DoubleLine Portfolio Manager Ken Shinoda welcomes firm CEO-CIO Jeffrey Gundlach for a special edition of Channel 11, recorded the morning after Federal Reserve Chairman Kevin Warsh’s second FOMC press conference, which Mr. Gundlach does not mince words about. Citing CNBC’s Steve Liesman, he calls it a case of “so much said, so little heard,” pointing to the 2s30s U.S. Treasury yield curve move from negative 108 basis points (bps) to positive 100 bps as proof the long end is punishing the Fed for talking tough on 2% inflation without acting on it. Mr. Gundlach believes a September hike is now a high-probability outcome, the only real way for Chairman Warsh to “get the stain off” the credibility he spent in this press conference.
On positioning, Mr. Gundlach reiterates his long-standing playbook: stay short and up in quality; avoid the long end entirely; and lean into structured products like legacy RMBS and asset-backed securities, which he thinks may now be safer than Treasuries given how much home equity has built up. He’s also more constructive on the plain-vanilla high yield bond market than he’s been in years, arguing that the riskiest borrowers have migrated to private credit and bank loans instead, leaving public junk bonds in comparatively better shape. On private credit itself, he returns to a familiar and pointed example, walking through the math behind a fund’s markdown from 100 to 81 and noting that under any honest scenario, some portion of the portfolio has to be worth close to zero.
Mr. Gundlach closes with a wide-ranging set of market calls: He sees Treasury issuance-fueled AI bond deals and record passive fund inflows creating a dangerous, price-insensitive dumping ground for overvalued IPOs; reiterates his preference for equal-weighted over cap-weighted equity exposure; and lays out the case for TIPS, gold near $4,000, broad commodities and emerging markets equities, which he believes could still see full mean reversion in valuation versus the S&P 500.
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.
Mr. Gundlach is CEO of DoubleLine. In 2011, he appeared on the cover of Barron's as "The New Bond King." In 2013, Institutional Investor named him "Money Manager of the Year." In 2012, 2015 and 2016, he was named one of "The Fifty Most Influential" in Bloomberg Markets. In 2017, he was inducted into the FIASI Fixed Income Hall of Fame. Mr. Gundlach is a summa cum laude graduate of Dartmouth College, with degrees in Mathematics and Philosophy.
