Article on Jeffrey Gundlach

[Parsad]

Discussion about bonds, rates, stocks and the U.S. dollar.  Cheers!

 

https://www.marketwatch.com/story/bond-king-jeff-gundlach-says-there-is-a-simple-reason-treasury-yields-are-so-low-even-as-inflation-surges-11626371005?siteid=yhoof2

[no_free_lunch]

I always have to respect Gundlach for speaking his mind.  The only point I am not sure on is the US dollar falling. Maybe that's how it goes but I have been hearing that prediction for 15 years.  I just have a hard time with it because of the money printing in all the other developed countries.  Why would USD fall against the euro when their central banks are doing more or less the same things.

[TwoCitiesCapital]

8 minutes ago, no_free_lunch said:

I always have to respect Gundlach for speaking his mind.  The only point I am not sure on is the US dollar falling. Maybe that's how it goes but I have been hearing that prediction for 15 years.  I just have a hard time with it because of the money printing in all the other developed countries.  Why would USD fall against the euro when their central banks are doing more or less the same things.

 

We printed WAY more, but QE locks a bunch of it up as bank reserves which don't circulate. 

 

The near term drop in the dollar may be done, but long term the trend is against it. We've seen over 20 years of global reserves decreasing reliance on the USD. We've seen 5-10 years of countries that have run afoul of the US reducing their reliance on dollars in trade (China, Russia, Iran, etc.). Continued trillion deficits in good and bad times? 

 

Gradually and then suddenly. 

[Spekulatius]

The USD is the best house in a bad neighborhood. There is just no alternative as far as fiat currencies are concerned.

Yen and Euro  both punish you with negative interest rates, the chinese  yuan isn’t freely convertible, the Swiss Franc and the GBP are too small to matter ( GBP has worse fundamentals, imo).

 

You can try Bitcoin or Gold which both have issues. Gold is probably the best of above ( imo).

 

TINA basically.

Edited July 17, 2021 by Spekulatius

[TwoCitiesCapital]

28 minutes ago, Spekulatius said:

The USD is the best house in a bad neighborhood. There is just no alternative as far as fist currencies are concerned.

Yen and Euro  both punish you with negative interest rates, the chinese  yuan isn’t freely convertible, the Swiss Franc and the GBP are too small to matter ( GBP has worse fundamentals, imo).

 

You can try Bitcoin or Gold which both have issues. Gold is probably the best of above ( imo).

 

TINA basically.

 

This is true for now, but I don't have any reason to believe the US isn't headed into the realm of 0 and negative rates just like Europe and Japan. 

 

It'd be foolish to assume our outcome would be different when we followed the same prescription. 

 

Aging population. Disinflation. Innovations that increase productivity and reduce the need for capital. Excessive debt loads that need to be serviced.

 

All point to lower trend rates until central banks decide we need to inflate our way out of debt loads that can't be serviced by working age population. 

[tede02]

Gundlach is an interesting guy to listen to...I'd even say entertaining. He's got a lot of insight (which probably explains why Howard Marks backed Doubleline when it launched). The story of Gundlach's path into the asset management industry is legendary.