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Bram de Haas
Bram de Haas
Articles (439)  | Author's Website |

Jeffrey Gundlach: 50% in Cash

Summary of Jeffrey Gundlach's interview on CNBC

April 28, 2020 | About:

Bond guru Jeffrey Gundlach of DoubleLine Capital appeared on CNBC April 27.

In the interview, Gundlach said he believes the Fed is violating its mandate by supporting the corporate bond market. He does not appear to be a fan of the CARES act either, which gives some people more money unemployed vs. employed. He also points out that the U.S. no longer has any net job creations since the financial crisis.

Gundlach sees the iShares iBoxx $ Investment Grade Corporate Bond ETF (LQD) as one of the most overvalued assets, since it almost entirely retraced its dramatic fall earlier in the year.

Gundlach sees a very tough way forward for the S&P 500 (SPY) and doesn't think it can easily go above 3000. He is starting to ramp up his short positions against the S&P 500, although he's not at the level he had been in February. Gundlach doesn't like long stock positions at the moment because he thinks there's max 3%-4% upside, but the downside could easily take out the earlier lows of the year.

Gundlach also discussed the issues facing parts of the economy, including restaurants and local governments, as Covid-19 restrictions are lifted, as well as the problems for investors in commodities markets.

Asked about his best positions, Gundlach said he doesn't like commodities. He is also bothered by how much speculation there is in paper gold. What if the people in the paper suddenly decide to take delivery? He is not sure if there's enough gold to meet the demand. He reported that his largest position is cash at about 50% of the portfolio, and that's down from 100% back in February. Gundlach believes liquidity is now very important.

Disclosure: short LQD, long GLD

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About the author:

Bram de Haas
Bram de Haas is managing editor of The Special Situations Report and Founder of Starshot Capital B.V.

Visit Bram de Haas's Website

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