Saxo Bank 10 Outrageous Predictions for 2014

London (ots/PRNewswire) -

Saxo Bank [http://www.saxobank.com ], the online multi-asset
trading and investment specialist, today releases its annual set of
'Outrageous Predictions' for the year ahead. Although the probability
of any one of the predictions coming true is low, they are deduced
strategically by Saxo Bank analysts based on a feasible - if unlikely
- series of market and political events.

This year's predictions range from an EU wealth tax and the Bank
of Japan's cancellation of all its government debt to a nasty
hangover for the tech sector's 'Fat Five' and a plummeting Brent
crude price as the market becomes awash with oil. Another outrageous
claim is that US deflation will loom large following Act II of
Congress's political morass in January, while Germany may be
dethroned as the Eurozone's outperformer and fall back into
recession.

Prospects for Brazil, India, South Africa, Indonesia and Turkey
will also look grim if QE tapering in the US leads to higher marginal
costs of capital from rising interest rates, exposing those with
current account deficits and eroding the value of their currency.
Meanwhile, Europe could face renewed political and economic turmoil
when an anti-EU transactional alliance becomes the largest group in
the European Parliament.

Steen Jakobsen, Chief Economist at Saxo Bank, comments:

"This isn't meant to be a pessimistic outlook. This is about
critical events that could lead to change - hopefully for the better.
After all, looking back through history, all changes, good or bad,
are made after moments of crisis after a comprehensive failure of the
old way of doing things. As things are now, global wealth and income
distribution remain hugely lopsided which also has to mean that
significant change is more likely than ever due to unsustainable
imbalances. 2014 could and should be the year in which a mandate for
change not only becomes necessary, but is also implemented.

"We emphasise that the Outrageous Predictions are not Saxo Bank's
official calls for 2014, but rather an exercise in feeling out the
major risks to capital preservation, and intended to encourage
investors to prepare for the worst case scenario before trading or
investing."

To see more please go to the Outrageous Predictions website:
http://www.tradingfloor.com/blogs/outrageous-predictions

To follow Outrageous Predictions or make your own, join the
conversation on Twitter by using the hashtag #SaxoOP and don't forget
to follow Trading Floor and Saxo Bank on @tradingfloorcom and
@SaxoBank.

Saxo Bank's Outrageous Predictions 2014

1. EU wealth tax heralds return of Soviet-style economy

Panicking at deflation and lack of growth, the EU Commission will
impose wealth taxes for anyone with savings in excess of USD or EUR
100,000 in the name of removing inequality and to secure sufficient
funds to create a "crisis buffer". It will be the final move towards
a totalitarian European state and the low point for individual and
property rights. The obvious trade is to buy hard assets and sell
inflated intangible assets.

2. Anti-EU alliance will become the largest group in parliament

Following the European Parliamentary elections in May, a
pan-European, anti-EU transnational alliance will become the largest
group in parliament. The new European Parliament chooses an anti-EU
chairman and the European heads of state and government fail to pick
a president of the European Commission, sending Europe back into
political and economic turmoil.

3. Tech's 'Fat Five' wake up to a nasty hangover in 2014

While the US information technology sector is trading about 15
percent below the current S&P 500 valuation, a small group of
technology stocks are trading at a huge premium of about 700 percent
above market valuation. These 'fat five' - Amazon, Netflix, Twitter,
Pandora Media and Yelp - present a new bubble within an old bubble
thanks to investors oversubscribing to rare growth scenarios in the
aftermath of the financial crisis.

4. Desperate BoJ to delete government debt after USDJPY goes below
80

In 2014, the global recovery runs out of gas, sending risk assets
down and forcing investors back into the yen with USDJPY dropping
below 80. In desperation, the Bank of Japan simply deletes all of its
government debt securities, a simple but untested accounting trick
and the outcome of which will see a nerve-wracking journey into
complete uncertainty and potentially a disaster with unknown side
effects.

5. US deflation: coming to a town near you

Although indicators may suggest that the US economy is stronger,
the housing market remains fragile and wage growth remains
non-existent. With Congress scheduled to perform Act II of its "how
to disrupt the US economy" charade in January, investment, employment
and consumer confidence will once again suffer. This will push
inflation down, not up, next year, and deflation will again top the
FOMC agenda.

6. Quantitative easing goes all-in on mortgages

Quantitative easing in the US has pushed interest expenses down
and sent risky assets to the moon, creating an artificial sense of
improvement in the economy. Grave challenges remain, particularly for
the housing market which is effectively on life support. The FOMC
will therefore go all-in on mortgages in 2014, transforming QE3 to a
100 percent mortgage bond purchase programme and - far from tapering
- will increase the scope of the programme to more than USD 100bn per
month.

7. Brent crude drops to USD 80/barrel as producers fail to respond

The global market will become awash with oil thanks to rising
production from non-conventional methods and increased Saudi Arabian
ouput. For the first time in years hedge funds will build a major
short position, helping to drive Brent crude oil down to USD
80/barrel. Once producers finally get around to reducing production,
oil will respond with a strong bounce and the industry will conclude
that high prices are not a foregone conclusion.

8. Germany in recession

Germany's sustained outperformance will end in 2014, disappointing
consensus. Years of excess thrift in Germany has seen even the US
turn on the euro area's largest economy and a coordinated plan by
other key economies to reduce the excessive trade surplus cannot be
ruled out. Add to this falling energy prices in the US, which induce
German companies to move production to the West; lower
competitiveness due to rising real wages; potential demands from the
SPD, the new coalition partner, to improve the well-being of the
lower and middle classes in Germany; and an emerging China that will
focus more on domestic consumption following its recent Third Plenum.

9. CAC 40 drops 40% on French malaise

Equities will hit a wall and tumble sharply on the realisation
that the only driver for the market is the greater fool theory.
Meanwhile, the malaise in France only deepens under the mismanagement
of the Hollande government. Housing prices, which never really
corrected after the crisis, execute a swan dive, pummeling
consumption and confidence. The CAC 40 Index falls by more than 40
percent from its 2013 highs by the end of the year as investors head
for the exit.

10. 'Fragile Five' to fall 25% against the USD

The expected tapering of quantitative easing in the US will lead
to higher marginal costs of capital from rising interest rates. This
will leave countries with expanding current account deficits exposed
to a deteriorating risk appetite on the part of global investors,
which could ultimately force a move lower in their currencies,
especially against the US dollar. We have put five countries into
this category - Brazil, India, South Africa, Indonesia and Turkey.

About Saxo Bank

Saxo Bank is a leading online trading [http://www.saxobank.com/fo
rex?csref=b1744_Link_boilerplate_pressrelease ] and investment
specialist. A fully licensed and regulated European bank, Saxo Bank
enables private investors and institutional clients to trade FX,
CFDs, ETFs, Stocks, Futures, Options and other derivatives via three
specialised and fully integrated trading platforms; the browser-based
SaxoWebTrader [http://dk.saxobank.com/lp/webtraderdemo?csref=b1748_L
ink_boilerplate_pressrelease_danish ] , the downloadable SaxoTrader
[http://www.saxobank.com/demo-account?csref=b1746_Link_boilerplate_pr
essrelease ] and the SaxoMobileTrader
[http://www.saxobank.com/trading-platforms/saxomobiletrader ]
application available in over 20 languages. Saxo Bank also offers
professional portfolio and fund management through Saxo Asset
Management who accommodates high-net worth private clients and
institutional investors and provides banking services and advice to
retail clients through Saxo Privatbank. The Saxo Bank Group is
headquartered in Copenhagen with offices throughout Europe, Asia,
Middle East, Latin America and Australia.

Media enquiries
Kasper Elbjorn, Head of Group Public Relations
+45-3065-4300
press@saxobank.com

ots Originaltext: Saxo Bank (Switzerland) SA
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