CNBC: Gundlach says the Global Stock Market is Signaling 'Something Bad' is Happening

Article by Tae Kim on CNBC Financial

Jeffrey Gundlach believes the U.S. stock market can't diverge from global equity markets forever.

div > div.group > p:first-child" itemprop="cssSelector"> The bond investor noted the S&P 500 was strangely outperforming the rest of the world's equity markets since the summer into this month.

"I said before ... if the global stock market is going to take out the low and put in a new low, something bad must be happening. I don't think the U.S. can hold in there," he said on CNBC's "Halftime Report" Thursday.

"Well what happened as rates broke to the upside ... the global stock market except for U.S. did take a new leg down and did go to a 12-month low. And it's interesting the S&P 500 did what I said ... That is join the global stock market on the way down."

Relative performance of S&P 500 (blue) versus Rest of World ex-U.S. (green) YTD

On Wednesday, the Dow Jones Industrial Average declined by more than 800 points and the S&P 500 fell by 3.3 percent as investors worried about the negative effects from the rising interest rate environment .

The sell-off came a day after the 10-year note yield traded above 3.25 percent hitting its highest level since 2011. This occurred about a week after Federal Reserve Chairman Jerome Powell said the central bank is a "long way" from getting rates to neutral in an interview with PBS, which pointed to a possible more aggressive path for rate hikes.

Gundlach is founder and CEO of DoubleLine. DoubleLine has assets under management of more than $120 billion, according to its website.

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