Jeff Gundlach: Very Cautious 2013 Outlook
Posted by Larry Doyle on December 19, 2012 6:05 AM |
Last week I shared with readers a written “playbook” provided by Jeff Gundlach and his team at Doubleline in my commentary, What Is Really Going On in the Economy/Markets?.
Today we get to invite Mr. Gundlach “into” our office so to speak and hear his piercing insights. If you have an even passing interest in the markets and economy, get yourself a second cup of coffee and some pain medication as you absorb this 20-minutes worth of wisdom that will surely help you navigate the economic and market landscape in 2013 if not beyond. What does Gundlach address?
1. We should be more concerned with the fiscal crisis than the fiscal cliff.
2. Economic headwinds are prevailing and likely to worsen given developments in Washington.
3. Government bonds likely to remain strongly supported . . . for now.
4. Bullish on Japanese equities but learn why….a debasing of their currency.
5. Calls for increasing inflation are WAY too early.
6. The United States may not be in as bad shape as Japan but there are some similarities.
7. Market fundamentals have been trumped by Federal Reserve policy but each successive round of quantitative easing is having a lessened impact.
8. Investors should be hoarding cash and waiting for better price points on many risk assets.
9. Investors need to develop and maintain a longer time frame and outlook in managing assets.
10. The world will be a very different place 3 years from today!!
11. The economy left to its own devices would like to go into a “cleansing” recession.
12. Likely to see substantially lower prices in many risk sectors that have benefited and been propped up by the Fed’s QE programs. He specifically referenced the S&P 500 as likely to experience a serious decline at some point perhaps later in 2013 into 2014.
13. We are not currently in a credit bubble.
14. The next recession —and we would be in a global recession right now if not for central bank policies — will be a ‘killer’ and bring real cracks into the market. He questions what the Fed and Uncle Sam can do to slow that recession at that juncture.
15. We will not experience a repeat of 2008 in the markets because there is not the same degree of leverage in the markets currently, although that could change somewhat if hedge funds try to play catch up with the market and increase their leverage.
16. There is a lot of naivete involved with many investing currently in the market.
17. Homebuilder stocks look overpriced. Financials look cheap.
This clip runs for 20-minutes. You may not necessarily like all that he says BUT you should listen as he charts the path for our 2013 landscape and beyond.
Props to our friends at eWallStreeter for initially highlighting this.
I have no affiliation or business interest with any entity referenced in this commentary. The opinions expressed are my own. I am a proponent of real transparency within our markets so that investor confidence and investor protection can be achieved.