Felix Zulauf, a former UBS strategist who founded his own hedge fund in 1990, is often gloomy, but also often right. He issued a bearish macro call in early 2008 and predicted a market rally early the following year. Judging by his remarks in the Barron's mid-year roundtable, he's still downbeat.
Things appear to be getting better slowly, but "the world economy is weaker than people think it is", he reckons. Bond yields "won't rise"; indeed, they "might come down in major countries by late summer". Stocks could rally into the summer, but this will be a last gasp, while emerging-market currencies and equities, along with commodities, are set to keep disappointing. "It is time to reduce portfolio risk."
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