Gundlach Sees 'Overinvestment' in Private Credit
DoubleLine Group CEO Jeffrey Gundlach says private credit today is analogous to the CDO market in the mid-part of the '00s at the Bloomberg Global Credit Forum in Los Angeles.
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Reckoning Is Coming for US Treasuries, Says Gundlach
DoubleLine Capital CEO Jeffrey Gundlach says a "reckoning is coming" for US treasuries. "You should be thinking about increasing your allocations to non-dollar investments," he said at the Bloomberg Global Credit Forum.
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'Sell America' is in full force for elite investor Jeffrey Gundlach, who warns of a US debt 'reckoning'
Investor Jeff Gundlach expressed caution over the US debt load in recent remarks. He said the "untenable" debt burden in America is heading for a "reckoning." The so-called "King of Bonds" said his firm is starting to introduce foreign currencies to its funds. Elite investor Jeffrey Gundlach is doubling down on the '"Sell America" trade. The DoubleLine Capital CEO, previously coined as the "King of Bonds," raised concerns about dollar-denominated assets when speaking at the Bloomberg Global Credit Forum on Wednesday. At the core of his comments is growing concern over America's swelling debt load, which is expected to get even bigger if President Donald Trump's "Big Beautiful Bill" eventually passes. "There's an awareness now that the long-term Treasury bond is not a legitimate flight-to-quality asset," Gundlach said, warning that a "reckoning is coming." He's referring to recent volatility in long-dated government bonds, like 30-year Treasurys, which haven't been trading like the sure-thing safe bet they're supposed to be. And Gundlach's firm has been putting its money where its mouth is. The DoubleLine CEO said his firm has been allocating more fund holdings to foreign currencies, and recommended that investors broadly start to think about boosting non-dollar-denominated holdings. Gundlach also sees the tide turning in the global stock market. "Things always take longer than people think, but it's happening in real-time, and the next one will be selective emerging market equities as opposed to the US," Gundlach said. Gundlach highlighted multiple unusual patterns that have been flashing in US markets this year. He sees these as signs that markets are likely concerned about the US debt, and that faith in US assets is starting to fade, he added. The US dollar and stocks. When the S&P 500 falls, the value of the dollar typically moves higher relative to other currencies, Gundlach said. But in April, when the S&P 500 tanked 20% amid the turmoil from Donald Trump's tariffs, the US dollar also weakened in value. The US Dollar Index, which weighs the greenback against a basket of foreign currencies, traded around 97.8 on Thursday, down 9% from levels at the start of the year. US Treasurys. When the Fed cuts interest rates, the 10-year US Treasury yield, which is tied to long-term interest rate expectations in the economy, typically falls. But the 10-year yield has climbed around 74 basis points from its low in September, around the time the Fed issued its first rate cut. "So I think what we have is recognition is that the interest expense for the United States is untenable if we continue running a $2.1 trillion budget deficit and we continue to have sticky interest rates," Gundlach said of the market shifts. Foreign investors have steadily added exposure to the US market over the last 17 years, Gundlach said, noting that the foreign net investment position in the US currently hovered around $25 trillion. "It's not inconceivable that some of the $25 trillion that came in just a couple — not even two decades — could go out," Gundlach said. "You should be thinking about increasing your allocations to non-dollar investments. And it's already working." Gundlach said there were several areas where investors could find safety away from US assets. Gold. Gundlach said he's continued to hold gold when it reached the level around $3,000 an ounce, and that he also holds stakes in gold miners. Previously, he's said that he believes gold could rally to as high as $4,000 an ounce as concerns swirl over tariffs, geopolitical conflict, and rising debt levels in the US. "I think gold is a real asset class. It's no longer for lunatic survivalists and wild speculators," he said. India. Gundlach also said investors should look into Indian assets, suggesting that India could see a similar run-up in economic growth that China has seen over the past three decades. India is riddled with many of the same economic issue China faced 35 years ago, Gundlach said, though be believed many of those issues can be fixed. "I don't know how long it will take, but that's one you buy," he said. Gundlach has consistently sounded the alarm on rising deficits in the US for years, and encouraged investors to pile into safe-havens. But forecasters on Wall Street have cast doubt on the "Sell America" trade, which is hinges on the idea that US will stop outperforming other assets in the world. JPMorgan and Morgan Stanley are among those who have said that they believe US assets will continue to dominate global markets. Read the original article on Business Insider Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
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Legendary fund manager sends blunt 3-word message on economy
Legendary fund manager sends blunt 3-word message on economy originally appeared on TheStreet. There's been considerable debate over the US economy this year. After delivering solid growth in 2024 that propelled the S&P 500 up 24%, worries have mounted that President Trump's tariffs scheme could fuel inflation, crimp spending, and send the economy, stocks, and bonds into a tailspin. Those favoring tariffs argue they're the best way to strong-arm manufacturing back to America, while opponents say they're inflationary impact couldn't happen at a worse time, given increasing will take time to determine who is correct. Factories take considerable time to build, and most economists think tariffs' inflation impact on business and consumer spending trends won't really be felt until later this year. There's also the chance that future trade deals reduce the tariff bite. However, that argument lost some of its strength this week when President Trump said that ongoing negotiations with China wouldn't result in lower tariffs on Chinese imports. Undeniably, this dynamic means there's significant uncertainty, and historically, that's not a great recipe for a strong economy or stock market. The potential for the US economy to cause problems for stocks and bonds isn't lost on billionaire hedge fund manager Jeffrey Gundlach, the founder of DoubleLine, a hedge fund with over $90 billion in assets under management. Gundlach recently offered a blunt assessment of the market's future, and given his professional experience since the mid-1980s, investors ought to consider his advice carefully. A flood of monetary and fiscal stimulus saved the US economy from a Covid-driven depression in 2020, but it sparked runaway inflation that forced the Federal Reserve to employ the most hawkish rate hikes since the 1980s when Fed Chair Paul Volcker won a war against skyrocketing inflation. The Fed's rate hikes worked, given that inflation has fallen below 3% from over 8% in 2022, but they've done so at a cost. The drag of higher rates has caused layoffs, lifting the US unemployment rate to 4.2% from 3.4% in uptick in joblessness prompted Fed Chair Jerome Powell to switch gears again, cutting rates last September, November, and December. However, those cuts have yet to improve employment meaningfully, and they've arguably set the stage for inflation to reassert itself. President Trump's tariff plans compound the worry over inflation. In February, he enacted 25% tariffs on Canada and Mexico. In April, he announced 25% tariffs on autos. While he's temporarily walked back the worst of his reciprocal tariffs, a 10% baseline tariff and a roughly 55% US tariff on China remain. Those tariffs pose a high threat to the US economy. Since China joined the World Trade Organization in 2001, the US and China have become increasingly entwined. Most US companies, including manufacturers, source goods from China, especially automakers and retailers whose supply chains are particularly reliant. The rising costs associated with higher import taxes will likely force companies to raise consumer prices or take a hit to their bottom line. Higher prices will likely crimp revenue growth, while smaller profit margins reduce earnings. That's not a great backdrop for higher stock prices, given revenue and profit growth are cornerstones of stock market valuation. Perhaps unsurprisingly, the situation has affected consumer confidence. The Conference Board's closely watched Expectations Index was 72.8 last month, below the threshold of 80 that often signals a looming recession. Gundlach's forty-year career managing money means he's seen a thing or two. His position at the top of one of the largest hedge funds gives him insight across sectors, industries, and asset not a fan of what's happening. And unlike during Covid, the US isn't nearly in the shape it was to prevent any future recession with stimulus, given the size of the U.S. debt pile. 'There's an awareness now that the long-term Treasury bond is not a legitimate flight-to-quality asset,' said Gundlach in a Bloomberg interview. "It's not responding to lower interest rates." If true, that would mark a major shift. Historically, global investors have sought safety in Treasuries, viewing them as essentially risk-free assets. "In the last 15 years, there have been a number of corrections in the S&P 500, and in every single one of them, when the S&P 500 goes down more than 10%, the trade-weighted dollar index goes up. This time the Dollar went down... Usually, when the Fed starts cutting interest rates, rates across the yield curve go time, the 10-year went up," noted Gundlach. More Economic Analysis: Hedge-fund manager sees U.S. becoming Greece A critical industry is slamming the economy Reports may show whether the economy is toughing out the tariffs Gundlach worries that yields on US Treasuries could rise significantly, reaching 6%. That would be good news for retirees pocketing fixed income, but it would be a major headwind for corporations and households who became addicted to the Fed's previous zero-interest rate policy, or ZIRP. "The interest expense for the United States is untenable if we continue running a $2.1 trillion budget deficit," said Gundlach. The 10-year Treasury note and 30-year Treasury bond yields are currently 4.39% and 4.88%. The 10-year Treasury yield is often used to inform mortgage rates, so a big uptick in its yields would send ripples through the housing market. He also thinks we may have seen the low in inflation for now, suggesting household budgets will get more crimped. "We're likely seeing the low point in near-term inflation," said Gundlach. Overall, Gundlach offered a blunt conclusion: "A reckoning is coming.'Legendary fund manager sends blunt 3-word message on economy first appeared on TheStreet on Jun 12, 2025 This story was originally reported by TheStreet on Jun 12, 2025, where it first appeared. Sign in to access your portfolio
