- Billionaire 'Bond King' Jeff Gundlach warned oil prices could surge past $200 a barrel.
- The DoubleLine Capital boss rang the stagflation alarm, and slammed the Fed's stimulus efforts.
- Gundlach touted emerging-market stocks over US equities, and trumpeted cash and bonds.
Billionaire investor Jeff Gundlach predicted crude oil prices would climb to $200 a barrel, and warned soaring prices and shortages could lead to stagflation in the US, during a Magnifi Media interview this week.
The DoubleLine Capital CEO — whose nickname is the "Bond King" — blasted the Federal Reserve and Treasury for overstimulating the economy, advised investors to buy emerging-market stocks, and touted cash and bonds as protection against potential deflation.
Here are Gundlach's 8 best quotes from the interview, edited for length and clarity:
1. "When people are complaining about gasoline prices, they ain't seen nothing yet."
2. "I'm going to say $200 a barrel. I think oil is going to get there. It's up 35% in a week, so it's on a tear, and we haven't even talked about the potential for an embargo."
3. "We absolutely have made a really bad misstep. We decided we hated a future with fossil fuel, but we didn't have a plan to transition us from tremendous uses of fossil fuel into other sources of energy. Now we have this shortage, and we're going to have to weirdly pivot back to more fossil fuel to ultimately get ourselves back on a path to the green fuels."
4. "Historically, oil shocks have led to demand destruction that causes recessions. We're going to start hearing the word stagflation a lot more."
5. "The situation right now is the most difficult that Jay Powell has seen, or any Fed chair in a while, because the stock market is basically in a bear market. And yet the inflation rate is going up, and the economy is likely to slow down with all of these price increases curtailing demand."
6. "The authorities are our drug pushers, and they're putting heroin into the economy all the time, and the doses keep getting bigger and bigger. Maybe the next dose is going to be heroin laced with fentanyl. It's possible that the dollar just can't stand it anymore, and starts to decline." (Gundlach was criticizing the Fed's quantitative easing and the government's deficit spending since the financial crisis.)
7. "I recommend that investors dollar-cost average out of US stocks and into emerging-market stocks. That is a way of resculpting portfolios that will take advantage of the trends that are underway." (Gundlach cited the relative outperformance in emerging-market stocks in recent weeks, the rising strength of China, the prospect of a weaker US dollar, and the ballooning national debt.)
8. "There is a case for a deflationary outcome. You would want to own what looks like about the most unattractive thing out there, which is the 30-year US Treasury bond. It sounds ridiculous that we would be advocating for something yielding just over 2%, against a 7.5% Consumer Price Index reading that doesn't look like it's going to relax meaningfully anytime soon. But that is the one thing — that and cash, frankly — that can protect you from a deflationary scenario. So as weird as it sounds, I actually like cash in the bond market.