Friday, October 26, 2012

U.S. debt will balloon to $25 trillion within four years, believes Felix Zulauf

Swiss investor Felix Zulauf shared his opinion that the path ahead of USA financial stabilization seems very tough. Mr. Zulauf argued that the U.S. government will find further fiscal stimulus unaffordable since we have seen the debt of the States has risen from $10 trillion to $16 trillion and $25 trillion is in sight within four years at this pace.

Zulauf believes that in order to find a cure for the current situation a fiscal restraint is needed, even if at a short-term cost in growth, and added that "Obama has no plan" and that Republican vice presidential candidate Paul Ryan’s plan is "implausible." Minor fixes are the likeliest case, resulting in economic stagnation. Zulauf’s only good news was that households appear to have completed deleveraging.

The Swiss financial guru fears competitive devaluations, pushed initially by the United States. He foresees current firmness in the euro to the U.S. dollar ending soon and parity or even a discount to the U.S. dollar as quite probable, for political reasons.

As with equities, bonds are subject to a downward cycle, hyperinflation is possible in deeply troubled countries, and central banks in other countries would welcome modest inflation, which would be likelier in asset prices than consumer prices. He added that these bankers sold gold at the low point, questioning why anyone would trust them to manage the process competently.

Wednesday, October 24, 2012

Felix Zulauf: Eurozone will be the shortest currency union in history

The president of Zulauf Asset Management AG - Felix Zulauf expressed his opinion that the Eurozone is oh its way to become the shortest currency union in history. Swiss hedge fund manager believes that the only allternative to breakup is only a federal union. Zulauf thinks that additional temporary measures risk aggravating social conditions, with local rioting leading to broader civil unrest.

Austerity measures brought by some of the European governments have only produced an imminent crisis. In Zulauf's view, the crisis is imminent and does not require a specific event. He believes that after six to nine months, the markets may suddenly wake up and react powerfully to some seemingly minor event.

Zulauf, during his recent speech in Prague, added that investment options in the intermediate term are grim. While the equity markets may thrive in the coming year or two, the seven-year equity cycle will turn in 2015 or so and "buy and hold" strategies will turn out to be painful for those with a three- to four-year horizon. Although the coming bust will be bad, Zulauf thinks it will not be as serious as the last.

Zulauf added, that Central banks sold gold at the low point, so they should not be trusted to manage inflation. The only hope, he said, was a supply-side focus on increasing productivity and lowering economic barriers could help in principle. But governments are already "heading in the other direction, Zulauf also said.

Monday, October 22, 2012

Felix Zulauf: China actual growth is at a 3% rate

Investment guru Felix Zulauf expressed his opinion that most of the investors are overestimating China's growth rates and in the meantime are underestimating the problems in the Asian country.

The president of Zulauf Asset Management AG made his statement during the Fifth Annual European Investment Conference and added that the slowing growth in China is a foretoken to a global economic crisis that will strike every single region.

Swiss hedge fund manager Felix Zulauf indicated that "excessive" booms always lead to a bust, and China’s will be no exception. HSpeaking at an investor conference sponsored by the CFA Institute in Prague, Zulauf said China is actually growing at a 3 percent rate than official reports of nearly triple that level. Earkier this month a 7.4 percent rate was reported by the Chinese government.

In his view, market commentators underestimate the problems in China. Zulauf said that while China's new leadership may implement a "timid stimulus", it won't have much effect, and that a "credit boom in reverse" seems imminent. Like any aftermath of an "excessive" boom, China will end up going bust. Consequently, public growth forecasts for Australia, Latin America and other natural resource countries are too high.

Monday, October 1, 2012

Felix Zulauf with another bearish forecast for the future

One of the most successful hedge fund managers Felix Zulauf has come up with another pessimistic prediction for the future.

According to Zulauf, the thirty-year bond bull market has ended and also predicting that the price of gold will surge in the near future. Moreover, the hedge fund manager himself is of the opinion that one has to sell half of what he owns along with selling the other half in the near future at the latest.

The Swiss investor thinks that bonds are overvalued and that the real return is negative. Furthermore, Zulauf is convinced that stocks will collapse in the next 2 or 3 years, adding that the investment world will see 1k in the S&P, which is more than 30 per cent decline.

In a recent interview, Zulauf said that they were in a stage of the super cycle and everything is accelerating. He explained that the fiat currency is in the final stage and that it always collapses in the end.

Felix Zulauf is the opinion that the European Central Bank will do everything in its power to prevent a potential collapse of the system. He is convinced that the ECB will finance everything including bankrupt governments and banks to every bankrupt entity which is crucial for the system.