How is Gundlach preparing and trading in advance "Trump presidency"? "Look at arms manufacturers, said Gundlach. He would avoid companies that are susceptible to global trade slowdowns, particularly those related to Mexico and China.... As he gets the nomination, the markets and investors are going to worry about it more. You will see a downgrading of global growth based on geopolitical risks. You must factor this into your risk-management."
Moments ago, the 2016 edition of the Sohn Investment Conference started, a feeding frenzy for traders and hedge fund managers such as Gundlach, Einhorn and Chanos who descend on this popular annual "round table" to pitch their best and worst ideas. As always, the moment a company's name is mentioned in a bullish or bearish context, its stock is sure to surge or slump, as the headline-hungry algos immediate pounce in the current reactionary market environment. But is following the advice of these hedge fund gurus such a good idea?
While there was no unexpected overnight central bank announcement unlike yesterday's surprise by the RBA which unleashed volatility havoc in the FX market, which promptly spilled over into all asset classes, overnight stocks around the world saw another leg lower without a tangible catalyst, while EM currencies fell to a one-month low after two Fed presidents raised concern investors had become too complacent in their belief that U.S. interest rate raises will stay on hold. Or perhaps all that is happening is that after ignoring Trump, the market is starting to finally price in the possible reality of the Donald in the White House (although as Jeff Gundlach pointed out, Trump would be a far better president for the economy and the market than Hillary or Bernie).
If the world’s economies were really out of intensive care, why would ultra-radical monetary policies like helicopter money be increasingly debated at the highest level of governments? Also, how come 70% of Americans believe the US economy is on the wrong course? And why do almost half of US citizens admit they couldn’t come up with $400 to meet an unexpected need? Yes, I know why ask why? And it is what is, and a bunch of other clichés. But this isn’t normal, it isn’t healthy, and - at least in the opinion of this author—it isn’t going to end well.
“If the weather forecast suggests it might rain, wouldn’t you carry an umbrella?”
“The market does what it should do, just not always when.” – Jesse Livermore
"A succesful investor is that which makes all the same mistakes that everyone else makes... but learns from them," explains DoubleLine's Jeff Gundlach in this brief but extremely crucial to comprehend interview. If you want to know why you lost in 2008 and 2011 when you thought your 'bond' portfolio would save you... the new bond guru explains...
"The riskiest things are now stocks and other investments perceived to be safe. One of the most popular categories in US investing are low volatility stock funds. But there is no such thing! If you think that a stock like Johnson & Johnson can’t go down, you’re wrong.. If you are waiting for the confirmation of a recession before taking actions to protect your investment portfolio, it will likely be far too late.”
This afternoon Jeffrey Gundlach held one of his periodic interviews with Reuters' Jenna Ablan in which he said that the selloff in Treasurys is over and that investors looking to purchase Treasuries in the wake of the bond market's sell-off - if one can call a move in the 10Y to 1.91% a selloff - are making a prudent move. "I think it is a reasonable strategy to start legging into the Treasury market."
"The US stock market seems egregiously overvalued versus other stock markets... you are going to see declines in the US stock market and since the correlations are so high this means that probably the junk bond market will go back down, too. Negative interest rates are the dumbest idea ever. It’s horrible.... Gold is doing fine. It’s preserving capital in the US, it’s been making money over the last couple of years for European investors. That’s why I own gold.... Trump is going to win. I think Clinton and Sanders are both very poor candidates."
Jeff Gundlach: "I Remain Bullish On Gold", Fed Hike Increasingly Likely "One And Done" - Live WebcastSubmitted by Tyler Durden on 04/12/2016 16:32 -0400
Seemingly echoing Fed's Williams earlier hawkish comments, Atlanta Fed's Lockhart notes that full employment is "getting closert and closer," and warns that "rate hikes are justified in 2016, possibly soon," adding that LOCKHART SAYS RATE HIKE JUSTIFIED AS EARLY AS APRIL FOMC. It is clear the messagge that is being sent - don't keep buying stocks in anticipation of our 'put' (but don't sell 'em below 2000 either). Or is it a desperate attempt to reclaim some lost credibility?
While many investors may be breathing a sigh of relief thanks to the bounce off the February low, with the S&P up 11% since the start of February – it’s still not all lollipops and rainbows out there in market-land. There’s some worrying undercurrents that could spell more trouble ahead...
"...these lines will converge!"