Macro Digest: A crucial 48 hours for risk Macro Digest: A crucial 48 hours for risk Macro Digest: A crucial 48 hours for risk

Macro Digest: A crucial 48 hours for risk

Steen Jakobsen

Chief Investment Officer

The macro backdrop story is this:

The 'credit cake', or the credit impulse plus nominal debt issuance, is collapsing. Since the financial crisis, the world's monetary growth (main debt) has risen more than nominal growth, i.e. World Monetary Growth / World Nominal Growth > 1 (8-10%/4-6%) 

Now, however, world monetary growth is 2-2.5% against 5-6% world growth, so significantly below 1!
We have, along with Saxo Bank macro head Christopher Dembik, exhaustively documented the collapse in the credit impulse (the change of change in credit), which leads the world by nine-12 months.

The question is, where do we go from here?

The Federal Reserve is insisting on normalising policy rates, meaning that the rest of the world (read: emerging markets) are getting less credit at much higher prices. In the US, meanwhile, this liquidity shortfall has been neutralised by tax reforms that see US firms bringing money back home... and thus increasing liquidity foronshore US markets.

Add to this the most aggressive buy-back, dividend, and M&A period in history (to the tune of around $1.2 billion) and you have the reason why the US market has outperformed, and why it could continue to outperform in the short term.

Is contagion happening? It's too early to tell, but with today’s likely announce of an additional $200 billion in tariffs and the market breakdown shown below, the risk is rising.

The action plan

We are still net looking to buy EM risk, but post-today’s announcement. Failure to take out recent EM lows will make us dip our toes; if not, we wait.

The next two trading days will be critical for the overall risk climate, and we will keep you posted as to how we view things playing out.

Now, onto four charts that illustrate the market's present pain:


Tencent is the most widely owned stock and maintains the biggest weight in global EM funds. The trend been down since March but now it has broken both its recent low plus the low end of the channel.
Source: Bloomberg

Alibaba's latest earnings release was reasonably strong, but the company's shares just broke lower. Is this a bad omen for China's tech sector?
Source: Bloomberg

Tesla is having a tough time, both in markets and on social media. The TSLA junk bond is now trading at 8% and the default risk is rising fast. Elon Musk's personal life is increasingly becoming a risk to the company itself

The Musk + Trump show is not pretty and I don’t see any good exits/solutions for either of them.
Source: Bloomberg

Finally, India and its currency are spinning out of control as high energy prices increase its deficit.
Source: Bloomberg

The Saxo Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
- Notification on Non-Independent Investment Research (
- Full disclaimer (

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments. Saxo Markets does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment made in reliance of this presentation. Any opinions made are subject to change and may be personal to the author. These may not necessarily reflect the opinion of Saxo Capital Markets or its affiliates.

Saxo Markets
88 Market Street
CapitaSpring #31-01
Singapore 048948

Contact Saxo

Select region


Saxo Capital Markets Pte Ltd ('Saxo Markets') is a company authorised and regulated by the Monetary Authority of Singapore (MAS) [Co. Reg. No.: 200601141M ] and is a wholly owned subsidiary of Saxo Bank A/S, headquartered in Denmark. Please refer to our General Business Terms & Risk Warning to consider whether acquiring or continuing to hold financial products is suitable for you, prior to opening an account and investing in a financial product.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Trading in leveraged products such as Margin FX products may result in your losses exceeding your initial deposits. Saxo Markets does not provide financial advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo Markets does not take into account an individual’s needs, objectives or financial situation.

The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit

The information or the products and services referred to on this website may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and Services offered on this website are not intended for residents of the United States, Malaysia and Japan. Please click here to view our full disclaimer.

This advertisement has not been reviewed by the Monetary Authority of Singapore.

Apple and the Apple logo are trademarks of Apple Inc, registered in the US and other countries and regions. App Store is a service mark of Apple Inc. Google Play and the Google Play logo are trademarks of Google LLC.