Gundlach: There Will Be No U.S.-China Trade Deal, 75% Chance of a Recession in 2020; Scotiabank: The Fed and ECB Both Face Fresh Challenges

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Jeffrey Gundlach, the chief executive of DoubleLine, said Thursday there will be no trade deal between the U.S. and China before the presidential election. At a presentation in London, Gundlach said President Trump is the “irresistible force” but that China has every incentive to attempt to wait out his presidency. Trump won’t do a deal without intellectual property being addressed while China can’t do such a deal, he said. Speaking about negative-yielding debt, Gundlach said it is only central banks or regulated pension and insurance funds that own the securities.

Jeffrey Gundlach on Thursday struck a pessimistic tone, saying there was a 75% chance of a recession before the next presidential election as he warned that the corporate bond market is a crisis waiting to happen.

Gundlach, the outspoken chief executive of DoubleLine, mockingly delivered a presentation called the “Greatest Economy Ever,” an allusion to President Donald Trump’s characterization, which the famed bond investor doesn’t share.

Gundlach, to a London audience, outlined a number of worrying signs, including declines in purchasing indexes, which peaked at right about the same time the U.S. and global stock markets SPX, +0.12% did.

Gundlach said neither Trump nor China would be willing to agree to a trade deal, with the Chinese side waiting for the possible electoral defeat of the White House incumbent.

He also pointed to a New York Fed model showing a rising likelihood of a U.S. recession but did concede that jobless-claims data have been indicative of a strong labor market, even if jobs growth has slowed.


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