It's been a few months since Gundlach last held one of his open webcasts for his DoubleLine bond fund. Among other things, it will be interesting to hear his comments on the market meltup, the ongoing dislocation between stocks and bonds, the K-shaped recovery, and of course his thoughts on the next president (Gundlach famously predicted that Trump would win again, with the caveat that a flare up in Covid-19 cases could change the outcome).
Today's webcast is titled "No End in Sight," probably a reference to the liquidity firehose unleashed by central banks to prop up stock markets and to make the wealth divide even greater.
Courtesy of Bloomberg, the last time Gundlach made the following observations:
- The Dollar: He is a long-term dollar bear, but said that even in the short-run, the dollar got ahead of itself.
- Treasuries: He expected the yield curve to steepen with 30-year yields rising. He also bet against the TIPS market
- Stocks: Gundlach said the S&P 500 was in “nosebleed territory. This is not a cheap market.” He added the market was the most overvalued in history when looking at market cap relative to U.S. GDP.
- Corporate Bonds: Gundlach warned of a wave of downgrades of BB-rated bonds into the high yield spaces, saying the spread between BBB-rated bonds and BB-rated bonds were historically narrow.
Most recently, Gundlach ominously tweeted that "lots of financial trends are quietly reversing"- we are confident he will dig into this topic as well.
Lots of financial market trends quietly reversing. Will be addressing that in the weeks ahead.— Jeffrey Gundlach (@TruthGundlach) December 8, 2020
Oh, and for those wondering the title refers to, it is US public debt: as Gundlach says "there is no end in sight to US public debt."
Alongside this, Gundlach also touches on the marginal utility of debt, pointing out that that every dollar in debt now only results in 30 cents of GDP growth.
And there is the obligatory V2 and Velocity of M2 chart:
Gundlach also shows one of our favorite charts: the recent shocking gap between disposable income and spending resulting in record savings.
Another chart which was borrowed from here, is the following visualization of government benefits of household income.
His full presentation is below: