Doubleline Capital’s Jeffrey Gundlach expects a US recession will start in a few months, and that the Federal Reserve will need to respond “very dramatically.” He made the comments in an interview on CNBC on Monday. Valerie Tytel reports on Bloomberg Television.
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Gundlach Warns Recession to Start in Few Months, Fed to Cut Rates
Renowned investor Jeffrey Gundlach recently sounded the alarm, warning that a recession is imminent and could hit the global economy within the next few months. Gundlach, who is the CEO of DoubleLine Capital and known for his accurate predictions, cautioned investors to brace themselves for an economic downturn, which he believes will be led by the United States.
Gundlach believes that the ongoing trade tensions between the US and China, coupled with slowing global growth, will be the primary drivers of the impending recession. He stated that the recent yield curve inversion, which has traditionally been a reliable indicator of recessions, confirms his prediction.
The yield curve inversion occurs when short-term Treasury yields exceed long-term yields, and it has been a reliable harbinger of economic downturns in the past. Gundlach emphasized that the current inversion serves as a warning sign for investors and policymakers alike.
Furthermore, Gundlach expects the Federal Reserve to play a crucial role in the coming months. He believes that the central bank will cut interest rates in an attempt to mitigate the impact of the recession. The Fed has already signaled its willingness to take a more accommodative approach, with the possibility of multiple cuts this year.
Gundlach’s assertion aligns with growing market expectations of a rate cut. Many investors have already factored in at least two rate cuts by the end of 2019. The anticipation of lower rates has fueled a surge in stock markets, as investors hope that looser monetary policy will provide a much-needed boost to the economy.
However, critics argue that the central bank’s ability to combat an impending recession using traditional policy tools may be limited this time around. With interest rates still historically low, the Fed has less room to maneuver compared to previous economic downturns. This raises concerns about the potential effectiveness of rate cuts in stimulating the economy.
Given the interconnectedness of the global economy, a US recession would likely reverberate throughout the world, impacting various sectors and countries. The International Monetary Fund (IMF) recently revised down its global growth forecast, highlighting increased risks to the world economy. It warned that ongoing trade tensions, geopolitical uncertainties, and a slowdown in major economies could have severe consequences.
While Gundlach’s prediction of an upcoming recession may seem alarming, it is important to note that economic forecasts can be fallible. The timing and severity of a downturn can be challenging to predict accurately. Therefore, investors and policymakers should remain cautious and closely monitor economic indicators to make informed decisions.
In conclusion, Jeffrey Gundlach’s warning of an imminent recession within the next few months has sent shockwaves through the financial community. His analysis of the yield curve inversion, coupled with ongoing trade tensions and global slowdown, raises concerns about the state of the global economy. As investors brace themselves for potentially challenging times ahead, all eyes will be on the Federal Reserve and its actions to help mitigate the impact of the downturn.
The most important thing that should be on everyone's mind currently should be to invest in different sources of income that doesn't depend on the government. Especially with the current economic crisis around the word. This is still a good time to invest in various stocks, Gold, silver and digital currencies.
Recession already started
The last 3 yrs (and also the last 10yrs), hundreds of youtube videos saying crash, stagflation,housing market crash, stock crash, and NOTHING has change or happened. Facts are facts.
This recession is most likely the result of an external factor. For the first time in decades, the United States is losing its clout as a federal reserve currency. They don't have any more economies to use to control inflation, and less money is being spent on stock and oil trading than in the past. They all lend support to the idea that a new multilateral world order is in the works.
National Debt is too big for an economy to contract. Like the movie Speed. Can't slow inflation and growth. Or else we implode like a dying star.
No rate cuts, banks need to stop whining. We need recession and lower inflation. Strong balance sheets will win and trash will burn
Recession started the day they started raising loan rates
The Fed will cut rates only when some thing breaks !! What if the Fed cut rates at this moment that inflation still so high ? And what disaster will come doing this ? We will need another Paul Volcker at that time !!
Will the FED cut rates if inflation is still high say ,3-4% ?
The recession will be mild
And thats even if we have a recession
Its not 2008
Everything is lined up for bitcoin to be the best performing asset of the decade. Few are onboard, that's why it will work…
Nothing is gonna happen doesn’t need to happen. Yes, it does housing prices. Are absolutely ridiculous. Something needs to change so people can afford a Home Ridiculous Covid screwed this whole world up.
Its NAIVE of FED that soft landing is possible! Its CRAZY how bad the situations are right now!!!
PI and PPI she sounds like she's spelling M I S S I S S I P P I
Money managers are DISHONEST.
Tell Valerie to relax please. She sounds like a Karen.
great maybe finally car prices will come back down to normal
Acting like we don’t want a recession
Valerie looks like a werewolf!
A regional bank's business model no longer working is not a reason to raise rates.
Valerie always looks irritated and tired.
How dare you say
Uhg
Either we have a banking collapse or more government control…either way it’s not good
Lol the definition of recession has legally changed twice since biden took office. It's 2 consecutive quarters of negative gdp growth measured on a qoq basis. I'm pretty sure we already were in one like over a year ago. Such a joke what the 'news' says.