Tags: gundlach | bond | bitcoin | stocks

'Bond King' Gundlach: Bet Against Stocks Due to Bond Yields, Bitcoin


By    |   Wednesday, 04 April 2018 02:17 PM

"Bond king" Jeffrey Gundlach advised savvy investors that stocks will struggle for the rest of the year amid pressure from rising yields on government debt.

The DoubleLine Capital founder repeated his recent warnings that bitcoin has been a leading indicator for the market's direction, with its slump a bad omen for equities.

"We're in a low volatility regime that is completely, obviously different from what we experienced in 2017. It's payback time," Gundlach told CNBC's "Halftime Report" in an interview.

"2017 was the easiest investment year of all time. The risk-adjusted returns for the stock market were probably the best in history," he said.

Rising government bond yields have put pressure on stock prices, he said. Specifically, a 2.63 percent yield on the benchmark 10-year Treasury note marks a line in the sand for stocks, which are currently in correction territory, CNBC.com reported.

"The stock market can't take higher bond yields," he said.

Gundlach explained that the controversial cryptocurrency bitcoin has tumbled itself recently, foreshadowing downturns in stocks.

"Bitcoin very clearly leads risk assets," he said.

“Bitcoin is the dot-com of our world today, and this mania is so similar to where we were in 1999."

For months, Gundlach, who oversees $119 billion at DoubleLine Capital, has asserted that bitcoin has become the "lead horse" of risk assets and that its previous plunges have had a cascading effect on other risk assets including equities and high-yield junk bonds, Reuters explained.

Gundlach told Reuters on Monday that bitcoin carries so much predictive power "because it was the poster child of the speculative mood late last year."

Bitcoin peaked in mid-December at just under $20,000. From December to early February it fell to around $6,600 then rebounded to $11,500 in early March. Since then, it has been on a steady decline but edged recently to around $6,782.64, according to CNBC, which cited data from industry website CoinDesk, which tracks the price across a number of exchanges.

"That (December) crash means the speculative mood got exhausted," he said. "The hip bone is connected to the thigh bone."

Gundlach said bitcoin's price went vertical starting around mid-September. The S&P 500 Index accelerated to the upside at exactly the same time, he said. "Bitcoin mania was reached in mid-December and it promptly started to crash."

In a January investor webcast, Gundlach said he believed the price on bitcoin had hit its peak. “The high for bitcoin is in,” he said. “It’s just a thing that is out there, unproven. I have a theory that bitcoin is very different than what people think. People think that it is tremendously safe and anonymous and can’t be hacked and all that stuff. I have feeling that it is the opposite.

“I do not own bitcoin. This type of investment is very, very different from my conservative DNA,” Gundlach said.

(Newsmax wire services contributed to this report).

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"Bond king" Jeffrey Gundlach advised savvy investors that stocks will struggle for the rest of the year amid pressure from rising yields on government debt.
gundlach, bond, bitcoin, stocks
Wednesday, 04 April 2018 02:17 PM
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