DoubleLine Capital LP’s Jeffrey Gundlach criticized U.S. President Donald Trump for the “shocking” growth in the U.S. debt burden.
The Los Angeles-based fund manager noted in a webcast Tuesday the “incredible increase” in corporate and government debt, with federal deficits only poised to grow. He spoke a month after the Treasury Department said total U.S. public debt had climbed to a record above $22 trillion.
“This is something that is getting more and more attention, and I think it has to,” said Gundlach, the firm’s chief investment officer. “It’s really shocking that the president ran on the promise of eliminating the national debt, and here it is at $22 trillion and going higher by about $1.5 trillion a year in a growing economy.”
The budget deficit could hit 11 percent of gross domestic product in the next downturn "and I’ll take the over" said Gundlach, who suggested 13 percent is more likely.
Other Key Takeaways
- Gundlach called modern monetary theory “complete nonsense” that is being used to justify a “massive socialist program.”
- He credited the rebound in the stock market to a “remarkable, 180-degree turn” by the Federal Reserve, noting that the narrative around quantitative tightening has shifted from "autopilot" to ending the balance-sheet normalization plan this year Still, he expects stocks to fall below the December lows over the course of 2019.
- Purchasing managers index new orders data don’t make him worry a recession is imminent, "but looking forward” it’s starting to have the look of a 2020 downturn. “It’s a good time” to own TIPS, especially longer-dated issues.
- Growing trade and budget shortfalls -- known as the twin deficits -- will weigh on the greenback, and the “next big move for the dollar is down.”
This article was provided by Bloomberg News.