About Jeffrey Gundlach
Jeffrey Gundlach, CEO and CIO of DoubleLine Capital, has been a frequent commentator on financial markets and Federal Reserve policy. He has drawn comparisons between current conditions in private credit markets and the financial alchemy that preceded the 2008 mortgage crisis, citing a prominent fund whose loan portfolio was marked down from 100 to 81 as a sign of trouble. Gundlach has described the current environment as one where "hope is a very poor investment strategy" and has advised investors to avoid weak credit, momentum-driven U.S. stocks, and long-term government bonds, while favoring emerging markets and equal-weighted U.S. equity strategies.
Regarding the Federal Reserve under new Chair Kevin Warsh, Gundlach has expressed cautious optimism, stating he believes Warsh "will be a better fit the chair" than Jerome Powell. He characterized Warsh's debut press conference as the start of a new era, noting that Warsh repeatedly emphasized "We will deliver price stability" and that his creation of five task forces suggests no rate changes until at least the fall. Gundlach has also said he believes there is "no chance" the Fed will cut rates in 2026 and that he would bet on a rate hike instead. He has warned of a potential crisis in the long-term bond market similar to the UK's 2022 gilt crisis and has described the current stock market as "very, very high," while noting that mega-cap companies selling shares suggests a "hype cycle on steroids" reminiscent of the year 2000.
Source: AI-verified profile updated from Jeffrey Gundlach's recent appearances.
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Transcript (6 segments)
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Host0:07
We are back with DoubleLine Capital. Under, death, or to pick up on the task force? I was on the fence about Kevin Warsh and I saw him speak at an event and had a chance to talk to him a bit and he blew me away with his thoughts and ideas. I think the task force, he talked about buying time, not only allow him to buy time but redo the playing field, he goes by the status quo, they would have to hike rates right now. If they reimagine, better sources of data, more efficient data, inflation versus PCE core, we may be in his mind, closer to the 2% target already. So I think he wants to change the apparatus and then go from there.
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Jeffrey Gundlach0:59
I think that's right, but what you said is important. If you look at the chart created, I think it was created by J.P. Morgan Asset Management, but they took the chart on the prices paid in manufacturing employment. And as you'd expect, low prices paid and employment, he would be at the lower left of that chart. He would think the Fed would ease all the time because you have no inflation and weak employment, and that if you have high employment, you think they would tighten. One thing I enhanced with one idea and this was on my X feed and it showed the chart and it's fascinating. During Volcker in the 80s, 82 twice and 85, you had hiking with the lower left, low inflation and low employment hiking because they wanted to get rid of inflation. The only examples in the upper right are Arthur Burns basically being into over easing, and there's only one dot in the upper right where there was an ease. So Volcker was his own person. So where we sit right now was in the upper right, should be hiking, not thinking about easing. All things are not equal. New sheriff in town, the Fed, and the like, the fact he's doing new ideas. I can prove the Fed has been following the two-year. There's no need to listen and bow. I think you will not follow the two-year, and that's how he got rid of inflation. That's 15% late 70s, early 80s. He hiked rates to 20% when the two-year was at 15 and still at 15, he dropped rate to 14 and a half. So he was leading the two-year, not following. And I like the idea we have someone that's not just automatic, and I am optimistic he will be a better fit as chair.
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Host3:51
I've got three minutes to go. I'm much more obstructed. Ask about the topic: Does Kimi K3, the leapfrog of this technology? Number one, according to the government, intervene? Some Republicans say they stole the information from Americans and put a layer on top and then fell back to our companies, and that's not capitalism. Where do you come down on this?
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Jeffrey Gundlach4:20
I don't think that should be allowed. My uncle made the commercial photocopier and he spent the last 20 years of his career fighting the Japanese dealing all of their photocopy technology. They basically, he had to go to Tokyo and sit in trial, and what they were doing was taking every exact thing exactly the same, turning one part metal to plastic, and that's it. He was miserable about that. And I think that's what the Chinese are doing, and it's not surprising because the Chinese have so many students in our university system trained in these technologies and they go back and share the information with the Chinese companies. Clearly it's something that needs addressed.
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Host5:08
Before I let you go, what do you see markets going second half of the year?
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Jeffrey Gundlach5:13
It's an interesting situation. Stocks are all over the place, particularly single-name stocks in crazy volatility. And meanwhile, bonds are stable as a rock. Right now, my best indicator, hard to believe, ten-year Treasury, going back 40 years of .93, incredibly good indicator. Seven-day moving average of the GDP and German ten-year, I have time to go into why that works, but right now it should be 4.62. Right now it's 4.63, and there's no volatility for about two years now. So in bonds, you're just trying to avoid it at this time and learn something like the five-year Treasury yield spread to get around 6% bond portfolio. But I want nothing that is weak single B, I want things that are real honest-to-goodness credit fundamental. So it will be interesting. The stock markets probably start to rise as we go into earnings. I think we will get good stuff out of these companies, and that's why I think it started. People don't want to be short going into what's perceived to be a good earnings season.
