Jeffrey Gundlach Sees 5% Return for U. S. Stocks; 20% for Japanese

By on January 4, 2013

Jeffrey Gundlach - Doubleline CapitalDoubleline Capital co-founder and CEO Jeffrey Gundlach provided his 2013 outlook to CNBC’s Gary Kaminsky yesterday. Gundlach said the fiscal cliff was chapter one of the ongoing fiscal crisis, which will be followed by chapter two; the coming fight over the debt ceiling and whether there will be any spending cuts.

Gundlach noted that the yield on the 10-year Treasury is almost exactly the same as when he visited CNBC back in September. The bond market is being supported by the Federal Reserve which is keeping rates lower than they would otherwise be, he added. Bonds are in a range-bound market and now is not a bad time to put money in bonds as they are yielding at the higher end of the range according to Gundlach.

Gundlach said he doesn’t think there is a bond bubble, but the year 2013 may be building a credit risk bubble, as investors starved for yield are likely to leverage credit risk in search of yield. This could turn bad in the event bonds weaken, he added. Gundlach stated that in the near term the leveraging could bring higher prices for such assets as junk bonds, corporate bonds, emerging market debt, and credit risk in the mortgage-backed securities market.

Kaminsky asked Gundlach to provide his estimated one year return on five asset classes. Gundlach’s responses:

10-year Treasury….3%

S&P 500….5%

Mortgage-backed securities….6%

High-yield junk bonds….6%

Japanese stock index….20%

Finally, Gundlach commented on Apple (AAPL) stock which he still sees descending from its bubble and settling down around $425.

2 Comments

  1. Phoenix

    January 5, 2013 at 9:57 am

    excellent interview !!!

  2. Lucci

    January 5, 2013 at 2:44 pm

    I agree his thoughts on japan. Its time to buy the dollar vs the yen

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