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Jakobsen on Europe, deflation and the euro
Eurozone inflation fell to 0.8% in December, well below target. It's a bad omen, says Saxo Bank's Chief Investment Officer Steen Jakobsen, of the dramatic slowdown he expects in growth not just in Europe but also in Asia. It follows a surprise drop in German HICP inflation on Monday.
It's a major concern, he says, for the European Central Bank. It gives its latest policy news on Thursday. Steen says the ECB will use deflation as an excuse to try to talk the euro down which is not far off its 52 week high of USD 1.39. He believes that rhetoric will work in the short term given that the US Federal Reserve has a new chair in Janet Yellen and people expect growth and more "tapering" in the United States. Steen has long argued there'll be less growth and more QE this year.
He's also maintained for some time that early 2014 is all about moving risk from equities to bonds, notably in core countries such as Germany. He also forecasts some slight increase in the spreads in the peripheral bond market.
01:53 minutes
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