Lifting a line from T.S. Eliot, DoubleLine Portfolio Manager Eric Dhall surveys a cruel start to April for stocks (0:23) and other risk assets, as shock over Washington-imposed tariffs and fears of a trade war sent the broad equity market into a correction and tech into bear land. The sharp worsening in growth outlooks also erased most of commodities’ gains YTD (2: 07). Prices on WTI and Brent crude plunging below resistance levels the “double whammy” of worsening growth expectations and the stunning decision of OPEC+ to triple oil production relative to increase expectations. The resulting flight to safety (8:29) rewarded investors in high-grade fixed income securities with price gains in U.S. Treasuries, Agency mortgage-backed securities and investment grade corporate bonds. Analyst Mark Kimbrough (13:04) goes through the week’s macro data, including unemployment readings for March that might have buoyed risk markets, but for forward-looking macro fears swamping the backward-looking data prints.
Turning to the Federal Reserve (24:51), Eric Dhall notes Fed Chairman Jerome Powell is in a tough spot. The markets want four fed funds cuts this year, but Powell faces prospects of both labor deterioration and higher inflation. “I think the Fed is going to sit on its hands in May,” Eric says, “and not do anything knee-jerk unless we get some really massive data prints.” Among the data prints for the week of April 7(33:00), Mark Kimbrough will be on the lookout for the Fed’s report on consumer credit borrowing (Monday), the NFIB small business optimism report (Tuesday), the March consumer price index (Thursday) and March producer price index (Friday).
Mr. Dhall joined DoubleLine in 2013. He is a Portfolio Manager on the Macro-Asset Allocation team where he works with portfolio management performing analysis and trading for derivatives-based and multi-asset strategies. Mr. Dhall’s research and analysis has contributed to the team’s development of DoubleLine’s smart-beta suite of strategies. Prior to DoubleLine, he worked at Capital Group performing quantitative analysis in fixed income. Prior to Capital Group, Mr. Dhall was an instructor in finance at the UCLA Anderson School of Management and a research instructor at the UCLA Samueli School of Engineering. Previous to that, he worked in International Finance at Gulf Machinery Company. Mr. Dhall holds a B.S. in Physics with a secondary emphasis in Business from the University of California, Berkeley and an M.S. in Financial Engineering from the UCLA Anderson School of Management.
Mr. Kimbrough joined DoubleLine in 2012, where he worked primarily on Agency Mortgage Backed Securities and the Fixed Income Asset Allocation process as a member of the Risk Analyst team. He transitioned to his current role in 2019 where he serves as an Analyst on the Macro Asset Allocation team. Prior to DoubleLine, Mr. Kimbrough was at Western Asset Management working on systems monitoring and development within the Risk Department. He holds a BS in Business Administration with a concentration in Real Estate Finance and a minor in Economics from the University of Southern California. Mr. Kimbrough is a CFA® charterholder.
