Jeffrey Gundlach Excited by Selloff

Bond manager Jeffrey Gundlach describes the recent selloff in markets as ‘exhilarating’ and one that plays ‘right into the DoubleLine wheelhouse.” This according to a recent article in CityWire.

In a recent webcast, Gundlach expressed excitement about the opportunities inherent in the current crisis but cautioned investors “against buying in when it appeared markets might be recovering,” adding “I’m getting less negative on the stock market…but things have to clean out and are going to take some time.”

Gundlach has long been bearish on the corporate bond market, the article explains, “warning on the size and composition of the lower end of the investment-grade sector, as well as high yield and the US equity market.” DoubleLine performed well during the 2008 financial crisis by buying securities which went on to rally. In Gundlach’s words, “We shined in the global financial crisis.”

He said the Fed’s rate cuts and plan for further quantitative easing were not surprising, but argued that the government’s plans to distribute cash to small businesses could be vulnerable to abuse:  “I can’t even imagine the kind of corruption that will go on.”

Gundlach noted, “Sometimes it is what you don’t do that makes you succeed,” adding that the BB corporate bond market is “about as unattractive as I have ever seen it in my career.” High yield markets, he said are “screaming recession, and with a magnitude that looks to be wider than the great recession of 2007.”