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DoubleLine's Jeffrey Gundlach (Photo: Jim Lee/Bloomberg)

Portfolio > Economy & Markets

DoubleLine’s Gundlach ‘Turning More Bearish’

By Dinah Wisenberg Brin

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Jeffrey Gundlach, DoubleLine CEO, chief investment officer and founder, is turning more bearish toward risk assets based on current economic conditions, he said in a CNBC appearance Wednesday.

The billionaire asset manager also said he considers the odds for a recession to be “pretty darn high right now.”

Gundlach, whose firm focuses heavily on fixed income strategies, has been “relatively neutral to somewhat optimistic or tinged toward optimism on risk assets ever since, really, last September,” he said on the network’s “Closing Bell” show.

“I’m really turning more bearish at this point in time,” he added. “I think the markets for risk assets are too complacent given this cocktail of higher interest rates, quantitative tightening and credit contraction.”

Risk assets generally include those considered to carry some volatility and uncertainty, including stocks, high-yield bonds and commodities.

“Certainly we should expect higher default rates in lower-quality fixed income securities as we move into the end of this year, and I’m strongly of the opinion that investors should be going up in quality in bond portfolios,” he said.

Gundlach spoke after the Federal Reserve raised its benchmark interest rate another 25 basis points, to a 5% to 5.25% target range. He said he doesn’t expect banks to stop losing assets until the Fed cuts interest rates and noted the central bank doesn’t appear inclined to do so at its next meeting.

Gundlach doesn’t expect the Fed to keep raising interest rates.

Bloomberg reported that Gundlach, in the same interview, voiced concern about the stock market and suggested the S&P 500 Index will “break to the down side” after a push to exceed  the 4,200-4,300 level.

(Photo: Jim Lee/Bloomberg)

Dinah Wisenberg Brin

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