Bond king Jeff Gundlach on imminent recession, Fed outlook, rates: VIDEO
CNBC’s Scott Wapner had Jeff Gundlach on this week to run down the near-term economic outlook, and there are several key topics he covered:
– Chances are 50/50 that we’re done with Fed rate hikes.
– Credit contraction concern is at core of imminent Fed pause.
– A lot of consumers realized banks aren’t paying them the 4% the market suggests they should get on their deposits, and this might cause deposits to move into other investments.
– Fed must either fight inflation or recession. You can’t do both.
– Fed was late to hike rates last year.
– Clubber Lang in Rocky series predicted pain, and Fed chair Powell has said the same.
– Now that pain may come in the form of a recession in a few months.
– 3.37% seems to be the floor for the 10yr note for now.
– [If this is the case, we may stick in the mid-6% range for mortgage rates.]
– The economy is clearly weak. Almost everyone agrees a recession is coming, the question is how severe.
– High Yield bond market is shut down. Spreads on junkier stuff have blown out, which indicates health of credit system overall isn’t great.
– We’re right at that point where conditions are getting tougher.
– Stocks have had zero return in 2 years, which has been better than bonds.
– If we have a recession, the Fed must act very dramatically.
– Quantitative easing is a tool of the Fed that they might not be as useful this time.
– But the Fed will abandon the inflation fight and pause or ease rates.
– Social Security will run short on money in 9-11 years without a recession, and benefits could be cut 20%.
– With a recession, this could happen in 5 years.
Link to full video is below.
DoubleLine CEO Jeff Gundlach was on CNBC this week to discuss the outlook, and when he talks you need to listen.
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