Gundlach: "I'm Waiting For Something To Go Kaboom"

Tyler Durden's picture




 

Following some well-timed 'suggestions' in Natural Gas and Apple this year, the new bond guru has some rather more concerning views about the future of America. Reflecting on a dismal outlook progressing due to the fact that "Retirees take resources from a society, and workers produce resources", Gundlach has cut his exposure to US equities (apart from gold-miners and NatGas producers) noting their expensive valuation and low potential for growth. In a forthcoming Bloomberg Markets interview, the DoubleLine CEO warns we are about to enter the ominous third phase of the current debacle (Phase 1: a 27-year buildup of corporate, personal and sovereign debt. That lasted until 2008, when Phase 2 started, unfettered lending finally toppled banks and pushed the global economy into a recession, spurring governments and central banks to spend trillions of dollars to stimulate growth) as deeply indebted countries and companies, which Gundlach doesn’t name, will default sometime after 2013. "I don’t believe you’re going to get some sort of an early warning," Gundlach warns "You should be moving now."

 

Excerpts (via Bloomberg):

On Hard Assets:

He recommends buying hard assets: Gemstones, art and commercial real estate are high on his list. And DoubleLine has been buying the stocks of Chinese companies, U.S. natural gas producers and gold-mining firms because it considers them to be bargains.

On Bonds:

Most of DoubleLine’s assets are in the Total Return Bond Fund, which has 78 percent of its holdings in residential mortgage-backed securities -- both those guaranteed by the U.S. government and those that are not and have discounted prices.

 

The mix should help the fund weather either inflation or deflation because the securities should move in opposite directions if interest rates go up or down. Because higher rates could mean the economy is improving and housing prices are recovering, there would be fewer defaults on the riskier non-guaranteed bonds, and prices would rise, says Philip Barach, DoubleLine’s co-founder and president.

On Kaboom:

He says the amount of money investors can make in phase three will dwarf what they can earn now.

 

“I’m waiting for something to go kaboom,” Gundlach says in his office a week before the L.A. speech. “If phase three takes two years, it’s worth waiting for. The markets don’t have lots of opportunity now.”

 

Gundlach is so confident that phase three is coming that he’s planning to start an equities fund and a long-short hedge fund in early 2013 to offer investors additional protection from inflation.

On Japan:

“Japan is running out of policy tools,”

On Europe:

Following actions by the European Central Bank that pumped $355.4 billion into the region starting in 2010, DoubleLine managers see several possible events that could hammer markets, from Finland exiting the euro zone to another near default of a Spanish bank.

 

“The only reason asset prices are up is because of all the liquidity in the system,” says Luz Padilla, manager of the $707 million DoubleLine Emerging Markets Fixed Income Fund. (DBLEX) “Our concern is that it can turn very quickly.”

On USA:

Gundlach sees a post-election, pre-fiscal cliff economy that’s growing anemically and only because of consumer loans, government stimulus and the Fed. He says inflation could jump by 2 percentage points if the Fed ramps up its purchases of government debt beyond what it has done so far.

On US Equities:

Retirees take resources from a society, and workers produce resources,” he says.

 

In line with Gundlach’s gloomy outlook for America, the Multi-Asset fund recently dumped some of its U.S. equities. Sherman says the stocks are too expensive and U.S. companies don’t have much potential for growth. But the fund has added to its holdings of gold-mining companies and natural gas producers in 2012 because these stocks are cheap, he says.

On Bernanke and The Fed:

You’re just going to build up pressure in the pressure cooker, and when it blows, the lid will blow sky-high, and that’s when you get to phase three,” Gundlach says.

On Obama and The Fiscal Cliff:

Gundlach says he has no faith that President Barack Obama in his second term will reach an accord with Congress to make significant cuts in the $1.09 trillion deficit. He says the tax hikes proposed by Obama on the wealthy wouldn’t bring in enough revenue to have a significant impact and politicians probably won’t make major cuts in entitlement programs because the public overwhelmingly supports them.

 

Gundlach dismisses the chances of a grand compromise on the so-called fiscal cliff of automatic spending cuts and tax increases totaling $607 billion if an agreement isn’t reached by January. Rather, he expects politicians will find a way to push the deficit issues into 2013 and beyond.

 

I don’t think Obama is likely to give on anything, and I doubt the Republicans are going to roll over because they failed to regain the White House,” Gundlach says.

On Gundlach:

He’s a much more complex human being than an egotistical blowhard,” Baha, 53, says. “The guy is a paradox. He is crazy about football. Then he recites a T.S. Eliot poem.”

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Fri, 11/30/2012 - 18:03 | 3025158 crusty curmudgeon
crusty curmudgeon's picture

People just need to buy and hold and faith in the stock market.  All these doom and gloomers are bad investors that want someone to blame.

(Sorry, I just wanted to beat MillionDollarBonus to the punch.)

Fri, 11/30/2012 - 18:06 | 3025166 prains
prains's picture

On putting a bankers head on a spike:       sooner than you think

Fri, 11/30/2012 - 18:16 | 3025201 Go Tribe
Go Tribe's picture

Gotta start with the politicians, remove the threat of State violence. Then move to the banksters and communists.

Fri, 11/30/2012 - 18:23 | 3025232 john39
john39's picture

politicians are pointless.  unless you take out the puppetmasters...  they will continue to refill the ranks of politicians with corrupt, stupid and docile narcissists...

Fri, 11/30/2012 - 19:05 | 3025327 Things that go bump
Things that go bump's picture

To get to them, first you have to get through all those nameless, faceless bureaucrats, the hoards of unelected and unaccountable-to-voters apparatchiks who actually run the show, including all those bloated alphabet agencies.  You can't just tap that twice in the head like a zombie.  This monster is a hydra.  Take out its head and 3 more grow in its place.  Whose got the stomach for that?  

Fri, 11/30/2012 - 19:11 | 3025369 Town Crier
Town Crier's picture

How would one explain the finer points of a de Kooning to a band of cannibals?

Fri, 11/30/2012 - 19:28 | 3025381 Things that go bump
Things that go bump's picture

Such refinements are generally only appreciated by those whose basic survival needs are assured.  I think in this case, like the missionaries in those old cartoons, you would be explaining from within the pot.  They would use the de Kooning for kindling.  

Sat, 12/01/2012 - 04:02 | 3026092 SilverSavant
SilverSavant's picture

I am not so sure.   Keep removing the head and pretty soon they quit sticking back up.  As for the faceless bureaucrats, it is hard to remain faceless if they start taking any responsibility.   Most of these type do not like to share power.   I think you are wrong to look at this from a pessimistic perspective.  An Army without generals is much easier to fight.   Once you get them to run you can have the whole pyschcology to a 180, even with the bureaucrats.   

Sat, 12/01/2012 - 04:07 | 3026094 SilverSavant
SilverSavant's picture

I am not so sure.   Keep removing the head and pretty soon they quit sticking back up.  As for the faceless bureaucrats, it is hard to remain faceless if they start taking any responsibility.   Most of these type do not like to share power.   I think you are wrong to look at this from a pessimistic perspective.  An Army without generals is much easier to fight.   Once you get them to run you can have the whole pyschcology to a 180, even with the bureaucrats.   

Fri, 11/30/2012 - 19:17 | 3025378 Nadaclue
Nadaclue's picture

Actually, Barky O and his clan are Communists, according to Vlad Putin.I agree with Vlad on this one. Ironic how the Ruskies and the USA are switching roles. Taks a reformed comny to recognize a growing commy.

http://english.pravda.ru/opinion/columnists/19-11-2012/122849-obama_sovi...

Fri, 11/30/2012 - 20:30 | 3025522 Things that go bump
Things that go bump's picture

“Be careful how you choose your enemy, for you will come to resemble him. The moment you adapt your enemy's methods your enemy has won. The rest is suffering and historical opera.”  

Michael Ventura

 

Fri, 11/30/2012 - 20:49 | 3025556 bankerbackbacon
bankerbackbacon's picture

"Ironic how the Ruskies and the USA are switching roles"

 

So you meant a country which is controlled by private bankers (Russia) is switching wings or heads of the double headed eagle, with a country controlled by private bankers (AmeriKAa). Of course you did I missed the subtlety.

Sat, 12/01/2012 - 13:27 | 3026473 stuckonarock
stuckonarock's picture

Ive thought about this long and hard.

Only one way to beat a large monster.

Every time a small part of it comes into contact with you, FUCKIN KILL IT !!(metaphorically speaking)   tie it up with bullshit and wits, make it use lots of its energy and resources dealing with you, be awkward, request difficult to locate and irrelevant information get legal, etc etc.

If every tentacle of the monster encounters resistance, injury and pain, it slowly, slowly withers and dies.  Needs lots of people to kill a big monster, just fukin do it.

Fri, 11/30/2012 - 19:25 | 3025397 Savyindallas
Savyindallas's picture

Like a shishkebob? I like that. Should we sign up bankster kids for the Hunger Games? I wouldn't stoop to their level. I do like the Bankster games -let's get unemployed former thousand dollar an hour hookers to hunt down their former Johns for money. Let them get revenge for having been subjected to the dergradation of having these sleazy pencil nozed slimy scum snorting coke out of their assess.

Fri, 11/30/2012 - 18:32 | 3025257 Dugald
Dugald's picture

"Retirees take resources from a society, and workers produce resources"

Very bad for the collective.... 

Simple solution.....Shoot all Retirees! 

Fri, 11/30/2012 - 18:45 | 3025293 SanOvaBeach
SanOvaBeach's picture

I'm a retiree, where do u live, asshole?

Fri, 11/30/2012 - 21:45 | 3025673 klockwerks
klockwerks's picture

plus 1000 sob. Let me know when you get his address and I'll go with you. I'm 67 still making a 6 figure income

Sat, 12/01/2012 - 00:23 | 3025898 boogerbently
boogerbently's picture

Me too......(you're counting the pennies, too, right?)

Sat, 12/01/2012 - 07:02 | 3026143 SanOvaBeach
SanOvaBeach's picture

Ok, I'll let you know when I get the address.................................

Fri, 11/30/2012 - 19:56 | 3025471 cherokeepilot
cherokeepilot's picture

"Shoot all Retirees! "   Would that be valid only until you retire?  

Sat, 12/01/2012 - 01:28 | 3025971 Snidley Whipsnae
Snidley Whipsnae's picture

The SOB hasn't come to terms with his own mortality... still a mental infant.

Fri, 11/30/2012 - 23:32 | 3025846 boogerbently
boogerbently's picture

Retirees vote and spend.

The "burden to society" is the multigenerational welfare/disability/food stamp/medicaid crowd. They have NEVER contributed.

 

Sat, 12/01/2012 - 10:00 | 3026227 Urban Redneck
Urban Redneck's picture

 

Spending isn't the same as Producing (except in minds of diminished capacity).

Spending OASDI payments is economically no different than AARA 99 weAkers and SNAP recipients spending their "benefits"

As to the "burden to society" - the present value of future "benefits" to be paid to the young far exceed the present value benefits to be paid to the old.

Healthcare rationing will dispatch those incapable of producing, regardless of age

Healthcare regulations will grow the ranks of the non-producers (anyone not on PRIVATE payrolls)

Rationing of non-healthcare government handouts coupled inflation which exceeds COLAs will cull the weak, the unprepared, and the those unwilling to resist alike.

Age doesn't kill, but the inactivity of sitting on one's ass and passively watching either the grass or the leviathan grow certainly can kill. 

 

 

Sat, 12/01/2012 - 11:23 | 3026323 boogerbently
boogerbently's picture

You are misinformed, young one.

Spending IS producing, according to all economic metrics. Which is why there is welfare, unemployment, etc.

The key is "Whose money are you spending?"

Keeping money moving through the system.

"Living" isn't producing, either.

The 2nd, 3rd, 4th generation welfare recipients do NOT represent a better "future value". they will just expand exponentially, NEVER being productive,and further drain the system.

I have worked all my life (ALREADY) saved a portion of my earnings (401 AND Soc. Sec.), paid IN ADVANCE ( for the last 50 years) for my healthcare in my retired years (Medicare).

I'm sorry if some of the programs they started by stealing my retirement (SS) money will need to be cut, but that isn't what we all contributed those funds for.

To my way of thinking, everything went along fine until you lazy, spoiled Gen. X/Y/Z'ers with "entitlement issues" started hasving trouble pulling your own weight.

I worked hard and saved to have the right to "passively watch the grass grow."

Do yourself a favor, print a copy of your post so you can read it in 30 years, to see what a selfish, immature ass you "were".

 

 

Sat, 12/01/2012 - 17:09 | 3026777 Urban Redneck
Urban Redneck's picture

I see the old timers is setting in... or perhaps I wasn't clear enough when I wrote - the present value of future "benefits" to be paid to the young far exceed the present value benefits to be paid to the old.

The government has made promises that it cannot keep. Everyone will pay.  That is the nature of inflation- like death, it does not discriminate.

Spending is not producing, it is merely transferring money, just as printing money is not producing.  Both methods have been used in the past several years to show that the economy is larger and more productive now then it was in 2006 or 2007, and that the recession ended years ago, my memory is still good enough to clearly remember how much more busy the roads, airports, restaurants and hotels were 6 years ago.  The academics and politicians can play definition games with economics all they like- and the oil producers and Chinese manufacturers will laugh all the way to the bank, in the last half decade or so energy prices have increased 70% (along with the rest of the commodity complex).

Have your SS COLAs kept up with the increases in food, energy, and other required spending?

If I'm still here in another 30 years, I might have a good laugh at this post because I am actually quite selfless, if a bit of a cold-hearted ass from the long journey I've already taken. In the mean time- read the stoics, it will help with both the old timers and the coming economic hardships.

 

 

 

Sat, 12/01/2012 - 20:18 | 3027133 Whiner
Whiner's picture

Class warfare, Bitchez! Obammy picks up the pieces. Leader for life ala Hugo Chavez

Fri, 11/30/2012 - 19:00 | 3025329 Silver Bug
Silver Bug's picture

I can't imagine you will have to wait too long. The whole financial system will go Kaboom soon enough.

 

"Avoid the five most common gold and silver mistakes. Know when to sell."

Fri, 11/30/2012 - 23:02 | 3025795 boogerbently
boogerbently's picture

Their dilema is, they can't get all our guns before the big meltdown.

They know they will be the first to be "punished."

Fri, 11/30/2012 - 19:28 | 3025403 quasimodo
quasimodo's picture

Please forgive the OT, but what happened to that dude Michael with the joker avatar? 

 

Fri, 11/30/2012 - 19:56 | 3025472 James
James's picture

quasimodo, Michaels last post was 9/18/12.

the guy was on a tear the last couple months he was here.

he told us he was leaving on his own accord for some time and did.

Fri, 11/30/2012 - 18:04 | 3025161 grid-b-gone
grid-b-gone's picture

Skate to where the puck is going to be = Gretzky

Fri, 11/30/2012 - 18:06 | 3025165 Bicycle Repairman
Bicycle Repairman's picture

Gundlach who?

Fri, 11/30/2012 - 18:06 | 3025168 lemonobrien
lemonobrien's picture

me too. though i think gemstones is a mistake; mainly because grading issues arn't straight forward like... "dis is golds, dis is silvers" Artwork too is nice, but subjective... and i can paint too.

Fri, 11/30/2012 - 18:20 | 3025223 astoriajoe
astoriajoe's picture

and didn't they just announce a shitton of diamonds in a Russian asteroid impact crater?

Fri, 11/30/2012 - 23:08 | 3025801 boogerbently
boogerbently's picture

Who cares, diamonds have NEVER been "rare".

I hope they get revalued in the big "reset".

If getting our noses rubbed in reality, like this, doesn't  make us re-prioritize, then we are hopeless.

WOMEN give diamonds their value.....period!

Sat, 12/01/2012 - 16:27 | 3026705 piceridu
piceridu's picture

I wonder why diamonds aren't traded on OPEN exchanges...maybe because they have phony valuations and aren't rare at all?

Ask DeBeers...a one carat stone should cost around $5 if they were allowed to be traded openly world wide.

Sat, 12/01/2012 - 16:30 | 3026711 knukles
knukles's picture

Diamonds are a girl's best friend, oil is abiotic and gold comes exclusively from meteorites.

(I'm just the messenger)

Fri, 11/30/2012 - 19:36 | 3025424 MachoMan
MachoMan's picture

I can pretty easily test gold or silver with incredibly cheap tools and a moderate degree of ingenuity and get a considerable amount of confidence that it is real.  With art...  well, the expert you use to authenticate it better be incredibly good AND honest...  in a world full of fakes.

Fri, 11/30/2012 - 18:07 | 3025169 drbill
drbill's picture

Something already went KABOOM. We just haven't been allowed to hear it. And rest assured it won't be the MSM that reports it first.

Fri, 11/30/2012 - 18:32 | 3025258 ThirdWorldDude
ThirdWorldDude's picture

+1 I've always wondered how an implosion sounds.

Sat, 12/01/2012 - 13:00 | 3026435 MrSteve
MrSteve's picture

Implosions sound just like thunder. When the lightning bolt superheats the air it sparks through, the air molecules spread out according to PV=nRT, where T is a very big temperature, and then they slam back together to make the thunderclap. This is a different noise than a vacuum tube TV makes when it hits concrete from three stories up. That's a muffled crash kind of implosion. The poof you get when you break a 4 foot flurescent bulb is another implosion sound.

When you're under almost 2 quadrillion bucks of worthless derivatives, they can only hear your screams in hell if you are holding onto "their" promises.

Fri, 11/30/2012 - 18:40 | 3025280 Dan Conway
Dan Conway's picture

It already exploded but not many have figured it out what it means yet.  Those that haven't figured it out are either having fun (black friday brawling, obummer phones, snap, govt bailout recipients, etc.) or are getting screwed "medievel" but somehow think that obummer will save them. 

Fri, 11/30/2012 - 18:08 | 3025171 woggie
woggie's picture

the beast is on the gobble
and all that matters is we're all headed for it's belly
http://youtu.be/ntmthFyaYzY

Fri, 11/30/2012 - 19:10 | 3025357 Bastiat
Bastiat's picture

Gobble this.

Fri, 11/30/2012 - 18:09 | 3025174 ArrestBobRubin
ArrestBobRubin's picture
"I'm Waiting For Something To Go Kaboom"

Let's all pray that it's the Federal Reserve Building.

Fri, 11/30/2012 - 21:07 | 3025604 hawk nation
hawk nation's picture

That happens just before they let ron paul in for an audit or they finally have to deliver the gold they have stored for other nations

Fri, 11/30/2012 - 23:09 | 3025805 boogerbently
boogerbently's picture

Or the building holding the COMPLETE meeting of the House and Senate (& WH)

Sat, 12/01/2012 - 08:23 | 3026182 Incubus
Incubus's picture

What would Guy Fawkes do?

Sat, 12/01/2012 - 08:25 | 3026184 overmedicatedun...
overmedicatedundersexed's picture

having served in a bankster war: be elsewhere when things go kaboom.

Sat, 12/01/2012 - 11:31 | 3026331 SanOvaBeach
SanOvaBeach's picture

A pence for the Guy?

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