DoubleLine Capital CEO Jeffrey Gundlach says that the trend of American exceptionalism has come to an abrupt end.

In a new CNBC interview, the billionaire “Bond King” says that foreign investors have been happily investing in US assets over the last two decades, leading to massive capital inflows to the tune of tens of trillions of dollars.

But now, Gundlach says he’s seeing signs that foreign investors are yanking capital out of US markets in favor of the euro and European equities. According to the hedge fund chief executive, the reversal in flows tells him that investors are now crowning a new market leader.

“Foreigners have been very willing – downright enthusiastic, almost euphoric – about buying dollar assets over the past 18 years or so. Over $25 trillion has been invested in US financial markets, more than the US has invested in foreign markets. 

That’s a massive increase. It went from $3 trillion to $28 trillion by one measure. That may be reversing, and this is part of the underpinning for why I think that the trend of US outperformance is over. And I mean over for real…

I’ve been recommending Europe in European currency for dollar-based investors. The [European] index has outperformed the US index by a decent amount, but if you had the currency side of it, if you own it in euros and you get the currency translation, you are just printing money right now. 

And that trade, I believe, is just getting started.”

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Billionaire Jeffrey Gundlach is warning that the US dollar is very close to triggering a collapse amid its sustained weakness this year.

In a new video update, the DoubleLine Capital CEO says he’s keeping a close watch on the US dollar index (DXY), which tracks the performance of the USD against a basket of foreign currencies.

Gundlach points out that the DXY has been in a macro downtrend, and he expects the US dollar index to melt down if it loses a diagonal trendline that has held as support since 2011.

“The dollar has been in a pattern of lower highs going back to 1985 and lower lows, with the exception of 2020, perhaps. But I think the dollar is going to continue to go down. 

I know I am not alone in this view… If it breaks down, if you can mentally draw a trendline between that low in 2011 (DXY at 72) and the low back in 2021 (DXY at 89), if we break down below that trendline, I think it’s truly a dollar bear market. 

Should that happen, I would expect it to take out the low on this chart, so down below the level of around 72 or whatever. Now this is surreal.”  

Based on Gundlach’s diagonal trendline, the DXY needs to stay above 97 to avoid a 25% crash toward 72. At time of writing, the DXY is hovering at 98.24.

Last week, the billionaire Bond King said that the stock market, the dollar and the Treasury market are not behaving as usual, hinting at deeper concerns that are unsettling investors in US assets. According to Gundlach, foreign investors holding trillions in US assets may begin pulling out of American markets as concerns mount over the government’s unsustainable fiscal path.

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DoubleLine Capital CEO Jeffrey Gundlach is warning that investors holding trillions of dollars in US assets could soon reallocate capital overseas.

In a new interview with Bloomberg, Gundlach says recent behavior in the stock market, the dollar and the Treasury market appears “strange” to him, hinting at deeper concerns that are unsettling investors in US assets.

According to Gundlach, investors are beginning to sniff out the looming risks tied to the US government’s unsustainable fiscal trajectory.

“In the last 15 years, there has been a number of corrections on the S&P 500, and in every single one of them, when the S&P goes down by more than 10%, the trade-weighted dollar index goes up. This time, the dollar went down when the S&P 500 went down by almost 20%. That’s strange, things are behaving differently. 

Usually when the Fed starts cutting interest rates, rates across the yield curve go down. The 10-year Treasury almost always goes up [in price] immediately following the first Fed rate cut, and then it keeps rallying for a while. This time, the 10-year yield went up, and the yield curve is steepening. 

So I think what we have is recognition that the interest expense for the United States is untenable – if we continue running a $2.1 trillion budget deficit and we continue to have sticky interest rates.” 

The Bond King zeroes in on foreign investors, noting that they hold tens of trillions of dollars in US assets. Gundlach says it is now within the realm of possibility for the investor cohort to start exiting US markets.

“There’s a net investment position; foreigners were investing more in the US than the US was investing outside the country to the tune of $3 trillion. That was about 15 or 17 years ago. It’s now over $25 trillion is the net investment position, and the dollar is falling. It’s not inconceivable that some of that $25 trillion that came in not even two decades could go out.”

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Billionaire “Bond King” Jeffrey Gundlach says the US will likely witness one crisis this year that would force the Fed to resume a rate-cutting cycle.

In a new CNBC interview, the founder and CEO of investment firm DoubleLine Capital says he sees the Fed cutting rates this year, but it won’t be related to the Fed’s dual mandate of achieving maximum employment and an average of 2% annual inflation.

“I do think they’ll cut rates, but I don’t think it’s going to be because of much better inflation data because I don’t think it’s going to get much better. I doubt the unemployment rate is going to be a shocker in the near term, like in the next few months.

But I do think they’ll cut rates because some liquidity problems may come up. So I do think they’ll probably cut rates by year end, and I still think it’s probably less than the market thinks, but I’m closer to the market now because I’ve stayed at two and the market has gone from five or six down to two and a half [cuts].”

According to Gundlach, some institutions are starting to witness liquidity problems. Gundlach uses Harvard’s recent bond sale to show that US-based entities are in need of cash, but says other institutions are having the same issue.

“The thing that I feel is starting to get talked about, and I think might be significant in the next market problem is this illiquidity issue that [has] developed and it’s getting some play on the newswires with Harvard and some elite universities where they don’t have any money. 

They’re asset-rich but they’re cash-poor. Harvard has a $53 billion endowment, and they’ve tapped the bond market now twice for basically operating cash. And the reason is – and I’m just using Harvard as a placeholder because this has been in the news and reported with statistics – they report 40% of their endowment in private equity. 

I suspect that another big slug is in private credit, which has been a booming asset class. We’re starting to see stories of some of the faster-moving university endowments saying, ‘We might want to exit some of our commitments…’

I think this is going to be an issue.”

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The founder and CEO of investment firm DoubleLine Capital Jeffrey Gundlach is leaning bearish on the US stock market amid the imposition of import tariffs as high as 50% by the world’s largest economy.

In a new CNBC interview, Gundlach says he sees the S&P 500 stock index falling by around 14% from the current level.

“So I think investors need to stay on defensive mode. We certainly are positioned for that. And the extent to which investors hold cash, I would continue to do that until we get something more of a sustained bottom. As I said earlier, I’m looking for 4,500 on the S&P [500 index].”

According to the billionaire investor who earned the nickname “Bond King” due to his success in the bond market after the 2008 financial crisis, the market uncertainty caused by the imposition of import tariffs in the US is going to persist for the foreseeable future as a quick resolution is unlikely.

“People talked about tariffs [getting] delayed. There is no way that’s going to happen. I think [US President Donald] Trump is going to keep this going.

And I don’t understand exactly how he calculates or the administration calculates this strange formula to set these tariffs. It just doesn’t seem to make much sense to me mathematically. But at least it’s a formula. Whether it’s logical or not, it’s a formula. Otherwise, it’s just going to be totally arbitrary.

But he’s [Trump] keeping people guessing. And he’s not going to back down. I don’t think so. So this is something that’s going to have to play out and we’re going to be dealing with this, I would say certainly for weeks or months and not just days.”

The S&P 500 index is trading at 5,222 at time of writing, down by over 10% since the start of the year.

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Billionaire “Bond King” Jeffrey Gundlach says the stock market is struggling to sustain rallies due to a massive expense draining the government’s coffers.

In a new CNBC interview, the CEO of investment management firm DoubleLine Capital points out that the S&P 500 has given up most of its gains since the Federal Reserve began its rate-cutting cycle in Q3 2024.

According to Gundlach, risk assets like equities tend to witness upside bursts when the Fed slashes interest rates. With the S&P500 plummeting to a level last seen in September of last year, Gundlach says the bearish price action indicates a deeper issue is troubling the stock market.

“Since the Fed starting cutting rates back in September, bond yields are still up and the stock market is doing very, very little since then. So this is an unusual time period where the Fed cutting rates by 100 basis points and talking about two more, we have not seen a rally in the 10-year Treasury bond…

We have also not really had a rally in stocks since the Fed started cutting interest rates. There’s that old phrase ‘Don’t fight the Fed,’ which is supposed to mean that if the Fed is cutting, you’re supposed to stay long risk but it sort of isn’t working this time.

I think that’s going to continue to be a theme as we move forward in time.

I think that we really have a big problem… with this interest expense. It’s over $3 billion a day in interest expense on the Treasury debt.”

Interest expense is the interest paid by the US government to holders of its $36.22 trillion national debt. The nonpartisan, nonprofit Committee for a Responsible Federal Budget (CRFB) says data from the Treasury Department showed that the government paid $882 billion in interest costs during the 2024 fiscal year, which ran from October 1st, 2023 to September 30th, 2024.

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