By Robert Huebscher of Advisor Perspectives
Today’s economic problems, it seems, can be understood through the lens of pop artist Andy Warhol. Warhol, who DoubleLine’s Jeff Gundlach calls an “absolute futuristic genius” in his ability to depict trends in American consumerism, showed through his illustrations of everyday objects, such as Coca Cola cans, that products used by the upper crust of society were accessible to anyone in America. That accessibility made it natural for consumers to borrow money to improve their standard of living, leading to a three-decade long explosion in public debt.
Gundlach delivered the keynote address at last week’s Morningstar Investor Conference in Chicago. He is the chief investment officer of DoubleLine, the firm he founded after leaving TCW last year. DoubleLine now manages just over a $1 billion in bond funds, mostly in mortgage-backed securities, where Gundlach’s expertise is highly regarded. Gundlach’s presentation shared a similar theme with many he gave while he was at TCW, documenting the immensity of U.S. debt obligations and the lack of options for alleviating that burden. As he has stated in the past, he does not consider inflation to be a threat in the capital markets today. He cited six options open to policy makers, but believes a seventh – some form of default – is most likely.
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A final warning
Gundlach concluded his talk by warning that at some points “something bad” could happen relative to risk, causing the dollar to drop and Treasury yields to rise. “That is what you need to watch out for.”
“If the world starts to behave differently,” he said, “you need to sell immediately, because you don't have much time. So I suggest that all of us watch the way the markets react to bad news regarding risk. If their behavior changes, you have to sell very, very quickly.”
He's right of course
ReplyDeleteWe will keep printing until it affects
Confidence in the monetary system itself
aka fake FRNs
Maybe we'll print a lil after that too
Austerity won't work
Gotta run it till the wheels fall off
Or, like Billy Idol prophetically say
He says
If there's nothing pure in this world
And if there's nothing sure in this world
START AGAIN
C'mon, chicos
It's a nice day for
Una boda blanca
Hmmmmm anyone remember that movie "Rollover?"
ReplyDeleteWeird how that movie probably does happen worldwide...Small panic causes bigger panic and all the lemminigs jump off the cliff.
Now a days it's a total possibility being everything is digital...So if a million investors all have the same sell off point on a stock and it hits then a rush begins.
Here on this site we see so much bad news...Rumours of wars, famines, disasters...It will happen but why not take a semi-stoic approach to it?
I'm a lil spooked...But can't live in fear of what if?...Get prep, pray for the best...Everything else just tune it out...Because there is no magic bullet or formula that will cure the crash that will come.
I rather have it come now then later...The quicker we have it happen the quicker we can start rebuilding...However if there's an EMP or a methane explosion we are SOOOOOOOOO f*cked...All bets are off...Becomes Mad Max till the military comes in.
The Future:
ReplyDeleteMonetize
Tax
Tax by stealth
Shift taxes
Cut benefits
Cut programs
Raise eligibilty requirements
Keep interest rates low
Create new taxes
Create new fees
Raise fees
inflate
stimulate
manipulate
Do all of the above simultaneously while attempting to maintain an orderly economy
There won't be enough time for most to sell "quickly."
ReplyDeleteDon't be too greedy. Get out now.