In an exclusive interview on “Mornings with Maria” on Wednesday, DoubleLine Capital CEO Jeffrey Gundlach – also known as “The Bond King” – warned of a deteriorating economy in 2024 and Americans entering a “death spiral” regarding their personal finances.
Gundlach told presenter Maria Bartiromo, “I believe that everything except employment is experiencing stress, and this has been going on for a while ever since they implemented the stimulus.” “I believe that’s because the government response was so absurdly disproportionate. It was really the 2021 free money that is perplexing because it brought on inflation, which anyone sensible, you should’ve known that it would.”
“However, consumers have significantly increased their credit card spending to close the disparity, which is unsustainable. It is a traditional tractor draw,” he added. Once you begin using a credit card to pay another credit card, you are essentially in a financial death spiral.
The market leader argued that traditional macroeconomic indicators are “strongly suggestive” of increased volatility. The yield curve, which represents the yields on long-term and short-term bonds, remains inverted, and the unemployment rate is reaching a plateau.
“Therefore, all of a sudden, short-term interest rates become relatively lower than long-term rates,” Gundlach began to explain. And this has occurred in a manner that is fairly convincing that economic weakness will occur, say, in the first half of next year.
