Hot Features
Premium
Register to chat with like-minded investors on our interactive forums.
Jeffrey Gundlach, CEO of DoubleLine: “We are not out of the woods”
Jeffrey Gundlach, dubbed the “Bond King”, has doubted the strength of the fledgling recovery in the US stock market after Covid-19 market sell-off in March.
Speaking to CNBC, the billionaire CEO of DoubleLine stated: “I’m certainly in the camp that we are not out of the woods. I think a retest of the low is very plausible. I think we’d take out the low.”
Having briefly plunged as low as 2,191.86 in March, the S&P 500 index has gained 30 per cent since. It was helped in part by Washington’s record-breaking $2tr (£1.6tr, €1.84tr) stimulus package and the Federal Reserve’s resumption of unlimited quantitative easing and unprecedented level of asset-purchasing.
The leading equity benchmark is now 16 per cent below the record high it reached earlier in the year.
In Gundlach’s eyes this brief surge belies the true state of the American economy. “People don’t understand the magnitude of the social unease at least that’s going to happen when 26 million-plus people have lost their job,” he said. “We’ve lost every single job that we created since the bottom in 2009.”
The investor revealed: “I did just put a short on the S&P at 2,863. At this level, I think the upside and downside is very poor. I don’t think it could make it to 3,000, but it could. I think downside easily to the lows or beyond.” But he added: “I’m not nearly where I was in February when I was very, very short.”
After his interview Gundlach took to Twitter to vent more of his disdain for the policies pursued by both the US government and the Federal Reserve: “The ‘shock-and-awe’ of the last six weeks’ (highly questionable) policies served its short term purpose. But I predict and fear its effect will soon wear off. If these policies work so well to get back to ‘normal’ we should not still need them.”
Signing off his tirade, the CEO of an investment management firm with almost $148bn in assets under management took aim at the leadership of companies rescues by the government, tweeting: “I doubt I am the only person frustrated by National-Debt-financed bailouts of companies that leveraged up large to buy back stock to levitate share prices to enrich shareholders and company executives.”
