Fra Zerohedge:
Having predicted the Donald Trump victory, and nailing the upturn in US Treasury yields as well as the concurrent stork market rally, DoubleLine’s Jeffrey Gundlach has once again taken the other side of the trade after riding it for the past 3 weeks, and is now considerably less exuberant on Trumponomics.
Speaking to Reuters, Gundlach, who went “maximum negative” on Treasuries on July 6 when the yield on the benchmark 10-year Treasury note hit 1.32 percent and bottom-ticked what may have been a generational low in rates, said that markets could reverse the recent momentum in equities, and at the very latest by U.S. President-elect Donald Trump’s Jan. 20, 2017 inauguration.
The “new bond king” said that the strong U.S. stock market rally, surge in Treasury yields and strength in the U.S. dollar since Trump’s surprising presidential victory more than three weeks ago look to be “losing steam,” Gundlach told Reuters in a telephone interview.
“The bar was so low on Trump to the point people were expecting markets will go down 80 percent and global depression – and now this guy is the Wizard of Oz and so expectations are high,” Gundlach said. “There’s no magic here.”
Gundlach had warned last month that federal programs take time to implement, rising mortgage rates and monthly payments are not positive for the “psyche of the middle class and broadly,” and supporters of defeated White House candidate Hillary Clinton are not in a mood to spend money.
“There is going to be a buyer’s remorse period,” said Gundlach, who voted for Trump and accurately predicted in January the winner of the presidential election.
What happens next: “The dollar is going to go down, yields have peaked and will move sideways, stocks have peaked as well and gold is going to go up in the short term.”
“I am less defensive now on Treasuries and I am less negative on the 10-year Treasury note at a 2.35 percent yield than we were at 1.35 percent yield,” he said. “Bank of America’s dividend yield is 1.39 percent while the 3-year Treasury yield is 1.45 percent. I mean, really?”
Gundlach said he began purchasing Treasuries last week and agency mortgage-backed securities on Tuesday, as yields have risen, he said.
After Trump’s presidential victory, Gundlach told investors to avoid exposure to so-called “FANG” stocks, and remains bearish on the group.
“People want something real,” Gundlach said. “No more on this ‘man behind the curtain’ stuff. Industrials, materials … people are tired of tweets. They want cement.”
He concluded: “It is so late to be buying the Trump Trade.”
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Bill Gross bakker op om denne vurdering:
As President-elect Donald Trump’s economic team takes shape, led by Treasury Secretary nominee Steven Mnuchin, investors are misguided in betting that promised tax cuts, infrastructure spending and deregulation will spur faster growth, according to an e-mail Thursday from Gross, the billionaire bond fund manager. He said the benefits from such fiscal stimulus likely would be temporary.
Gross said future growth is primarily a function of productivity, which has flat lined for the last several years and shows little promise of accelerating.
“A strong dollar and continuing structural headwinds including aging demographics, de-globalization trade policies, and accelerating debt-to-GDP in almost all countries at now higher interest rates, promise to contain productivity at perhaps 1 percent annual growth rates and therefore real GDP growth at 2 percent,” he wrote.
