Jeff Gundlach, CEO and CIO of DoubleLine, shares which BRIC nation he is finding opportunity in. And Dr. J notices some unusual activity in WisdomTree India Earnings.
Jeff Gundlach video and transcript below
On April 9th 2021, Bruce Greenwald, the founding director of the Heilbrunn Center for Graham and Dodd Investing at Columbia Business School, sat down for a Fireside Chat with Li Lu, the founder and chairman of Himalaya Capital as part of the 13th Columbia China Business Conference. Q1 2021 hedge fund letters, conferences and more Read More
active trader pro today. welcome back. let’s bring back jeffrey gundlach to get his global outlook. the emerging markets have been one of the hardest hit areas, jeff. are you finding any opportunity because there certainly is a lot of carnage there, whether it’s the equity markets and as you referenced already, the currencies. it’s interesting that when the liquidation cycle began in may of this year, may 1st, you really saw emerging market equities broadly speaking underperform the s&p 500. the s&p 500 had really historic outperformance through july of this — june or july of this year relative to a basket of emerging markets. what’s interesting is that two markets which had been sort of soft have shown to be somewhat immune from this liquidation cycle and one of them is russia. the russian stock market bottomed relatively to the s&p 500 literally the day of the beginning of the liquidation cycle and it’s been outperforming and with oil prices being strong, there’s a reason why the russian stock market might be of interest. but also what i like about it is it’s not really dependent so much on global liquidity like qe that seems to be the issue with indonesia and with india. another market that clearly seems to be an island that doesn’t need fed liquidity is the chinese stock market. the shanghai composite which has been one of the worst stock marketsmultiyear period. it seems bizarre how it trades between 2,000 and 2,100 most of the time. i’m not interested in going long the shanghai composite today. i’m just interested in playing a breakout either way on the shanghai composite because after this long period of really no volatility, when it goes up or down, i think you want to go with that market and i love it when that happens because you don’t really have to take some sort of a speculative bet on it. you let the market do the talking. but i like being long the russian stock market today versus a basket of emerging markets. we’re doing that in macro strategies and i like wait and see on the shanghai. other than that i think the emerging markets are too volatile right now. i’m too low risk to get involved in trying to bottom pick say the indian stock market or something like that. it’s almost like — if you look — it’s almost like it could be fatal like shorting tesla. i mean, i don’t know where tesla is going but i’d be scared to death to short that thing because it’s a monster in terms of its cultish momentum. so similar on the downside with emerging markets. one more thing on emerging markets, emerging market fixed income is a basket. take a look at the emb etf. the thing is down over 11% year-to-date. there’s this monstrous divergence between emerging market fixed income performance and u.s. high yield performance for reasons that are understandable, but they’re pretty well embedded in investor psychology by now. you’re supposed to be buying some of that emb etf and increasing emerging market exposure, certainly not cutting it. if you don’t have any, i would add. just to repeat what i said, we’re in a world where people used to say, i don’t care about volatility, i want income. now they’re saying i don’t care about income, i want volatility. you won’t make money in these income vehicles until that psychology changes, which will require some of these signals to materialize like we talked about in the prior segment and also a basic shift in sentiment which isn’t in evidence yet in the marketplace. it’s interesting, you know, as we and certainly the market participants by the hour are keeping an eye on the situation over in syria and russia’s role in all of that and our seemingly deteriorating relationship with russia, yet as an investor you’re casting a keen eye there. absolutely. you’re right. it is deteriorating, but the bloodless verdict of the equity markets has been since may 1st that the russian position is strengthening. let’s talk some quick stocks before we run, jeff. chipotle. last time we talked, you said you hadn’t put a short on yet. that’s right. did you miss your chance or are you short now? no. i actually am waiting for it to break down. i think when it breaks down, it should break down pretty sharply and you can play that move. so i want to see it break down. chipotle today reminds me a lot of where apple was a year ago. went above $700, and ultimately peaked out there. it was quite overvalued. i don’t think chipotle is necessarily overbelieved, but i definitely think it’s overvalued. it’s just a basic valuation argument. a pe of 43 with the forward looking pe over 38, i just don’t see it. and so i think — and it doesn’t pay a dividend either. so i think that when you have a breakdown in that stock, i think it’s going to drop by 30%. so we’ll wait to see some evidence of that before shorting it. what are you short now? anything? just pear trades. we’re short emerging market equities versus the russian equities and stuff like that but i have shorts i’m looking at. i don’t want to talk about them because i’ve kind of learned by watching cnbc that sometimes announcing your shorts isn’t the greatest idea in terms of inviting some competition. only if it’s a 20% short interest. that’s only if the initials are hlf. it is interesting. hlf, it certainly looks high to me. if you force me to do something on hlf, i would probably short it. the pe is not very bad but the stock chart is an invitation for a short. what about apple, now that we have the knowledge of carl icahn who has gotten into apple, i just wonder your thoughts on it given what you said before about that stock and where you thought it was going. well, as i talked about, we bought apple below $425. we thought it was going to go to $500. that was the easy money. it did go to $500. apple i can see moving a little bit higher. i think it has problems around $530 though. so apple is a stock that we’re going to be saying good-bye to and just having a new tral on. we still own it. we own it from below $425. the easy money has been made. i was happy when carl said he bought it and it popped up because that’s how it got to $500. it seems to be making no progress recently and so i think it’s kind of a dead money stock really for quite a while to come once it settles in around the low 500s. maybe you should take a page from carl. what about jeffrey gundlach on twitter. i don’t have a twitter or facebook or anything like that. i’m a ludite. i’m still rocking the blackberry bold believe it or in the. i’m pretty low tech. we’ll talk to you again soon, jeff. thanks so much. great, judge. great to be here. be good. jeff gundlach. do you want to wrap up that conversation real quick? i saw some real big activity yesterday in emerging markets, one of the big ones of course, india. the epi. this is the india fund by wisdom tree and somebody stepped in and bought 1.2 million shares of this etf and they bought a bunch of puts. that’s a synthetic call. all you really need to know is that’s a very bullish trade. stock is up another 3% today. i just want to highlight a point that jeff made i think is really important for investors who are looking at emerging markets as this monolithic one big trade. he’s basically saying that
The king of bonds on rising rates
The markets received better than expected GDP numbers and a drop in jobless claims. The FMHR traders share what that may mean for tapering. And Jeffrey Gundlach, CEO and CIO of DoubleLine, joins to discuss rising rates and why he looks at emerging markets currencies as an indicator.