Gundlach Says Stocks "Obviously Overbought", Buys "More Long-Term Treasuries In Last Month Than In Four Years"
Doubleline's Jeff Gundlach must not be a GETCO algo because unlike the algorithmic programs who are all that's left of traders in this policy farce of a manipulated market and who are programmed to BTFD especially when there is a massive stop hunt program about to be unleashed on 10-20 ES contracts, he is not buying stocks. Instead the bond manager has closed his July 2012 call when he called the top in Treasurys, and told Reuters that he has bought "more long-term Treasuries in the last month" than in the last four years." And this coming form the so-called new "bond king." Gundlach said he started buying benchmark 10-year U.S. Treasury notes in the last month after yields popped above 2 percent, because he sees value there relative to other asset classes, including stocks, which he said are "overbought."
More:
"I bought more long-term Treasuries in the last month than I've bought in four years. I am a fan of Treasuries now. I wasn't a fan of Treasuries in July," said Gundlach, chief investment officer and chief executive officer of DoubleLine Capital.
"They looked cheap at a yield above 2 percent, compared to certain riskier assets, which had gone up in price over the last six months while Treasury prices fell," he said. "Also, owning 10-year Treasuries at yields above 2 percent provides an offset to credit risk we are taking elsewhere in the portfolio."
So far, Gundlach's call is proving correct as 10-year Treasury bond yields dropped below 2 percent to yield 1.87 percent on Monday.
As for stocks...
The investor, who was dubbed by Barron's as the new "King of Bonds" two years ago, said he thinks the recent rally in stocks, which last week drove the Dow Jones industrial average within 75 points of its record close of 14,164.53, has gone too far.
"They are obviously overbought in the short term," he said.
Gundlach, known for his contrarian investment views and opinions, also shorted Apple at $610 last year and predicted that the tech giant's stock would fall to $425. On Monday, Apple's stock was trading at around $423.
Finally, as all our readers know quite well, ex the Fed, the economy, not to mention the market, would be a complete disaster:
He also said the U.S. economy would have no growth without central bank action.
"It's pretty clear that the Bank of Japan, Bank of England, the ECB and the Federal Reserve have expanded their balance sheets by approximately 3.5 percent of GDP per year for the last four years - and if it weren't for that, you'd have negative GDP."
The problem, of course, is that as long as the Chairman believes unprecedented US central-planning will have a happier result than it did in the USSR, those who believe there is any trace of fundemantal or technical reflection of what is truly going on, will be in for a surprise, or suffer unprecedented losses, or most both, whichever comes first.
And on this bearish news, buy stocks. It's call New Normal logic.
(9 votes)
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And bonds are underbought? LOL!
Well, the Fed will be openly monetizing bonds not stocks (those unopenly, using Citadel) as long as the US has a budget deficit, so forever.
Anybody who buys, supports or sells sovereign bonds is slave trader. Humanity needs to boycott debt serfdom through private CBs and corrupt government if we are ever going to get out of this mess. It is a vicious cycle of wealth extraction through taxes at gunpoint to pay interest on money created from nothing.
Then don't buy.
Buy gold, which will have its transactions taxed to oblivion should it ever be a threat.
Buy stocks, with the S&P volume at 1998 levels amid 12 million extra people and maybe a billion extra shares since then. And with HFT 80% of that.
It's bonds or farmland. The bad news about the latter is you have to get out of your chair to do it.
So, gold is mined around the world by Detroit union workers? Ask coin shop for gold's pedigree, i.e. compliance with "conflict gold"? /sarc
Who the hell would buy treasuries when you can buy student debt?!?! Is this schmuck really going to miss out on the once in a lifetime opportunity to invest in my generation? Nothing could possibly go wrong! The debt is nondischargeable! If there has ever been a sure thing then this is certainly it! NAIL YOUR FINGERS TO THE BUY BUTTON BOYS!!! BUY BUY BUY!!!
Pretty much exactly that.
Don't fight the Fed means bonds, not stocks. The source of infinite money has explicitly said they are permanent bid on bonds.
As long as civilization remains intact, bond prices have a floor and yields a ceiling. You sleep a lot easier with bonds than with stocks or gold, given that all powerful bid.
Now farmland is another matter.
Long US Treasury bonds still attractive I think, even today. At least through the end of 2013.
Bonds = Debt.
Government debt.
Have as much "value" as used toilet paper!
Look at what you're doing to yourself. You're discussing value in a sentence ending with an exclamation mark.
You're doing it to yourself. You need toilet paper when doing it to yourself. Don't get all emo about it.
What stocks overbought??? Look at GOLD Miners
P/E below 10, NEM 4.3% Divident, ABX 3.5% divident and yet
2008 Lows at GLD:GDX Ratio.. Yes, guys, 2008 Lows
FED and Co f*cking bastards. Fraud and Scam and nothing
we can do about it. Print, Print, Print Everything:
Gold, Silver, Tuna, Beef, Bread, Rise, Oranges, Print and eat..
http://stocktwits.com/message/12380287
Actually look out below on the gold miners, GDX for example next support level is in the basement,,,,,,,,they are all pretty much going to the bottom before they recover after the event.......
I see some leading effect with GDX vs the rest of the equity markets. Look at what happened in 2008 on the way down and in 2009 on the way up.
GDX is pointing nowhere but down, and if GLD keeps grinding lower, then there's no reason why GDX can't fall back to the 2008 lows. At 36 now, there's a long way to go before the 15-20 range is reached.
So I'm preparing to buy GDX....at much lower prices....and I'm looking at it as a possible leading indicator for the rest of the equity markets.....also to be bought at far lower prices.
" there's a long way to go before the 15-20 range is reached."
I think you are crazy.. Biggest Gold Miners earnings some serious cash ABX/NEM GG
Current Dividends no where to be found in 2008 as well and POG at least 240% higher from 2008.
Conclusion? Bottom is in either today or at 35$/ GDX level, that's bare minimum. IMHO,
Good luck piling up on the the same train.. Every Tom Dick and Harry now short Miners,
Watch what would happens next.
Sounds like you're calling a bottom.
Intersting, because I've been hearing that the "Bottom is in" with GDX since early 2012. All those bottom callers were dead wrong.
Just look at the a long-term chart. It's clearly still dropping (more like collapsing lately). Could it see bounces back up to its 200dma? Sure, but until the 200dma turns up, it's best not to catch this falling knife.
I'm not shorting it. I want to own it. But I see far better entry prices later this year.
no go with the charts,,,,,,even if they reavalue gold to 100k an ounce tomorrow its showing more expensive to get out of ground in future
boston is right next support way down,,,,,on gold miners,,,,,,
Check back last year from 2/28 and bottom in may 5/15 at $39 And at that point it's also was way below 200 MA And it shoots back up to $55. It's all depends on POG. If Gold won't drop much and somehow move back closer or above 1600, then that be it with GDX. I think robots are scared to be in GDX while GOLD is $50 away from double bottom. Good luck.
Otherwise it's a usual tactits that people piling up on tops and short/sell bottoms. That's "normal" sheepy trading schema.
My point is simple. If Gold Hold 1550-1575 and move higher, Bottom for GDX is in, Period. It's all about GOLD now. If you think GOLD will hit 1400 then you right,
but I'm betting on GOLD holding current support levels and eventually moving higher, near term.
Yup.
I see lower gold prices.
If risk assets retreat, for whatever reason, then gold could get sucked down with them, temporarily of course.
How much?
Well gold fell about 35% from peak in 08 (without violating its long-term uptrend). If history rhymes (and I know this could be an extreme scenario) then gold fall all the way back to the mid-1200's.
And yes, I'm buying gold all the way down, from 1550 to 1200, if it happens.
So my thesis is---don't buy GDX, or any miner, until risk assets finally crack, and with the S&P sitting at 1525, risk assets are far from being badly sold off.
Buy the dip. Don't believe the hype.
http://www.youtube.com/watch?v=9vQaVIoEjOM
About the gun...
I wasn't licensed to have one
There's no excuse except ignorance and failure to think logically for buying any common stocks. Buying mining stocks as a "play" on metals prices fails to take into account that "there is many a slip twixt the cup and the lip". There's a long list of things, including simply market sentiment, that can keep mining stocks from participating in a metals caused rally. If you can underst and what the Comex is; it is not a Silver Store; you don't go there to buy Silver; it's a place where you can benefit from the price rise on twice as much silver as you can actually afford to buy; (called two to one margin); this is rational and accomplishes the "Beta" you're looking for in the miners; which may or may not occur. If you have enough money to buy 500 oz. of Silver; you can deposit it with a broker and buy one mini-contract on 1000oz. This is very conservative; but it doubles your gains on any rise in Silver prices. For instance, you can buy a December '13 mini-contract right now; and wait for a significant rally, or a expontential price chart, (ski-ramp; often mistakenly called "parabolic). and sell it again. The idea being to make a profit in dollars; the same idea you have in buying the mining stock. But this has only one un-known; the price of Silver; and at this margin level you won't be forced out of the market by any downwave.
Ben will slaughter gold and silver before this is done
The only way 15-20 is possible is if gold retests triple digits. Major miners are already trading at P/Es of 5 to 7, WITH growing revenues. HUI/GLD is already near its all-time low.
Good luck on your call. If what you say comes true, I will be buying them with my credit cards.
Just for fun, I pulled up a couple of financials.
NEM's sales and operating income are DOWN Q312 vs Q311.
Same for IAG.
Same for GG (for Q412 vs Q411)
ABX's sales are up slightly but gross margin % is falling.
B.S Margins are temperately falling, but Earnings are fine. ABX will earn $4.40/share (lower estimate)
$45 stock trading at $28 with 3.4% Divi, keep selling..
Nice thread.
Recent post from M.A. on this very subject.
http://www.marketanthropology.com/2013/03/when-it-comes-to-gold-its-all-...
Or as long as the US has a Fed. Russia used to be Communist "Forever". but not so much, anymore.
Have you ever seen something going forever in financial markets Tyler?
They will run the currency into the ground. There is no exit strategy.
The problem is that the Fed is buying 80% of T-bills. When the Fed stops who will step in to buy the T-bills. China stopped buying 2 years ago. What if China and Russia decide to dump the t-bills they already own? We would be a smoldering bit of toast on that day.
"When the Fed stops"
right there is your logic error
It would be a good test - the FED currently conjures $85B/month, what could they pull off in one day? And would the ChiComs and Putin accept it?
Bingo, that's the real reason ben is buying bonds with printed dollars
Silly Gamma... don't you know our 401Ks and IRAs are the next one's to step in and buy those bills after the Fed is done?
We just won't have any choice in the matter.
Well the way to play the reflation failure is not to buy bonds when they trade at historical low, but to buy puts on Stocks when they trade at historical highs!!!
Gundlach is probably correct about the failure to reflate and a second leg down. But there is no fundamental values in bonds. For hammer everything looks like a nail. The bonds buying is not an investment, it is a trade. As an investment those bonds have zero merit. There is more juice to make with puts on Equities when vol is very low and stocks at all time high. I think Gundlach is afraid of paying premium, but then what, teh bonds go to 1.5% and then what? The US stops printing, the US stops trying to inflate. Ok, but then we have a default pure and simple.
Buy Tobacco shares and short treasuries and enjoy the carry trade. Works in deflation, works in inflation.
Correct, but the fed can wait you out bra'
Not if you are dead already.
Short term, maybe. I thought the same thing until you realize that eventually the FED will start charging banks holding excess reserves in order to keep the stock market (equities) from imploding. The nominal rate could go negative. I'm not sure if long term bonds is the right call, but short term durations is better than cash, and is about the only place you can go (other than PMs) if you think the equity market is going to tank. Long term bonds generally follow the equity market.
SP500 weekly still pushing higher for not much else other than "it can".
http://bullandbearmash.com/chart/sp500-weekly-finishes-1576-time-high/
Over bought is the understatement of the year. The process seems to be "let the market fall sharply and then slowly squeeze the shorts".
+1 one on the Game plan.
The fact they are so "obviously overbought" only ensures the bear camp lemmings will short on any red candle, thus guaranteeing another stop run.
Funny. this pig is not ready to die yet and the only way to kill it is to stop shorting and leave all those longs trapped.
that would really fuck them
It will run though 2015
Gold + 10 cents on the day.
So he avoids the equity bubble but piles into the bond bubble?
Idiot should've just bought gold.
A new cap-ex is born, great news ea?
Stocks can only go higher because.......because thats what Ben wants.
Another moneychanger.
Sickening how much effort and energy is spent just trying to stay ahead of currency depreciation.
pods
So it's mainstream stocks OR bonds?
Screw that. What's the third choice?
Silver and Gold my little chicadee
http://www.youtube.com/watch?v=CirrRY_6aaU
deflation is coming .. aggregate demand collapse.
And currency supply explosion...