🔴 Will Corporate Bonds Cause the Next Recession? (w/ Jeff Gundlach) | Real Vision Classics

🔴 Will Corporate Bonds Cause the Next Recession? (w/ Jeff Gundlach) | Real Vision Classics

Thanks very much great to see you again thanks for doing this I know you’ve not been well and neither was have been so
The time of year is that time of year and I’m very cold Los Angeles so much
I want to talk to you about but I want to start with the stock market and there’s something that has been on my mind
And that is December
Did something change in December or was it just a glitch as it’s been nailed? Well, I I think that
the attitude about
really changed a lot during
December it can’t change twice
first it changed in a way that
Accelerated the stock market lower and I think that also has something to do with year-end
I think there was some people adjust things at your end. There may be some selling and the like but Powell was thought to be
Different than the other Fed chair I fell for it, too. Yeah, he was supposed to be
Non-academic, he doesn’t have a PhD in economics. And I think the word was pragmatic. Yeah for jpowel and then he showed up at
After the rate hike at the press conference and he sounded very different than being pragmatic. He’s basically said
Were on autopilot with quantitative tightening
which is the last thing that a falling stock market needs to hear because quantitative easing seems to be correlated with
With higher prices so quiet of tightening. It is interesting the global stock market really accelerated to the downside in October
Which is when QT was ramped up to a maximum of 50 billion per month
So pollicis were on autopilot
which the market was shocked to hear because he thought I was pragmatic and wouldn’t be rigid and his thinking and then he also
Used the word models a lot. Yeah inputs to the models and
All of a sudden he sounded as wonky as any Fed chair
Ever gets and kind of detached from being pragmatic at the market didn’t like that at all
so it went accelerating I think about dropped eight hundred points for money hoping his mouth to the end of the press conference and that
Scared him and we had a complete 180
From the pragmatic Powell to the Powell put which wasn’t supposed to exist at all. No, and I don’t think I can remember
rhetorical shift so
rapid and so major
From a Fed chair, but it’s just a few days later with the stock market and freefall
It’s all about patience and I didn’t really ever say really that we were
Closed-minded on quantitative tightening and we tried it out many Fed officials to go along with this. So then it was that fateful afternoon
We was on stage with Bernanke and Jan Yellen
And suddenly it was one big dove fest and a love fest probably ever since then
It’s like Powell put and feds got your back and also year-end kicked in where I think there was a lot of rebalancing
And I think it started maybe just before your end. So put in the low intraday on December 26
The low close was the 24 and I think the rebalancing was pretty major because stock market something was negative
Some significance for the year and the bond market eked out a positive return that leads
Rebalance errs to sell bonds buy stocks and that kind of started happening
So I think that fundamentally I think we’re in a bear market
global equities
peaked way back on January 26th of
2018 right in the center of the coordinated global growth
Narrative, which was pretty well supported by the data. It was it was true, but it’s all based upon
Stimulus and the like and so you had a classic kind of rolling top formation
bear markets usually start are
preceded by something insane happening and the insane thing goes on far longer than people believe that it should or could
So in the 1990s it was calms
You know these IPOs were floated with no sales. Let alone. Yeah net revenue and
Succeeded at IPO and I don’t know seven
It was the insane lending standards and leverage and the structured finance market
Which went on for about two years longer than seem like it should have or could have and this time it was cryptocurrency
So in 2018 or 2017 rather you had this
parabolic rise in
Bitcoin whilst use as a placeholder
Where suddenly it was a mania and that was observed because of Long Island iced tea
changes names a Long Island blockchain
Kodak which had 100 million dollar market caps probably nothing really there. They
said they’re gonna do Kodak coin is if they could do that with a hundred dollar market cap and
The stocks went up 400% on these announcements which was very reminiscent of the mentality of the dot-coms
Then Bitcoin started crashing
About a month before the global stock market went to its peak. So that was the front edge of
the beginning of I think a risk bear market and then global stocks to generate 26 and then utilities and then
Transports and then the Dow and then the S&P and finally the Nasdaq
Went to new high
into the early part of the fall and that was down to the fangs and then it was down to Amazon and Apple and then
Amazon gave it up in an Abbe. Apple announced we don’t really want to tell you how many phones we sell
Because it sounds to me like it’s not good news
Otherwise, they’d probably be fairly comfortable of reporting it so down
We went and we had what people call a bear market
20% not on a close in the S&P but intraday and every other index to the 20% but that’s obviously an arbitrary number
It’s more of a mentality. Yeah, it’s more of a
Change in preferences and way people think about things so we’ve had this
spectacular multi-week
retracement but I
Just don’t think things are fundamentally healthy
that’s what it feels like because I
Looking at those markets in in so October November and then into the depths of December
The numbers were bad at the headline stage, but when she looked under there is the plumbing
It looked really as though things got shaken quite severely and yet we’ve seen this V balance
Yeah, and I’m interested because people who’ve been around for a long long time who were very worried in October November December
Seem very sanguine again now
Which I find
Curious because it is that all because they suddenly believe that the Fed
Has turned around and they are gonna slowly
I think you’d have to point to the Fed because the economic data continues to deteriorate
And we’re starting to see reversals and unemployment claims now rising on a four week moving average basis. We’re starting to see
Earnings estimates collapsing. Yeah, margin estimates collapsing sales dropping
You see housing is negative
Surprises confidence d’etre, none of these things are at the alarm bell recession, but they’re getting fairly close
I mean we were miles away from anything resembling a caution signal on the economy back in September
but there’s been pretty much across the board deterioration and the economic surprise data and just data changes and the like
High-yield spreads have come in a lot from their wives of December
But there’s they still have a look that it’s not doesn’t really all that long term
Sanguine, and I think what people will increasingly understand is just how out of kilter our debt
Situation is at the federal level and forget about state and local which is another problem
But just focusing on federal
I mean in 2018 for the calendar year not the fiscal which done in September before the counter data was just announced recently
the national debt increased by one point four eight trillion dollars now that’s about seven percent of GDP and
This is when we’re supposedly in a good economy with three percent real GDP five point three nominal through September
we don’t have the data through year end yet and
You have to ask yourself
Are we really growing at all in an organic way?
because the most recent data point on GDP
5.3 is less than 7 percent of GDP right in less than the growth in the debt
So if we hadn’t grown the debt by some percent of GDP, I guess we’d have a negative economy right now
And so what happens one has to ask?
During the next recession which maybe is coming again. No alarm bells
Blaring right now when it comes just how big is the deficit going to be foreigners are not buying our debt anymore
The Fed for now is not buying our debt and maybe change their mind again
I mean again one of the most amazing reversals auto-pilot cutie to last week an admission
They’re discussing using QE as a regular tool. Yeah, not just emergency even when you’re not zero interest rates
You don’t just use it as part of your ordinary toolkit. So what happens when the next recession comes will the deficit be?
Four trillion three trillion. I don’t know but
Usually the debt-to-gdp ratio goes up by 4% the deficit. Sorry deficit GP ratio goes up by 4% from
the good times to the recession
Sent me we’re gonna go to 11%
Maybe worse than that and people are starting to realize that
The supply of bonds relative to the interest rate that we have right now
Seems like it’s a mismatch that I just think if retail is supposed to be buying the bond market
Maybe if you have if you’re floating trillions of dollars of bonds, maybe you need more than the yield on the 2-year Treasury
To get the ten-year sold in the 30 years old. So we’ve had the Pavlovian reaction interestingly
when the stock market dropped we got a nice bond rally and but yet it kind of held as
Stock market has rebounded bonds have fully gone quiet. They haven’t gone back to 340 on the third year. We’re hovering at 3%
Right, so it’s interesting that the bond market is so quiet
When these debt issues seem very big. There’s also 700 billion dollars of corporate bonds maturing this year and more next year and
If they continue Qt, we’ve got more on top of that. So it seems to me that the yield curve should be steepening and
particularly if
The Fed is really going to get easy again
And it’s thinking about maybe doing q:e or needing to yes have suggests to me that maybe long rates need to rise
Yeah this interest because you’ve you’ve been talking about this debt issue for a while recently. We’ve become more vociferous about it
Yeah, I was I was
Talking about it really for about 10 15 years, right? But I announced in 12 or 13 that there’s good news people as a
Debt worrier we are actually in a stable place
Where we’re not going to worry about it for the next few years because debt to GDP will actually stabilize deficit
doesn’t have the
Entitlement compounding problems for the next few years. I said would probably have to start worrying about it in 18 or 19, right?
And so here we are but but it’s it’s one of those things that the law of large numbers has applied
It’s been such a big number. We haven’t talked about the
123 23 trillion. Yeah 6 times GDP if we wanted to fund our liabilities the 123 trillion
Over the next 60 years we’d have to put 10% of our GDP aside right from negative 7 today to +10, right?
Which of course is?
Impossible with today’s currency, but everybody says that they say, you know what, so let’s not even talk about that. Sure
But it but it is a real problem
These are real promises that after remember the guy that ate a Big Mac everyday for a month. Yeah
Doing great. Yeah. Yeah. Yeah
Maybe this is the healthiest diet ever and then all of a sudden the kidneys start shutting down, right, you know
It’s the same thing. I mean I heard president Trump last week was asked
Are you a little concerned about the 1.48 trillion dollars of growth the national debt?
And he just said growth will take care of it, right?
Wait, mr. President. I thought you said this is the greatest economy ever if growth is taking care of it
Why isn’t it taking care of it? Yeah, so plus the the deficit was announced at well 800 billion
Well, they like right they don’t count what are considered to be?
temporary military exercises just even though we’ve been at it for almost two decades and they don’t count a natural disaster relief and
They’d say that they’re getting loans from Social Security, which is that say me loaning, you know myself money
So it’s not really gonna work. Yeah, so it’s really just a question of when
the issue really does
devolve into a crisis and we are we any closer because it’s it’s been put off and put off and put off but
Somewhere there’s a line
I think the the date is no further into the future than 2025 if I use the CBO projections
This is now on interest expense for the federal government
It’s been stable at about one point two five percent in spite of the tremendous growth in debt. We’ve had interest rates
Declining of course that works its way through with a lag. So the more recent interest rate rises haven’t really factored into that much
Because not much debt has rolled over but the CBO says that around 2025 or so
Without a recession which is a long time without a recession and assuming some basic assumptions
Which need to be challenged that we would have 3% of GDP and interest expense
That’s one in three quarter percent of GDP that just disappeared. Yeah, and so you start to wonder can you have economic growth?
That point with that
interest expense eating into the economic potential and if you used a
Scenario it would blow up very quickly. So
It’s I think that we’re getting to the point where the compounding curve is
Very close to the point where
point of no return
Well, I mean the other thing that’s obviously gonna exacerbate this on the political side of things. Obviously the real auditory everything
Yeah, and that’s gaining some serious traction and whether or not you believe in the politicians putting this stuff forward a lot of people
Don’t think I OC is a genuine threat because she’s so young inexperienced, but her policies are gaining some serious traction
It’s astonishing that the bartender. Mrs. Bush’s what I call
Castillo Cortez because that was her profession, I think she
With 15,000 plus votes not even 16,000 votes has somehow been
Informally elected as the leader of the Democratic Party, right and she’s got fifteen thousand seven hundred votes. I think it was that’s it
But it shows that how out of sync
Things have started to become I’ve been saying for well since 2015
Frankly I said if you think this elections weird the one coming up in 2016 with job Trump is gonna win
You ain’t seen nothing yet. I said I think in 2020 you’re going to see fracturing
So you might have more than two parties that really have funding and today Tom Friedman. I think his name is wrote a piece
Suggesting exactly that so my lunatic idea has now made it into at least part of the mainstream
That you have a fracturing of the Democratic Party
into the old-line try to build the pie until you redistribute the pie and then you’ve got the
diamonds which were shattered in 2016 and will you have
Trump running depends if there’s a recession or not. He won’t run if there’s a recession
Yeah, you can’t brag about the economy if we’re in a recession
No, if nobody gets reelected in a recession
you know it but if he runs will admit Romney type try to be the adult in the room as they call themselves and
fracture that
To parties and I know we’re gonna get a socialist running
That’s for sure whether whether they are have the mantle of the Democratic Party or not there
I mean it will definitely be no Democratic Socialist. Don’t forget its display put Democratic in front
Yeah, because it makes it sound like it’s better than its forced upon you because you voted for
Yeah, I guess but yeah Democratic Socialist Bernie
Just announced that he’s in the Democratic race, but his rhetoric has changed remarkably. He’s been
transformed from the socialist
wing leader with basically an anti Wall Street greed message back when he announced in 2015 and now he’s basically
Borrowed all of the identity politics rhetoric in his announcement on a video yesterday that he was throwing his hat in the ring
He talked about we have to combat racism sexism bigotry, etc
And that was nowhere to be found in Bernie’s. Yeah rhetoric in 2015
So people have taken his ideas and run with them and they’re warmly embraced the 2015 ideas
But he doesn’t really quite seem relevant anymore
Because the way that you can get his ideas with a fresh young editor that I chase on it
well, we’ll come back to politics, but I want to talk about the phone line taking a corporate bond market because
Exactly to me that looks like ground zero well
The the problem with bonds it were they go wrong is when people think they’re in something safe
Because they’re safe people. They’re oriented towards non risk-taking
so they buy floating rate triple A’s subprime bonds in
2005 and they’re not getting a huge return there any like LIBOR plus 50 or something, but hey, you know
It’s more than LIBOR and its triple-a and it floats. So risk can’t be found
Then they woke up one day and they were bid at seventy
Not at 100 anymore and suddenly there now or disabused of the notion these are safe and you can’t really blame them for selling
Because they didn’t sign up for this show
Well, we have a similar maybe not as egregious
But it’s an echo of a rating problem in the bond market right now in the corporate bond market
Where the but the court by market has exploded in size. It’s like more than double where it was ten or twelve years ago
And a lot of it is I think over rated there was a report by Morgan Stanley research that suggested that fully fully
45% of
Parts of the corporate bond market would be rated junk right now if you use leverage ratios alone now
They use more than leverage ratios. There’s other variables that go into rating but the leverage ratio seems to be a really important
Yeah, you see. What do you think?
Yeah, and the the corporate debt is percent of GDP said of record high and if you really had a recession
I have a feeling that the rating agencies have
which have been reassured they listen with sympathetic ears to reassuring statements made by highly leveraged corporations as long as they
Indicate that they’re aware of the problem and have some eye some desire to work towards a better place
over the next few years
Well, if there’s a recession there’s not convenient working towards a better place. And so all of those bonds potentially could be downgraded
into a junk status and as we all know when a triple B rate of corporate bond
Crosses the line in the junk status the price goes down. It doesn’t go up so you could find people that have
poured into corporate bonds that includes corporate pension plans
Which thought that they had a clever idea of matching up their liabilities which are discounted by the single a long
Corporate rate and so let’s match them with assets that are corporate bonds. So they move together
That sounds good until the recession comes
Because the single area corporate bond
Index will forever be rated single a it may be populated with different names
But it will always be single a whereas the portfolio’s that are invested in single a and trip will be corporate bonds
They will get downgraded and so suddenly these corporations could realize well my safe solution
Turned out to be unsafe because it let’s say they just widen by and these are 20-year duration bonds
Yeah, so there’s a lot a lot of spread duration so you could say okay
Maybe they widened by let’s just pick a not terribly. Scary number 200 basis points could be much worse than that
You just lost 35% Yeah
Well, you should underperformed your solution by 35% So will they sell I think the answer is yes
And so if you have a miss rated market and it goes into a downgrade problem
You get tremendous force selling and that’s what happened in. Oh say, oh no eight with a securitized market and this time
I think it’s the corporate bond market Stern. Well, we didn’t have ETF spec
You know, I hate them and that’s just gonna exacerbate the problem. Absolutely I think
ETFs and passive investing broadly is the definition of momentum
it’s pure momentum investment you own more and more and more of the stuff that’s gone up the most and you know in less and
Less and less of the stuff that’s now cheap
And so it’s classic momentum investing so it helped momentum on the way up and it will exacerbate momentum on the way down
I think that’s part of what we saw in
If you want to call it a glitch
It’s a systemic glitch, right because those ETFs haven’t gone away
So yeah, I think that
Passive investing is the flavor du jour it continues to amaze me
how the idea of passive is through is the
Path to success in equities yet anti passive
Aggressive active management is successful in bonds amok again and that this ideas live side by side together
Simultaneously, in fact in the 90s. It was exactly the opposite people thought active equity was a place to go
And bonds had gone through a bad experience in 1994 and people said I don’t want to do any of this weird stuff anymore
I want just fright down the center of the fairway index for ya. We never stopped making the same mistakes
Yes, it’s so fast thing about it. It keeps going back and forth
I read I don’t read a lot of books, but on Martin Luther King Day. I read John Kenneth Galbraith the rate crashed in 1929
Highly recommended very easy read it’s he’s got an incredible vocabulary. I need a dictionary next to it
So yeah reading Jim grant for the first time is done
it’s fascinating because a lot of the things that were happening there was
ridiculous amounts of leverage then some some crazy stuff that was going on with
margin rates and the like but the
desire of the authorities to
combat the decline
Seemed very familiar to December
So it’s really interesting to read so so what does listening to DOMA because there’s an awful noticing my highest conviction ideas
The dollar is going down for a longer term longer term
I turn negative on the dollar above a hundred on the Dixie index and
You’ll remember that when the Fed first raise interest rates way back in December of 2015
the consensus viewpoint was the dollar has to be screaming-hot to the upside because the feds gonna raise rates and nobody else will and I
pointed out in many presentations that that’s not historically true
In fact when the feds raising rates very common for the dollar to initially decline
buy the rumor sell the news the dollar went up into the Fed rate hike and
Basically, it stayed at that elevated level and went up to 103 by January 2017
But dollar trends are very long-term, you know
and there’s really not much in terms of counter trend along the way they’re persistent and sustained and they usually go on for about
six to eight years
So if the top was 2015 to 2017 we’re looking at 2021 to 2025 as the dollar bear case
Which is very interesting along with my 2025 deficit problem
Yeah, there was two ways to get out of the out of the liability problem. You can devalue or you can default and
Devaluing probably is at least part of the solution. And so I think the dollars going down I
am positive on emerging markets versus the u.s. Doc market
I’ve been that way very significantly since basically last September that was one of my recommendations. It’s a Barron’s roundtable
Whereas if you’re bullish just by e/m
P.m. And if you’re bearish parrot with a short on the S&P 500
And that is interesting because the emerging markets
outperform during the decline of
The fourth quarter, which is very unusual. Yeah, and it suggests
significant underlying relative strength because with the dollar going up an emerging markets not
underperforming in the downtrend it suggests that the cheapness which is evident to all on things like the killer the Shiller Cape ratio and
all kinds of other metrics
It looks like it’s starting to win out. And if you get if you get a dollar decline, well then obviously emerging markets have
retrorockets unrelated performance and it’s interesting that with the dollar stable e/m has started to
Outperform and gold is rising again
Which is interesting and so I think one of the things that might really start to fuel
Changes in relative value might be if the wealth tax
Concept actually starts to go
Truly mainstream and I Got News for you. It’s sort of already is in the polls. Yeah
I read today a shocking eighty-seven percent of Democrats are in favor of
the wealth tax proposal by Elizabeth Warren
Eighty-seven percent you don’t get readings above eighty seven percent except for dislike of Congress, right? That’s about it
And so even more than fifty percent of Republicans are in favor of it
So with that kind of polling
It’s pretty hard to see that that won’t be part of some platform of success in
2020 and one would think is people would be getting out of all forms of
easily identifiable wealth like computer blips and bank accounts and
Yeah other things and trying something I maybe that maybe it’ll bury gold in their backyard. Yeah, right. Maybe they’ll buy you know
Pigeon blood red rubies, you know where you can put one in your shoe. It’s worth ten million dollars and you can walk comfortably, right?
Because there’s the the wealth
Concentration is just so high
So it would seem to me that those things would be early warning signs of the potential
for this wealth tech sort of thing, you know, it’s very fascinating because the reason that there’s a estate tax in America is because they
They got around the Constitution because it’s it’s a direct tax yet
I call an indirect tax
So they don’t have to apportion it and the way they got away with it is they said we are not taxing your estate
We’re taxing your right
To give money to your ears. Well, let’s suppose Warren’s wealth tax is
Excellent. You’re you’re privileged to not give money. Alright, right
Don’t give away is being text
So you’ll be taxed on privileged of giving your money away and privilege of not giving it away
Which kind of means to just being taxed directly?
So be interesting to see how they try to kind of square that logic what you touched on gold air nation
I know it’s something you’ve gone backwards and forwards over the attention which I’m sold at eleven eleven. Ninety six. Yeah
Last summer and it was pretty close to the low I was discouraged when it broke down
From the high 1200 s but when it got down there I became positive on it
And I thought the dollar was going down and I think I recommend in Barron’s GDX
Yeah also which got off to a slow start, but it’s catching up quickly. I think it’s up
10% now your due date or since January 7th when it did that Barron’s roundtable
So I’m very bullish on that and it’s also interesting to see silver performing
Well, palladium all time high. So yeah, I think that I’ve been
Really recommending that if you want ever to own gold
The time to do it was basically last summer. Yeah, and I it’s it’s a
Fair amount from there, but not enough to worry about because if it really gonna work as part of your portfolio
You know 1400 is just not of a huge price relative to not sure the range over the past 15 years
What do you look across all this and we’ve touched on a lot of stuff here politics and the dollar and bonds and negatives
Is there any one thing that keeps you up at night apart from apart from this cold? And the nurse dog flu?
Yeah, I get asked that question a lot. It’s kind of those
Standard questions to ask nothing really keeps me up at night. I don’t really worry about stuff anymore. I
accept things the way they are and I think that the reason people worry, I think is that
They are not acknowledging some certain dangers and they feel it subconsciously
I know that there’s dangers, but I’m aware of them and I look right at them and I think that’s
why I’m
Pretty good at managing money
I think it’s about looking for risks finding them and accepting that they’re there and trying to make them non-fatal
I’m really most worried about
The but just the basic divide
everywhere in the you know, just the whole have have-nots thing which is ushering in fractured politics everywhere and
It’s not gonna end until it fully ends. We’re not going to get the genie back in the bottle
We’re not going back to Bush versus Clinton. No, right?
It’s going to end up with awareness of the non sustainability of debt
particularly now in the United States particularly if our dollar drops particularly if
the challenge of the dollars reserve currency becomes increasingly real
Because our interest rates would be a lot higher if we were not world’s global reserve currency
But that’s that’s something that is definitely a topic that is moving closer to front of us and it’s definitely moving that direction
Yeah, people kind of just dismiss it still they say it’s no challenge. It’s just like the deficit its money sinks where
It’s just a given if you if you say the dollar is
Not well not forever be the global reserve currency people don’t are safe because it’s been their entire life
Yeah, I remember in eight before Lehman went bankrupt. I wrote a white paper
Begging people to get out of commercial paper money market funds and I gave a speech
Saying whatever you do don’t own a commercial paper money market fund because it’s got all kinds of financial debt
It might be 30 days, but it doesn’t matter it could all default and people couldn’t hear me
They would come up to me after speech and say did I hear you, right?
You said money market funds can be risky. And I said which one of those words did you not understand?
This is not complicated. Right? Yeah, I was absolutely crystal clear in my statement
It wasn’t oblique and yet it’s so foreign that they can’t quite accept it. And so
people need to listen with
Their mind as well as their ears and not just repeat what they’re told
Which I’ve said this several times publicly my biggest revelation in life. Was that people want to be told what to think?
Yeah, because I don’t and I do the same thing every human being does you assume everybody’s like you when you’re young
You know
You just know your own little world and you don’t know that there’s many different ways of operating and then you start to realize
Gee by assuming that everybody wants to figure things out for themselves. I’m not getting anywhere, right?
It might not explain it, right
I’ll try harder and a few more years go by I’m still not getting anywhere then I’ve light bulb goes on
No, they want to be told what to think. Yeah, so
It’s very convenient to be told that deficits don’t matter and you’ve been pretty much pounded into submission on that idea
But the math is the math
And it’s not complicated
It’s just arithmetic and you get to the compounding curve where I mean if we pass legislation like next year
Maybe we could somehow
Reverse course, but we’re not going to we’re gonna buy that kind of legislation is is not gonna get you any votes
Let’s face it all it gets you votes when?
Problem is out in plain sight and is hurting people right now
And we’re still in mega denial mode because we actually think that we can get richer by borrowing more
That’s the message from the Democratic Socialist. Don’t ask me how I’m gonna pay for it. That’s not even important
You’re missing the real question. How are we going to divvy up the massive prosperity? Right? We’re gonna borrow our way to prosperity
Which of course is?
Nonsensical just think about that in your personal life
but but not just from the more credit cards you get the more wealthy you are sure but MMT modern monetary theory is
Gaining all kinds of traction wherever you look it’s suddenly become an incredibly hot topic which we know it doesn’t work
It can’t work. You can’t just spend your way into prosperity. Sure
You can’t drink yourself sober, right?
but at a certain time in the cycle
Which we seem to be at it it sounds great to a lot of people right and they want to be told what to think
Extraordinary popular delusions and the madness of crimes exactly right and it’s amazing how it happens and bitcoin was an example of that. I
think now maybe we’ll
Go all digital and all this down the line something like this will work but bitcoin was not going to a million
you know, it was just ridiculous mania and I think
Spending your way to prosperity is so blatantly idiotic yet when you get groupthink going and everybody starts to repeat what they’re told
Yeah, this is what happens but it’s a perfect example of what you’re just talking about
people want to be told what to think and if
The people on the TV tell them this is a great idea and it might just work
they’re all going to get behind it because it sounds fantastic particularly if they hear it enough times for enough people and
People nod their head in the north-south direction. When yes when you say yeah. Yeah
So just one more thing before we finish cuz I like it
A lot of your time but you you you called the Trump election
Perfectly you talked recently about the next election. Perhaps being decided by Congress
it could be because if you get four funded parties or even three it’s possible that nobody gets the majority of the electorate and
What a show that would be can you because against this?
Background of divisive miss you would have one house choosing the president and the other chamber
Choosing the vice president and one is controlled by the Democrats and the others can fold roll by Republicans. So you
could get this incredible situation where you’ve
diametrically opposed in views that are number one and number two and you wonder if there wouldn’t be
god forbid somebody that wants number two to turn into number one right through some diabolical means
but even that’s not your base case scenario, I mean when you look forward I mean
I know we’re a way out but when you look forward to 2020 as it stands now
How do you gain that when you when you try to think through what it’s too early?
It’s I think think it’s really early frankly. I mean this video record. I’ve been so good at these things
I think it’s two words. So it’s amazing. It feels like this campaigns been going on for a while. It doesn’t right. It’s February of
2019 right. So we’re a year and a half plus away
So a lot of things are gonna change the economy is going to change that’s gonna matter
I think we’ll be able to get real clarity about a year from now maybe a little less what’s gonna happen?
But I’m virtually positive you’re gonna get a socialist running the socialist ideas poll very well and Bernie Sanders
Raised six million dollars in twenty four hours and he’s not even that strong anymore
So there’s a there’s a lot of force there. I
think Bloomberg could well run if you get a socialist, I think you could have
This Howard Schultz character run. I’d I I don’t think so. He seemed to not really understand what he signed up for
I think he lasted about 23 seconds before the heckler came in right and I don’t haven’t really heard from him since he’s gone
Very so I I don’t know about that one, but you’ll get one of these people and maybe you know
Maybe Joe Biden. I’m in which would shock me that he would think he would have a chance
Because nobody who’s old-school is gonna win. No. No. Oh all I know is it’s going to be Trump again or
Socialist or we’re in a recession and I guess we’re all socialists then yeah
You know, it’s a great way to finish
Yeah, thank you so much for the time and forgetting that you’re sickbed to come and do this. I really appreciate it. Thanks
Grant good to see you again

100 thoughts on “🔴 Will Corporate Bonds Cause the Next Recession? (w/ Jeff Gundlach) | Real Vision Classics

  1. Real Vision Classics are the best videos from our premium subscription service released free, often a few months after the original air date. The original air date is in the top left corner as the video starts. Film date is located in the description.

  2. Thanks for making this available. 99% of it is still relevant so that you'd think the interview was just yesterday. Always enjoy Gundlach's insights.

  3. If the bond king didn't see this move in yields coming due to deterioration in growth and inflation, and was calling for even higher rates at the top of the hiking cycle…is he really a bond king?

  4. In 2017 I had accumulated a good chunk of money and thought for the first time in my life to invest some of that money in apart from precious metals, stocks or shares.
    I had no idea of economics, technical analysis apart from a rudimentary level that any other could gain from scraps of information garnered from media.
    I must say that Crypto was in the news at the time so I hurriedly started researching a couple to put some money in to.
    Several weeks later the peak was reached and the prices started to free fall.
    I kept buying every few weeks after looking into dollar cost averaging and was even bitten by the hodl mind set that was expressed on different forums etc.
    Luckily since that time I have spent hours every day learning about economics and although being completely blind to bubbles, heard mentality and fads see the money I initially used as the best education I have ever had thanks to amazing channels like 'Real Vision'.
    I'm 35 now and for anyone younger than me I hope they know how lucky they are to be watching these amazing recordings.
    It is no wonder to me that economics is not taught in state schools for how much easier life would be If we knew from our teenage years how economics control almost every facet of our lives.
    Thanks a million

  5. Debt goes up no matter what political party is in control. So tell what is the difference of Democratic socialist and republican conservative. At this point they are all the same.

  6. These interviews seem hopelessly out of date with everything that going on right now. Come on real vision. Don’t post this stuff as new.

  7. Next recession, debt will bloat up. The usd will be meddled with by banks, politicians, and government. Uncertainty and negativity will be so extreme people will de facto go to crypto. Gold and silver will be ok if you’re trading with your neighbor farmer Fred, but for global purchases/global trade, crypto will be the solution. 3 billion was sent and settled in minutes with minimal fees, about 300 usd. Much faster than swift. Load up on the top 3 ( bitcoin, litecoin, and ethereum), set it, and forget it. All the idiots saying buy local aren’t realistic, and crypto will grease the global economic transactions…unless you want to wait for shipping to send 200 billion in gold and then ship the goods over, which is twice as long.

  8. I think people should be losing sleep, and not out of fear of losing money, we could be heading to complete collapse and the 100's of millions/billions of deaths that will entail.

  9. MMT doesn't sound ridiculous because we've already been borrowing our way to prosperity and the downside of that hasn't really hit yet. The Republicans show no interest in fiscal responsibility and haven't demonstrated it to any extent in recent history. So the choice is between ridiculous debt whose benefit accrues to the wealthy vs. ridiculous debt whose benefit accrues to everyone. Frame it that way, and MMT is appealing.

  10. "Getting richer by borrowing more" is not just the message of the democratic socialists… its every politicians message. This entire bubble, the Bush tax cuts, the bailout, the Fed. Free healthcare for every American seems like a better expense than letting Mitt Romney pay 9.8% tax on the 20 MILLION dollars he made in ONE year. The system needs a reset. Gold standard. People will save money because it is actually valuable. The late 1800s and early 1900s were the pinnacle of western civilization because we had a global gold standard. Gold was $35 an oz in 1971 when we got off the gold exchange standard

  11. It's hilarious how little the guys interviewed here understand MMT. Or socialism, for that matter. Socialism sounds good because it is good. Look at the Nordic countries, consistently rated the happiest places on Earth. Whereas America is home of the biggest drug epidemic ever, growing homelessness, and we're at each others throats politically. When you meet people's needs, they are happier, and there's nowhere for divisiveness to stick. Socialism is just the agreement to meet everyone's needs rather than letting a few people steal the whole pie. Kind of what you learned in kindergarten.

  12. It's so marvelous to tune into Jeff Gundlach, especially these days, and Grant Williams is the perfect interviewer – perfect!

  13. Trump's a snake oil salesmen so seeing a bartender take the helm wont be out of the question.
    The 1% has been reaping in the profits for half a century.
    It's time for a change

  14. I predict it will be increased taxes in America that undoes the economy. Taxes are already way too high. And their not going lower.

  15. Schiff keeps talking about the economy and Fed like it was some past happenings. It's not like that anymore. Why is the US economy still relevant? That is what Mr. Gundlach needs to address instead of repeating Schiff

  16. Regarding claim you can't spend your way to prosperity and MMT can't work, are you therefore also claiming that there is no such thing as aggregate demand? Really? I think MMT should be open to debate, because when it comes to any theory, whether its in economics or hard science, there is always a lot of uncertainty. Please check your hubris at the door.

  17. Everytime a Republican is POTUS the deficit balloons. Democratic socialist will pay by taxing billionaires such as this speaker. Not by running up the deficit. He is not an honest actor.

  18. Chairman Powell is the real hero of the Trump mandate. He is working hard to deflate the debt bubble, probably because he has grand-children and, as a "common" man, he wants them to inherit a world in which they are not strangled by debt.
    Whoever criticises his QT policies clearly a stockmarket gambling addiction and needs to be defibrillated back into reality.

  19. When companies are paying bond agencies to rate their own debt, it will always be biased towards the borrower. Same thing happened during GFC, seems like Walk Street never changed

  20. Autopilot the balance sheet sham. If they wanted a steep yield curve just offer the mortgages on the balance sheet? M.f.ers plan to run off 30 year worthless paper by going ZIRP!

  21. Short end of the yield is being juiced by the federal reserve because they got a lot to peddle? The long end is overseas betting on Q.E. And a soft dollar? Banks want QE to run back home to the city of london! Gold is money when you run out of paper to trade?

  22. When Jeff said that dems are gonna spend a lot of money w/o asking who’s gonna pay it, it’s the same thing as Republican given money to the military pushing now $800 Billions, and cutting taxes for the rich, he don’t understand, The republican is making it easy for the dems to increase the deficit, so it’s good for the rep but not for the dems. Give me a break……

  23. Appreciate the video…would have appreciated it more had it been posted in March when it originally aired. A lot can change in 5 months. https://www.youtube.com/watch?v=QLf9tGq2Vv4

  24. The views and interviews on here are great… it would be nice to see a Check sheet put together though. like a simple list/matrix of all interviewers and their responses to the basic questions. the basic questions like, do you think a rescission is coming, how do you feel about gold… or btc… etc. this would of course need to be relative to dates etc. but would just be interesting to see. Can also check it 5 years from now and see how well they called it. no real benefit to it, but would be nice to see, even the interviewees can reflect on their past predictions. They all seem so confident in their own predictions and not everyone can be right.

  25. 14:15 his pompousness proceeding his point was foolish. I'm not a Cortez supporter; however, I dont think the fact that a 'common man/woman' should be dismissed in such an arrogant way. What difference does it make what position she held prior?! Shes holds one now that shows alot of growth, and inspiring individuals as to what the 'retail' can accomplish. And if shes up to task …and she last…he will be made to look the fool…as if he does not already.

    Me personally I'm tired of the old guard telling everyone else how dumb they are…yet all your talking and knowledge could do nothing to prevent todays issues…ie old wall had their chance and the events to come happened on their watch…so stowaway the pompousness.

  26. I instantly dismiss anyone who says BTC is going to zero, or is going away, or is going to die as either delusional, uneducated, or a fiat shill. I started reading an article this morning and in the first three sentences the writer, claiming to know what's up with BTC, said the Bitcoin network is prone to hacks. I instantly hit the back button. Really unbelievable misinformation, FUD, and outright lies still going around.

  27. he had all this stuff to say about DS yet couldn't say a thing about republicans…lol. he just scared of his money he earned not producing a damn thing.

  28. Basically what happened that the baby boomer generations were promised with all of these social programs that started back in 1935 with Social Security, Medicare, etc. and to place your money and trust in the stock markets and all of these annuity and pension programs in which made Wall Street rich over the years but now the boomers are retiring and are demanding all of these promises and social services programs and the money is just not there to fund everything anymore. So the cuts to future social programs are coming thus the reason why you have a big divide between the 2 parties. We got one thing correct this is one big "Baby" generation who wants our government to baby them from cradle to the grave for sure and the millenials are saying not on my dime. This is the division in the country. Back in 1935, we should have said No Deal to FDR's New Deal program lol.

  29. If the U.s. defaults on the Big Bonds, you can bet your azz they will default on the EE Bonds that the peons hold. I am going to sell my $15K worth of EEs and buy silver ASEs, this week. Drain what money you do not need from your bank accounts,and buy PMs , or Junior PM stocks (They rise most on % terms). Most of them are worth more than their stock prices, since the major golds short those stocks to make it harder for them to acquire funds.

  30. If all the Experts on the internet preaching gold/silver, to you are so friggin smart, how come they are not all Billionaires, retired and leading the fun life? Once their names are familiar, they write books. That is how they make money. And by advisory fees to rich dumb clients. Just buy gold or silver coins of one oz. or less, and get rid of your toxic paper called 'money'. I am 96 years old, and grew up with REAL coins, and when Indian head pennies were the prevalent ,or only pennies. Think of all the precious silver coins that we spent frivolously! I remember the gold colored paper money that was convertible to Hard Gold, and the Silver Certificates, that were exchangeable
    for Hard Silver. The only reason for paper money was it was lighter to carry!

  31. These two financial geniuses will inherit important positions in their respective countries governments treasury cabinets.

  32. jason good you are a slimy little trump voting, 1 percenter wanna be who has no doubt bent over for trump at the polls and is probably on some kind of dole. Hey don't take your social security. There is one of you at the dog park I go to. He is a tea party moron and gets social security disability. You jerk off, complaining snowflake, pussies should walk the walk. Hey little guy, bet you have a big gun collection to go along with your big shit talk.

  33. What is the current record for Real Vision re-posting "Recession! Recession!" videos for a 24-hour and/ or 48-hour period?

    Because we have to be at seriously record levels as of August 16th.

  34. It's this mentality of borrowing, borrowing, borrowing with no intention of paying back is what it going to kill us.

  35. TENCENTS index china MSCI …..A shares 1.6 Trn plus market cap Morgan Stanley inject to chinas stock market true or false this is the narrative away from the west to east best get the percentages right from the bank of America not uk printing

  36. I think this "free everything" idea people are pushing on this channel is misinformed in some ways. It's not free heathcare, we stop paying a private tax to insurance companies, and pay less tax to the government as a single-payer, for better coverage. We tax higher income people (it was 98% in FDR days, compared to 30%- today). Amazon payes zero in taxes, but the employees that make it possible for the high-ups to be rich have to pee in bottles and go on food-stamps – trickle down economics working perfectly (sarcasm). Speculative trades get taxed. Let's stop spending billions on our several never-ending wars, and instead of using our taxes to buy a $400 billion jet plane, spend it on our people at home. It's not "free stuff" and going further into debt, it's spending our money in different places – on things that help the US people who weren't born with silver spoons.

  37. Fascinating, full spectrum analysis. Jeff could fill the role of a Platonic "philosopher king" to fix the US. Over a weekend, Jeff could devise dynamic political and economic policies that would propel the U.S. economy on a solid basis. Time for all women and girly men, including the seeming ftm transvestite Donna T. to bow out of politics and move aside for an authentic philosopher king.

  38. This guy goes off the rails when he begins to discuss US politics. He is completely clueless. His condescending take on AOC "the bartender" is both elitist and disgusting. Trump won't run when the economy tanks? Ha, good one! The host was also dripping with sarcasm when discussing AOC or Bernie. Ok, keep talking. Lost in your white, male, high income bubble, I think you are all massively underestimating the political transformation that will happen in 2020. This terrible political analysis really taints your economic analysis.

  39. this is old video, Feb 2019, i wonder what JG would say now about Powell's rate cut, Powell was not an economist and i had high hope since he knew very well how bad QE was as he discussed it in 2015, so mad to see him killing the US economy and creating mal-investment even more, so sad,

  40. Agreed. Downvoted for posting an old video. The market has hit new all time highs since this now contrarian call, lol. In fact the market is up up some 20% since this video. lmao. Nice call.

  41. The markets love that loan money in their pocket. When its time to pay up theyre all gunna go bankrupt and then its not gunna be called socialism when they get bailed out. And hes still gunna wear his 10k dollar suits and say the bartender is an idiot

  42. The minimum wage should be $60 to $80 per hour to equal the purchasing power equal to the 1960 minimum wage. The annual income is only $127.000 per year just as $12,000 was in 1960.

  43. Liquidity drives stock prices. Bond prices have collapsed globally in the last several months. As of mid-Aug 2019, $15 trillion in govt bonds worldwide have a negative yield, and it's growing. The US 10-yr Treasury yield dropped precipitiously to 1.5% by mid August approaching the all-time low of 1.34%..and this is when the economy is supposedly doing well. This should hold stocks up for a while (like until the day after the 2020 election). After that, watch out.

  44. The dollar is going down….the point of no return…spending your way to prosperity is so idiotic. Attention genius Trump. Attention Trump voters.

  45. You're going to say the democrats want all sort of free stuff? Trump just had a huge tax cut which he put on the national debt. So this false dichotomy of fiscal responsible Reps. and wasteful Dems. is getting really old, apart from simply being wrong.

  46. Always be aware of YouTubers who have something to sell! They make videos in order to sell their product, it don't mean what they say about their product or how it performs is true! Gold and Silver shills are everywhere on YouTube and there is no way in hell that gold and silver will save your wealth! It just transfers the dollar value to a metal value, the loaf of bread still costs the same in that comparative ratio! And the FEDS WILL NEVER RETURN TO A GOLD BACKED DOLLAR! Several countries are RIGHT NOW creating their own NATIONAL CRYPTO CURRENCY in order to facilitate dumping the U.S. Dollar! Crypto Currency, or Digital Assets, are the next revolution in currency, and ALL U.S. Companies, such as JPMorgan Chase, The Federal Reserve, Google, Amazon, Tesla, FaceBook, IBM, are just a handful of companies going to convert to Digital Assets, or already have! In 2 years, there will be NO STOCK MARKET as you know it… All U.S. Companies will create their own Blockchain Technology and convert there stocks to digital assets! NASDAQ, in partnership with ICE, have created a Digital Asset Exchange called "BAKKT" which launches on September 23rd, 2019… AND WILL BE THE REPLACEMENT FOR NASDAQ! EVERYTHING IS GOING INTO DIGITAL ASSETS AND YOU BETTER BE IN THE KNOW!

  47. Artificially low interest rates are not the solution; they are the problem. They gave Europe a debt crisis, and America a sub-prime mortgage crisis. And how did governments react? They moved interest rates even lower. What will the next crisis be?

  48. How can quantitive easing work at all when it really is money created to the banks who do not even need it in order to lend to industry and commerce? The banks create money in the act of creating debt which they then take ownership of which is deeply immoral. This has even been admitted by the bank of England and Deutch bank, however, the media and the politicians insist that it is not so. Liars all!

  49. the two of you are paid to lend credibility to this sick exploitative system. You both well know that there is no difference between parties dem/rep they are serving the same psychopathic criminal parasite agenda. You two are just part of the top 10%, the hand maiden servants to the 1%, you are seen through,

  50. forget socialists, republicans are plenty willing to borrow too much for no reason. viz. the newest budget. at least socialists are willing to tax to make up the difference.

  51. The FED is a criminal banking cartel. Andrew Jackson kicked out the bankers but they came back in 1913. Nixon defaulted on US backed gold currency in 1971. We re coming to the end of the bankers reckless, destructive policy. Get ready for the next greater depression. Buy Gold and Silver. END THE FED AND HANG ALL THE CENTRAL BANKERS.

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