In the wake of a contentious election and a recession, it’s plausible that many Americans will “start reevaluating their political philosophy” — not just whether they’re liberal or conservative but their views on democracy entirely, DoubleLine Capital CEO Jeffrey Gundlach said Monday.
“We have people who are strongly committed to the idea of democracy, [and that it’s] the greatest thing,” he said. “And yet China has had massive economic growth with totalitarianism.”
Gundlach, who predicted Donald Trump’s win in 2016, believes the president will be reelected, but “I have far less conviction than I did in 2016 when I was certain of it,” he said
One reason for his election view is COVID-19′s spread at “big universities” in the Midwest, such as Ohio State University and the University of Wisconsin, could curb Democratic-leaning votes.
He also believes “with a reasonable degree of confidence” that the Senate will remain in Republican hands.
Sharing the ”dais” was David Rosenberg of Rosenberg Research, who wasn’t so confident, but did say the House of Representatives remaining Democratic-led is “ironclad.” Thus, if Gundlach is correct, “we’re left with what we’ve already had the past couple of months: fiscal gridlock.”
However, if there is a “blue wave,” the stimulus will come faster, and tax increases will be down the road, he added.
Yet both experts see bad times ahead for the next year no matter who wins the election. In fact, Gundlach noted that without another stimulus package, “the economy, which already is in tatters, would be a disaster.”
Some other highlights of their discussion were as follows.
Gundlach noted that “there’s going to be some real employment problems. It will be borne out of information CEOs have learned about their company through a work-from-home prism.
“Most businesses will be downsizing in terms of middle management because they realize these people just watch workers, and [CEOs] don’t need that,“ he said. “[Those job losses] will be an [economic] drag. So the next stimulus will have to be huge.”
Rosenberg agreed that “the best job news is behind us.”