Gundlach Says U.S. Recession Could Hit This Summer

When this billionaire talks, it’s worth listening.

One of the investors I have come to really appreciate is the bond guru Jeffrey Gundlach of DoubleLine.

Gundlach was interviewed by Yahoo Finance on Feb. 13. He talked extensively about the firm's January report that is worth reading as well. Here are the three key takeaways from his appearance:

  • Fed has dramatically altered course.
  • Corporate leverage and national debt are the two most important risks.
  • A recession is at least four months out.

Fed changed course

The Fed is not going to do anything until they communicate it first. That’s a massive change from the previous stance when quantitative tightening or QT was on autopilot. The Fed is having conversations about quantitative tightening. They are considering quantitative easing as a regular policy tool. The market isn’t sure whether the Fed is going to do QT or QE. This isn’t necessarily bad. It is what Greenspan did as well.

Risks Gundlach is concerned about are:

  1. Corporate leverage.

  2. National debt.

The first risk is that there is considerable corporate leverage. If you look at leverage ratios alone, 45% of the investment grade bond market would be rated junk right now.

Because companies are saying they plan to pay down debt, rating agencies give them a pass. And rate the companies investment grade when they deserve a junk rating based on the quantity of debt.

If there is a recession, it will be obvious leverage ratios will not be addressed and rating agencies will issue massive amounts of downgrades.

Here I’m interjecting my own interpretation, but this will flood the junk bond market while scaring investment-grade investors out. Their supposed safe investment will turn out not to be safe. This means falling prices in both parts of the bond market.

The national debt is increasing by about 6% per year currently. In a recession it will probably increase by around 10% per year, assuming we go into a typical recession.

There are also $700 billion of government bonds that are maturing this year.

For these reasons, in the next recession we may only see Treasuries with short maturities act as a safe haven while long-term government bonds will be sold off.

The real key to thinking about these problems is, in light of the next recession, when they will come to the forefront.

When is this recession coming?

There are more signs compared to last year. The indicators Gundlach looks at for recessions are not even flashing full yellow yet:

1. The Conference Board leading economic indicators are weakening from a high level. They are still very high.

2. The stock market is currently moving up.

3. Sentiment indicators are coming down but from high levels.

4. Unemployment rate is going up a little bit. This is close to flashing yellow.

5. Junk bond spreads went out in December. But they completely rebounded. These are not signaling anything yet.

This leads Gundlach to the conclusion there is no recession on the foreseeable horizon. But the foreseeable horizon is usually about four to six months.

Full story at GuruFocus.com

Get Access To Marc Chaikin's "Power Gauge Report"

Enter your email address to access all the details.


By submitting your email address, you give Profitable News permission to deliver the report or research you’re requesting to your email inbox. As a bonus, you will also get a free subscription to one of our carefully selected marketing partners. To learn more about our partners, click here. You can unsubscribe at any time. (Privacy Policy)

The AI Stocks Every Investor Should Have On Their Radar

Enter your email address to access all the details.


By submitting your email address, you give Profitable News permission to deliver the report or research you’re requesting to your email inbox. As a bonus, you will also get a free subscription to one of our carefully selected marketing partners. To learn more about our partners, click here. You can unsubscribe at any time. (Privacy Policy)

Write This Stock Ticker Down Right Now

Enter your email below to see the stock name and ticker on the next page.



By submitting your email address, you give Profitable News permission to deliver the report or research you’re requesting to your email inbox. As a bonus, you will also get a free subscription to one of our carefully selected marketing partners. To learn more about our partners, click here. You can unsubscribe at any time. (Privacy Policy)

Write This Stock Ticker Down Right Now

Enter your email below to see the stock name and ticker on the next page.



By submitting your email address, you give Profitable News permission to deliver the report or research you’re requesting to your email inbox. As a bonus, you will also get a free subscription to one of our carefully selected marketing partners. To learn more about our partners, click here. You can unsubscribe at any time. (Privacy Policy)

Write This Stock Ticker Down Right Now

Enter your email below to see the stock name and ticker on the next page.


By submitting your email address, you give Profitable News permission to deliver the report or research you’re requesting to your email inbox. As a bonus, you will also get a free subscription to one of our carefully selected marketing partners. To learn more about our partners, click here. You can unsubscribe at any time. (Privacy Policy)

Write This Stock Ticker Down Right Now

Enter your email address to see the name and ticker on the next page.


By submitting your email address, you give Profitable News permission to deliver the report or research you’re requesting to your email inbox. As a bonus, you will also get a free subscription to one of our carefully selected marketing partners. To learn more about our partners, click here. You can unsubscribe at any time. (Privacy Policy)

How to Collect "Amazon Royalty" Payouts Before the Deadline

Thanks to a little-known IRS loophole, regular Americans can collect up to $28,544 (or more) in payouts from what is called “Amazon’s secret royalty program”…
Enter your email address to access all the details.


By submitting your email address, you give Profitable News permission to deliver the report or research you’re requesting to your email inbox. As a bonus, you will also get a free subscription to one of our carefully selected marketing partners. To learn more about our partners, click here. You can unsubscribe at any time. (Privacy Policy)

Elon Musk's "Project Omega"

It could soon mint new millionaires, while plunging millions of unprepared Americans into poverty. Get the stocks at the center of it all.
Enter your email address to receive the names and ticker symbols.


By submitting your email address, you give Profitable News permission to deliver the report or research you’re requesting to your email inbox. As a bonus, you will also get a free subscription to one of our carefully selected marketing partners. To learn more about our partners, click here. You can unsubscribe at any time. (Privacy Policy)

The #1 Trade For 2023

Elon Musk is set to reveal his secret “Project X” that could revolutionize a $23 Trillion industry, and potentially be 1,000x bigger than EV’s. 
This Backdoor play could hand early investors a windfall of gains.
Enter your email address to receive this company’s name and ticker symbol for free.


By submitting your email address, you give Profitable News permission to deliver the report or research you’re requesting to your email inbox. As a bonus, you will also get a free subscription to one of our carefully selected marketing partners. To learn more about our partners, click here. You can unsubscribe at any time. (Privacy Policy)

Every Investor Should Have This $3 AI Stock On Their Radar

Enter your email address to get access to all the details.


By submitting your email address, you give Profitable News permission to deliver the report or research you’re requesting to your email inbox. As a bonus, you will also get a free subscription to one of our carefully selected marketing partners. To learn more about our partners, click here. You can unsubscribe at any time. (Privacy Policy)

Project An-E

Breakthrough A.I. Just Predicted What the Stock Prices of Tesla, Nvidia, and Apple Will Be 30 Days from Now…
Enter your email address for immediate access.


By submitting your email address, you give Profitable News permission to deliver the report or research you’re requesting to your email inbox. As a bonus, you will also get a free subscription to one of our carefully selected marketing partners. To learn more about our partners, click here. You can unsubscribe at any time. (Privacy Policy)

Elon Musk's "Project Omega"

It could soon mint new millionaires, while plunging millions of unprepared Americans into poverty. Get the stocks at the center of it all.
Enter your email address to receive the names and ticker symbols.


By submitting your email address, you give Profitable News permission to deliver the report or research you’re requesting to your email inbox. As a bonus, you will also get a free subscription to one of our carefully selected marketing partners. To learn more about our partners, click here. You can unsubscribe at any time. (Privacy Policy)

#1 A.I. Stock Currently Trading For $3

Gain immediate access to this revolutionary $3 A.I. stock that is set to disrupt a $15 Trillion Market soar 75X.
Enter your email address to receive the name and ticker symbol for free.


By submitting your email address, you give Profitable News permission to deliver the report or research you’re requesting to your email inbox. As a bonus, you will also get a free subscription to one of our carefully selected marketing partners. To learn more about our partners, click here. You can unsubscribe at any time. (Privacy Policy)