27/05/2024 6:53 PM

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Jeffrey Gundlach is shorting the market, says a retest of the low ‘very plausible’

Jeffrey Gundlach, CEO of DoubleLine, said on Monday the stock market could sell off again to retest the low in March as he believes investors are too optimistic about the economic recovery from the coronavirus pandemic.

“I’m certainly in the camp that we are not out of the woods. I think a retest of the low is very plausible,” Gundlach said on Monday on CNBC’s “Halftime Report.” “I think we’d take out the low.”

“People don’t understand the magnitude of … the social unease at least that’s going to happen when … 26 million plus people have lost their job,” Gundlach said. “We’ve lost every single job that we created since the bottom in 2009.”

The so-called bond king revealed he just initiated a short position against the stock market.

“Actually I did just put a short on the S&P at 2,863. At this level, i think the upside and downside is very poor. I don’t think it could make it to 3,000, but it could. I think downside easily to the lows or beyond… I’m not nearly where I was in February when I was very, very short,” Gundlach said.

The S&P 500 has bounced 30{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} off its March 23 low of 2,191.86 as investors cheered the Federal Reserve’s unprecedented easing measures as well as signs that the pandemic could be easing off.

In March, the S&P 500 tumbled into a bear market at the fastest pace ever as the pandemic caused unprecedented economic uncertainty. At its worst level of the sell-off, the S&P 500 was 34{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} off its all-time high on February 19.  The equity benchmark is now about 16{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} below that record.

Gundlach also said Monday the popular corporate bond ETF LQD looks like the most overvalued bond asset because of the Fed’s massive bond-buying program.

DoubleLine had more than $148 billion in assets under management as of the end of 2019, according to its website.

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