What Are Some Investment Strategies for the US's Pending Stagflation?

Excerpts from Dr. Enzio von Pfeil's May 29, 2008 appearance on CNBC Asia:

1. Do you have any investment strategies to tackle the current global economic situation (inflation, soaring crude prices, U.S. stagflation worries)?
   
   • Stagflation is the name of the game.
   • We have been through this four times.
   • My analyses suggest that the current U.S. mess is going to take two years to clean up, and that implies a 40% market drop.
   • Thus, fear has replaced greed as the basic investment strategy
2. What is your outlook for Asia markets?
   
   • Other than Taiwan, we are not keen on Asia’s markets.
   • The Economic Time™ is fine in China – but the constant issuance of new shares, exacerbated by the Sichuan disaster, makes us leery against our afore-mentioned basic premise that fear is the current mindset.
   • We are not disciples of “de-coupling.” If anything, telecoms and the Internet means that markets are even more tightly entwined now. Thus, a crack in the US markets represents a global financial earthquake.
3. Where should we park our money in Q2?
   
   • In currencies. If you believe our current leeriness concerning the U.S. market, then the yen will strengthen in line with carry trades being unwound.
   • I also like the Euro and Australian dollar; superpower currencies such as the previous Sterling, and now the U.S. dollar, are always doomed.
   • The commodities story is not over by a long shot: India and China have to create millions of jobs a year.
   • Keep money in short-term instruments; avoid bonds with looming stagflation.
4. Any sector or stock picks?
   • Commodity-related: from fertilizers to transport.
   • Definitely NOT any stocks related to the financial sector, e.g. banks, insurers and brokers.
   • As fear is the main investment force: consumer staples, NOT consumer discretionary.

Comments

[NOWHEREMAN:]

Very nice article, The 40% decline I assume is from present levels and is based on The SPX.

Translated, its the mid seventies revisited.

2008 May 28 04:53 AM

[H.W.:]

i like the way this is presented - short and direct!

2008 May 28 11:07 AM

[hrant:]

most "experts" are saying stay awy from financials and buy commodities. I am doing the reverse .

2008 May 29 12:55 PM

[yj:]

According to this clown, the stock market was going to crash last October 2007.. check his posts..
His "economic clock" was bullish on China.. and of course he didn't see the decline in the Chinese stock market coming, so if you had invested in China at the time, you would be looking at some nice losses..

This clown is just as clueless as any figure head speaking on CNBC..
repeat after me ..NOBODY CAN PREDICT THE FUTURE, not even clowns with PhDs..

2008 Jun 11 12:32 AM