Here's The NEW Jeff Gundlach Trade

yen

Photo: Wikimedia Commons

Jeff Gundlach hosted another one of his popular webcasts to DoubleLine Funds clients.And everyone always listens for his trading recommendations (See: long Spain, short U.S. and long natural gas, short Apple)

And during last night’s call, he unveiled another controversial trade:

Go short the Japanese yen and long the Japanese stock market.

He believes Japan will pursue aggressive currency debasement in its effort to stimulate the economy.

During his presentation, he provided 9 charts that supported his view on this trade.

Japan has an incredibly heavy debt load

The budget balance is around -7.6% of 2012 GDP

Meanwhile, the birthrate has been falling and the population is ageing

Since last year's tsunami, interest in nuclear energy has collapsed and energy imports have spiked

Surging imports have caused Japan to fall into a trade deficit

Japan's stock market has underperformed the US stock market for years

Japan has a positive real interest rate (unlike the US) which gives them room to pursue more easy monetary policy

Japan's dividend yield is higher than the interest income offered by Japanese bonds

All things considered, Gundlach believes there's a big opportunity if you go short the yen and long the Nikkei

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