Jeffrey Gundlach presented his latest forecast on a diversified array of financial assets in his latest webcast entitled, Just Markets-Aqualung. Amusingly the latter part of the title, Aqualung is a portable breathing device for divers that enables them to survive in an unnatural environment submerged in water with artificial oxygen.
In other words, the central bank’s constant flow of life support liquidity is keeping markets liquid and traders alive.
“the central bank’s constant flow of life support liquidity is keeping markets liquid and traders alive”
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Jeffrey Gundlach presented his latest forecast with Asian equities high on his “like list” saying that he finds them extremely attractive
Jeffrey Gundlach notes that Emerging Markets have beaten the S&P 500 since June, partly because of a weaker dollar, and there may be more room to run there, he added.
“The dollar should be weak given the Federal Reserve’s pledge to hold interest rates near zero for years to come” he said.
So, with a weak dollar, Jeffrey Gundlach doesn’t believe investors will be queuing to buy the new issuance of monetized federal debt, which is intended to part-finance the proposed one and a half trillion-dollar deficit spending.
“Don’t count on foreigners to buy Treasuries, Gundlach said. The non-U.S. share of purchases has been going down for years” he said. Moreover, he worries who will buy them.
Jeffrey Gundlach presented his latest forecast on commodities believing that they have room to run due to the weak US dollar.
“The dollar should be weak given the Federal Reserve’s pledge to hold interest rates near zero for years to come”
Investors should have 25% of their portfolios in some sort of real asset play, such as real estate or industrial commodities, according to Gundlach
Regarding Bitcoin, he said he turned neutral at $23,000, and he remains neutral on the fast-moving digital currency as well as gold.
“the global money supply has exploded by $20 trillion in 2020” – Wealth Training Company
Moving on to the global economy Jeffrey Gundlach presented his latest forecast saying that he doesn’t “believe that we’ve left the recession yet”
But he also said he has cast away many of his usual economic indicator slides because of the way that Covid-19 has skewed several of them. He points out average hourly earnings, referencing the surge in earnings in December which however is because of job losses in lower-pay roles.
Jeffrey Gundlach then shows a chart of TSA travelers which illustrates the depressed number of travelers, which he believes is an indication of pent-up demand. “I think this supports the narrative that there’s pent-up demand” he said.
Jeffrey Gundlach presented his latest forecast on the work from the home trend
The “never work from home” crowd is now at 4% from 32% pre-Covid. He believes this will have longer effects as business leaders have to “make the tough decision to restructure their business that accommodates more work from home”.
Jeffrey Gundlach then presents a chart of the global money supply which has exploded by $20 trillion in 2020. The Fed continues to inject $120BN in liquidity every month.
The largest consensus trade is USD shorts. But Jeffrey Gundlach is not convinced that the USD will keep sliding and he presented two charts that provide technical support for the dollar, at least in the short-term, the first being the 2017 support level.
“Once again, the market was right when the yield curve bottomed out in 2020 and the dollar has moved accordingly,” said Jeffrey Gundlach.
So, rising yields are bullish for the USD.
See Jeffrey Gundlach presented his latest forecast in his webcast entitled Just Markets-Aqualung.