Bloomberg News: DoubleLine's Gundlach Says 'Reckoning Is Coming' for US Debt
Article by Aaron Weinman and Lisa Abramowicz in Bloomberg News
America’s debt burden and interest expense have become “untenable,” a situation that may lead investors to move out of dollar-based assets,according to DoubleLine Capital’s Jeffrey Gundlach.
“There’s an awareness now that the long-term Treasury bond is not a legitimate flight-to-quality asset,” the veteran bond manager said Wednesday in an interview at the Bloomberg Global Credit Forum in Los Angeles. A “reckoning is coming.”
In a wide-ranging discussion that also touched on gold’s attractiveness, stretched market valuations, the state of private credit,artificial intelligence and long-term investment opportunities in India, Gundlach said investors should consider increasing their non-dollar-based holdings, adding that his firm was starting to introduce foreign currencies into its funds. His comments came a day before a closely watched auction for 30-year Treasury bonds.
Gundlach, 65, likened today’s market to the environment in 1999, just before the dot-com bust, as well as 2006 and 2007 before the global financial crisis.
Going further, he said the booming private credit sector is analogous to the market for collateralized debt obligations, or CDOs, in the mid-2000s, “where there’s just tremendous .....