Spanning the Globe with Felix Zulauf

On the Financial Sense Newshour this week, Jim Puplava is very pleased to welcome Felix Zulauf to the program. Felix has worked in the financial markets and asset management for almost 40 years. He started his investment career as a trader for a large Swiss Bank and received training in research and portfolio management thereafter with several leading investment banks in New York, Zurich and in Paris. Felix joined Union Bank of Switzerland (UBS), Zurich, in 1977 and held several positions over the years including managing global mutual funds, heading the institutional portfolio management unit and at the same time acting as the global strategist for the UBS Group. After two years with a medium-sized Financial Organization as a member of the executive board, he founded his wholly owned Zulauf Asset Management AG in 1990, allowing him to independently practice his own individual investment philosophy.

In 2001, he made two of his staff members to partners and sold the majority of his company to them in steps and acted only as advisor from 2003 onwards. Mr. Zulauf focused on macro and strategic issues within the firm. In spring 2009 Zulauf Asset Management was split in two parts and Felix Zulauf fully owns the split-off Zulauf Asset Management AG focusing on managing a conservative global macro fund as well as some advisory activities to selected family offices and institutions.

Felix Zulauf always believed that the world economy and the financial markets move in cycles. That has helped him avoiding all the major casualties in the financial markets since the 1973/74 bear market in equities. He has been a member of Barron’s Roundtable for over 20 years.

In a very special interview this week on the Financial Sense Newshour, Felix Zulauf and Jim Puplava discuss a wide variety of critical economic issues, including the rising risk of inflation, the future of the European Union, China and the developing world, and the potential revolt of the bond market to massive debt creation.

Transcript

Jim Puplava: Joining me next on the program is Felix Zulauf; he is president of Zulauf Asset Management. Felix, I want to go back to something you said in the beginning of the year in a roundtable interview. You offered the opinion that there are two worlds that we live in; say the industrial world and the emerging world. Inside of the industrial world, it is living on the fiction that it can afford its current lifestyle by going further into debt. Have recent deficits in the US surprised you in that the bond markets have been slow to revolt?

Felix Zulauf: In a way yes, but there are good reasons for that and the good reasons are that the global capital flow system is not working according to how a free market system would allow. It is because central banks on the other side of the US dollar where those capital flows flow to out of the US dollar because monitored policy is too easy here and weakens the dollar and nobody wants the dollar as an investment currency anymore and money flows away. Would actually then strengthen other currencies and those recipients of those dollars they do not like their currencies to be strengthened to the degree free capital flows would do it and therefore they intervene. They recycle a big part, not all but a big part of the money back into US treasury paper and that is why the whole system continues further and that is why the US Bond Market, the Treasury Bond Market has held up much better. On top of that, you have the Central Bank buying huge quantities of treasury paper and there are so called almost despite the large deficit a certain technical shortage of treasury paper for the time being. Of course this is not the very stable situation, it is sustained for the time being, unstable situation and is highly inflationary at the end but it can break down anytime and when it does, then we enter a bear market and not just for equities but also for commodities.

Jim Puplava: Now because the private sector is still in a process of de-leveraging, it is allowed government such as ours to leverage up. Lately Felix inflationary signs are beginning to surface for example regional fed surveys on the day that you and I are speaking we have the Texas manufacturing outlook, the prices paid component has been going up and recently we are starting to see a pickup in the PPI and CPI. How long before this presents a problem for the Fed and the financial markets.

Felix Zulauf: Well first of all going back to what I said before is the inflationary pickup would have shown up much more quickly and in much more decisive way if the other central banks would have let their currencies depreciate to the degree free capital flows would have done so. That would have stopped the US central banks from pursuing its ill guided policy much sooner. Now I think inflation is picking up and we are talking about consumer price inflation. I mean there are many types of inflation around but talking about consumer price inflation and producer price inflation, those prices are picking up and I think they will surprise on the upside in the US during the second part of this year. I do expect CPI to reach 4% or slightly above that probably and doing that it should really stop the Fed from the current policy. It should really lead to some change of monetary policy, that will be very decisive for capital markets and commodity markets, and those are currency markets in the world.

Jim Puplava: By holding on to their currency peg and I am referring to countries like China, US inflation is being transmitted to many emerging markets such as China. China has been in the process of raising bank reserves and raising interest rates to combat inflation. Is there a risk Felix that they over do it and what might that mean to the developing world, especially the US?

Felix Zulauf: Well it is true that they are tightening credit in a way by hiking up reserve for ratio requirements but this is only one factor. Other factors still point to very easy monetary policy in China and so this is only taking away what they give on the other hand and it is still a relatively easy monetary environment in China, and you can see that by the enterprises in China still going up. When you have an economy that is a closed economy to a very large degree because capital cannot freely flow out of its system, and you have inflation rates that probably 10% in reality and you have prime lending rates at maybe 6.5% and you have deposit rate for savers at 2%. That means you have very low deep negative real interest rates, that is an incentive to invest in all sorts of assets, and as long as that is the case you know, the reserve ratio requirement has to go up a lot higher until it really slows down the Chinese economy into a recession. I think we are marching in that direction but we are far from the point where it would trigger a recession. What the Chinese are trying to do is they are trying to moderate economic growth and thereby controlling inflation bringing it down to a somewhat lower level so that the cyclical expansion of the economy can continue and the job creation can continue etc, and that is what they are shooting for. They may be successful for the time being but the end of the day is this business cycle expansion in China will go to excesses that some of the excesses are very clearly around and you can see it with ghost towns and mail investments in several part of the economy etc. But it will only continue to run for another, I do not know, two or three years until something, probably an exogenous shock or a decisive change of monetary policy somewhere else triggers the recession. I think we are on the way to it, but it will take another two to three years until we get there.

Jim Puplava: I want to move onto Europe where we have the problems with the pig countries, the Euro is a monetary currency without a political union. How does the issue of the pig death issues get resolved and does the Euro hold together or do the Pigs break off or do we get for example two different currencies say, any thoughts on that?

Felix Zulauf: Well if I knew, I think the two currencies are out of the question that is unrealistic. You cannot create for political reasons, you cannot create two clear classes of currencies, a good currency and a bad currency, and you cannot do that. Economical rationale is trying to force a breakup by pushing interest rates higher and pushing some economies eventually out of the currency union. Political forces however they want to keep the currency together. They are moving and pushing in the other direction and for good reasons you know, European history has been a very bloody one and European integration is an important factor for European countries. They do not want to fall back to WWI or WWII and those things and therefore you will have a tug of war between two forces and I think it will go on for a number of more years. In the meantime, you have a situation where the markets are trying to force a decision and unfortunately, Germany has the big saying and the German government because they have been the threat to the rest of Europe, WWI and WWII and their own history. You know, they do not want to break the Euro apart, and therefore they will at the end of the day, they will always cave in and it will be up to the German people, not the German politicians. The German people to revolt against the fiscal union and the Germans paying eventually for their southern neighbors. I think it will be dragging on epic drama for a number of more years. In the meantime you will see that the current policy track by the European central bank that wants to go the way of the old German Bundesbank namely to put currency stability first and economic management by monetary policy last, that will not work. Because the Euro can only hold together in the long run if the European monetary policy goes the way the US monetary policy goes. Namely to make the Euro as structurally the currency and of course the Germans do not want that and therefore you have a lot of issues. I believe that the next in line will probably not be Spain, but I think the next stock in Europe will come out of Italy. The Italian public debt situation is a lot worse than Spain; Spain’s public debt situation at the present time is okay. The problem there is the private debt situation. It is a little bit like Ireland before the government assumed the debt of all the banks and assumed the banking system guaranteed etc etc. but I think the world is focused on Spain, which will eventually fall in my view, but I think before that you will probably see Italy. We have a banking system in Italy that is losing deposits and they have problems to refund the banking system, and you know; only two or three large banks can directly go to the ECB to get very low, cheap refinancing. The other banks they cannot do that, they have to go to the free market and the Euro monetary situation is very tight, liquidity is very tight because the European central bank is steering a different policy from the US. Therefore what these banks are doing, they go to the Dole Market, they refund in dollars, translate those dollars into euros which make the Euro a strong currency or it appears as though in the currency markets and that is how they breach the currency situation. This is a highly unsustainable situation because it forces the Euro further up and in face of the whole weak peripheral economies and they are weak. They are the weakest in the whole industrialized world, they are being forced down because they cannot export anything anymore. So I think you will soon see, this summer or so, you will see a problem in the Italian market and that will be the next shock in Europe, and those shocks then force the ECB to change direction and eventually they will end up with an easy monetary policy.

Jim Puplava:  I want to move back to the United States and if we look back historically Felix and you talked about this in your Barons’ Interview, in the 60s and 70s over a period of time, we had inflation building up in the economy in the financial system. That process was reversed under Volker who kept interest rates high over a period of time until he rung large inflation out of the system. It seems like we are gradually reversing that process first with Greenspan and now with Bernanke and it would appear that  ultimately this leads to the debasement of the dollar which we have seen fall. It appears this process has already begun, in your opinion where are these polices leading the US and what happens to the dollar and especially its reserve status?

Felix Zulauf: It is a good observation, I think when the Bretton Woods system of fixed exchange rates and the gold standard, the US dollar backed by gold broke down in 1971, since then we have for most of the time living in an environment with negative real interest rates at the short and in the US. Paul Wolcott changed that for a certain period of time because he was called in my President Carter to make the dollar stable again and to ring inflation out of the system. He did that but the bond market took about five years to understand it and for those five years 79-84 we had extremely high interest rates in nominal terms and in real terms and only thereafter, inflation rates began to decline and so did  interest rates in nominal terms and later under Greenspan in real terms. Greenspan then solved every economic crisis by forcing interest rates down and created negative real interest rates at the short end and we our now in a period like in the 1970’s where we have probably for years to come negative real interest rates in the US dollar. What Bernanke is doing right now is just about the opposite of the reverse of what Paul Wolcott was doing from 79-85. He is pumping liquidity into the system; he is creating negative real interest rates, a disincentive to a state in the US dollar and the US dollar denominated nominal efforts and an incentive to move out of the dollar and to move into real assets. He is really the first central bank in history I can remember who said I want to make US stock prices to go up, and I will do whatever is necessary to do that. We are witnessing the biggest financial market manipulation of all times and it is lead by a central bank. This is terrible, and therefore you can look at the currency or gold price in another way that the world usually looks at it. Usually the world looks at the gold price going up. I from time to time look at our currency prices in gold how they behave and you had a big first waterfall decline in the 1970’s until Wolcott created high real interest rates and high real interest rates strengthen the inherent value of paper money and now we are in the second waterfall decline of our currency. It is not just the dollar, it is all of the major currencies basically and they just compete with each other.  But it is basically all the major currencies in a waterfall decline which I think will continue for another I do not know, for another four or five years until it is over and until the world finds out we cannot go on like that. Then another Mr. Wolcott will be called in to recreate stability and then we will have a serious recession, maybe depression like recession and we will try to cleanse the system. The question is whether we can go through an exercise like we had in the late 70’, early 80’s. I do not believe that our system can live with such a long period of high real interest rates anymore. I think our system would collapse and therefore whenever they try they will probably break up after a few quarters because the pain will be too much and then we go into the next waterfall. It is a pretty desperate situation our world has moved itself into.

Jim Puplava: You know as a result of the currency debasement that you have been talking about, we have seen gold and silver, especially gold rise every year for the last decade. Now Felix gold is over $1500, silver is approaching $50. many financial experts are calling this a bubble but today if you look at gold and silver, it represents such a small fraction of total capitalization of global financial assets. If we go back to lets say the last bull market in gold for example in 1980, it was about 3-4% of market capitalization so it would appear from the size of the capital markets today that gold and silver have a long way to go, would you agree with that?

Felix Zulauf: That is absolutely right you know, people and they call gold a bubble, they do forget that there are more financial lessons created everyday than there is gold or silver mined every day, and it is very difficult to mine gold. In one cubic meter of earth crust, you have .0004gms of gold. It is hard work to get it out of the earth and you cannot just put a button or write a check at the central bank to create billions or trillions. It is hard work, and that is why it is the disciplining ankle. It is too that during the gold standard times in the 1960’s, all the gold mined in the world represented about 5% of all the market capitalization of global equities, bonds, and money markets. At the recent time as you said in 1980 at the extreme of the last extreme of the gold price at $850, it represented about 3% of global financial assets and right now it represents about .06% or .07%, something of that order. To just go back to where it was in the 1980’s extreme and I think usually these trends have a dynamic by itself and they usually end in excess. Getting back to 3% would require at current gold prices that we bought 65000 tons of gold. That is about 20 years of mine production at the current rate of production and production has not increased in recent years. It has been flat because it is difficult to get it out. I mean it is not over valued and it is certainly not over owned when you compare it to paper assets.

Jim Puplava:  Felix, last year QEI was ending in the spring and the Fed began to talk about its exit strategies going as far as writing up Ed pieces in the Wall Street Journal. However, by spring or late spring and summer, the economy began to slow down and in Jacksonhole last august, he talked about or Bernanke talked about QEII. This year QEII is supposed to end at the end of June, if it does, will its ending take some of the air out of the stock market bubble?

Felix Zulauf: Well Bernanke has given signs that it could end by the end of June. But unlike during QEI when he said he would then unwind part of QEI of the assets requited, he would sell and dispose them. He did not hint at any selling of what he acquired in QEII, so I think we cannot expect the Federal Reserve Bank to really shrink their asset base. I would not expect that but it will not grow again and by not growing the rate of change turns negative and that means that it will probably have a negative impact on the stock market and maybe on some other asset markets as well. Now I do not believe that the current point of time you will go into a bear market already. The technicals are still confirming the new highs in the stock market in the US and in some other countries but not in all the countries around the world. I think the ending of QEII will bring a stop and will probably bring a correction in the stock market and this could be a correction of 15% or so. It could be a little bit less or a little bit more and I said at the beginning of the year, most likely into spring bullish and then bearish particularly for the second half. I still believe that so I thought that either May or early summer we will see the highs of this run and I think I said about 10% or so and I said from the beginning of the year the downside was about 10% so that would give you about up to 20% correction. Should the stock markets correct by 20% or close to that in the second half, QEIII will starve late this year. You know that is the way it is, our central bank here in the US is so concerned about depression and the system breaking down that whenever a surprise is correct you know, remind you that X surprise is the way they want to stimulate the economy. Really, rising X surprises should improve balance sheet and should create purchasing power and therefore they will come in again and go into QEIII and that is the world we live in. Eventually we will go to QEIII or whatever you know, that is the way the US is doing it and this will end badly of course.

Jim Puplava: I know Felix at the beginning of the year you were bullish on uranium, has recent events in Japan altered your views towards uranium and nuclear power in the long run?

Felix Zulauf: Well it has been a terrible tragedy in Japan and I understand that the discussion is much more in Europe than in the US is about exit uranium nuclear power. The discussion in Europe is much more serious at the surface than in the US. You do not hear a lot about it in the US and I think what we have is a temporary stop at thinking about further uranium driven nuclear power plants in the world. I do not believe that they will stop the construction of nuclear power plants in China and the emerging countries. But in the industrialized world there is a certain stop regarding thinking and looking at all the different safety issues. If you are realistic and that is what you have to be at the end, the world cannot function without nuclear power. That is completely unrealistic, solar power and other alternative energy sources are very very minuscule compared to oil and we all know the problem of peak oil etc, and how difficult and how expensive it is getting to get it out of the ground, and nuclear power is safe if put at the right places. I think if I am correctly rereading all the papers that I have seen about the Fukushima Nuclear Power Plant from American experts in the 1960s when they wanted to construct that power plant said that it was not safe. So I think safety has to get improved but we cannot move away from nuclear power. What does it all mean for the price of uranium; it probably means that we have a long period where uranium is out of the spotlight, where the speculators and investors in uranium are selling out. Where the market gets extremely cheap, you can already buy uranium participating holding in Canada at the discount of already 20% to what their holding is worth at the present time. But after a while the world gets back to reality and then they will probably improve the safety and they will use nuclear power in the future and probably even more than in the past. Therefore, I think these are prices to gather and accumulate those assets but not for the next six months, it is much more for the next three years.

Jim Puplava: Felix, Evelyn Garrett of the Browning Newsletter is a frequent guest on my show and the last time I did an interview with her she said that the weather around the globe is at a tipping point for example in Texas which is a major wheat exporter and grower, Texas is experiencing its worst drought in 44 years. You add the recent floods, delays in planting season; you mix in growing demand for better diets in emerging worlds, what are you long-term views of the AG sector regarding not only the commodities but the agricultural companies?

Felix Zulauf: Evelyn does some interesting work and I knew her father quite well and have been following those climate cycles since the early 1980’s, and what you described for Texas we also see in Europe. At the present time in my own country of Switzerland, they have the drought, they have the warmest April ever on record and it is probably as dry as it is usually in summertime in Arizona, and there is no water in the rivers, the ships cannot function etc etc. I do believe that the changing climate patterns which go in cycles will be with us and create further havoc to the weather and that will create further havoc to the harvest as we have some flooding in some areas and some drought in some other areas. Inventory levels of grains are relatively low on a historical basis and if something goes wrong with the harvest, you have rising prices. On top of that, you have the emerging world that is rapidly industrializing and you have a growing middle class. I was recently down in Brazil and I have not been there for quite some time, some years. It was just impressive to see how much the middle class has grown and that is leading to changing diet and it means more meat and that requires more grain etc etc. therefore I think it is a long term bullish theme to invest in agriculture of all sorts. Playing the commodities by themselves is one way to do it, but investing in those could deliver to the farmers like the fertilizer companies, like the machinery companies, like the grain trading companies etc, that makes a lot of sense. I think that is a dominating theme and  I recommend investors to stick with that theme because it remains in place.

Jim Puplava: Felix you are a European who spends some time living in Florida, so you might bring what I call a more unbiased outlook on our countries eroding economic circumstances. What I find sometimes as Americans we are quite to predict the demise of lets say other regions or currencies like the Euro or the European Union. But might we be too complacent about our own economic unification? Fort example if the dollar plunges under dyer economic conditions, is it conceivable that the great unification known as the united states might itself unravel and I am thinking of my own state that I live in, we are facing what, thirty five billion in budget deficits. We have lost over 35% of our manufacturing base in the last decade and we are also losing high paying tax payers in small businesses that are leaving the state. So from you perspective as a foreigner who spends some time here in the United States, how do you see us?

Felix Zulauf: Well I have certainly a high affinity to this country, I love this country and have so since the first time I put my foot on US soil in the 70’s, and was first to see how mismanaged your economy and your country is. Not just at the present time, it has been a process over the last 15 or 20 years, and you know, other countries and economies are also mismanaged. But it doers not really matter if Belgium is mismanaged; it matters to the Belgium and maybe to some neighbors to a small degree. But if the US which is the largest, still the largest economic and military power in the world and represents one quarter of world TDP is mismanaged, it has tremendous consequences, and the human nature is such that you do not correct until it hurts, and I think you are on that way. It is interesting to note that virtually every industrialized country, even those that have been relatively successful, relatively speaking over the last few years like Germany, they are trying to cut their government expenditures in some ways. They have tried to address certain entitlement issues. They are trying to address certain tax issues etc etc. the US is the only country that I still debating and has not done anything and that is shocking. That seems to be the case because your president came in and set the agenda completely wrong and has now problems to move away from his dogmatic belief how to change the US. He has social issues first instead of economic issues, but the republicans unfortunately also do not cooperate in the right way. You know everybody wants to pay as little taxes as possible, but it is a fact that your corporate sector is paying the lowest tax rate, the lowest taxes in about 50 years and that cannot continue. So you have to bring the situation into balance, usually this happens only once some major damage has already been done and I think your currency will decline more and the declining in weak currency locks in the people in their own country. They become prisoners in their own country because they cannot move out, it is too expensive. I just bought a new European car here and I pay half the price of what I pay in Europe, same car. Same car, and this is the way it goes, an average American cannot afford to go on a journey to a foreign country in Europe or in Asia because it is too expensive. The elite, the top 20%, they can do that and I think you have to create some rebalancing of all of that and everybody has to suffer and everybody has to make some confessions. Usually this happens only once you are deep in the mud and it is painful, and I feel that the pain is not high enough to make those changes yet, but it will come.

Jim Puplava: You know Felix, the United states has had a long history of cultivating a dependency on economic programs that were initially intended to be supplemental in nature and I am thinking of social security which started as a safety net to make sure that people did not starve in their old age. Today it consumes 15% of a self-employed person’s income. We have Medicare; Medicaid, which were designed to help a small percentage of the population yet now, the government has broadened these programs and even provides prescription drugs. Fannie Mae and Freddie Mac were designed to broaden the American dream of home ownership but eventually became the mortgage market. As we look at the Feds program, quantitative easing, QEI, QEII, why would these programs be any different than any other federal program and what is to prevent it from becoming QE infinity as Marc Faber has suggested?

Felix Zulauf: Well that is a difficult question to answer you know, being European I hate socialism of course. But I think the average European today is much better off than the average American. The statistics may not tell you that but I live in both parts and I have several homes in Europe in different countries, I live in all of those parts and I can compare with the US and I do have friends who are average citizens here in this country. I tell you the average American is much worse off today than the average European, so there is something wrong. In the 1960’s it was completely the opposite, the average American that was the European’s dream. You know we were much worse off in Europe than the average American citizen. So something has gone wrong, and I think you have to get back to the basics. The basics about running an economy is let it move as freely as possible but implement some strict and clear rules and guidelines and laws, and that is the first thing. The second thing is you have to be aware that prosperity is being created by saving, investing, innovating, manufacturing, that creates jobs again. Out of those jobs comes income, out of that income comes savings, out of the savings you create investments, out of the investments you can innovate etc etc. that is the way it goes, you have moved away from that under Greenspan. Greenspan encouraged asset booms and he tried to guide and massage the economy by inflating asset prices and create balance sheet booms for private households and corporations, and those balance sheet booms then create purchasing power. Now all of that leads to a leveraged economy and once the wind turns to the other side, you have a bust situation and then you cannot come out of it. You have to refind the old way of creating prosperity, it is a painful way back but you know, you better start today than tomorrow that would be my recommendation.

Jim Puplava: Felix, one of the broad themes of this show is that we really do not live in truly free markets. You see governments intervening in the currency markets, they tinker with interest rates, and even slap on retaliatory tariffs from time to time. Today we live in a world dominated by central bankers who desire to set interest rates and liquidity by decree versus lets say being determined by free market of savings and demand. These are not ignorant people and in fact many central bankers are graduates of the world’s finest universities yet they seem to be caught in their own world denying that for example, inflation exists or dismissing bubbles is unforeseeable events. From you personal experiences, I know you know a lot of central bankers, can you shed some light on how central bankers think or what makes them tick?

Felix Zulauf: Well most of the central bankers when you speak to them alone are very nice people and intelligent, well educated and bright and they understand the issues. The problem with them is that they do not speak to the outside world as often as they should. They met once a month and they talk to each other and they reconfirm each other and reaffirm that they are on the right track and they think that in this chaotic world we head into and we have created that they are the ones who have to lead us out. By doing that, they actually lead us even further into peril, that is the situation as I read it and when you talk about university degrees and education, I must tell you that I am deeply concerned that our young people in economics, they are not taught the right lessons. When you take a graduation course in economics at leading business schools today, it is just an exercise in mathematics. That is not the way it works, these youngsters in economics are not even taught how an economic cycle functions from the beginning to the end. I realize that only when our own son went to university and he took economic lessons and things like that and what he showed me I was shocked. I think our fine schools are doing many things right, but they are also doing a lot of things wrong and economics is a very difficult science. It is not the science actually, it is a social science and therefore odd and it should be taught as a social science and not as a mathematical scientific idea. I think the problem really starts there.

Jim Puplava: A final question if I may, if you have viewed the world from your from your perch Felix, what worries you the most, and lastly what are you most optimistic about?

Felix Zulauf: Well what worries me the most is our next generation, we leave our children a terrible world that is over indebted and continues to move in the direction that we will end in chaos. I know from history that when you move in that direction that you could have development that will be very, very painful and could eventually also lead to war. That worries me the most. What makes me the most optimistic, the human being. The human beings have proven over time and time again that even if they where in the worst of all messes and chaotic situations, they eventually came out of it and the power and the hunger to improve the situation was always there. Usually it comes late; most often, it comes too late after a lot of the damage is done. But usually human beings have always turned around and improved the situation.

Jim Puplava: Well we will end on that optimist note, Felix I want to thank you for being so generous of your time. We have been speaking with Felix Zulauf; he is President of Zulaf Asset Management. Felix I want to wish you all the best and thank you so much for coming in the program.

Felix Zulauf: Thank you very much Jim, the best to you too and thank you for having me.

John Loeffler: Well theoretically, QEII comes to an end in June, but what after that. If we look at what is happening, asset markets are rising, the S&P is rising but unlike the beginning of QEI, oil prices are rising as well. So what is going to follow after QEII, Bill Laggner from Baring Asset Management is Jim’s guest in the next segment of the Financial Sense Newshour as it continues at www.financialsense.com.