Jeffrey Gundlach Talks Macro and Markets with P&I Editor-in-Chief Jennifer Ablan

In a Jan. 24, 2024, interview on Twitter Spaces with Pensions & Investments Editor-in-Chief Jennifer Ablan, DoubleLine Capital Founder and CEO Jeffrey Gundlach discusses momentum-ruled markets, his expectation of recession in 2024, suspicious patterns in labor market statistics, which investments to buy and what to avoid in the current market, and the coming restructuring of the U.S. government’s $210 trillion in unfunded liabilities. Here are a few of the interview highlights.

(4:22) “Grabby markets”: In the wake of Federal Reserve Chair Jerome H. Powell’s apparent policy pivot on Dec. 13, 2023, markets have turned “grabby” with “people lifting every offer” and new-issue deals oversubscribed by ratios of 20x-to-20x demand vs. supply.

(6:28) Suspicious patterns in jobs and employment market data released by the U.S. government, tending to show a healthier labor market than is actually the case.

(11:02) “Investors are into this zone where it’s sentiment driven rather than fundamentally driven, the proof statement being the run-up of the S&P 500 in 2023 amid a mere 1% increase in S&P 500 earnings.

(14:53) The Federal Reserve’s tardiness in awakening to inflation, its policies over the past two years and the fact that real interest rates are now high relative to inflation. The latter factor and declining inflation will cause the Fed to cut rates this year.

(17:42) The acceleration of the national debt spiral, now at $24 trillion, while maturing debt is being rolled into and new debt issues into rising interest rates. The U.S. government’s “liabilities are bigger than the assets. We’re a hedge fund that’s dreading a margin call.” He notes that the Fed’s leaving the fed funds rate unchanged would increase “the cost of servicing the Treasury debt by a huge percentage of tax receipts.”

(24:47) Jeffrey Gundlach’s answer to Jennifer Ablan’s question “What do you buy in this environment, and what do you avoid?”

(29:36) The “really bad contradiction” of buying Bitcoin, which Mr. Gundlach avoids even as a stand-alone investment, via exchange-traded funds.

(30:57) The attractiveness of gold given a world economic system in “really bad shape” and the likely inflationary future responses by governments in the developed world to that situation.

(31:57) The future restructuring of the U.S. government’s unfunded liabilities, which now total $210 trillion.

(35:36) The outlook for the U.S. presidential election.