Billionaire investor Jeff Gundlach warned of the dollar decline in a recent CNBC interview, predicting stubborn inflation and suggesting that Bitcoin (BTC) could fall.
Here is a summary of Gundlach’s interview in 8 points
1) Gundlach’s early analyzes identified upward pressure on wages and rising housing costs as key drivers of further inflation. He begins his CNBC interview with:
It is almost certain that we will achieve sustained high inflation. We do not think inflation will fall below 4% at any time in 2022.
2-) Gundlach thinks that the interest rate applied by the Central Banks to the banks is insufficient:
The negative interest rates we have today are not badly attractive. But they support the idea that stocks are still not overvalued against government bonds.
3-) Gundlach talks about how comfortable he is holding stocks right now:
Slightly worse than when I was in July. The situation becomes a little more cautious as the Fed begins to contract.
4-) As for inflation:
The government’s trillions-dollar ‘money spray’ is responsible for all our recent economic progress. Without incentives and without consumers buying cash imports from the money spray, we didn’t really have any economic growth.
5-) Gundlach underlines the strong historical correlation between widening budget and trade deficits and negative dollar trend:
The dollar will fall.
6-) Gundlach, using the Shiller CAPE ratio, noted that emerging markets are more expensive than half the S&P 500.
It’s not foolish to believe that under the right conditions, emerging markets will outperform the US by 100 percent. We expect this to happen over a multi-year timeframe.
7-) Gundlach recommends that investors put 30% to 35% of their portfolio in commodities and other physical assets such as real estate and gold:
Commodities are incredibly strong. But since they don’t have any fixes, I’d be on a crazy uptrend to them. They’re still pretty cheap in the long run compared to the S&P 500. Once the worm turns – it seems to have commodities at a very cheap level – it’s not foolish to believe that commodities could outperform a few hundred points.
According to Jeff Gundlach, Bitcoin can now fall!
8) The billionaire investor finally mentions the Bitcoin (BTC) price:
Bitcoin chart is scarier today than it was in July. We had $60,000 plus a double peak, we basically had a blast. I really think a lot of things are crescendo this week – bond yields, Bitcoin, even oil. Everything that has worked for you in the last few weeks, I think it’s time to fade.
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