Contributing to the global malaise, oil prices are likely to move sideways, Gundlach says, because inventories continue to rise.
“People calling for oil to rebound don’t know what they’re talking about,” Gundlach says. “The futures curve bears that out; oil will stay below $60 through 2022. If that happens, you have real problems.”
Bill Priest, founder, CEO and portfolio manager for Epoch Investment Partners, said that the world economy will continue to grow – but slowly.
“Two percent is the new 4 percent,” Priest says. “It turns out that the U.S. will be the only geography to experience growth.”
Priest was skeptical of emerging market GDP growth numbers and presaged that global macro conditions would worsen as the effects of the Chinese slowdown bleed over to its trading partners.
“China was the buyer of everything, and commodity markets crash when they don’t do well,” Priest says. “Emerging markets are toast, but the U.S. is hardly affected at all.”
Investors are best off making investment decisions not on economic sector or geographic location, but fundamentals, Priest says.
“Invest in companies, not countries,” Priest says. “I think stocks are the better investment, but if you’re owning equities, you need to hold them, because the slow growth environment will persist. The end of quantitative easing in the U.S. and the U.K. shifts importance from price/earnings multiples to earnings and dividends.”
Priest names ABInbev, AirBus, Kimberly-Clark, Applied Materials and Dow Chemicals as companies that passed his muster.
Gundlach, on the other hand, said investors could find safest harbor in closed-end bond funds.