Market Currents
A weakening global economy on top of a highly fragile credit system "is an explosive cocktail,"...
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Saturday, June 9, 2012, 11:25 AM ETA weakening global economy on top of a highly fragile credit system "is an explosive cocktail," says Felix Zulauf, sounding apocalyptic in the Barron's mid-year roundtable. Markets are oversold (and Treasurys overbought) for now, especially with authorities about to apply a band-aid, but continued euro disintegration and China weakness "should lead the world into financial and economic chaos."
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Then, we could allow Market Currents to be devoted to meaningful news.
I've got a Yen for Garbage. Film at 10
by BARRON MAESTRO on JANUARY 27, 2012
Mike Santoli recently interviewed Felix Zulauf, president of Zulauf Asset Management, in conjunction with the Barron’s Roundtable. According to Pundit Tracker, Zulauf was the most accurate Roundtable member over the past 10 years."
Read more: http://bit.ly/KriQam
http://bit.ly/NoSppX
The group should still hold its collective head high, however, as its long-term track record remains splendid, as shown below. All but one of the 2011 participants has been there since 2002, including the late Archie MacAllaster. Fred Hickey joined in 2005.
Annualized Returns: 2002-11
Felix Zulauf 25.4%
Marc Faber 23.1%
Oscar Schafer 13.7%
Roundtable Average 12.4%
Meryl Witmer 11.3%
Scott Black 4.8%
Mario Gabelli 4.4%
Abby Joseph Cohen 1.8%
S&P 500 -0.2%
Archie MacAllaster -1.9%
World GDP will be around 3% in 2012 and we are looking at a once in a lifetime expansion of the global middle class.
That is pretty telling. When one compares the alleged prema-bears such as Zulauf and Faber against the uber-bulls such as Gabelli and Cohen, there not much comparison. Wonder whose clients are in better shape today?
These are not even real returns.
But! The returns of the top four are astonishing. Maybe SA readers should go to Barrons for trading advice?
Of course, they trade more frequently than their quarterly parties in Barrons. Here's a suggestion for those who like to juggle statistics. How do their Barron's records compare to the records of their funds and/or hedge funds and other investment vehicles?
If they're as good, those who can afford their minimums should buy into their funds and hedge funds.
Gabell's record seems about the same as that of his funds, which haven't done well since the dotcom bust in 2001.
Hey, Mad Max sells.
Too bad you don't feel the desire to investigate Zulauf's track record because I think you have him confused with other pundits like Marc Faber.
This is what he said at the mid-year Barron's 2009 Roundtable:
http://bit.ly/LIaOaZ
"Barron's: What is the view from Europe, Felix?
Zulauf: The structural forces in the global economy are unchanged from the past few quarters. A long-term imbalance remains between overspending in the U.S. and over-producing in China. The financial crisis was the start of a move to greater balance that implies lower growth for both sides. The deleveraging process also continues in many economies, with the exception of the U.K.. This process has only started. It will run for several years. We are shifting debt from the private sector to the government sector, which will lever up. These structural forces will continue to be a major restrictive factor in the world economy. In the cyclical arena, things look a little better, but not as good as you might think from the media reports.
So, fewer green shoots?
The green shoots are primarily the result of inventory restocking. Inventories have been cut around the world, and in Asia they have been cut to the bone. Now production is ramping up to get in line with demand. Inventories are being restocked in many industries. The process is far along in technology, but way behind in capital goods. The U.S. economy will look a little better in the next two to three quarters, due to inventory restocking and fiscal stimulus. But the improvement won't continue after mid-2010, when the economy turns bumpy again.
In Europe, Germany has structural problems, but virtually no cyclical imbalances. It is one-third of the European economy. The weaker parts of the Eurozone -- Portugal, Ireland, Greece and Spain -- are trapped in a Euro-denominated system and should devalue their currencies to help their economies. They can't, and therefore will deflate. They'll be the poor guys for the next 12 months. The U.K. hasn't even started to adjust. Consumers there continue to borrow and spend. In the next year they will go through the same thing U.S. consumers have gone through. "
Zulauf has been bullish and bearish based upon his macro calls so this is just one of his macro calls. He could be wrong but he has the best performance of all of the Barron's pundits which includes the perma-bulls like Gabelli and Cohen. Unless you think investment performance is irrelevant.
Perhaps, he is worth listening to unless you are close-minded on the issue.
Are there global problems - yes - nothing new. However, the US is somewhat insulated because of the enormous internal market size.
Obviously you are close-minded. The returns are measured the same way for all the people mentioned, crude or not, which means that he has outperformed all of them by a wide margin.
Once again you can ignore if you like but don't disparage.
In that comment above he absolutely nailed the Euro crisis years before it erupted so he knows what he is talking about. The Swiss are not known for being panicky.
He absolutely nailed it last year as well.
June 2011, he had this to say at the Barron's round table:
http://on.barrons.com/...
"What do you see in the near term?
From Asia to Europe to the U.S., all the important economic indicators are rolling over. Some blame the Japanese tragedy; others, the weather. It is more than that. It is the result of policy decisions. Economic growth could slow to a crawl well into early next year. The stock market isn't priced for that. Analysts will cut their earnings estimates. There is 20% downside risk from the market's intraday May high. Once the economic news turns decisively disappointing, the authorities will come to the rescue and try to stimulate again. That is when a trader can move in on the long side for a rally at year end.
Those who have to own stocks should buy pharmaceuticals, health care and consumer staples rather than cyclicals. In the near term, through the summer and fall, I would short the XME [ SPDR S&P Metals and Mining exchange-traded fund], the XLI [ Industrial Select Sector SPDR ], the XLK [ Technology Select Sector SPDR ] and the XLF [ Financial Select Sector SPDR ]. If you have to own something, go with the Consumer Staples Select Sector SPDR [XLP] and the Utilities Select Sector SPDR [XLU]."
"So everyone who disagrees with you is close minded? LOL."
In your case I would say yes. I have not expressed an opinion, I have presented evidence to you that demonstrates Felix is not a "kook or end of days nut".
I conclude that if he were bullish now you would agree with him.
Apparently factual evidence is less important to you than your feelings.
Good luck and good investing!
the end is nigh
run for your lives
save yourselves
run for your lives
save yourselves
E
All is well and there in nothing on the radar that could derail the euphoria.
Very interesting investing advice.
For all your perma-bulls who keep mocking guys like Zulauf and Faber, why don't you hang your shingle with the likes of Abby Joseph Cohen or Gabelli...? How's that worked out for you for the past decade??
I'm glad I listened to Zulauf in 2008, and to Rosenberg on going long the 10 and 30 yr T in 2009 - stellar 20%+ annual returns on treasuries and IG/HY bonds since then. My long/short equities have done phenomenally well too with the Bernanke put providing a floor on valuations, but perhaps you shouldn't be so dismissive of great global macro managers like Zulauf....
Again for the perma bears, we are in the midst of a one time buildout/growth of the world middle class. APPL is an example of one of the surfers of this wave. This is the true macro econ phenomena.
Finally, a speculation on the advantages of "inside" information for billionaires. One advantage of Buffet owning a railroad is the (truncated) window on macro economic info. For instance, just by looking at the numbers behind customer shipments of stuff you can probably get intel which is not available to retail and go long or short accordingly.