World Economic Trend Analysis

A few weeks ago I was invited by Christian Lauridsen, senior manager of Saxo Ebank to give a talk on the global economy for the benefit of Saxo Bank clients. I jumped at that chance and was in Europe all last week.

On Thursday, I met with Steen Jakobsen, Chief Economist for Saxo, for several hours. Unbeknown to me, Steen had been reading my blog for years as had a few others at Saxo Bank.

Before our respective speeches, (we each talked for 20-30 minutes to Saxo clients), Steen joked with me about my often repeated phrase "Keynesian Clowns". I asked him if he thought I was being too hard on US economists and he replied "not hard enough".

Global Imbalances

I had a speech prepared in advance but ended up ad-libbing much of it, starting with an admission that I thought 2011 would be the year that something would matter but so far it hasn't.

I touched on the sovereign debt crisis in Europe, China overheating, property bubbles in Australia and Canada, rate hikes in Europe, and state cutbacks in the US.

However, the point I stressed most was on valuations, and how little value I see in general.

Steen and I Both Like Japanese Equities

I do like Japanese equities and also gold, but the latter can correct significantly at any time.

Steen also likes Japanese equities for the same reasons that I see: After 20+ years of deflation, many Japanese corporations are trading at book value with little or no debt on their balance sheets. That is in distinct contrast to the equity valuations elsewhere.

One difference of opinion I had with Steen is that I am bearish on the Yen, but he is bullish, at least for a while.

There were about 60 people in the room and I asked how many had investments in Japan. Only a few hands went up. I asked the same question at a recent gold conference show I attended and only one hand out of 120 went up.

The best time to buy something is when everyone ignores the sector. The same was true of gold in 2000.

Valuation and Leverage

Steen commented on the presentations in his post last Friday Steen's Chronicle: Who�s going to pick up the tab?

Last night I had the pleasure of speaking at a Saxo EBANK seminar in Copenhagen with the world famous blogger Mike �Mish� Shedlock -he of the Mish�s Global Economic Trend Analysis blog.

First, I must note that it was a novel experience for me in my twelve years of speaking engagements to be out-gunned on the negative side on my investment outlook. In the past, so many have asked me after my presentations: �Steen, you are always selling everything � what are we supposed to BUY? Clearly, I need to bring Mish along on more of these speaking gigs and play off his gloom to make my views appear a bit more cheery.

Mish raised several critical themes and issues in the current financial environment, but the most interesting was the often forgotten focus on leverage in the US � which we all know is high, but do we really understand exactly how high?

....

Please click on the preceding link for the rest of Steen's discussion.

Images of Stockholm and Copenhagen

In addition to the presentation at Saxo bank, I was able to visit Stockholm for two days and spent the rest of the time in Copenhagen. Both cities are beautiful and very photogenic. I even managed to get in a round of golf in both cities.

Tivoli, the world's oldest amusement park is a must see attraction in Copenhagen, even if you are not interested in rides, which in general I am not. Here are some images I managed to grab between rounds of golf, blogging, and meeting with Saxo.

Click on any image for more resolution and size. If you see a +sign on any image, click a second time for maximum sharpness.

Copenhagen Ships and Businesses Along Canal