Doubleline’s Jeff Gundlach is on CNBC.
He was the subject of a recent Barron’s profile (see here).
We’re covering live.
He’s focused on the incredibly slim spread between high-yield debt on Treasuries.
There WILL be defaults on high-yield one of these days.
The 4+% spread just isn’t that much, especially when you figure that average default rates will revert to some normal rate.
“For now high yields will give a decent investment return, but you won’t outperform Treasuries.”
High yields won’t collapse imminently. It will just happen over time, probably around 2013.
“The pieces are coming into place for a top.”
- The fundamentals are bad.
- Nobody buys for the fundamentals. They buy for low tax rates and the history of low defaults.
- It’s just like subprime. They’re owned for a technical reason (in the case of subprime it was that inappropriate AAA-rating).
- Gundlach is agnostic on whether there will be a crash or not.
- Kaminski asks what he thinks about people who want to hold their munis forever, and not go if they’re underater. Gundlach: “An investor is a trader who is underwater.”
- And all those people who think they’re going to hold to maturity will dump.
- Gundlach likes long-term Treasury bonds. See 10-year going to 3.25%.