DoubleLine Capital CEO & CIO Jeffrey Gundlach, who predicted a Trump win in January, says stocks are a messy bet while some Treasuries are looking good right now.
Before analyzing different asset classes on a call with investors and market-watchers on Tuesday, the Bond King laid out the reasons for Donald Trump’s election, highlighting economic data.
“Trump won because people felt abandoned and left behind,” he said.
Median worker wages for men, for instance, have dropped by 4.6% since 1973. At the same time, the top 5% of wage earners have seen a 51.4% real increase in their purchasing power.
Meanwhile, the share of wealth for the bottom 90% of households has fallen from 36% to 23%, as the share of the top 0.1% has soared from 7% to 22% over the past 20 years.
“The ownership of wealth has shifted,” Gundlach said. “But those trends are about to reverse.”
Also, Obamacare monthly premium hikes for 2017, which were made public Nov. 1, were “massive,” he points out. For a 27-year-old, they are going from $242 to $302.
Investors should expect “a bumpy ride” at the start of Trump’s term in office, the DoubleLine executive says, adding that the president-elect does not have a “magic wand” to improve the economy.
“The markets remain completely confused as to what will be the trend direction from the election,” he explained.
A group of stocks to stay away from includes Facebook, Amazon, Netflix and Google. “Avoid the ‘FANGs’ in a big way,” said Gundlach, noting that the market had priced a Clinton win into their valuations before Trump’s win.
Instead, he favors financials, materials and industrials. Banks, for instance, stand to benefit from “a steeper yield curve and less regulation.”
“Maybe liquor sales will go up,” Gundlach said during the webcast. “The Trump win is not positive for consumer spending.”