Jeffrey Gundlach Fed Day - CNBC Closing Bell - 12 June 2024

with Scott Wapner,Steve Liesman and Jeffrey Gundlach,founder,CEO and Chief Investment Officer of DoubleLine Capital LP The interview took place in DoubleLine's Los Angeles office.The Federal Reserve left interest rates unchanged at its June meeting.Mr.Gundlach is predicting a recession and is less sure the Federal Reserve will make even one interest rate cut this year.He currently likes investing in gold and India.DoubleLine has a range of mutual funds,closed end funds,exchange traded funds and UCITS.UCITS is a European Union regulatory framework for trading mutual funds. Based in Tampa,Florida,DoubleLine is majority employee owned and employs 248.Oaktree Capital Mangement owns a 20% stake in the firm.

DoubleLine CEO Jeffrey Gundlach: Powell is right to say that inflation has declined a lot - CNBC

Bear market's final leg looms as weak earnings season, says Morgan Stanley's Mike Wilson

The Fed will likely kill the market rally, says Trivariate's Adam Parker

The removal of Fed puts has caused these bear market challenges, says Ritholtz's Josh Brown

A recession is more likely than a soft landing, says Charles Schwab's Liz Ann Sonders

Fed Chair Powell finally sent markets the right message, says Mohamed El-Erian

Powell's 'hawkish' Jackson Hole speech hammers the markets - CNBC

Market is better setup for a 75 bps hike, says JPMorgan's Gabriela Santos

Fed Banker Sympathetic to Savers

One of this week's economic highlights is the Federal Reserve Open Market Committee meeting on Tuesday and Wednesday to decide on whether to raise interest rates.*
I think that we are going to see an inflation increase going forward,said James Bullard,President of the Federal Reserve Bank of St.Louis and an FOMC member.There's been a longtime disconnect between what the market thinks the Fed is going to do and what it actually does,Mr.Bullard cautioned.I'm not sure why we have to have this constant disconnect.Not only have we moved at meetings;we've also moved at inter-meetings.We reserve the right to move at any time.*
I felt that quantitative easing was pretty effective in the US.If we had to go back to that tool,I think we could do it.I feel that our toolbox is not nearly as empty as some seem to describe it.*
I think we should be able to tolerate mild overshoot:2.2 inflation is probably better than 1.5.I do think that it's a tragedy of sorts that we talk about borrowers and forget about savers.We want to do better in terms of equilibrium in the market instead of always borrowing from the future,Mr.Bullard told Bloomberg Radio.*
The Wall Street consensus is,the Fed won't raise rates at this meeting.

Some Fed Members Still Think 2015 Rate Increase Is Best

At its September meeting,the Federal Reserve's Open Market Committee declined to raise interest rates and left a sense of uncertainty over investors.Just after the meeting,three Fed members advocated raising rates this year.
I argued against the decision,St.Louis Federal Reserve Bank President James Bullard said.Holding rates steady yet again seems to have created rather than reduced global macroeconomic uncertainty.*
San Francisco FRB President John Williams and Richmond FRB President Jeffrey Lacker also called for a near term rate hike.*
If 2015 is the year the Fed will raise rates,it will have to be in December,since there is no press conference scheduled for the October meeting,suggested Tony Nash,chief economist and managing partner at Complete Intelligence,who focuses on Asia.
In the US,you have a lot of people checking out of the work force between 30-55 years of age,those peak earning years,which limits the consumer.We do see opportunities in the emerging markets short term;in the longer term,debt issues are more troubling.
If we see a very small rate rise and a very slow pace,the emerging markets will suffer,but the magnitude of the suffering will be very shallow.Among the emerging markets,India has a very weak portfolio of ministers.Prime Minister Narendra Modi is going to have to change it up,if he wants to improve the economy.*
iShares MSCI Emerging Markets ETF (EEM)

Will the Fed Move This Week - and what should investors do?

Can the economy deal with a Federal Reserve interest rate hike at this week's Federal Open Market Committee meeting?Yes,the economy can support an 0.25% increase,but we don't think there will be one,Andrew Burkly of Oppenheimer&Co. told CNBC.To me,the risk is essentially longer,not sooner.We're leaning more to a rate increase in the latter part of the year.The sector I like for investing in from all this is the financials.*
The options market suggests that this week's FOMC meeting could be potentially one of the most volatile that we've seen in years,added Stacy Gilbert of Susquehanna Capital Group.We have seen an increase in what I call "crash protection,"and we haven't seen this increase of crash protection over the last couple of years.This is one of the biggest increases that we've seen.
The S&P 500 options are pricing in a stock market move of about 2.25% for a one day move,which prior to the past couple of weeks would have been a notable move in the S&P 500,and something that we haven't seen relative to the Fed in quite a while.So I think there's a lot of uncertainty out there.The markets are pricing this in as a notable event,and portfolio managers and investors are looking at their portfolios saying "What if?I want to be able to sleep at night."*
The Fed's decision will be released on Thursday.Whenever the rate increase comes,it will be the first one since 2006.The US economics team at Morgan Stanley thinks a hawkish pass by the Fed is a 60% probability.In other words,the Fed would pass on a September rate liftoff,citing the recent tightening in financial conditions;while leaving open the possibility of an increase at the October or December FOMC meetings.*
Morgan Stanley (MS),Oppenheimer Holdings Inc (OPY),Susquehanna Bancshares Inc (SUSQ)

Market Ideas Late February 2015

We fully expect over the next 10-15 days we could see the S&P 500 at 2000 or below,said Matthew Tuttle of Tuttle Tactical Management,because:
1.Greece hasn't been solved.
2.Vladimir Putin.
3.The Fed is the 800-pound gorilla.Once the Fed exits,investors will go with it.*
Ultimately,crude probably does go lower,adds Dennis Gartman,editor of The Gartman Letter.We've broken some down-trend lines.Actually,I own a couple of oil companies to hedge my own position.
The fact is,stocks are going higher.Anybody short of stocks has been in a very difficult position,and will continue to be.The beach ball is still going higher.There's no reason to believe otherwise.A lot of people have been bearish-very smart guys-and they've been wrong.*
Steve Milunovich,IT hardware analyst and managing director at UBS,has reiterated his buy rating on Apple,with a 150.00 price target.Apple is reportedly working on an all-electric minivan type car.We do think the Apple ecosystem is increasing-very important.The change is,Apple is becoming pervasive in consumer lives.It still primarily monetises through its devices,but services is the glue to the story.
CEO Tim Cook has done a tremendous job of putting it all together.If they really do expand,the less they depend on the iPhone,and that's helpful.If Apple goes up to 160-170 dollars per share,it will have a market cap of a trillion dollars.*
Apple Computer(AAPL),iShares Core S&P 500 ETF(IVV),Chevron(CVX),Valero Energy(VLO)

Investing Today:Top Positions February 2015

I think stocks are fairly valued,relatively cheap compared to bonds,said famed money manager Bill Miller,Chairman and Chief Investment Officer at Legg Mason Global Asset Management;but I also think there are too many cross-currents here:Greece,Ukraine.There's a fair degree of interest in the Fed of moving off the zero mark.I think they want to do it because of the very low rates.I would think the 10-year Treasury will settle somewhere at 4-5%,its normal rate.
Amazon had a bad year last year,and after Q4 we went into it heavily,to our largest position.They have a market cap of 170 billion;they haven't sold stock;and they make a lot of cash,which to me is more important than profits.The Apple Pay and Apple Watch should do very well this year.If Apple struggles to reach her highs,the whole market struggles.Intrexon is a synthetic biology company.It's going to rewrite DNA,with applications for health care,energy and the environment making it a consumer company.
The S&P Homebuilders etf is a top ten position,along with Intrexon,Mr.Miller revealed.*
Halliburton Oil is cutting 8% of its workforce-not surprising since prices are still below the level needed to sustain the industry,according to energy analyst Pavel Molchanov of Raymond James Financial.Fifty or fifty-five dollar oil doesn't cut it medium-term.If oil stays in the fifties,global supply will decline in 2016,being self-correcting.Oil supply is stabilising by the end of this year,as supply will be flat or down slightly.*
Amazon(AMZN),Apple Computer(APPL),Intrexon(XON),SPDR S&P Homebuilders ETF(XHB),Halliburton Oil Company(HAL)

Which Stocks To Invest In,November 2014

You should find companies that produce most of their earnings here in the US,says Barry James of James Advantage Funds.The Federal Reserve moved to the side when it ended its bond-buying program recently,so we could see some more volatility,but overall,we're still pretty positive on stocks.Companies that Mr.James likes include:
Alaska Airlines(ALK)
Dr.Pepper Snapple(DPS)
Hanes Brands(HBI)*
Paul Dietrich,CEO of Fairfax Global Markets LLC,prefers value stocks.These companies are undervalued and have huge free cash flow.Value investors are outperforming the benchmarks,and will continue to outperform.He likes companies such as:
Macy's(M)
Micron Tech(MU)
Alaska Airlines(ALK)*
Alaska Airlines is one of the most frequently recommended stocks,as are other airlines.Airlines are currently benefitting from lower oil prices and not increasing their capacity-which means more crowded planes,but helps their profit margins.

Analyst Eyeballs Inflation Risk

Significant inflation could be just around the corner,causing the Federal Reserve to exit its bond buying support of the stock market in short order,according to Peter Boockvar,chief market analyst at the Lindsey Group.I think it's a big deal,Mr.Boockvar told CNBC.We've had multiple data points pointing to a bottoming in inflation.Gasoline prices are at their highest level since July.
If there's one thing that could handcuff Fed policy,it's a rise in inflation.According to the Fed's measure,we're far away from it.I think it's important in gauging the timing of the exit strategy.A faster uptick in inflation could hasten that exit strategy faster than the Fed thinks.You get back to that 2% level faster than the Fed thinks and you're going to see rate hikes faster than the Fed expected,Mr.Boockvar pointed out.
The Thomson Reuters/Jefferies CRB Index of 19 commodities,a widely recognised benchmark for commmodities trading,is at its highest point since October 2012.A closely watched measure of inflation,the Consumer Price Index,will be released later today.
On Monday,the markets shrugged off Ukraine worries on strong retail sales and Citigroup earnings.
Citigroup(C)

Where To Invest;Sochi Medal Count;Julia Mancuso

We'll end the year with high single digit gains,predicts Kevin Mahn,President and CIO at Hennion&Walsh Asset Management.I think there is upside,but I believe there's more pullback in the market because we haven't reached certainty about the debt ceiling and the market hasn't adjusted to new Fed Chairman Janet Yellen yet.*
I think this is the year for diversification again.People forgot about asset allocation last year,with the market up 30%.You have to be nimble.You have to be active,and you can't concentrate on just one asset class.You have to look at alternative assets like gold and REITs.I would say the housing recovery isn't over,with the REITs.We actually favour Europe over the US this year,even though we're bullish on the US,Mr.Mahn said on CNBC.*
Sochi Winter Olympics Total Medal Count as of Friday morning:
1.Canada 7
1.Netherlands 7
1.Norway 7
2.Russia 6
3.USA 5
4.Austria 3
4.Czech Republic 3
5.France 2
6.Germany 2
6.Sweden 2
Canada has the most gold medals(3).*
America's Julia Mancuso,29,won the bronze in the women's Super Combined alpine skiing event,which combines downhill with slalom.She now has won each Olympic medal in her career,including two bronze,making her the most decorated female alpine skier in US history.I can't even believe it,Mancuso said.It was such a tough slalom.*
The effervescent Mancuso attributes her Olympics success to having grown up in the Squaw Valley ski resort of Lake Tahoe,California,site of the 1960 Winter Olympics.Jamie Anderson,who won the first gold medal in the female slopestyle snowboard event the day before,also hails from the Lake Tahoe area.*
Canada's Charles Hamelin won his third gold medal in the 1500 meter speedskating event,tying the record for most gold medals won in a single event.Hamelin,29,is from Sainte-Julie,Quebec.

Inflation and the Economic Road Ahead

It's obvious to me that the Fed wants out of QE,PIMCO founder,CEO and chief investment officer Bill Gross told CNBC.What we're seeing is an end to QE in October or November,and then a focus on the policy rate,a discussion that focuses on inflation rather than employment.*
Mohammed El-Erian's departure was a surprise to us.We're not exactly certain where he's going.We're disappointed that he's not gonna continue in a successor role to me.Mohammed and I have been good friends for 14 years.We're neighbours;he's just down the street.As to why he's leaving,I basically can't tell you.That's best left to him.
I don't think it had anything to do with performance.Perhaps like an architect he's moving to another house.We understand that he does want to take a break.He's gonna end up somewhere at a higher level.We now have six deputy CIOs under the structure Mohammed created.This is a sharing of ideas that will function more quickly and more responsive to the market.*
Global financial markets are still highly levered.The emerging markets are slowing down,and developed markets are responding.Mexico to me is still the best of the emerging markets.Its wages in the auto sector are just 15% of the US.Mexico is a hold that's just been caught up in the rest of the emerging markets.*
There's always a risk of inflation going forward.We're in an artificially enhanced market that won't necessarily give returns higher than inflation.I think we're fairly valued at 15 times earnings.We're OK as long as growth remains at least 2-3%,and I think it will,"the bond king" Bill Gross said.*
The Fed's key inflation gauge rose slightly in December.The PCE went from 1.1 to 1.2%,well within the Fed's stated goal of 2.0%.Personal income was flat,but personal spending increased at 0.4%,double the estimated increase of 0.2%.

Emerging Markets Slide;Gold Sales,London Homes Up

Emerging market stocks declined markedly in early Monday trading.The problem is,emerging markets have not addressed their domestic issues.They don't have very strong growth momentum.They really have to look at their own economies,and not blame the Federal Reserve or other developed markets,an analyst at Bank Julius Baer noted.*
Australia's sovereign wealth fund racked up record gains in 2013.As well,the Perth Mint,a refiner of gold and silver bullion into coins and bars,has posted higher sales for January as gold prices rose.Sales climbed 10% as investors sought refuge from an equities market weakened by slowing Chinese growth and Fed tapering.The price of gold fell 28% last year,but has risen 3% so far in 2014.*
Two trillion dollars of equity have been lost since the Fed started tapering its bond buying programme.We've had PE multiple expansion in markets without the earnings to back it up,points out Nick Xanders,global equity strategist at BTIG.
Both the Thai baht and stock market staged a relief rally Monday when national elections went off peacefully,although many polling places were blockaded by opposition protestors.*
Rubber prices dropped to a 16 month low on the Chinese manufacturing pullback.*
London home prices are surging because of an influx of Asian buyers.There are fears a housing bubble may be in the making.*

Asia This Day:Fed's Fisher in Sydney;China Services;Shanghai Golf

A top central banker,Richard W. Fisher,who is President of the Federal Reserve Bank of Dallas,has bitterly criticised the U.S. Government for the inept handling of the federal budget,thus hindering the Federal Reserve's efforts to help the economy recover.Mr.Fisher thus echoed the frustration of the American people with the recent government shutdown and sequestration.
I am not a proponent of increasing government spending without restraint,Fisher,whose father was born in the Australian state of Queensland,said in a Sydney speech to business economists.The excessively over-indebted US Government has been hog-tied,prevented from providing stimulus.It has thus provided a counter-cyclical,suppressive role.The inablity of our government to get its act together has countered the pro-cyclical role of the Federal Reserve.We have a government that hasn't been able to agree on a budget in 5 years;that has historically,under both Republican and Democrat presidents and Congresses,spent money and committed itself to fund long-term programs without devising revenue streams to cover current costs or fund future liabilities.
One could say that GDP would have risen at 3.2 percent had government expediture increased at the same rate as private expenditure.Or,more modestly,if government had just been held constant,instead of contracting,GDP would have grown at an annual rate of 2.6 percent.
Under these circumstances,it is no small wonder American businesses are not expanding and growing jobs at the pace we at the Fed would like to see.It is no small wonder that our economy is growing at a substandard pace compared to previous recoveries.It is no small wonder that the most expansive monetary policy the Fed Open Market Committee has ever engineered has been hampered from accomplishing what it set out to do,Mr Fisher complained.*
China's services sector grew the most in thirteen months in October,a report from the National Bureau of Statistics shows.The services PMI rose to 56.3 in October from 55.4 in September.*
Most Asian markets fell in early Monday trading,with Japan's Nikkei index down 0.88%,perhaps disconcerted by Mr.Fisher's remarks.*
In golf,American Dustin Johnson won the PGA Tour's World Golf Chmapionships-HSBC Champions in Shanghai in a memorable tussle with England's Ian Poulter and Graeme McDowell of Scotland.Johnson said it was the most important win of his career,given the field and the tournament.It was his eigth PGA Tour victory.He praised HSBC for their excellent work on the tournament.
Johnson,Poulter and McDowell spurred each other on with an exhibition of accurate ball-striking.China's WC Liang also played well,tying for fifteenth with his eleven under par 66.Poulter and McDowell will go on to the Turkish Open this week in the European Tour's Race to Dubai.