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

"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.”

Comments

Hulk Rusty Shorts Mon, 10/23/2017 - 23:30 Permalink

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...

In reply to by Rusty Shorts

Escrava Isaura Five Star Tue, 10/24/2017 - 04:54 Permalink

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.  
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In reply to by Five Star

Hillarys Server Hulk Mon, 10/23/2017 - 23:51 Permalink

Found Julian's daily schedule at the hotel.09:00 am  Wake up10:00 am  Eat breakfast11:00 am  Check e-mail12:00 am  Watch CNN01:00 pm  Eat lunch01:30 pm  Check e-mail02:00 pm  Prostitutes pee on bed03:00 pm  Check e-mail04:00 pm  More prostitutes pee on bed05:00 pm  Watch CNN07:00 pm  Check e-mail08:00 pm  Eat dinner09:00 pm  Prostitutes pee on dinner10:00 pm  Check e-mail10:30 pm  Check bitcoin spot price11:00 pm  Get drunk12:00 pm  Sleep

In reply to by Hulk

king leon Rusty Shorts Tue, 10/24/2017 - 05:32 Permalink

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  www.truthseeker.co.uk

In reply to by Rusty Shorts

KFBR392 Mon, 10/23/2017 - 23:29 Permalink

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.

new game libertyanyday Tue, 10/24/2017 - 06:45 Permalink

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?hmmm

In reply to by libertyanyday

coast1 Mon, 10/23/2017 - 23:30 Permalink

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: http://m.beforeitsnews.com/silver/2016/04/how-the-imf-forbids-the-use-of... http://www.24hgold.com/english/news-gold-silver-why-does-the-imf-prohibi... 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: http://anonhq.com/checkmate-central-bank-russia/ http://www.pravdareport.com/russia/economics/30-12-2014/129431-usa_russi... 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? http://www.mygen.com/users/ufo/Mao_was_a_Yale_Man_2.html 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: https://www.sprottmoney.com/blog/the-new-shanghai-gold-exchange-does-any... 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: http://www.silver-investor.com/charlessavoie/cs_july04.htm http://m.digitaljournal.com/article/279166 http://www.dnaindia.com/money/column-china-urges-citizens-to-buy-gold-an... 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:wow!!interesting perspective on muchI disagree on some of thisrich vs poor to be sureI think China engages the US and West on its own terms in order to share control first,   then to take it away/ jimChina has used back channels to move 30,000 tons from Londonall done off marketyou missed this huge essential pointVoice was part of the removal project from March 2012 to Oct 2014no effect to gold price when supply comes from Vatican vaultsjim 

Chicken Farmer coast1 Mon, 10/23/2017 - 23:40 Permalink

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 there...wtf what a pity!!
Damn strait ignorance is bliss!!

In reply to by coast1

samsara Chicken Farmer Mon, 10/23/2017 - 23:59 Permalink

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."

In reply to by Chicken Farmer

Dame Ednas Possum samsara Tue, 10/24/2017 - 00:33 Permalink

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. 

In reply to by samsara

new game Dame Ednas Possum Tue, 10/24/2017 - 07:10 Permalink

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...

In reply to by Dame Ednas Possum

runnymede Dame Ednas Possum Wed, 10/25/2017 - 01:43 Permalink

The Good BrahminBy 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.

In reply to by Dame Ednas Possum