Billionaire bond fund manager Jeffrey Gundlach is concerned the US is headed in an ‘appalling’ direction
‘The Bond King’ talks markets, the Fed, border crisis on ‘Making Money’
DoubleLine CEO and CIO Jeffrey Gundlach, also known as 'The Bond King,' discusses the Fed, bond market potential and the Biden administration on 'Making Money.'
Giving his take on the state of the markets and the U.S. economy, DoubleLine CEO and CIO Jeffrey Gundlach, also known as "The Bond King," warned America is headed in an "appalling" direction on "Making Money with Charles Payne" Thursday.
"I just find it appalling that we wring our hands over the tragedies that occur because there's shootings of six or eight or 15 people, and that's horrible, and it gets a lot of play in the mainstream media," Gundlach told host Charles Payne. "But people are dying of fentanyl by very large numbers every single day."
"Why don't we stop it?" he continued. "And the only answer to that question that I can come up with is because we don't want to. And that's an appalling answer because we're allowing all of these deaths."
Gundlach had penned an open letter to President Biden on Twitter in October, calling for his administration to address the border crisis and illegal activity taking place along it.
BILLIONAIRE BOND FUND MANAGER JEFFREY GUNDLACH WARNS OF REAL RECESSION IN 2023
"Dear President Biden, please get tough on fentanyl now," he tweeted. "It is a far more urgent issue than crack ever was, which you focused on decades ago. 300 Americans dead per day on average."
After Biden’s first visit to the border this week, Gundlach voiced disappointment that the president didn’t urgently address fentanyl deaths.
"We know that it's coming through Mexico, the Mexican border. We know that it's coming out of China, and yet we don't do anything about it. And I just have to scratch my head and ask the question, ‘why are we allowing all of these deaths due specifically to this fentanyl?’" the CEO posited. "I just wish that we really cared about some very substantial problems, instead of focusing always on multi-trillion dollar spending bills that nobody reads."
Jeffrey Gundlach, co-founder and chief executive officer of DoubleLine Capital LP, speaks during the Sohn Investment Conference in New York, U.S., on Monday, May 6, 2019. The conference gathers top investors from around the globe for a day of fresh m … (Photographer: Alex Flynn/Bloomberg via Getty Images / Getty Images)
Expanding on the Biden administration, Gundlach weighed in on Federal Reserve Chair Jerome Powell’s framework, saying a "radical shift" could come from the central bank under the right conditions.
"If the two-year Treasury [yield] drops below 4%," The Bond King explained, "I think you're going to see a radical shift in Fed rhetoric… There's so many recession indicators that are now flagging. The leading economic indicators is [sic] always very important. It's very negative… So the Fed just needs to get in line with the bottom line."
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Powell has, so far, rapidly raised rates to avoid a "long-term inflation problem," according to Gundlach, claiming that consequences of being "entrenched" by inflation could be worse than a moderate recession.
"The ultimate consequence of entrenched inflation and elevated inflation expectations leading to a really intractable problem," he said. "I really think he should stop worrying so much about the inflation problem at this point, though, because inflation is coming down and it's going to come down further for sure in the next few months… The question really is, what happens beyond that?"
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When it comes to rising interest rates, Gundlach advised investors to listen more to the bond market than the Fed and consider switching their portfolio from a 60/40 stocks-to-bonds split, to a 40/60 balance.
The DoubleLine CEO, known as 'The Bond King,' weighs in on what to expect from markets and the economy as the Federal Reserve tries to curb inflation, which remains near 40-year highs.
The Bond King cited "tremendous income" up for grabs on a mix of bonds, including high-yield bonds, corporate bonds, emerging market bonds and asset-backed securities.
"Thanks to the interest rate increases, bond portfolios are down in the 80s or even in the 70s on parts of the credit market. And it's very easy for bonds priced at 75 to go up to 85 or 95," Gundlach explained. "That sounds like the profit potential from the stock market. That's a good case. You have four times income flow and less downside, so bonds are really cheap compared to stocks."