Unfortunately, CNBC on Thursday decided to ask Jeff Gundlach what he thinks about the Fed’s dovish double-down and, relatedly, what the DoubleLine boss thinks about US equities going forward.
To be fair to Scott Wapner, it’s not entirely clear who initiated this latest close encounter of the Gundlach kind. I, for one, continue to believe that Jeff is his own best marketer.
But irrespective of whether Jeff called up CNBC and asked if the network was interested in his take (“Do you want to know what I think?”, “Errr, I mean, ok Jeff, if y….”, “Great, let’s get started”) or whether CNBC called him, the end result was predictable.
Spoiler alert: We’re still in a bear market. And that’s not all. Here is the transcript:
Wapner: Were you surprised by Fed’s dovish double-down on Wednesday?
Gundlach: I think you have to be. I predicted they would go from two hikes this year to 0.5, and everyone told me there was no way they would downgrade it that far. But they went even further!
And what the heck is that “1 hike in 2020” thing about? It seems almost desperate.
Fed has gone from “we got this” to “we’ll get back to you”. Not reassuring.
Wapner: Do you still think we’re in a bear market or has the Fed’s pivot (and double-down) changed the game?
Gundlach — Yes to bear market. In 2007 the Fed went from “biased to tighten” to an “emergency ease” in just a few weeks. The S&P celebrated with a push to essentially a double top over the ensuing several weeks.
I’ll say one thing for Jeff: The acknowledgement that he was a bit surprised by the shift lower in the dots is a big step for him. After all, it’s pretty hard to “surprise” someone who knows everything, so maybe his admission that he was at least a little bit taken aback represents some humility.
Or maybe not. Because he qualifies his “surprise” by reminding you that he almost predicted it and that all manner of unnamed “everyones” told him he was crazy when he suggested “they would go from two hikes this year to 0.5”.
Crazy like a fox!
Only not really. The reality of this situation is that the market priced the Fed out a long time ago and when it comes to who “everyone” is in the context of the (likely imaginary) people who told Jeff “there was no way they would downgrade it that far”, “everyone” apparently doesn’t include any of the multiple sellside desks who predicted just that.
As far as the whole “we’re still in a bear market” thing goes, you’re reminded that Jeff doesn’t subscribe to the technical definition of a bear market. For him it’s more about feel. And that’s a good thing, because very much contrary to his assertion that “the stock market was and still is in a bear market” (as delivered earlier this month during his not-at-all-alarmist “Highway To Hell” webcast), the stock markets was not and still isn’t in a bear market.
We can all quibble about the usefulness of the inherently arbitrary 20% threshold, but that doesn’t make it any less funny to point out the fact that if we go by the traditional definition of the term “bear market”, Gundlach is saying something that simply isn’t true (the S&P traded 19.8% below the September all-time high late last year).
Speaking of funny, do note that according to Gundlach, 2011 (the last time we skirted a bear market) was another time when stocks were “in a bear market rally“. And then in 2013, investors should have gotten “defensive“, because “chasing stocks” would have been a bad idea. In May of 2016, US stocks felt like “dead money” to Jeff. In January of 2017, it was apparently imperative that “U.S.-centric portfolios should diversify globally.”
Oh, and in 2012, he was “waiting for something to go kaboom”.
And I already know what readers are going to say/ask. They’re going to say: “Well, but maybe that’s not fair.” And then they’re going to ask: “What was the context for all of those calls?”
To which I would respond: “That’s why the links are there – read and decide for yourself.”
Mr Gundlach ripped me a new one on a conference call when I asked, not told, but asked if high yield bonds were a good bond market sector. It was 2013 I think and of course high yield did very well going forward. But Mr. G pretty much called me an idiot for asking the question. You have to hand it to him, he is a really convincing marketer and in his circle of competence he is a very savvy investor. I don’t think high yield, or equities are in that circle though. And I was very surprised that he recommended investors buy BKLN in a Barron’s roundtable. Talk about an accident waiting to happen. If an ETF were going to blow up this would be the one. In his favor, since that recommendation short bank loans have done well. But it is liking picking up nickels in front of a steam roller. Ok said my piece, back to work.
A boy may cry Wolf many times and be consistently wrong…..until…..the (3 month – 10 year) spread falls below 10 bps…….Plus.. this “boy” is wealthy as hell!
First Gundlach gets ripped for being obviously right, and now he is getting ripped for being so obviously wrong. Poor guy can do nothing right.
I don’t know why Gundlach deserves to be in your rogues’ gallery, though. Peter Schiff has predicted 107 out of the last three stock market crashes / recessions, and Catherine Wood said Tesla stock could hit $4,000 per. There seem to be a lot of goofy squawkers out there at least equally worthy of your derision.
True dat.
Yet none of them has “truth” in his/her Twitter handle.
Well, Cathie is a nice gal – in fact, I went to the cocktail party when ARK first got up and running. true story (although she doesn’t know me as “Heisenberg”).
But the answer to your question, frankly and with apologies to Cathie and Peter, is that nobody gives a shit what Cathie and Peter think. Gundlach, on the other hand, is a damn titan, love him or hate him.
so, i feel like there’s just more comedic value with picking on Jeff because after all, Jeff doesn’t (and shouldn’t) give a damn what me or anybody else says because barring some kind of truly epic meltdown, his place in the hall of fame is cemented.