In a webcast on June 27, Jeffrey Gundlach, CEO of DoubleLine Funds, picked up where an earlier webcast left off asking, “What in the world is going on?” Gundlach referred to the 10% intraday drop in the Nikkei on May 22 saying that since then, “something seemed to have changed.”
Gundlach said the sell-off in stocks and bonds globally has had “nothing to do with inflation.” Despite some volatility through the credit crisis, the consumer price index is at a low point, according to Gundlach. “A lot of people think the CPI is a bunch of hooey and it’s just being manipulated by the government,” he said, referring then to the personal consumption expenditures index, “a measure the Fed likes to look at.” The PCE is also on a low that goes all the way back to the ‘60s, he said. “There’s no message of inflation in the market.”
Also not showing signs of inflation is gold, Gundlach continued. In late June, gold fell to nearly $1,200 and rose only slightly on Wednesday. “The momentum in gold is incredibly high on the downside,” Gundlach said.
Commodities, while low, are “eerily stable,” Gundlach said, noting that since April, virtually every commodity is down.