Wednesday, April 25, 2012

Jeff Gundlach: The Bond King speaks

We at Price Signals love how CNBC has branded Doubleline's Jeff Gundlach the "Bond King" even as they have the former bond king, Pimco's Bill Gross and his wing man Mo El-Erian, on the show on what seems like a daily basis.

CNBC interviews Gundlach, who looks creepy as usual and sports his normal orange tie, on the floor of the NYSE. Gundlach asserts that US debt is so high at $15T that 'normal' interest rates would kill the economy (a 6% rate would result in an extra $600B in interest payments). We therefore need a slow growth economy to prevent nominal GDP from growing too much and putting pressure on rates. He doesn't think inflation will accelerate in wages and housing, but rather in commodities and the things "we need."

The bond king doesn't see treasury rates rising much this year, but even a bond rally wouldn't make much since rates are so low. If the 10y went to 1.5% from 2%, investors would make only 6%.

JG also supports his short Apple thesis and believes that the stock has peaked.

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