Jeffrey Gundlach says bonds are ‘too cheap’ compared to stocks – and offer one way to get a 9% return without much risk

You can forgive Jeffrey Gundlach, a long-suffering Buffalo Bills fan, if he’s considering the NFL now that the team he supports looks like the Super Bowl favourite. DoubleLine Capital CEO says he remembers it Crown royal whiskey advertisementwhere the referee tells those who drink it to take a water break.

The motto is ‘stay in the game,’ Gundlach said. In a Twitter Spaces . conversation Hosted by Jennifer Ablan, Editor-in-Chief of Pension and Investments. “[The Fed] The celebration started—which is a euphemism for stress—one shot, two shots, three shots in a row, and now three more shots… like dude, do you have water, you know? Slower.”

Gundlach says there is a serious risk that the Fed will over-tighten, and just over-tighten the downside as it overtook to the upside, particularly as it also reduces the size of its balance sheet through quantitative tightening. “Because they are trying to get [inflation] With a 700 basis point drop, the overshoot could be bigger,” he says. “Maybe down to minus 4% on the CPI, or minus 2%.”

He says that’s what the bond market is saying with an inflation rate of 8% to 9%. Why would anyone buy BX 30-year Treasuries 3.50%: TMUBMUSD30Y
? The only logic that squares the circle is that inflation will outpace the downside.”

Gundlach S&P 500 SPX says
to as much as 3000, and maybe “3400 – either way, less than it is today.” Perhaps not surprisingly, the man known as the King of Bonds sees plenty of opportunities in the fixed income field. “Bonds are wickedly cheap for stocks,” he said. And that’s from someone who said in January that stock markets are overpriced, but cheap for bonds. Not anymore.”

“This is a very good time to buy bonds, and one of the ways I know is that no one wants to do that,” he said.

For low-risk investors, he said, a bank loan fund makes sense. He said the short-term interest rate differential is about 300 basis points. So if the Fed takes interest rates to 4%, the investor gets a 7% return, but can buy bonds under 95, at a hypothetical rate of less than 1%.

“The way things go wrong is if the Fed cuts interest rates to zero again, and then you will have less income stream, but right now, it’s a very easy way to get income,” Gundlash said.

Hear from Ray Dalio in The best new ideas at the Money Festival On September 21 and 22 in New York. The hedge fund pioneer has strong views on the direction the economy is headed.

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Russian President Vladimir Putin Partial filling order Of the reservists, they accused the West of nuclear blackmail and implicitly threatened to use nuclear weapons.

The FOMC Rate The decision will be at 2 PM ET, with expectations that the rate hike will be 75 basis points. Deutsche Bank economists expect the dot chart, released at the same time as the FOMC statement, to show the median federal funds forecast for 2022 at 4.1%, 2023 forecast at 4.3% and 2024 forecast at 3.9%. Press conference with Federal Reserve Chairman Jerome Powell begins at 2:30 p.m.

Before that, existing homes are scheduled to go on sale at 10 a.m. ET.

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