equitieswatch
Tuesday, February 7, 2023
About us
Advertise
  • Home
  • Stock Market
  • Finance
  • Cryptocurrency
  • Commodities
No Result
View All Result
Equitieswatch.com
No Result
View All Result

‘Calamity’ may be coming, stock-market setup similar to 1999: Jeffrey Gundlach

by equitieswatch
April 12, 2022
in Finance

 A “calamity” may be coming for markets, potentially in 2023, Jeffrey Gundlach, chief executive officer and chief investment officer of DoubleLine, warned Tuesday on stage at the Exchange ETF conference in Miami. 

The Treasury market’s yield curve is signaling “trouble ahead,” Gundlach said, referring to the recent inversion of 2-year
TMUBMUSD02Y,
2.384%

and 10-year yields
TMUBMUSD10Y,
2.713%
,
which historically has preceded a recession. The setup in the stock market is “very similar” to the one seen in the fourth quarter in 1999, he warned, in a reference to the lead-up to the bursting of the dot-com bubble. 

Read: Why an inverted yield curve is a bad tool for timing the stock market

The S&P 500 has been “massively juiced” by quantitative easing and low rates under central banking policy, according to Gundlach, who said that he favors stocks outside the U.S. “One of the hardest things” in the investment business is “to change after you’ve been right,” he said. 

While the S&P 500 saw an unusually strong run over the past few years, it’s down so far in 2022 amid heightened concern over the Russia-Ukraine war and expectations for the Federal Reserve to battle soaring inflation in part through interest rate hikes. Gundlach said he expects that European stocks will outperform the U.S., particularly when a recession arrives.

When 2-year and 10-year yields invert, “you’re supposed to be on recession watch, and we are,” said Gundlach, who is known as the bond king. “I am not looking for a recession this year because it takes time.”

See: U.S. recession indicator is `not flashing code red’ yet, says pioneering yield-curve researcher

The yield on the 2-year Treasury note briefly exceeded the 10-year yield recently. A persistent inversion of that measure of the curve has been a reliable predictor of recession, though typically with a lag of more than a year.

The fact that 10-year yields have moved back above 2-year yields “is not a cause for celebration if you’re looking for economic growth,” said Gundlach, who also sees the disinversion as a cause for concern. 

Meanwhile, the cost of living is “much higher” than the rise captured by the consumer-price index, according to Gundlach, who said wage growth and rising rents will be important drivers of inflation this year. 

The consumer-price index jumped 1.2% in March, fueled by the higher cost of gasoline, food and housing, according to a statement Tuesday from the U.S. Bureau of Labor Statistics. It was the largest monthly gain since Hurricane Katrina in 2005, driving inflation over the past year to 8.5% — the highest since January 1982. 

Read: U.S. inflation rate leaps to 8.5%, CPI shows, as higher gas prices slam consumers

But core inflation, which excludes food and energy, rose just 0.3% in March for the smallest increase in six months and a potential sign that the surging cost of living may be peaking. 

“We think inflation is going to fall ”this year, said Gundlach, but remain elevated. He predicted that it will probably fall to around 6%. 

Gundlach also lamented a rough 2022 for fixed income so far. With some core bond funds being down 12% this year, “we’re talking about a massive bear market,” he said. “Who wants to be ‘bond king’ these days?”

Also read: U.S. government bonds just suffered their worst quarter of the past half-century: Here’s why some investors may not be fazed

Major U.S. stock benchmarks were up Tuesday afternoon, with the S&P 500
SPX,
-0.06%

rising about 0.5% , the Dow Jones Jones Industrial Average
DJIA,
-0.09%

gaining 0.3% and the Nasdaq Composite
COMP,
+0.12%

climbing 0.7%, according to FactSet data, at last check.

Within fixed income, the yield on the 10-year Treasury note was down about 9 basis points at around 2.68% Tuesday afternoon , FactSet show. The 2-year yield was trading below that level, at about 2.38%.

Source link

YOU MAY ALSO LIKE

The U.S. is hurtling toward a recession. Here’s the best-case scenario for how it could play out—and the worst

Bitcoin Breaches $20,000 for the First Time Since 2020

ShareTweetPin

Search

No Result
View All Result

Recent News

Oil slips further on demand, financial market worries By Reuters

Oil Sinks Further Amid China Concerns, Weakened Economic Prospects By Investing.com

October 25, 2022
Gold Up, Set for Second Weekly Gain as Dollar Falls from 20-Year High By Investing.com

Gold Pressured Near $1,650, Copper Muted on Economic Fears By Investing.com

October 25, 2022
Explainer-What would be the impact of Russian oil sanctions in Europe? By Reuters

Oil prices edge higher as U.S. dollar eases By Reuters

October 25, 2022
Equitieswatch.com

Equitieswatch.com is your Stock Market, Finance, Forex, Cryptocurrency, Business, NFT News Website. We provide you with the latest breaking news and videos straight from the Business industry.

  • Home
  • About us
  • Contact
  • Privacy Policy

© 2022 www.equitieswatch.com

No Result
View All Result
  • Home
  • Stock Market
  • Finance
  • Cryptocurrency
  • Commodities

© 2022 www.equitieswatch.com