Saxo Bank warns of global slowdown in fourth quarter

Analysts as Saxo Bank predict that despite central bank interventions, we won't see a sustainable comeback for growth until policymarkets stop supporting "the parts of the economy that don't need or deserve support".

Instead, they recommend that support for "the most important engine of job and economic growth" is the focus, namely small and medium-sized enterprises. A struggling market is likely to force the Fed's hand, and see it increasing quantitative easing next year rather than begin to taper asset purchases.

Saxo Bank's chief economist, Steen Jakobsen, says that "the global economy is running on empty" and that a discussion of exit strategy from "extend and pretend" policy will come in 2014.

Analysts warn that in early 2014 this QE cycle or the market response to it will begin to falter as Fed policy will increasingly risk losing credibility.

Jakobsen says that the market sees two paths - a choice between inflating away debt or writing off debts between treasuries and central banks. Yet he believes history is going to repeat itself with a third option - a repeat of the 1940s when "the Fed got saved by disinflation and a recession brought on by the very same policy which today slows the path towards recovery - too much easy money".