Veteran macro investor Felix Zulauf has updated his market outlook, confirming that his earlier predictions for 2025 have largely come true—stocks peaked early in the year, corrected by 15–20%, and volatility surged alongside growing geopolitical tensions. Now, he believes the worst may be behind us, and a global economic reshuffle is laying the groundwork for a long-term rally . According to Zulauf, the S&P 500 has already bottomed near 4,835 , just shy of his projected 5,000 level. He anticipates a brief retest in May , potentially dipping as low as 4,500 , before a sustained recovery takes hold. If recession is avoided, the index could climb steadily from mid-2025, with a bullish target of 7,500 by late 2026 or early 2027 —a gain of over 50% from current levels. Zulauf’s confidence is based on several unfolding factors: Global pessimism has peaked , with Bank of America’s fund manager survey reporting the most bearish sentiment in 25 years . Treasury yields have spiked (10-year at 4.6%+ ), reflecting structural changes in capital flows, not just Fed policy. Foreign holdings of U.S. Treasuries remain massive at $7.2 trillion , making the U.S. vulnerable to bond market shocks during geopolitical stress. The U.S. dollar index (DXY), once at 110 , is now expected to dip below 98 in the coming weeks, signaling a multi-year decline . Zulauf stresses that 2025 is a transition year where investors must stay tactical. “Sharp pullbacks should be used to buy into long-term positions,” he says. "When your gut tells you to sell, that’s usually the time to start buying." Looking ahead, he sees a global rebalancing of capital and economic influence . The U.S. won’t dominate investment returns as it has in recent years due to unsustainable deficits and geopolitical pushback. He expects foreign markets to outperform , led by European equities (especially Germany, as it begins massive defense and infrastructure spending) and Asian stocks—despite geopolitical risks. In terms of sectors, Zulauf is: Bearish on long-duration bonds , seeing 10-year Treasury yields breaking 5% by 2026–27 . Bullish on commodities , especially crude oil , which he sees hitting $150–$200 by 2027 after bottoming near $60 . Long-term bullish on gold , with a projected peak near $3,400 before a temporary correction to $2,600–$2,700 . Despite Western hesitation, global central banks are aggressively accumulating gold as trust in the U.S. dollar wanes. He warns that AI hype is fading , and the mega-cap tech "Magnificent 7" stocks are unlikely to lead the next leg of the bull market. Instead, investors should look for U.S.-based industrials , companies with minimal international tax arbitrage, and resilient business models aligned with domestic growth and trade realignment. While risks remain—especially a potential global recession in late 2025 —Zulauf concludes that the worst is likely priced in. “By fall 2025 , investors should be fully invested,” he advises. “The setup is there for a strong 18- to 24-month bull run that will reward those who stayed patient during this volatile transition.”
