Jeff Gundlach – who is in the UK, apparently – opened his mouth on Thursday and out came a series of somewhat dour warnings about the economy.
“We should be on recession watch before the 2020 election”, Gundlach said, at an event in London. “We’re getting closer but we’re not there yet”.
How close are we, you ask? Well, according to an account of Gundlach’s Thursday comments, he puts the subjective odds of a downturn before the election at 75%.
The DoubleLine boss also said investors should be mindful of any re-steepening in the curve. “It’s the inversion occurring and then going away [that’s cause for concern]”, he remarked. Gundlach has previously demanded that market watchers “respect” the signal from the yield curve.
Jeff’s latest prognostications are reminiscent of his penchant for stating the obvious and couching it in terms that suggest he wants you to believe he’s said something profound – in this case, that growth in the US is decelerating, but hasn’t yet contracted for two consecutive quarters (or one, for that matter).
At the same London event, he said he’s now turned “neutral” on gold after the latest run-up. “Gold is a flight-to-quality asset”, Jeff reminds you. “I think it’s had a big run”.
He “thinks” right. Gold has obviously been a standout in 2019, as real yields plunged and the global stock of negative-yielding debt ballooned to $17 trillion.
Arguably, it will be more challenging for gold to rise from here as long as the dollar remains firm, but we’ll see.
For his part, Gundlach reckons it’s going to be “tough for gold to get above $1,600.”
“I don’t think it will happen this year”, he added. “$1,400 is a better buying opportunity”.
Getting back to the economy, don’t forget that Jeff shocked Fox Business in June when he told the network that Trump might actually pull out of the 2020 race if the economy rolls over.
“I am not even sure he’s going to really run”, he mused. “If the economy goes into recession and he can’t pull out by removing the tariffs, there’s very little for him to run on”.