DoubleLine Capital founder Jeffrey Gundlach enlisted the help of his Chicago investment partners to put on a private economic discussion and modern wing art viewing at The Chicago Art Institute June 3. The Windy City's own CNBC star, Rick Santelli, moderated the discussion, which included CNBC frequenter and research hound Jim Bianco. The three touched on the Fed, global economics, the dollar, inflation and risk and opportunity in today's topsy turvy bond world.

A two-hour reception and private viewing of the Art Institute's modern art wing followed the 90-minute discussion and Q&A that included financial advisors and industry folks. DoubleLine's lavish spread of top-shelf liquors, spirits and hors d'oeuvres was reminiscent of the heady days before the dot.com crash and similarly before the housing bubble burst.

Gundlach surrounds himself with sensory excellence, and his thoughts can make one's head hurt trying to interpret them. Gundlach speaks in metaphor, analogy, philosophy, and economics -- occasionally doused in a thin veil of humor to those who get the joke. Gundlach speaks with such conviction that it often seems that he is stating the obvious, but there is nothing obvious about the DoubleLine founder.

Negative Bond Yields

"Negative bond yields seem like the most ludicrous thing you can possibly imagine...you lending me that money makes me a better credit rating," Gundlach started. He likened a negative yield spread to "one of those optical illusions." Gundlach set the stage for the next big financial crisis as he sees it, and he laid out the landscape for the challenges in the bond investing world right now.

Gundlach knows that most people would wonder why trillions of dollars are invested in negative European debt, so he explained that big money cannot just leave its money in cash. "I would short bonds with negative yields with 100 times leverage, but you can't do that," he said.

This brought him to the reason that people, collectively, still like U.S bonds: "Negative bond yields, and low bond yields in Europe, had become the answer to why U.S. bonds are a good buy,” he said.

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