“Why Anyone Believes Printing Money Will Leave Us Better Off Is Beyond Me”

From a tactical point of view, Saxobank’s CIO Steen Jakobsen lives in a very simple world:

”A great deal of intelligence can be invested in ignorance when the need for illusion is deep’ – Saul Bellow Just back from four cruel weeks of travelling: Bucharest, London, Sydney, Melbourne, Lisboa, Porto, Madrid, and Zrich. Housing bubbles everywhere to be seen, and all denied by local policymakers and economists. The big selloff in 2015 will come from housing and housing-related investments as the marginal cost of capital rises through regulation and through ‘margin calls’ on banks as their profit-to-GDP ratios grow too high for the economy to function properly. The dividend society is here and the true manifestation of Japanisation is not a future event but a thing we are living in right now… Core trading view Ten-year bond yields (US) will continue lower into the second quarter of 2015. I see acceleration to the downside, mainly in the US where 10-year yields could hit 2.00% and bottom out at 1.5% by Q2 as GDP comes off (relative to ‘lift off’ consensus). European factors: Lower than anticipated growth in Germany (China rebalancing, lower US current account deficit and EZ overall); the impact of the Russian crisis is only beginning to impact the real economy, and of course there is the deflation (which the European Central Bank promised us would never happen…). US factors: Energy sector moving towards default and closing down capacity, subtracting 0.3-0.5% from GDP, plus a lackluster housing market (despite record low mortgage rates), plus contraction in monetary aggregate…

This post was published at Zero Hedge on 11/30/2014.