Gundlach: "The Order of The Financial System Is About To Be Turned Upside Down"

Tyler Durden's picture

"I'm not a big fan of bonds right now," may seem like an odd way for the so-called Bond King to begin, but in an audience at Vanity Fair's Establishment Summit, DoubleLine's Jeff Gundlach told Bethany McLean, "I haven’t been really [a fan of bonds] for the past four years, even though I manage them, and institutions have to own them for various reasons."

Gundlach urged investors to be “light” on bonds. As Vanity Fair's William Cohan reports, Gundlach admitted “I’m stuck in it,” of his massive bond portfolio, adding that interest rates have bottomed out and been rising gradually for the past six years.

Gundlach said his job now, on behalf of his clients, “is to get them to the other side of the valley.”

When the bigger, seemingly inevitable hikes in interest rates come, “I’ll feel like I’ve done a service by getting people through,” he said.


“That’s why I’m still at the game. I want to see how the movie ends.”

But it can’t end well. To illustrate his point about the risk in owning bonds these days, Gundlach shared a chart that showed how investors in European “junk” bonds are willing to accept the same no-default return as they are for U.S. Treasury bonds, pointing out that this phenomenon has been caused by "manipulated behavior" by central banks.

European interest rates “should be much higher than they are today,” he said,

“...[and] once Draghi realizes this, the order of the financial system will be turned upside down and it won’t be a good thing.


It will mean the liquidity that has been pumping up the markets will be drying up in 2018...


...Things go down. We’ve been in an artificially inflated market for stocks and bonds largely around the world.

“My job is to find scary things,” Gundlach told McLean...

“My critics say, ‘You find seven risks for every one that exists.’ Guilty. That’s my job. My job is to try to find out what can go wrong, not cover my ears and hum. It’s better to keep your eyes open.”

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Rusty Shorts's picture

Check this out, Julian Assange has half billion $$$BitCoin.

Hulk's picture

Rusty, nothing like being half a billion aire and being stuck in a hotel room...

P.S.  I used to work with John Hanley, circa 2001, after he sold ghost. He was living in a hotel room after he sold ghost to symantec. and I would always bug him: John, what the fuck are you doing living in ahotel room in LA, with many millions in the bank working on Portlock??? You stupid mother fucker !!!

P.S. He was actualy a smart mother fucker and I enjoyed working with him...

abyssinian's picture

yeah yeah yeah gloom and doom!  Next thing they will call you racist like Dr. Faber.. 

gmrpeabody's picture

It's that time of the year when everything bad that can happen will happen.., only next year. We see this every year about this time...

abyssinian's picture

Jeff!  Smarten up buy bitcoin or other cryptocurrencies.  If you did the last 4 years with your bond money, you would have been the biggest hero for all your clients. 

Five Star's picture

Not even a touch of hypocrisy Jeff 'Brexit is so unlikely you shouldn't even hedge it' Gundlach...

Escrava Isaura's picture

Gundlach: job now, on behalf of his clients, “is to get them to the other side of the valley.” 

LOL. Sounding like a priest.

Your ‘financial’ religion is about to end.

There’s no other side, because the other side has nothing left to be take.

Keep playing the financial fraud such as bond and crypto currencies till it go down, says, in the next 10 years.

Followed by many proxy wars/civil wars. Soon thereafter, we’ll nuke each other.

Then all religions ‘all lies’ are gone.



white horse's picture

Including religion of atheisam.

hxc's picture

I think most hedgies agree with you for once, but you bug the living shit out of us with the rest of your comments, hence the downvotes.

libertyanyday's picture

your gonna be first to get whacked.............crypto will be declared counterifeit and CB's will hijack one for thier use..........smell the bacon

Hillarys Server's picture

Found Julian's daily schedule at the hotel.

09:00 am  Wake up
10:00 am  Eat breakfast
11:00 am  Check e-mail
12:00 am  Watch CNN
01:00 pm  Eat lunch
01:30 pm  Check e-mail
02:00 pm  Prostitutes pee on bed
03:00 pm  Check e-mail
04:00 pm  More prostitutes pee on bed
05:00 pm  Watch CNN
07:00 pm  Check e-mail
08:00 pm  Eat dinner
09:00 pm  Prostitutes pee on dinner
10:00 pm  Check e-mail
10:30 pm  Check bitcoin spot price
11:00 pm  Get drunk
12:00 pm  Sleep

ElTerco's picture

The down votes are because you f*cked up. That's Trump's daily schedule.

Paul Kersey's picture

ElTerco, do you really believe that Trump would actually have to PAY someone to "pee on his dinner"?

MansaMusa's picture

No nap in that schedule !?  Everyone needs a nap after a bbj & golden shower

mc225's picture

ghost was a great, great program

Titus's picture

Interesting. We may have some common friends, a good friend of mine worked at potluck in the same time period. 

I really wish my friend would read zerohedge instead of BuzzFeed. We would be better friends now.

gmrpeabody's picture

<Deleted for lack of coherent content...>

Kayman's picture

Some of the wealthiest (measured in dollars) people I know live some of the humblest lives. Conspicuous Consumption is for Narcisists.

king leon's picture

Off topic: Chad Nishimura, an eye witness to the Las Vegas shooting who claimed that "Stephen Paddock" just looked like a normal guy with not much baggage, was found dead outside a church after disappearing for 2 weeks, all of his social networks were deleted. Police believe Nishimura was shot after a botched robbery attempt at 5.30 pm.

Why do whistleblowers always hang out with robbers when they go on the run?/sarc

Mentaliusanything's picture

Rusty, unlikely, 21 million max at end point and the last one to mine will be hard.

With that sort of money he could hire his own army and buy a his own space.

lester1's picture

Trump's tax cuts will be the trigger!

mily's picture

Apropos Jeff's Irish roots and his "beaten up" face from the picture, someone must have paid him a visit at double line headquaters,

"listen huh, whatever you do don't call him little Jeffrey, ok?",

"Mr Gundlach, you know I have respect to your business..."

halcyon's picture

Can't wait for the shit go down. It's been a long time coming... Maybe in 2018-2019. We'll see. Till then, trade with caution.


Cash2Riches's picture

Its better to bring this mess crashing down sooner, rather than later. The banks are just priming the markets for another massive collapse. We have a montrous bond bubble, that is just waiting to pop.

mily's picture

"This sucker could go down"...v2.0?

tmosley's picture

I'll be honest, I was really hoping he was going to tell us how he became the fresh prince of Bel-aire.

runnymede's picture

I was hoping he would be the first oligarch to admit they really are just winging it and they can't really believe how much bullshit people swallow as long as you promise them something. 

Lost in translation's picture


It’s what doom-porn has done to me.

Somebody please wake me from my coma when the S&P is 666 again.

Hulk's picture

Belgium ales have my liquidity at a maximum !!!

God bless Belgium ales !!!

La Meme, sil vous palait !!!

KnightTakesKing's picture

Blah. The American Craft Beer scene is where it's at.

Dragon HAwk's picture

I need Bread and they won't take my paper currency.

KFBR392's picture

wow. so insightful. something *could* happen. and he gets paid how much to enlighten this profoundly? fuck him nothing is ever going down except joe averages real income.

Mikeyyy's picture

"... once Draghi realizes this..."

Gundlach may be waiting a long, long time for this to happen.

Sirius Wonderblast's picture

Draghi will be well aware of it, just not acknowledging.

libertyanyday's picture

how many more trillions can be injected without a dam breaking somewhere.

new game's picture

yup, trillions put towards keeping the train rolling on the tracks.

so what is the game changer? (black swan).

free markets used to allow a game changer to come out of the blue.

now, everything is micro managed to prevent market distortion while they distort the market with ultra low interest rates to keep the interest proportion of budgets from crowding the fiscal pie.

at some point the interest rate on shit tons of bonds will matter...

when does maff matter?


runnymede's picture

A dam is pretty tough. It's when you run out of mountain to build it higher. Then comes the debt overtop. 

coast1's picture

I know this is long, but its good :-)  someone posted this a couple of days ago, and my apologies, but I dont know who it was..Then, I sent it to Jim Willie...His comments arte below the copy/paste from another commenter here on ZH...This is deep stuff, and true..please check it out.

China and Russia are not the good guys either. In fact, China and Russia are only playing good cop, bad cop with their partners, the Americans and the Europeans.

China, like Russia, is not pro-gold and acts in collusion with the COMEX and LBMA to suppress the price of gold. When gold goes up in price, it will be against the will of the Chinese, the Russians and the Indians.

The BRICs are all IMF member countries and are thus forbidden to monetize gold, or link their currencies to gold, or use gold as a trading or exchange mechanism:

India recently collaborated with Western bankers and following the West's instructions, temporarily destroyed the purchasing power of its own Indian population by demonetizing physical cash, under the guise of eliminating tax evasion and cash-only criminal activity. This has had the effect of crashing the gold price by temporarily removing the Indians from the gold market, exactly when the Trump inauguration lit a fire under the gold price.

The Russians never abstained from using dollars even at the time of the communist USSR! If they did not demand gold for their oil during the Cold War, why would the Russians do it now when the Russian central bank is owned and controlled by the City of London banking establishment since the creation of the new Russian Constitution under Yeltsin? The Russians are forbidden to issue their own currency the Ruble without permission from Western bankers and the Russians can only buy US Treasuries with the dollars they get for their oil, not gold. There are more dollar assets than Rubles in Russia:

The gold price would have skyrocketed if the Russians and the Chinese were buying gold hand over fist as alleged. Why do you think that Western bankers would give gold away at or below cost to their purported enemies?

Unless they were not enemies in reality, and just partners playing good cop, bad cop for the purposes of fooling and manipulating their unsuspecting respective populations?

Why do the Russians never ask the Americans to leave Syria where the Americans are illegal invaders under international law? Why did the Russians never prevent the Israelis from attacking their allies the Syrians?

The Shanghai Gold Exchange is a fraud designed to legitimize the fraudulent COMEX "discovered" gold price. Goldman Sachs and JPM never could have manipulated the gold and silver prices lower without active Chinese collaboration. That the Shanghai Gold Exchange is a physical only market is a LIE:

The Chinese government defrauded and stole from their own Chinese citizens by encouraging them to buy gold at the top. The Chinese bankers then colluded with JPM and Goldman Sachs to crash the gold and silver prices. Large amounts of physical silver were leased out and sold into the physical markets by the Chinese authorities as well:

Do not forget: It's the international ruling classes against the common folk. That's the real meaning of globalism.

here is Jim willies response to the above:


interesting perspective on much

I disagree on some of this

rich vs poor to be sure

I think China engages the US and West on its own terms in order to share control first,

   then to take it away

/ jim

China has used back channels to move 30,000 tons from London

all done off market

you missed this huge essential point

Voice was part of the removal project from March 2012 to Oct 2014 no effect to gold price when supply comes from Vatican vaults jim


Chicken Farmer's picture

Maybe I’ve been an absolute moron for the last 8 years I’ve been reading ZH but what just occurred to me after aljl these bulls?!t articles is that, if I’d never read one of these articles ... right now today regardless of all the real shit that’s gone ,on I’d think life is pretty damn good, bills are paid, S & P looking good, 401k ain’t bad but NO I had to go and swallow the F’n pill and can never go back what a pity!!
Damn strait ignorance is bliss!!

coast1's picture

I have been "semi-moron"  so I know what you mean.. Its never too late to make changes, you did well, now take what you have learned and continue..You are not a moron, by any means, but now you can take what you have learned and even do better...

samsara's picture

Yes, staying on the same course is comfortable. Just keep going on same path(ignorance).

Everything works fine ... Until you step into the open manhole.

But we do know what you mean, you listen to people's conversation at work and just mutter to yourself. You can't enlighten even the people in your family much less just work acquaintances.

As my mom used to say,
"Some Minds are Like Cement, All Mixed Up and Permanently Set."

Dame Ednas Possum's picture

Being conscious and aware is frigging hard work. 

Once awake it is impossible to switch off... and it then pervades all aspects of one's life, whether one likes it or not! 

I often wonder if it would be easier to be stumbling about in blissful ignorance like so many others... but I know I can never achieve that, even if I wanted to. 

It's an albatross. 

new game's picture

simple shit for me. never ever will i fuking put one dime in the markets or a big bank. i don't give one flying fuk about bit coin. i don't give another flying fuk about the s and p, dow or gold or any of this investment shit. it is all one big trap cunsuming mental space that could be put to happiness and lifes simple pleasures. fuk wall street, the fuking bond dickhead, monies fukheads and all their ilk.

been there, and will never ever go back.

i have what i earn. simple shit maynard.

ps farmer dude. u r not a moron, but a simple happy good guy. don't look back, ya can't change it anyway. keep on truking fwd and put this investment shit in a box and burn it...

piles of money are the falsest of false security. the real security in life is the ability to learn, teach and be self sufficient without money.

the day will arrive when the majority will be mostly helpless with piles of worthless investments. one big lol to that fuking waste of life...

runnymede's picture

The Good Brahmin

By Voltaire 

Right up your alley. Short read as well and free many places online.

Your comment is excellent. 

A quick note on Voltaire --- his books and short stories were written after the age of 50. Before that he was a playwright. His genius was the ability to poke fun at TPTB without an angry tone. And it angered those folks to no end. The french exiled him and banned his work. And it made him all the more famous. Sort of the original Streisand Effect.

Mikeyyy's picture

I'd say you were right.  You've been an absolute moron the past eight years.