(Staff and Wire) You know things are gloomy when Jeffrey Gundlach from DoubleLine reveals his sense of humor.
The bond king held a special webcast yesterday to talk about the "two sinks" he sees for the global economy and the markets.
The first of these sinks (in the sense of liquidity literally going down the drain) dominated trading in March. The second is coming now.
In theory, Gundlach sees this second drop as being worse, coming as it does from a lower base. This is when the economic impact of the ongoing medical crisis starts to become clear.
“I think we are going to get something that resembles that panicky feeling again during the month of April,” he said.
The S&P 500 lost 12.52% in March in its biggest monthly decline since the 16.94% slide of October 2008.
“The low we hit in the middle of March, I would bet that low will get taken out,” he said.
Gundlach said the market is acting “somewhat dysfunctionally” and that projections by banks that the U.S. economy will quickly recover were too optimistic.
That said, he sees better things ahead. He was full of humor. After all, bonds are still the least dirty shirt in the global pile right now, even if real yields are well below zero and inflation seems imminent.
He actually used quotes from people like Ben Bernanke to carry the negative messaging. Even there, while Bernanke sees disaster, this is less a Great Depression generational drag than it is a temporary crisis, Gundlach says.
“We will get back to a better place, but it’s just not going to bounce back in a V-shape back to January of 2020,” he said.
Gundlach said earlier in March that there was a 90% chance the United States would enter a recession before the end of the year due to the effects of the coronavirus pandemic.
Cleveland Federal Reserve Bank President Loretta Mester said on Tuesday that U.S. economic data for the first half could be “very bad” due to efforts to slow the spread of the coronavirus.
President Donald Trump and his top healthcare advisers urged Americans to follow strict social distancing measures ahead of a “tough two weeks” that could see at least 100,000 deaths from the coronavirus in the United States.