Gundlach’s Market Outlook

According to Jeffrey Gundlach, although the S&P 500 will post a negative return in 2018, there is no recession in the offing. This according to a recent Barron’s article highlighting takeaways from the DoubleLine CEO’s presentation at the Barron’s Top Advisor conference earlier this month.

The article provides charts from Gundlach’s presentation that reflect the following:

  • Central banks are scaling back their bond purchases, and net purchases by both the Fed and the ECB are expected to “dip into net-negative territory by July.”
  • U.S. Conference Board Leading Economic Indicator (LEI), says Gundlach, would “normally be starting to sink if a recession were in view. Instead, it’s rising.”
  • Factory order, he points out, are “booming,” and ISM’s surveys of goods and services producers are showing “little cause for concern.”
  • Consumer confidence is high.
  • “A relatively low yield spread between junk bonds and Treasury bonds of comparable maturities indicates that investors are sanguine about the economy.”
  • Commodity prices, says Gundlach, are poised for a late-cycle rally, and he recommends owning some to spread risk.