Notes from Double Line’s Just Markets 2017. Wow, once again Jeffrey Gundlach shows he is the smartest guy in the room when it comes to market calls. Note that he is the ONLY credible pundit I follow that predicted Trump’s election and he did this in the spring of 2016 I believe. His in depth narrated slide deck presentation covers a lot of ground. This is my takeaway. The soon to be posted interview in its entirety might be found here. https://event.webcasts.com/starthere.jsp?ei=1125855
Buy India.Good value, demographics, and some structural reform. Gundlach’s in keeping with his contrarian chops is not that bullish on the dollar like everyone else. He noted that Trump talks a strong dollar but doesn’t like what a strong dollar will do to rust belt manufacturing.
7 out of the last 7 two term presidents like Obama led to recessions in the first year of the incoming administration. Although Gundlach sees no signs of a recession now.
Believes Trump will trade tax cuts for the wealthiest to the Republican party for an increase in deficit spending for his infrastructure and military agenda.
Fed will raise rates 2.5 times or somewhere between 2 and 3 times in 2017 with the earliest rate hike in June, July- not this March as it would be too soon into a new Presidency. 10 yr will rise to 3% and not inconceivable that it will rise to 6% in 5 years as it was there in 2006-7 time frame not that long ago. The current counter trend bond rally has a little more to go. And the 10 yr could go a little lower.
Stocks are good for now but rising rates and the deficit will become a major structural problem. The next election could be about it. Markets are not cheap by any measure and stocks could take a fall or should have a contraction in PE with rising rates. Inflation is clearly on the rise. Own some commodities for example he mentioned gold. Also likes International particularly India.
Risks are that Trump is thin skinned and could lead to military action or that trade protectionism derails the stock rally. Market is not cheap