Gundlach still a bull on Treasurys


I see no reason for long-term rates to head higher, says Jeff Gundlach, appearing on CNBC. He doesn't see the taper coming soon - incomes are falling, the labor force participation rate is stuck, and inflation is non-existent. Further, why would Janet Yellen take the Fed helm and immediately begin to reverse a policy she's so supportive of?

Without the taper, he notes, QE is actually expanding on a relative basis thanks to a smaller budget deficit and less Treasury issuance needing to be mopped up by the central bank.

The best opportunity in fixed income continues to be closed-end funds trading at discounts to net asset value (his DBL being one of them). You can put together a basket of these, he says, yielding 8-9% and with a discount to NAV of 10%. Others possibilities (though we haven't checked their prices vs. NAV): PDI, PTY, PCI, PHK, PKO, PCN, PCI, PFN, PFL.

Treasurys continue their big rally, the yield on the 10-year now all the way down to 2.60%. TLT +0.8%, TBT -1.6%.

Turning to stocks: I don't like $300B market cap companies trading at 20x forward earnings, he says, suggesting GOOG be "harvested" for gains.

On TSLA: There's something wrong with this picture, he says, noting the company's $23B valuation while GM and Ford are hitting new highs. These massive Tesla sales being priced into the stock have to come from somewhere.

Comments (5)
  • Humble Eagles
    , contributor
    Comments (2715) | Send Message
     
    Well, the GOOG executive team has certainly been following Gundlach's advice, selling billions in GOOG stock! Page sold almost $40MM this week...again. Like Apple, the amount of stock they are given to dump on the market is frightening! You have to wonder why these tech execs keep so little of their stock?
    17 Oct 2013, 03:19 PM Reply Like
  • surferbroadband
    , contributor
    Comments (4648) | Send Message
     
    "On TSLA: There's something wrong with this picture, he says, noting the company's $23B valuation while GM and Ford are hitting new highs. These massive Tesla sales being priced into the stock have to come from somewhere."

     

    What is wrong is his thinking.

     

    Mr. Gundlach is not seeing the big picture. And what I don't understand is why are they quoting someone who speaks to CNBC? Other cable network having more viewers and more credibility.

     

    The massive sales from Tesla motors are already here right now. Tesla is making as many cars as it can make right now. It will take a few years to ramp up production in the 1 million units a year.

     

    That will happen. As things stand right now, Tesla Motors effectively has a monopoly on the electric car market. The stock price has a long way to go up before it goes down.
    17 Oct 2013, 03:30 PM Reply Like
  • Ed Porter
    , contributor
    Comments (715) | Send Message
     
    The big picture is exactly what Gundlach IS seeing!

     

    He is not, per se, questioning TSLA's revenue growth path as implied by its stock price.

     

    What he IS questioning, is if that is TSLA's growth path, and then you also look at other automotive manufacturers hitting new highs, then the implication is that the overall automotive market is expanding massively.

     

    So either a) that's right, or b) the overall automotive market is NOT expanding that much, and in that case his point is - so who's growth path is incorrect - TSLA's? or F + GM + others?
    23 Oct 2013, 12:10 AM Reply Like
  • Mongoose7916
    , contributor
    Comments (233) | Send Message
     
    So at what point is Tesla fairly valued then?
    17 Oct 2013, 05:46 PM Reply Like
  • Decider
    , contributor
    Comments (1400) | Send Message
     
    Why don't we see more coverage of PCI lately?
    1 Apr, 02:33 AM Reply Like
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