{"id":35695,"date":"2013-01-24T14:24:35","date_gmt":"2013-01-24T19:24:35","guid":{"rendered":"http:\/\/countingpips.com\/forex-news\/?p=35695"},"modified":"2013-01-24T14:24:36","modified_gmt":"2013-01-24T19:24:36","slug":"and-the-roundtable-says","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex-news\/2013\/01\/24\/and-the-roundtable-says\/","title":{"rendered":"And the Roundtable Says\u2026"},"content":{"rendered":"

By The Sizemore Letter<\/u><\/a> <\/p>\n

I look forward to Barron\u2019s Roundtable<\/a><\/i> every January.\u00a0 It\u2019s a collection of ten contrarian investors who seldom agree on anything\u2014which is precisely why I find it valuable.<\/p>\n

Money managers and financial journalists are often prone to groupthink, and when they succumb to it they become useful only as contrary indicators.\u00a0 Market insights only have value when they are independent, and the Barron\u2019s<\/i> Roundtable is anything if not independent.\u00a0 Eccentric might be a better word.<\/p>\n

Unfortunately, Barron\u2019s<\/i> is a man down this year, and he happens to be the most eccentric of the lot; Gloom, Boom & Doom Report<\/i> editor Marc Faber was not able to attend.\u00a0 I often disagree with Faber, but he always gives me food for thought.<\/p>\n

Let\u2019s take a look at what the panel is saying for 2013.<\/p>\n

I\u2019ll start with the Bond King Bill Gross, manager of the Total Return ETF (NYSE:$<\/span>BOND<\/a>)<\/b>.\u00a0 As with Marc Faber, I also find myself disagreeing with Mr. Gross on a regular basis, though I take what he says very seriously.\u00a0 And he is one of the few active managers I use<\/a> when allocating client accounts.\u00a0 So, what does Mr. Gross have to say?<\/p>\n

\u201cThe US continues to have a \u201cnew normal\u201d economy, with annual growth of 2% or less\u2026 There are several reasons for this. \u00a0There is too much debt, and the ongoing deleveraging process creates the fiscal drag we just talked about.\u00a0 There is also a demographic issue: The population is getting older\u2026 Third, de-globalization leads to slower growth.\u201d<\/i><\/p>\n

Gross overstates the risk of \u201cde-globalization.\u201d\u00a0 Free trade and globalization have stalled out to an extent, but they haven\u2019t exactly gone into reverse, or at least not recently.\u00a0 But he is absolutely correct about deleveraging and aging demographics, and I share his view that inflation will remain benign in 2013.\u00a0 We\u2019ll have to wait until Part II of the Barron\u2019s<\/i> story to get Gross\u2019 specific recommendations for the year.<\/p>\n

Moving on, Switzerland-based hedgie Felix Zulauf has a peculiar bullish take on Japan:<\/p>\n

\u201cThe Japanese government is in a difficult position, with the country\u2019s debt running at 230% of GDP.\u00a0 Japan is in a recession.\u00a0 The budget deficit exceeds 8% of GDP and could top 10% this year and next.\u00a0 The deficit was easy to finance as long as Japan was running a structural current-account surplus and the domestic pool of savings was large enough to do so.\u00a0 In recent times the country\u2019s external accounts have deteriorated, and that could continue.\u201d <\/i><\/p>\n

The facts of Japan\u2019s dismal position are indisputable, yet Zulauf is bullish on Japanese equities.\u00a0 Why?\u00a0\u00a0 Because the deliberate policy of pushing the yen down and igniting inflation should be bullish for Japanese equities.<\/p>\n

Thus far, Zulauf has been spot on.\u00a0 The yen has cratered, and Japanese stocks have rallied.\u00a0 But Japanese shares should be considered a short-term speculative trade, not an investment.\u00a0 As I\u2019ve written before, Japan is a dead man walking<\/a>.\u00a0 And moves to spur inflation could have the effect of pushing up long-term yields to the point that rolling over Japan\u2019s gargantuan debts becomes problematic.\u00a0 Japanese equities may have a good year in 2013.\u00a0 But my bet is that the big money will be made shorting Japanese equities in the not-too-distant future.<\/p>\n

Finally, we come to Mario Gabelli of Gabelli Asset Management, who had one of the most eclectic set of recommendations.\u00a0 Gabelli is bullish on, of all things, sausage, recommending Hillshire Brands (NYSE:$<\/span>HSH<\/a>).<\/b>\u00a0 Continuing his breakfast theme, he\u2019s also bullish Post Holdings (Nasdaq:$<\/span>POST<\/a>),<\/b> the maker of Grape Nuts and other cereals.<\/p>\n

But he\u2019s also bullish on natural gas and MLPs (as am I), dental products, and water infrastructure.\u00a0 Readers might want to keep an eye on Xylem Inc (NYSE:$<\/span>XYL<\/a>),<\/b> a producer of pumps, filters, and technologies for water and wastewater treatment.\u00a0 Earnings might be a little slow for the next few quarters, as a third of the company\u2019s business comes from Europe.\u00a0 Gabelli expects it to be acquired within two years at a 50% premium to its current price.<\/p>\n

Disclosures: Sizemore Capital is long BOND. This article first appeared on MarketWatch<\/a>.<\/p>\n

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The post And the Roundtable Says\u2026<\/a> appeared first on Sizemore Insights<\/a>.<\/p>\n

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