Thread by @DLineCap

DoubleLine CEO Jeffrey Gundlach presents his 2020 "Just Markets" webcast.

Follow along here for live updates!

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Jeffrey Gundlach announces "our own Round Table" bringing together Jeffrey as host, Jeffrey Sherman as moderator and special guests @DiMartinoBooth @biancoresearch @EconguyRosie, Ed Hyman & Steve Romick.

First Video goes live Thursday!

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@DiMartinoBooth @biancoresearch @EconguyRosie Jeffrey Gundlach: Japan volume of neg yielding debt increased in 2019.

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@DiMartinoBooth @biancoresearch @EconguyRosie Jeffrey Gundlach: Banks can't make money at negative interest rates.

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@DiMartinoBooth @biancoresearch @EconguyRosie Jeffrey: yield curve steepening may have helped U.S. bank stocks in 2019.

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Jeffrey: Deutsche Bank has rallied since the nadir in interest rates but remains weak.

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Gundlach: $DB needs to end negative interest rates

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Jeffrey: in the US, financials, while better performing this year versus in Europe, still have been struggling versus the non-financial stock market.

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Jeffrey: Fed seems to be solidly on hold. They don't want to even want to say anything. Afraid of the microphone.

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Jeffrey: A lot of potential volatility building in 2020, especially due to election uncertainty.

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Jeffrey: I seriously do not believe Joe Biden is going to win the Democratic nomination.

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Jeffrey: Bernie Sanders making progress in @PredictIt betting odds.

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Jeffrey: vilification of billionaires is a prime theme in the Democratic primary. Bloomberg won't get nomination.

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Jeffrey: voters probably not ready for Mayor Pete. Impressive candidate but too young.

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Jeffrey: Amy Klobuchar not gaining much traction.

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Jeffrey: Bernie Sanders most likely to win the Democratic nomination.

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Gundlach: people said no way Trump could win the Republican nomination in 2016.

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Jeffrey: I think Bernie is stronger than people think. Bernie is authentic. You might not like his policies, but he doesn't waver.

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Jeffrey: Would Sanders win a general election? Depends on the economy.

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Jeffrey: Biden would have a really hard time holding his own in a 1-on-1 debate with Trump for 2 hours.

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Economic consensus for GDP in 2020 is at 1.8%.

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Jeffrey: odds of recession latest view is 35% in 2020

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DoubleLine Round Table guests: Ed Hyman more positive on economy in 2020 but @EconguyRosie sees underappreciated risks to the economy.

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@EconguyRosie Other Round Table guests were Danielle DiMartino Booth, Steven Romick, James Bianco.

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First of 3 videos of the Round Table discussions will go live on DoubleLine.com this Thursday.

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Jeffrey: Initial Jobless Claims are very low.

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Jeffrey: so far, strong for the economy, but we would get worried if we see deterioration.

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Jeffrey: so far, strong for the economy, but we would get worried if we see deterioration

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Jeffrey: watch that 4-week average for initial jobless claims. labor markets key to consumer sentiment

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Jeffrey: some risk of recession, but not too high.

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Jeffrey: uptrend in wage growth after years of stagnant wage growth. peaked out before at 4%.

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Jeffrey: Fed easing, not tightening. Conclusion: Fed wants higher inflation.

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Jeffrey: in prior cycles, Fed took rising wages as a negative. This time Fed is taking higher wages as a positive.

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Jeffrey: ever since 1975, mortgage has been higher than average hourly earnings.

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Jeffrey: Bernanke and Yellen like negative interest rates.

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Jeffrey: applauding Powell loudly for opposing negative interest rates.

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Jeffrey: Fed providing liquidity, building up balance sheet. Repo facility is disconcerting.

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Jeffrey: dust-up in the repo market on Sep 17 showed Fed underestimated the amount of reserves needed in the system.

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Jeffrey: Jim Bianco @biancoresearch pointed out in the round table, lack of articulation by the Fed on how it will address the repo facility.

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@biancoresearch Jeffrey: we should see a steeper yield curve.

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Jeffrey: you should be probably defensive on the long end of the Treasury market right now

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Jeffrey: only one measure of Core inflation is below 2%. It's laughable that the Fed contends it cannot meet its inflation target.

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Jeffrey: the exception is the PCE at 1.6. One of the reasons is it uses Medicare reimbursement rates to measure healthcare inflation. This understates inflation in healthcare. The Fed deliberately uses this as a cover for letting other inflation rates go higher.

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Jeffrey: in 2019 the markets had to run to chase central banks

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Jeffrey: 2019 was a great year for financial assets. don't expect that in 2020.

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Jeffrey: high correlation between Fed's balance sheet size and the Treasury yield curve.

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Jeffrey: so with the Fed expanding its balance sheet, curve should steepen. so stay away from the long end of the Treasury market. wait for better buying opportunity

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Jeffrey: very reliable history between Fed balance sheet size and changes in the yield curve.

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Jeffrey: Powell has made clear, must have persistent rising in inflation before would consider raising short-term rates. So don't look for a rise in short-term rates by the Fed any time soon.

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Jeffrey: only 35% chance of recession in 2020. If recession does occur, you could see real trouble in both stocks and long-term bonds.

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Jeffrey: dollar didn't do much in 2019. Thought it would weaken. As foreigners start to divest in the U.S., that should lead to a much weaker dollar.

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Jeffrey: U.S. is uniquely bad versus Eurozone in terms of its budget.

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Jeffrey: not bullish at all for the dollar

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Jeffrey: Fed dovishness also suggests weaker dollar.

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Jeffrey: looks like dollar lower in months ahead. favor non-US equity markets. likes gold. likes commodities.

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Jeffrey: weaker dollar also would be good for emerging markets. you can buy $EEM if the dollar is falling.

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Jeffrey: Traded-weighted dollar rejected the peak of 2001. Bearish for dollar. Looks like a classic set-up for reversal.

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Jeffrey: highest-conviction idea is the dollar will weaken.

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Jeffrey: copper-gold ratio has been incredible over the past 9 months as a predictor of near-term changes in the 10-year Treasury yield.

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Average of US nominal GDP YOY and the 10-year Bund yield, the 10-year Treasury yield should be around 2.1 to 2.2.

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Jeffrey: It takes less and less of a rate rise to break the economy.

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Jeffrey: foreign buyers of Treasuries are probably not hedging their currency risk.

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Jeffrey: This has supported the dollar. It's dangerous. Non-US institutions are doing need-based naked buying of Treasuries.

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Jeffrey: This could lead to an acceleration of the dollar to the downside.

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Jeffrey: Russell 2000 below its low of 2018. Dow Transports are below their high as well. This is a bearish signal for U.S. stocks.

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Jeffrey: If the wrong thing happens in the Middle East, like knocking out oil facilities in Iran, could lead to higher oil prices. Shorting oil probably a bad idea.

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Jeffrey: we're looking at higher long-term interest rates first, followed by more manipulation by the Fed

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Jeffrey: we're looking at higher long-term interest rates first, followed by more manipulation by the Fed.

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Jeffrey: Commodities/Dow Jones ratio moves in huge sweeps. Near very low. Buy signal on a valuation for commodities. But this can take a long time to work.

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Jeffrey: Commodities/Dow Jones ratio is ultimately headed up. Could be as late as a 2021 event.

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Jeffrey: Gold is doing great. Gold miners blew away the S&P 500. Silver, always super volatile, did great. Other parts of the commodity complex did well with a notable exception of grains.

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Jeffrey: Korean Stock Exchange suggests skepticism in a big trade deal between the U.S. and China.

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Jeffrey: Agency MBS Option Adjusted Spread looks superior to that of Corporate OAS.

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Jeffrey: OAS of US junk bonds collapsed. People are throwing caution to the wind and buying junk bonds.

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Jeffrey: One of the worst investments in the bond markets are BB corporate bonds.

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priced at 3 3/4% to no losses. Junk bonds go down in recession and advent of default cycle.

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Jeffrey: high yield upgrade-downgrade ratio is worsening.

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Jeffrey: biggest risk in 2020? More belief in Bernie Sanders' election prospects

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Jeffrey: people are buying corporate bonds out of yield starvation

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Jeffrey: I like TIPS more than nominals in the Treasury market

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Jeffrey: interest-coverage ratios are good, but leverage ratios are not, including in the BBB part of the corporate bond market.

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Jeffrey: Absence of tax-loss selling in 2019 kept close-end funds expensive.

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Jeffrey: DoubleLine is always thinking about starting a muni fund, but not in 2020.

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That concludes our live recap of Jeffrey Gundlach's Just Markets 2020.

Thanks for tuning in!

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