Monetary Matters with Jack Farley

20% Decline In Stocks By First Quarter 2025? Felix Zulauf on a Bubble In S&P 500, Yen Carry Trade, and Bond Market Rollercoaster

Dec 12, 2024

Felix Zulauf, a renowned macro investor and founder of Zulauf Consulting, shares his insights on market trends and economic forecasts. He predicts a significant correction in the S&P 500 by early 2025, sparking concerns over the Yen carry trade and its potential impact on liquidity. Zulauf discusses the precarious balance in bond yields amidst a secular bear market, alongside the outlook for commodities like oil and gold. He emphasizes the complex interplay of tariffs, economic disparities, and the unpredictable ride that 2025 may bring for investors.

56:49

Episode guests

Felix Zulauf

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Episode notes

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Quick takeaways

Felix Zulauf predicts a significant correction in the S&P 500, potentially exceeding 1000 points by early 2025, indicating market vulnerability.

The podcast discusses how global economic trends, particularly in Europe and China, are complicating commodity performance amidst looming market corrections.

Deep dives

Current Market Bubble Dynamics

The U.S. equity market is currently characterized as a bubble, with valuations reaching historical highs. Analysts indicate that, depending on various metrics, the market is at its highest or second highest valuation in 140 years. The growth of the bubble hinges heavily on liquidity, which has historically needed to expand to maintain rising prices. Recent data shows a significant reduction in liquidity within the financial system, suggesting that without continued growth in this area, the bubble may face imminent risks.

Intro

3min

Analyzing Liquidity Dynamics and Economic Disparities

3min

Economic Predictions and Market Dynamics

25min

Commodities Outlook Amid Economic Concerns

5min

Commodity Investments and the Volatility of Bitcoin

4min

Investment Strategies and Economic Dynamics

15min

Forecasting Market Volatility: The Decade of Roller Coasters

3min

Today’s episode is brought to you by the Teucrium Wheat Fund. War, weather, inflation—even monetary policy—drive wheat prices. See disclaimers below. Explore the opportunities at: https://bit.ly/Teucrium

Felix Zulauf, renowned macro investor and founder of Zulauf consulting, joins Jack on Monetary Matters to share his current views on stocks, bonds, and commodities. Zulauf expects a >1000 point correction in the S&P 500 in early 2025, and warns that a strengthening Japanese yen could unleash a wave of liquidations from investors involved in the Yen carry trade. Under such a risk-off scenario, Zulauf expects U.S. Treasury yields to decline, however he thinks the secular bear market in bonds will ultimately continue. Zulauf is not ready to call an end to the secular bull market in U.S. stocks. Recorded on December 9, 2024.

Felix Zulauf website: https://www.felixzulauf.com/

Felix Zulauf email: info@felixzulauf.com

Zulauf Consulting on LinkedIn: zulauf-consulting

Zulauf Consulting YouTube Channel: @zulaufconsulting

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