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Gundlach Says Stocks "Obviously Overbought", Buys "More Long-Term Treasuries In Last Month Than In Four Years"

Tyler Durden's picture





 

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.

 


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Mon, 03/04/2013 - 16:18 | Link to Comment lolmao500
lolmao500's picture

And bonds are underbought? LOL!

Mon, 03/04/2013 - 16:23 | Link to Comment Tyler Durden
Tyler Durden's picture

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.

Mon, 03/04/2013 - 16:27 | Link to Comment The Thunder Child
The Thunder Child's picture

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.

Mon, 03/04/2013 - 16:32 | Link to Comment CrashisOptimistic
CrashisOptimistic's picture

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.

Mon, 03/04/2013 - 20:30 | Link to Comment Kirk2NCC1701
Kirk2NCC1701's picture

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

Mon, 03/04/2013 - 20:31 | Link to Comment EscapingProgress
EscapingProgress's picture

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!!!

Mon, 03/04/2013 - 16:29 | Link to Comment CrashisOptimistic
CrashisOptimistic's picture

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.

Mon, 03/04/2013 - 16:58 | Link to Comment formadesika3
formadesika3's picture

Long US Treasury bonds still attractive I think, even today. At least through the end of 2013. 

Mon, 03/04/2013 - 17:26 | Link to Comment OutLookingIn
OutLookingIn's picture

Bonds = Debt.

Government debt.

Have as much "value" as used toilet paper!

Mon, 03/04/2013 - 17:49 | Link to Comment formadesika3
formadesika3's picture

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.

Mon, 03/04/2013 - 16:35 | Link to Comment rogeliokh
rogeliokh's picture

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

 

Mon, 03/04/2013 - 16:43 | Link to Comment I think I need ...
I think I need to buy a gun's picture

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.......

 

Mon, 03/04/2013 - 16:52 | Link to Comment Boston
Boston's picture

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.

Mon, 03/04/2013 - 16:57 | Link to Comment rogeliokh
rogeliokh's picture

" 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.

 

Mon, 03/04/2013 - 17:06 | Link to Comment Boston
Boston's picture

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.

Mon, 03/04/2013 - 17:18 | Link to Comment I think I need ...
I think I need to buy a gun's picture

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,,,,,,

Mon, 03/04/2013 - 17:21 | Link to Comment rogeliokh
rogeliokh's picture

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.

Mon, 03/04/2013 - 17:39 | Link to Comment rogeliokh
rogeliokh's picture

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.

Mon, 03/04/2013 - 18:09 | Link to Comment Boston
Boston's picture

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.

Mon, 03/04/2013 - 18:44 | Link to Comment spinone
spinone's picture

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

Mon, 03/04/2013 - 17:22 | Link to Comment SAT 800
SAT 800's picture

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.

Mon, 03/04/2013 - 18:14 | Link to Comment max2205
max2205's picture

Ben will slaughter gold and silver before this is done

Mon, 03/04/2013 - 17:33 | Link to Comment TheCanadianAustrian
TheCanadianAustrian's picture

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.

Mon, 03/04/2013 - 18:24 | Link to Comment Boston
Boston's picture

Major miners are already trading at P/Es of 5 to 7, WITH growing revenues

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.

 

Mon, 03/04/2013 - 19:20 | Link to Comment rogeliokh
rogeliokh's picture

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..

Mon, 03/04/2013 - 21:15 | Link to Comment spekulatn
spekulatn's picture

Nice thread. 

Recent post from M.A. on this very subject.

http://www.marketanthropology.com/2013/03/when-it-comes-to-gold-its-all-...

Mon, 03/04/2013 - 17:12 | Link to Comment SAT 800
SAT 800's picture

Or as long as the US has a Fed. Russia used to be Communist "Forever". but not so much, anymore.

Mon, 03/04/2013 - 17:19 | Link to Comment WhiteNight123129
WhiteNight123129's picture

Have you ever seen something going forever in financial markets Tyler?

Mon, 03/04/2013 - 18:40 | Link to Comment spinone
spinone's picture

They will run the currency into the ground.  There is no exit strategy.

Mon, 03/04/2013 - 16:27 | Link to Comment Gamma735
Gamma735's picture

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.

Mon, 03/04/2013 - 16:48 | Link to Comment Panafrican Funk...
Panafrican Funktron Robot's picture

"When the Fed stops"

right there is your logic error

Mon, 03/04/2013 - 16:50 | Link to Comment Joe Davola
Joe Davola's picture

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?

Mon, 03/04/2013 - 18:16 | Link to Comment max2205
max2205's picture

Bingo, that's the real reason ben is buying bonds with printed dollars

 

Mon, 03/04/2013 - 23:55 | Link to Comment Assetman
Assetman's picture

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.

Mon, 03/04/2013 - 17:22 | Link to Comment WhiteNight123129
WhiteNight123129's picture

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.

 

Mon, 03/04/2013 - 18:46 | Link to Comment spinone
spinone's picture

Correct, but the fed can wait you out bra'

Tue, 03/05/2013 - 06:08 | Link to Comment WhiteNight123129
WhiteNight123129's picture

Not if you are dead already.

Mon, 03/04/2013 - 20:24 | Link to Comment Pareto
Pareto's picture

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.

Mon, 03/04/2013 - 16:20 | Link to Comment orangegeek
orangegeek's picture

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".

Mon, 03/04/2013 - 16:34 | Link to Comment VonManstein
VonManstein's picture

+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

Mon, 03/04/2013 - 18:54 | Link to Comment spinone
spinone's picture

It will run though 2015

Mon, 03/04/2013 - 16:21 | Link to Comment q99x2
q99x2's picture

Gold + 10 cents on the day.

Mon, 03/04/2013 - 16:21 | Link to Comment SeverinSlade
SeverinSlade's picture

So he avoids the equity bubble but piles into the bond bubble?

Idiot should've just bought gold.

Mon, 03/04/2013 - 16:21 | Link to Comment negative rates
negative rates's picture

A new cap-ex is born, great news ea?

Mon, 03/04/2013 - 16:22 | Link to Comment ultimate warrior
ultimate warrior's picture

Stocks can only go higher because.......because thats what Ben wants.

Mon, 03/04/2013 - 16:22 | Link to Comment pods
pods's picture

Another moneychanger.  

Sickening how much effort and energy is spent just trying to stay ahead of currency depreciation.

pods

Mon, 03/04/2013 - 16:26 | Link to Comment Kreditanstalt
Kreditanstalt's picture

So it's mainstream stocks OR bonds?

Screw that.  What's the third choice?

Mon, 03/04/2013 - 18:47 | Link to Comment spinone
spinone's picture

Silver and Gold my little chicadee

http://www.youtube.com/watch?v=CirrRY_6aaU

Mon, 03/04/2013 - 16:30 | Link to Comment Jason T
Jason T's picture

deflation is coming .. aggregate demand collapse.

Mon, 03/04/2013 - 19:33 | Link to Comment Kreditanstalt
Kreditanstalt's picture

And currency supply explosion...

Mon, 03/04/2013 - 16:30 | Link to Comment Yen Cross
Yen Cross's picture

 Gundlach is also short the yen. I don't like that trade s/t, but I'm sure he's trading a longer time frame. "Being a bond guy and all".

Mon, 03/04/2013 - 16:36 | Link to Comment Black Markets
Black Markets's picture

For fuck sake it doesn't matter what you buy so long as you are OUT of cash.

It's cash that is crashing here as the central banks pursue a policy of monetary drag, raising rates far too slowly, easing too much and generally bankrolling their various respective governments by transferring the spending power of currency deposits to the public finances.

Everybody is at it. Holding money is a dumb fucking play.

All assets will rise.

What is basically happening is the banks are buying everything up in an environment of low monetary velocity.

Once the banks own everything the central banks will start printing money and distributing it to the wider economy and the general public.

When this happens monetary velocity will accelerate and the economy will take off again and who will benefit? The banks who bought everything because they were first receivers during the period of slow monetary velocity.

The whole system is vulnerable to influence from the men who control finance and monetary issuance. Their power is so esoteric that it survives unquestioned.

It is not necessarily a bad thing. It is better to have plutocrats than barbarian chieftains. These megalomaniac psychopaths need to be occupied in order to keep the peace.

It's good that the Icahn's of this world spend 20hours a day plotting market mischief rather than laying siege to suburbia and invading Poland.

Mon, 03/04/2013 - 20:24 | Link to Comment MrPalladium
MrPalladium's picture

"It is better to have plutocrats than barbarian chieftains"

Depends upon which barbarians you are talking about.

Mon, 03/04/2013 - 16:37 | Link to Comment Uncle Zuzu
Uncle Zuzu's picture

"Stocks are obviously overbought in the short-term and I am obviously overpaid in all terms, long, middle and short."

Mon, 03/04/2013 - 16:37 | Link to Comment lolmao500
lolmao500's picture

Big rumors coming out of Europe that a lot of SWAPs are gonna be called... and it won't be pretty.

Mon, 03/04/2013 - 17:19 | Link to Comment rubearish10
rubearish10's picture

Apparently those "big" rumors are not big enough!

Mon, 03/04/2013 - 16:41 | Link to Comment electricgorilla
electricgorilla's picture

Looks like alot of people are going to be wrong here. BTFD? Good luck with that.

Mon, 03/04/2013 - 16:42 | Link to Comment fuu
fuu's picture

Look at that orderly afternoon ramp, stairway to heaven.

Mon, 03/04/2013 - 16:43 | Link to Comment thismarketisrigged
thismarketisrigged's picture

every single stock is fucking overbought and will fucking crash like a bitch once this crash happens, which shouldbe realtivley soon, since this has been going on for 5 years already.

 

look for goog to fucking drop to 500 when this happens. talk about a stock being overbought. same with amzn, company has not fucking made a profit in god knows how long, yet the stock continues to shoot up on nothing.

Mon, 03/04/2013 - 16:51 | Link to Comment rhinoblitzing
rhinoblitzing's picture

Current Depository Trust  seems 2 b GOOG and PCLN -

Mon, 03/04/2013 - 17:11 | Link to Comment Cthonic
Cthonic's picture

According to Forbes, PCLN is #20 Most Shorted Nasdaq 100 Component according to latest data

Mon, 03/04/2013 - 17:03 | Link to Comment Kirk2NCC1701
Kirk2NCC1701's picture

Funny... when I flipped my 401k into an IRA, I opted for cash the Treasuries for the same reason.  And I don't make what he does, so... either I need to be paid more, or he needs to be paid less.

But I forget: you only get paid way more if you risk OPM, not your own money.  Silly me.

Mon, 03/04/2013 - 21:18 | Link to Comment spekulatn
spekulatn's picture

Working on Wall Street 101:

Here is a guaranteed way to get paid well if you work on Wall Street. Find a best friend at a competing bank or hedge fund and take opposite sides of the same large bet. In one year’s time one of you will have a huge profit and get paid well. The other person will have lost and perhaps be fired. The sum of both your profits will be zero, but the sum of what you get paid will be positive. Split the pay.

 

http://blogs.scientificamerican.com/guest-blog/2013/02/27/why-its-smart-...

Mon, 03/04/2013 - 17:09 | Link to Comment SAT 800
SAT 800's picture

Of course the Stocks are overbought; and I thnk one thing on his mind, is the flight capital from Europe that will soon be flowng faster into Dollar items; such as Ten Years; He and Kyle Bass are the people I listen to very carefully; because they're as smart as I am, and they do this full time. They don't make mistakes over any one year period.

Mon, 03/04/2013 - 17:17 | Link to Comment Bingfa
Bingfa's picture

Buys "more long term treasuries"

That's hilarious, that has to be a typo....... maybe he said "more long term farmland"

 

Mon, 03/04/2013 - 17:28 | Link to Comment WhiteNight123129
WhiteNight123129's picture

The only reason the Treasuries rallied is because of the Italian election and knee-jerk treasuries. There could be more turmoil, but the South of EUrope owns the vote at the ECB, meaning in the next 2 years ECB prints and then what goes with the safe heaven rally on treasuries? Over.

The long the Treasuries yield stay above the all time low, the long the FEd prints the more you move into bear market for bonds. Another 2 years of uncertainty and then rates rise aggressively.

 

 

Mon, 03/04/2013 - 17:34 | Link to Comment Lord Of Finance
Lord Of Finance's picture

Go into treasuries for quite some time. Interests rates should stay low for a while. It takes about 7-10 years for massive spending/printing to start making economic impact. That is where I am for short term, and emphasize short.

 

    I want to see this nonsense come to a reset as much as anyone, but the money binge will not impact for a few more years. I want it to occur most especially against this corrupt and dispicable administration, but I am afraid it will not occur until after the 2016 election. And that adninistraation will get the blame. It is what has occured throughout history. Bernanke's, Geithners and Obuma's treacherous policies will be a distant memory to the sheep when all this printing leads to near catastrophic to outright catestrophic inflation in a few more years.

Mon, 03/04/2013 - 17:50 | Link to Comment syntaxterror
syntaxterror's picture

Motherfucking bullish!!!

Mon, 03/04/2013 - 18:16 | Link to Comment Börjesson
Börjesson's picture

"The dumbest investment, in my view, is a long-term government bond."

- Warren Buffett on CNBC this morning

Mon, 03/04/2013 - 19:21 | Link to Comment goldenbuddha454
goldenbuddha454's picture

Gundlach called AAPL falling through 425, when all the other analysts were piling into the stock.  I'd rather be with Gundlach than against him.

Mon, 03/04/2013 - 20:23 | Link to Comment Richard Whitney
Richard Whitney's picture

TBT closed at 65.47 today. Let's watch,and review in a month or two.

Mon, 03/04/2013 - 20:39 | Link to Comment Hongcha
Hongcha's picture

Silver may be putting in a tradeable bottom here.  Long since late Friday.

Tue, 03/05/2013 - 02:45 | Link to Comment magne13
magne13's picture

Guys, Gundlach is right and he should be loading up on 3% bonds and 2% notes as well as some long equity exposure, obviously not Apple, cuz thats going to 213, but as much as I love ZH and all the contributing commentaries, it is much easier if you look at the big picture and the timeline for what will transpire:

PROBLEM = zero growth, higher exponentially increasing debt, unfunded liabilities and decreasing collateral values

SOLUTION:

1. FED KEEPS ZERO RATES INDEFINITELY AT LEAST TILL 2016

2. FED CONTINUES PUMPING 85BLN A MONTH INTO INVESTMENT BANKS

3.  INVESTMENT BANKS CONTINUE TO PUMP 85 BLN SPLIT BETWEEN NEW SIV'S AND EQUITY MARKETS

4.  SP500 AND ALL INDICES CONTINUE LINEAR PUMP WITH MINOR PULLBACKS

5. LONG TERM RATES ANCHORED VIA RMB/$ PEG, FED INTERVENTION, LONG TERM LIABILITY MISMATCHS

RESULTS:

1. 2013-2016 EQUITY MARKETS 15% ANNUALIZED RETURNS

2. LONG TERM RATES 3.25% TO 2.50% RANGE

3. BANK RESERVES NEAR 3TRN, ASSET PRICES HIGHER, INPUT PRICES HIGHER, FOOD HIGHER, GAS HIGHER

Then the FED can raise rates which will be a boon for unfunded pension liabilities as the risk free rate rises and discount rates normalize.  FED is the bad bank and will hold assets to maturity, they do not need to worry about the losses on their balance sheet, nor do they need to pay anything to the Treasury.  That is just a luxury for the treasury, that is not the intention of the FED, it is the by product of an over spending government.  So as much as I do not agree with the bankster mentality, it is much a part of a very corrupt system that we are stuck with.  If you choose to fight and resist and be a naysayer and doomsdayer, this market will destroy you and you we be left to vent your miseries on this board.  The market will never go down as it did in 2008, it will never crash as it did in 87 nor 29, because it is no longer a zero sum game.  It is a rigged game by which the FED who controls all the money can simply print and print and force every other CBank around the globe to do the same.  Thats it, that simple, we have everyone backed into the corner and they will just have to take it.  So I suggest you just BTFD and get into the matrix.

 

Tue, 03/05/2013 - 08:09 | Link to Comment goldenbuddha454
goldenbuddha454's picture

"it will never crash as it did in 87 nor 29"           That is one interesting call. 

Wed, 03/06/2013 - 03:24 | Link to Comment Lord Of Finance
Lord Of Finance's picture

Good post. He can load up long treasuries and sell them to some sucker if the winds change direction after 2015 or so. He can easily sell and get out if the shit does hit the fan, and if we continue to have a Japan scenario here over the next couple lost decades, then going long would be a safe/good call, but I do believe that even the fed will have to recognize real inflation come 2016 or thereafter. Food and energy inflation(especially food) will be soooo devastating that it will start to affect the CPI(in the LONG term). Maybe by 2016 at the earliest. It will be undeniable at some point. The fed will be forced to raise rates,(by the same way they always have been forced), by then and that will be devastating to this sand castle economy THEY have been artificially proping up with grossly inflated asset prices.

 

  Gundlach knows this is a possibility. Both scenarios are highly possible, but I am putting my money out of the long term bond/Japan scenario for now. Once again, Maybe Gundlach knows there will be undeniable inflation in 3-5 years and he is just setting up the suckers to sell them his bonds in the future. Or he is playing it by ear and eye as we all are. We do not have crystal balls in this game. There is no telling for sure what will happen and exactly when. We just stay on look out, and this site is a great lookout post!!!!!!!!!!!!

Tue, 03/05/2013 - 09:05 | Link to Comment Grand Supercycle
Grand Supercycle's picture

DXY daily chart retracement & DOW  daily megaphone wedge confirmed thus more equity upside while DXY retraces from current overextended level.

Bullish warning for DXY monthly long term chart continues and this will not change.

trader618

Tue, 03/05/2013 - 09:40 | Link to Comment Nu Yawks hottes...
Nu Yawks hottest club is's picture

I can't fault this guy's logic and, truth be told, he usually seems to be 'on the money' whenever I've seen him interviewed.

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