Jeff Gundlach – the so-called bond king is calling for ‘hard landing’ in the economy, of course, caused by the Fed’s aggressive raising of interest rates. It’s interesting to me that Gundlach and many others are calling for the bad outcome, while it is obvious that the equities markets aren’t buying that scenario. It is very difficult to reconcile the S&P500 at 4,000 with any recession, let alone a ‘hard landing’. Who knows? Not me–obviously I have found out that trying to forecast (also called wild ass guess) these things is a coin toss of sorts. I can say that record credit card debt by consumers and a never ending federal budget deficit isn’t going to end well–but whether this is next week or next decade I have no clue.
Right now I am seeing the 10 year treasury yield at 3.95%–poised to head over 4% once again–all it takes is one more piece of stronger than expected economic data. Today we have jobless claims coming out and it is unlikely this will move rates over 4%–but tomorrow we have the personal consumer expenditures (PCE) index coming out and if it comes out hot ‘hello 4%’. We also have 5–yes 5 Fed yakkers tomorrow-always a wild card of sorts.
Yesterday was a slightly green day for preferreds and baby bonds–not a very green day, but a green day just the same. I watch–that is all–watch–why do anything else?