“ECB Is Worst-Run Central Bank In The World” – Felix Zulauf Sees 30% Plunge In US Stocks “Taking The World With It”

Sunday, October 21, 2018
By Paul Martin

By Lauren Rublin, via Barrons.com
Sun, 10/21/2018

Felix Zulauf was a member of the Barron’s Roundtable for about 30 years, until relinquishing his seat at our annual investment gathering in 2017. While his predictions were more right than wrong, it was the breadth of his knowledge and the depth of his analysis of global markets that won him devoted fans among his Roundtable peers, the crew at Barron’s, and beyond. Simply put, Felix, president of Zulauf Asset Management in Baar, Switzerland, always knew—and still knows—better than most how to connect the dots among central bankers’ actions, fiscal policies, currency gyrations, geopolitics, and the price of assets, hard and soft.

With interest rates rising, governments in flux, and the world’s two biggest economies facing off over trade, it seemed the right time to ask him how today’s turmoil will impact investors in the year ahead. Ever gracious, he shared his thoughts and best investment bets in an interview this past week. Read on for the view from Baar.

Barron’s: Felix, how have you been keeping busy since you left the Roundtable?

Felix Zulauf: I’m still running money, but it’s my own money, and I’m still a consultant to investors and institutions. I’m in the market almost every day. I like analyzing the world; the tectonic shifts occurring make it too fascinating to quit.

Which shifts do you mean?

For one, we have left the world of free markets and entered the world of managed economies. This is a major change in my lifetime. Central banks took over the running of economic policy after the financial crisis and run the show to this day. Also, the globalization movie is starting to run backward. The past 30 years saw the biggest globalization process ever, with the integration of China into the world economy. With today’s trade conflict, that is changing. The alternative is more regionalization of the economy, which could create problems for multinational companies.

Is a reversal of globalization inevitable?

The Northeast Asia economic model isn’t compatible with the Western model. In the West, corporations are run for profit. In Northeast Asia, exports have been used to increase employment, income, and market share. In China, average export prices have been unchanged in U.S. dollar terms for the past 15 years, whereas the average wage has gone up six times. A company with such statistics goes bankrupt, but China has escaped that outcome through the use of debt.

The Rest…HERE

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