The “new debt king” called DoubleLine Capital CEO of Gonzalez expects the U.S. stock market will fall, the magnitude of the pullback will probably be much more than 10% or 15%, but it is not clear whether it will exceed 80%.
He also reiterated the movie “put a bet” (The Big Short) the protagonist of the prototype Michael Burry recently issued a warning that there will be “runaway Inflation“, that the inflationary situation will shock policy makers, stock and bond investors.
Gonzalez expects that overall inflation will rise significantly, expected in June and July inflation will rise by up to more than 3% year-on-year. But the U.S. Federal Reserve is not worried about rising inflation, and will even welcome the rise in inflation, because negative interest rates will make the federal debt becomes more manageable.
In addition, in the long run, he is bullish on the trend of commodities and remains neutral on Gold, believing that the market sell-off of gold has been quite strong, and gold prices are expected to rebound in the long run. As for DoubleLine’s model, gold is at about fair value.
Gonzalez estimates that the VIX volatility index, commonly known as the “panic index,” will exceed 100 during the next economic downturn. in the investment-grade corporate bond market, the downgrade cycle appears to have ended and the upgrade cycle may have begun.
For U.S. debt rates, he said rates should be comparable to the average of U.S. nominal gross domestic product (GDP) growth and German government bond rates, which are a proxy for the level of interest rates in international markets. According to that criterion, if the widely predicted result is true, the equivalent Treasury bond interest rate will exceed 3%, implying greater room for Treasury bonds to fall.
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