Jeff Gundlach is hosting a webcast entitled “What If?” this afternoon at 4:15 EST. The veteran bond buyer will be covering questions about the bond market and giving the best answers he has to those “What If?” questions. Gundlach will be looking in particular at the Federal Reserve’s plan to ease off QE, and th effect that move will have on the bond market.
17:24 EST- Gundlach is ending the presentation now.
17:20 EST- Gundlach is going through the returns on his funds right now.
17:19 EST- Housing is not likely to continue on as strong as it has been. Housing’s contribution to GDP is looking to disappoint.
17:18 EST- Weakness in Homebuilders ETF. It’s still as high as it was in 2007. Gundlach heard somewhere that was a bubble.
17:15 EST- Delinquancy rate is falling in Subprime, but it’s still high.
17:14 EST- The worst bond market for investors is TIPS. that means inflation doesn’t look to be on the way.
17:13 EST- Housing in the United States now, mortgage rates are up, it doesn’t look like it’s going to spike, but they may go a little higher.
17:12 EST- Europe’s periphery doesn’t look good, but it’s somewhat stable because of ECB policy.
17:10 EST- GDP is still down almost everywhere from highs in 2007. Spain’s housing market is still dangerous.
17:09 EST- Income tax increases in the top two categories would need to be above 160% in order to balance the budget.
17:08 EST- In order to balance the budget with tax only, corporation tax would have toto hit 66%.
17:07 EST- Social security problems are lulling right now. The problems are coming in future, however.
17:06 EST- Gundlach thought the Fed would keep QE going because of the effect on the budget deficit. With interest rates up, the United States’ net interest is going way up.
17:05 EST- Personal Consumption Expenditures are fueled by debt. Not just personal debt, but government debt given out as transfer payments and similar grants.
17:04 EST- The price of oil in rupees makes India look very shaky. Rupee depreciation and high oil prices could cause problems.
17:03 EST- Gold is at an all time high in rupee terms because of the fall in the value of the currency. Gold collapses aren’t the same all over.
17:02 EST- Gold peaked when investors were comfortable investing in Real Estate again this year.
17:00 EST- Gundlach is looking at gold prices against US home prices. When home prices fell, gold roared upward. Gundlach doesn’t think that’s a coincident that’s users heading for safety and tangible assets.
16:59 EST- Doubleline has funds for clients that are sure interest rates are going to rise. Gundlach recommends those funds for anybody worried about losing on an interest rate rise.
16:58 EST- Doubleline has much less interest rate risk than another bond funds. Interest rate rises are still going to effect the bond fund.
16:57 EST- Commodities are another asset group going sideways. There’s no inflation indicator yet, not until the market moves up or down.
16:56 EST- Commodities are up next.
16:56 EST- Emerging and Developed Equities are much less correlated when you look at 10 years.
16:55 EST- Emerging and Developed equities were correlated for years. On January 1 2013 that correlation ended.
16:53 EST- Russia has been going well since taper talk began. Long China and Russia, short India in EM.
16:52 EST- If you have to be in EM Equities, China is looking the best of the bunch, the country has been boosted since taper talk began. Russia is another country insulated from foreign capital problems.
16:49 EST- Gundlach is positive on some EM equities. He thinks stocks in China are going to outperform because the country doesn’t need foreign capital. China will insulate investors from some problems.
16:47 EST- India’s currency is weak because of reliance on foreign capital. Gundlach would not own Indian stocks because of the foreign exchange problem.
16:46 EST- good sign that new players in emerging markets are getting out.
16:45 EST- emerging markets aren’t dangerous in general according to Gundlach, but India looks weak and might blow up.
16:43 EST- Emerging market equity ETF shares boomed in 2012 and fell off a cliff this year. It’s a good sign for the health of emerging market equities, says Gundlach.
16:42 EST- There’s a correlation between stocks and bonds, and it means nobody’s making any money right now.
16:40 EST- Negative correlation on stocks ans bonds is a new trend, it came from worries about deflation. That trend has lasted for years, but the correlation is slightly correlated now.
16:39 EST- Huge rise in bond interest rate brought on by QE taper talk.
16:38 EST- Stocks are going sidewards at the moment, and investors who think the equities market is strong are wrong.
16:37 EST- San Francisco Fed study on QE shows confidence intervals all over the place, the bank isn’t certain of anything at all
16:36 EST- QE isn’t really being reduced right now. It’s going in lock with the budget deficit according to Gundlach.
16:34 EST- QE now, Francisco Fed thinks that monetary easing inflation takes much longer to get rid of than the short term GDP boost.
16:31 EST- Gundlach thinks a QE taper makes sense because he sees the program as funding the budget deficit and the deficit is less this year.
16:30 EST- Bond sell off has been steeper than historical changes. The current sell off is close to the bottom of all interest rate rise related sell offs.
16:29 EST- Gundlach showed us The Scream by Munch for a while, that’s how people are feeling apparently.
16:28 EST- The rises now are form newcomers to the bond market rather than inflation or fundamentals. Sentiment in bond markets could stay bad for a while, there needs to be a change internationally to change sentiment.
16:27 EST- Gundlach said rates could hit 3.10% or 3.15% on CNBC a couple of weeks ago.
16:26 EST- Gundlach hasn’t heard much from Fed governors, and he thinks that’s unusual. He thought interest rates would stay below 2.30% because he though QE would continue.
16:25 EST- Gundlach thought the Federal Reserve would not walk from QE so easily. He thought they’d follow in Japan and Europe’s footsteps. Gundlach thinks it’s a mistake.
16:24 EST- We’re onto QE now, Gundlach is talking about his interest rate predictions in the past.
16:23 EST- convertibles are related to equity, so they’re doing well, emerging market bonds are doing poorly. Gundlach is taking a look at return by rating now.
16:22 EST- He’s looking at the difference between 2012 and 2013 Bank of America Fixed Income Returns for various bond types, convertibles, high yield, International-Emerging, Corporate, International-Developed, Mortgages and Government bonds
16:21 EST- Gundlach starts by looking at what the market has returned so far, he’s looking at the different returns on different types of bonds.
16:20 EST- Gundlach is on now. He’s talking about interest rate rises. The theme of the webcast is what will happen on QE rises and other big macro moves.
16:18 EST- The webcast has just begun. Jeff Gundlach hasn’t come online yet, we’re hearing about the Double Line funds information and so on.