Billionaire “Bond King” Jeffrey Gundlach says that this year the US will probably see a crisis that would force the Fed to resume an interest rate rate.
In a new CNBC interview, the founder and CEO of investment firm Doubleline Capital says that this year he sees the FED reduction rates, but it will not be related to the double mandate of the FED to achieve maximum employment and an average of 2% annual inflation.
“I think they will lower the rates, but I don’t think it will be because of much better inflation data because I don’t think it will be much better. I doubt that the unemployment rate will become a shock in the short term, as in the coming months.
But I do think they will lower the rates because some liquidity problems can pop up. So I think they will probably lower the rates towards the end of the year, and I still think it is probably less than the market, but I am now closer to the market because I have stayed on two and the market has gone from five or six to two and a half [cuts]. “
According to Gundlach, some institutions start to witness liquidity problems. Gundlach uses the recent bond sale of Harvard to show that established entities need money in the US, but says that other institutions have the same problem.
“The thing I think it will be talked about, and I think this might be important in the next market problem, this illiquidity problem is that [has] Developed and gets some play on the newswires with Harvard and some Elite universities where they have no money.
They are rich in assets, but they are cash. Harvard has a donation of $ 53 billion and they have now ticked the bond market twice for in principle exploitation of cash. And the reason is – and I only use Harvard as a temporary designation because this has been in the news and reported with statistics – they report 40% of their donation in private equity.
I suspect that another large Slug is private credit, which has been a flourishing asset class. We start to see stories about some of the faster -moving university donations that say: “We may want to leave some of our obligations …”
I think this will be a problem. “
https://www.youtube.com/watch?v=-OVQOCQXYJO
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