DoubleLine Portfolio Manager Ken Shinoda on March 4, 2025, surveys 00:00 sell-offs in risk assets and rallies in bonds amid 00:38 “a massive change in sentiment around growth,” spurred by weaker-than-expected macro readings.
Highlights:
1:15 The Atlanta Fed GDP forecast, which calls for a 2.85% contraction in the first quarter. Mr. Shinoda cautions against overreacting to the estimate, as it was heavily influenced by businesses frontloading imports due to concerns over possible tariffs by the Trump administration.
02:08 Big rotation out of Magnificent Seven stocks, leading equally weighted large-cap equities to outperform the market-cap-weighted S&P 500 Index. Likewise, a possible collapse in “speculative fervor” might be signaled by reversals in crypto, Tesla shares and the ARK Innovation ETF.
03:07 “Trump trade” reversals, e.g., falling small-cap stocks, 10-year U.S. Treasury yield and U.S. Dollar Index.
03:41 Make Europe Great Again: Surveying equity performance across global markets year-to-date (YTD), Mr. Shinoda notes that European stocks are besting other markets, including the U.S.
05:43 Euro-dollar FX in the wake of Trump 1.0: a sign of things to come during Trump 2.0? “After the first Trump election, the euro sold off into the election and then started rallying again.” So far, euro-dollar “almost looks identical.”
06:34 Commodities off their local highs, except for natural gas, probably up on seasonal demand, and gold, which after a 25% gain in 2024 is up over 9% YTD. 07:15 A survey of Treasury yields.
08:45 Positive returns in February and 2025 YTD across the fixed income universe. “Finally, finally, finally,” Mr. Shinoda notes, “after underperforming Treasuries and corporate bonds during this sell-off of the last couple years,” Agency RMBS are outperforming “from the cheap valuations that we’ve noted here on Channel 11.”
10:08 A “dramatic change” in market expectations for future levels of the target federal funds rate since the end of 2024, as investors foresee economic weakness compelling more accommodation from the Federal Reserve.
Mr. Shinoda joined DoubleLine at inception in 2009. He is Chairman of the Structured Products Committee and oversees the non-Agency RMBS team specializing in investing in non-Agency mortgage-backed securities, residential whole loans and other mortgage-related opportunities. Mr. Shinoda is co-Portfolio Manager on the Total Return, Opportunistic Income, Income, Opportunistic MBS and Strategic MBS strategies. He is also lead Portfolio Manager overseeing the Mortgage Opportunities private funds. Mr. Shinoda is also a permanent member of the Fixed Income Asset Allocation Committee, as well as, participating in the Global Asset Allocation Committee. In addition, he hosts DoubleLine’s “Channel 11 News” (Twitter @DLineChannel11, dline11@doubleline.com), a webcast series that provides market insights and commentary with peers and industry experts. Prior to DoubleLine, Mr. Shinoda was Vice President at TCW where he worked in portfolio management and trading. He holds a B.S. in Business Administration from the University of Southern California and is a CFA® charterholder.
