DoubleLine Capital, Released on 10/29/24 (Recorded on 10/22/24)

In a conversation at the Buffalo AKG Art Museum with Drew Watson, Art Services Specialist at U.S. Trust, Bank of America, DoubleLine CEO Jeffrey Gundlach discusses his near-term outlook for Federal Reserve monetary policy, the prospects for sub-3% inflation into next year, a secular change in interest-rate regime rewriting the behavioral rules of markets and the potential for a failed Treasury auction. The discussion was recorded Oct. 22, 2024.

Highlights from Mr. Gundlach’s talk:

(0:10) The forgotten depression of 1921 and the failed course of U.S. recession policy since then.

(2:53) The “most important investment concept”: the idea that in the midst of an end of a four-decade secular regime of lower interest rates and a rewriting of the developed world’s social and economic order, past experience often will mislead investors in their decision-making.

(4:59) Gold as a “permanent asset allocation amid fears across many fronts, including imploding institutions; U.S. involvement “in two significant wars” on its way to three; massive budget deficits; institutions such as the CIA and Justice Department meddling in elections; inflationary policy.

(6:01) The end of “the old game plan” by which the U.S. government collapsed interest rates to borrow its way out of recessions.

(8:01) In the absence of lower Treasury rates off which corporate spreads price, corporate bonds in the next recessions are headed toward “a much higher default rate than what we think we know from experience.”

(10:53) The outlook for Federal Reserve rate cuts for the remainder of 2024.

(13:04) Jobs reports by the government and indications the statistics are being manipulated.

(15:44) Inflation outlook: “A lot of people are worried that inflation isn’t dead yet. I’m not in that camp.” DoubleLine has “been pretty good on inflation forecasts, and we think we’re going to be living in somewhere below 3% on the CPI at least until the middle of next year.”

(16:07) The vulnerability of longer-term Treasury bonds to “crazy” government actions once the size of the federal debt exceeds critical thresholds. Mr. Gundlach cites past illegal policy actions such as the subordinating of senior secured General Motors debt to bail out the GM pension system and the Fed’s purchase of corporate bonds in 2020 in response to the collapse of the corporate bond market.

Jeffrey Gundlach is the Chief Executive Officer and Chief Investment Officer of DoubleLine Capital. He is recognized as an expert in bond and fixed income investments. His investment strategies have been featured in leading publications from around the world In 2013, he was named “Money Manager of the Year” by Institutional Investor. He is a graduate of Dartmouth College summa cum laude holding a BA in Mathematics and Philosophy. He attended Yale University as a PhD candidate in Mathematics.

  economy, federal reserve, gold, inflation, investing, Jeffrey Gundlach