In a Q&A session after Jeffrey Gundlach's investment outlook on Tuesday, the straight-talking DoubleLine exec held forth on the Biden administration, markets and whether he's really leaving California, among other topics. Click through this gallery for highlights.
1. GOLD: Are you bullish on it?
GUNDLACH: I am actually neutral on gold. But if you forced me to buy gold or sell gold, I would buy it at the level it’s at today. Basically, I want to be in sync with the dollar — the dollar metrics [now] declining that I’ve been referring to.
2. POLITICS: Would you serve in a president’s cabinet?
Not in the political environment we are in now, certainly not and probably not ever. It’s not the type of mingling situation that is attractive to me.
3. REAL ESTATE: Is now a good time to help a millennial child buy a home?
Buying a home means you need to take a mortgage — now [or] in the future. I think you should buy it now. Home prices are growing less than some … measures, and the rates are super low. This could help a child — buying a home right now.
4. ASSET ALLOCATION: Are you sticking with one-fourth gold, one-fourth bonds, one-fourth stocks, and one-fourth cash for your own portfolio?
Absolutely. I am. That’s a good place to hide for the tail risk that we see increasing in the markets and in the economy as we move forward.
5. FUTURE SHOCK: Will the basic institutions that we operate under stay largely as they are now after the "Fourth Turning" of American society?
(The Fourth Turning refers to a recurring generation cycle in American history, a theory developed by authors William Strauss and Neil Howe.)
No, I don’t think that at all. We are going to have very significant change as part of the Fourth Turning. You may not recognize American society from today’s vantage point after the next six or eight years of [it].
6. STOCKS: With the U.S. equity/GDP ratio over 180, is this the biggest bubble you’re ever seen?
On the statistics, it sort of is, but it doesn’t feel like it. The dot-com runup was especially bubblicious, or kind of insane. There weren’t even earnings or revenues in a lot of places. At least a lot of [today’s] stock market valuations are based on some pretty powerful mega-companies. Now, they may be capped a part of the Fourth Turning, but it … still doesn’t feel quite as irrational to me as January of 2000.
7. STATE TAXATION: When are you leaving California? Elon Musk has left for Texas, where there’s no income tax.
“The problems with these destination states — like Texas, particularly Austin, or Las Vegas, Nevada, or somewhere like this — is that their infrastructure is based on a much lower population than what is starting to occur. I’m worried that a lot of these places may have a need to impose income taxes. … I have no plan to leave California. I am researching it, [though] not in a terribly aggressive manner. But if they raise the income tax to 16.8%, which they’re kind of talking about as a proposal, I’ll probably work harder on [the research],” he explained.
8. YELLEN/BIDEN: Do you have any opinion on Janet Yellen as Secretary of the Treasury?
[President-elect Joe Biden] is getting the band back together. I would make the comment that the people he’s appointing are pretty old. They’re trying to put us back to 1995, and that can’t be done.
DoubleLine Capital CEO and Chief Investment Officer Jeffrey Gundlach said Tuesday that while inflation likely will remain low in the near future, it could rise to 2.25% to 2.4% next year.
During a webcast, Gundlach spoke about the currently high level of U.S. public debt, which recently hit $27 trillion, saying “there is no end in sight.”
As for the Federal Reserve’s easy monetary policy, he doesn’t believe it’s feeding inflation, since “they’re not truly printing money” but instead are lending it.
As a result of this, as well as other policies and factors, existing home sales have gone from one of the lowest readings in the past 20 years to one of the highest, Gundlach explained. “There seems to be no end in sight” for this trend.
In terms of specific investments, Gundlach said a call he’s had lots of conviction on this year is that the dollar is going down. While the U.S. dollar was worth 0.90 euros on Jan. 31, it was at 0.83 euros on Wednesday.
Turning to Bitcoin, Gundlach explained that while he’s not for or against the cryptocurrency, he’s been bullish on its direction. “Just look at it as a fascinating representation of animal spirits and speculation,” he cautioned.
The DoubleLine executive also said the underperformance of small-caps might be coming to end, given the recent move in the Russell 2000 relative to the S&P 500 — which has been “pretty powerful already.”
Looking at the copper-gold ratio, Gundlach said it suggests that 10-year Treasury yields should be higher, adding “fundamentals do not support today’s Treasury levels.”
Also, “copper has been on a tear,” he noted, in contrast to gold’s weakening performance.
The talk was followed by a Q&A session in which Gundlach expounded on Janet Yellen’s nomination as U.S. Treasury secretary, his asset allocation and more. Click through the slideshow above for highlights of the exchange.
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