Home Videos Jeff Gundlach: No Bond Bubble, Apple Is Worth $425

    Jeff Gundlach: No Bond Bubble, Apple Is Worth $425 [VIDEO]

    Jeff Gundlach: No Bond Bubble, Apple Is Worth $425 [VIDEO]

    Jeffrey Gundlach, DoubleLine Capital CEO, does not believe there is a bond bubble, but thinks that double digit returns going forward are unlikely. Gundlach was on CNBC yesterday, and also discussed his views on the country’s biggest company (by market cap). Gundlach who is considered a bond guru, has been bearish on Apple for a while.  He stated “I deeply believe Apple is headed to $425 a share.” He discussed the fiscal cliff and other economic and investing topics. The video and a computer generated transcript are embedded below:

    if you took our next guest’s advice early last year you’d have been handsomely rewarded in
    return. now to give you his 2013 outlook, double line capital’s co-founder and ceo jeffrey
    gundlach joins gary kaminsky for an exclusive interview. hi, gary. simon, happy new year
    and thanks very much. jeffrey, our viewers know who you are. they want to hear what you
    have to say. when we visited with you in los angeles in september, you sort of telegraphed
    what you expected with the fiscal cliff and not surprisingly, you were dead-on. so tell us now
    what are your expectations in terms of what’s happening with the debt ceiling, how it will
    impact capital markets and how the portfolio’s positioned as a result of that. gary, happy
    new year. it feels like ground hog day, that movie, doesn’t it? where the fiscal cliff was the
    big deal and ace have been saying for the last few months that’s not really the big deal. the
    big deal is the fiscal crisis that’s ongoing in the united states and we’re just moving on to
    chapter 2. chapter 2 is the coming fight over the debt ceiling and will there be any spending
    cuts. it is amazing how politicians on both sides of the aisle were talking about how the bill to
    address the fiscal cliff needed to be balanced and what came out couldn’t have been more
    imbalanced sort of by definition with nothing but tax increases. so now comes the harder
    work as we move forward and we’re stuck with the same issues. i really think the
    environment hasn’t changed much since you visited double line back in september. when it
    comes to the bond market, the yield on the 10-year treasury i think almost exactly the same
    today as it was in the middle part of later september when you visited our offices. so we’re
    in a range bound market for bond. we have these two competing forces. on the positive
    side if you want to call it a positive, you have rate repression by the federal reserve, buying
    bonds which obviously keeps interest rates lower than they would otherwise be. but on the
    other side, in the treasury market, you have no value to speak of from an investor’s
    perspective. however, when you’re at the higher end of the range in yields, which you are
    right now, the higher end of the range for the last few months, it is actually a reasonable
    time to be putting cash to work in the bond market because the prospect for higher yields
    just isn’t that great with the fed’s policies. i want to get to expected returns in various asset
    classes. when we came out there last time you made a comment about price discovery and
    how the manipulation by central banks around the world were making it very hard for bond
    markets to have true price discovery. do you get a sense that there is better price discovery
    now than there was back in the early part of the fall? no. i think it’s just getting
    systematically worse. people keep talking about a bond bubble. i keep hearing that all the
    time. i done think there is a bond bubble but i think the year 2013 may be building a credit
    risk bubble as we move forward because what’s happening is that investors starved for
    yield now that yields are lower on competing assets versus treasuries, thanks to yield
    compression, due to yield starvation, the next move i believe that will start happening in the
    financial industry is funds will start leveraging credit risk to a greeter extent which will build
    up an overexposure potentially should the market ultimately turn against bonds later on. so
    i think that’s really an issue that investors should be thinking about. in the near term, it is
    actually a positive for risk assets in the bond market because the leveraging up of those
    sectors will bring even higher prices and lower yields on things like junk bonds, corate
    bonds, emerging market debt and things like credit risk in the mortgage-backed securities
    market. those things are likely to add higher in price — jeffrey, since we did this a year ago
    and bill gross sat down in california giving out his outlook in terms of expected returns in

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