal stimulus in the EU even with the sleight-of-hand trick of hiding the spending in inflation and negative real returns on low-yielding Superfund bonds that are actually EU bonds in disguise. At the same the younger generation enjoys a stronger job market and less unfair tax burdens as the system proves such a success that income taxes are lowered progressively.

Market impact: Bond yields harmonise across Europe, leading to German Bunds underperforming. EU defence, construction and new energy companies are some of the best performers.

See next 2022 prediction:
Women’s Reddit Army takes on the corporate patriarchy

Christopher Dembik

Head of Macro Analysis

Saxo Bank

Topics: Outrageous Predictions Row 2 OP 2021

Women’s Reddit Army takes on the corporate patriarchy

Wed, 01 Dec 2021 23:05:00 Z

Mimicking the meme stock Reddit Army tactics of 2020-21, a group of women traders launch a coordinated assault on companies with weak records on gender equality, leading to huge swings in equity prices for targeted companies.

See all predictions

Saving and investing has become a crucial topic among female communities. Many realise that because women’s life expectancy is longer, they need more long-term savings. However, they might have missed the opportunity to invest in the longest bull market in history due to the wage gap. On average, women earn 20% less than men in the same positions, thus have less disposable income to invest. Making things worse, the Covid crisis aggravated the gender inequality crisis, as it was disproportionately women who left their jobs to take care of children during the lockdowns. Because of the pandemic, it will now take 135.6 years to close the gender pay gap, versus 99.5 years before Covid, according to the World Economic Forum.

Women are not willing to wait any longer. Tired of the lack of progress, 2022 sees a massive grass-roots effort based on social media platforms to force companies that break civil rights laws to address unfair and sexist, racist, ageist and ableist practices. Although women have been struggling with lower salaries they have higher saving rates than men. Those savings will now come in handy as they decide to take the situation into their own hands and throw their considerable influence around in a #metoo movement in financial markets.

In contrast to the often-nihilistic original Reddit Army, the Women’s Reddit Army will be more sophisticated, with women traders coordinating a long squeeze by shorting stocks of selected patriarch companies. At the same time, they will direct funds to companies with the best metrics on female representation in middle management and among executives. Instead of condemning the development, politicians worldwide welcome and support their cause, putting even more pressure on companies with outdated patriarchal attitudes, poor gender equality in pay, and under-representation of women on boards and in management to address the errors of their ways.

Market impact: The movement gets real results as the broader market catches on to the theme and joins in, forcing targeted company prices sharply lower, which sees companies scrambling to change their ways. It marks the beginning of a gender parity renaissance in markets.

See next 2022 prediction:
India joins the Gulf Cooperation Council as a non-voting member

Althea Spinozzi

Head of Fixed Income Strategy

Saxo Bank

Topics: Outrageous Predictions Row 1 OP 2022

India joins the Gulf Cooperation Council as a non-voting member

Wed, 01 Dec 2021 23:00:00 Z

The world's geopolitical alliances will lurch into a phase of drastic realignment as we have an ugly cocktail of new deglobalising geopolitics and much higher energy prices.

See all predictions

Countries reliant on imports for the majority of their energy inputs in a rapidly deglobalising world will need to move fast to strategically reorientate strategic alliances and secure long-term energy supplies. One such alliance could involve India, with its mighty technology sector, joining the Gulf Cooperation Council (GCC) as non-voting member, or in some sort of free trade zone. This alliance would see a reduction in India’s energy insecurity as it secures long-term import commitments. On the other hand, India’s incredibly strong technology platform and deepening capital markets could attract the excess savings generated in the GCC region, through lower friction access.

There is ample history linking these two parties. Many Indian companies are de facto running out of GCC member countries, and likewise India is seen as a “must-have” investment destination, not only for Middle East investors, but also globally as the world becomes far more multipolar, with the US, China and EU increasingly pursuing independent agendas and the rest of the world seeking to keep as many options open as possible.

Historically there has been an attempt already to change the GCC mandate of the regional, intergovernmental political and economic union to a more formal Gulf Union in 2011. We see new alliances being formed globally, all with a view to avoiding too close a commitment to either China or the US.

Interregional trading zones will secure “closer to home” production and investment, combined with the security of reliable supplies from India’s point of view, and a reliable destination market from the GCC’s point of view. The alliance helps lay the groundwork for the GCC countries to plan for their future beyond oil and gas and for India to accelerate its development via huge new investments in infrastructure and improvements in agricultural productivity together with fossil fuel imports, bridging the way to a post-carbon longer-term future.

Market impact: The Indian rupee proves far more resilient than its EM peers in a volatile year for markets. The bubbly Indian stock market corrects with other equity markets in early 2022, but proves a strong relative performer from the intra-year lows.

See next 2022 prediction:
Spotify disrupted due to NFT-based digital rights platform

Steen Jakobsen

Chief Investment Officer

Saxo Bank

Topics: Outrageous Predictions Row 3 OP 2022

Spotify disrupted due to NFT-based digital rights platform

Wed, 01 Dec 2021 22:50:00 Z

Musicians are ready for change as the current music streaming paradigm means that labels and streaming platforms capture 75-95 percent of revenue paid for listening to streamed music. In 2022, new blockchain-based technology will help them grab back their fair share of industry revenues.

See all predictions

Non-fungible tokens, or NFTs, are unique digital assets, the ownership of which can be established and stored on a digital ledger via blockchain tech. And 2021 was the year of the rise of NFTs as out of nowhere they gained traction. Investors wildly bid up things like uniquely generated character images from CryptoPunks and illustrations by the former unknown artist Beeple, one of which sold for a record $69M in March.

While the early days of NFTs have looked chaotic and dangerous for asset buyers, the outlook is bright for NFT technology. Not only does an NFT-based platform offer a new way to verify the ownership of rights, but also a way to distribute rights without intermediaries, i.e., a completely decentralised system obviating the need for a centralised platform.

The use case for NFTs could prove particularly compelling in the next step for the technology for content generators in the music industry as musicians feel unfairly treated by the revenue sharing models of the current streaming platforms like Spotify and Apple Music. These models don’t guide individual subscribers’ fees to the actual music an individual subscriber listens to. Rather, all subscription fee revenues are aggregated and distributed based on every artist’s share of total streams. In addition, the platforms take a substantial cut, which together with the cut paid to labels is some 75 percent or more of the total revenue.

But by leveraging NFTs, more specifically via “smart-contract” blockchains, artists could distribute music directly to listeners without centralised intermediaries taking a cut, while tracking their income in real-time—even getting paid in real-time—with listeners enjoying the knowledge that the money they are paying is going straight to the artist.

In 2022, an NFT-based service takes hold and begins offering music from notable stars – perhaps the likes of Katy Perry, The Chainsmokers and Jason Derulo, all of whom have recently backed an effort to create a new blockchain-powered streaming platform. Other well-known artists begin pulling their music from the now “traditional” streaming platforms, which suddenly find themselves terminally disrupted. Investors see the eventual writing on the wall for podcasts, movies and other forms of digitisable contents as well.

Market impact: Investors recognise that Spotify’s future is bleak, sending its shares down 33 percent in 2022.

See next 2022 prediction:
New hypersonic tech drives space race and new cold war

Mads Eberhardt

Cryptocurrency Analyst

Topics: Outrageous Predictions Row 3 OP 2022

New hypersonic tech drives space race and new cold war

Wed, 01 Dec 2021 22:40:00 Z

The latest hypersonic missile tests are driving a widening sense of insecurity as this tech renders legacy conventional and even nuclear military hardware obsolete. In 2022 a massive hypersonic arms race develops among major militaries as no country wants to feel left behind.

See all predictions

In the summer of 2021, China tested a hypersonic vehicle that could enter low orbit and later re-enter the atmosphere to then cruise toward its target. The test was said to shock top US military officials, with chairman of the Joint Chiefs of Staff Mark Milley even willing to say that this was close to a “Sputnik moment” for the US. That was a reference back to the successful Soviet launch of the Sputnik satellite in 1957, which served as a wakeup call to the US on superior Soviet rocketry and space capabilities, and an event that marked the beginning of the space race, the most iconic part of the US-Soviet cold war rivalry. In 2022, it is clear from funding priorities that hypersonics and space are the heart of a new phase of the deepening rivalry between the US and China on all fronts—economic and military. Other major powers with advanced military tech join in as well, likely including Russia, India, Israel and the EU.

Hypersonic capabilities represent a game-changing threat to the long-standing military strategic status quo, as the technology brings asymmetric new defensive and offensive capabilities that upset the two massive pillars of military strategy of recent decades. The first is the potential for devastating hypersonic tech defence against the conventional attack capabilities of long-range bombing aircraft, as well as the so-called “deep water” navy of ships that can bring the fight to any corner of the globe without refuelling. Billion-dollar surface ships risk proving sitting ducks without a chance to defend themselves against a hypersonic attack that arrives at multiples of the speed previously possible—perhaps as high as Mach 10. The second pillar of the old Cold War era was the principle of mutually assured destruction (MAD) in the event of nuclear war, under which it was pointless to launch a nuclear war as long as there was still time for the opponent to launch an equally destructive ICBM counterattack from land- and submarine-based ballistic missiles. But the speed and agility of hypersonic tech introduces the belief that superior defence could thwart an attack entirely and even allow for new first-strike capabilities.

Market impact: massive funding for companies like Raytheon that build hypersonic tech with space delivery capabilities and underperformance of “expensive conventional hardware” companies in the aircraft and ship-building side of the military hardware equation.

See next 2022 prediction:
Medical breakthrough extends average life expectancy 25 years

John J. Hardy

Global Head of Macro Strategy

Saxo Bank

Topics: Outrageous Predictions Row 3 OP 2022

Medical breakthrough extends average life expectancy 25 years

Wed, 01 Dec 2021 22:30:00 Z

Young forever, or for at least a lot longer. In 2022, a key breakthrough in biomedicine brings the prospect of extending productive adulthood and the average life expectancy by up to 25 years, prompting projected ethical, environmental and fiscal crises of epic proportions.

See all predictions

In search of slowing the natural process of aging, researchers have been studying the processes at the centre of how we age from multiple angles and with a growing arsenal of advanced technologies, from therapeutics to “prime editing” at the DNA level. The year 2022 sees a major breakthrough from a multi-factor approach, as a cocktail of treatments is put together that tweaks cell-level processes in order to extend their life and thus the life of the organism composed of those cells. It’s not cheap, but it’s effective and has already been demonstrated on laboratory mice containing human DNA, extending their lives some 30% and more. The implication for humans is the possibility that average life expectancy can be extended by 25 years or more, and with it the incredible prospect in the future that age 80 will be the new 50. Not only that, but this future is open to older humans too as the new fountain of youth treatment can slow and even rejuvenate already old cells.

Not only do life expectancy improvements come via longer life, but also through reduction and even elimination of most human diseases—from heart disease to neuro-degenerative disorders—many of which are responsible for the decline in health and productivity as we age. This is made possible by the prime editing of DNA approach, which doesn’t rely on new cells via division but actually rewrites existing cells.

The prospect of a massive leap in human quality of life and life expectancy are huge wins for mankind, but bring an enormous ethical and financial quandary. Imagine that almost everyone can look forward to living to an average age of 115 and more healthily. What would this mean for private and government pensions, or even the ability or desire to retire? And what about the cost to the planet if it is set to support billions more people, not to mention whether or not there is enough food to go around? And then there is the ethical question of whether it is humane to not make the cocktail available to everyone. In short, how would our value systems, political systems and planet cope?

See next 2022 prediction:
The plan to end of fossil fuels gets a rain check

Steen Jakobsen

Chief Investment Officer

Saxo Bank

Topics: Outrageous Predictions Row 1 OP 2022

In a world of negative real rates, EM Asia is a beacon of hope

Tue, 05 Oct 2021 05:58:00 Z

It's time to take a step back from developed markets if you want to find positive yields

Inflation is no transitory joke …

Take it from someone who—unlike my peers—was originally in the transitory camp of inflation; after all, the tri-factor meta-trends of ever-lower US yields since the 1980s, deflationary forces of technology, and ageing demographics in most western and developed markets were goliath factors that have been running for decades.

Now it’s not so much that these meta-trends have been usurped overnight; it’s more the recognition of the fact that we could well be entering a medium inflationary regime which could run for years.

For context here is a table of recent inflationary prints across the globe (September 16, 2021)*:

*Worth noting that Australia and New Zealand CPIs are quarterly, unlike the default monthly figures for other countries. Sources are Saxo Bank and Bloomberg.

The fascinating thing you can see is that out of the major economies in the world, from both a DM and EM representation, the US is fourth in terms of having the highest inflation rate at 5.3%, but has a central bank rate of 0.0%—way lower than the +4.50% to +6.75% range across Russia, Brazil and Mexico.

If someone had told you in December 2019 that in 2 years’ time the US would be showing higher inflation than places like South Africa, Indonesia and India, alongside a central bank that had not hiked or tapered yet, they would have been laughed out of the room.

The other startling takeaway is the +3.2% to +3.8% range of inflation across the other DMs, with all of them having all-time low central bank rates. What is even more revealing of the inflection point, is when you compare the inflation and central bank rates pre-Covid (December 2019) and today (September 2021).

For instance, pre-Covid Norges bank’s rate was +1.50% with inflation running at +1.40%. Today inflation has more than doubled to +3.40%, while the Norges bank rate as of early September was sitting at 0.00%. It’s not hard to fathom a pathway where Norges bank returns to its +1.50% rate, if not higher, over the next 12 months.

Meanwhile in China, Indonesia and India, inflation has actually been falling from pre-Covid levels to the present. And in the case of China’s PBOC, they never cut rates during the Covid crisis.

Negative real rates reign supreme in developed markets …

Negative real rates seem to be a function of developed markets that have lost the ability to have true price discovery, and are instead influenced by synthetic pricing as a result of extraordinary credit growth. A key inflection point was seen in 1971 when Nixon took the US off the Gold Standard and with it, accountability. Also after the 2008 financial crisis, the predominant response from the US and most of the world was one of monetary policy expansion but fiscal policy restraint. Obama was a Democrat president and Congress was controlled by Republicans who, now being out of the White House, had found faith again in being fiscally conservative.

For additional context on the extent of this synthetic pricing that is prevalent in our markets, the Fed’s BS/GDP ratio grew from around 6% prior to the sub-prime 2008 crisis to a high of 26%, in measures that were supposed to be “temporary”. “Tapering” brought us back to a low of 18%, and then post-Covid we’ve seen that ratio spike to 38%. Now where could this number get to?

When Abenomics kicked off in the back end of 2012, the BoJ BS/GDP was around 28%. Today, less than 20 years later, it’s 133%, with no signs or indications of a reversal of policies to any kind of normalisation. The BoJ own the vast majority of the bond market in Japan and depending on whose data you trust, potentially up to 30% of equities. And this from the third biggest country that, unlike the US, is not even the global reserve currency of the world, with the deepest and most valuable equity, debt, real estate and intellectual property markets.

If we normalise the quarterly growth of the Fed Balance Sheet versus the S&P 500 from the end of 2007 to the end of August 2021, we can see that the Fed’s Balance Sheet grew by +935% versus the S&P 500’s +308%.

Source: Bloomberg and Saxo Group

The net result of all this liquidity in the system is developed markets that cannot reverse course back to a world of positive real rates. The political capital, will and courage is not there. Perhaps most alarming, the zeitgeist and the societal imbalances would just not stand for it. In the DMs we’ve just had the biggest wealth distribution from government balance sheets to its citizens and the vast majority are going to get used to this entitlement. And politicians being politicians, they will respond like monkeys, pushing the same button over and over all because it feels good and leads to their further entrenchment. The flawed incentives, vested interests of the elite, and lack of accountability and transparency from policymakers have DMs stuck in a vicious feedback loop that only compounds the house of cards that has been building since 2008.

Emerging markets are the only place to find positive real yields.

EM Asia is host to some of the biggest real rates yielding bond markets in the world. These include Indonesia (+4.5%), China (+2.1%), and Malaysia (+1.1%); contrast this with the negative rates to be found in the USA (-4.0%) and the Eurozone (-3.7%).

Source: Bloomberg and Saxo Group

Explore Saxo’s products

Kay Van-Petersen

Global Macro Strategist

Saxo Bank

Topics: Quarterly Outlook

The sad reality of the green transition

Tue, 05 Oct 2021 05:56:00 Z

It might do wonders for the planet, but will a carbon-free society translate into higher growth and GDP?

As hopes rise that the pandemic is almost over in the developed world, visions of a second “Roaring Twenties” to match last century’s post-pandemic decade have proliferated. In the Jazz Age of the 1920s, consumerism and mass culture took shape. Innovations emerged: automobile, radio, motion pictures and labour-saving electric appliances, for instance. It’s tempting to ask whether history will repeat itself. The automobile and the radio have been replaced by the green transformation as the major driver of change. But today’s secular stagnation will be tough to overcome. In our view there’s no sign at this stage that the worldwide transition to a carbon-free society will translate into higher productivity growth and higher GDP growth over the long term.

A circular relationship: It is known from economists and non-economists that productivity is a long-term determinant of return on capital and thereby of interest rates. Antonin Bergeaud, Gilbert Cette and Rémy Lecat showed that “interest rates are also a determinant of the minimum expected return from investment projects, and therefore of the productivity level required for such investments” (see here). To put it another way, the decline in real interest rates allowed weakly productive companies (including zombie companies) and projects to be profitable; this caused a slowdown in productivity. Bergeaud, Cette and Lecat state that the relationship between productivity growth and real interest rates is not unidirectional, but circular.

The natural disasters hitting the world in 2020 served as a wake-up call to governments and the private sector on the urgent need to tackle climate change and accelerate the transition to a carbon-free world. Companies have invested massively to reduce their carbon footprint. Governments have unleashed billions to stimulate investments in green energy. But there’s little sign it will lead to much higher average growth and productivity than before the pandemic. The prevalence of negative real interest rates is an indication that decarbonisation and sustainable investing is unlikely to improve productivity and thereby economic growth, at least in the short and medium term.

No technological breakthrough yet: One escape would be a technological breakthrough, but there’s still no sign of it. The digital revolution, which started at the end of the 1990s, has not stopped the decline in productivity. The green transition is only accompanied by a few concrete innovations. The sad reality of the green transition is that a large amount of the invested money goes to projects with little ability to change the face of the world. Many European countries have decided to exit nuclear power, mostly for ideological reasons. This is a risky political choice for the planet. Each time, it has resulted in higher reliance on more harmful energy sources, such as natural gas or coal. In Germany, CO2 emissions increased by 35 million tons per year, for instance. In Belgium, the decision to close two thirds of its nuclear power stations between 2022 and 2025 and to build gas power stations as a replacement will multiply CO2 emissions per kwh by 74. At the current level of technological development, renewable energies are not able to replace conventional energy sources. A distinction must be made between variable renewable energy (wind power and solar power) and controllable renewable energy (hydroelectricity and biomass). The first one is not useful in the energy mix towards a carbon-free world since it is not able to supply a steady supply of electricity. The second one must be an integral part of the energy mix. In recent years, governments have wasted a huge amount of money in wind and solar investments. But for most countries, these energy sources make little sense. The allocation of resources in the green transition is often misguided.

There are a few promising technologies but they are at the prototype stage. It will take several years, perhaps five to ten years, to reach large-scale industrial applications.

China has invested billions of dollars to build a thorium-fuelled nuclear reactor by 2030. Thorium is a weakly radioactive metallic chemical element discovered in 1829 in Norway. It has several advantages over uranium: 1) it is four times more abundant and can be found all over the planet; 2) it produces less volume of waste. 83% of this is neutralised in 10 years, and the other in 300 years; 3) it is safer. It solidifies quickly when it is exposed to open air, and it does not emit radioactive gas. Some European countries have also started research on thorium, but with smaller budgets.
Many countries are working on green hydrogen as a replacement for fossil hydrocarbons. Green hydrogen is an energy storage solution based on renewable energy. There are two pitfalls: one is a poor efficiency rate of 25% to 30%. This means that more than two-thirds of the renewable electricity produced at the start vanishes in the process; the other is high cost. Green hydrogen is four times more expensive than blue hydrogen, which is produced from fossil energy. This explains why the global production of green hydrogen is marginal—less than 5% of the total. It will require years of research and investment to improve the technology, hopefully.
We mentioned that variable renewable energy is of little use in the energy mix. But technological improvement could change the situation in the next five to ten years. Large industrial projects seek to address the problem of wind intermittence. Instead of increasing the number of offshore wind farms individually connected to national grids (which increases costs and reduces systemic efficiency), the Dutch electricity transmission operator TenneT promotes the idea of artificial islands in the North Sea serving as hubs to distribute electricity in an optimised way to neighbouring countries. This is a pilot project and will take years to be rolled out.

Big government: Industrials have fully understood the challenges of the energy transition. But the private sector will not be able to bear the cost alone. There is no historical example where such a change has been achieved other than through a form of large-scale political intervention, massive public investments, and central economic planning. The recovery plans adopted to exit the Covid-19 recession are a first step. More than a third of the French recovery plan is devoted to energy transition. In the United States, more than $8bn has been allocated to hydrogen production, mostly blue hydrogen, as part of the infrastructure plan—there is more to come. But if we want the green transition to be synonymous with higher productivity growth and higher GDP growth, we first need to make sure that resources are optimally allocated. This is not the case yet.

In our view, the negative real rates are an economic sign that the green transformation needs to find a different path from here. If anything, it does us the favour of pointing out that in order to solve the green deficit we need to find productivity and a model which allocates higher marginal productivity, and not a political narrative of a change which is nothing but real change.

Source: Macrobond, Saxo Group research and Strategy

Explore Saxo’s products

Christopher Dembik

Head of Macro Analysis

Saxo Bank

Topics: Quarterly Outlook

Saxo News & Research - Videos

Big Tech earnings: Microsoft, Alphabet, Meta and Amazon put AI spending on trial

Key takeaways

Cloud gives the first answer

Advertising still pays the rent

The new test: useful growth

Risks to watch

Investor playbook

From promise to payback

Oil, batteries and a cheaper Tesla: the next phase of the EV race

Key takeaways

Back to the driveway

Oil has entered the chat

Why battery makers matter more now

The road can still get slippery

Investor playbook

Where the real EV battle sits

Saxo Market Compass - 16 March 2026

Saxo Weekly Market Compass

16 March 2026 (recap week of 9 to 13 March 2026)

Headlines & introduction

Equities

What happened

Looking ahead

Volatility

What happened

Looking ahead

Options sentiment

What happened

Looking ahead

Digital assets

What happened

Looking ahead

Fixed income

What happened

Looking ahead

Commodities

What happened

Looking ahead

Currencies

What happened

Looking ahead

Conclusion

Saxo Market Compass - 9 March 2026

Saxo Weekly Market Compass – the Iran shock rewrites the market narrative

9 March 2026 (recap week of 2 to 6 March 2026)

Headlines & introduction

A geopolitical shock became a macro shock.

Equities

Equities traded less on fundamentals and more on the price of disruption.

Options sentiment

The options market pointed to protection first, conviction second.

Volatility

Volatility rose because oil turned geopolitics into policy risk.

Digital assets

Crypto held up better than many risk assets, but did not decouple from macro stress.

Fixed income

Bond markets repriced inflation risk faster than recession risk.

Commodities

Commodities were the clearest expression of the Iran shock.

Currencies

The dollar regained its role as the cleanest liquid refuge.

Key takeaways

Looking ahead (9 to 13 March 2026)

The key question now is whether the Iran shock remains an energy event or becomes a broader policy problem.

Conclusion

The first week of March ended with a different market narrative than the one it started with.

Saxo Market Compass - 2 March 2026

Saxo Weekly Market Compass – 2 March 2026

(Recap week of 23 to 27 February 2026)

Headlines & introduction

AI volatility, shifting rate expectations and rising geopolitical tension shaped the final week of February.

Equities

US: AI leadership tested, but breadth improved

Europe and Asia: resilience in Europe, divergence in Asia

Volatility

Volatility cooled mid-week, then stabilised

Market sentiment based on options flow data

Positioning shifts from expansion to protection

Digital assets

Saxo Weekly Market Compass –
the Iran shock rewrites the market narrative