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FelixZulaufZulaufAssetManagement(macroissues)

BarronsTheArtofSuccessfulInvestingConferenceOctober21,2013
TheeconomyisdoingOKonthesurface,buttheconsumerisnot
o Disposableincomebarelygrowing(approx.1%ayear)
Lackofalternativesistheforcedrivingthemarkethigher
Bondmarketisnotattractive
o Simplyput,youcanloseyearsofcouponsinacoupleofweeks
Thinksthebullmarketisgoinghigher
ThinkssoutheastAsianbankingsystemisinabubble
o ParticularlyChina,Singapore,andHongKong
o Thesecountries(aswellasafewothers)haveseenanextremeincreaseinconsumer
debt
o [AmremindedofChanos35%increaseintotaldebtperannumand10%GDPgrowth
means25%annualincreaseinnetdebt,adoubleevery3years]
o Chineserealestateinextremebubble
NotonlyissoutheastAsiabutallemergingmarketsareinabubble
o Dependentuponcontinuingcapitalflowsfromthewest
o ProppedupbyQE
o WheninterestratesriseintheU.S.capitalflowswillreverseandthesemarketswill
comecrashingdown
StartedtoseethesereversalswhenyieldsspikedonFedtapertalk
Fedpreventsreformbypreventingacrisis
Sees20%possiblecorrectioninU.S.market
o Wontbemorethan20%becausehebelievesfedwillpropupequitiesintheeventofa
marketcorrect
Goldisntgoingbackupuntiltheresacrisis
o NoCPIinflationbutplentyofassetinflation(equity,bonds,art)
Lackofalternativesyouhavetostickwithstocksatthispoint
o U.S.andEuropearethebestchoices
TheEurosimplycannotworkinthelongrun
o Peggingdifferenteconomiestothesamecurrencyisridiculous
Seesnext10yearsinEuropeasstagnantatbest

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