Well, well, well! The “Bond King” himself, Jeffrey Gundlach, has decided to grace us with his wisdom. And what does he say? That the US will likely stumble into a crisis this year that’ll force the good ol’ Fed to start slashing rates. Now, isn’t that a comforting thought? 😅
In his latest chat with CNBC, Gundlach, the founder and CEO of DoubleLine Capital (don’t you just love saying “CEO” after someone’s name? Sounds so official), insists that a rate cut is coming. But—and here’s the kicker—it won’t be because the Fed is suddenly basking in glorious employment numbers or celebrating a miracle 2% inflation. Nah, those days are over, folks.
“I do think they’ll cut rates, but not because inflation suddenly turns into a puppy dog. It’s not going to get much better. And I highly doubt unemployment will surprise us with a shocker anytime soon,” he quips. So if you’re waiting for that miracle recovery, you might want to take a seat. 💺
“But mark my words, they’ll cut rates because of some liquidity problems. That’s probably going to happen by the end of the year. And yes, I know the market is all over the place with their predictions, but I’m leaning towards cutting by just two, not five or six. Hey, I’m still playing the long game here!” And let’s be honest, when Gundlach speaks, people listen. At least he didn’t tell us to buy a yacht. 😆
So, what’s this liquidity problem all about, you ask? Well, Gundlach says some big institutions, like Harvard (yes, the Ivy League is in the mix), are starting to experience some serious cash flow issues. Imagine that—Harvard with $53 billion in the bank, but still begging for a little pocket change. What a world! 😲
“Here’s the deal,” he continues, “these institutions are asset-rich, but cash-poor. Harvard has a monster endowment, but it’s got 40% of it tied up in private equity. And don’t even get me started on private credit, that’s the next big thing to make your head spin. I’m seeing university endowments saying, ‘Maybe we should get out of some of our commitments…’ Oh yeah, this is gonna be a problem.” Oh, Harvard, can you at least throw a couple million my way? 😂
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2025-05-11 23:11