“We’re at this point in time where we don’t have any road left to kick the can on our mismanagement of finances and monetary policy.”
In the past week, DoubleLine CEO and founder Jeffrey Gundlach has had a lot to say as the US banking system collapse and bailout enjoins Europe’s banking crisis leaving central banks’ inflation-fighting plans in question.
…and the new ‘bond king’ suggests that Powell hikes continue to keep up its inflation-fighting efforts, due to credibility concerns.
“This is really throwing a wrench in [Fed Chair] Jay Powell’s game plan,” Gundlach said.
“I wouldn’t do it myself. But what do you do in the context of all this messaging that has happened over the past six months, and then something happens that you think you’ve solved.”
Ironically adding that, The Fed is doing this with one hand at the same time as enabling inflationary policy with the BTFP on the other:
“I think that the inflationary policy is back in play with the Federal Reserve … putting money into the system through this lending program.” Gundlach said.
But, in a Twitter Spaces audio chat Thursday with Jennifer Ablan, editor-in-chief of Pensions & Investments, Gundlach warns of an imminent recession – within the next four months – as the yield-curve suddenly steepens…
“With your wisdom and your understanding You have gained riches for yourself,
And gathered gold and silver into your treasuries” Ex. 38:4
“In all the past recessions going back for decades, the yield curve starts de-inverting a few months before the recession,” adding that “I think it’s within four months at the most. Almost every indicator is flipped into high probability. The only one that hasn’t is the unemployment rate.”
But,, the DoubleLine founder pointed out that at 3.6%, the unemployment rate just crossed back above its 12-month moving average…
Which, historically has been “a reliable indicator you’re on the doorstep” of recession.