Jeff Gundlach has begun his first webcast since the election. Check back here for updates.
4:29: The president-elect does not have a magic wand, says Gundlach. Trump won't take office for a couple of months, and initiatives take time to implement. Couple this with the sharp rise in interest rates, and those hoping for a quick return to speedier growth are likely to be disappointed.
4:33: Looking into the backlash of middle America against the elites, Gundlach says median income has been falling on a real basis since 1973 (that is unless you're a professional or work for the government). Then there's rents - and rent as a percentage of income is soaring, while mortgage payments as a percent of income have been tumbling.
4:35: It's incredible, he says, how the market discounts events. Gundlach notes the FANG stocks predicted the victor by rolling over roughly one week ahead the "surprise" election results. As for the future, Gundlach wouldn't touch any of those names.
4:38: White eyes of inflation? Gundlach posts a chart of four different inflation gauges, and every one of them bottomed a few months ago and have been rising since. Not a fan of TIPS for some time, Gundlach's become one. A full 100% of Treasury holdings in one of his funds are in TIPS.
4:41: Oil? A return to the mid-$20s isn't likely to happen, with a move to the $60s way more likely.
4:42: As for the dollar, he's long-term bullish, but the charts are looking very toppy at the moment. He's looking for a short-term reversal.
4:44: Alongside a long-term bullish view on the dollar, he's long-term bearish on long-dated Treasurys, but in the short term sees the 10-year yield topping out in the 2.30-2.35% area. A near 100 basis point move has already occurred - now's not the time to go all-in on a bearish bond call.
4:55: Bond yields have bottomed globally as well. The move hasn't been as significant as the U.S., but it's pretty clear on the charts.
4:59: A check of the 5-year inflation swap forward shows an "explosion" in inflation expectations in the past few weeks. "When people ask me if the Fed will hike in December, I tell them, if the Fed doesn't hike then, it never will."
5:05: "This is as bad as it gets," says Gundlach, getting to his "money chart" - a long-term chart of the 10-year Treasury yield. It looks like what technicians would call a double bottom - the yield touched 1.35% in 2012 and then blasted higher. It sunk to roughly the same level this summer, only to reverse sharply higher. He again reiterates he wouldn't be a seller of Treasurys here just because the move has been so sharp to the upside.
5:09: Gundlach doesn't name names, but says he saw a bond "pro" on CNBC recommending corporate bonds as a hedge against falling Treasury prices. His voice rising, Gundlach says it would be nuts to hedge long-dated Treasurys by purchasing corporates at current spread levels. If you need to own long-dated paper, says Gundlach, make sure it's government paper.
"The dam is breaking, you can feel it," Jeff Gundlach tells Reuters, referring to the recent string of modest S&P 500 declines. He sees another 5-10% downside for the index.
Meanwhile, DoubleLine's $61.6B Total Return Bond Fund (MUTF:DBLTX) (ETF cousin: TOTL) suffered its first month of net outflows since January 2014, with $33.2M pulled. The $7.7B Core Fixed Income Fund (MUTF:DBLFX) had net inflows of $166.5M in October, bringing YTD inflows to $2.1B.
Having been vocally bearish on bond prices for months, Gundlach isn't surprised at least some are heeding his warnings and pulling money out of fixed income offerings.