Billionaire ‘Bond King’ Jeff Gundlach warns of stubborn inflation next year – and compares growth stock boom to dot-com bubble

• Jeff Gundlach predicts that inflation will remain high in 2022 and expects the dollar to fall sharply.
• The head of DoubleLine Funds compared the boom in growth stocks this year to the dot-com bubble.
• The investor expects the gradual reduction in federal stimulus measures in the United States to shake the markets and dampen economic growth.

Billionaire investor Jeff Gundlach predicted in his last quarterly webcast that inflation will remain stubbornly high in 2022, and he compared this year’s frenzy around growth stocks to the dot-com bubble.

The boss of DoubleLine Funds – whose nickname is the “King of Bonds” – also warned that if the Federal Reserve raised interest rates and lowered its stimulus efforts, financial markets would be shaken and economic growth would falter.

Here are the 12 best Gundlach quotes from webcasting, slightly edited and condensed for clarity:

1. “The stock market, and risky assets in general, have been supported for more than a decade by the expansion of the Fed’s balance sheet. As we move towards lower and ultimately higher rates of interest, it turns into more choppy waters for the markets. “

2. “It’s fascinating to see charts that compare the dot-com era to some of today’s speculative booms, like some of those funds that invest in very dynamic companies. did so in the late ’90s. Now they have clearly shifted and show the extent of the decline in dot-com stocks following the dot-com collapse. “

3. “The Fed has reacted clearly to market movements, and will continue to defend risky assets. Money printing and money giving are here to stay.”

4. “The US economy is not strong. It looks like it is strong due to the stimulus, which has never been as extreme as it is now.”

5. “It’s likely we’ll see economic problems with just a few interest rate hikes from the Fed. Maybe only four or eight hikes or so, maybe it’s 1% or 1, 5% off the federal funds rate, which breaks the economy. “

6. “The bond market seems to be sniffing out a weaker economy ahead. The yield curve flattens out enough that we can expect economic problems sooner rather than later. My baseline scenario is that we will start to see problems by the second half of 2022. “

7. “I would advise investors to keep an eye on the high yield bond market. It is a reliable canary in the coal mine for risky assets in general. “

8. “It’s very possible that we won’t see inflation below 4% at any time in 2022. There is also a 7% risk over the next two months. That would really be something to see. ” – Gundlach pointed out that ‘non-standard’ wage growth and housing inflation would be the likely drivers of high inflation next year.

9. “My long-term view of the dollar remains sharply bearish. We envision a weaker dollar in the second half of next year, maybe 2023. The dollar will fall, thanks to the double deficit problem in the United States. United. It will slide quite powerfully. “- Gundlach predicted the dollar would fall to at least a 12-year low.

10. “When the dollar starts to fall, you will see significant outperformance in non-US stocks. Emerging markets will perform very well when that happens. “

11. “It is remarkable how well emerging markets were able to outperform US stocks at the right time. All of the outperformance of US stocks in the mid-1990s has been completely reversed in the six or eight years since the dot-com bust. This could very well happen again.

12. “Gold is so boring. It’s been surprisingly stable with all the commodity inflation and the mad rush in bitcoin. Gold, and silver with it, is sort of the orphans of the commodities market. The dollar being firm this year has been a ceiling on gold, but when it goes down, gold will rise. “