DoubleLine CEO Talks Stock Market Tussle, High Yields And Bitcoins 25% Increase
The Chief Executive Officer and the CIO of DoubleLine Capital LP, Jeff Gundlach, who manages more than $200 billion, gave forecasts and discussed markets and investments for 2019.
During his annual webcast, “Just Markets”, the executive indicated that there would be an increase in yields that could affect the stocks. The revenue curve is expected to experience a sharp increase this year.
Although he cautions investors to do away with Bitcoin, he still believes that it could go as far as $5,000. The alleged bond king also advised investors to focus on companies that have solid balance sheets. It would not come as a surprise that most of the things Gundlach predicted have come to be true. For instance, the huge sell-off in the stock market in December.
Tussle Between Stocks And Rates
According to DoubleLine Capital CEO, 2019 shall continue being an unstable year in that higher yields are expected to be at war with the stocks. The stock market rates are expected to go higher as days go by.
He went on to emphasize what the bond market expects and how the narrowing agenda of the Federal Reserve is reflected in its dot plot.
The likelihood of an increase in the market-implied rate is less. Recently, the chairman of Federal Reserve, Jerome Powell, stated that central bank will be more tolerant with the monetary policy since it closely observes the economy.
The Index Fall
When Gundlach called on the enormous sell-off at the end of 2018, it was just what the stock market needed. He predicted in mid-December that the S&P 500 would sink even lower and surprisingly, by this time, it had fallen 11% from its unsurpassed high. He was convinced that it was a bear market.
One week later, during the eve of Christmas, his call came to pass. The index briefly plunged into the bear market territory thus going down by more than 20% from its intraday record high.
Since then, the market has rebounded. When the New Year began, the S&P 500 went up 2%, and this is said to have been driven by the trade talk assurances between the US and China.
Steepening Yield Curve
Contrary to conventional wisdom, Gundlach also predicts that the yield curve would steepen in 2019. Wall Street is very apprehensive about the possibility of an inverted yield curve. This could mean that there is a likelihood of a recession in the near future.
Over decades, inversions have been followed by recessions that last from a few months to two years
Waging On Bitcoin At $5,000
It may seem questionable but Gundlach predicted that Bitcoin crypto could increase up to about 25%. Previously he has been all against Bitcoin to a point of advising investors to get out of it. However, he still believes that it could make it to $5,000.
The alleged king-of-bonds also cautioned about the anticipated problem with corporate credit both on company and government level. Due to a drop in corporate credit, he advised investors to work with firms that have strong balance sheets.