“I will doing a webcast tomorrow March 31, 2020 at 4:15 pm EDT”, Jeff Gundlach declared, in a presumptuous Monday tweet that could have walked right out of the presidential Twitter feed. “The title is ‘A Tale of Two Sinks’ which, as always, contains many layers of meaning”.
“Many layers of meaning” – you can’t help but chuckle. Jeff is a character, and like many titans of finance, he’s living proof that no matter how successful and actually important you become, it’s still possible to harbor delusions of grandeur.
In any event, Gundlach kept his promise. He took a few minutes away from fielding panicked calls from peers offering to sell him “blue chip” art on the cheap to hold another one of his live events, which are more useful as headline fodder for the media than anything else. This was the second webcast he’s held in two weeks.
Generally speaking, this ostensibly profound “tale” was a recap of recent events and, to a lesser extent, his tweets, spiced with deficit warnings and misgivings about what he considers to be overly-optimistic projections from Wall Street with regard to where the economy goes after the recession.
As far as equities, it won’t surprise you to learn that Jeff sees a retest of the local lows.
“The low we hit in the middle of March, I bet that low will get taken out”, he said, essentially parroting the narrative adopted by almost all market participants coming off the worst quarter since the crisis. “The market has really made it back to a resistance zone and continues to act somewhat dysfunctionally in my opinion”, he added. “Take out the low of March and then we’ll get a more enduring low”.
“I think we’re going to get something that resembles that panicky feeling again during the month of April”, he added, suggesting that ultimately, US equities may be in for a long, slow path back to record highs.
“It won’t be back to where it was prior for a long time to come”, he cautioned, “particularly on a real basis”.
On the economy, he thinks some Wall Street projections for a V-shaped recovery aren’t realistic. He uses the following visual which is actually somewhat dated, as indicated by the “as of” header. For example, Goldman’s forecast for Q2 came down sharply on Tuesday.
Gundlach called the current economic environment “depression”-like, and said that although “we will get back to a better place, it’s just not going to bounce back in a V-shape back to January of 2020”.
As for the dollar, he’s bearish because… well, because “deficits”, basically.
There’s more, but, frankly, it’s not any semblance of profound. As usual, it was just a narrated slide show documenting recent market developments, only this time, those developments have been particularly dramatic.
Gundlach delivered a barrage of tweets during the March tumult.
“I strongly suggest no government bailouts whatsoever”, he said, on March 19. “Stop back stopping greed and mismanagement”.
A day later, he exclaimed that while “calls for government bailouts and helicopter money are deafening, the government doesn’t have any money!”
“Far from it!”, he went on to digitally shout. “Establishment leadership has already racked up $24 Trillion in National Debt and $132 Trillion in unfunded liabilities”.
I would (again) submit that anyone who tells you (implicitly or otherwise) that the US government can go broke, is being disingenuous.
Commenting earlier Tuesday on Trump’s tweet about a $2 trillion stimulus package, Stephanie Kelton delivered yet another reality check to a world that simply refuses to accept the truth.
“Congress can write a $2 trillion spending bill without offsets. And the Fed will clear the payments the way it’s always done”, she said, flatly. “Matching the deficit spending with bond sales, while unnecessary, is how we do it now”.