FELIX ZULAUF -The Market will go bellow the March 2009 low

FELIX ZULAUF je osnivač Zulauf Asset Management, sa sjedištem u Švicarskoj. Redovno se pojavljuje na Barron’s annual roundtable.

2008 preporučio je ulaganje u zlato i shortanje dionica.

Početkom 2009 najavio je skoro dno na dioničkom tržištu i preporučio kupnju nafte, zlata i emerging markets.

početkom 2010 preporučio je shortanje Eura ...

“The euro is about 20% overvalued relative to the U.S. dollar. It could trade down to $1.25, from $1.45. You can see how the weaker members of the European Union are getting squeezed.”




Felix Zulauf has made some great calls over the last few years and now he is terribly bearish and believes the debt deflation environment is far from running its course. He believes we are currently at a major turning point in the markets where investors are beginning to realize that government spending is not the solution to all our problems:

“The world is at a major crossroads. Some countries are at the end of a dead-end street. Greece has hit the wall. Spain and Hungary probably will be next. The Greek debt crisis was the beginning of markets refusing to finance irresponsible public-sector indebtedness. It will travel from the periphery to the center in coming years. The common denominator in the housing crisis, the euro crisis and the banking crisis is that industrialized economies carry too much debt. These crises show that we have to rewrite our system. We have been living a fiction for the past 20 years in order to enjoy a greater standard of living. Hard times are ahead, and the steps that Europe has announced to contain its crisis are only the beginning. Governments must cut spending and promises, such as entitlement programs, and raise taxes. At best this means stagnation for some years, but it could be much worse. Deflationary pressures will increase.”

Felix Zulauf adds,

“The market is naïve in assuming the earnings models of the past 20 or 30 years can be extrapolated out to the next five years. The market will hit a lower low than it did in March 2009. What was missing last year was the complete desperation and turning away from equities as an asset class that marks the end of a secular bear market. That will come. European and U.S. policymakers believe China eventually will bail us out, but China is tightening. Its real-estate sector will get hit badly. All the leading indicators are topping around the world.”

He sees an intermediate low in the summer or fall and then a total market meltdown,

“Commodity prices are heading lower. The stock market probably will make its low for the year in late summer or fall. The upside is probably 5%, the downside 20%. If there is a big break in the fall and the Federal Reserve starts printing money again, stocks could rally. I would be willing to buy if the markets are oversold enough and my indicators turn bullish medium-term. That likely would mean stocks go up through year end, though they could rise more if the crisis triggers another major stimulus by the authorities. The market’s move would be temporary, however. Secular bear markets usually bottom slightly below book value. Book value on the S&P 500 is around $500, a far cry from last week’s $1,064. In the 1930s, the market was trading at half of book.”