Billionaire “Bond King” Jeffrey Gundlach thinks inflation won’t fall below 4% next year and bond markets are already “smell of a weaker economy.” For gold, this means a long-term hold after a “shockingly stable” and “boring” year, according to the Bond King. Jeffrey Gundlach’s views and comments on the DoubleLine Total Return Webcast cryptocoin.com compiled for our readers.
“A hawkish Fed pulls the economy down”
According to DoubleLine CEO Jeffrey Gundlach, “tough waters” await financial markets in 2022 as the Federal Reserve looks to step up its tapering program and raise interest rates next year. The Bond King comments:
Jerome Powell will be doubling up on this tapering speed that will get us out in March. It’s quite likely to turn into rough waters, as the stock market and risk assets have been clearly supported by balance sheet expansion for over a decade.
Stating that a hawkish Fed will pull the economy down, Jeffrey Gundlach states that in 2022, as the Central Bank continues to increase interest rates, economic problems will increase:
With just a few rate hikes from the Fed, we’re likely to see economic problems. Four rate hikes or 1% to 1.5% would disrupt the economy.
Jeffrey Gundlach: Dollar hits ceiling for gold
The bond market is already signaling red flags. According to Jeffrey Gundlach, since March this year, the bond market seems to be sensing a weaker economy is coming. “Economic problems should be expected sooner or later,” said Jeffrey Gundlach, and he thinks that we will basically start to see the problems in the second half of 2022.
The Bond King says the trigger behind a more hawkish Fed is inflation, which won’t go away next year anyway. Jeffrey Gundlach warns that the US inflation rate may not fall below 4% on an annual basis for all of 2022:
Auto inflation may fall, timber inflation may dissipate, inflation may dissipate in some of the supply chain bottlenecks, but wage growth and housing may replace it and persist. Looking at the end of 2022, it is very likely that we will not see data with a value below 4% at any time in 2022.
Jeffrey Gundlach also predicts that inflation could rise to 7% year-on-year over the next few months. Asked about gold, Jeffrey Gundlach says it’s “shockingly stable” and “boring” in light of commodity inflation and the wild ride that has been going on in Bitcoin this year:
Gold and silver are a kind of orphan in the commodity market. They never rose. The dollar became the ceiling of gold. I think gold will go up when the dollar goes down.
Dollar will fall hard, emerging markets will perform spectacularly, according to Bond King
Jeffrey Gundlach continues to hold gold as a long-term investment, adding that he last bought the precious metal at $1,180 in September 2018. However, compared to other things from commodities this year, he considers it absolutely not rewarding. The long-term dollar outlook is “strongly bearish” with prospects for a weaker dollar in the second half of 2022 or 2023 due to twin deficits in the US, according to the billionaire money manager:
Once the dollar starts to drop, I think it will drop pretty strongly and hit a 2009 low. When the dollar starts to drop, you will see tremendous performance in non-US stocks. Emerging markets will perform very strongly.
The DoubleLine CEO also predicts that the Fed will step in to defend risk assets through money printing:
If the stock market drops 20% or more, the Fed will step in. The printing and distribution of money will remain with us. And I predicted years ago that we would send money to people and do it in larger and larger amounts.
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