Saxo Bank points to the short-sightedness of the world’s governments escalating trade tensions.
Multi-asset brokerage Saxo Bank has warned that tensions between the United States and China could end “very badly” in its outlook report for the third quarter of 2018.
In fact, the report paints a rather dim scenario for the quarter and states that we are entering into one of the most dangerous periods for the global economy since the Berlin Wall fell in 1989.
In particular, Saxo Bank points to the short-sightedness of the world’s governments escalating trade tensions. This is considering the proximity to the November 6 US midterm elections, where Trump will need to show that he’s getting America “a better deal.”
No stranger to making bold market calls, Steen Jakobsen, Chief Economist and CIO at Saxo Bank said: “global tensions are ratcheting higher by the day, fuelled by the foolish policies of foolish leaders.
“Tit-for-tat trade wars and agendas that pander only to self-interest are jeopardizing the global economy.”
Jakobsen also adds: “There are no winners in a trade war, and the trend is pointing in the wrong direction as nationalist agendas erode the status of global institutional frameworks.
“History teaches us that this can end badly. If the loser is a big economy or a strong political power, they may impose restrictions – tariffs, for example – to counter the competitive disadvantage.”
Can we avoid a trade war?
While the current consensus is that an outright trade war will be avoided, according to Jakobsen, it ignores the midterm election in the US.
Jakobsen suggests there are three possible paths from where we are now:
A ‘mild’ crisis where the US, China, and Europe all reach higher tariff levels but stop short of creating outright ‘walls’ – probability: 25 percent.
A more severe crisis with escalating trade tensions into the November 6 US mid-term elections and beyond (where President Trump must show his base that he is living up to his promises of ‘getting the US a better deal’) – probability: 50 percent.
A move on par with the Smoot-Hawley Tariff Act of June 1930 – probability: 25 percent.
Jakobsen sources a United Nations (UN) report from May, which said a trade war could trigger “a sharp drop in global investment and trade.” In a scenario outlined by the UN, world gross product growth could drop by 1.4 percent in 2019 and slow world trade growth by 6 percent.
To put this in perspective, losses of this size in trade is around half of those experienced in 2009, which was the worst year of the global financial crisis.
Only China can save us
While the report is mainly negative, there is some hope, and that hope is China.
Commenting on China, Christopher Dembik, Head of Macroeconomic Analysis said: “So far, China has only responded to the US measures by using the same tools, and without seeking escalation.”
He also added: “China has still many options to counter the impact of trade tensions. [sic] It is complicated at this stage to second-guess the evolution of US trade policy but it is almost certain that China will do its best to avoid a full-blown trade war and related Volatility because financial and monetary stability are crucial to its future economic development.”
Tough times ahead
The report also addresses the equity and Forex markets. According to John Hardy, Head of FX Strategy, in the second half of 2018 equity markets will begin to negatively discount 2019. He also adds this is likely to be a year in which the US government will run its largest deficit to nominal GDP since 2013.
Hardy claims: “the market got a bit ahead of itself in positioning for further strength in the euro and weakness in the US dollar in Q2.
"But after the enormous correction and USD rally, we look for the USD to find a top in the second half of the year and to begin heading lower again," he said.
"The world can’t afford a strong dollar and once the Trump tax and fiscal stimulus fade, the US will have a hard time finding USD buyers to offset its enormous external imbalances,” he warned.
Multi-asset brokerage Saxo Bank has warned that tensions between the United States and China could end “very badly” in its outlook report for the third quarter of 2018.
In fact, the report paints a rather dim scenario for the quarter and states that we are entering into one of the most dangerous periods for the global economy since the Berlin Wall fell in 1989.
In particular, Saxo Bank points to the short-sightedness of the world’s governments escalating trade tensions. This is considering the proximity to the November 6 US midterm elections, where Trump will need to show that he’s getting America “a better deal.”
No stranger to making bold market calls, Steen Jakobsen, Chief Economist and CIO at Saxo Bank said: “global tensions are ratcheting higher by the day, fuelled by the foolish policies of foolish leaders.
“Tit-for-tat trade wars and agendas that pander only to self-interest are jeopardizing the global economy.”
Jakobsen also adds: “There are no winners in a trade war, and the trend is pointing in the wrong direction as nationalist agendas erode the status of global institutional frameworks.
“History teaches us that this can end badly. If the loser is a big economy or a strong political power, they may impose restrictions – tariffs, for example – to counter the competitive disadvantage.”
Can we avoid a trade war?
While the current consensus is that an outright trade war will be avoided, according to Jakobsen, it ignores the midterm election in the US.
Jakobsen suggests there are three possible paths from where we are now:
A ‘mild’ crisis where the US, China, and Europe all reach higher tariff levels but stop short of creating outright ‘walls’ – probability: 25 percent.
A more severe crisis with escalating trade tensions into the November 6 US mid-term elections and beyond (where President Trump must show his base that he is living up to his promises of ‘getting the US a better deal’) – probability: 50 percent.
A move on par with the Smoot-Hawley Tariff Act of June 1930 – probability: 25 percent.
Jakobsen sources a United Nations (UN) report from May, which said a trade war could trigger “a sharp drop in global investment and trade.” In a scenario outlined by the UN, world gross product growth could drop by 1.4 percent in 2019 and slow world trade growth by 6 percent.
To put this in perspective, losses of this size in trade is around half of those experienced in 2009, which was the worst year of the global financial crisis.
Only China can save us
While the report is mainly negative, there is some hope, and that hope is China.
Commenting on China, Christopher Dembik, Head of Macroeconomic Analysis said: “So far, China has only responded to the US measures by using the same tools, and without seeking escalation.”
He also added: “China has still many options to counter the impact of trade tensions. [sic] It is complicated at this stage to second-guess the evolution of US trade policy but it is almost certain that China will do its best to avoid a full-blown trade war and related Volatility because financial and monetary stability are crucial to its future economic development.”
Tough times ahead
The report also addresses the equity and Forex markets. According to John Hardy, Head of FX Strategy, in the second half of 2018 equity markets will begin to negatively discount 2019. He also adds this is likely to be a year in which the US government will run its largest deficit to nominal GDP since 2013.
Hardy claims: “the market got a bit ahead of itself in positioning for further strength in the euro and weakness in the US dollar in Q2.
"But after the enormous correction and USD rally, we look for the USD to find a top in the second half of the year and to begin heading lower again," he said.
"The world can’t afford a strong dollar and once the Trump tax and fiscal stimulus fade, the US will have a hard time finding USD buyers to offset its enormous external imbalances,” he warned.
58% of UK Investors Choose Professional Guidance over 'Finfluencers’
Network, Learn, Grow | FMAS:24
Network, Learn, Grow | FMAS:24
Get ready to mark your calendars for FMAS:24, returning this May! Take a quick glimpse of what awaits at the Sandton Convention Centre in Sandton, South Africa from May 20-22, 2024.
Don't miss out on this 5-second invite packed with energy and urgency!
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
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Get ready to mark your calendars for FMAS:24, returning this May! Take a quick glimpse of what awaits at the Sandton Convention Centre in Sandton, South Africa from May 20-22, 2024.
Don't miss out on this 5-second invite packed with energy and urgency!
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
📣 Stay updated with the latest in finance and trading!
Follow FMevents across our social media platforms for news, insights, and event updates. Connect with us today:
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Don't miss out on our latest videos, interviews, and event coverage. Subscribe to our YouTube channel for more!
Here's a sneak peek into the FMAS:24 vibrant atmosphere! Join us at Africa’s premium financial event for a transformative experience that combines the best of finance and technology.
From May 20-22, 2024, the Sandton Convention Centre in Sandton, South Africa, will be the hub for over 3,500 attendees to engage in unparalleled networking opportunities, learn from over 150 industry-leading speakers, and explore innovations from 120+ exhibitors.
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
📣 Stay updated with the latest in finance and trading!
Follow FMevents across our social media platforms for news, insights, and event updates. Connect with us today:
🔗 LinkedIn: https://www.linkedin.com/showcase/financemagnates-events/
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Don't miss out on our latest videos, interviews, and event coverage. Subscribe to our YouTube channel for more!
Here's a sneak peek into the FMAS:24 vibrant atmosphere! Join us at Africa’s premium financial event for a transformative experience that combines the best of finance and technology.
From May 20-22, 2024, the Sandton Convention Centre in Sandton, South Africa, will be the hub for over 3,500 attendees to engage in unparalleled networking opportunities, learn from over 150 industry-leading speakers, and explore innovations from 120+ exhibitors.
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
📣 Stay updated with the latest in finance and trading!
Follow FMevents across our social media platforms for news, insights, and event updates. Connect with us today:
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Join 3500+ Attendees at FMAS:24 | Africa's Premium Financial Event
Join 3500+ Attendees at FMAS:24 | Africa's Premium Financial Event
Looking to expand your network in #Africa? Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa
📣 Stay updated with the latest in finance and trading!
Follow Finance Magnates for news, insights, and event updates across our social media platforms. Connect with us today:
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Looking to expand your network in #Africa? Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa
📣 Stay updated with the latest in finance and trading!
Follow Finance Magnates for news, insights, and event updates across our social media platforms. Connect with us today:
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Join 3500+ Attendees at FMAS:24 - Africa's Premium Financial Event
Join 3500+ Attendees at FMAS:24 - Africa's Premium Financial Event
Looking to expand your network in #Africa?
Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa
Looking to expand your network in #Africa?
Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa
Where the Prop Trading Industry Goes from Here | Finance Magnates Podcast
Where the Prop Trading Industry Goes from Here | Finance Magnates Podcast
Explore the tumultuous world of prop trading in this Finance Magnates podcast episode, featuring insights from Head of Axi Select, Greg Rubin.
We're discussing the challenges and shifts caused by MetaQuotes' pivotal decisions affecting MT4 and MT5 users, and how Axi Select offers a unique, realistic path to professional trading, steering clear of traditional prop firm pitfalls.
Tune in for expert analysis on the future of trading and innovative funding models.
The Axi Select programme is only available to clients of AxiTrader Limited. CFDs carry a high risk of investment loss. In our dealings with you, we will act as a principal counterparty to all of your positions. This content is not available for AU, NZ, EU and UK residents. For more information, refer to our Terms of Service. Standard trading fees apply.
This content is provided solely for general informational purposes and should not be construed as financial product advice or an investment recommendation. It has been prepared without considering your personal circumstances.
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Explore the tumultuous world of prop trading in this Finance Magnates podcast episode, featuring insights from Head of Axi Select, Greg Rubin.
We're discussing the challenges and shifts caused by MetaQuotes' pivotal decisions affecting MT4 and MT5 users, and how Axi Select offers a unique, realistic path to professional trading, steering clear of traditional prop firm pitfalls.
Tune in for expert analysis on the future of trading and innovative funding models.
The Axi Select programme is only available to clients of AxiTrader Limited. CFDs carry a high risk of investment loss. In our dealings with you, we will act as a principal counterparty to all of your positions. This content is not available for AU, NZ, EU and UK residents. For more information, refer to our Terms of Service. Standard trading fees apply.
This content is provided solely for general informational purposes and should not be construed as financial product advice or an investment recommendation. It has been prepared without considering your personal circumstances.
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