Felix Zulauf: Deflation Will Sink Stocks

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Felix Zulauf expects stocks to correct at least 15% in 2015.

This transcript has been automatically generated and may not be 100% accurate.

I … conventional wisdom is that the U S economy is strong enough … that it can separate from the slowing global economy especially your in China … he was ill all questions the convention with a Jack Otter editor of Barron’s the common Felix is president of Zillow asset management and of course a longtime member of the Barron’s Roundtable … ah so let’s start with this idea that as the U S economy Charges Ahead We don’t need to worry about deflation in Europe … but as the mainstream the expectation and and the allies cajoles normalization reached even happened we leave worldwide … the CEO icing that the coupling of us won’t at the knees of … because the US we get affected by chio Islam … the oil price slump is going to affect the U S economy because it affects capital spending … to L’Occitane The DTE to fix the employment Gross … beat effects critique only … a very very pain job sitting in the industry etc said on there for us is going to slow down … from the great financial crisis on what’s the US has bein on it trying to grow spectrum … of about two a treat when the Hoff has sent a random … and that’s how it’s going to stay the CIA … and the rest of the world is due to slowing down … and the you know it’s the it’s the mind boggling many local on the new seal the seam is that the differ widely in recent years to the world economy … and the really coming keep slowing Doll and commodity prices keep us slumping it’s a good said Rob … inflation rates … are approaching as the euro in some regions etc etc … is just a different role he’s in the flakes milling process … that he’s at work and at some point if I I see … the markets really got to it … and then the week up the stock market’s been sent off … because coffee is about the future earnings it said Wright said … and and then you see what happens I do ask you how to invest in the nearby river firstly follow on one energy points … there’s this sort of debate between … the benefit of falling oil prices which is a consumer has more money in his pocket so forth and the obvious problems which are laid out the loss of well paying jobs and the … earnings slowdown in the SB five hundred … on do you see a benefit from those lower prices O differently they all to signs that the benefit is clearly that the expenditures for a nasty … goes down and and that’s a big relief … the question these with the consumer has … been released think that’s that then defeat on not … and I assume they do spend only very small portion effect all … because they are realizing the roles of CEO interest rates … they do not accumulate as much capital for their retirement and therefore they have to save more and rising savings eight season you a lot of sea and clearly they’re still repairing their balance sheets from the Great Recession and some years later this pipeline … ah so with in this environment I you are still bullish on bonds you have been right in been bullish on bonds for quite some time now everyone … thinks that’s a crazy idea … aam but it’s more than anything will continue … in this scenario I just described the he would be the right seemed to short stocks but the shortening expertise … into a duo were sometimes in the first landfall so … he’s very difficult to do and for most people and therefore ivory come into Roth Allstate wheezing really long bonsai week of mandates that the euro … um and Treasuries up the year-ago height high steel own them … I steal a hang onto them I’ve seen the we are going much slower in its thirty years because … the GOP’s going to flatten out the aam now heads to feed the five or so … in the eighteen years facility year US Treasuries … that he’s seen a live to where we’re owing to Sussman Tov … of the prices of two thousand twelve and the crisis of two thousand and nine … and I see we are going to break those LOS tango to new lows and the probably humans he led his Rubino Cooper St sometimes the CIA … and sometimes see CEO Wednesday’s crises and the … feeling the markets and the use of very low … then we have to set it but not yet to lock in two-and-a-half percent for thirty years is a fairly depressing idea … is there anything else see things might might give a little bit more of a … low yield over the coming years when I see can also be seen is the the strong dollar … rising to the U S dollar has been strong and continue to be strong … the new vehicle rich and sometimes the CEO … and a collection of income when the market to realize these that the there won’t be any fixed rate hike … and the actually they could even go to QE … you know and and a court of law no one is once again your brain commercialism which is that at some point this year be its allies September the Fed will raise rates … you’re saying the stock … that’s not gonna happen in my view … I do know know is if you tell I’ve never being there was the … in my view that he’s not going to happen because the mainstream the … interview he’s he’s wrong on that will be coming around the U S economy … and and I think that all due to the remains strong … they are off tall … for … completely different reasons you know there is that … an outstanding short position of about nine to ten trillion US dollars … and that’s the of the site … and unintended consequences of true easy money for too long out of the Greenspan gun on a period … when the corporate sector throughout the role … Wayne team to U S dollar day because they knew was a currency would weaken the can be can be can … and now the US seeking a mate and maybe fall the wrong reasons … the difference in economic gross it’s a good set up the dollar has strengthened … today social position out there and actual position eventually must be cobbler … so I think there’s a lot of purchasing power out there … the chance to buy US dollars and on top will be … when the low price goes down … you know we Melek about truly … a trillion … US dollars US dollars … We bike patrol … it’s a it’s … because it’s less science and and that money usually buzzing based Eagle will in the role … and that’s lacking … that he’s a less supply of us solace … and the Coen become the new U S has been shrinking for several years … that’s the way to supplied almost to the world … so as the traits we really have less … gross of supply of dollars and that he’s going to make the dollar’s strong … incoming is yours drifting lower effective thanks very much the laws that come thank you for having me …

Source: wsj.com

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