Jeff Wins

In a new profile of Jeffrey Gundlach at Forbes, reporter Matt Schifrin makes no bones about the fact that the LA bond manager is now the undisputed king. This is something I’ve said for awhile now (full disclosure, we utilize DoubleLine Funds for client and personal accounts).

Jeff says a lot of interesting and provocative things in the piece. He believes the moment the Fed raises rates, which they may do simply because they’d like to reload the gun for future use, the dollar will run up, there will be a flight to Treasurys and there is a 30% chance that we will end up exporting deflationary pressures to countries around the world. He views the current period as a “calm before the hurricane” and looks for the horrendous demography of both developed nations and EM nations like China and Russia to cause the next calamity. Gundlach points to the support ratios of the world’s labor-to-retirees as a cause for concern, not least of all because these costs will simply be added to all of the debt we’ve taken on now, a decade ahead of time.

Looking inward, Jeff explains why DoubleLine’s Total Return flagship fund will never accept $100 billion in AUM – “we’re not ambulance chasers” – and he casts quite a bit of doubt that PIMCO’s Total Return fund can actually be managed by committee – “I don’t buy for a second that they will all work together and with no conflict.”

This is easily the best thing you will read today. It begins here:

Bond manager Jeffrey Gundlach is wearing a white T-shirt, faded blue jeans and worn leather boat shoes as he traipses about the blooming morning glories in his perfectly landscaped backyard, perched high above a canyon overlooking the deep blue Pacific Ocean. It’s the middle of the afternoon on a work Monday in October; European bank stocks are tumbling; oil prices are down 25% since June; and against the backdrop of an anemic economy and 2.25% ten-year Treasury, the Federal Open Market Committee is about to make an important announcement. These are unsettling times in the financial markets, but for Gundlach it’s a picture-perfect autumn day in southern California, and he is living in paradise.

Keep reading:

Glory To The New Bond King (Forbes)