DoubleLine CEO Jeff Gundlach hosted one of his popular webcasts this afternoon in which he discussed
“the economy, the markets and his outlook for what he believes may be the best investment strategies and sector allocations for the DoubleLine Total Return Bond Fund and Core Fixed Income Fund.”
The webcast is titled “Something for Nothing.”
Below is a summary of the call.
4:23: Gundlach says one reason perhaps risk markets have been supported in 2013 is shrinking deficits while Federal Reserve bond buying has remained constant.
4:30: Gundlach has been talking mostly about Obamacare for the first 15 minutes of the call. He is concerned.
4:41: Gundlach notes the first increase in household debt in Q3 2013 in years, says those who expect economic growth to plateau at higher levels in 2014 probably need that development to hold steady.
4:46: Gundlach says the unemployment rate would be 9.3% if those who dropped out of the labour force for reasons other than demographics since the crisis were still in the labour force.
4:48: Gundlach notes that the unemployment rate for those without high school diplomas has been falling in line with the decline in unemployment for college graduates.
4:51: Gundlach says a lot of people are getting worried about covenant-lite loans and other relaxation of lending standards in the corporate bond market. He says this will come back to haunt us at some point, but not as long as corporate profitability stays this high.
4:55: Gundlach says Fed stimulus will be with us longer than people think because there is no inflation.
4:58: Gundlach doesn’t think it’s right to favour high-yield bonds over dollar-denominated emerging market bonds, given recent EM underperformance.
4:59: If rates go higher, Gundlach thinks the pension community is going to be a buyer.
5:02: Gundlach says a basket of Asian currencies seems to be a good short-term leading indicator of U.S. interest rates. When Asian currencies weaken, usually rates rise.
5:04: Gundlach says from a long-term perspective, there isn’t a compelling case for EM equities relative to U.S. equities.
5:21: “One of the problems with this whole Japanese thing is that Mr. Abe is losing his popularity.” — Gundlach
5:28: Gundlach is bullish on non-agency mortgages.
5:28: Gundlach says Bitcoin is just a wild, speculative rocket-shot to the moon, and it’s living in a world of its own just based on speculation.
5:29: Gundlach says he thinks there is causality between the rise in real estate prices and the decline in gold prices.