Saxo Credit ImpulseMonthlyFocus: - TradingFloor.com

Saxo Credit ImpulseMonthlyFocus: - TradingFloor.com

Saxo Credit Impulse Monthly Focus: Euro area February 1, 2018 Dembik Christopher Head of Macro Analysis FREE TO SHARE

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Saxo Group FREE TO SHARE Credit Impulse Description The notion of Credit Impulse has been introduced for the first time by Michael Biggs in November 2008. It represents the flow of new credit issued by the private sector as percentage of GDP. It is considered as the second derivative of credit growth and arguably the biggest driver behind economic growth. The idea behind Credit Impulse is based on basic Keynesian economics. Since spending is a flow, it should be compared with net new lending also a flow rather than credit outstanding a stock.

The main advantage of Credit Impulse is that it helps to solve a number of conundrums that cannot be explained by an analysis focusing on the credit stock. In addition, it has been demonstrated that, for many time periods and countries, a strong correlation exists between credit impulse and other economic data, especially private sector demand, and financial assets. Before the GFC, the USA, Japan and Europe were the main drivers of the global credit cycle but, since 2009, a major shift has happened resulting in China becoming the dominant actor. As a result, China Credit Impulse is key to monitor in order to assess the evolution of the global economy. Calculation: To calculate Credit Impulse, we use the variation of the stock of loans held by the non-financial private sector (Nonfinancial Corporations and Households & NPISH) on a quarterly basis and we calculate a second derivative which is finally expressed as percentage of GDP. Saxo Bank Credit Impulse:

Saxo Bank Global Credit Impulse is based on 18 countries that represent 69.4% of global GDP share (adjusted for purchasing-power-parity). It is updated on a quarterly frequency in order to avoid too many adjustments. The index is GDP weighted and it is built using GDP in current prices from IMF WEO in order to have access to forecasts and since all data are expressed in USD. Publications: Saxo Bank publishes the Credit Impulse Monthly Focus which covers the evolution of credit and correlations in a specific economic area and the Credit Impulse Quarterly Update which includes the updated version of Saxo Global Credit Impulse and last trends in core countries. Saxo Group

FREE TO SHARE Disclaimer NON-INDEPENDENT INVESTMENT RESEARCH None of the information contained herein constitutes an offer (or solicitation of an offer) to buy or sell any currency, product or financial instrument, to make any investment, or to participate in any particular trading strategy. This material is produced for marketing and/or informational purposes only and Saxo Bank A/S and its owners, subsidiaries and affiliates whether acting directly or through branch offices (Saxo Bank Group) make no representation or warranty, and assume no liability, for the accuracy or completeness of the information provided herein. In providing this material Saxo Bank Group has not taken into account any particular recipients investment objectives, special investment goals, financial situation, and specific needs and demands and nothing herein is intended as a recommendation for any recipient to invest or divest in a particular manner and Saxo Bank Group assumes no liability for any recipient sustaining a loss from

trading in accordance with a perceived recommendation. All investments entail a risk and may result in both profits and losses. In particular investments in leveraged products, such as but not limited to foreign exchange, derivatives and commodities can be very speculative and profits and losses may fluctuate both violently and rapidly. Speculative trading is not suitable for all investors and all recipients should carefully consider their financial situation and consult financial advisor(s) in order to understand the risks involved and ensure the suitability of their situation prior to making any investment, divestment or entering into any transaction. Any mentioning herein, if any, of any risk may not be, and should not be considered to be, neither a comprehensive disclosure or risks nor a comprehensive description such risks. Any expression of opinion may be personal to the author and may not reflect the opinion of Saxo Bank Group and all expressions of opinion are subject to change without notice (neither prior nor subsequent). This [website/communication] refers to past performance. Past performance is not a reliable indicator of future performance. Indications of past performance displayed on this [website/communication] will not necessarily be repeated in the future. No representation is being made that any investment will or is likely to achieve profits or losses similar to those achieved in the past, or that significant losses will be avoided.

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