Gundlach Says ‘Look Out’ for Exploding Deficits in 2018-2020

by John Gittelsohn

Bad times lie ahead for bondholders as rising inflation and resurging deficits conspire to drive up interest rates, according to Jeffrey Gundlach.

“We’re in the eye of a hurricane for the next three to four years,” Gundlach, chief executive officer of DoubleLine Capital, said Tuesday at the Impact 2016 conference hosted by Charles Schwab Corp. in San Diego. “Come 2018, 2019 and 2020, look out!”

Gundlach, 56, has recommended that investors stay on the defensive by reducing exposure to longer-duration securities. The manager, whose firm is based in Los Angeles, has favored emerging-market debt over high-yield bonds amid concern that oil prices will plateau and threaten energy companies’ ability to repay debt. He’s also warned that stocks have more downside than upside.

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