At the Barron’s 2019 Roundtable held last month, Jeffrey Gundlach of DoubleLine Capital shared some insights:

According to Gundlach, there has been an expectation by many that the dollar would go up because of the Fed’s planned rate increases. But while the Fed predicted two such increases in 2019, Gundlach says “the market is expecting virtually none. I think the Fed is already showing signs of capitulation, and so it’s likely that the dollar will go down.”

Gundlach argues that a weak dollar “correlates strongly to emerging market equity outperformance.”  He says that China is a factor in this, but that EM has been broadly outperforming the U.S. in recent months.

He notes that gold performs well when the dollar is weak: “I turned bullish on gold in the middle of last year at $1,196 an ounce. Gold and commodities,” he added, “broadly should benefit this year, although I worry about the economic scenario for industrial commodities.”

On the bond side, Gundlach expressed concern regarding longer maturities, citing U.S. budget problems “leading to a potentially much steeper yield curve, so I want to stay relatively short term.”

“Lastly,” Gundlach concludes, “I have an anti-recommendation. It is too expensive to short. Don’t buy junk bonds. Get out of junk bonds.”