29/03/2024 7:30 AM

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Jeffrey Gundlach says the coronavirus sell-off will worsen again in April, taking out the March low

Jeffrey Gundlach speaking at the 2019 SOHN Conference in New York on May 6th, 2019.

Adam Jeffery | CNBC

DoubleLine Capital CEO Jeffrey Gundlach believes the coronavirus sell-off is not over yet and the market will hit a more “enduring” bottom after taking out the March low.

“The low we hit in the middle of March… I would bet that low will get taken out,” Gundlach said in an investor webcast on Tuesday. “The market has really made it back to a resistance zone and the market continues to act somewhat dysfunctionally in my opinion … Take out the low of March and then we’ll get a more enduring low.”

The S&P 500 tumbled into a bear market at the fastest pace ever as the coronavirus pandemic caused unprecedented economic uncertainty. The equity benchmark hit a three-year closing low of 2,237.40 on March 23, more than 30{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} from its record high reached in February. 

The so-called bond king compared the current stock rout to the ones in 1929, 2000 and 2007. He said during 1929 sell-off, the market “went sideways” for almost a year and then the economy worsened again.

Some on Wall Street are calling for a “V” shaped recovery in the U.S. economy — a sharp drop in GDP in the second quarter and a swift snapback in the third quarter. Gundlach believes those estimates are “highly, highly optimistic.” 

Gundlach said earlier this month that there’s a 90{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} chance the United States will enter a recession before the year is over due to the coronavirus pandemic.

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

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