Jeff Gundlach the founder of DoubleLine Capital Management was on CNBC today sharing his views on the economy.
In the first video he said that he thought the Fed will reduce bond purchases later in the year as the Fed is financing the budget deficit and since the deficit is shrinking they will taper to some extent. He then went on to say that he felt that long-term US Government bonds would be the best investment going forward. He said this was going to be the case since inflation is really-really low so we are going to see a bond market rally. He then walks through his thoughts on the bond market and how he is worried that the financial markets are trying to balance on ZIRP. He sees people fleeing from bonds into dividend paying stocks, REITs, MLPs, and other assets. He thinks this is a mistake because the basic premise is I don't want to own bonds since yields are too low and since yields will rise soon they will fall, but if you look at the verdict of the market while bonds have had modestly negative returns most of the bond alternatives have had horrible returns. He thinks if the low interest rate premise is incorrect yield alternatives will fall much further.