DoubleLine’s Ken Shinoda welcomes back Gerard Minack, director of Minack Advisors, to get Mr. Minack’s outlook on the markets for 2023, including what Mr. Minack sees as the equity market’s overconfidence in the Fed engineering a soft landing. “We can’t have both the rate market being right and what it’s forecasting and the equity market being right and what it’s forecasting,” Mr. Minack says. “My base case is that we do get a recession that starts probably June quarter. If we (do), then the rate market is probably right to be expecting better easing in the second half of the year.” He then discusses the impact of the Fed’s push for a quick return to 2% inflation (2:43) and how the Fed’s inflation fight will hinge on loosening the labor market by 1% to 2% (4:47). If that were to happen, Mr. Minack notes, “There’s never been an increase in U.S. unemployment of more than half a percent without a recession.”
Messrs. Shinoda and Minack also look at, among other topics, the historic challenges of 2022 for high-level asset allocation (11:42), Mr. Minack’s outlook for equities earnings decline (15:49), a credit market that Mr. Minack sees as too complacent (20:14) and a betting man’s perspective on the Fed pulling off a soft landing (30:40). On the Fed’s challenge to loosen the labor market to get wages under control, Mr. Minack observes, “If you’re watching unemployment rate to drive your monetary policy, you really are driving the car by looking at the rearview mirror, because the unemployment rate is a lagging variable.”
The two close out the episode with Mr. Minack’s thoughts on the U.S. dollar and international assets (33:28), including what he sees as a declining dollar; why he is bullish on CapEx (for tangible stuff not for coding the next TikTok) (36:05); and commodities positioning (39:32). This episode was recorded Jan. 25, 2023.
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, firstname.lastname@example.org), 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.