Gundlach Doesn't Think Yellen Wants To Raise Rates

Jeffrey GundlachREUTERS/Brendan McDermidJeffrey Gundlach, star bond investor and head of DoubleLine Capital, speaks at the Sohn Investment Conference in New York, May 8, 2013.

Jeffrey Gundlach of DoubleLine just wrapped his latest webcast about the markets and the economy.

Gundlach talked a bit about the rally in bonds this year, and wondered why market participants never ask if they should be buying the rally in bonds the way people ask about buying the rally in stocks.

Gundlach also addressed the labour market, which he noted Fed Chair Janet Yellen is singularly focused on, and says there is no real reason for the Fed to raise rates if the purchasing power of the bottom seven deciles of wage earners is declining year over year.

The Fed is also focused on inflation, and while headline inflation remains low, an outsized portion of these modest increases has come from housing, which Gundlach says impacts middle class wage earners, again giving the Fed no real incentive to raise interest rates.

The housing market, which Gundlach hasn’t viewed all that positively over the last couple years, also appears to be in a tough spot, as new home sales have flatlined. The price of housing has also increased while the home ownership has declined. “When you look at this, the housing market actually appears quite sick,” Gundlach said.

Gundlach also addressed Europe, saying that there is some contagion risk with regard to a potential break up of the economic bloc given the recent momentum behind the Scottish movement for independence. Gundlach does not, however, think the Scottish vote will be a “Yes,” and sees significant movement in financial assets due to this fear is unlikely.

The presentation, called “Fixed Income Playbook,” followed an appearance from Gundlach on CNBC earlier this morning, where he talked about his thoughts on the Treasury market, Apple, and the Japanese yen.

See Gundlach’s Entire Presentation Here ยป

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