Billionaire Jeffrey Gundlach, also known as Bond King, has shared his opinion on when to buy cryptocurrencies. “You need a real Fed pivot,” he said. Gundlach also warned of the rising risk of deflation, noting that it’s time to be bearish on the stock market.
Jeffrey Gundlach on Fed rate hikes, US economy and when to buy crypto
Founder and chief executive of investment management firm Doubleline, Jeffrey Gundlach this week shared his views on the U.S. economy, stock and bond markets, and buying crypto. Headquartered in Tampa, Fla., Doubleline had over $107 billion in assets under management (AUM) as of June 30.
In an interview with CNBC on the sidelines of Tuesday’s Future Proof conference, the billionaire explained that it’s too early to jump on the crypto bandwagon as the Federal Reserve is likely to raise more interest rates.
When asked if it’s a good time to buy cryptocurrency in the current market conditions, Gundlach opined:
I would definitely not be a buyer today.
Gundlach is sometimes referred to as the Bond King, having appeared on the cover of Barron’s in 2011 as “The New Bond King”. Institutional Investor named him “Money Manager of the Year” in 2013 and Bloomberg Markets ranked him among the “Fifty Most Influential” in 2012, 2015 and 2016. In 2017 he was inducted into the FIASI Fixed Income Hall of Fame. Its network value is currently about 2.2 billion.
In Tuesday’s interview, the billionaire stressed that the time has come to return to the crypto space when the Federal Reserve backs away from rate hikes and begins its “free money” policy. Citing the Federal Reserve’s dovish stance and recession fears, Gundlach stressed:
I think they buy crypto when they make free money again… They need a real Fed pivot.
He added that investors should not buy crypto if there are only “dreams” of a monetary policy pivot.
The Doubleline CEO also warned of the rising risk of deflation, which he saw as the biggest threat to the US economy and markets. He said it’s time for investors to become more bearish on US stocks, noting that the S&P 500 could fall 20% by mid-October.
“The action of the credit market is consistent with economic weakness and stock market problems,” Gundlach described, stating:
I think you need to start getting more bearish.
While admitting that stock picking isn’t his forte, he said, “You always want to own stocks, but I’m a bit on the lighter side.” Nonetheless, he sees emerging markets as the biggest opportunity ahead for equity investors.
Noting the risk of deflation, he suggested that investors should invest in long-dated US debt. “Buy long-term government bonds,” he advised, emphasizing:
The risk of deflation is much higher today than it has been in the past two years.
Regarding the time frame, he clarified: “I’m not talking about next month. I’m talking sometime later next year, certainly in 2023.”
Recently, Tesla CEO Elon Musk also warned that a larger Fed rate hike could lead to deflation, echoing Ark Invest CEO Cathie Wood’s statement that “leading indicators of inflation such as gold and copper show the risk of deflation.”
What do you think of billionaire Jeff Gundlach’s comments on deflation and buying crypto? Let us know in the comment section below.
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