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DoubleLine CEO Jeffrey Gundlach warns of recession driven by ‘cocktail of economic risk’
CNBC ^ | TUE, MAY 14 2019 | Kate Rooney

Posted on 05/15/2019 7:45:27 AM PDT by Carolyn_Denton2355

DoubleLine CEO Jeffrey Gundlach warned investors Tuesday that the U.S. is unequipped for recession as it becomes increasingly strapped by debt.

“Any thoughtful person would be concerned,” the so-called “bond king” said in a webcast. “It’s sounding like a pretty bad cocktail of economic risk, and risk to the long end of the bond market.”

The billionaire investor said the United States is “out of tools” to gin up the economy during the next recession. He pointed to the Federal Reserve’s decision to leave interest rates steady and a dovish turnaround that boosted stocks this year.

The Fed signaled it would not hike rates for the rest of 2019. Even with record low unemployment, “it seems like the economy economy can’t handle a 2.5% Fed funds rate,” he said.

Gundlach also said most of the U.S. economy’s gross domestic product, or GDP, growth boils down to the amount the country borrowed. He likened the spending problem to maxing out a credit card.

(Excerpt) Read more at cnbc.com ...


TOPICS: Business/Economy; Government
KEYWORDS: debt; economy; recession
Do we have to prepare ourselves for a new crisis?
1 posted on 05/15/2019 7:45:27 AM PDT by Carolyn_Denton2355
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To: Carolyn_Denton2355
There is one tool nobody is talking about: income tax reform that encourages savings and investment in the USA.

American individuals and companies have multiple trillions of dollars sitting in non-US financial institutions for tax-avoidance reasons; we need to encourage the bringing back of that money to jump-start the economy.

2 posted on 05/15/2019 7:51:50 AM PDT by RayChuang88 (FairTax: America's Economic Cure)
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To: Carolyn_Denton2355

These guys always lie to you. My guess is he’s had a few cocktails himself.


3 posted on 05/15/2019 7:52:10 AM PDT by Fido969 (In!)
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To: Carolyn_Denton2355

:: Even with record low unemployment, “it seems like the economy [economy] can’t handle a 2.5% Fed funds rate,” he said. ::

Based on what objective evidence?

:: Even with record low unemployment, “it seems like the economy [economy] can’t handle a 2.5% Fed funds rate,” he said. ::

Oh! it SEEMS like...

:: Even with record low unemployment, “it seems like the economy [economy] can’t handle a 2.5% Fed funds rate,” he said. ::

What Gundlach didn’t say:
Because it maintains my bonds at a steady RoR that is detrimental to my need to manipulate them in times of volatility to make MOAR money for ME.


4 posted on 05/15/2019 7:52:40 AM PDT by Cletus.D.Yokel (Catastrophic, Anthropogenic Climate Alterations: The acronym explains the science.)
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To: Cletus.D.Yokel

Bond fund managers are the biggest pieces of scum on the planet.

They will always keep the good deals for themselves, and palm off the junk into the mutual funds they sell to pensions funds and older investors who are told they need to invest in bonds to reduce risk.


5 posted on 05/15/2019 7:59:51 AM PDT by Fido969 (In!)
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To: Carolyn_Denton2355

There is one guarantee with markets.... they rise and they fall. Sometimes in spectacular fashion.

However, “conventional wisdom” in our public discourse on a whole host of topics in the past few decades has been horribly wrong.

Foreign policy group think - wrong

Economic prognostication - wrong

Global warming - wrong

Housing market stability - wrong

The list is quite long where those who should know - didn’t know. The real irony is the same people who were wrong then are still the ones prognosticating today.

We are experiencing an expansion that is far beyond anything we expected to see again after the Obama years. A period of correction (recession) is inevitable - it is only a matter of when. The DNC, MSM (really part of the DNC), and big investment banks will try to sell us a recession if it hurts the President. You can count on it. The Fed will also do the same things as they are controlled by conventional wisdom (again, its often wrong) and the establishment who still hates Trump.

If Trump can delay the inevitable (and healthy) contraction and correction until after the election it will be an amazing feat. He has some very smart people on his economic team who buck conventional wisdom so he might do it. Our media and politicians treat a recession like the black plague, but never forget that it is necessary for the long-term health of the economy (not the 4 year election cycle).

The next recession may not be nearly as bad minus the typical bloodbath on Wall Street and MSM hysteria because Trump has improved the fundamentals of our economy.

There are going to be massive forces that push for it in the next 18 months.


6 posted on 05/15/2019 8:07:18 AM PDT by volunbeer (Find the truth and accept it - anything else is delusional)
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To: Carolyn_Denton2355
Many years ago, I was on Wall St. I was in the bond business (as in I financed projects with private and/or public debt).

Whenever we heard the term "bond king," we laughed out loud.

This is a sell-side guy who watches interest rates to see how they are moving.

Think about that a minute.

That's like watching paint dry or grass grow.

The funeral home business is dynamic by comparison.

7 posted on 05/15/2019 8:08:46 AM PDT by RoosterRedux
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To: Carolyn_Denton2355

Yeah. It’s called the 2020 election. It’s the end of the world as we know it if Trump wins (or so the hysterical Democratic Socialists would have you believe).


8 posted on 05/15/2019 8:12:08 AM PDT by RoosterRedux
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To: Carolyn_Denton2355

They never said this when bammy racked up the debt.


9 posted on 05/15/2019 8:16:45 AM PDT by I want the USA back (Islam, not a religion, a totalitarian political ideology aiming for world domination. -Wilders)
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To: Carolyn_Denton2355

Bond holders and that industry are notoriously pessimistic.
He has a point, though, in that we have no cushion at present to lower interest rates to stave off the next recession.


10 posted on 05/15/2019 8:20:26 AM PDT by sparklite2 (Don't mind me. I'm just a contrarian.)
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To: Carolyn_Denton2355

Bond guys have been very pessimistic lately. Not a big surprise when bonds have so little return.


11 posted on 05/15/2019 8:24:25 AM PDT by JayGalt (You can't teach a donkey how to tap dance.)
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To: JayGalt
Bond guys have been very pessimistic lately. Not a big surprise when bonds have so little return.

But lenders are making money. Look at the Capitol One balance sheet - demand and term deposits paying 1-2%, which they lend out as credit card debt, raking in on average (after losses) 15%.

Bond holders (who are pension funds, and older investors told to invest in bonds to get a "guaranteed return" with low risk... *snort*) and savers are the suckers in this economy.

12 posted on 05/15/2019 8:51:34 AM PDT by Fido969 (In!)
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To: RayChuang88

Yeah, I’ve heard that before and I totally agree with this idea. However, how can we force big corporations to bring back all the money they’re hiding on Virgen Islands and in other tax havens? Without breaking the rule of law and the free market, of course.


13 posted on 05/21/2019 4:16:09 AM PDT by Carolyn_Denton2355
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To: Carolyn_Denton2355
The answer is simple: a tax system that no longer taxes bank account earned interest and stock market dividend payments. Both Steve Forbes' flat tax plan from 1996 and the FairTax proposal do this.

If we get such radical reform, the USA will end up being the world's largest tax haven because investors all over the world will put their money in American banks and the US stock market essentially tax free.

14 posted on 05/21/2019 5:35:21 AM PDT by RayChuang88 (FairTax: America's Economic Cure)
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