billionaire investor Jeffrey Gundlach Despite the “boom” of the stock market, a recession appears to be “inevitable”, he said, warning.
what happened: in conversation In an interview with Fox Business Network, Gundlach questioned the current market valuation and enthusiasm. He suggested that cash could be put to better use after the coming recession.
“I have doubts about valuations and I have doubts about the strength of the market, so I want to preserve cash at this point and put it in place to prepare for the fallout of a downturn. I'm thinking about it,” he said. .
Gundlach, also known as the “bond king,” expressed concern about the S&P 500 index, which soared 24% last year and rose another 3% this year to a record high. He highlighted the strong gains in tech stocks, including: Nvidia Inc. NVDAthe market capitalization reached $1.5 trillion.
“We're in a valuation phase in the stock market and I think we need to start with a long-term view and skip the final stages of this vibrant game, because I think the value is very high.”
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Mr. Gundlach noted that an inversion of the yield curve and its subsequent release from the inversion is a reliable indicator of a recession. He emphasized that the 10-year Treasury yield has been below the 2-year Treasury yield for more than 18 months, and the gap has narrowed significantly in recent years.
he also leading economic index, has been on a downward trend for 21 consecutive months, a sign of impending economic turmoil. With that in mind, Mr. Gundlach called on the Federal Reserve to cut interest rates this year after raising them from virtually zero to over 5%.
why is it important: This isn't the first time Gundlach has expressed concern about a possible recession. Earlier this month, he predicted a decline in the S&P 500 index, maintaining a bearish stance on the market and suggesting that the S&P 500 index is not an ideal investment at this time. He predicted that the so-called Magnificent Seven stocks would likely underperform relative to the broader market.
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