Gundlach: Gold Will Hit New Low, HLF a Short [VIDEO]

Updated on

Transcript:

carl, thanks. welcome to the halftime show. right here on the wall is where we stand. up day for stocks. dow is up 87, nasdaq, s&p positive as well. here is what we’re following. gundlach unplugged. the king of bonds in a halftime exclusive on rates, the fed, and what stocks he’s playing. battle over the builders. a halftime throwdown. first, our top story, a rough august for stocks winding down. what will september hold? the typically tough month comes with so much for investors to digest. dropping jobless claims and talk of a mega deal in the telecom space. what does it all mean for your money? we ask the traders, stephanie link, jon najarian, steve weiss, josh brown. josh brown, what does all of it mean? if we have to prioritize what’s most concerning right now to me, i would put syria a little bit lower on the list. i think the housing market is really, really important here. i think the telegraphing we’re getting from the home builder stocks is highly negative. the 20% drop in new home sales, which are much more concurrent than existing home sales we saw in june and july are vexing and, frankly, if you look at gdp growth in the second quarter, about 40% of that was housing related. so if we’re going to worry about all of those issues, i would pick housing to be the number one right now thing that people want to be considering and watching very carefully. steve, you’re disappointed we didn’t get a bigger pullback today because you wanted to put a lot more money to work. and i have been nibbling buying some things but to me what josh just said, the way he started out is exactly what’s driving the market today. if you recall, it wasn’t that long ago that we used to say, here is what’s going on, this is so good, so good for the market. josh said the top things to worry about, and that to me is just endemic of the bearishness that’s really creeped up with the market over the last month, and if you look at put call ratio, it’s extreme bearishness right now. so i do think we have some issues in september. i don’t think it’s all clear, but i believe we’ll get through them and if you find compelling buying opportunities as i keep adding to macy’s and to citi, i think you have to start buying them. stephanie link? i think the reason the market is up today really is because the economic data was a lot better. gdp was good, but the initial claims, you’re now at seven consecutive weeks under 350,000. that bodes very well for the nonfarm payroll numbers. could be 200,000-plus kind of a number next friday, and so me that’s going to be the big number. and i do believe that good news is good news. i think we do want the fed to taper and just to get it out of the way. and once we get it out of the way, we can kind of focus on a lot of other issues and i do think that volatility will continue in september certainly, but we’ve been buying on the weakness because i think that the direction in the market is going higher because the economy, the direction of the economy is going higher. there was one other important data point today and that was the bureau of economic analysis, another agency, came out and said corporate profits are basically up 10%. that’s a powerful number, and puts to bed some of the concerns about profitability. so this last fourth of the year you think could be positive for the stock market. i think it’s critical. i think expectations have come down to a level where it could be very positive. to josh’s point right at the top, he hit the home builders, but you take a look at them today, they’re the strongest sector out there. lennar, toll brothers, dh horton, pulte homes, all of these are screaming to the upside here today. why? there’s a very minor move out of the mortgage rates, down to, what, 451 from 458. that’s not really what’s driving it, at least not — mortgage rates are up 100% — 100 basis points in the last 90 days. the fact of the matter is we got a case-shiller report that’s way out of date. we got existing home sales that are way out of date. the most concurrent measure that we could look at to gauge how homes are really selling is new home sales. we had two disappointments in a row. i got to tell you, a lot of this economic recovery is predicated on — so why are we seeing 4% jumps out of the home builders today? today? i can’t answer for day to day. i’m talking about larger trends. that big 20% to 30% sell-off. maybe but that’s not — people are going to be able to afford it even if rates go back up — job growth supersedes everything. that’s right. i don’t disagree. that’s why i think the home builders are up. they have gotten trashed. everyone was nervous we were growing 1.5%. now it looks like we’re growing 2% gdp, maybe better. i would much prefer that you be right than i be right. let’s be clear. however, however, right now when we’re talking about september taper, debt ceiling, this, that, the other thing, this is the thing that i think traders are most concerned about. rates are rising again, and that brings us to our exclusive interview with jeffrey gundlach, the ceo of doubleline with $60 billion under management. he’s live in l.a. welcome back. nice to be with you. let’s go back to june 27th on this program and on your webcast. you said the momentum in higher interest rates is slowing. the ten-year yield will be much lower by the end of the year and not by a tiny amount. this has surprised you, hasn’t it? well, we can go back to the absolute bottom interest rates which was july of last year. i think i was on cnbc at the new york stock exchange talking about how negative we were on interest rates. they were going to go higher. at that time we had a totally different psychology than what we have in place today. at that time people were talking about sort of liking the ten-year as a trade because it was at about 1.60% and it might go down to 1.25% and i said that’s a very strange mentality because you don’t even make much money even if you’re right. when the ten-year broke to above 2% earlier this year, we thought that it would hold at about 2.35% and that was in june, and when the ten-year broke above 2.35% we turned negative on interest rates thinking they would go higher certainly to 2.75% on the ten-year. we have captured the bearish part of it by about 70%, which is actually our long term hit rate in terms of calling markets and interest rates. where we are right now is we’re looking for signals on interest rates as to what might be a signal that the interest rate increase is over and, frankly, i don’t really see those signals right now. the sentiment that i talked about being different from a year ago is now basically fear and loathing. people have gone from i don’t care about volatility, i want income, to i don’t care about income, i don’t want volatility. what i asked my large investors what would they do if the ten-year went to 2%, they all say i would sell heavily. and that means hat you have this kind of circular argument against interest rates falling. you need a change of psychology away from fear and loathing. one of the things i’m looking at every single morning, the first thing i look at is i look at what’s happening in the emerging market currencies, in the rupee and looking at kind of marveling of how good a lindicator they’ve been. although there’s been some movement overnight in terms of trying to shore up the currencies, i don’t really think you want to go long those currencies, and we need to see some sort of better movement there i think to help us understand when interest rates might stop rising in the u.s. i think we might get a flush higher in interest rates after — i think after tapering. i think the fed will taper. as i have talked about, they’re just financing the budget deficit. the budget deficit is less. they really need to slow down purchases. on the moment that happens i think you get rallies in market. after that we’ll start to enter a period of higher volatility because the markets won’t have a safety net and i mean equity nets also won’t have a safety net that has been very important in psychology heretofore ever since basically year end. do you have a number in your mind to where you think the ten-year note yield tops out at? i don’t think it’s that much higher from where it is. one thing people have talked about and i think correctly is they’ve compared this year, the rate rise that started may 1st, they’ve compared it to the rate rise that started way back in 1994, january 31st. and if you put those charts next to each other, they are remarkably similar. in the first few months of the sell-off in ’94, you had a liquidation cycle and rates spiked higher very similar in pattern to what happened in may and june, and then they kind of stopped going up after a few months, and that’s kind of where we seem to be right now, and then they kind of leaked higher because of fear and loathing again. lack of interest. i mean, there is plenty of yield right now in the bond market. it’s not in treasuries. it’s in areas where investors that watch your program probably can participate

Leave a Comment