Jeffrey Gundlach Predicted In May That One Sector Of The Stock Market Would Tumble -- He Was Right

XhbYahoo FinanceHomebuilders have been getting crushed as the S&P 500 (GSPC) ticked higher.

Jeffrey Gundlach is having a pretty great year. His extremely contrarian forecast that US interest rates would fall has been spot on.

However, Gundlach also deserves some credit for his May 5 call: short the homebuilder stocks.

Specifically, he recommended shorting the XHB, and exchange-traded fund (ETF) of publicly traded homebuilders.

The XHB closed at $US28.61 on Friday, down 9% from its May 5 close of $US31.35.

Meanwhile, the S&P 500 is actually up 1% during that same period.

Gundlach cited the soft incoming housing market data. And even though the XHB was already off of its high, he was warned that the outlook for homeownership was bleak.

“Renting is more appealing across all age groups, all parts of the U.S., city, suburb, small town and rural,” he said.

Gundlach wasn’t available for comment on Friday.

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