Wednesday, September 9, 2015

Doubleline's Jeff Gundlach Talks About Rate Hikes and Oil and Trump and Puerto Rico and...frankly you can't get the guy to shut up

From ValueWalk:

Gundlach Passionate About Fed Rate Hike
Jeffrey Gundlach, chief executive and chief investment officer at Doubleline, has rather strong opinions that are similar in their declarative nature to proclamations of Donald Trump, whom he praised in a Tuesday webcast. Throughout the presentation Gundlach inserted his unique brand of market insight, such as predicting that investors in Puerto Rico might receive 100 percent of their investment back, alongside strong declarations that one strategy or viewpoint was superior to another. But Gundlach saved his most significant proclamation for Fed Chair Janet Yellen. 
Gundlach: “Dammit, Janet, don’t raise rates”“Dammit, Janet, don’t raise rates,” Gundlach implored with a commanding tone in his voice. He then launched into reasons why the Fed should not hike, challenging a Bloomberg report that claimed the bond market had given the “all clear” signal to raise rates. He pointed to a Fed funds futures chart showing a declining prospects for a rate hike, now near 28 percent, and spoke to technical truth: “If one were to look at that chart they would say it is in a downtrend,” pointing that the odds of a September rate hike persistently decreasing. 
Reasons that the Fed should not hike interest rates now included nominal gross domestic product currently under 4 percent, commodity prices looking worse than sickly, emerging markets tanking and the junk bond market likely imperil in a rising rate environment.  Gundlach said if the Fed did tighten it would deteriorate financial conditions. He pointed out that Fed tightening often occurs when nominal GDP is above 4 percent at least. 
Rumors over the end that the Fed is more likely than not to hold off a September rate hike spurred stocks Monday, as was noted in the question and answer portion of the broadcast. Would the lack of a rate hike September 17 propel stocks?  Gundlach answered that in the absence of a Fed rate hike in September the stock market would likely take its cue from China. When considering efforts to tame markets with manipulative measures, he said the more you try to keep things smooth, the harder the ultimate crash could become, apparently contradicting his thoughts about the Fed raising interest rates off the zero level. While he was confident in his Fed hike comments and used historical comparisons, he failed to seriously address the fact interest rates would be rising off zero, a historical oddity that places historical comparisons in perspective. 
Gundlach: Oil will modulate near $55 but won't rallyThe price of oil is often viewed as a proxy, to certain degrees, for future economic strength. The topic has been controversial, as the likes of Morgan Creek’s Mark Yusko have called for oil to travel in the $30 range while JPMorgan is anticipating strength. Gundlach sides with JPMorgan Chase & Co. (NYSE:JPM), as he looks to oil reaching $55 per barrel but not rallying to a significant degree past that level....MORE
Previously on Gundlach!:

Interest Rates: "Jeffrey Gundlach’s Surprising Forecast"

"Jeff Gundlach: "If Oil Drops To $40 The Geopolitical Consequences Could Be Terrifying""

Gundlach: CPI and WTI

Gundlach's New Presentation on Oil, Bonds, 2015: "This Time Is Different"

Let's Get Ready to Rumble: "Gross Vs. Gundlach: Who Has More Skill?"

10-Year Treasury Yield Plunges Below 2% On Weak Economic Data"
Just to be clear: we are not Jeff Gundlach fanbois.
In fact if the allegations in "Latest Twist in the Jeffrey Gundlach Bonds, Drugs and Porn Litigation" are true you might not even want to have a beer with him