Felix Zulauf was interviewed by Barrons last week. Every fall Barrons invites a lot of the Roundtable members to share their views for the remainder of the year. As I’ve mentioned previously, Zulauf, Marc Faber and Fred Hickey are worth paying attention to.

It appears as though Zulauf has softened his stance in the last few months. First of all, he made no mention of any country leaving the Eurozone. Previously, Zulauf expected that at least 1 country would leave the Eurozone in 2012 and he also stated that it could be as many 3 countries leaving the Eurozone. However, in October 2012, Zulauf did not mention any risk of the Eurozone breakup.

Interestingly, Zulauf was bulish about Japan. This is the first time I can remember that Zulauf has expressed any optimism about Japan.

The Bank of Japan and the government have battled but are coming to a resolution. The government is introducing some reforms that the BoJ wanted, and the BoJ eventually will cooperate by weakening the yen. The root of the changes is the deterioration in Japan’s balance of payments, which will allow the Bank of Japan to weaken the currency more dramatically than otherwise would be the case. A weaker yen will help the Japanese economy and particularly export industries. The yen trades at 79 to the dollar. It could fall to 100 in the next two to three years.

Of course many investors including Kyle Bass and Hugh Hendry have been waiting for the yen to fall but it has consistently rise versus the dollar. Many value investors have wasted a better part of a decade trying to call an inflection point in Japanese equities. The story is always the same – the BOJ will succeed at creating asset inflation, bondholders will rush out of JGB’s and into stocks and a lower yen will boost Japanese multinationals.

Zulauf also made another contrary call in that he expects a sharp rebound in the price of Chinese shares.

“The biggest recorded credit and investment boom in history has gone bust. The Chinese stock market has given back almost 90% of its rally off the 2008 lows. After the government changeover in mid-November, expect some economic stimulus. That could help Chinese stocks rally. In the next six to nine months, Chinese stocks are an interesting bet, and Chinese exchange-traded funds such as the FXI and the GXC could be good vehicles.”

In January 2012, Zulauf was bearish on emerging markets and he expected a severe slowdown in China. Now he has changed his tune as the Chinese market has been battered in 2012.  However, it sounds like Zulauf is only advocating a trade in the FXI and not actually buying Chinese shares as an investment.

Of course, Zulauf continues to bullish on gold as he has been for a number of years. Zulauf correctly predicted that there would be a correction in the price of gold for the first 6-9 months of 2012. However he now feels as though this correction is over and it’s safe to buy gold bullion once again.

“Gold is in a secular bull market. The correction to the low-$1,500s is over. There is a lot of optimism in the market, and gold needs to come down a little. If Obama wins, the price could shoot up again. If Romney wins, the market could be weaker going into December, after which the price will rise. Next year, gold will go to new highs.”

Jim Chanos continues to be bearish on China.  In a recent interview with CNBC, Chanos said that 20% of his macro fund is still short the H shares in Hong Kong.

Chanos called the H share market a “roach motel.” Chanos said that he would not trust the accounting of any Chinese companies.

Chanos also noted that China is experiencing a typical credit boom as credit is growing 30% year over year.  Thus, how much more can China stimulate as their economy starts to slow?

Longtime China bull Jim Rogers had some harsh words for China bear Hugh Hendry over the weekend.

“Hugh has been dead wrong about China for three years now and China has not collapsed as he predicted, loudly, verbally and widely,” said Rogers.

Hugh Hendry has written scathing reports over the Chinese growth plan which he called unprecedented in 400 years of economic history.

However, upon closer examination, it is unclear whether Hendry has been dead wrong.

First of all, Chinese property prices are down 30% in some areas. Secondly, the Shanghai market is near the 2009 lows. Thirdly, commodity producers such as BHP and Rio Tinto are at multi year lows. Shorting all three asset classes would have yielded profitable speculations over the last three years.

Furthermore the economic slide in China may only be in the early innings. Perhaps, GDP in China will continue to contract as Europe and the U.S. enter a recession. The export model may stagnate in the next two years as the indebted West is forced to de-leverage.

Jim Rogers sees the slowing growth in China but he does not see an economic collapse on the horizon.

“We have many problems facing the world and are set for some very serious problems in 2013 and 2014,” he said. China reported GDP growth of 7.6% in 2012, its slowest growth rate since 2009, and last week Premier Wen Jiabao issued a warning on the country’s stability and economic prospects.

But Rogers said these developments are just evidence the Chinese government is sticking to its long-term plan for the economy. “For three years China has announced publicly, loudly and clearly it is trying to slow its economy down. They wanted to pop their real estate bubble and do something about inflation so they have slowed things down. What is the surprise here? What is the news?”

Legendary hedge fund manager Jim Chanos is more bearish on China these days.

The most outspoken Sino-Skeptic is Wall Street short-seller Jim Chanos, who over the past several years has placed negative bets on the stocks of major Chinese banks, real-estate developers, and mining concerns, like Australia’s Rio Tinto (ticker: RIO) and Brazil’s  Vale (VALE), which are major suppliers to the Chinese fixed-asset orgy. Never one to mince words, Chanos contends that China is headed for a hard landing of epic proportions because of its shaky financial system and an imminent collapse in its property market, which undergirds the entire economy. “I’m being conservative when I say that the coming bust in China’s real-estate market will be a thousand times that of Dubai,” he told Barron’s.

The argument is nothing new for Chanos. He first revealed his bearish position on China in 2010. Most people think he was either wrong or early. However, Chinese shares have underperformed the broader market over the last two years.

Every investor inspires to be  a “contrarian” yet most fall victim to groupthink. The paid to play crowd are often more interested in saving their career than with absolute performance. Subsequently, money managers often have near identical portfolios.

One of the great contrarian indicators is the Barrons Big Money poll. This survey gives you insight into what America’s portfolio managers see ahead.  At the bottom of this post I have the Barrons Big Money Poll from 2008 where almost every manager missed the financial crisis that was brewing.

A few observations from your esteemed editor:

First of all, money managers detest bonds, particularly U.S. Treasuries.  Only 2% of money managers are bullish. This is quite remarkable when you consider that bonds were the place to be in 2011 and that bonds have been in a secular bull market since 1982! The stock market and the bond market have risen in unison in 2012. This is a rare occurrence and it usually means that one segment of the market (usually equity investors) is wrong.

The second most hated segment of the market is cash. Only 5% of money managers are bullish on cash. I would presume that this means that mutual funds have low cash levels and hedge funds are margined to the hilt. The consequences of this bearishness no cash is that there may be no cash available to propel the markets higher.  Cash has been a good investment over the last decade yet investors hate it.

The last are of the market that is hated right now is gold.  39% of money managers are bearish on gold. This is remarkable given that gold has been in a secular bull market for 11 years.  Gold is still positive for the year. Gold stocks on the other hand have been a disaster.

The takeaway from the Barrons poll is that money managers are straying from secular bull markets in order to chase momentum favorites.  Perhaps a portfolio of utilities (XLU), bonds (IEF), gold (GLD) and cash is the right strategy for the summer ahead.

If we are looking for short candidates, Asian stocks and LatAm stocks appear to be the best place to start. Only 8% of money managers are bearish on LatAm stocks. Who is left to buy more shares of EWZ and GXG?

Here is the Barron’s Big Money Poll from 2008 only 6 months before the worst financial crisis since the Great Depression.

It’s incredible that most money managers think that they deserve 2/20. Only 12% were bearish. The list of their favorite stocks reads like a list of the walking dead with AIG and RIMM.  The favorite sector was the financial sector where stocks lost about 75% in the ensuing 18 months.

This is why the Barrons Big Money Poll is a wonderful contrarian indicator.