We’ve said it before, we’ll say it again. You can’t exploit “emergency stimulus” level interest rates for the benefit of a propped-up stock market for a decade without eventually paying the piper. Now Jeffrey Gundlach, the “Wall Street bond king” who manages $118 billion, is saying the same thing.
Jeffrey Gundlach, chief executive of Doubleline Capital, said on Wednesday that the “low rate-low volatility” market environment went on for so long that now “the unwind will be turbulent and not over in a couple of days.”
Gundlach, who is known as the Wall Street bond king, told Reuters that bitcoin was the “lead horse” of risk assets and its recent plunge has had a cascading effect on other risk assets.
Gundlach said it is “hard to love bonds at even a 3 per cent” yield. “Rising interest rates are a problem and the U.S. is in debt and there is massive bond supply,” Gundlach said.
The U.S. is headed for a sovereign debt and currency crisis that will make the financial crisis of 2008 look like a Sunday school picnic. It's finally time to pay the piper for 9 years of fake economic growth the #Fed purchased with QE and ZIRP. Payback's a bitch!
— Peter Schiff (@PeterSchiff) February 9, 2018
Never Mess With Another Man’s Money – Household & Corporate #Debt Through the Roof @TraderStef for @CrushTheStreet t.co/71892JWAGi #Fed #Financial Repression #NYSE #MarginDebt #AmericanDream #Consumer #Retail #Jobs #StudentLoans #AutoLoans #CreditCards @DiMartinoBooth pic.twitter.com/iuJoql1xH5
— TraderStef (@TraderStef) November 23, 2017
Veteran investor says that’s because of more debt in system
Rogers makes no claim to know the timing for his prediction
Jim Rogers, 75, says the next bear market in stocks will be more catastrophic than any other market downturn that he’s lived through.
The veteran investor says that’s because even more debt has accumulated in the global economy since the financial crisis, especially in the U.S. While Rogers isn’t saying that stocks are poised to enter bear territory now — or making any claim to know when they will — he says he’s not surprised that U.S. equities resumed their selloff Thursday and he expects the rout to continue.
“When we have a bear market again, and we are going to have a bear market again, it will be the worst in our lifetime,” Rogers, the chairman of Rogers Holdings Inc., said in a phone interview. “Debt is everywhere, and it’s much, much higher now.”
The plunge in equity markets resumed Thursday, as the S&P 500 Index sank 3.8 percent, taking its rout since a Jan. 26 record past 10 percent and meeting the accepted definition of a correction. The Dow Jones Industrial Average plunged more than 1,000 points, while the losses continued in early Asian trading Friday as the Nikkei 225 Stock Average dropped as much as 3.5 percent.