Gundlach's Bond-Market Inflection Point
https://www.bloomberg.com/gadfly/articl ... ping-point
They can do this by reducing the overall durations of their portfolios, reducing the number of bond holdings and putting that money into cash reserves.
Gundlach has also stuck to his position that Donald Trump will be elected President, which he feels will lead to increased fiscal stimulus.
This in turn could lead to increased government borrowing and then cause investors to clamor for higher yields, and he says that he sees this happening already.
"The trend is your friend. The dollar went up 30-plus percent from lows in 2011. That's a big vote for a currency. Plus, President Trump does not want a stronger dollar."
Gundlach said he does not see stocks under severe selling pressure with the 10-year yield around 2.25 percent. But if rates rise significantly, that will likely touch off a selloff in stocks during the summer, Gundlach said.
On gold, Gundlach said he sees "another leg up" in prices and that "it is not a time to give up on gold."
Interest rates should rise and stocks should temporarily fall this summer
Gundlach also said he expects gold to "have another leg up" and oil prices to trend lower over the longer term because of improved technology for extraction.
“All recession indicators are flashing no recession, which means it’s priced in”.
Gundlach also said during the webcast that commodities may be one of the best investments this year.
A year ago, Gundlach said:
1. 10-year Treasuries would “almost for sure” approach 3%, a level that would signal an end to the multi-decade bond bull market. The 10-year peaked at 2.6258% in March and climbed back above 2.5% on Tuesday.
2. The Federal Reserve would raise rates two or three times in 2017 and needed to be “less relaxed” because of the rising risk of inflation. The Fed lifted rates three times, while consumer price inflation has been running at about 2%.
3. Investors should diversify their equity holdings beyond the U.S. to countries such as India and Japan. In dollar terms, Japan’s Topix returned 27% and India’s NSE Nifty 50 Index surged 39%, compared with a 22% gain for the S&P 500.
He cited weak chart patterns, a rising deficit, signs of an economic slowdown and the Federal Reserve's shrinking balance sheet.
On currencies, Gundlach said, "I still believe pretty deeply that the next big move in the dollar is down." He cited those same deficit concerns.
But he does like one play for the long term: emerging markets.
"I think you''ll do much better" owning stocks outside of the U.S.
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