• Billionaire Jeffrey Gundlach, aka the „Bond King,“ has warned of „painful outcomes that are coming in the next recession.“
• Gundlach shared his outlook on the U.S. economy in an interview with Yahoo Finance last week, cautioning that attempting to reduce the severity of problems could lead to a more severe problem.
• The billionaire opined that when you have this attempt to never have a significant downturn in the economy, it violates his rule of financial physics.
Billionaire ‚Bond King‘ Warns of Painful Outcomes
Billionaire Jeffrey Gundlach, also known as „the Bond King,“ has warned of difficult times ahead for America during its next recession. In an interview with Yahoo finance last week, Gundlach cautions that attempting to reduce the severity of problems could make them worse in the long run. He goes on to explain his rule of financial physics which states that reducing the severity of problems results in more severe issues down the line.
Gundlach’s Net Worth and Background
Gundlach is chief executive officer and chief investment officer at Doubleline Investment Management firm and was named „The New Bond King“ by Barron’s magazine back in 2011. He currently holds a net worth estimated at $2.2 billion according to Forbes Magazine.
Indicators for Recession
Gundlach explains that one indicator for recession will be if unemployment rate crosses its 36-month moving average which suggests we are facing a hard landing type of recession. He further explains how Federal Reserve is predicting a recession themselves since they stated unemployment rate would end this year at 4.6% which historically indicates more than 50-basis-point rise in unemployment rate meaning a recession is imminent..
Federal Reserve Attempts To Curb Inflation
In December 2019 Federal Reserve attempted to curb inflation by implementing zero interest rates and quantitative easing policies but Gundlarch suggest these actions may have unintended consequences such as ultimately leading up to very high severity problem due to trying avoid any type hard landing ever..
Gundlarch warns investors should take precautionary measures ahead of time because regardless if it’s soft or hard landing no one can predict how bad or long lasting this economic downturn will be .