While Washington pundits and national pollsters predicted a Clinton victory, DoubleLine CEO Jeffrey Gundlach leaned the other way, basing his views on a variety of factors, including economic trends and other data, which – as a trained mathematician – he follows closely.
Speaking Tuesday, before any results were reported, Gundlach said the Republican candidate had “massively outperformed” expectations during the election campaign.
“When Trump was just an asterisk in the polls, I said he was a tremendously undervalued asset,” the Bond King explained – noting that the two candidates were at “a darn near tie in the polls.”
What Your Peers Are Reading
As early as February, Gundlach said he “kind of” expected Trump to win. One month later, he noted, “You have to entertain [such a] hypothetical” outcome.
And in May, he expressed even more conviction, stating, “I think Trump is going to win. I just have a feeling that he’s going to win. I think you need to prepare for a Trump presidency.”
As asset manager Michael Khouw of Optimize Advisors and other market watchers pointed out on Twitter early Wednesday, “Jeff Gundlach was right.”
In earlier calls with investors, the fixed-income specialist points to Trump’s Reagan-like slogan “Make America great again!”
“Trump has a gift for finding the soft spot in people and exploiting it pretty effectively,” he explained.
Clinton, on the other hand, employed a logo with an arrow and represented the status quo. “With Hillary you’re going sideways,” Gundlach stated.
It’s the Economy, Stupid!
While Bill Clinton zoomed in on the impact voters were feeling in their wallets in the 1990s, it was Trump who appears to have done so in 2016.
Gundlach, who combs through economic and financial data daily and shares at least several dozen tables with investors on his quarterly calls, had recently pointed September’s jobs report as a sign that investors should be on alert for a U.S. recession: The unemployment rate breached its 12-month moving average.
At the same time, that month’s non-farm payrolls report showed the unemployment rate ticking up to 5%, while the 12-month moving average held steady at 4.9%.
Over the past year, the trend in the unemployment rate has flipped from improving to deteriorating, he has pointed out.