DoubleLine Capital LP’s Jeffrey Gundlach criticized U.S. President Donald Trump for the “shocking” growth in the U.S. debt burden.

The Los Angeles-based fund manager noted in a webcast Tuesday the “incredible increase” in corporate and government debt, with federal deficits only poised to grow. He spoke a month after the Treasury Department said total U.S. public debt had climbed to a record above $22 trillion.

“This is something that is getting more and more attention, and I think it has to,” said Gundlach, the firm’s chief investment officer.

“It’s really shocking that the president ran on the promise of eliminating the national debt, and here it is at $22 trillion and going higher by about $1.5 trillion a year in a growing economy.”

Gundlach said Trump’s failure to rein in the budget or trade deficits means the “next big move for the dollar is down.”

‘Over’ Bet

The budget deficit could hit 11 percent of gross domestic product in the next downturn "and I’ll take the over," he added, suggesting that 13 percent is more likely.

Other Key Takeaways

• Gundlach called modern monetary theory “complete nonsense” that is being used to justify a “massive socialist program”
• Gundlach also sounded the alarm on the U.S. corporate debt market. He said most BBB debt would be junk if graded on leverage metrics, and will be re-rated to that level in the next downturn. On the one hand, ratings agencies have been listening “with sympathetic ears” to executives saying debt metrics will improve. On the other, the fourth quarter saw many A rated credits downgraded to BBBs.
• He credited the rebound in the stock market to a “remarkable, 180-degree turn” by the Federal Reserve, saying that Chairman Jerome Powell’s “60 Minutes” appearance was intended to cement the Fed’s U-Turn.
• Still, he expects stocks to fall below the December lows over the course of 2019
• Purchasing managers index new orders data don’t make him worry a recession is imminent, 'but looking forward” it’s starting to have the look of a 2020 downturn.
• “It’s a good time” to own TIPS, especially longer-dated issues
• Growing trade and budget shortfalls -- known as the twin deficits -- will weigh on the greenback, and the “next big move for the dollar is down”
• While Gundlach thinks the Treasury curve will meaningfully steepen, the Fed could upend that view should the central bank pursue unconventional policies on the scale of Japan’s.
• He sees the Fed’s upcoming dot plot as capitulating to the market.